The Very, Very Rich and How They Got That Way

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First published in 1972

Published in this edition 2010

Copyright © 1972 Max Gunther

Design copyright © 2010 Harriman House

The right of Max Gunther to be identified as author has been asserted in accordance with the Copyright, Design and Patents Acts 1988.

ISBN: 978-0-85719-066-6

British Library Cataloguing in Publication Data

A CIP catalogue record for this book can be obtained from the British Library.

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How to Get Lucky

Instant Millionaires

The Luck Factor

The Zurich Axioms

Max Gunther (1926-1998), born in England, went to the United States when he was 11 years old, attended schools in New Jersey and received his BA from Princeton University in 1949. He served in the US Army in 1950 and 1951 and was a staff member of
Business Week
from 1951 to 1955. Mr Gunther then served as a contributing editor of
Time
for two years. From 1956 he published articles in several magazines, including
Playboy
. Among his other books are
The Zurich Axioms
,
The Luck Factor
,
How to Get Lucky
and
Instant Millionaires
.

Mr Gunther lived in Ridgefield, Connecticut, where his wife was a real-estate broker. They had three children. The author said that his diversions included surfing and skating, carving chess sets and playing chess, and painting.

In 1972 Max Gunther invited readers to take a journey with him through a gallery of America’s most prominent millionaires. It was a golden gallery indeed, since the inhabitants framed here are by no means merely ordinary millionaires. A minimum qualifying standard to be considered for inclusion in Gunther’s list is ownership of assets valued at $100 million or more (the equivalent of $500 million today).

We are dealing, then, with the astonishingly affluent, the crème de la crème of the self-made rich.

As Gunther makes plain from the outset of this inquiry into fortune, the wealthy are not just ordinary people, and among the wealthy the very, very rich are an even more specialised breed. It takes an extremely particular type of mindset and approach to accumulate the wealth that the men profiled here did – and it was the desire to discover this mindset and approach that spurred Gunther’s quest.

The Very, Very Rich
is a survey of the lives and character traits of America’s super rich and, most importantly, an analysis of the methods they employed to generate their huge swathes of capital.

To name but a few of the luminaries included: we meet a salesman in W. Clement Stone; massively successful ‘jacks-of-all-trades’ in Howard Hughes and William Lear; a stock market speculator in Joseph Hirshhorn; and exponents of OPM (other people’s money) and OPW (other people’s work), in Daniel Ludwig, James Ling and Ray Kroc.

Though
The Very, Very Rich
may very well be read for simple entertainment, Gunther intended it to also have a practical application as a guide for those who themselves harbour dreams of ascending the ladder to supreme fortune.

This classic is now nearly 40 years old but its value endures since, as Gunther is keen to impress upon readers, the key steps on the route to wealth do not change with time. Those contained in this book can be learned from, adapted and applied by anyone today.

Harriman House

September 2010

COME WITH ME NOW, ye seekers, and stand before this great golden door. In a while we will turn the jeweled key and go in. Step softly. Speak in whispers. You in the back, there, get rid of that damned beer can. We are about to enter the presence of Wealth.

Did I pronounce it with an awestruck capital
W
? I intended to. This is not ordinary wealth we are about to study, not the mere upper crust, not even the tribe of mere millionaires. No, we are about to see Wealth in its most exaggerated – some would say gorgeous, some would say disgusting – manifestations. The very poorest individuals we’ll meet will have net assets of $100 million or not far below, and some will have more than a billion.

What is the purpose of our visit to this golden gallery? Why, you ask, should we study these, the immoderately rich?

It is a sharp question, and we must acknowledge from the start that some will say there is no sensible answer. Our quest, we will be told, is foolish. A historical record stretching back some 2500 years reveals that wealth and seekers after wealth and seekers after the seekers (in which final category we now find ourselves) have all been steadfastly jeered at in every clime and culture. Wealth, the 2500-year-old platitude goes, is only an ephemeral thing and may not even be real at all. A man is better advised to spend his life in quest of something else: truth, perhaps, or beauty, but not money. Money isn’t worth the seeking.

Nobody knows who first noted that you can’t take it with you – probably a Cro-Magnon man bellyaching about his neighbor’s flashy new leopard skin. The Greek philosopher Theognis was one of the first to put the sour old cliché in writing. “No one goes to heaven with all his immense wealth,” Theognis grumped in the Fifth or Sixth Century B.C. Very probably not a single year has since gone by in which some man of intellectual stature has not reiterated the thought in hopes of cooling off whatever rat race was then afoot. Cicero said it in materialist Rome. Shakespeare said it to the earthy Elizabethans, while, across the English Channel, Rembrandt, himself a moderately rich man, was saying it to the boom-maddened Dutch. Shelley said it in reference to a departed king named Ozymandias. Thoreau said it at Walden. It would probably be a safe bet that at least 100,000 novels published in the 20th century have said it one way or another. The Bible says it not once but many times.

