Rich and How They Got That Way : How the Wealthiest People of All Time--from Genghis Khan to Bill Gates--Made Their Fortunes

by Crossen, Cynthia

• ISBN13: 9780812932676
• ISBN10: 0812932676
• Format: Hardcover
• Copyright: 2000-07-01
• Publisher: Crown Business

Summary

What does Bill Gates have in common with Genghis Khan, the thirteenth-century conqueror who wanted to own the world but settled for just five million square miles? Or, for that matter, what does Gates have to do with Pope Alexander IV, whom historians describe as a scoundrel, saint, charlatan, and samaritan? Or Richard Arkwright, the eighteenth-century industrialist with the ultimate rags-to-riches story, who claimed that if he lived long enough he could repay Britain's entire national debt? These four men were among the richest people in history, and they and six others tell a dramatic and important story -- how the wealthy have made, invested, and spent their money over the past thousand years. A millennium ago, plunder was a primary source of great fortunes. In the twelfth to fourteenth centuries, plunder became too dangerous, and trade took over as the source of great riches. The fifteenth and sixteenth centuries saw the earliest capitalists and bankers pool risk, making money with money. The eighteenth and nineteenth centuries belonged to merchants and industrialists, who recognized the emergence of a new consumer society. In the twentieth century, the key to becoming wealthy was appealing to the mass market, and no one did it better than Bill Gates and his computer software. What do early millionaires, who prospered by killing their enemies, have in common with the modern wizards of spreadsheets? For one thing, successful warriors, like prosperous capitalists, could do what's now called "thinking outside the box." They smelled opportunity where others saw obstacles. The fact that something had never been done was a goad, not a halter, to the self-made wealthy, whether they were thieves or chief executive officers -- or both. The Rich and How They Got That Wayis an informative and entertaining look at the very rich and how they got their money, used it, and sometimes frittered it away. Through their stories Cynthia Crossen traces the major financial, social, and technological developments that have shaped the world we live in. Told with wit and charm, the stories of some of the great characters of the past thousand years come alive: -- Machmud of Ghazni, the ruler who killed tens of thousands of Indians for their gold and in forty years of nearly constant warfare never lost a battle. -- Mansa Musa, the African king who executed anyone who sneezed in his presence and left a trail of gold wherever he went. -- Jacob Fugger, the fifteenth-century German banker who impertinently declared, "the king reigns, but the bank rules," managed the Pope's money, and whose aggressive debt collection techniques on behalf of the papacy repelled Martin Luther and helped provoke him into launching the Protestant Reformation. -- John Law, the Pied Piper of paper money, who became so popular that people would overturn their carriages if they passed him in the street, hoping to draw his attention and buy some stock. -- Howqua, the nineteenth-century Chinese trader who made millions on opium. -- Hetty Green, whose stock-market genius made her a millionaire, and who was so miserly that she tried to get her son into a charity hospital when he hurt his leg. The way wealth is created has changed so much that rich people on either end of the millennium could almost be two different species. Yet there are similarities, too. The twenty-first-century wealthy want big houses, political power, gold jewelry, and freedom from restraint -- just like the wealthy of the eleventh century. And the people who become wealthy share some personality traits, too, such as aggression, egotism, and determination.The Rich and How They Got That Wayfollows the trajectory of wealth from past to present and proves, once and for all, that the rich are different from everyone else.

Author Biography

Cynthia Crossen is a senior editor at <i>The Wall Street Journal</i>, where she has been a reporter and editor since 1983. Her beats have included the financial markets, publishing, education, and social trends. Her previous book, <b>Tainted Truth: The Manipulation of Fact in America</b>, was one of Business Week's top ten business books of 1994. She lives in Garrison, New York, with her husband.

Table of Contents

Acknowledgments	ix
Introduction The Wealthy, Then and Now	xiii
When Thieves Were Kings	3	(26)
Machmud of Ghazni (971-1030)
The Raider Who Came to Stay	29	(22)
Genghis Khan (1162-1227)
The Man in the Middle	51	(22)
Mansa Musa (d. 1332)
Ungodly Rich	73	(24)
Pope Alexander VI (1431-1503)
Money Begets Money	97	(26)
Jacob Fugger (1459-1526)
Dreamers, Gamblers, and Suckers	123	(24)
John Law (1671-1729)
Men and Machines	147	(24)
Richard Arkwright (1732-1792)
Addicted to Trade	171	(24)
Howqua (1769-1843)
Outmanning the Men	195	(24)
Hetty Green (1834-1916)
The $100 Billion Man	219	(22)
Bill Gates (b. 1955)
Notes	241	(18)
Bibliography	259	(14)
Index	273

Excerpts

The Wealthy, Then and Now

You've heard about the extraordinary wealth of Bill Gates, J. P. Morgan, and the sultan of Brunei, but have you ever heard of Mansa Musa, one of the richest men who ever lived?

Mansa Musa was an African king who died more than 650 years ago, but he shared more than you might imagine with Gates, Morgan, and the sultan. All four built ostentatiously fabulous homes for themselves; all employed legions of fawning retainers; and all enjoyed a knack for using wealth to create more wealth.

