Shirtsleeves to Shirtless: How to Lose Any Amount of Money

I’ve never really understood the “shirtsleeves to shirtsleeves in three generations” line. I understand the premise; within three generations, family wealth is often squandered. With rare exceptions, this has been witnessed across the centuries and around the world.

The part that I don’t get — maybe it made more sense about three generations ago — is the shirtsleeves bit. Apparently, “shirtsleeves” are a sign of poverty, but I think if your shirt has sleeves, you’ve got more than someone whose shirt has no sleeves, and any shirt is generally better than no shirt at all.

Etymological rants aside, there is clearly something to this phenomenon. I’ve been running quite a lot lately, so I’ve also been listening to a bunch of audiobooks, or “books on tape” as they might be called by someone who associates shirtsleeves with poor folk.

Three of my more recent listens were about the rise and fall of three prominent American families with names you may recognize: Stroh, Astor, and Vanderbilt. If you enjoy tragedies and train wrecks with a financial twist, I can heartily recommend all three books.

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The Stroh Family

In Beer Money: A Memoir of Privilege and Loss, Frances Stroh details the bad business decisions and conspicuous spending habits that took down an iconic brewery that had been valued at $700 Million in the 1980s, leaving its potential heirs with next to nothing from the Stroh family. The author, of course, was to be one of those heirs.

The Stroh’s Brewery and growing wealth of the business and the family who owned it actually lasted for more than three generations. Founded in Detroit in 1850 by author Frances Stroh’s immigrant great-great-grandfather, Bernard Stroh, the brewery remained in the family through the fifth generation until it was ultimately acquired for pennies on the dollar by Coors in 1989.

What happened? On the personal side, the family wealth was squandered by the usual suspects of society’s elite. Big, beautiful homes filled with art, antiques, first edition books, and other collectibles. Alcohol and drugs both played their roles, and a reliance on a $400,000 per year dividend check in the 1980s meant that no one needed a job to live the high life. Some fifth-generation family members did work for the brewery and its companies, but not all were fit to do so.

On the business side, it’s a bit more complicated, but a post-mortem look tells us that Stroh’s probably got too big too fast. In the 1970s and 1980s, they swallowed up competition while failing to pivot when the only American breweries larger than them (Anheuser Busch and Miller) made a big push into light beer.

They also poured money into risky ventures that were well outside of their wheelhouse, including biotechnology and a real estate development on what turned out to be not-so-desirable Detroit riverfront property.

Much of their growth was enabled by borrowed money, and when the bills came due, the company had no choice but to be dismantled and sold for parts at the turn of the millennium. I haven’t heard what became of the Swedish Bikini Team, who were the faces and bodies of Stroh’s Old Milwaukee brand for a time in the 1990s, but I imagine they’ve long since disbanded.

While the family business is long gone, some fifth-generation Strohs have found success. Frances became a successful artist and author. Her cousin Greg, who worked for Stroh’s in his youth, went on to found Izze soda (which was acquired by Pepsi), along with two other successful food-product businesses.

Although the Stroh fortune is essentially gone, the heirs have continued to fight over money. As money tends to marry money, Frances’ maternal grandmother apparently set up a trust fund for Frances Stroh and her brothers, currently valued at $100 Million. Now, Frances is facing a lawsuit from her younger brother Whitney accusing her of financial misfeasance and elder abuse, among other things.

More money.

More problems.

The Vanderbilt Family

It’s impossible to summarize the rise and fall of the Vanderbilts in a handful of paragraphs. I mean, Anderson Cooper, the great-great-great-grandson of “Commodore” Cornelius Vanderbilt, wrote an entire freaking book about his family with scant, if any, mention of Biltmore, the largest private home in the U.S. that was built for his great-great-uncle George Washinton Vanderbilt II.

That home, which I toured not long ago, is the first thing that comes to mind when I hear the name Vanderbilt, and even with help from co-author Katherine Howe, the estate wasn’t deemed adequate to receive a proper mention in Vanderbilt: The Rise and Fall of an American Dynasty.

