One guy changed the world; the other filled your basement with little dust-catching toys. But the second guy’s fortune dwarfs the first guy’s wealth by a factor of 20.
Cyrus McCormick invented one of the killer apps of the 19th century: the mechanical reaper, which transformed the way people had farmed for thousands of years, making wheat harvesting enormously more efficient and freeing up countless workers to move over to the burgeoning industrial sector. The invention also made him rich. At his death in 1884, McCormick left a fortune that would be worth about $215.9 million in today’s dollars.
More than a century later, another Chicagoan rode to stratospheric riches on the success of his invention. Ty Warner, the failed actor turned toy salesman who created Beanie Babies, easily the most popular collectible toy of the 1990s, amassed a fortune that Forbes estimated last year at $4.4 billion, making him the richest person in the Chicago area today.
That’s right-when the two fortunes are compared in today’s dollars, Ty Warner is worth more than 20 times what Cyrus McCormick was. Being rich, it turns out, has changed a lot in the past 100 or so years. Whereas the holders of some of Chicago’s great 19th- and early 20th-century fortunes, such as Swift, Armour, and McCormick, were undeniably and fabulously wealthy, most of them were nowhere near as rich, in today’s dollars, as their modern counterparts named Crown, Wrigley, and Bucksbaum.
“This is a really good time to be wealthy,” says Diane Swonk, chief economist and senior managing director for Mesirow Financial, a Chicago-based wealth management company. “There’s enormous opportunity-a whole new global revolution-and a technological revolution that creates the possibility of enormous profits.” And enormous riches. Indeed, more wealth-some $30 trillion-has been created in the United States in the past 25 years than in the preceding 200 years, according to The Wall Street Journal.
Some reasons for the disparity between fortunes made then and now:
• A bigger, juicier pie. Over the past century, the U.S. population has multiplied dramatically, and the economy has become vastly larger, more complex, and more productive. “You can sell more, and sell faster, than ever,” says Lester A. Morris, senior managing director of Mesirow’s Highland Park investment advisory office. What’s more, the Internet, and the spread of multiple forms of advertising, have enhanced the opportunities to build immense fortunes.
• A global economy. Cyrus McCormick had easy access only to the U.S. market and those of other Western countries, while Warner had the entire world, including all of Asia, notes Greg Pusinelli, a principal at another Chicago-based wealth management firm, William Blair & Company-which was founded by a descendant of Cyrus McCormick.
• More investment options. The plutocrats of the 19th century drew money mostly from their own businesses or real estate, Pusinelli says. Today, rich people’s money works much harder for them than it did back then, thanks to diversified investment portfolios. “Wealth today is managed by firms like ours and is directed into limited partnerships, hedge funds-the whole alternative investment class,” Pusinelli says. “The variety of types of investments that are available to the ultrawealthy today is much greater.” And the pace of asset allocation is speeding up as more data becomes immediately available via the Internet. “They’re making instantaneous decisions about how to invest, with information you couldn’t find 100 years ago,” Pusinelli says.
To arrive at a ranking of the city’s wealthiest people of all time, Chicago gathered information on the net worth of a number of the city’s biggest tycoons of the 19th and 20th centuries, based on estimates made, in most instances, shortly before or after they died. Then we used an equation devised by the Federal Reserve Bank of Minneapolis to calculate what that money would have been worth, adjusted for inflation, in 2005. Finally we compared those figures with estimates published in 2005 by Forbes magazine on today’s wealthiest Chicagoans.
The hands-down richest Chicagoan of all time, with a titanic $23.3 billion in today’s dollars: John D. MacArthur, whose empire included two banks, 19 insurance companies, and 100,000 acres of land in Florida. His wealth would have made him the third-richest American today, behind only Bill Gates and Warren Buffett.
MacArthur is unusual in that he is one of just four deceased titans to make our inflation-adjusted top ten. Marshall Field, perhaps the wealthiest man in the world in the 1890s, made the cut, as did Julius Rosenwald, who once ran Sears. Meanwhile, onetime giants such as the meatpackers Philip Danforth Armour and Gustavus Swift, the reaper king Cyrus McCormick, and the railcar magnate George Pullman-though among the wealthiest men of their day-finished out of the money.
But don’t cry for the multimillionaires of the Gilded Age. In their time, their wealth may have swung heavier for them than it would today. “When Cyrus McCormick was very wealthy, the great masses of people had nothing,” Lester Morris says. “The disparity between the wealthy and the masses was probably bigger then than it is today, when the majority of Americans are at least middle class, not lower class. People like him could hire households of servants for next to nothing, so their standard of living was much better, in terms of what they could buy with the money they had.” Consider, too, that until 1913 there was no income tax in this country. “That’s an offset in favor of the historical figures,” Pusinelli says. “They were largely untaxed, unlike today.”
