Aspire | Action | Acquire
Aspire | Action | Acquire

Shirtsleeves to Shirtsleeves

There is an old adage “from shirtsleeves to shirtsleeves in three generations” that is built on the premise that the first generation of family makes the wealth, the second spends it, and the third blows what little there is left. Is it true?

For the Astors, the third generation was a turning point in the family’s fortune. John Jacob III, the grandson of the family patriarch, inherited the bulk of his father’s estate and migrated to England. His brother, William Backhouse Jr, became the less-entitled head of the family remaining in America. He spent much of his time in Florida aboard what was feted as the largest yacht in the world. His socialite wife presented herself as “the Mrs Astor” in New York.

Synonymous with the Astor family’s wealth was New York’s first Waldorf-Astoria Hotel which was sold to Alfred du Pont, of the chemical company dynasty, for around fifteen million dollars in 1929. The original hotel comprised two joined buildings. One replaced the family home inherited by William Waldorf, who succeeded John Astor III. The other building replaced Mrs Astor’s home, after the death of her husband William Backhouse Jnr.

When purchased by Alfred du Pont, the first Waldorf-Astoria hotel was demolished to make way for the Empire State Building. The reign of the Astors in New York was rapidly coming to an end at the time when du Pont fortunes were rising. Of the poorer Astors, those remaining in America, John Jacob IV, the son of William Backhouse Jr, had two sons. On the ill-fated maiden voyage on the RMS Titanic, John Jacob IV would die as its richest passenger.

Surviving John Jacob VI were Vincent from his first marriage and John Jacob VI from a second marriage. Vincent Astor inherited the bulk of his father’s estate and, after three marriages, died childless without an heir. His third wife, Brooke (d, 2007), earned the title as “the last Mrs Astor” and devoted her life and husband’s inheritance to philanthropic causes. Vincent’s younger half-brother, who was born after the sinking of the Titanic, received little of the family estate other than from a charitable trust and made a career in shipping,

The loss of control in a founding business, as happened when John Jacob Astor sold his fur trading business, is often tied to the demise of family fortunes. It is true of the Vanderbilt family whose gilded era wealth succeeded the Astors as America’s richest family. Like the Astors, whose New York real estate empire was also sold off by those who resided abroad, Vanderbilt money would make its way to England to fund the family’s entrance into society; namely Blenheim Palace where the wartime prime minister Winston Churchill was born.

History is repeating itself with the gradual disconnection of business ownership upon which the twentieth century wealth of the du Pont and Ford families were built. An exception is the Rockefellers whose wealth continues to survive the forced break-up of Standard Oil, which was a web of shared ownerships and not a corporatized family business in the conventional sense. Currently, we are seeing the devolution of the Murdoch family empire as the era of newspapers, in the conventional printed form, is replaced by the internet. This, while the empire founding patriarch, Rupert Murdoch, continues at the company helm.

The issue from a fourth-generation insider, Nelson Aldrich, Jnr., is that successive generations of wealth lose entrepreneurial imagination through lack of hunger, and distance themselves from the vulgarity of the market. Despite this, “Old Money” often welcomes “New Money” and elevates the latter’s aspirational social standing[1]; which in itself is transactional.

[1] Nelson W. Aldrich, Old Money: The Mythology of America’s Upper Class (New York: Distributed by Random House, 1988), 91-92, 111.