Truthfully, when I hear the word “Vanderbilt,” I think of the SEC school with mediocre athletics but great academics that I came close to attending as both an undergrad and medical school interviewee. In the end, I chose a Big Ten school with a similar profile closer to home that offered better scholarships. And now we’re officially off topic. Back to Anderson Cooper and the incredible wealth his extended family enjoyed over the years.

According to Cooper, his mother, Gloria Vanderbilt, inherited a fortune of several million dollars nearly one hundred years ago, which would be the equivalent of tens of millions today. She blew through most of it, made a fortune of her own via some combination of fame, artwork, and blue jeans, but blew through a lot of that wealth, as well.

When she passed away at age 95, she left one son her co-op stocked with antiques, and Anderson got “everything else,” a value of about $1.5 Million that had to pass through probate. It’s not nothing, but it’s also not the billions it could have been after so many decades of missed growth potential.

The Vanderbilt’s fortune can be considered to have started with Cornelius, the great-great-great-grandson of a Dutch immigrant from Bilt, Netherlands. Cornelius’ father was in the ferry business, which is where Cornelius got his start, and he moved from there to operating steamships, but the real money started pouring in when he built railroads. His net worth was reported to be greater than $100 Million in the late 1870s, the equivalent of about $3 Billion today.

That “equivalency” is based on an inflation adjustment, but the metric doesn’t do his level of wealth much justice. There are hundreds of people worth at least $3 Billion today, and a few worth more than $300 Billion. But back then, no one in the world was worth more than Cornelius Vanderbilt.

The Commodore lived relatively modestly given his means, and purportedly did not spend lavishly with the exception of the occasional racehorse. His heirs, or at least those descended from his oldest son who inherited the vast majority of his wealth (the younger surviving son and nine daughters got relatively little), spent lavishly on, well, just about everything.

They built extravagant homes, some of which, like the Biltmore and Breakers, are still standing and open to ticketed tourists, with no one actually living in them anymore. Others were razed or sold, but a number of them are still standing as historic landmarks. See here for a complete listing of Vanderbilt houses, some of which cost the equivalent of $200 Million to $300 Million in inflation-adjusted dollars to build.

The family fortune wasn’t squandered overnight. Cornelius’ primary heir, Billy, more than doubled his inheritance to $200 Million. That was passed on to Billy’s sons William and Cornelius II (the grandson of Cornelius I — confusing, I know), and the Gilded Age spending spree was on.

There were opulent balls and society parties, ridiculous vacation homes, large staffs to manage each estate, and little incentive to go out and make a living for one’s self.

The Vanderbilt name lives on in the University that began with a million-dollar donation and in the Biltmore, which is still family-owned if not occupied, but they are no longer among America’s wealthiest families.

The sixth generation appears to be poised for a comeback, however. Anderson Cooper is said to be earning $12 Million a year as an anchor at CNN. Given the research he’s done, I doubt he’ll quickly burn through what he’s made.

The Astor Family

Cooper and Howe followed up the Vanderbilt saga with the similar and somewhat intertwined tale of the Astor family.

There’s a lot of overlap. It started with a hard-working laborer-turned-businessman. This one, John Jacob Astor, primarily made his money in the fur trade in the late 18th and early 19th century.

In Astor: The Rise and Fall of an American Fortune, Cooper tells us how the Astors evolved from beaver skins to bourgeoise, rising to the pinnacle of high society in New York City alongside the Vanderbilts.

Much of the extravagance parallels that of the Vanderbilts and other prominent families of the late 19th and early 20th centuries. There were the parties, of course, the hotels (they put the Astor in Waldorf Astoria), and philanthropic endeavors like the Astor Library which eventualy became the New York Public Library.

When he died in 1848, John Jacob Astor was the wealthiest man in the U.S. His net worth of $20 Million was the equivalent of 0.9% of GDP, which might be a better metric the inflation equivalent. 0.9% of U.S. GDP today is close to $250 Billion.

His fortune went on to buy an immense amount of New York City real estate, several newspapers and magazines, including Newsweek and Times of London, and various other businesses, most of which are no longer controlled by the Astor family, now in the 7th generation descended from John Jacob.

