April 13, 2023 • 21 mins
Billionaire entrepreneurs are as famous as Hollywood celebrities: names like Elon Musk, Jeff Bezos, Mark Zuckerberg, and Bill Gates. But it was the families of the Gilded Age that laid the groundwork for wealth in America today. University of Texas History professor Jeremi Suri explains the foundations of American wealth with host Steven Schragis.
One Day University is a co-production of iHeart Podcasts and School of Humans. It is a Curiosity Podcast. You can sign up at the website OneDayU.com to become a member and access over 700 full length video lectures. You can also download their app. Once you’re a member, you can watch Professor Jeremi Suri’s lecture, “Rockefeller, Vanderbilt, Carnegie, Gates, Bezos, & Musk: A History of American Wealth”
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Speaker 1 (00:03):
In Elon Musk's case, I'm not trying to diminish what
he's done, but he seems to be less about building
something rather than moving from one entrepreneurial activity to another.
And we'll see if that's sustainable wealth. Historically, it has
not been welcome to one day university talks with the
(00:25):
world's most engaging and inspiring professors discussing their most popular courses.
This podcast is your chance to discover some of our
top rated lectures on your own schedule. I'm Steven Schragis,
can you name a billionaire? I bet you can. They're
as famous as Hollywood celebrities Musk, Bezos, Zuckerberg, Gates. But
(00:48):
how well do you know the wealthy Americans of the past?
Names like Vanderbilt and Carnegie and Rockefeller are plastered all
over buildings across the US. How do these and impact
our lives today? Professor Jeremy Surry talks about this in
his one day university lecture called A History of American Wealth.
(01:08):
He teaches history at the University of Texas and he
co hosts his own weekly podcast, This Is Democracy with
his son. Jeremy explains that to understand wealth in America today,
you have to first understand its history. I think there
(01:30):
is a tendency to treat wealth as very specific to
a time and place, and so we tend not to
think about comparing someone like Cornelius Vanderbilt, who builds railroads,
with someone like Elon Musk who builds electric cars and
twitter and things of that, and they seem so different.
I came up though, with this comparison. I think this
(01:52):
comparison is absolutely important because as a historian, what I'm
interested in are the lines of continuity as well as
disc continuity from one period to another. And the way
to think about history is to think about it like archaeology.
It's layered, and so the new is not built on
the destruction of the old. The new is actually built
on the old and their elements of the old. In
(02:14):
terms of our legal structure, our practice, our culture, the
way we think about wealth that are still related to
that period long ago. I think this is important in
helping us to understand what it is that makes for
wealth today and how it builds on the layers of
what came before. I'm going to say the phrase wealth inequality.
You have people who think it's not a problem, it's
(02:35):
a big problem. It's a huge problem. It's not a
new problem. Yes, I think this is a really important point.
I think if there's one thing to remember from the lecture,
it's that we have been struggling as a society to
make sense and figure out what to do about wealth
inequality since the late nineteenth century. This Stephen is what
Mark Twain is commenting on when he coins the phrase
(02:56):
gilded Age. It's an ironic phrase, as everything is with
Mark Twain. And why is this. Our system does a
very good job of rewarding innovation. Those who produce something new,
the John David Rockefellers, those who create a new industry,
as Rockefeller did, they get rewarded handsomely in the American
capitalist system. And that's of course what encourages them to
(03:18):
do what they do. That's what encourages immigrants to come
to our society and become business people in this way,
but in rewarding innovation, that means that those who are
less innovative are often left far behind, and there is
a very deep hole that people can fall into. Failure
is as possible in our society as success. And the
(03:39):
question is if we are to be a peaceful, stable,
democratic polity. What do you do with those who haven't
been as fortunate, who haven't been as successful. The late
nineteenth century shows us that when our system is perhaps
working best in terms of producing innovation, Stephen, it's also
producing a lot of people who get left behind and
are barely subsisting. We struggled with that then and we're
(04:00):
struggling with it today. We have to see that's not
just a problem of today. That's a problem of our system,
and we need to think about what kinds of systemic
reforms we believe are appropriate. Franklin Rosal had an answer
to that. That's what the New Deal was about. We
have to ask ourselves today, what kind of answer do
we want. I'm living in Austin, Texas right now. We
(04:20):
have some of the wealthiest Americans who are moving here,
are becoming wealthy here, and now we have a huge
homeless problem. At the same time. These two things go
hand in hand. It's an old problem. It's a systemic problem.
