The Transformation of the World (49 page)

Poverty and starvation are closely related to each other, without quite being mutually reinforcing. Although the poor may lack everything else, the last thing left to them is enough food to keep body and soul together. Not all poor people go hungry, and not all starving people are poor. Poverty as a concept embraces more. Societies have their own definitions of “the poor”; people who are not poor engage in discourse about those who are and make them recipients of their charity. In comparison with developed industrial societies,
all
premodern societies, whatever their cultural characteristics, were poor. But modern economies have not ended poverty—which is one reason why the achievements of “modernity” should not be celebrated too smugly. In the early twenty-first century there are still famines and hunger revolts in Africa and Asia; every sixth person on the earth is persistently undernourished. The increase in the productive forces of society in the nineteenth century—mainly the increases in agricultural productivity and the opening up of cheaper sources of fossil energy—did not as a rule go hand in hand with more equal opportunities in life.

Poverty and affluence are relative terms, both within one single society and between different societies. For example, an individual country—say, mid-nineteenth-century England—may become richer as a whole, but at the same time, if differences in income, consumption, and educational opportunity between the top and bottom layers of society become greater rather than smaller, relative poverty will become more evident than before. Long-term tendencies of income distribution are hard to identify in Western Europe (in spite of particularly good data), and even harder for the rest of the world. “Optimists” and “pessimists” have long stood in irreconcilable opposition to each other. There is much to suggest that, at least in England and France, the income and assets gap opened wider around the 1740s and gradually began to close again only a century later. In particular, the gulf between the big bourgeoisie and the class of manual workers broadened during that period. In many countries, the last third of the nineteenth century was a new era of narrowing differences. This is also consistent with the simple theoretical observation that the growth processes of “high industrialization” were driven not by working-class “underconsumption” but only by an expansion of mass demand.
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This did not mean, of course, that the rich grew poorer.

The Rich and the Superrich

The richest were not immune from illness or misfortune. They ate better, enjoyed better clothing and housing, freed themselves of physical work, were able to travel more easily, and had unobstructed access to high culture. They lived in a world of luxury and, through their public conduct, set the norms of consumption to which others aspired. Whether in Europe, North America, or South Africa, the capitalist process created a degree of private wealth that in earlier ages had been attainable only by political and military rulers and by very small numbers of patrician merchants. In the year 1900 the rich were nowhere as rich, in absolute or relative terms, as they were under the conditions of capitalism. In some European countries, landowning aristocracies preserved their wealth from former times. At the end of the nineteenth century, the highest echelons of the English and Russian nobility (including many ennobled merchants) were still among the wealthiest people in the world. The Austrian, Hungarian, and Prussian (mainly Upper Silesian) nobility followed some distance behind, whereas the French had never really recovered from the Revolution of 1789–94.
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Such wealth could be best preserved if it was invested not only in well-run landed estates but also in more modern sectors such as banking, mining, and urban real estate. At the same time, huge new fortunes had been amassed in finance and industry, and especially in Britain these nouveaux riches aped the lifestyles and symbolic displays of an aristocracy that did not constitute a closed caste but was separated from lower strata by fine shades of status. Old and new money, lords, knights (who had to be addressed as “Sir”), and untitled millionaires shared a world of sumptuous townhouses and country estates, a world inhabited by no more than four thousand people.
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In the pioneer societies of the New World and Australasia, nearly all the great fortunes were of capitalist origin. There were no feudal roots, even though many landowners in British North America could effortlessly mimic the grand lifestyle of wealthy English gentry. A distinction must be drawn, however, among the various “new Europes.” In the antipodes few became spectacularly and lastingly rich as a result of either the gold rush or sheep farming. Although in 1913 Australia had a per capita income appreciably higher than Britain's and was even slightly ahead of the United States, it had few huge fortunes, and even the largest among them were considerably more modest than in Britain or the United States. There were more superrich people in Canada, but the real historical exception was the United States. When Alexis de Tocqueville traveled there in 1831–32 and felt himself to be fundamentally in a society of equals, he underestimated not only the ongoing formation of
very
large fortunes but also the widening of income differentials within American society—a process, it is true, that only later historical research uncovered. The growth and concentration of wealth was giving rise to prosperous oligarchies, both in the Northern states and among the planters of the South. The “self-made men” of the middle
of the century, who used to be readily thought of as anti-oligarchic levelers, inserted themselves into this elite cosmos.

After the end of the Civil War in 1865, the elite divisions between North and South disappeared over time, while the transition began to a mature, high-growth industrial economy able to benefit from nationwide economies of scale and unparalleled corporate opportunities for capital accumulation. The richest tenth of the population owned one-half of the national wealth in 1860, but two-thirds by 1900; the top 1 percent of families held 40 percent.
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Income inequality reached a peak between the turn of the century and 1914. The conviction of the founding fathers, especially Thomas Jefferson, that republican virtue required limits to material inequality continued to have some resonance into the 1880s, but then a new free-market ideology bestowed on boundless capital accumulation a legitimacy that would be occasionally questioned but never radically combated in the politics of the United States.
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Extreme wealth even became one of the symbols of America's nascent world supremacy. The Astors, Vanderbilts, Dukes, and Rockefellers put Europeans in the shadow with their fabulous riches, staging a degree of luxury consumption that became known throughout the world.

