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America's new Gentry

by cmaukonen 7/17/2011 - 9:17 pm


A class of people has re-emerged in the last 40 years or so.  The Gentry.  These are not the wealthy or rich like the top 1% we hear about so often but compose the to 10% of earners.  The professionals and upper management. Medical specialists and lawyers and real estate developers  and stock brokers and the like. 

The original Landed Gentry of England and Europe based their wealth on the land they owned which was usually farmed. Quite often in grains like corn and sometimes wheat. And as long as the grain prices remained high, they were well off.   But the industrial revolution threatened their financial grip by enabling the imports of cheaper grains from America.  Having gained significant representation in Parliament, they were enabled to enact laws to protect their wealth by restricting imports. Such as the Corn Laws.


In 1813, a House of Commons Committee recommended excluding foreign-grown corn until domestically grown corn reached £4 (2010: £202.25) per quarter (1 quarter = 28 lb / 12.7 kg). The political economist Thomas Malthus believed this to be a fair price, and that it would be dangerous for Britain to rely on imported corn as lower prices would reduce labourers' wages, and manufacturers would lose out due to the fall in purchasing power of landlords and farmers.[3] However David Ricardo believed in free trade so Britain could use its capital and population to her comparative advantage.[3] With the advent of peace in 1814, corn prices dropped, and the Tory government of Lord Liverpool passed the 1815 Corn Law. This led to serious rioting in London.[4]

Eventually these laws were revoked and this was the end of the Landed Gentry class. But even worse was the fact that before hand these folks had assumed their financial status would remain unchanged or even increase so they spent like sailors. A large number of these Landed Gentries were in hock up to their eye balls so when the grain prices did fall, they lost everything. 

America's Gentry class or Landed Gentries unlike their English counterparts, consisted of the Southern Plantation owners.  Their wealth was depended on slave labor.   But like their counterparts these people were not always the best at managing their financial affairs.  Thomas Jefferson having expensive tastes, was constantly in debt.   The civil war and industrialization put an end to these Plantation Gentry but a new Gentry class was emerging at the same time.

One consisting of stock brokers and stock traders and media and film moguls and accountants and business executives whose wealth was came from and was dependent on the new technological advances of movies and radio and the automobile. A lot of these folks also were heavily invested in the surging stock market, hoping to become one of the wealthy aristocracy.   And like the Gentry classes of old, all believing that these good times would last for ever.  Easy money if you can get it.  But good times don't last and in 1929 it all came to an abrupt end.  The market crashed and a lot of these folks lost everything since a good deal of this stock was bought on margin.  That is by using loans to on the stock to pay for more stock. And if they escaped the original crash, they would loose what ever was left from the bank failures and the eventual bottoming out of the market in the 1930s.  

With the depression of the 1930 came heavy banking and market regulations. Then came WWII. The American Gentry class was diminished once again. And it would remain so for years to come.

With the market regulated as well as the banking sector there was little left to make an instant fortune in. Most of American Industry was owned by those that started these companies or family members and economic growth was constant but slow and even.  Having been stung by the market crash and depression, most small investors stayed away from the stock market.  This all began to change in the late 1970s when these American corporations began to be run by the new Gentry class that had emerged. The new investors began buying up stock and taking them over. Selling them and trading them and and making money in the process. 

This was soon replaced by technology investing and real estate investing.  This new investor Gentry consisted of upper management, medical professionals, lawyers and professional politicians.  All hoping to make an easy killing.  And the new manors became the gated communities with swimming pools and security systems. Their stately purebred horses replace by BMWs and Mercedes Benz and Porsche.  Then the regulations that kept the frenzy from getting out of hand were lifted and their were more good times to be had. Well for a while.

But as in the past all their greed, high living and financial ineptness caught with them and this time it brought the entire economy - not just here but through out Europe and the rest of the world - to a screeching halt. The real estate market dried up and prices started to take a dive. Lending stopped. Banks and financial institutions began to fail.

