20 March 2014

Rich Differences

The Guardian a few days ago had a news story that included a list of the five richest families in Britain. I knew the Duke of Westminster's family had long been the richest in the country, but the appearance of the Cadogan's got me thinking about what different sources of wealth between the richest five British and the richest five American families might tell us about the different historical trajectories followed by the two countries, especially their two economies. While I like to think of them as more alike than different, as an historian it is my job to look for evidence that challenges my view. Sports is a good one. Maybe rich people are, too.

The Cadogans are the oldest family in terms of being rich and influential. They have links to Cromwell's parliamentary army, the Duke of Marlborough (the Churchills) and the Glorious Revolution and service in the Napoleonic Wars. Their wealth rests on London property, inherited after marrying the Sloane heiress in 1717.

The Grosvenors are like the Cadogans in their fortune resting on ownership of parts of London. However, at the time the Cadogans were marrying into London property, the Grosvenors were based in Cheshire. It was the first marquess of Westminster whose development of Belgravia and Pimlico on the edges of Westminster who really founded the family fortune.

There is about a hundred-year gap between the Grosvenors and The Hindujas in terms of launching a family fortune. The Hindujas were originally from Sind, and the business began in Bombay, but they were active in the traditional trade across the Arabian Sea between Persia and Bombay. In 1919, the Hindujas set up in Tehran, and in the 1950s and 1960s Iran became central to their money-making. After the fall of the Shah in 1979, the Hindujas moved their base to London, although most of the business activities remained located in India and the Near East. One can think of the Hinduja wealth as a creation of the trading network shaped by the British Empire. In this sense, the Hindujas are very unlike the Cadogans and Grosvenors.

The Reubens are like the Hindujas, in that they are something of an Imperial legacy. They too started in Bombay, and then made their way to London. The difference is that they did that a lot earlier, with the family arriving in the early 1950s, not long after India's independence. They were traders, and benefited from London's rapid reassertion of its position as the most important global financial centre despite the tremendous debt left from the Second World War, the transformation of the US dollar into the world's reserve currency and the continued decline of Britain's economic position relative to other states. Rich by the 1980s, they did well out of the end of the Cold War, although they are said to have terminated their links with Russian businessmen in the early years of this century.

Mike Ashley is a post-Thatcher creation, and his achievement resembles that of Sainsbury of Victorian Britain (a dynamic period with a few fortunes built by those of humble origins), in that he transformed retail into a fortune. He made his money selling sportswear to Britons and buying up other businesses. His business interests really expanded during the long 1994-2008 economic boom that transformed Britain out of all recognition from the 'sick man of Europe' of the 1970s and 1980s. Ashley's family background is relatively humble, compared to the other four names on the British side of this list.

The Mars family name will be familiar to all Britons via the Mars bar, the British equivalent to America's Milky Way. The founder, Frank Mars, is a bit unusual in this list for having experienced a business failure with his first efforts in 1911. He tried again in the 1920s, and launched a British subsidiary in the depths of depression in 1932.

Fred C. Koch, founder of The Koch family fortune, like the Mars, has ties to Britain. In the 1920s he worked at an oil refinery in Kent, until in 1925 he moved to Wichita, Kansas, to found his oil refining business. Legal troubles in the US ensured that he found markets for his refining process outside the United States, which ended up shaping his political views. Koch Industries was founded in 1940, and later expanded from its core engineering business to become an oil and chemical conglomerate.

The Pritzker family is traditionally associated with the Hyatt hotel chain, although they were not the original owners of the original Hyatt. In fact, the family is from Chicago, and started their ascent to wealth as lawyers and investors. They also made quite a bit from traditional manufacturing through their ownership of what became the Marmon Group. Their accumulation began in earnest in the late 1950s and early 1960s, although the original Pritzker investments date back to the mid-1950s

The Waltons should need little introduction here, as their Wal-Marts are everywhere. The first Wal-Mart opened its doors in 1962.

The Duncans of Houston, Texas, offer the classic Texan story of wealth, based on oil and gas. However, they did not make their money from drilling oil wells, but by ownership of pipelines and storage facilities. They are also among the newer wealthy families. Dan Duncan spent some years working for another company before setting up for himself in 1968.

So can we draw any conclusions from this list of names? Not conclusions, perhaps, but there is one key observation. It is interesting that (with one exception) the American list reflects the post-1945 economic history of the United States, whereas the British list represents three very distinct phases of the kingdom's history. Put together, in the way I like to treat Anglo-America, though, and the really interesting point is that the British list is far more multi-cultural than the American one. And I would have expected that.

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