Every so often, however, a refreshing new intellect comes around and unsays it. One such was Jesse Livermore, a famous stock-market speculator who flourished on Wall Street in the first half of this century. “It’s true you can’t take it with you,” said Livermore one day, contemplating a large capital gain he had just scored, “but you can sure as hell use it until you go.”

Right on, dear old Jesse. It will be assumed that all visitors to this gallery share Livermore’s view or at least are willing to suspend judgment about it. Those who think Livermore wrong are, of course, welcome to come in and browse, but they will find nobody here willing to debate with them. The argument for and against wealth is a proper subject of other times and places, but not now and not here.

With that prickly subject neatly sidestepped, let’s now consider what we stand to gain from our visit. For one thing, we stand to be entertained. The very, very rich are an unusual and fascinating group – obviously different from you and me, as F. Scott Fitzgerald pointed out, yet not so very different that we can’t see our own humanity reflected in their faces. Their stories are stories of ordinary human beings raised to stunning magnitude by forces from within and without. Each is a man who took his material environment as he found it and not only figured out how to survive in it, not only rose above it, but conquered it absolutely.

In a sense these are fairy tales. Each starts with a ragged hero pursuing some risky course, going out alone to fight giants. Each ends with the hero sitting on a bag of gold, grinning. But there is one notable difference: The reader of a fairy tale cannot hope any such adventure will ever happen to him. The reader of these rich men’s tales may nurture this hope – in fact, is cordially invited to do so.

Which brings up the second good reason for our visit to the gallery: The lives of the rich men gathered here are highly instructive.

With a few exceptions, which will be justified when the time comes, all the ventures you’ll meet here started from the bottom. We have categorically excluded all holders of great inherited wealth: Rockefellers, Mellons, Fords. Each of our men started as nobody in particular: an ordinary man like you or me, drifting on the great economic tides of our times with millions of other ordinary men. Some were plain middle-class salary earners; some started even lower, in conditions of actual poverty. Each, by using his own brain and backbone, rose to be one of the mighty.

By watching how they did it, you can (if you wish) think about how you will do it. The gallery is organized by the various routes these men took to the top. One man played the stock market, another developed a technological innovation, and so on. One or more of the routes may attract you by reason of temperament or past experience. Pick your route, study the man who took it to its end, and then ... well, the rest will be up to you.

You’ll note that no route is easy, especially in the beginning. The first few steps are always highly risky. Every one of these rich men –
every
one – had to start by turning his back on safety and security. It is patently impossible to get rich by sticking with a salaried job. You can hope for slightly more wealth by selling a professional skill on a free-lance basis – by becoming a famous actor, surgeon, novelist – but even then your chances of becoming a hundred-millionaire or even a ten-millionaire are so close to zero that the difference isn’t worth considering. To make the big money you must take the big risks. Every one of the very, very rich, as you’ll see, had to be willing at some early stage to put himself in a highly vulnerable position – a position from which he could go either straight up to wealth or swiftly down to bankruptcy.

It should be pointed out that these high-stakes games produce losers as well as winners. We have collected only the winners here. Nobody knows the losers’ names. It is interesting to speculate about the reasons for winning and losing, why one man goes up while another man, starting out on the same route in substantially the same way, goes down. Character has something to do with it, and so does plain luck. We will study both these phenomena in the course of our visit.

It should also be pointed out that the size of the pot raked in by each winner is partly a matter of conjecture – even, sometimes, to the winner himself. J. Paul Getty, one of the very richest of the rich, has said several times in response to reporters’ questions that he honestly doesn’t know just how much he is worth. If you own a million shares of stock, the value of your holding can rise or fall by a million dollars in a single day. This makes an exact assessment difficult even in cases where the stock has a known market value. If the stock isn’t publicly traded, the difficulty is multiplied.

Howard Hughes, to take just one example, is sole owner of the very profitable Hughes Tool Company. There is no public market for the stock of this company and therefore it is impossible to say with precision what Hughes’s holding is worth. The only way to arrive at a guess is to look at the company’s sales, earnings and assets – but these are also matters of conjecture, for a privately owned company isn’t required to publish such figures, and Hughes Tool, in fact, doesn’t. Thus, you must be satisfied with an estimate based on an estimate – a leaky piece of arithmetic at best. You estimate how the company performs in terms of profitability, and then you estimate how the stock market might evaluate that performance if the company’s common shares were ever offered for public trading. The resulting rickety figure is your guess as to your rich man’s pile.

