Charles Slack has written a book Hetty about Hetty Green who, in the 1900's, was the world’s richest woman. At the time of her death in 1916 her personal fortune was estimated at $100 Million dollars or $1.6 Billion in today’s dollars. History has treated her as an eccentric miser, but this book gives the full picture of this amazing Massachusetts multi millionaire. Hetty’s fortune passed intact in equal shares to her daughter and son which was due to the fact that by never establishing a residence no state was successful in court in claiming estate taxes on her death. Neither of her children left heirs and on the death of her son, his share of the fortune passed to his widowed sister. When she died without leaving a child, her will distributed the fortune to a variety of charitable beneficiaries.
I was interested in reading in he book about the economic times she lived in, that in 1901 J.P. Morgan paid Andrew Carnegie nearly $500 Million dollars for Carnegie Steel. This was the highest price ever paid for a company which became U.S. Steel. Carnegie lived in a sixty four room house which was so large it required a special railroad spur running into his basement to deliver the two tons of coal needed for just one day of heating in the winter. The book doesn’t discuss it, but Charles Schwab was instrumental in helping Carneqie become as rich as he was. Schwab had started at Carnegie Steel as a worker in 1897 and at thirty five was the president of the company. It was Schwab who negotiated the sale. While Carnegie, a Scottish immigrant, had a similar rise to wealth beginning as a telegraph operator to a steel mill owner, he was very generous with his money and conservative in his investments. My home town of Anacortes, has a public library built with money donated by Carnegie. Schwab, on the other hand, lived a life of wanton spending and the stock market crash of 1929 ruined him. He wasn’t even able to sell his mansion and ended up living in a small apartment at his death.
On the other hand, Hetty easily survived the mid 1900 crash because of her conservative investments. In the early 1900's investors bought stock of corporations on margin and there was a flurry of purchase of watered down stock – stock whose stated value greatly exceeded the assets of the company. This frenzy continued until 1907 when the bubble burst. Just as in the 2009 economic downturn, this impacted not just individuals but banks and trust companies that had also been investing as speculators. When the huge Knickerbocker Trust Company shut it’s doors there was panic, but Hetty held her fortune.
A reading of the book leaves one with the impression that Hetty lived a very lonely, frugal and unhappy life in order to multiple and preserve her money. Her son spent it freely and used it for his enjoyment and his sister treated her share like her mother did living conservatively. What seems to me to be unfortunate is that on the death of the daughter the money was scattered without any real goal to a variety of differing beneficiaries because there were no children. I thought how much more good it would have done to have created a foundation like that of the generous Bill Gates and his wife. Holding it in one foundation would have resulted in much more benefit then a long laundry list of unconnected charities and beneficiaries.