It's not about the current individuals. How do we address that.
That's a historical question, and history helps us to see
how important it is. You mentioned Mark Twain coined the
(04:41):
phrase guilded age give us a little more. When did
he do that? What did he mean by gilded age? Yes,
great question. I was just talking to my undergraduates about this.
So Mark Twain wrote a novel, who wrote many, many novels,
of course, Huck Finn, Tom Sawyer. He wrote a pretty
mediocre novel in eighteen seventy three with a co author,
(05:01):
and the novel was called American The Guilded Age. And
that's where he used the phrase guilded Age. And he
meant that the country after the Civil War, especially in
the North, especially in New York, was coming to look
more wealthy and becoming more of a world power, but
that beneath the gold surface, beneath the surface of the wealth,
(05:22):
there was a lot of crud, a lot of difficulty,
a lot of poverty, and so it was not a
golden country. It was a gilded country. And he was
commenting on both the wealth on the surface in a
place like New York City and the poverty and the
continued suffering, particularly in the South. Suddenly, I've recently written
about right the problems of integrating that region and integrating
(05:45):
African Americans into the larger development of the American economy.
You chose three wealthy individuals from an earlier time, and
you chose three very wealthy individuals from our time. Now,
those are not the only wealthy individuals you could have
chosen from either group. For instance, the first group Vanderbilt, Carnegie,
(06:07):
and Rockefeller. Why did you choose those three? And who
did you almost choose but left out? Oh? Great, great question.
So the person I almost chose was Jay Gould. And
Jay Gould, I hope some of your listeners know about
Jay Gould. There's been a lot written about him. He
was also a railroad mogul like Cornelius Vanderbilt, and he
was responsible for a huge bubble of overinvestment in railways
(06:31):
and then the collapse of the American economy in what
turned out to be almost as bad as the Great
Depression is so called Panic of eighteen seventy three. So
he was a great man of success and a great
man of failure who in some ways brought down the
American economy, brought down the Grant presidency. But I didn't
want to get lost in that debate about the eighteen
seventy three depression. I chose three individuals who I thought
(06:53):
had some name recognition, who people recognize their importance, but
didn't know a lot about them. And that's particularly true,
I think for Vanderbilt. I grew up in New York City.
If you go to Grand Central Station, of course it's
on Vanderbilt Avenue. The name Vanderbilt is all over the place,
so it's a name people recognize, but most people don't
(07:15):
know much about. And that's often, I think a very
good strategy for getting people interested in history. Take something
you recognize and then help people to see what it's
really about, where it came from. Let's skip to the
last three, Bill Gates, Jeff Bezous, and Elon Musk. Why
those three WHO'DU leave out so many? I left out
(07:35):
Mark Zuckerberg for example, I left out then they're also
the oil people, Howard Hunt, various others here in Texas.
You know, I chose the three people there who I
thought were in the news most now who have become
more than just wealthy individuals, but political figures in our society.
Musk obviously with Twitter as well as Tesla. Bill Gates
(07:58):
is always commenting on environ mental issues and things of
that sort. And Jeff Bezos, because he's also been so controversial,
he comes up in every discussion of main street stores
and how to story survive with Amazon. So in this case,
I was choosing figures who I figured people knew a
lot about, but I was trying, just as you said
so well before, Stephen, to connect them to the earlier
(08:18):
figures we know less about. And so I thought that
made sense. And then the other thing is I think
these are three certainly of the most important individuals. You
could make an argument that Zuckerberg is equally important and
come up with a few other individuals, but it would
be hard to find three people more important to our
economy today than these three individuals. After the break, what
(08:39):
philanthropy meant to these ultra rich men and what wealth
might look like in the future. A really interesting part
of your talk where you're talking and contrasting philanthropy and
(09:03):
wealth and the relationship between the two, and how it
was different and the thinking was different among these six
very wealthy individuals. And I really loved this part where
you were contrasting Carnegie and Rockefeller, both very philanthropic but
very different in their thinking. Can you tell us about
that a little sure? I think one of the really
(09:23):
important points here is that the great wealth produced in
the late nineteenth century creates a whole new area of
activity called philanthropy. But what philanthropy means, as you said
so well, Stephen, is different from individual to individuals. So
for Carnegie, he really thinks about doing something for other
immigrant boys like him, for those who are really trying
(09:45):
to make their way in society, and in particular the
Carnegie libraries, which are still a mainstay of so many
communities in the United States, many small towns. The main
library is still what was originally a Carnegie library, funded
by carne Age's wealth. He really wants to do something
that's evident and that reaches out and touches quite frankly, young,
(10:06):
down and out people and gives them a chance to
improve themselves. What better than a public library in your town.