The rich man himself could offer some enlightenment, but the chances are he won’t – even if, unlike Getty, he knows the answer. Only a few of the very wealthy have publicly stated their net worth. For legal and tax reasons, and because of a highly developed sense of personal privacy that seems characteristic of the very, very rich, most tend to keep their mouths shut on this subject.

For more than a century the fortunes of the rich in America have been the focus of a national guessing game. Every so often somebody comes up with a new set of guesses, only to be shot down by somebody else.

Fortune
magazine, for instance, occasionally collects what it believes to be a fairly complete list of the country’s richest men and women. Back in 1957 the magazine said it could identify 155 Americans with piles of $50 million or more. In 1968, with fortunes swollen by continuing prosperity and inflation,
Fortune
raised the lower limit to $100 million and said it had found 153 people on or above that line. (
Fortune
called them “centimillionaires.” Somehow the word makes me think of rich centipedes. Trusting
Fortune
won’t mind, I’ll find other words.)

In publishing both lists,
Fortune
frankly admitted the likelihood that some important names had been omitted. “Some forms of wealth,” the magazine said, “... absolutely defy detection.”
Fortune
also admitted it might be wrong in some of its estimates about people on the lists. Some might be far poorer than estimated, some far richer.

But it did the magazine no good to display such charming modesty. Ferdinand Lundberg, a lifelong student of the wealthy, sailed into
Fortune
with huge and predatory delight in his odd 1968 book,
The Rich and the Super-Rich
. Many of the magazine’s 1957 wealth estimates, he said, were grossly wrong. He presented estimates of his own, the majority lower than
Fortune’s
. He also dredged up some new names that hadn’t appeared on the magazine’s list.

My own very rough calculations about some other disputed piles suggest to me that
Fortune
was often closer to the mark than Lundberg. It seems worth recognizing that Lundberg is a lone scholar, while
Fortune
has a large staff of highly trained reporters and other financial diggers – people with the time and expense money to poke into probate records, proxy statements, company earnings reports, and the like. Moreover, Lundberg, brilliant scholar though he is, seems to labor sometimes under the weight of a heavy set of biases. He doesn’t like the rich very much, says they manipulate the country and all that. His political viewpoint is decidedly not conservative. He spends many pages of his book enthusiastically roasting poor old William F. Buckley, Jr., and the
National Review
. As for
Fortune
, key spokesman of management and hence of the rich, Lundberg obviously doesn’t keep that fat, square, money-loving journal on his bedside table to sweeten his night’s dreams. In charging
Fortune
with error, he often seems motivated mainly by the sheer pleasure of quarreling with the magazine.

The wealth estimates presented here in our gallery cannot lay claim to being more accurate than
Fortune’s
, Lundberg’s or anybody else’s. They must be taken as simply one more set of estimates – with which the next estimator, as usual, is privileged to argue. Nor does our list lay any kind of claim to completeness. Omitted, of course, are all holders of large inherited wealth – who made up more than half of
Fortune’s
1968 list. Others have been omitted for random reasons. In some cases, for instance, two or more men might have had substantially similar careers. The man among them whose carrer seemed the most instructive or dramatic or just plain interesting has been included; the rest must await other biographers.

It is possible, even likely, that some observers of the current business scene will quarrel with the cast of characters here assembled. “Why did you pick X instead of Y?” they’ll ask. “X may have a hundred million but Y has
two
hundred million.” The answer in all cases will be that sheer money hasn’t been the only criterion for including or excluding any given fat cat. Money is the main criterion but not always the overriding one. Maybe X is more willing to talk to reporters than Y. Maybe X is simply a more likable fellow.

And, in any case, can it really make a difference whether a man has $100 million or $200 million? Either way, his wealth is so huge as nearly to surpass understanding. One hundred million dollars are more dollars than the mind can comfortably conceive. Laid end to end, they would stretch from here to – well, a hell of a long way. Piled up, they would surely topple over. If you had a salary of $200,000 a year, cheated on your income tax and managed to salt away half, it would take you 1000 years to accumulate $100 million. If you didn’t cheat and managed to save half the after-tax take-home, it would take you at least 4000 years. (As we’ve noted, you can’t get rich on a salary.) The sum of $100 million is so colossal that the income it would produce, if it were locked away in a savings bank at a modest 5% annual interest, would be enough to support 100 ordinary men like you and me in a style most of us would consider quite comfortable. The income would be $5 million. If 100 of us owned joint title to that $100 million in a savings bank, we could each draw $50,000 a year for all eternity, without ever touching a dime of the capital.

Yes, $100 million is a hard sum to visualize. But the fact remains that there are men alive today – not gods but plain men, made of bone and brain presumably no better in basic quality than yours or mine – who have each accumulated that much money in less than one adult lifetime.

Let’s see how on earth they did it. Welcome to the gallery of the very, very rich.