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It was not only in Britain that the rich looked as if they were on the verge of extinction. The number of wealthy Americans, and the size of their fortunes, fell until at least 1960, and possibly for several more years after that. In 1958 Business Week magazine wrote that ‘the rich have been in hiding for 20 years’. It was ‘the age of compression’, as the gap between rich and poor shrunk. In the UK great wealth reached its nadir during the 1950s and recovered only slightly during the 1960s and 1970s. It took until the 1980s, when taxes were cut, globalisation embraced and the City of London revolutionised by Big Bang, for it to become possible once again to make large sums of money.
Apart perhaps from Viscount Nuffield of Morris cars, who donated over £30 million and still died a multimillionaire in 1963, and the shipping magnate Sir John Ellerman, who left £52 million in 1973, the richest businessmen to die between the 1940s and 1970s — including even James de Rothschild and Guy Anthony Vandervell, the industrialist — were poorer in real terms than the richest City merchants of the past. Herman, Baron de Stern, a banker, left £3.5 million in 1887; Hugh McCalmont, a stockbroker, left £3.1 million the same year; and Giles Loder, a Russia merchant, left £2.9 million in 1871. They were worth well over £200 million each in today’s money.
By contrast, famous postwar names such as Walter Melville Wills, the tobacco manufacturer, Ernest Guinness, the brewer, Sir Jeremiah Coleman, the mustard maker, William Johnston Yapp, of Carrera’s, William Lever, the soap magnate, William Laurence Stephenson of Woolworths or Lord Rank, the cinema and bread baron, were worth only a fraction of that sum.
An early newspaper ranking found just five fortunes of £100 million or more in 1969: those of the Weston family, whose Associated British Foods is still going strong today; the Pilkington glass family; Lord Cowdray of the petroleum and engineering family; Sir John Ellerman; and the Moores football pools family.
Compare that with today’s 54 billionaires, led by steel baron Lakshmi Mittal’s £14.8 billion and Russian oligarch and Chelsea football club owner Roman Abramovich’s £10.8 billion; £60 million is required to make it into the Sunday Times Rich List top thousand. In the past 15 years the wealthiest have seen their worth soar by 600 per cent; the rich have never had it so good, as Harold Macmillan might have said.
Before Thatcherism, it was not only hard for the old upper classes to maintain their wealth, though a few landowners such as the Dukes of Westminster succeeded against the odds; it was even harder for outsiders to make any real fortune. Socialism not only destroyed wealth; it also froze society. Joseph Aaron Littman was the only self-made man to make the top ten in the first half of the 1950s. A Polish Jew, he started off with one tiny dress shop, emerging as a top property developer. He left £3.2 million when he died aged 55 in 1953, incredible given how hard it was to build a fortune from scratch. But even after adjusting for the runaway inflation of the past 50 years, his fortune was equivalent to only a little more than 1 per cent of that enjoyed today by Sir Philip Green, the owner of Bhs and Arcadia.
The ranks of today’s New-New Rich are not limited to billionaires, however; at least half a million people further down the scale probably qualify. Not for them the top hats and tails of the old order, the self-importance and brash self-consciousness of the yuppie and loadsamoney generations of the 1980s, or even the revolutionary optimism of the internet pioneers. Many do not even consider themselves to be wealthy, defining themselves instead by their supposed ordinariness. Like many rich of yore, some are asset-wealthy but cash-poor. A disproportionate number of these New-New Rich work in the City of London, the capital of globalisation; some are retired; many have made money from property; others are more or less temporary economic migrants; they don’t all vote Tory; and growing numbers belong to the new public sector bourgeoisie.
At the bottom of the pile are those who meet what is now the minimum requirement for membership of the upper-middle class: an income of at least £100,000 a year, enjoyed by a record 480,000 people. Next come the 448,000 British investors who own at least $1 million net of debt in cash, shares or other financial assets, excluding property, according to the Merrill Lynch World Wealth Report. Many more are millionaires when housing is included; the Centre for Economics and Business Research forecasts 760,000 sterling millionaires in five years’ time thanks to buoyant house prices. Finally there are the billionaires, of whom there are more in Britain today than there were millionaires half a century ago.
Another of Rubinstein’s fascinating discoveries is that, for the super-rich at least, social mobility has improved. As recently as 1990, 15 of the top 100 richest men were from the landed gentry or aristocracy. Today just four are, the fewest ever; the number of those well off for two or more generations has collapsed from 30 to 17, and self-made men are on the rise. The old moneyed classes have benefited too, but have been overtaken by a new generation of entrepreneurs, entertainers, financiers and foreign migrants.
But as in the past, today’s super-rich have been partly absorbed by the old system. Today’s wealthiest receive titles in similar numbers as in the past; but Lord Sainsbury is one of the few to serve in a major political office. Today’s rich are rarely rooted in a provincial city, as were the cotton manufacturers of Oldham or Bolton, or the ship-owners and merchants of Liverpool or Bristol. London and the southeast of England are more dominant than ever. However, like their predecessors, they are increasingly turning to philanthropy, albeit not yet Bill Gates-style.
Only about a tenth of the super-rich are manufacturers; but that is not new. Rubinstein shows that most of the rich in Victorian England earned their fortunes in commerce and finance rather than in industry. And like their Victorian forefathers, many of the super-wealthy are foreign-born, including over a third of all billionaires, thanks in part to a favourable tax treatment. While there has been an explosion in female millionaires, the super-rich remain overwhelmingly male.
Perhaps most important of all, this increase in the number and wealth of the rich has occurred side by side with a relentless rise in the standard of living — and, indeed, with the near-disappearance of the traditional working class, which as Rubinstein argues compellingly is exactly the opposite of what Marx had predicted. New Labour’s genius was to understand that trickle-down economics works, and to grasp that to allow the rich to get richer is the only way to ensure economic growth and ever-higher wages.
There are two dark clouds on the horizon, however. Gordon Brown’s tax-and-spend proclivities have made it much harder for budding entrepreneurs; today’s rich usually started off during the last Tory government, when conditions were easier. Another worry is that, just as Mark Twain described late 19th-century America as the Gilded Age — because, as he saw it, the success of its industrialists was the gold-plating that camouflaged deep social problems and corruption — Britain in the early years of the 21st century is undoubtedly in its own Gilded Age. Most of us have never enjoyed so many material goods, yet do not feel that life is improving. We face too many other difficulties. Whereas the rich can insulate themselves from rising violence, a lack of affordable homes, falling educational standards and overcrowded trains, the rest of us are suffering from a growing malaise.
For all of that, the Labour government will ultimately pay. If only it had extended the Thatcher revolution, and shaken up education, health, welfare and policing instead of unthinkingly chucking money at them; and had allowed more new homes to be built, the quality of life of millions would have been transformed. Allowing the rich to become richer is only half the answer. By failing to understand this, Labour has allowed the promise of a new Golden Age of wealth, optimism and cultural improvement to slip away — a squandered opportunity for which they don’t deserve to be forgiven.
Allister Heath is associate editor of The Spectator and deputy editor of the Business.
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