4 Of The Wealthiest Families Who Lost It All
MAY 15, 2015 | BY LYNETTE GIL
From these tales of loss, we can learn a lot and not repeat their mistakes.
The Great Gatsby, that venerable summer reading favorite, poses a very good question: Is wealth the product of adversity or just a continuation of a legacy? Some might argue that it is a product of both, that its continuation will depend on factors internal (such as how the family handles the fortune or the business) and external (such as how the markets perform).
There is a theory that’s been making the rounds on the Internet that suggests that most family fortunes are lost by the third generation. Psychologists have identified and defined “sudden wealth syndrome” that affects people who come into wealth suddenly, like lottery winners, and spend all their fortunes.
Celebrities, heirs and famous athletes can succumb to this syndrome if they don’t know how to manage their assets or don’t have someone to do it for them.
Meanwhile, you might have heard of something called “affluenza,” which became a buzzword after a Texas teenager killed four people while driving drunk and was used as part of his defense in court last year.
Affluenza could mean many things, but in this case, the term was used to claim that the teenager was the product of wealthy and privileged parents who never set limits for him.
Of course, for any wealthy person, it helps if he or she has a great financial advisor.
Several sources cite that when Cornelius “Commodore” Vanderbilt died in 1877, he was already worth $100 million, which would be roughly $200 billion today, according to CoinTalk. He started his shipping and railroad business with $100 that he borrowed from his mother; today there is nothing left of those enterprises, except Vanderbilt University, which he gave $1 million to help endow and build.
Cornelius is the second richest person in American history, according to CNN Money.
Although a number of reports attest to his simple lifestyle, the same can’t be said for his heirs. His son William Henry “Billy” Vanderbilt did famously double the family fortune to $200 million, but his children and grandchildren spent their money on thouroughbred horses and lavish mansions in New York City and Newport, Rhode Island. They didn’t protect the family business.
Maybe the Vanderbilts could’ve avoided throwing their wealth into the wind if Cornelius had educated his children on the financial aspect of their lives and had a trusted family advisor to make sure that they planned properly to both protect their fortune and the family business for generations to come.
If you want to read the full family story, Forbes has a lengthy article on them here.
He named his operation Lion’s Head Brewery, but when he died, his son took over and changed the company name a few times.
By 1980, the brewery had grown from a family business to the third largest brewery in the country, worth as much as $700 million in 1988 ($9 billion today).
They acquired various breweries, including Schlitz, which was too big and had six plants. The acquisitions left the Strohs with debt and, according to Yahoo! Finance, they had too many brands and not enough of a marketing budget to sell the beer, while competing with Miller, Anheuser-Busch and Coors.
Also, it’s been reported that some of the family members spent the money on antiques, guns, cars, and shopping, and had no future plans for the company and the family fortune. The company was eventually sold to Pabst for $350 million, while Miller bought some of their brands. Most of that money went into repaying debt and employee pensions; the rest went into a family fund that gave out checks until it ran out in 2008, says the Yahoo article.
Again, spending and acquisitions seemed to be the downfall for this family’s legacy.
He had a 150-acre estate in New Jersey, another estate in Hollywood, a residence in London, and a house and a resort on Paradise Island in the Bahamas, the latter of which ended up costing him between $25 to $30 million and was never profitable, according to The New York Times.
His fortune, after his uncle died in 1957, swelled and was estimated to be a half a billion dollars. He was also wed four times and the divorces cost him much of his inherited money.
If Mr. Hartford had listened to a financial advisor and business planner, perhaps he could have invested wisely and tried his hand at other more fruitful ventures.
Heiress to an incredible fortune, The Wall Street Journal claims that Barbara “blew through as much as half a billion (in today’s dollars).” She spent it on art, jewelry and seven husbands. She gave gifts to strangers.
At one point, she was married to famous actor Cary Grant. She also married a Georgian prince, a count, a Russian prince, a diplomat, a baron and a Prince from the Kingdom of Champasak.
Other than most of her husbands exploiting her for her wealth, Hutton also suffered from several psychological conditions, and drug and alcohol abuse, that left her vulnerable. She only had one son, who died in an air crash in 1972. That was the final nail to Hutton’s coffin.
Her inability to be mentally and physically stable impeded sound judgement when it came to making financial and other important decisions in her life.