(FORTUNE Magazine) – THE LESSON to be drawn from the people who make up FORTUNE's roster of billionaires this year is that the kid next door can still grow up to be the billionaire on the block. So George Washington never slept in your house? Your grandfather didn't summer with the Vanderbilts? Don't despair. Among the 129 individuals and nuclear families that make up this year's list, self-made men and women rival heirs to family fortunes, and first-and second-generation immigrants abound. The age of the moguls is never over. Every era offers opportunities for the creative, the driven, and the enterprising. Yesterday's railroad barons are today's media magnates. Look at cable-TV billionaire Jack Kent Cooke. ''I don't go for that Horatio Alger crap,'' he says, but he started out selling encyclopedias door to door. The richest person on the 1988 list is still the Sultan of Brunei. The price of oil has zigged and zagged by about $4 a barrel since last year, but he's still worth $25 billion. If you can't have oil, candy is dandy. This year FORTUNE penetrated the secrecy that shrouds Mars Inc., the maker of Milky Ways, to refine our estimate of the worth of the Mars family, which owns the company outright. The latest figure: an astounding $12.5 billion. FORTUNE calculates that Mars has annual sales of at least $7 billion. Our estimate of the company's value is based on what comparable food concerns have recently sold for. Thus, Forrest Mars and his three children, Forrest Jr., John, and Jacqueline, overtake the Newhouse publishing magnates as the richest Americans. The wealth of the billionaires on FORTUNE's roster spans 25 countries on six continents. If the monarchs and moguls pooled their $320.6 billion in assets, they could finance the U.S. military for a year, even if hammers really did cost $435 apiece, and still have enough left over to wipe out the collective debt of Colombia and Ecuador. A team of 48 reporters and foreign correspondents, and hundreds of analysts and consultants, combed the world in search of billion-dollar portfolios. This year's list is the most comprehensive and reliable ever compiled. The 1988 money manifest reaches from youngster William Gates, the 32-year-old who co- founded and owns 40% of the software producer Microsoft, to oldster Tamesaburo Furukawa, who at 98 still manages Nippon Herald Films (see The Asians, page 66). It includes two queens -- Britain's sovereign is the world's richest woman, with a personal fortune of $8.7 billion -- six heads of state, industrialists, retailers, real estate speculators, and an artiste or two living off the family trust. They run hundreds of companies employing millions of workers throughout the world. Megabucks in hand, they wield extraordinary influence over educational, cultural, and political institutions. Some famous names didn't make the list. It is limited to individuals and nuclear families whose net worth -- what they own minus any debt they owe -- equals $1 billion or more. The Peugeot car clan, for example, may reach the billion-dollar rank collectively, but when you divide up the assets among dozens of cousins, a billion dissolves into mere millions. Deposed dictators, Mafia kingpins, and cocaine smugglers failed to make the cut. They've got money all right, but their riches are hard to prove and impossible to trace. THE BILLIONAIRES' CLUB is more exclusive than many realize. The Croesus of Brazilian television, Roberto Marinho, is commonly dubbed a billionaire in the press. In reality he is worth only $800 million. Olivetti Chairman Carlo De Benedetti certainly acted as if he had billions when he tried to buy the shares of Societe Generale de Belgique earlier this year. But De Benedetti is actually worth less than a billion. Financier Carl Lindner owns American Financial Corp. with his family. But his $8 billion in assets are offset by liabilities of $7.4 billion. Among the 41 new entries on this year's list is Donald Trump. That bashful real estate tycoon claims he is worth $3 billion or so. But subtract for his debt, and the figure is more like $1.3 billion. That's still plenty to pay the tab for a 282-foot floating palace known as the Trump Princess, the Plaza hotel, and the Taj Mahal casino in Atlantic City -- purchases that make him the most acquisitive billionaire. Fifteen European families joined the club this year. With the help of Bilanz, a