Money Lessons From the Founding Fathers

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By Kali Geldis

They may have written the most fundamental document for our nation, but some of the founding fathers weren't that great with basic personal finance.

We talked to the experts about what the founding fathers' financial flubs and successes can teach you about minding your money.

Thomas Jefferson

Jefferson's famous financial flaw was his large debt load.

Susan Kern, visiting associate professor at the College of William & Mary and the author of "The Jeffersons at Shadwell," says Thomas Jefferson was the victim of a lavish lifestyle and a declining business.

The third President of the United States was never one to pinch pennies, Kern says.

"His financial records are this amazing trove of details and a tool for historians that give us a very exact notation of things - where he was buying, what he was buying - but one wonders if he ever stopped to total the bottom line," she says.

Jefferson would reportedly spend $800 a day (in today's dollars) on groceries while he was in the White House, according to Ted Connolly, a bankruptcy lawyer for Looney & Grossman LLP who researched the founding fathers for a book he authored. A large portion of that was on wine. Not all of Jefferson's debts were of his own doing, though. After his father-in-law passed away in 1774, Jefferson inherited all of his debt - and 135 slaves - in the midst of a volatile Virginia tobacco industry, Kern says.


He was also a large proponent of taking responsibility for your debts. As a tobacco farmer, Jefferson was habitually using credit to make purchases since he would not find out how much money he had made on his exports until months after he shipped the goods. This was a common practice for farmers at the time, but one that caused major problems after the Revolutionary War.

"Following the American Revolution, there was still a lot of debt outstanding to creditors in Great Britain," Kern says. "There were a fair number of Americans who did not want to pay them and Jefferson was not one of them. He wanted to pay them. He was very personally responsible for what he owed."

Benjamin Franklin

Of all the founding fathers, Benjamin Franklin was the most well-known for his frugality. Franklin published "Poor Richard's Almanack" for almost two decades and during that time had some choice quotes about money that still apply today. Here are a few:

"If you'd know the value of money, go and borrow some"
"Beware of little expenses: a small leak will sink a great ship"
"Patience in market, is worth pounds in a year"

Connolly says Franklin's humble beginnings contributed to his frugality. He was one of 17 children and he had to start his own businesses and build up his own wealth. Franklin died a wealthy man and his businesses were successful.

"He would be the Warren Buffett of our time," Connolly says. "He'd be the one making the tough decisions."

James Monroe

The fifth President of the United States was, like Jefferson, not the most financially responsible architect of freedom.

Monroe has sizable debt as he reached the end of his life due to the decline of his plantation. Like many tobacco farmers (Jefferson included), Monroe's business suffered from the lower price tobacco brought.

Connolly says that Monroe even experienced a deed-in-lieu of foreclosure over a $25,000 debt, which in today's terms would be somewhere in the area of $750,000 to $1 million.

Monroe also had to ask the federal government for what Connolly calls "a bailout" of sorts. Having racked up some debts while traveling on behalf of the government, Monroe requested that Congress reimburse him for the expenses to the tune of $30,000. Congress eventually granted him the money.

George Washington

Washington was known as one of America's wealthiest presidents, and this is due in part to his land ownership.

Connolly says both George and his wife, Martha, had large holdings of land, but the key to his wealth was his good sense for money.

"His salary as President was 2% of the U.S. budget, which was pretty big at the time," he says. For reference, Connolly says 2% of last year's federal budget was $76 billion, though the budget is obviously much larger today.

Washington was also known as a diligent note-taker. Though he didn't take a salary from the Continental Army, he did make sure he was reimbursed for every expense he incurred, including mutton and a "chariot."

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Closing Bell: Stocks End Short Session Higher Ahead of July 4 Break

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Seth Wenig/AP
U.S. stocks ended Wednesday's shortened trading session higher as encouraging news about the nation's job market outweighed concerns about Egypt's turmoil, higher oil prices and Europe's debt crisis.

The Dow Jones industrial index (^DJI) added 56 points, more than recouping Tuesday losses, to end at 14,988, while the broader S&P 500 (^GPSC) gained a point to 1,615 and the tech-heavy Nasdaq (^IXIC) rose 10 to 3,443.

Payroll processing firm ADP (ADP) said that U.S. employers added 188,000 jobs in June, more than the 155,000 forecast by economists, according to data provider FactSet. The government's weekly jobless claims report provided evidence that layoffs remain low and job gains steady. The number of Americans seeking unemployment benefits fell 5,000 to 343,000, the Labor Department said.

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Another report showed that U.S. services firms grew at a slower pace in June from May but added more jobs.

Average U.S. rates on fixed mortgages eased this week after last week's surge, declines that could prompt homebuyers to act quickly before rates rise further. Mortgage-buyer Freddie Mac said the average on the 30-year loan dropped to 4.29%. That's down from 4.46% last week, the highest in two years and a full point more than a month ago.

Among stocks making moves Wednesday:
  • Alcoa (AA) fell 1.2%, to $7.71 after the Citigroup (C) analyst Brian Yu reduced his second-quarter and full-year profit predictions for the aluminum producer, citing low prices for the metal.
  • AutoNation (AN) gained 71 cents, or 1.6%, to $45.27 after Credit Suisse raised its rating on the stock to "outperform" from "neutral," citing a positive outlook for the company's parts and servicing business.
  • Yahoo (YHOO) rose 2.4% to $25.59 after the Internet company announced it was buying mobile-app maker Qwiki for a reported $50 million. The deal is Yahoo's third acquisition since May when it bought blogging service Tumblr for $1.1 billion in cash.
  • Boeing (BA) climbed more than 1% to $102.89 after news it delivered more planes than competitor Airbus in the first half of this year. The Chicago-based aerospace company has delivered 306 jetliners so far, including 17 787s. Boeing is playing catch-up with those deliveries because of the problems with the 787's battery earlier this year. It is aiming to deliver 60 of those planes this year.
  • Mead Johnson Nutrition (MJN) fell $6.05, or 8.1%, to $68.85 adding to Tuesday's 5.7 percent slump. The Chinese government is investigating the nutritional products maker for possibly violating anti-monopoly laws in its pricing of infant formula, Bloomberg News reported yesterday.
  • Shares of Honeywell International (HON) rose nearly 1% after federal regulators gave the company go-head to resume operations at a plant that helps make nuclear fuel, following a yearlong shutdown. The plant has been closed since May 2012 after the government ordered Honeywell to make the site able to withstand natural disasters.
What to watch Thursday:
  • U.S. stock and bond markets are closed for Independence Day; trading resumes Friday.
  • On Friday, all eyes will be on the latest jobs numbers, due out from the Labor Department at 8:30 a.m. ET. The consensus view is that the report will show U.S. employers added 161,000 jobs in June and the nation's unemployment rate fell a tenth of a percentage point to 7.5%.
Compiled from staff and wire reports.



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