For John David Rockefeller ad something different. He wants to
create institutions that he believes will create the kinds of
behavior and systemic changes in America that he thinks will
be beneficial for the United States and for the economy
(10:29):
as he thinks about it. So that's why the Rockefeller
Foundation gets involved, not in building libraries per se, but
in trying to fund particular kinds of research in health
and medicine, founding a university, the University of Chicago. It's
educational in the way that the libraries are, but it's
designed to be an elite institution. The University of Chicago
(10:49):
is to compete with the Harvards in the Yales and
so as a different approach that John David Rockefeller has.
And he's not an immigrant, and Rockefeller does think more
in terms of hierarchy in a more traditional religious sense.
Let's move on to the layer group, the current billionaires.
What about their philanthropy, I mean, in a certain way.
That's too early to tell, but it is clear that
(11:12):
Bill Gates has made a very strong commitment to give
most of his money away and to invest it in
areas where he believes that brain power will make the
biggest difference. He's a nerd who made his money as
a nerd, and so he's investing in nerdy things like
trying to find the right vaccine to help cure disease
(11:33):
around the world, investing in technologies that will help to
mitigate climate change. It's a very technical centered way. Jeff
Bezos seems to be investing in things that will stabilize
the society. That Amazon is selling products to so the
Washington Post. I think of that he bought The Washington Post,
(11:54):
and I don't think he's doing it to make money
at all. But I think he believes that having a
serious new serve helps to stabilize the country. It's a
public service that also helps to stabilize the world that
Amazon works in. And then Elon Musk. I have to say,
it's really too early to tell. Most of Elon musk
stuff seems to be self promotional so far, but I
don't want to be unfair because he's probably doing things
(12:16):
we don't see yet. One phrase you used describing Elon
Musk was that he is a new type entirely. You
said he was a quantum leap in how we think
about being wealthy. What were you getting at when you're
talking about Elon Musk. Well, the thing about Musk, and
we'll see whether he stays wealthy or not, is that
(12:38):
his wealth has been not in just doing one thing.
It's been in fluctuating from one thing to another. I
happen to be a fan of Tesla cars. I driver Tesla.
I think he helped push forward the electric car industry.
But he's doing SpaceX, He's doing Twitter he's doing all
sorts of other things, I think, often to the detriment
(12:58):
of some of his core attribe. But he is more
the entrepreneur than the business builder. And let me make
this clear. Entrepreneurs make a lot of money in American history.
But the billionaires, the ones who are super wealthy, the
ones we're talking about here, they usually built something. Rockefeller
built the oil industry for the world. Carnegie built the
(13:20):
steel industry in the United States. Vanderbilt built the train lines,
Bill Gates built the operating system that ran most of
our computers. Right, Jeff Bezos created the Global Department Store.
In Elon Musk's case, I'm not trying to diminish what
he's done, but he seems to be less about building
something rather than moving from one entrepreneurial activity to another.
(13:41):
And we'll see if that's sustainable wealth. Historically it has
not been. Okay, Now here's a phrase I had never
heard before, geographic wealth clustering. What's going on here? So
this is a concept that sociologists use. It. It's what
my grandmother would call high salutant language for a very
simple thing, which is that wealth tends not to be
(14:04):
evenly distributed across territory. It tends to grow together, it
tends to cluster together, it tends to be in hubs.
And that's for at least two reasons. One is that
there's usually something about a particular place that produces wealth.
So one of the things I tried to show in
the lecture is that this region we might call the
Upper Midwest, from western New York State all the way
(14:28):
across to Chicago, including Cleveland and Detroit, this area has
a comparative advantage in producing wealth in the second half
of the nineteenth century because it's located where the railroad
meets the Great Lakes. It's also an area that has
a lot of labor, immigrant labor and migrating African American
labor from the South. And it's an area that has
(14:49):
a lot of water, and the factories are running off water.