There are differences, of course: Mansa Musa executed anyone who sneezed in his presence, whereas the intensely cerebral Bill Gates merely accuses bunglers of saying the stupidest thing he's ever heard. Mansa Musa rode camels; Morgan had his private railroad car; the sultan of Brunei drives Rolls-Royces; Bill Gates likes Porsches. But in one important way, the four are more alike than different: They became rich on a scale attained by few in history.

Let's call them millionaires and billionaires, although before currency was used widely such words were meaningless. Only in the past few centuries has a million units of local currency become the threshold of exceptional wealth, and before the late twentieth century, millionaires were as rare as barons. Yet wealth -- along with its opposite, poverty -- has long been part of the human tapestry. Throughout history, some people have used strength, imagination, and luck to amass greater surpluses than their contemporaries. No one secret explains their success -- each wealthy person's blueprint is unique.

If there were a league of millionaires dating back to 1000, most of its early members would be royalty or men who excelled at combat. Machmud of Ghazni, the first of the ten wealthy people profiled here, was both. He lived at a time when most of the world was still poor, its inhabitants toiling ceaselessly just to stay warm and nourished. Wealth was largely a zero-sum game in Machmud's era -- the turn of the last millennium -- and a man with an army became rich by appropriating other people's possessions. It was dangerous and unreliable work, costly in human lives, but it was one of only a few possible paths to great fortune.

Beginning in about 1000, the circle of wealth began to widen, first gradually and then with increasing velocity. As agricultural societies began producing surpluses and the world's population slowly grew, it became possible for conquerors such as Genghis Khan in the twelfth century to move beyond simple robbery and begin taxing a conquered people -- in other words, securing a steady stream of wealth rather than relying upon the irregular acquisition of booty. With their broad and absolute power, Genghis Khan and some other early despots actually made the world safer for wealth creation by imposing order on embryonic transportation and communication systems. With the steady expansion of trade, people could become wealthy as shippers, bankers, inventors, and investors, as well as pirates, swindlers, and drug dealers.

Archaeologists of the future may someday call the second millennium the Money Age. The social changes wrought by the steady creation of wealth have transformed the world so profoundly that humans on either end of the second millennium could almost be considered two different species. A thousand years ago, luxury meant having a coat long enough to cover one's knees and more than one drinking cup to a family. Today it means a $10,000 watch box in which to store a $250,000 watch. A thousand years ago, the average peasant scrimped and scraped to pay the burial expenses when he or she died, probably at an early age. By the end of the same millennium, a person could buy a one-dollar lottery ticket, randomly choose six numbers, and become a multimillionaire.

A simple and enduring truth about wealth is that money begets money. There are occasional exceptions -- one was Andrew Carnegie, who washed up on America's shore with nothing but pockets full of gumption yet became one of the wealthiest men in America. But the vast majority of millionaires, from Mansa Musa to Bill Gates, got a head start from their parents or grandparents, even if it was just a good plot of land or some sturdy weapons.

Mansa Musa, for example, inherited a small African kingdom through which one of the world's great trade routes passed. Neither producer nor inventor, Mansa Musa was an early broker, greasing the wheels of intercultural trade. He created wealth by making it possible for others to buy and sell. For him, political or religious considerations were secondary to the business of business.

Many children of fortune have dispersed their money rather than increased it. Cosimo de Medici's son Piero frittered away a big hunk of his Italian dynasty's riches while earning the sobriquet "il Gottoso" ("the gouty one"). The famously weird American millionaire Doris Duke, heiress to $300 million of tobacco profits, once gave a coming-out party for two pet camels. Tommy Manville, who was bankrolled by the Johns-Manville corporate fortune, married thirteen times and was nicknamed by a newsmagazine "the patron saint of chorus girls."

But in the fourteenth century, Pope Alexander VI, the Borgia-born Renaissance cleric, adroitly used his dynastic privilege to reach the highest plane of earthly wealth and success. Like most of the very rich, Alexander had both a distinctive gift and a receptive society in which to exploit it. In Alexander's case, he had the ability to rule the spiritual world and manipulate the political world while reveling in sensual luxury. His society was one of the most corrupt in world history.

Regardless of how they assembled their fortunes, the millionaires of the second millennium were men and women who harnessed great determination to their pursuit of wealth. Early millionaires prospered by maiming or killing their enemies, so they may seem to have nothing to teach the modern wizards of spreadsheets. But successful warriors, like prosperous capitalists, were able to do what's now called "thinking outside the box." The fact that something had never been done before was a goad, not a halter to these people. Each of them understood that accumulating great wealth entailed capturing a fraction of the property or production of other people: The plunderer stole; the monarch taxed; the bureaucrat intercepted the flow of taxes to and from the state; the landlord rented the land that others farmed; the merchant took a profit when buying and selling goods. The fact that there are so many ways to become wealthy doesn't mean it's easy.

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Excerpted from The Rich and How They Got That Way: How the Wealthiest People of All Time--from Genghis Khan to Bill Gates--Made Their Fortunes by Cynthia Crossen
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