10 Richest People of All Time and How They Made Their Fortunes
By Alex in Money & Finance, Neatorama Exclusives, World Records on Jul 9, 2008 at 2:37 am
Quick: who is the richest man of all time? Bill Gates? Warren Buffet? Not even close, though there's no denying they're very, very rich. The richest man of all time, when wealth is measured as a percentage of the national economy, was John D. Rockefeller, whose fortunes made Gates' and Buffet's look downright puny.
Keeping score of who's wealthier is like a spectator sport with Forbes magazine as its official referee. Last year, Forbes counted 946 billionaires (there are too many millionaires to count, so they don't bother with that anymore) with combined net worth of $3.5 trillion. That's larger than the GDP of Germany, the third largest economy in the world.
But the richest people ever belong in their own special club. These people (all men) have built fortunes of legendary proportions when calculated at the peak of their wealth. Here is the list of the 10 Richest People of All Time and How They Made Their Fortunes.
1. John D. Rockefeller
Peak wealth: $318.3 billion (based on 2007 US dollar). Age at peak wealth: 74
As a young man, John Davison Rockefeller said that his two greatest ambitions were to make $100,000 and live to be 100. He died two months shy of his 98th birthday, but boy did he make good on the first goal.
Rockefeller wasn't born to a rich family. His father, William Avery "Big Bill" Rockefeller was a shiftless man who spent most of his times thinking up schemes to avoid actual work! Nevertheless, thanks to the guidance of his mom Eliza - a homemaker and devout Baptist - John D. grew up to be quite a hardworking man.
Rockefeller started out in business as a wholesale grocer and went on to found Standard Oil, which through shrewd business decisions and some say predatory and illegal practices, grew to be a gargantuan monopoly. At its peak, Standard Oil had about 90% of the market for refined oil (kerosene) in the United States (in the early days of Standard Oil, gasoline wasn't an important component of the oil industry - indeed, gasoline produced by the refineries were dumped in rivers because they were considered useless!)
In 1911, the US Supreme Court declared Standard Oil a monopoly under the Sherman Antitrust Act and ordered it to be broken up into 34 independent companies with different boards of directors. By that time, Rockefeller had long since retired from the company but still held a large percentage of shares. Ironically, the busting up of Standard Oil unlocked share values and his fortunes doubled overnight.
Rockefeller got his first job at 16 as a bookkeeper. In a move that portended his lifelong commitment to philanthropy, he tithed 10% of his income - from his first paycheck on - to charity. As his wealth grew, so did his charitable contributions. When he died in 1937, Rockefeller had given away half of his amassed fortune, and established philanthropic foundations to continue giving after his death.
2. Andrew Carnegie
Peak wealth: $298.3 billion. Age at peak wealth: 68
Andrew Carnegie immigrated as a young child to Pittsburgh from Scotland and began working at 13 years old as a bobbin boy in a textile mill. He changed spools of threads for 12 hours a day, 6 days a week for a weekly wage of $2. At 16 years old, Carnegie became a telegraph messenger boy, and soon after was promoted to be a telegraph operator.
Carnegie became a personal assistant to Thomas Scott, superintendent of the Pennsylvania Railroad Company and learned the ins and outs of the railroad business. It was Carnegie who invented a brutally efficient way to clear the tracks after a railway accident: by burning the railroad car!
When he was 20, Carnegie mortgaged his mother's house and made his first gutsy investment of $500 for 10 shares of the Adams Express company - sort of the Fed Ex delivery company of the 1800s - and was handsomely rewarded. He then invested in a company making sleeping cars for the railway. By the time he was 30, Carnegie had expanded his investments to iron works, steamers, railroads, and oil well.
But the real money came from steel. In the late 1880s, Carnegie built his steel empire to become the world's largest manufacturer of steel rails, pig iron, and coke.
In 1901, at the age of 66, Carnegie retired by selling his shares to John Pierpont Morgan for more than $225 million (a large sum today and an astounding amount of money back then) in form of gold-bonds. When the bonds were delivered, a special vault had to be built to physically house them!
Carnegie was big proponent of philanthropy - in a famous 1889 essay "The Gospel of Wealth," he wrote that wealth should be distributed to promote welfare of other people and enrich society. True to his words, Carnegie gave away more than $350 million or almost 90% of his fortune.