So it has all the resources needed in the way
Texas doesn't then to produce a lot of wealth. And
so that's why you get the Vanderbilts, the Rockefellers, the Carnegies,
all in this region at that time different from today.
No one would say that area today is producing the
(15:09):
greatest wealth. People would look actually to Austin Texas, they'd
look to Silicon Valley. So there are reasons why wealth
occurs in part in particular places. There's a second phenomenon,
which is that wealthy people like to be around other
wealthy people. We see this in Austin, Texas today. One
of the reasons why wealthy Californians are moving to my
city to Austin is because other wealthy people have moved
(15:31):
from California to Austin. And it's not just that they
want to be around other wealthy people to show if
their wealth. It's that, in the case of Austin, people
who are very tech savvy and really into technological entrepreneurship,
they want to be around other people doing that. So
it's an intellectual climate. There's a university that filters that.
So it's both the resources of the space at a
(15:52):
particular time and the people and then the ways in
which you get a kind of crowd effect as more
of one and moved to one place. All right, let
me throw out a couple of phrases, anti trust laws
and income tax. How do they factor it the banes
of so many people's existence. Yes, so anti trust laws
(16:13):
are created in the late nineteenth century and they are
promoted by people like William Jennings Bryan and of course
Theodore Roosevelt. Antitrust laws are created to prevent monopoly. The
trusts were the monopolies, and the targets for Theodore Roosevelt
were the mining companies, the railroad companies, and other entities
that became so large that they controlled the economy, and
(16:37):
that meant there was no competition, which meant they could
basically charge people whatever they wanted. The classic example of this,
of course, the biggest anti trust case in the world
in modern history is of course Standard Oil, Rockefeller's company,
which is broken up in the early twentieth century into
the Seven Sisters, each of which is still a huge company.
(16:57):
But the antitrust argument, very straightforward, was that Rockefeller not
only owned all the oil, he owned all the oil distribution,
all the refineries, and so that meant that in some
ways he controlled everyone's life as people started using more
and more oil. The approach most have taken is to
either break up and create competition, that's what anti trust
would say, or to create public utilities. In most of
(17:19):
our states, con Edison in New York, Austin Energy in
Austin is a utility that's a regulated monopoly. Antitrust laws
are designed to prevent monopoly. They were often, though, used
against labor unions and other groups, so they could be
used not just against economic monopolies, but against those that
were perceived rightfully or wrongfully as other kinds of monopolies.
Income tax. The income tax is also created in the
(17:42):
early twentieth century. It's the sixteenth Amendment nineteen thirteen, and
the income tax is an effort to redistribute the exorbitant
earnings of certain individuals in the economy and to use
that money to invest. This is what progressives want, like
Theodore Roosevelt, to invest that money in building at least
(18:05):
a floor, some foundation for those who are not as fortunate.
Before there was a income tax, a federal income tax.
Most of these very wealthy people were talking about paid zero.
They didn't pay a state or federal income tax. There
was no capital gains tax. The federal government got most
of its revenue before the twentieth century from tariffs on
trade and from rents and selling land owned by the government.
(18:30):
The income tax then becomes a major source of federal revenue,
and it starts out as a very small tax for
the very wealthiest of individuals. Final question, We're going to
go back to that concept of wealth clustering, and you
described it back in the Gilded Age, and you described
it now. Let's pretend a little and jump forward. What
(18:51):
do you think wealth clustering will look like many years
from now? Any predictions? I think. I'm going to make
these predictions based on my students. What I see my
students interested in when I was in college, and I
think when you were in college to even everyone wanted
to live in New York City and work for Goldman
Sacks because that's where the money was. My students don't
want those jobs now, I mean some will still take them, right.
(19:12):
They want to live in a cool place, they want
a high quality of life. They don't plan to go
to the office every day. So where is the clustering
going to be. It's going to be in cool places
to live with climate change. It's going to be in
places that have nice climates, that have good internet access,
places that are cosmopolitan with interesting people, interesting entertainment in
(19:32):
the arts. So it's going to be cities, but they're
going to look different. Austin is kind of a little
bit like this, but it won't remain the only place
or the top place that people come. I think we're
going to see more and more communities, maybe a Boulder,
Colorado that has a lot of the lifestyle choices people
want to make that will draw people, and it will
(19:53):
be less office based, more living based. Jeremy, thanks so much.
Your electron Wealth really was probably one of the most
interest hours we've ever had at Monday University. Thank you, Stephen.
