Don't Eat the Rich, Again
Newport, Rhode Island, is surely one of the most spectacular places in the United States, and, for what its amazing mansions of the Gilded Age represent, it should be considered the Mecca of American capitalist private wealth, suitable for pious pilgrimages of every sort.
Visitors to European palaces return home to say the sheer scale has to be experienced to be believed. So it is with these summer homes of the wealthy industrialists of the Gilded Age. They are as immense and magnificent as the palaces of the Old World, but with this difference: these were built entirely with private money derived from excellence and service under conditions of free enterprise.
These are the summer "cottages" of the men and women who laid the foundations for what would become the best of the modern economies. What a privilege that they are available now for public tours, so that anyone can catch a glimpse of that rare thing in the sweep of human history: immense wealth, justly owned.
As a class, they took their responsibilities as "dollar aristocrats" very seriously, but were not shy about displaying their wealth. They believed, wrongly as it turns out, that they were not living in a society of envy, and that their wealth should be seen for what it was: a sign of success in the service to humanity.
The Breakers of the Vanderbilt family is the most famous among them, but it is not the most charming. The Elms, built by the coal industrialist Edward Julius Berwind, is more breathtaking to the extent that it combines the tastes and sensibility of an 18th century French chateau with the most modern technology. Completed in 1901, and costing the equivalent today of $140 million to build, it featured electric lighting throughout the house (if the tour guide is correct, many Newport residents figured that electricity was just a passing fad).
What a thrill it is to imagine how new and exciting it must have been at the time, and to contemplate how the commercialization of electricity has transformed our lives so completely in a mere one hundred years. Mr. Berwind loved technology and had a passion for bringing it to the world. The son of German immigrants, he was a self-made man who became the largest single owner of coal properties in the United States. His property sitting on 14 acres – with ballrooms, sunrooms, libraries, breath-taking dinning areas, intimate bedrooms, a conservatory, amazing art, gardens – symbolizes not political power but the glory of private life as a reward for commercial accomplishment.
This class of industrialists had a certain consciousness of itself as the new elite for a new world in a new time – and justly so. After 1870, it became increasingly evident that the European monarchies were slipping away and with them the system of privilege that came with blood and birth. In their place stood the American capitalists, who excelled not in war and political intrigue, but in the most peaceful of all activities, making and providing things that others want to buy.
The hope was clear. The next century would be the American century because American liberty and commerce had triumphed over the statism and empires of the old world. American capitalists would create dynasties more culturally powerful than the most entrenched political families! Their wealth and skills would be passed from generation to generation! This class would be the key to the future of the world, bringing to all mankind a vision of a better life, one that served all classes of society, brought the world together through commerce and trade, put an end to war, forged a new world where American values of liberty, property, and peace would prevail.
And then something awful happened. Instead of being heralded as symbols of America's greatest, they came to be demonized as Robber Barons. Scoundrels like Teddy Roosevelt, and all his successors in the monstrous town of Washington, D.C., would target this class, naming them not producers but parasites – the first Big Lie of a century of lies. By tapping into that ancient sin of envy, TR would call for inheritance taxes and antitrust laws that would end up destroying these dynasties or forcing them to join the state as partners in crime.
What these taxes and regulations did not complete, World War I did, by drawing this class into the great destructive project of war making. In the period of only twenty years, their fortunes and sensibilities were smashed, and a dream lost. Nowadays, these homes are owned by a private foundation. No one could possibly pay the taxes, and the last of the family members left by the early 1960s.
America ate its rich, in a kind of slow-motion French Revolution. Actually it was worse: at least the French Revolution began with an attack on the state that only later went wrong; the Progressive Era was born in the basest possible motive: the desire to expropriate private wealth.
After the Progressive Era, private enterprise in America had been robbed of that crucial thing, a private aristocracy: the self-made barons and lords necessary in all times to keep the king in check. After that, it was just the individual versus the state, and the individual lost.
Yes, this class participated in its own undoing. Gabriel Kolko and Murray Rothbard have shown us all the ways in which warring families after World War I employed state power to smash their competitive rivals. What's more, the third-generation children of the original Men of Wealth participated in the politics of redistribution, organizing proto-socialist movements in Newport and using these mansions as staging grounds for destructive politics.
Why did they do this? Did this original New Class lack the values and grounding necessary to have seen what a masochistic exercise this would be? In a perverse way, did they actually desire their own destruction out of a sense of self-loathing born of their ignorance concerning the social good wrought by their capitalist acts?
For all the complications of those years, these amazing mansions stand as testimonies to what could have been. Truly, these astonishing mansions should be classified among the Seven Wonders of the World, and yet what does it say that so few Americans even know that they exist? Compare the numbers who come to visit Newport, filled with shrines to capitalist creation, as versus those who visit Washington and its shrines to despotism and death?
Yes, immense private wealth still exists, but it must hide and it must affect a democratic character, and it must pay constant obeisance to the politics of equality. And notice, too, how every time a new class of independent entrepreneurs raises its head on the American landscape, the trope is repeated: the political class calls these people parasites and demands their destruction. Why America continues to eat its finest children cries out for explanation.
Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.