Entrepreneurial Dynasties

The Triumphal March of Entrepreneurship

The evolution of high dynasticity, as described in Chaps. 2 and 3, took place within the trinity made up of the nascent modern state, heredity and the imperative of status equivalence. It was this favourable setting and framework that consolidated the monarch’s hereditary standing at the head of expanding statecraft between 1500 and 1800 and that established the heyday of royal and noble dynasties. In the nineteenth century, just as this heyday was beginning to wane, capitalist entrepreneurship reached unprecedented proportions, leading to the evolution of a new status hierarchy: the hierarchy of entrepreneurs. At the top of this hierarchy, business magnates rose to positions of prominence and power that entrepreneurs had never before experienced. This process of transformation was to become known as the Industrial Revolution. Heredity was not an inherent and integral part of the process, but the old axiom was easily transferred to new enterprises: farms, vineyards, craftsman workshops, moneylending shops, mills and other manufacturing works had long been handed down in the family in successive generations. Heredity was the central element carried over from the past, not only at the pinnacle of © The Author(s) 2017

R. Jallinoja, Families, Status and Dynasties,

DOI 10.1057/978-1-137-58073-3_4

power but in a plethora of industries. This, interestingly, happened at the same time as heredity was beginning to fade in state governance.

Discussing the prolonged emergence of the ‘commercial revolution’, Howell (2010, 290) observes that prosperous commercial people were not numerically dominant in Europe between 1300 and 1600. Nor were they the most powerful, either in 1600 or even in 1700, except in Italian cities and a few other places. Collins (2009, 240-1; see also Duplessis 2007, 204) maintains that the development of capitalism depended crucially on a sharp increase in manufactured production, according to him between 1700 and 1750, and an increase in the size of enterprises, first in France and the Netherlands, then in England, which then took the lead in industrialization, commerce and banking. This happened between 1780 and 1840, starting with the cotton industry, but the development of production in mechanized factories had to wait until the second half of the nineteenth century (Hobsbawm 1990, 56-95). In England, success lifted industrialists to the ranks of knighthood or peerage. The same was happening elsewhere in Europe, including Finland, where 12 per cent of all men ennobled in the nineteenth century were industrialists. Ennobling was thus continuously a performance of high status, showing how easily the old and new regimes could intermingle with each other. The United States was different in this respect: when it ceased to be a precapitalist nation sometime in the 1840s or 1850s, new industries were set up without such connections with the old regime. Given this liberty, the United States developed rapidly into a first-class industrial nation after the Civil War in the 1860s (Josephson 1962, 32).

The organization of entrepreneurs into a distinct status hierarchy was and is quite simple: the firm’s ranking and hence the entrepreneurs’ ranking is determined by the size of the firm. There was no ‘ennobling’ or any other set procedure for gaining access to entrepreneurship or for marking elevation to higher ranks. Neither were there official ranking rolls of the kind that in the late nineteenth century meticulously ordered civil servants into different ranks. Today, however, lists of the world’s highest- revenue companies and the richest billionaires are published annually by magazines like Forbes and Fortune to make visible this ranking order, company by company, billionaire by billionaire. These lists are circulated in newspapers and magazines so that national audiences can see how their companies and billionaires are doing. In the end, the ranking is purely a matter of money, which provides quite a simple and straightforward basis for the manifestation of hierarchy.

Due to my scholarly interest in dynasticity, the focus of my analysis here is on family firms that have been in the family’s possession for at least three successive generations—a common criterion for a dynasty (Landes 2007, xiv). I will explore, first, entrepreneurial dynasties that wielded considerable power but that remained local in scope. The case I have selected for more in-depth study is from Finland, representing the shipbuilding and shipping trade, a common business in coastal areas at the time when trade was mainly carried out via sea. But more generally, this case study is about family firms whose heyday was based on any commercially advantageous technology and that began to wane if they failed to take full advantage of a more advanced technology developing elsewhere. This was a turning point, indeed a death blow for many old family firms, paving the way for new firms to grow to prosperity, those whose owners had a good eye for new technologies. The remaining sections focus on the very pinnacle of entrepreneurs’ status hierarchy, a sample of ten magnate dynasties: the Warburg, Rothschild and Krupp families from Germany, the Morgan, Rockefeller, Ford and Vanderbilt dynasties from the United States, and the Agnelli from Italy, the Wallenbergs from Sweden and the Herlins from Finland. They are comparable to aristocratic councillor dynasties, which held the highest offices in successive generations. This sample of entrepreneurial dynasties was partly drawn at random, but in the end my choices fell upon the most famous of them. However, I wanted to add some less famous dynasties from Sweden and Finland, the Wallenbergs and the Herlins, the leading entrepreneurial dynasties in their countries.