I always enjoy working with you and with One Day University.
Thanks for joining us here at One Day University. Sign
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(20:14):
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In Elon Musk's case, I'm not trying to diminish what
he's done, but he seems to be less about building
something rather than moving from one entrepreneurial activity to another.
And we'll see if that's sustainable wealth. Historically, it has
not been welcome to one day university talks with the
(00:25):
world's most engaging and inspiring professors discussing their most popular courses.
This podcast is your chance to discover some of our
top rated lectures on your own schedule. I'm Steven Schragis,
can you name a billionaire? I bet you can. They're
as famous as Hollywood celebrities Musk, Bezos, Zuckerberg, Gates. But
(00:48):
how well do you know the wealthy Americans of the past?
Names like Vanderbilt and Carnegie and Rockefeller are plastered all
over buildings across the US. How do these and impact
our lives today? Professor Jeremy Surry talks about this in
his one day university lecture called A History of American Wealth.
(01:08):
He teaches history at the University of Texas and he
co hosts his own weekly podcast, This Is Democracy with
his son. Jeremy explains that to understand wealth in America today,
you have to first understand its history. I think there
(01:30):
is a tendency to treat wealth as very specific to
a time and place, and so we tend not to
think about comparing someone like Cornelius Vanderbilt, who builds railroads,
with someone like Elon Musk who builds electric cars and
twitter and things of that, and they seem so different.
I came up though, with this comparison. I think this
(01:52):
comparison is absolutely important because as a historian, what I'm
interested in are the lines of continuity as well as
disc continuity from one period to another. And the way
to think about history is to think about it like archaeology.
It's layered, and so the new is not built on
the destruction of the old. The new is actually built
on the old and their elements of the old. In
(02:14):
terms of our legal structure, our practice, our culture, the
way we think about wealth that are still related to
that period long ago. I think this is important in
helping us to understand what it is that makes for
wealth today and how it builds on the layers of
what came before. I'm going to say the phrase wealth inequality.
You have people who think it's not a problem, it's
(02:35):
a big problem. It's a huge problem. It's not a
new problem. Yes, I think this is a really important point.
I think if there's one thing to remember from the lecture,
it's that we have been struggling as a society to
make sense and figure out what to do about wealth
inequality since the late nineteenth century. This Stephen is what
Mark Twain is commenting on when he coins the phrase
(02:56):
gilded Age. It's an ironic phrase, as everything is with
Mark Twain. And why is this. Our system does a
very good job of rewarding innovation. Those who produce something new,
the John David Rockefellers, those who create a new industry,
as Rockefeller did, they get rewarded handsomely in the American
capitalist system. And that's of course what encourages them to
(03:18):
do what they do. That's what encourages immigrants to come
to our society and become business people in this way,
but in rewarding innovation, that means that those who are
less innovative are often left far behind, and there is
a very deep hole that people can fall into. Failure
is as possible in our society as success. And the
(03:39):
question is if we are to be a peaceful, stable,
democratic polity. What do you do with those who haven't
been as fortunate, who haven't been as successful. The late
nineteenth century shows us that when our system is perhaps
working best in terms of producing innovation, Stephen, it's also
producing a lot of people who get left behind and
are barely subsisting. We struggled with that then and we're
(04:00):
struggling with it today. We have to see that's not
just a problem of today. That's a problem of our system,
and we need to think about what kinds of systemic
reforms we believe are appropriate. Franklin Rosal had an answer
to that. That's what the New Deal was about. We
have to ask ourselves today, what kind of answer do
we want. I'm living in Austin, Texas right now. We
(04:20):
have some of the wealthiest Americans who are moving here,
are becoming wealthy here, and now we have a huge
homeless problem. At the same time. These two things go
hand in hand. It's an old problem. It's a systemic problem.
It's not about the current individuals. How do we address that.
That's a historical question, and history helps us to see
how important it is. You mentioned Mark Twain coined the
(04:41):
phrase guilded age give us a little more. When did
he do that? What did he mean by gilded age? Yes,
great question. I was just talking to my undergraduates about this.