Note: At the end of the Spanish American War, the United States bought the Philippines from Spain for $20 million. Carnegie was appalled at what he perceived to be an imperialist move and personally offered $20 million to the Philippines so it could buy its independence from the US (they didn't take him up on his offer).
3. Nicholas II of Russia
The last Russian Imperial family
Peak wealth: $253.5 billion. Age at peak wealth: 49
Nicholas II of Russia (born Nikolai Aleksandrovich Romanov) was the last Tsar of Russia. He ruled (badly) from 1894 until he was forced to abdicate in the Russian Revolution of 1917 by the Bolsheviks. His reign was marked with antisemitic pogroms, a crushing defeat by Japan in the Russo-Japanese War, revolutions, internal unrests their bloody suppressions, undue influence by the mystic Rasputin and World War I. A year after he was deposed, Nicholas and his entire family were executed by Lenin's order.
The life of the last tsar of Russia was filled with fascinating myths, legends, and history - and readers interested in it are encouraged to read more about Nicholas II and the Romanovs. Suffice it to say that Nicholas II became the third richest man in history the old fashioned way: he inherited his wealth.
4. William Henry Vanderbilt
Peak wealth: $231.6 billion. Age at peak wealth: 64
William Henry Vanderbilt had a pretty good start in life: he inherited nearly $100 million from his father, the railroad mogul Cornelius "The Commodore" Vanderbilt (if you want to read a rags to riches story, Cornelius' is pretty good - see below).
William Vanderbilt was groomed by his father to be a businessman (at times harshly - the imperious and domineering Cornelius liked to call his eldest son a "blockhead," "blatherskite," "sucker," and "good for nothing") and William turned out to be quite an able businessman. He expanded the family's railroad empire and thus the family fortune, finally earning his father's respect and friendship.
When William died in 1885, he was the richest man in the world.
5. Osman Ali Khan, Asaf Jah VII
Peak wealth: $210.8 billion. Age at peak wealth: 50
Asaf Jah VII (whose given name was Osman Ali Khan Bahadur) was the last Nizam or ruler of the Princely State of Hyderabad and Berar, before it was invaded and annexed by India in 1948.
By most accounts, "His Exalted Highness" the Nizam of Hyderabad was a benevolent ruler who promoted education, science and development. He spent about one-tenth of his Principality's budget on education, and even made primary education compulsory and free for the poor. In his 37-year rule, Hyderabad witnessed the introduction of electricity, railways, roads, and other development projects.
In 1937, Asaf Jah VII was on the cover of Time Magazine, labeled as the richest man in the world.
6. Andrew W. Mellon
Peak wealth: $188.8 billion. Age at peak wealth: 80
Andrew William Mellon was the son of a Pittsburgh banker Thomas Mellon (who founded the Mellon Bank). Andrew got his start early: he started a lumber company at the age of 17 and by the age of 27 had taken over his father's bank. He also got into oil, steel, shipbuilding, and construction business.
In 1921, President Warren G. Harding appointed the financier Mellon as the Secretary of the Treasury, where he served for 10 years (under three U.S. Presidents). At that post, Mellon increased federal revenue by decreasing the taxation rate and cutting federal spending.
7. Henry Ford
Peak wealth: $188.1 billion. Age at peak wealth: 57
If Henry Ford's father had his way, Henry would take over the family farm and become a farmer. But after the death of his beloved mother, Henry, who didn't particularly like farming, left home in 1879 at the age of 16 to work as an apprentice machinist.
At 28, Henry Ford became an engineer at Thomas Edison's company and started experimenting with gasoline engines (with Edison's approval). In 1896, at the age of 36, Ford started his first car company, the Detroit Automobile Company, which went bankrupt two years later.
Soon afterwards, he set up his second company, the Henry Ford Company. A year later, his partners hired Henry M. Leland to troubleshoot problems on the shop floor. Ford clashed almost immediately with Leland, and was forced out of the company bearing his name with only $900 cash. The Henry Ford Company was renamed Cadillac, and Ford went on to form his third car company, the "Ford & Malcomson" company ...