Re-creations of English country estates, French châteaux, or Italian palazzi, filled with priceless works of art from the Old World, were the most visible display of the new superwealth; nor was there any problem endowing universities, thereby helping them achieve a position among the most highly regarded in the world. The first rank, and even the second rank, of American property owners were able to marry effortlessly into the European upper nobility: Consuelo Vanderbilt, for instance, having a share in an inheritance worth $14 billion, married the financially tarnished Ninth Duke of Marlborough and became the mistress of Blenheim Palace, one of the largest palaces in Europe. Around the turn of the century, a generation that had inherited wealth from their industrialist parents also appeared on the scene: those champions of luxury consumption who were the subject of the sociologist Thorstein Veblen's
The Theory of the Leisure Class
(1899). Nevertheless, ancestry was not altogether unimportant in the United States. The cream of the cream—assuming they had managed to preserve and multiply their riches—came from old families that went back to colonial times in cities such as Charleston, Philadelphia, Boston, and New York. People referred to them as “aristocratic,” without implying that they occupied a fixed position at the top of a hierarchy. The US Constitution of 1787 made no provision for noble titles to be conferred on American citizens, and public officeholders, at least, did not accept foreign titles. “Aristocracy” was a metaphor for high prestige maintained across generations, and for a lifestyle expressing unshakable confidence in good taste that need fear no comparison with the summits of European
noblesse
. The American aristocracy, perhaps four hundred strong in late-nineteenth-century New York, could exude an exclusiveness and self-confidence that made even wealthier tycoons and captains of industry mildly aware of their
parvenu status. Old and new money sometimes competed for political power in a city, but in the game of distinction even a weakened patriciate was usually able to keep its nose in front.
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The size of the top American fortunes was without precedent in the history of the world. Never before had private individuals accumulated such wealth. The money that could be made from oil, railroads, and steel in the late-nineteenth-century United States was several times greater than that which even the most successful European cotton industrialist could achieve; in fact, very few pioneers of the English Industrial Revolution had become truly rich.
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The megarich looked down on those who were merely superrich. Thus, when the banker John Pierpont Morgan left a fortune of $68 million in 1914, the steel magnate Andrew Carnegie is supposed to have remarked pityingly that he had by no means been “a rich man.”
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Carnegie's own fortune and those of industrialists like John D. Rockefeller, Henry Ford, and Andrew W. Mellon were over half a billion dollars. The rapidity of the concentration of wealth may be gauged from the fact that the largest American private fortunes grew from about $25 million in 1860 to $100 million twenty years later and $1 billion two decades after that. By 1900 the richest man in the United States had assets worth twelve times more than those of the richest European (who was a member of the English aristocracy); not even the Rothschilds (finance), the Krupps (steel, machinery, weapons), or the Beits (British/South African gold and diamond capital) were in the same league.

The unique megafortunes in the United States are explained partly by factors such as the size of the internal market, the relatively high starting point for the economy, the wealth of natural resources, and the absence of political or legal obstacles to capitalist development. In addition there were synergistic effects within the industrial system. Rockefeller became a very rich man only after the emergence of the US car industry had presented his oil company with golden opportunities. Agricultural property did not stand behind any of the top American plutocrats, and in Britain too, by the 1880s, it was no longer land but finance, press ownership, or the gold and diamond trade that accounted for the largest fortunes. On the other hand, urban real estate was much in demand as a capital investment.
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Throughout the “West” (with the possible exception of Russia), the 1870s witnessed the birth of a “new,” hierarchically differentiated, wealth. Beneath the megafortunes lay a stratum consisting of mere millionaires or half-millionaires. This elite had a different cultural style: Old Money began to complain about the New Rich, who flaunted their wealth in a vulgar or unthinking fashion and hollowed out aristocratic manners by dint of imitation. And something else was new. In the 1830s or 1840s, rich people with democratic or even radical political views had existed in the United States under President Jackson, in France during the July Monarchy, in England after the Reform Bill of 1832, and in pre-1848 Germany. But now, by the 1880s at the latest, the classic plutocracy of the fin de siècle had come into being. Political liberalism was largely divided within itself,
as wealth virtually implied the representation of moneyed interests by conservative and right-leaning liberal parties. By no means were all the rich and superrich, in either Europe or the United States, vociferous propagandists for conservative values. But “radical plutocrat” had become a contradiction in terms.

Wealth in Asia

As in the United States, scarcely any large fortunes in Asia went back further than two centuries at the outmost. The conditions for the formation of private wealth were different from those in Europe and the neo-Europes. In China there had been no hereditary landowning aristocracy before the Manchu conquest of 1644, and large estates had generally been atypical; education more than property had been the qualification for elite membership. One could become prosperous in the state service, but not spectacularly wealthy, and few managed to keep their wealth in the family for many generations. The richest people in Qing China in the eighteenth and early nineteenth century were either members of the high Manchu nobility (e.g., princes living in Beijing in palaces arranged around a progression of inner courtyards
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), merchants holding a monopoly from the state (salt, the Canton trade), or bankers from Shanxi province. They were joined in the nineteenth century by middlemen trading within the treatyport system, the so-called compradors. The social prestige of merchants was far below that of scholar-officials, but they could indulge in luxury consumption that the latter deprecated as parvenu behavior, while also taking care to use their money to acquire landed property, purchase titles, and educate their sons. The dynastic accumulation of great fortunes was uncommon; it was more likely to occur among Chinese merchants, tax farmers, and mine owners in colonial Southeast Asia—in Batavia, for example, where ethnic Chinese had been active in the economy since the early seventeenth century. In 1880 the Khouw family, whose forebears had migrated there from China in the eighteenth century, were one of the largest landowners in and around Batavia and lived grandly at one of the best addresses in the city.
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In China itself, wealth tended to be kept secret so that the envy of the authorities would not be aroused; manorial architecture—the most conspicuous expenditure of the European aristocracy and their American imitators—played scarcely any role. In late imperial China, “rich people” were not a model for the rest of society. Moreover, although the Manchurian imperial family occupied the largest palace complex in the world, the riches “belonged” to an imperial clan of several thousands rather than to a royal family of ten to twenty people.