While much has been written about the great investors of the modern era, people seldom pay attention to the founding fathers’ guiding investment principles.
In recent months, the widely acclaimed musical Hamilton has piqued public interest in the personal lives of these historical icons. Before they were signers and framers of the Constitution, their occupations ranged from lawyers and merchants to farmers and financiers. In honor of Independence Day, we thought we’d take a closer look at their diverse (and sometimes unwise) investment strategies.
How did our nation’s founders invest their personal wealth?
Possibly the most well-known of the founding fathers, George Washington was the Commander-in-Chief of the Continental army during the Revolutionary War, as well as our nation’s first President. What the father of our country is lesser known for is his farming empire. Throughout his time in the Continental Army and in office, Washington’s true passion always remained his Mount Vernon home. From the time he inherited the property, Washington was dedicated to the ultimate value-add project.
According to HistoryNet, “Washington strove to make Mount Vernon the most modern, diversified, efficient, and profitable plantation possible. To achieve this end he acquired more land, experimented with new crops, and tried new techniques in farming and animal husbandry. He also ran commercially successful fisheries, a gristmill, and even a distillery.” Washington’s plantation initially focused on harvesting tobacco, but due to increasing British tariffs, he diversified his agricultural endeavors to include crop rotation, animal husbandry, and alcohol distillery.
Our third president perhaps showed the greatest disparity in his personal and professional financial practices. While Thomas Jefferson openly opposed expanding the national debt, he struggled with personal debt throughout his life. Jefferson’s main financial pitfalls lay in his lack of budgeting and diversification. While in office, Jefferson was known for having a taste for the finer things in life—a habit not supported by his means.
During his eight years as president, his personal wine bill was over $10,000. Adjusted for inflation, that is the equivalent of $150,000 in today’s currency. He was also known for spending exorbitant sums on luxury furnishings for his Monticello mansion. In fact, the majority of Jefferson’s personal net worth was tied to his famous Monticello property. As both a creditor and debtor in Monticello, his finances took a turn south during The Panic of 1819 when real estate values bottomed out.
This real estate collapse was compounded by fluctuating commodity prices which also impaired the area’s crop sales—preventing his neighbors from repaying their debts to him. Perhaps if Jefferson had diversified his holdings beyond Monticello and budgeted more appropriately, he could have mitigated the losses from this economic downturn.
Much like his sworn nemesis, Thomas Jefferson, Alexander Hamilton’s life was ironically marred by personal debt. The creator of our modern financial system and the nation’s first Treasury Secretary, Hamilton prioritized the national debt over his own. Much like Jefferson, he sunk much of his net worth into his country estate, The Grange.
Though he was considered one of the leading attorneys in New York at the time, his lawyer’s salary could not cover his real estate expenses as well as support his seven children. It is reported that he considered leasing out a portion of The Grange to generate residual income. Ultimately, however, his spending outweighed his income and Alexander Hamilton died in debt. Perhaps he should have heeded his own words at the Continental Congress, “a national debt, if it not excessive, will be to us a national blessing.”
Ben Franklin is not only one of our nation’s founding fathers, but also one of the nation’s first great entrepreneurs. A true renaissance man, Franklin was a prominent statesman, businessman, scientist, inventor, and author. He was a revered investor in his time, and well-renowned for his pearls of financial wisdom.
Franklin is responsible for some of the most common adages on personal finance, all of which are detailed in his bestseller, The Way to Wealth. First published in 1757, a few enduring gems from his financial manifesto still apply today. Two of the most famous are “a penny saved is a penny earned” and “an investment in knowledge always pays the best interest.” It’s no surprise then, that the hundred-dollar founding father graces our currency’s largest denomination. Some estimate that his net worth today would be around $10 billion!
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