Welcome everyone, I'm your host Greg McEwan and I am here with you on this journey to learn
so that we can make our highest contribution now and ongoing into the future.
Have you ever wondered how America's wealthiest families managed their fortunes across generations?
A lot of people think it's all about the initial success, the sheer magnitude of the
wealth itself but that is wrong. What we know now is that there is a single rule that makes the
difference between intergenerational wealth and being broke. By the end of this episode you'll
understand the starkly different legacies of the Rockefellers and the Vanderbilt's and that one
key to generational wealth. Let's get to it.
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That's help, h-e-l-p.com slash essential. When I was 10 years old, I started my first
business. It was car washing. And since then, until now, I have spent most of my life as an
entrepreneur or an authorpreneur. And that has worked out unbelievably well for me. But when I look
back, I just wonder what I could have contributed and accomplished if I'd really had early on mentors
to help me see in detail what to do and what not to do. Instead of committing to years and years
of acquiring debt for a degree, an alternative is that you can dive straight into the real world
practical bin there, done it, millionaire university podcast. It's not an education, it's a road map
to success. It's hosted by Justin and Tara Williams, whether you're curious about kickstarting a
software business without actually developing software, or you're hunting for a business model where
you can earn 10k plus a month, Justin and Tara, along with their roster of seasoned entrepreneurs,
have you covered? Listen to new episodes every Monday and Thursday, available on Apple's
Spotify or wherever you listen to podcasts. You can start right now effortlessly to turn your
business idea into a reality by listening to the millionaire university podcast. Two of America's
most iconic families, the Rockefellers and the Vanderbilts, amassed incredible wealth during the
Gilded Age. These families, both rooted in immense success, had distinctly different approaches
to the management of that wealth, which, as we will see, has had a lasting impact on their
legacies. First, we have the Vanderbilts. Cornelius Vanderbilt often dubbed the Commodore,
laid the foundation for the Vanderbilt fortune in shipping and later in railroads. By the time of his
death in 1877, he was the wealthiest man in America. When he died, it's estimated he was worth
$100 million, which in today's terms is an extraordinary $200 billion. That was more than the US
Treasury held at the time. It's worth noting that he himself lived quite a modest life
and was able to pass to his son 95% of that fortune. That son William Henry Vanderbilt did well.
He doubled the family fortune before his death, but amazingly that is the last time the Vanderbilt
fortune would grow. The Commodore was known for his frugality, but his descendants passed his son
lived opulent lifestyles. Mansions, lavish parties, and extravagant expenditures became synonymous
with the Vanderbilts. They built 10 Vanderbilt mansions just in Manhattan, including what is
considered the largest private residence ever built. But by 1947, according to Garrett Gunderson,
all 10 Vanderbilt Manhattan mansions had been torn down. Gunderson explains that, according to
family law, Cornelius Vanderbilt's last words to his family were, keep the money together.
But if that was, in fact, his last words, it's hard to think of a family who has more thoroughly
failed to act consistently with that dying man's wish. This massive, unbelievably large fortune
was divided among family members, and without proper financial education or a structure to preserve
the wealth the money started to dissipate. By the time the third generation of Vanderbilt's came of
age, much of the family fortune was gone. While some of the Vanderbilt mansions in a state's
remain as historical landmarks, or have been donated to institutions, the vast wealth,
Cornelius accumulated, did not last beyond a few generations. Contrast this with the Rockefellers.
John D Rockefeller, born in 1839, was the patriarch of the Rockefeller dynasty. He founded the
Standard Oil Company in 1870, which would become one of the world's first and largest multinational
corporations. At the peak of its power, Standard Oil controlled 90% of the oil in the United States.
John D Rockefeller Sr. made millions refining and selling oil that led to a boom in industrial
and technological innovation. I'm quoting here from John Nebuchadne. He continues,
when he was 18, his father loaned him $1,000 at 10% interest to help launch a produce commission,
Clark and Rockefeller, which made significant profits by providing food and supplies to soldiers
during the Civil War. Later, the commission began investing in oil fields in Pennsylvania
and the surrounding states. Rockefeller founded the Standard Oil Company in 1870 and invested
millions in other sectors, such as transportation and real estate. He was a famed philanthropist,
whose donations to a myriad of causes totaled more than $500 million. When he died in 1937,
his fortune reportedly reached more than $300 billion in today's dollars, and he had successfully
seized the title of Richest American. At the time, a title previously held by Cornelius Vanderbilt.
When the younger John D Rockefeller Jr. inherited his father's wealth, he quickly set about
establishing trusts and other legal entities to protect and grow his family's fortune perpetually.
The family emulated their patriarch's example by establishing traditions of education
and training two family members to help them properly manage wealth. They have carried on John
Senior's tradition of philanthropic dedication by donating as much as $50 million every year
to charitable causes. All descendants have had access to financial assistance at critical junctions
in their lives. The result is that Rockefeller descendants have served as CEOs of major financial
institutions, philanthropists, governors of multiple states, United States Senators,
and even Vice President of the United States. Today, the Rockefeller fortune totals less than
its founders original request, but remains intact and growing, estimated at more than $10 billion.
