There may be only about six stories in personal finance, but those stories seem to endure the passing of time. Good storytellers can breathe new life into the same old financial advice, and great communicators can introduce world-weary concepts to those who might need to hear them for the first time.
While looking for information about a town in upstate New York, I came across a gazetteer written in 1871 for Saratoga County. It’s a booklet, digitized for aiding online research, containing a business directory of several towns within that county. Like a telephone directory, the book contains names and addresses of residents, although unlike a telephone directory, there are no phone numbers.
The book is more than just a directory, though. The gazetteer offers historical accounts of the towns covered as well as general information a household in 1871 might need, such as a guide to the decimal system of measures, “recipes” for home remedies for common ailments, and of course, advertisements. (See one such advertisement, for pills “to prevent female irregularities,” reproduced here.)
What I found particularly interesting was a section titled, “How to Succeed in Business.” Several pages in the book are dedicated to help readers make good decisions with their labors, their interpersonal relationships, and the management of their money. There’s nothing particularly special about this. Financial self-help guides and business advice have been published for longer than this country has been in existence, but I enjoyed this discovery and thought it would be worth sharing.
Here are some excerpts, first on being an upright citizen in business.
What will my readers give to know how to get rich? Now, I will not vouch that following rules will enable every person who may read them to acquire wealth; but this I will answer for, that if ever a man does grow rich by honest means, and retains his wealth for any length of time, he must practice upon the principles laid down in the following essay. The remarks are not original with me, but I strongly commend them to the attention of every young man, at least as affording the true secret of success in attaining wealth…
Foremost in the list of requisites are honesty and strict integrity in every transaction of life. Let a man have the reputation of being fair and upright in his dealings, and he will possess the confidence of all who know him. Without these qualities every other merit will prove unavailing… In a word, it is almost impossible for a dishonest man to acquire wealth by a regular process of business, because he is shunned as a depredator upon society…
While most of the advice and observations in the few pages are still true seven score and two years hence, I am struck at how this last statement would probably be perceived as naive today. Today’s corporate environment seems to encourage taking advantage of customers to the extent allowable by law, and in many cases, crossing that line and avoiding meaningful punishment. Corporate executive take home astronomical salaries in comparison to those of their workers, and when those same companies have been found to contribute to the systemic failure of their industries or the economy at large, very few are held accountable. In short, today, dishonesty is acceptable in business as long as your lobbyists are successful.
The next excerpt relates to blind trust.
Next, let us consider the advantages of a cautious circumspection in our intercourse with the world. Slowness of belief and a proper distrust are essential to success. The credulous and confiding are ever the dupes of knaves and impostors. Ask those who have lost their property how it happened, and you will find in most cases that it has been owing to misplaced confidence. One has lost by endorsing, another by crediting, another by false representations; all of which a little more distrust would have prevented. In the affairs of this world men are not saved by faith, but by the want of it…
Before trusting a man, before putting it in his power to cause you a loss, possess yourself of every available information relative to him. Learn his history, his habits, inclinations and propensities; his reputation for honor, industry, frugality and punctuality; his prospects, resources, supports, advantages and disadvantages; his intentions and motives of action; who are his friends and enemies, and what are his good or bad qualities. You may learn a man’s good qualities and advantages from his friends — his bad qualities and disadvantages from his enemies. Make due allowance for exaggeration in both…
This was a lesson that took me some time to learn. I’ve always considered my trust in others a virtue; I suppose it is, except in business. Had I taken this advice to heart, I’d probably be in a better position today.
The author of this passage in the gazetteer also shares his opinions about a man’s relationship with money.
The art of money-saving is an important part of the art of money-getting. Without frugality no one can become rich; with it, few would be poor. Those who consume as fast as they produce, are on the road to ruin. As most of the poverty we meet with grows out of idleness and extravagance, so most large fortunes have been the result of habitual industry and frugality. The practice of economy is as necessary in the expenditure of time as of money. They say “if we take care of the pence the pounds will take care of themselves.” So, if we take care of the minutes, the days will take care of themselves.
The acquisition of wealth demands as much self-denial, and as many sacrifices of present gratification, as the practice of virtue itself. Vice and poverty proceed, in some degree, from the same sources, namely — the disposition to sacrifice the future to the present; the inability to forego a small present pleasure for great future advantages. Men fail of fortune in this world, as they fail of happiness in the world to come, simply because they are unwilling to deny themselves momentary enjoyments for the sake of permanent future happiness…
Every large city is full of persons, who, in order to support the appearance of wealth, constantly live beyond their income, and make up the deficiency by contracting debts which are never paid. Others, there are, the mere drones of society, who pass their days in idleness, and subsist by pirating on the hives of the industrious. Many who run a short-lived career of splendid beggary, could be persuaded to adopt a system of rigid economy for a few years, might pass the remainder of their days in affluence. But no! They must keep up appearances, they must live like other folks…
Frugality didn’t just form as a result of the recent recession, but it sure seems that way sometimes. But for everyone who adopts a frugal approach to their life, there are many others who prefer to live in such a way they appear to be wealthy. From this passage, I would assume 1871 saw a prevalence of the “keeping up with the Joneses” attitude just like today. Although the development and promotion of credit cards accelerated consumer debt during the twentieth century, it seems like citizens of this country in the nineteenth century had to contend with debt as well.
Finally, some advice about investing:
Stick to the business in which you are regularly employed. Let speculators make thousands in a year or a day; mind your own regular trade, never turning from it to the right or to the left. If you are a merchant, a professional man, or a mechanic, never by lots or stocks, unless you have surplus money which you wish to invest. Your own business you understand as well as other men; but other people’s business you do not understand. Let your business be some one which is useful to the community. All such occupations possess the elements of profit in themselves.
These two points from the above are important:
- Don’t invest in businesses you don’t understand. Stock pickers often look at stocks not as businesses but as collectibles to trade. I’ve purchased shares of companies without really knowing much about the companies’ management. I felt that cloud computing and distributed hosting would grow, so I purchased shares of a company that did that. I thought that Microsoft had a pervasive business, so I purchased stocks in that company. I predicted Toyota had room for growth when the company hit some snags, so I bought when the price dipped. But I only invested as much as I’d be willing to lose in return for the potential of gains.
- Some work has inherent value. If you are involved with a business that produces something for the benefit of the community or society at large, you are adding something positive to the world. In return, your compensation may not be spectacular, but if you can make a living and save for the future, you’ll likely feel better about your life than if you’re involved in an occupation that takes something away from the world.
Read the entire “How to Succeed in Business” passage from the Gazetteer and business directory of Saratoga County, N.Y. and Queensbury, Warren County, for 1871, as well as a section on “Cash and Credit,” compiled and published by Hamilton Child.