Slate Money: "The Salmon Legacy"

Original Air Date: August 1, 2020
Host: Felix Salmon (Axios)
Guests: Thomas Harding (author, Salmon family member), Emily Peck (HuffPost), Anna Szymanski (Breaking Views)

Episode Overview

This special episode of Slate Money departs from the usual business and finance headlines to delve deep into a unique story of family wealth, inheritance, and societal legacy. Host Felix Salmon welcomes his cousin, author Thomas Harding, to discuss the fascinating and highly unusual financial structure of their mutual family—the Salmons and Glucksteins—whose secretive system shaped their fortunes for over a century. Along with co-hosts Emily Peck and Anna Szymanski, the conversation explores the origins, evolution, and eventual dissolution of the Salmon family fund, the implications of inheritance, and the broader impact of generational wealth on society, with sharp historical, legal, and ethical insights.

Key Discussion Points & Insights

1. Origins and Structure of the Salmon Family Fund

• Background: The Salmon/Gluckstein families arrived in the UK in the 1840s as poor immigrants and built up a massive tobacco business before shifting into catering with the establishment of Jay Lyons & Co.

  • [02:26] Thomas Harding: “They were immigrants who arrived in Britain in the 1840s from Germany with nothing … by the 1870s, they made a decision to unify the family by sharing all the assets and all the revenue, all the income equally amongst the male members of the family.”

• Radical Financial Arrangement:

  • All male family members pooled 100% of their income and assets into a central fund, which then paid out equal shares based largely on age, with no relation to personal contribution or business success.
  • [03:33] Felix Salmon: “Every single penny you earned, you paid into the fund … and then the family fund would then pay you out basically according to how old you were.”

• Ownership and Lifestyle Consequences:

  • Houses, assets, and even vehicles were owned by the fund rather than individuals, creating both communal benefit and frustration.
  • [04:48] Felix: “The house that I lived in was not owned by my parents. It was owned by the fund.”

• Gender Exclusion:

  • Only men participated in the fund; women were given dowries on marriage, which were controlled by male relatives—a source of ongoing resentment.
  • [05:39] Thomas: “The women … especially my mother’s generation, there’s a lot of anger. There’s an extraordinary amount of anger. They did get some money when they got married … but key, it was managed by either the brother or their father.”

2. Sustaining and Dissolving the Fund

• Making It Work:

  • The fund persisted due to early unifying values, then the lucrative sale of the tobacco business to Imperial Tobacco, followed by substantial executive control and salaries at Jay Lyons.
  • [08:47] Felix: “…we controlled the company, and we not only controlled the company, but we had… all of the senior management positions were basically held by men who were members of the Salmon family.”

• Tension and Decline:

  • As the family grew and corporate fortunes shifted (notably after over-ambitious expansion and currency collapses in the ’70s), the system strained, especially as high earners saw fewer personal rewards.
  • [11:15] Felix: “Andrew and Paul [family members] basically said, no, it doesn’t make financial sense for us anymore. We would do better off outside the fund…”

• Emotional and Social Fallout:

  • Dissolution in the late 1980s–1990s caused significant emotional turmoil and required family consultations and therapy.
  • [12:22] Thomas: “When it finally did break up in the 1980s, 1990s, the emotional turmoil was extreme. They actually had to hire a management consultancy… to help them with psychological workshops…”

• Scale of Wealth:

  • At dissolution, roughly 40-50 family members each received about £3 million; widows and dependents were always cared for underfund rules.
  • [18:49] Thomas: "…about 3 million each is what they got. And there was about 40 or 50 who benefited, and then the most importantly, the widows.”

3. Unique and Secretive System

• Comparison to Other Models:

  • Comparable only to Israeli kibbutzim; the family fund system confounded even tax authorities.
  • [12:41] Thomas: “Even more interestingly, the tax authorities had never seen anything like it…”

• Secrecy due to Legal Gray Zones:

  • With uncertainty about tax legality, family members were instructed never to speak publicly about the fund.
  • [13:25] Felix: “…while we had good legal advice saying it was all legal and fine, no one wanted the tax authorities to start asking any questions…”

4. Wider Social and Ethical Reflections on Inheritance

• Personal Family Stories:

  • Emily Peck shares being disinherited at a small scale and reflects on the hurtful social aspects.
  • [20:41] Emily: "I was disinherited… I was shocked to learn after he died that I wasn’t in the will anymore…”

• Norms and Laws about Inheritance:

  • Under French law, disinheritance is illegal, prompting debate on whether inheritance should be a right.
  • [21:00] Felix: “Now, under French law, that’s illegal.”
  • Emily: “I feel that it should not be illegal to [disinherit]. …Do I think it’s good that wealth is passed down generationally? I think actually in the US especially it’s kind of harmful…”

• Intergenerational Wealth and Inequality:

  • The structure and cultural expectation of passing wealth create and exacerbate inequality, visible in racial wealth gaps and American policy history (redlining, New Deal exclusions).
  • [24:29] Felix: “…in the United States is this massive gap in wealth between Blacks and whites… and the reason for this is entirely because… blacks basically had no wealth at all… and then the dynamics of wealth getting passed down within families… has meant that there’s remained basically no wealth among the majority of black households.”

