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Do Only the Rich Get Richer?

Some comments on this post – comments involving income differences (“inequalities”) – prompt me to reprise this post from 2004.

NPR’s Marketplace yesterday ran a story on the widening income gap between Hispanics and whites in the United States. (I unsuccessfully tried to find a specific link to this story on Marketplace’s website.) One of the persons interviewed remarked that it’s a classic case of “the rich getting richer and the poor getting poorer” (or words very, very close to that effect).

This is an old and familiar saw – but one that doesn’t cut it.

Review the history of Americans who’ve become rich as entrepreneurs. A large percentage – my guess is a great majority of them – began life in modest circumstances.

Perhaps the most famous fabulously rich American of all time is John D. Rockefeller, founder of Standard Oil. He hailed from a poor, hard-scrabble farm in upstate New York, then moved with his family as a young boy to Ohio. He began his career at the age of 16 in Cleveland as a bookkeeper. He was quite the opposite of wealthy.

Or Andrew Carnegie. The son of a Scottish weaver, he immigrated to America, with nearly nothing, at the age of 13. Almost immediately he began his career – as a bobbin boy in a cotton mill. No riches here that launched Carnegie.

Or Aaron Montgomery Ward. He began his career working in a barrel factory at the age of 14; later he advanced to laboring in a brick yard. Even later, he earned his living as a traveling salesman. No riches here that launched Montgomery Ward.

Going back a few generations, consider John Jacob Astor. (See also here.) He was born in Germany, the son of a butcher, and worked in his brother’s factory making musical instruments. He did not amass any fortune until he came to the U.S. and started his fur-trading business.

Likewise for Cornelius Vanderbilt, descended from Dutch indentured servants and a man who quit school at the age of 11 to work on ferries. His family was of only modest means.

Or Gustavus Swift. He was the son of a farmer; he began his career as a butcher’s apprentice.

J.P. Morgan is something of an exception to the above cast of entrepreneurs. His father was a partner in a London investment firm.

More recently, Steve Jobs hails from a modest background. (Bill Gates is more like Morgan on this front; his father is a partner is the well-known law firm of Preston Gates & Ellis.)

I could go on, listing famous rich business people. I’m quite certain – without having yet done a detailed study – that the history of these people thoroughly disproves the tired adage that “the rich get richer and the poor get poorer.”

Others can be added to the above list.  Henry Ford (born on a farm); Richard Sears (son of a blacksmith); F.W. Woolworth (born on a potato farm); RCA’s David Sarnoff (born to poor Jewish parents in Minsk); IBM’s Thomas Watson (son of a small rural merchant).  As I said, I could go on and on.