Ah but this time they had even more pull in government. Not just here but in England and Europe as well. For the leaders and representatives were also members of this same Gentry class. So instead of these gentry loosing their shirts over their excesses, as should have been the case, they were bailed out. And make no mistake this is why there were and still are bail outs.   The investor Gentry class was given a reprieve and a promise that they would not have to take it in shorts for their behavior. What's more a lot of these people really do believe they are entitled to make money in this fashion. Their Free Market is simply a way to get rich quick with out any risk or consequences.

And paying back debt ? Well that's for the peasants.

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Gently jettison this 'genial' Gentry. Badly battered by bumbling banking bailouts, pitiful peons protest pissily, provoking prescribed protocols proposed by professional politicians, punishing peasants.  "Generous" Gentry jeers at pitiful peons.   Peons' pain persists. 

by MrSmith1 7/17/2011 - 9:58 pm

hehe...good one.

by cmaukonen 7/17/2011 - 10:02 pm (re: MrSmith1)

The gentry have always been among us.  But now that they look like the guy on the right we're not so sure who to be throwing eggs at.  It was a lot easier when they looked the part.

I've always hated that term "free market".  It's not a "market" if it's free.

by Ramona 7/18/2011 - 10:32 am

If one thinks of the "gentry" as simple those who make up the upper or ruling class of society, then as Ramona points out, they have always been among us, and my guess will be so for some time to come.

Although I have not  been privy to it, it does seem that there is still some battles in certain places on the East Coast between the "Old Money" and the "New Money."  The former, which I believe would like to think of themselves as "people of gentle birth*, good breeding, or high social position" and see the latter as barbarians with big checking accounts.  The latter both resent the Old Money people and yet at the same time wish to have their affirmation. 

*as opposed to the rest of us who emerge into the world through our rough births

In the end, I assume when the push comes to the shove, the two sides come together in their efforts to keep the unwashed masses from gaining to much power.  And of course, it is human nature that if is able to benefit one's self through the exercise of one's economic, social, and political power, one typically do so.  Even if from the perspective of those in the upper classes it seems unfair.  The same goes with creating a unlevel playing field that tilts in one's favor.  Not only it is in their nature, I believe that most feel they are truly entitled to such favors and benefits.  They are after all the "job creators" and the ones that make society "go"  as well as ensuring through their good breeding the continuation of civilized society.

by Another Trope 7/18/2011 - 12:33 pm

Although I have not  been privy to it, it does seem that there is still some battles in certain places on the East Coast between the "Old Money" and the "New Money."

Well it's been like that ever since there has been "Old Money" vs "New Money".

I think one of the situations that really gets me is this.

For most people, “rich” starts at roughly double whatever their own household income is. It’s the hedonic treadmill: you race towards it, but you never achieve it — even when you’re living in a million-dollar home and pulling down something north of $400,000 a year. Or, I daresay, when you’re living in a $4 million home and making $1 million a year. It’s just that above a certain income, people (Ben Stein, of course, always excepted) tend to have the good sense not to whine in public about how hard their life is.

That anyone who makes 250k or more could be just one or two paychecks away from economic disaster is simply incredulous.  How can that be ?

But there are a large number who are. Maybe that is why we have "Old Money". The "Old Money" did not live like they had more money than they actually had.

by cmaukonen 7/18/2011 - 1:13 pm (re: Another Trope)

Of course, there is also the "Old money-less" that resents the recently impoverished "New money-less" ... The "Old Money-less" are thoroughly embarrassed by the constant whining of the "New Money-less,"  and wish they would get a grip and accept their sorry lot.  

For "Old Money-less" families, most of whom both landed at Jamestown AND came over on the Mayflower, it's been a very long time since they gave up wondering how they let the entire country slip through their fingers. The truth is, they didn't care to accumulate wealth. They were here for the freedom and the pursuit of happiness.  They lived mostly humble lives of sacrifice and hard work, not wishing to make a spectacle of themselves and now, these recent victims of bad investments, under-water mortgages and over-extended credit lines come along and give the money-less a bad name. 

by MrSmith1 7/18/2011 - 2:19 pm (re: cmaukonen)

Oh where is Dickday when you need him. HA.. definitely deserves the daily comment of the day award.

 

But you got that right. Us old money-less take umbrage to the new money-less messing up our neighborhood  and property values.

by cmaukonen 7/18/2011 - 4:45 pm (re: MrSmith1)

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