Inherited Money or Earned Money?
Earlier this summer the world lost Gloria Vanderbilt. The eulogies talked mostly about her loves and dramas (Gloria lived a full life); those stories sell tabloids. We prefer to remember her business skills. For example, in the 1970’s, Gloria Vanderbilt basically re-invented the jean industry. Later she launched dress lines, blouses, fragrances, sheets, shoes…you name it – if you could wear it, the GV logo was on it.
In a late-life interview Gloria was asked which money was better, inherited money or earned money? She replied without hesitation, “Oh darling, the money you make is better.”
For Gloria, fulfillment was more about jeans than genes.
Gloria’s estate is guessed to be around $200 million – most of her wealth was the “better” money – she made it. At the time of her death, nobody knew who would inherit that fortune because Gloria had said inherited wealth is a curse. She believed inheritance discourages hard work.
Comment: Ironic, right? But as an heiress she would know…
To the surprise of many, she left almost all of her estate to her son Anderson Cooper, who has developed his own “brand” as CNN anchor and doesn’t need the money. Some predict he’ll donate it to charity.
Back to Gloria’s genes, students of financial history recall that Gloria’s great-great grandfather Cornelius built the original Vanderbilt family fortune. He developed America’s transportation industry in the early 19th century, first as a shipping magnate, then as a railroad man.
While listening to Gloria’s eulogies, we found ourselves remembering the talents and quirkiness of the Commodore. We looked up some of the old stories:
- The original Vanderbilts were humble farmers from the De Bilt village of the Netherlands (Van is the Dutch word for “from”, so Van De Bilt…you get it).
- Cornelius broke the humble family mold. By age 6 he was racing horses. By age 11 he worked in the ferry industry. At age 16 he bought his own boat and started a ferry business from Staten Island.
- By age 20 he owned a fleet of ships transporting passengers and cargo from New York to Charleston, SC.
- In 1838 Cornelius purchased the Staten Island Ferry, which earned him the nickname “Commodore”.
- By 1840 his steamship company was the largest employer in America.
- In the 1860’s the Commodore realized that America’s future depended on railroads and he created America’s largest single rail system. (He built the original Grand Central Station in New York City.)
Comment: Cornelius Vanderbilt was the first Robber Barron. Once asked by a reporter if he planned to sue a business rival, he replied: “It is not according to my mode of doing things, to bring a suit against a man I have the power in my own hands to punish.”
The Robber Barron’s of the 19th century played fast and loose in an unregulated business environment. Even so, some of the Commodore’s habits and values transcend 150 years of business. Author Thomas C. Corley, as quoted in Business Insider, said Commodore Vanderbilt built his success on these habits:
- He lived below his means and avoided debt.
- He put his money to work.
- He was forward-thinking and loved competition.
- He forged relationships with other success-minded individuals.
- He listened carefully but refused to be swayed by criticism.
- He stayed healthy and took time to relax. (Cornelius Vanderbilt ate lightly, didn’t drink, was physically active and took frequent vacations.)
- When he died in 1877 the Commodore was the wealthiest man in America. His estate in today’s equivalent dollars: almost $200 billion. He left most of that money to his son, Billy Vanderbilt, Gloria’s great-grandfather.
- An aside: the only charitable donation Cornelius Vanderbilt is known to have made was $1 million gift to Central University in Nashville. In return, Central changed its name to Vanderbilt. And what do we call the students and alumni of Vanderbilt University? The Commodores!
- Family tree: Cornelius begat William Henry “Billy” Vanderbilt, who begat Cornelius II, who begat Reginald Claypoole Vanderbilt, who was the father of Gloria Laura Vanderbilt…the mother of Anderson Cooper.
May Gloria Vanderbilt, whom we remember for game-changing genes and game-changing jeans, rest in peace. We will remember her wisdom, her passions and her intuitive business skill.
As most readers know, the original Vanderbilt family wealth is mostly long-gone. In future issues of Watching the Tape, we will talk briefly about two aspects of the Vanderbilt wealth:
What eventually happened to all that money? (if you’ve visited the Biltmore in Asheville you already know some of the story) – and –
How did Cornelius come to back the very first woman to run for President? He did so in 1872, before women even had the right to vote!
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