... and immediately got into trouble when he couldn't pay his suppliers, the Dodge brothers. Ford's partner, Alexander Malcomson was able to convince the Dodge brothers to invest in the company instead and the company was reincorporated as the Ford Motor Company. And a good thing they did because third time was the charm. The Ford Motor Company made Henry Ford a very rich man.
Henry Ford's name became synonymous with automobiles for good reasons: he introduced the Model T, the first inexpensive car for the masses. He also popularized the use of assembly lines in mass productions, high workers' wages to attract talent and discourage employee turnover, franchise model car dealerships, and even the 5-day workweek.
One interesting note about Henry Ford: he didn't believe in accountants. On one occasion, his son Edsel contracted the building of a new office building with much needed space for the Accounting division. When Henry asked what the space was for, Edsel acknowledged that it was for the accounting department. The very next day, when the accountants showed up for work, they found their office had been stripped - no desks, chairs, or telephones; even the carpeting was gone - and that Henry had fired them all. (Source: Edsel.com)
8. Marcus Licinius Crassus
Peak wealth: $169.8 billion. Age at peak wealth: 62
Marcus Licinius Crassus (ca. 115 BC to 53 BC) is the earliest historical figure in this list. He was a Roman general and politician who defeated the slave revolt led by Spartacus.
If you think the rest of the businessmen on this list were ruthless - in reality they've got nothing on Crassus. The Roman general became wealthy when he bought the homes and belongings from the victims of Sulla's sacking of Rome (Crassus was one of Sulla's generals) for cheap. He then re-sold them at a princely profit. Crassus then expanded his wealth through the slave trade, silver mining, and real estate, especially by buying houses of those declared enemies of the state for next to nothing.
But it was Crassus' acquisition of burning houses that earned him his lasting notoriety. He maintained a troop of 500 skilled builders - and when a fire broke out in Rome (back then a frequent occurrence), he negotiated the sale of the burning properties and those nearby for cheap. Once he obtained the properties, he called upon his men to demolish the burning property and save the nearby buildings (that was the preferred technique of fighting fire during Roman times). He then rebuilt and leased back the property to the original owners! At one point, Crassus owned a large part of Rome and some wondered whether the fires might not have actually been his doing ...
Crassus was so greedy that when he died, his enemies had his head severed and molten gold poured into his mouth as a mark of his greed (Source).
9. Basil II
Peak wealth: $169.4 billion. Age at peak wealth: 67
Basil II (or Basil the Bulgarslayer) was a Byzantine emperor from the Macedonian dynasty who reigned from 976 to 1025. For historians, Basil II's reign represented the apex of the Middle Byzantine Empire - he expanded the territory of the empire by annexing Bulgaria, making it the largest and strongest it had ever been in nearly five centuries.
Basil had no heir, and within half a century of his death, the Byzantine Empire crumbled.
10. Cornelius Vanderbilt
Peak wealth: $167.4 billion. Age at peak wealth: 82
Cornelius Vanderbilt is a true rags-to-riches story: he quit school at the age of 11 (famously saying "If I had learned education, I would not have had time to learn anything else") to work on ferries in New York. By 16, persuaded his mom to loan him $100 for a boat to start his own ferry business carrying freight and passengers between Staten Island and Manhattan. He repaid the loan with an additional $1000 one year later. It's from this business operating ships that he got his nickname "Commodore" that stuck for the rest of his life, even after he started getting into the railroad business.
Vanderbilt was ruthless in business. He once wrote a short (and now famous) letter to Charles Morgan and C.K. Garrison of the Morgan & Garrison company. The two men manipulated his steamship company's stock in his absence and took it over. The letter read "Gentlemen: you have undertaken to cheat me. I won't sue you, for the law is too slow. I'll ruin you. Yours truly, Cornelius Vanderbilt." True to his words, two years later Vanderbilt forced them out of business by running a competing business.
Despite of their wealth - or perhaps because of it, the Vanderbilt family wasn't a happy one. The Commodore was constantly thinking of his will, which he called "that paper." He wanted the money to remain intact, and thus it must be handed down to a single heir. Indeed, he disowned all of his sons other than William (see above), believing that only William was ruthless enough in business to be capable of maintaining his empire.
A note about the list: since it is based on the proportion of peak wealth to the national GDP in the country the individual lived in at the time they were alive, the list is dynamic: it changes as the GDP fluctuates, though it's rare to have a large shift in its composition.