How did Gatsby get so rich?

May 10, 2013 | Last updated on May 10, 2013
2 min read

With the film version of The Great Gatsby set to hit screens today, 1920s style shindigs are everywhere, celebrating the lavish lifestyle lived by the millionaire protagonist.

Although Gatsby comes from F. Scott Fitzgerald’s imagination, if he were a real man in the ‘20s, how did he become so great and how could he afford to throw such extravagant parties?

Apparently, he started off penniless and made his money selling illegal, over-the-counter liquor in his drug-store empire during the first two years of prohibition.

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Kevin Roose, for New York Magazine, calculates that with the low profit margin nature of the bootlegging business. If Gatsby had kept all his assets in cash he would have been worth only $1.25 million in 1922 — the year the book takes place.

With his net-worth in mind, Roose posits that Gatsby would have been living and spending entirely beyond his means. But he also assumes Gatsby would have kept his illegally obtained funds out of the stock market, which is highly unlikely.

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The 1920s were, however, America’s introduction to consumer credit, which inevitably turned the country’s attitude towards saving on its head, making it possible and common to spend radically and freely.

This carefree attitude is likely what Gatsby needed to make daring investment choices to create his wealth. During the novel, he is always receiving telephone calls from Chicago and Philadelphia, which are likely in reference to large business ventures that don’t require his physical presence. This is probably the closest he could have come to managing a hedge fund in the 1920s.

Even if Gatsby was somewhat cash-poor, he was still sitting on a large number of alternative investments, including a mansion, cars and boats. These luxury items may not have been just for show, but also part of a sensible diversification strategy.

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In the interest of not spoiling the story for those heading to the cinemas this weekend, the question of whether Gatsby’s spending was too elaborate will remain open.