Why is generational wealth so quickly and easily consumed, and what lesson lies in the answer
for the rest of us? Gunderson puts it this way, it's amazing how quickly wealth can disappear
when you fact in three forces. Division, taxes, and risk. Imagine two parents with unbelievable wealth,
$100 million in their estate. Let's say they have four children, who each have four children,
who each again have four children, that's just the great-grandchildren. Without proper planning and
applying just the 40% estate tax to each generation transfer, each great-grandchild will receive
just $343,000 out of an original 100 million. Now, to be sure, that doesn't sound like nothing,
and these numbers are so massive it's hard even to relate to the story, but surely there's something
in the contrasting tales of the Rockefellers and the Vanderbilt's for all of us. Lessons about
wealth management and preservation. The Rockefellers with their forward thinking approach ensured that
their wealth would benefit not just their immediate family but also society at large in an
ongoing residual way. The Vanderbilt on the other hand serve as a cautionary tale about the
transience of wealth without systems, structures, and education in place, even the greatest fortunes
imaginable can diminish rapidly. The principle at the center of these contrasts is not about the
size of the fortunes. It's about a mechanism available to everyone, to you, to me, to the whole
world. We could think of it like a mindset, and it's true at the macro level but also at the
micro-loan level. In a small village called Jabra in Bangladesh, Dr. Muhammad Yunus, an economist
with a keen eye and a compassionate heart, stumbled upon a group of 42 bamboo stool makers struggling
under the weight of the local moneylenders' ruthless interest rates. They couldn't dream of
approaching traditional banks, which deemed them unworthy of loans due to their lack of collateral.
One day, driven by a simple yet profound act of kindness, Yunus lent them a total of just $27
from his own pocket. This small gesture sparked an idea that would eventually ignite a global
revolution in finance. He observed how this mega-emount enabled these artisans to buy materials
weave their stools, sell them, and repay him. It wasn't just about the money. It was about trust,
dignity, and potential. Emboldened by this success, Yunus founded the Gramian Bank in 1983,
choosing to focus primarily on women. He believed in their power to bring about real social change.
They were the backbone of families and communities, and by empowering them, a ripple effect was
inevitable. Rather than asking for collateral, the bank organized borrowers into groups, fostering
a spirit of community and peer accountability. If one member struggled, the others would rally
around, ensuring they stayed on track. As the years passed, stories of transformation emerged.
A woman named Aisha borrowed a small sum to buy a cow. Every day, she'd milk it, sell the
produce, and slowly expanded her tiny enterprise, eventually sending her children to school.
Faradah, once a destitute widow borrowed to weave baskets. Over time, not only did she provide for
her family, but she also became a beacon of hope for others. In short, the Gramian model worked
wonders. From that initial $27 to millions of borrowers, and a staggering repayment rate of over 96%.
The bank was a testament to the power of trust and the untapped potential of the impoverished.
The world took notice. In 2006, of course, Dr. Uniscent, his brainchild, the Gramian bank,
were awarded the Nobel Peace Prize. Unis's journey, which began in a humble village,
and a $27 loan, has rippled across the globe. It's inspired countless other initiatives,
one of which I share an effortless on page 152 about how this model was evolved in the creation
of Kiva. But today, I want to invite you to evolve this model further into a micro-loan mindset
for your family, to think from now and forever onwards about the creation of a family bank.
As it's proven in the Gramian model, or in the Kiva model, or in the United's model,
micro-loans can still bring about tremendous empowerment and accountability for those that
are involved in those arrangements, but surely the same can be applied in small ways within
our own families. Parents can provide small amounts of money to their children as a micro-loan
to start a mini-business. The quintessentially American lemonade stand comes to mind,
or a lawn mowing service, or in my own personal experience in my first entrepreneurial venture
at age 10, when my father provided a loan for me to buy car washing supplies to start my business.
I repaid him the money, but there was something magic in all of that. I was helped to get going,
but I felt the strength and empowerment that comes from paying it back, and the momentum started
from there. Perhaps this could be extended into other forms of family entrepreneurship.
A family member has a promising business idea but lacks capital. The family can collectively
provide a micro-loan to help kickstart the venture. The agreement can be formalized with repayment
terms, teaching about financial accountability and the intricacies of lending, or you could have
a micro-loan for education. Families could set up a micro-loan system for educational purposes.
A family member wants to take a short course or buy books. The family can provide a loan which
the individual pays back over time, potentially even reinvesting into the funds for others'
use. I'm just trying to illustrate that creating intergenerational wealth isn't about having
massive wealth. It's about a tiny mindset that has disproportionate impact. As I wrote in
Effortless, reading a book is among the most high leverage activities on earth, and that is
absolutely true of a book that's coming out this week called The Family Bank, The Key to
Generational Wealth. It's by John H. Nebuchad. I was happy and honored to write the forward for it,
because I really do believe that The Family Bank and particularly the mindset behind it
is an absolute game changer. In the great tapestry of American wealth and legacy,
the contrasting threads of the Rockefellers and Vanderbilt's paint a vivid portrait of choice,
foresight and responsibility. Today, we've journeyed through their storied histories. We've looked
at the dazzling allure of newfound riches and the sobering realities of fleeting fortunes.
The key takeaway? It's not just about a massing wealth, but how you nurture it, what you pass on
as we've explored the creation of a family bank, and that key mindset behind it can spell the
difference between a legacy that endures or one that vanishes within generations, whether your
intent is vast, or simply that you would like to leave something behind for your loved ones.
Remember, it's the systems, the structures, and the wisdom you put in place that truly matter.
And as this new book from Nebuchad, The Family Bank suggests, you too have the power to shape
your financial destiny, and not just yours, but for many, many people beyond you.
Thank you for joining me for what I hope has been a riveting tale of two billionaires.
What is one idea that stood out to you today? What is one thing that you can do differently
immediately, and reading the family bank might be just that thing? And who is somebody that you
can share this episode with so that the conversation continues after this episode has come to an end?
Until next time, whether it's your time or your money, invest wisely, and think very, very long term.
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