Cooper’s retelling of the family history ends with a recap of a trial in which the last Mrs. Astor, Brooke, was subject to — stop me if you’ve heard this one before — financial misfeasance and elderly abuse. In this case, it was her son mismanaging what could only be considered the scraps of what was once an immense fortune.

How to Lose Any Amount of Money

Grow up wealthy. Be raised primarily by a nanny, nurse, or governess. Better yet, all three. Be fed by a team of chefs while you look down upon the gardeners.

Start smoking while young. Drink some, too. Save the hard drugs for prep school or college. You’ll get caught, but they’ll graduate you, anyway. You’ve got a name.

You don’t have to work. You’ve got a name and a trust fund. If you do work, start a business with no business plan using other people’s money. It can come from your parents or the banks who will happily lend you that money with that name.

Sue somebody. Bonus points if it’s a family member, and it probably will be.

Marry well, but sleep around. Gamble a little. Or a lot. There will always be other people’s money to fall back upon. Until there’s not. And that’s undoubtedly what will happen if you follow the outline above.

Clearly, I want you to follow exactly none of this advice. It is, however, the amalgamation of a few dozen stories I’ve heard about a whole lot of unsavory characters with names like Stroh, Vanderbilt, and Astor. That’s how you go about losing any amount of money, something many of them excelled at.

Lessons Learned

I don’t mean to pick on these three family dynasties; they just happen to be three that have been immortalized in print and audio recordings that recently reached my ears. While their legacies are mostly sad and unsurprising, there are some take-home lessons here.

Happiness is Not a Life of Pure Luxury

“Inherited wealth is a real handicap to happiness… It has left me with nothing to hope for, with nothing definite to seek or strive for.” – William K. Vanderbilt

The best way to kill someone’s motivation to become a millionaire is to hand them a million dollars. The focus shifts from how to obtain it to how to spend it. It turns out the latter is much easier than the former.

How Much Do You Want to Leave as an Inheritance?

Knowing what we know about extreme excess, do you want to leave your kids or grandkids with millions? How about tens of millions? Hundreds of millions?

Few of us will need to contemplate that final number, but the others may well be within reach. If so, it’s important to contemplate how you want your wealth distributed, and when. When you’ve come to a conclusion, I recommend letting your potential heirs know the plan. Total reliance on an inheritance is bad, but it’s even worse if that inheritance is never realized. Generation wealth can be a blessing, but too often, it more closely resembles a curse.

Someone Will Always Have More

“Be thankful for what you have; you’ll end up having more. If you concentrate on what you don’t have, you will never, ever have enough.” Oprah Winfrey

This quote echoes the story of Catch 22 author Joseph Heller telling party guest Kurt Vonnegut that he’s got something the billionaire party host will never have — enough.

Learning what Enough is for you is key to contentment. With exceedingly rare exceptions, someone will always be earning more than you, running faster than you, getting stronger than you, or writing better than you. I don’t say this to rob you of all motivation, but for a happier life, it’s best to learn to be content with good enough.

Make Money Inaccessible

If you want money to last, make it hard to get.

A Danish butter magnate (yes, you read that right) who passed away in 1924, had an impressive coin collection. His will stipulated that it could not be touched for 100 years. Today, it’s estimated value is $73 million, and the first batch of coins sold at auction for a combined $16.5 Million to benefit his descendants, and there’s much more where that came from.

Benjamin Franklin did something similar with two £1,000 gifts to the cities of Philadelphia and Boston. The money was to be loaned, with interest, to young tradespeople to start businesses. 100 years later, Philadelphia’s gift had turned into $70,800. Boston had well over $300,000.

At the century mark, the cities were allowed to use most of the money for public works. They did that among other things, and at the 200-year mark, the trusts established from the initial grants had grown to about $2 Million in Philadelphia and $4.5 Million in Boston. To paraphrase Rick James, compound interest is a hell of a drug.

Just imagine if Bernard Stroh, Cornelius Vanderbilt, or John Jacob Astor had been wise enough to follow Benjamin Franklin’s lead with even a small portion of what they were worth in the 19th century.