“I’ve come to get what’s mine,” Hetty Green told the bank president. Her entire $25 million fortune was on the line as the bank neared insolvency. And Hetty wasn’t about to take a loss.
Hetty prevailed, as she did in so many deals. When she died in 1916, she left a fortune worth between $2.7 and $5.4 billion in today’s dollars.
That made her the richest woman on earth.
Growing Up Hetty
Hetty’s father, the owner of a large whaling business, had poor vision. So from a young age, Hetty read him the financial news.
For hours on end, day after day, she read to him. During those years, Hetty absorbed an enormous amount of information about financial markets.
When her father died, he left her a large estate. But although she had been his right hand for years in business, he tied up all the money in a trust. He didn’t trust her to manage the estate because she was a woman.
But Hetty was determined to prove herself. She took the income from the trust and started investing.
A Fortune Forged Alone
Hetty’s first investment was in US government bonds.
They were trading at half their convertible value in gold. Markets were betting that after the Civil War, the US could never pay the massive war debt.
Hetty bet the other way. She knew the nation’s vast natural resources would help guarantee the bonds.
Hetty didn’t care what other investors thought. She used her own judgement. From the excellent Charles Slack biography, Hetty:
“Where other investors sought the safety of numbers, the soothing ring of consensus, Hetty felt most comfortable on her own, trusting her own judgment and instincts.”
In time, the US made good on its obligations and Hetty made a fortune.
The Queen of Wall Street
Each day, Hetty commuted from small apartments in Brooklyn or Hoboken, NJ to the Chemical Bank near Wall Street. She sat at a desk in the back, pouring over her holdings.
This way, she didn’t even have to pay for office space.
Hetty played a key role in financing the industrialization of the late 1800’s. She bankrolled railroads and construction projects across the country.
Hetty’s wealth grew so massive that newspapers ran headlines when she lowered her interest rates, just as they do with the Federal Reserve today. New York City even came to the little woman in the simple black dress several times, desperate for a bailout.
“More than once she bailed New York City out of a pinch. It is staggering to think of a major city coming to a single person, hat in hand, but such was the scope of Hetty’s fortune.”
In the Panic of 1907, J.P. Morgan held talks in his palatial library that helped resolve the crisis. The only woman present: Hetty Green.
What I Learned from Hetty
Hetty got an entire education reading the financial news to her father.
While I’m no Hetty, I can relate to that. I read The Wall Street Journal on the bus to school in 8th grade and have read it regularly since, for 26 years. It’s amazing how much you can pick up just reading financial news.
Unusually for a massive investor, Hetty had no partners or co-investors.
She invested her own money for herself alone. Because she compounded her capital quickly, she still became hugely rich.
I may do the same. Raising money and managing LP relationships takes a ton of time. That’s time I can’t spend with founders.
Let’s say I invest $1 million and raise $4 million to make a $5 million fund. With the 20% carry, the increase in my gains is just 80%. Less than double, for an enormous amount of time and effort.
Perhaps Hetty did the same calculation.
Wrap-Up
In some sense, the late 1800’s was a lot like today.
People were building the railroads and later, products moved on those railroads. Today, we’re building compute and applications to run on top of it.
Either way, it’s infrastructure layer, application layer.
The old money fortunes of today come from the Industrial Revolution. Today’s Intelligence Revolution will mint many new ones.
Now is a great time to read up on the last economic revolution. And of all the colorful characters of that age, there are few better than Hetty Green.
P.S. I highly recommend the Founder’s Podcast episode on Hetty, by David Senra. It’s a wonderful overview of her life. This podcast introduced me to Hetty and to the wonderful Slack book.
More on investing:
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