Being rich meant something then, too. Swonk points out that “we’re a very market-oriented economy now, so we are creating more wealthy people. It’s not just that the rich are getting richer; it’s that more people fall into the category of rich. If you go back to those earlier days, very few people had the opportunity to get rich. So if you got rich, or especially if you got megarich, you really were distinctive.”
Here are Chicago’s ten wealthiest people ever, in 2005 dollars.
1. John D. MacArthur (1897-1978)
Owned banks, insurance companies, oil wells, and a big swath of Florida. In 1972, his fortune was estimated in the Chicago Sun-Times at $5 billion. A chunk of that funds the annual “genius” grants handed out (at the rate of about $200 million a year) by the John D. and Catherine T. MacArthur Foundation.
2. Ty Warner (b. 1944)
The man behind the now-defunct Beanie Babies craze, he has invested lately in high-end international resorts.
3. Lester Crown (b. 1925) and family
A significant shareholder in General Dynamics, which subsumed the Material Service Corporation-the construction company cofounded by Crown’s father, Henry-in 1959
4. William Wrigley Jr. (b. 1964)
Head of the chewing-gum superpower founded by his great-grandfather
5. Julius Rosenwald (1862-1932)
After buying a one-quarter interest in the fledgling Sears, Roebuck & Co. in 1895 for $37,500, he built the company into the retail and catalog powerhouse of the first half of the 20th century. He left an estate estimated at $200 million.
6. Marshall Field (1834-1906)
The man who started Chicago’s grandest department stores. Remember them? At his death, he was worth an estimated $118 million.
7. Matthew Bucksbaum (b. 1926) and family
His family’s General Growth Properties owns or manages more than 200 shopping malls.
8. Sam Zell (b. 1941)
Maverick real-estate investor
9. W. Clement Stone (1902-2002)
Upwards of $2.1 billion
Insurance magnate and coauthor of Success Through a Positive Mental Attitude
10. John P. Calamos Sr. (b. 1940)
Head of a set of mutual funds based in Naperville
Many ultrarich Chicagoans of old don’t crack our inflation-adjusted top ten. Some, like Samuel Insull, lost their vast fortunes well before they died. The city’s original energy czar-he ran Commonwealth Edison, Peoples Gas, and Chicago’s elevated trains, and built the Civic Opera House-Insull at his peak was worth $150 million ($1.7 billion in 2005 dollars). But the Depression brought an end to his empire, and when he died of a heart attack in a Paris subway station in 1938, Insull had only a monogrammed handkerchief and seven francs in his pockets.
In other instances, it was tough to determine a person’s peak worth. Philip Knight Wrigley, a member of the second generation of the chewing-gum dynasty, ran the company-and the Chicago Cubs-following his father’s death in 1932. P. K. was worth $100 million at the end of World War II, or $1.08 billion in 2005 dollars. (His assets included Santa Catalina Island in California; 400,000 shares of the oil company Texaco; and large estates in Wisconsin and Arizona.) But the extent of his fortune when he died in 1977 is unclear.
Here is a selection of some other Chicagoans whose fortunes didn’t quite stack up.
Philip D. Armour (1832-1901)
Estimated net worth: $50 million
Adjusted for 2005: $1.2 billion
The “Meat King of America” once ran the world’s largest meatpacking facility.
Charles Yerkes (1837-1905)
Estimated net worth (while living in Chicago): $30 million
2005: $699 million
The “Goliath of Graft” was the city’s transit king until leaving town around 1900.
Levi Leiter (1834-1904)
Estimated net worth: $30 million
2005: $648 million
In 1881, Leiter sold out his department store interest to his partner, Marshall Field, for $2.5 million.
Gustavus Swift (1839-1903)
Estimated net worth: $27 million
2005: $583 million
Swift revolutionized the meat business with such innovations as the first practical railroad refrigerator car.
Otto Young (1844-1906)
Estimated net worth: $20 million
2005: $431.2 million
Young co-owned The Fair, the Loop department store, and big chunks of downtown real estate.
A. Montgomery Ward (1843-1913)
Estimated net worth: $15 million
2005: $294.3 million
Ward built a national mail-order and department store business and fought to preserve the downtown lakefront.
Cyrus McCormick (1809-84)
Estimated net worth: $10 million
2005: $215.9 million
McCormick’s reaper transformed agriculture worldwide.
Potter Palmer (1826-1902)
Estimated net worth: $8 million
2005: $179 million
The man who made State Street that great street and then gilded the Gold Coast, Palmer left his entire estate to his wife, Bertha Honoré Palmer.
George Pullman (1831-97)
Estimated net worth: $7.6 million
2005: $177 million
The railroad sleeping car manufacturer was buried beneath tons of concrete to fend off angry workers.
John G. Shedd (1850-1926)
Estimated net worth: $15 million
2005: $165 million
In 1924, Shedd, the second president of Marshall Field & Company, helped launch Chicago’s lakefront aquarium.