So Mark Twain wrote a novel, who wrote many, many novels,
of course, Huck Finn, Tom Sawyer. He wrote a pretty
mediocre novel in eighteen seventy three with a co author,
(05:01):
and the novel was called American The Guilded Age. And
that's where he used the phrase guilded Age. And he
meant that the country after the Civil War, especially in
the North, especially in New York, was coming to look
more wealthy and becoming more of a world power, but
that beneath the gold surface, beneath the surface of the wealth,
(05:22):
there was a lot of crud, a lot of difficulty,
a lot of poverty, and so it was not a
golden country. It was a gilded country. And he was
commenting on both the wealth on the surface in a
place like New York City and the poverty and the
continued suffering, particularly in the South. Suddenly, I've recently written
about right the problems of integrating that region and integrating
(05:45):
African Americans into the larger development of the American economy.
You chose three wealthy individuals from an earlier time, and
you chose three very wealthy individuals from our time. Now,
those are not the only wealthy individuals you could have
chosen from either group. For instance, the first group Vanderbilt, Carnegie,
(06:07):
and Rockefeller. Why did you choose those three? And who
did you almost choose but left out? Oh? Great, great question.
So the person I almost chose was Jay Gould. And
Jay Gould, I hope some of your listeners know about
Jay Gould. There's been a lot written about him. He
was also a railroad mogul like Cornelius Vanderbilt, and he
was responsible for a huge bubble of overinvestment in railways
(06:31):
and then the collapse of the American economy in what
turned out to be almost as bad as the Great
Depression is so called Panic of eighteen seventy three. So
he was a great man of success and a great
man of failure who in some ways brought down the
American economy, brought down the Grant presidency. But I didn't
want to get lost in that debate about the eighteen
seventy three depression. I chose three individuals who I thought
(06:53):
had some name recognition, who people recognize their importance, but
didn't know a lot about them. And that's particularly true,
I think for Vanderbilt. I grew up in New York City.
If you go to Grand Central Station, of course it's
on Vanderbilt Avenue. The name Vanderbilt is all over the place,
so it's a name people recognize, but most people don't
(07:15):
know much about. And that's often, I think a very
good strategy for getting people interested in history. Take something
you recognize and then help people to see what it's
really about, where it came from. Let's skip to the
last three, Bill Gates, Jeff Bezous, and Elon Musk. Why
those three WHO'DU leave out so many? I left out
(07:35):
Mark Zuckerberg for example, I left out then they're also
the oil people, Howard Hunt, various others here in Texas.
You know, I chose the three people there who I
thought were in the news most now who have become
more than just wealthy individuals, but political figures in our society.
Musk obviously with Twitter as well as Tesla. Bill Gates
(07:58):
is always commenting on environ mental issues and things of
that sort. And Jeff Bezos, because he's also been so controversial,
he comes up in every discussion of main street stores
and how to story survive with Amazon. So in this case,
I was choosing figures who I figured people knew a
lot about, but I was trying, just as you said
so well before, Stephen, to connect them to the earlier
(08:18):
figures we know less about. And so I thought that
made sense. And then the other thing is I think
these are three certainly of the most important individuals. You
could make an argument that Zuckerberg is equally important and
come up with a few other individuals, but it would
be hard to find three people more important to our
economy today than these three individuals. After the break, what
(08:39):
philanthropy meant to these ultra rich men and what wealth
might look like in the future. A really interesting part
of your talk where you're talking and contrasting philanthropy and
(09:03):
wealth and the relationship between the two, and how it
was different and the thinking was different among these six
very wealthy individuals. And I really loved this part where
you were contrasting Carnegie and Rockefeller, both very philanthropic but
very different in their thinking. Can you tell us about
that a little sure? I think one of the really
(09:23):
important points here is that the great wealth produced in
the late nineteenth century creates a whole new area of
activity called philanthropy. But what philanthropy means, as you said
so well, Stephen, is different from individual to individuals. So
for Carnegie, he really thinks about doing something for other
immigrant boys like him, for those who are really trying
(09:45):
to make their way in society, and in particular the
Carnegie libraries, which are still a mainstay of so many
communities in the United States, many small towns. The main
library is still what was originally a Carnegie library, funded
by carne Age's wealth. He really wants to do something
that's evident and that reaches out and touches quite frankly, young,
(10:06):
down and out people and gives them a chance to
improve themselves. What better than a public library in your town.