Swiss business magazine, we added several cagey richniks of Switzerland and Liechtenstein -- countries whose laws help citizens conceal their wealth. Two Turkish manufacturers, Vehbi Koc and Sakip Sabanci, were relatively unknown until correspondent Mehmet Ali Kislali checked out everything from what they owe to what they eat for breakfast. Koc takes a glass of water with honey, while Sabanci quaffs sugarless tea and nibbles plain white cheese. Japan's rising yen and real estate values contributed eight new Japanese to the list. Meet Isao Nakauchi, an avowed capitalist who has a curious penchant for spouting Maoist sayings -- his favorite: ''What is the bastion of iron? It is the masses.'' A billion-dollar nest egg should be enough to insulate any nabob from the nastier side effects of stock market crashes or currency fluctuations. But of the 10 families who fell off last year's list, several owe their ex status to a couple of very scary days last fall on the New York Stock Exchange. Among them: Don Fisher, whose stock in the Gap was stone-washed by the October gyrations, and Milton Petrie, whose Petrie Stores are worth little more than half their value a year ago. Even Arabs lamented Black Monday. The ruling Al Sabahs of Kuwait are about $1 billion poorer this year because of their foreign investments. But they still have $4 billion. COMMUNICATIONS CZARS barely felt the crash. They bought in early and rode the trend. ''Prices for media properties have increased five- to 15-fold in the last 15 to 20 years,'' says Haskel Benishay, professor of managerial economics at Northwestern's J.L. Kellogg Graduate School of Management. ''TV stations that used to sell for $500,000 are going for $3 million to $7 million. We have a new cadre of media billionaires.'' America's Newhouse brothers, Canada's Kenneth Thomson, Britain's Robert Maxwell, Australia's Kerry Packer, and West Germany's Reinhard Mohn are among those who are gobbling up properties and getting fat off the profits. Rupert Murdoch recently agreed to buy Triangle Publications, publisher of TV Guide, from fellow billionaire Walter Annenberg for a staggering $3 billion. Examining how the cadre spends -- or doesn't spend -- its fortune can be a lesson in living. Consider Leona Helmsley and Gloria Thurn und Taxis, two flamboyant wives of older, indulgent billionaires. Leona calls herself the queen (for more on the Helmsleys, see The Americans, page 49), but Gloria's title of princess is real. A beautiful but impoverished noblewoman, she married Europe's largest landowner (net worth: $2.7 billion) eight years ago. Now she dances her nights away in outlandish costumes at lavish balls among guests who include dress designers, hairdressers, and press agents. Frugality is the hallmark of Li Ka-shing, owner of a Hong Kong trading conglomerate. ''My living standard in 1962 was higher than it is today,'' says Li, who is worth $2.5 billion but who dwells in the same modest two-story house he acquired 20 years ago. ''A simple life is more enjoyable.'' Wal- Mart's Sam Walton agrees. This unpretentious retailer lost nearly $2 billion the week after the crash. Not to worry. He drives a Ford pickup and spends $6 on a haircut, so the $7.4 billion he has left goes a long way. Flashy or frugal, the superrich are giving it away. David Packard (net worth: $2.2 billion), co-founder of Hewlett-Packard, led the pack when he announced plans to contribute $2 billion to a foundation dedicated to causes supported by his late wife. Canada's Reichmann family (net worth: $6.3 billion) tithe to charity each year. BUT ARE THE RICH happy? you ask as you read about bitter divorces and brutal kidnappings. Do extravagant parties and ancient castles compensate for highly publicized family feuds? ''Absolutely!'' says Robin Leach, host of Lifestyles of the Rich and Famous, the TV show that glorifies their lives. ''The rich have an ease of living. They never schlep their clothes to the cleaners in the rain. They send James. We yearn to hear that they are miserable because they've got it and we don't. But most of the billionaires I've met are having a grand old time.'' Self-made billionaires have more than money: They own the magic that produced it.

BOX: CONTENTS

Stories about the most interesting billionaires precede the rankings.

The Americans 49 The Europeans 62 The Asians 66 The Others 70 Rankings 71 Yesteryear's Rich 105