Old money

Old money
This article is about the socioeconomic term. For other uses, see Old money (disambiguation).

Old money is "the inherited wealth of established upper-class families (i.e. gentry, patriciate)" or "a person, family, or lineage possessing inherited wealth."[1] The term typically describes a class of the super-rich, who have been able to maintain their wealth across multiple generations. However, many old money families are not as wealthy as people are led to believe. Many of them live relatively modest lives but still hold a high social ranking because of their family name.

Contents

United States

American locations such as Fairfield County, Connecticut, Westchester County, New York, Long Island's Gold Coast, the Upper East Side of Manhattan, Detroit's Grosse Pointe, Boston's Back Bay and Beacon Hill, Newport, RI, and Philadelphia's Main Line are associated[by whom?] with old money. Ironically, these areas' inhabitants that are colloquially described as "old money" are almost always descendants of the people the term "nouveau riche" (new money) was originally coined to describe: nineteenth century industrialists, bankers, and builders. Traditionally, wealth was associated with landowning and these Gilded Age fortunes made money in a new way, hence the term new money. Edith Wharton, among Gilded Age America's greatest chroniclers, referred to industrialists and their ilk as "brazen new money"[2].

Wealth - assets held by an individual or by a household - provides an important dimension of social stratification because it can pass from generation to generation, ensuring that a family's offspring will remain financially stable. Families with "old money" use accumulated assets or savings to bridge interruptions in income, thus guarding against downward social mobility.[3]

"Old money" applies to those of the upper class whose wealth separates them from lower social classes. According to anthropologist W. Lloyd Warner, the upper class in the United States during the 1930s was divided into the upper-upper and the lower-upper classes.[4] The lower-upper were those that did not come from traditionally wealthy families. They earned their money from investments and business rather than inheritance. In contrast to the nouveau riche, the upper-upper class was families viewed as "quasi-aristocratic" and "high-society".[4] These had been rich for generations. They lived off idle inheritances rather than earned wealth.

During the early 20th century, the upper-upper class were seen as more prestigious.[4]

"Old money" contrasts with the nouveau riche and parvenus. These fall under the category "new money" (those not from traditionally wealthy families). Some families with "old money" include:

  • The Rockefeller family: While founder John D. Rockefeller had modest origins and was initially considered "new money", he made billions of dollars in oil in the late 19th and early 20th centuries. Over time, the Rockefellers became considered "old money" as their wealth was passed down from generation to generation and their lineage still remains wealthy.
  • The Vanderbilt family made their fortune in the railroad industry and other investments. They have been a prominent wealthy family in the United States for 200 years.
  • The Astor family made their fortune in the 19th century, through real estate, the hotel industry and other investments.

Although many "old money" individuals do not rank as high on the list of Forbes Top 400 richest Americans as they once did, their wealth continues to grow. Many families increased their holdings by investment strategies such as the pooling of resources[7] For example, the Rockefeller family's estimated net worth of $1 billion in the 1930s grew to $8.5 billion by 2000. In 60 years, four of the richest families in the United States increased their combined $2–$4 billion in 1937 to $38 billion without holding large shares in emerging industries.[8][9]

Europe

  • The Rothschild family established finance houses across Europe from the 18th century and was ennobled by the Habsburg Emperor and Queen Victoria. Throughout the 19th century, they controlled the largest fortune in the world, in today's terms many hundreds of billions, if not in trillions ($US). The family has, at least to some extent, maintained its wealth for over two centuries.[10]

Effects of World War II

Economists assert that the largest transfer of income will be as the older generation leaves wealth to the baby boomers. Inheritance has been estimated to make up 6% of the US GDP each year.[11] The current generation is wealthier than any generation before. This increase in wealth and inheritance indicates a rise of "old money" in American families. Stephen Haseler argues that America is becoming an inheritance culture in which much economic opportunity is from family inheritance and not personal achievement.[12]

See also

References

  1. ^ "Old Money" The American Heritage Dictionary of the English Language, Fourth Edition. Houghton Mifflin Company, 2004. 05 Nov. 2008. Dictionary.com http://dictionary.reference.com/browse/oldmoney
  2. ^ http://www.time.com/time/magazine/article/0,9171,938649,00.html
  3. ^ Scholz, Claudia W. and Juanita M. Firestone. "Wealth." Blackwell Encyclopedia of Sociology. Ritzer, George (Ed). Blackwell Publishing, 2007. Blackwell Reference Online. 06 November 2008 http://www.blackwellreference.com/subscriber/tocnode?id=g9781405124331_chunk_g978140512433129_ss1-5
  4. ^ a b c Warner, W. Lloyd, 1960. Social Class in America: A Manual of Procedure for the Measurement of Social Status.
  5. ^ Lundberg, Ferdinand. The Rich and the Super-Rich. New York: Bantam Books/Lyle Stuart Publishing, 1968. pp.165-177 (paperback edition)
  6. ^ Author Unknown. "Fortune 500 2008: Fortune 1000 1-100". Fortune. May 5, 2008. Viewed Dec. 2, 2008. http://money.cnn.com/magazines/fortune/fortune500/2008/full_list/
  7. ^ Phillips, Kevin. Wealth and Democracy: A Political History of the American Rich. Westminster, Md: Broadway Books, 2003, p. 115
  8. ^ Phillips 2003, p. 116
  9. ^ Haseler, Stephen. Super-Rich: The Unjust New World of Global Capitalism. New York, NY: Palgrave Publishers, 2000, p. 2
  10. ^ The House of Rothschild: Money's prophets, 1798-1848, Volume 1, Niall Ferguson, 1999, page 481-85
  11. ^ Haseler, Stephen. Super-Rich: The Unjust New World of Global Capitalism. New York, NY: Palgrave Publishers, 2000, p. 16
  12. ^ Haseler, Stephen. Super-Rich: The Unjust New World of Global Capitalism. New York, NY: Palgrave Publishers, 2000, p. 17

Further reading

  • Aldrich, Nelson. Old Money: The Mythology of Wealth in America. New York: Allworth Communications, 1996.
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