For John David Rockefeller ad something different. He wants to
create institutions that he believes will create the kinds of
behavior and systemic changes in America that he thinks will
be beneficial for the United States and for the economy
(10:29):
as he thinks about it. So that's why the Rockefeller
Foundation gets involved, not in building libraries per se, but
in trying to fund particular kinds of research in health
and medicine, founding a university, the University of Chicago. It's
educational in the way that the libraries are, but it's
designed to be an elite institution. The University of Chicago
(10:49):
is to compete with the Harvards in the Yales and
so as a different approach that John David Rockefeller has.
And he's not an immigrant, and Rockefeller does think more
in terms of hierarchy in a more traditional religious sense.
Let's move on to the layer group, the current billionaires.
What about their philanthropy, I mean, in a certain way.
That's too early to tell, but it is clear that
(11:12):
Bill Gates has made a very strong commitment to give
most of his money away and to invest it in
areas where he believes that brain power will make the
biggest difference. He's a nerd who made his money as
a nerd, and so he's investing in nerdy things like
trying to find the right vaccine to help cure disease
(11:33):
around the world, investing in technologies that will help to
mitigate climate change. It's a very technical centered way. Jeff
Bezos seems to be investing in things that will stabilize
the society. That Amazon is selling products to so the
Washington Post. I think of that he bought The Washington Post,
(11:54):
and I don't think he's doing it to make money
at all. But I think he believes that having a
serious new serve helps to stabilize the country. It's a
public service that also helps to stabilize the world that
Amazon works in. And then Elon Musk. I have to say,
it's really too early to tell. Most of Elon musk
stuff seems to be self promotional so far, but I
don't want to be unfair because he's probably doing things
(12:16):
we don't see yet. One phrase you used describing Elon
Musk was that he is a new type entirely. You
said he was a quantum leap in how we think
about being wealthy. What were you getting at when you're
talking about Elon Musk. Well, the thing about Musk, and
we'll see whether he stays wealthy or not, is that
(12:38):
his wealth has been not in just doing one thing.
It's been in fluctuating from one thing to another. I
happen to be a fan of Tesla cars. I driver Tesla.
I think he helped push forward the electric car industry.
But he's doing SpaceX, He's doing Twitter he's doing all
sorts of other things, I think, often to the detriment
(12:58):
of some of his core attribe. But he is more
the entrepreneur than the business builder. And let me make
this clear. Entrepreneurs make a lot of money in American history.
But the billionaires, the ones who are super wealthy, the
ones we're talking about here, they usually built something. Rockefeller
built the oil industry for the world. Carnegie built the
(13:20):
steel industry in the United States. Vanderbilt built the train lines,
Bill Gates built the operating system that ran most of
our computers. Right, Jeff Bezos created the Global Department Store.
In Elon Musk's case, I'm not trying to diminish what
he's done, but he seems to be less about building
something rather than moving from one entrepreneurial activity to another.
(13:41):
And we'll see if that's sustainable wealth. Historically it has
not been. Okay, Now here's a phrase I had never
heard before, geographic wealth clustering. What's going on here? So
this is a concept that sociologists use. It. It's what
my grandmother would call high salutant language for a very
simple thing, which is that wealth tends not to be
(14:04):
evenly distributed across territory. It tends to grow together, it
tends to cluster together, it tends to be in hubs.
And that's for at least two reasons. One is that
there's usually something about a particular place that produces wealth.
So one of the things I tried to show in
the lecture is that this region we might call the
Upper Midwest, from western New York State all the way
(14:28):
across to Chicago, including Cleveland and Detroit, this area has
a comparative advantage in producing wealth in the second half
of the nineteenth century because it's located where the railroad
meets the Great Lakes. It's also an area that has
a lot of labor, immigrant labor and migrating African American
labor from the South. And it's an area that has
(14:49):
a lot of water, and the factories are running off water.
So it has all the resources needed in the way
Texas doesn't then to produce a lot of wealth. And
so that's why you get the Vanderbilts, the Rockefellers, the Carnegies,
all in this region at that time different from today.
No one would say that area today is producing the
(15:09):
greatest wealth. People would look actually to Austin Texas, they'd
look to Silicon Valley. So there are reasons why wealth
occurs in part in particular places. There's a second phenomenon,
which is that wealthy people like to be around other
wealthy people. We see this in Austin, Texas today. One
of the reasons why wealthy Californians are moving to my
city to Austin is because other wealthy people have moved
(15:31):
from California to Austin. And it's not just that they
want to be around other wealthy people to show if
their wealth. It's that, in the case of Austin, people
who are very tech savvy and really into technological entrepreneurship,
they want to be around other people doing that. So
it's an intellectual climate. There's a university that filters that.