• The Inheritor’s Burden:

  • Large unearned inheritances can discourage self-actualization and create dysfunction among heirs.
  • [29:04] Emily: “It’s even unfair to the people getting the money, the inheritors, because I think they lose out on the opportunity to work and realize their full humanity.”

• Alternatives and Social Mobility:

  • Notable capitalists (Buffett, Gates) pledge to give away fortunes, but most wealth perpetuates in families. Social mobility is increasingly stunted as the context of birth weighs heavier than effort or upward striving.
  • [33:36] Emily: “You could even see that in… social mobility data… the context that you grow up in is so powerful…”

• Privilege Beyond Inheritance:

  • Felix reflects on the enduring privileges of growing up in wealth, even without an inheritance per se.
  • [33:27] Felix: “If I inherit nothing from my father, I have so many advantages in terms of wealth and privilege…”

5. Historical Coda and Power Dynamics

• From Immigrants to Power:
  • The Salmon family story is also one of immigrants using pooled resources to move from poverty to positions of prestige and influence—members of Parliament, chairs of nonprofits within a few generations.
  • [37:06] Thomas: “…by 1820. They’re now members of Parliament… chairmans of various nonprofits… and they couldn’t have done that without that privilege.”
• Money vs. Power:
  • Felix notes “it’s a lot easier to turn power into money than to turn money into power,” especially for immigrant families seeking respectability and influence.

Notable Quotes & Memorable Moments

• [03:33] Felix Salmon:
  “Every single penny you earned, you paid into the fund … and then the family fund would then pay you out basically according to how old you were.”

• [05:39] Thomas Harding:
  “The women…there’s a lot of anger. …They did get some money when they got married…but key, it was managed by either the brother or their father.”

• [12:22] Thomas Harding:
  “…the emotional turmoil was extreme. They actually had to hire a management consultancy… to help them with psychological workshops…”

• [13:25] Felix Salmon:
  “No one wanted the tax authorities to start asking any questions because who knows where that might end up.”

• [19:40] Anna Szymanski & Felix Salmon:
  “Like a little mini socialism, a communist experiment.”
  Felix: “Yeah, it’s communism with chauffeur-y.”

• [29:04] Emily Peck:
  “It’s even unfair to the people getting the money, the inheritors, because…I think they lose out on the opportunity to work and realize their full humanity.”

• [33:27] Felix Salmon:
  “If I inherit nothing from my father, I have so many advantages in terms of wealth and privilege…”

Timestamps for Key Segments

• [02:26]: Origins of the Salmon family fund and pooling of income
• [04:48]: Fund-owned housing and family structure
• [05:39]: Gender disparities and family resentment
• [08:47]: Shift to Lyons, management control, and financial mechanics
• [12:22]: Emotional impact and psychological fallout of dissolving the fund
• [13:25]: Secrecy and the fund’s legal gray area
• [18:49]: Cashout upon dissolution—who got what
• [19:40]: “Mini-socialism”—is the fund like kibbutz or communism?
• [20:41]: Emily Peck’s personal experience of disinheritance
• [24:29]: Inheritance, race, and structural inequality in the US
• [29:04]: The inheritor’s dilemma
• [33:27]: Privilege from growing up wealthy, aside from inheritance
• [37:06]: Money, privilege, and turning wealth into societal power

Tone & Style

The conversation is candid, personal, and sometimes humorous, balancing family anecdotes with sharp historical and economic analysis. The hosts’ tone is engaged, often playful (“communism with chauffeur-y”), but turns reflective when addressing questions of fairness, exclusion, and societal impact. The guests bring out both the peculiarities of their own family’s history and the universality of debates around wealth and opportunity.

Summary

"The Salmon Legacy" episode offers a compelling, intimate portrait of an unusual experiment in family communism among British-Jewish business dynasties—and uses this story as a lens to examine the broader consequences, injustices, and complexities surrounding intergenerational wealth, inheritance norms, and social mobility. With both critique and nostalgia, the hosts explore how family wealth shapes individuals and societies, and challenge listeners to reconsider both the mechanics and the morality of passing fortunes down the family tree.