Gold, brothels and real estate: How did the Trumps get so rich?

The name only came to the US two generations ago...

Gold, brothels and real estate: How did the Trumps get so rich?

Picture by Darko Vojinovic AP/Press Association Images

Donald Trump is possibly the brashest businessmen of his generation, and his critics are fast to highlight the fact that he was born into money - but where did the Trump family fortune come from?

The Trumps, or Drumpfs, as they were originally called (although the exact timing of this change is a source of controversy) only arrived across the Atlantic in 1885 when Donald's grandfather fled Germany.

Friedrich Trump was a barber by trade, and facing both limited career opportunities in rural Bavaria as well as getting close to the age when he would have been required to do military service, he set sail for New York in his mid-teens.

He was registered as 'Trumpf' on his migration records, but soon dropped the 'f' and started working as a barber in Manhattan's Lower East Side.

After a few years cutting hair, he moved-on to Seattle where he established saloons, restaurants and guest houses (which doubled as brothels) to offer services to miners chasing gold.

His enterprising nature is summed up in one episode when a new rail route left his establishment isolated and starved of customers, so he stuck it on a barge to relocate it.

His ventures worked, and he started to build up the 'nest egg' which would provide the foundation of the Trump empire.

The most successful branch was in British Columbia. Its newspaper advertisements (such as the above, which is preserved in the University of British Columbia's archives) said that it was open around the clock and that it housed "Elegantly furnished private boxes for ladies and parties," a euphemism for the services of prostitutes.

Having become a wealthy man, he tried to return to Germany in 1905 to settle down. However, Friedrich was refused permission to move back, as he had not carried out his mandatory military service and failed to register that he was leaving the country when he first set out for America in his teens.

Letters recovered last year show that he was banished from his homeland, and asked to not come back. Under the threat of deportation, he returned to New York.

He then went on to work as a hotel manager and bought some land in Queens to start building housing. However, he died in the 1918 flu outbreak at the age of 49.

Donald's Dad

Donald Trump's father - Fred Trump - was the real alchemist in the family.

He was involved in the family's business interests from an early age and grew into a leadership role following his father's death while he was in his early teens. By the age of 15, he was effectively running the business.

Donald Trump, right, pictured with his father, Fred Trump, far left, and boxing promoter Don King at a press conference in December 1987 in Atlantic City

The Trumps hoovered up land in Queens and Brooklyn and built affordable housing to service the borough's swelling populations. Fred also got in early on supermarkets where customers could pick up their own shopping, rather than relying on a clerk.

He benefited from taking state contracts and delivering the housing for significantly less than the grants he was given.

In The Art of the Deal, Donald recalls his father getting $10m grants, then building developments for $9m, leaving him with $1m profit.

These public schemes allowed him to build on profit margins that wold have been impossible to achieve in the private market.

However, that tactic eventually landed him in front of a US Senate committee, who investigated him for profiteering from public housing schemes.

Image: Donald Trump waves to staff members of the Trump Taj Mahal Casino Resort as they cheer him on before the start of the grand opening ceremonies in Atlantic City, N.J., 1990. Trump attended the gala with his mother, Mary, father, Fred, and sister, the U.S. District Court Judge Maryanne Trump Barry. (AP Photo/Charles Rex Arbogast)

While he was found to have not broken any laws, although the Trumps did receive a punishment from the Department of Justice later in his career when it was found that black applicants were being denied leases to live in their properties.

Fred stuck to his formula, kept building, and became one of the largest landlords in the city's outer boroughs.

Inventing 'The Donald'

Fred's second son, Donald, born in 1946, soon emerged as the heir to his father's business.

His older brother Fred 'Freddy' Junior was set to take a leading role, but things on that front didn't go to plan. During the course of his first major project -  a Coney Island development - Fred Senior had a major falling-out with his son, when he replaced windows installing expensive new ones. This ate into the Trumps' precious margins, convincing Fred that his elder son wasn't fit to take over.

"For Fred (Junior), it wasn’t something that was going to work," Donald later said about his brother's business exploits.

Freddy, who was eight years older than Donald, pursued a career as a pilot. He also developed a serious drinking problem, an addiction which contributed to his early death in his 40s.

"He was the life of the party [...] He was a fantastic guy, but he got stuck on alcohol," Donald later told People Magazine. In response to his struggle, Donald swore off alcohol and recreational drugs.

In 1971, still in his 20s, Fred put Donald in charge of his company - the same firm that his grandfather Frederick had started.

He went on to rename it The Trump Organisation, and took the family business out of the boroughs and into Manhattan.

His father gave him a $1m loan, which helped to secure other loans worth $100m and launch his career in New York. His loans were co-signed by Fred, who went on to run his businesses in Brooklyn and Queens while Donald took on 'the city'.

Donald soon began securing lucrative development contracts and leaving his mark on Manhattan. Initially, he was involved in constructing apartment blocks for low and middle-income families, following his father's blueprint.

Business Insider notes that the company was worth the equivalent of $800m in today's money by 1974.

As state policy changed, the Trumps moved out of the middle-income accommodation market. Donald oversaw major investments, including the purchase of the Commodore Hotel in New York in 1976, which was later renamed the Grand Hyatt.

He bought the building at a time when the city was struggling, and politicians agreed to give him a major tax-break on the deal. Donald Trump's risk paid off, and he sold his stake in 1996 for $142m.

The young developer stuck to this strategy, buying key properties including the iconic Plaza Hotel and the former Bank of Manhattan building.

The peak of the former Bank of Manhattan building, off of Wall St

The 58-storey Trump Tower, which has been Donald's primary residence until his move to the White House, was built in 1983.

Media man

Having entered the New York business fray at a young age, Donald made himself available to reporters and often appeared on TV, beginning to build his own personal brand and celebrity.

In 1987, his memoir-cum-business manual The Art of the Deal became a New York Times bestseller and raised his profile even further.

From that point on his business track record becomes more patchy. It has been argued that if he cashed out soon after he got control of the family business and put his money in a secure fund, he'd be worth more today than he currently is.

He went on to rack up debts of $900m by the early '90s as casino investments and other business gambles failed to pay off.

Conflicts of interest

Donald Trump has said he has signed documents to give "complete and total" control of his sprawling business interests to his adult sons. This came amid fears he could face conflicts of interest when he enters the White House.

Mr Trump told reporters: "My two sons, who are right there, Don and Eric, are going to be running the company [...] They are going to be running it in a very professional manner. They're not going to discuss it with me."

He said he had signed legal papers "turning over complete and total control to my sons". Under the agreement, his business assets will be held in a trust. Don Jr. and Eric currently hold executive vice-president roles and are the fourth generation of Trumps to run the business that Friedrich started.

If you are interested in learning more about the family, Channel 4 recently made a very interesting documentary called Meet the Trumps: From Immigrant to President, which is available to stream on its app and website.