So it's both the resources of the space at a
(15:52):
particular time and the people and then the ways in
which you get a kind of crowd effect as more
of one and moved to one place. All right, let
me throw out a couple of phrases, anti trust laws
and income tax. How do they factor it the banes
of so many people's existence. Yes, so anti trust laws
(16:13):
are created in the late nineteenth century and they are
promoted by people like William Jennings Bryan and of course
Theodore Roosevelt. Antitrust laws are created to prevent monopoly. The
trusts were the monopolies, and the targets for Theodore Roosevelt
were the mining companies, the railroad companies, and other entities
that became so large that they controlled the economy, and
(16:37):
that meant there was no competition, which meant they could
basically charge people whatever they wanted. The classic example of this,
of course, the biggest anti trust case in the world
in modern history is of course Standard Oil, Rockefeller's company,
which is broken up in the early twentieth century into
the Seven Sisters, each of which is still a huge company.
(16:57):
But the antitrust argument, very straightforward, was that Rockefeller not
only owned all the oil, he owned all the oil distribution,
all the refineries, and so that meant that in some
ways he controlled everyone's life as people started using more
and more oil. The approach most have taken is to
either break up and create competition, that's what anti trust
would say, or to create public utilities. In most of
(17:19):
our states, con Edison in New York, Austin Energy in
Austin is a utility that's a regulated monopoly. Antitrust laws
are designed to prevent monopoly. They were often, though, used
against labor unions and other groups, so they could be
used not just against economic monopolies, but against those that
were perceived rightfully or wrongfully as other kinds of monopolies.
Income tax. The income tax is also created in the
(17:42):
early twentieth century. It's the sixteenth Amendment nineteen thirteen, and
the income tax is an effort to redistribute the exorbitant
earnings of certain individuals in the economy and to use
that money to invest. This is what progressives want, like
Theodore Roosevelt, to invest that money in building at least
(18:05):
a floor, some foundation for those who are not as fortunate.
Before there was a income tax, a federal income tax.
Most of these very wealthy people were talking about paid zero.
They didn't pay a state or federal income tax. There
was no capital gains tax. The federal government got most
of its revenue before the twentieth century from tariffs on
trade and from rents and selling land owned by the government.
(18:30):
The income tax then becomes a major source of federal revenue,
and it starts out as a very small tax for
the very wealthiest of individuals. Final question, We're going to
go back to that concept of wealth clustering, and you
described it back in the Gilded Age, and you described
it now. Let's pretend a little and jump forward. What
(18:51):
do you think wealth clustering will look like many years
from now? Any predictions? I think. I'm going to make
these predictions based on my students. What I see my
students interested in when I was in college, and I
think when you were in college to even everyone wanted
to live in New York City and work for Goldman
Sacks because that's where the money was. My students don't
want those jobs now, I mean some will still take them, right.
(19:12):
They want to live in a cool place, they want
a high quality of life. They don't plan to go
to the office every day. So where is the clustering
going to be. It's going to be in cool places
to live with climate change. It's going to be in
places that have nice climates, that have good internet access,
places that are cosmopolitan with interesting people, interesting entertainment in
(19:32):
the arts. So it's going to be cities, but they're
going to look different. Austin is kind of a little
bit like this, but it won't remain the only place
or the top place that people come. I think we're
going to see more and more communities, maybe a Boulder,
Colorado that has a lot of the lifestyle choices people
want to make that will draw people, and it will
(19:53):
be less office based, more living based. Jeremy, thanks so much.
Your electron Wealth really was probably one of the most
interest hours we've ever had at Monday University. Thank you, Stephen.
I always enjoy working with you and with One Day University.
Thanks for joining us here at One Day University. Sign
up at our website one dayu dot com to become
(20:14):
a member an access over seven hundred full length video
lectures from the world's finest professors. You can also download
our app. There you can learn more about today's episode
and watch University of Texas Professor Jeremy series lecture on
the history of American wealth, as well as its talks
on presidential leadership, the Cold War, and more. Join us
(20:37):
next time when we talk about unexplained history. When I
say Cleopatra, the members of your audience are going to
immediately think of Elizabeth Taylor with her great blue eyeshadow.
We in fact don't know and that was kind of
an invented image. One Day University is a production of
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