#103 Hetty Green The Richest Woman in America

Summary Notes


Hetty Green, known as the "Witch of Wall Street," defied the stereotypes of the Gilded Age, amassing a fortune through shrewd investments in railroads, real estate, and government bonds, while living frugally and independently. Author Janet Wallach's biography of Green reveals a woman who, despite being cast aside as a child, became a financial titan by adhering to principles of common sense, hard work, and a contrarian investment strategy—buying low when others sold in fear and selling high when others bought in greed. Hetty's wealth, equivalent to over $2 billion today, was built on a foundation of meticulous research, a keen understanding of market cycles, and an unwavering commitment to her own judgment, making her a role model for investors like Claude Shannon, who studied her methods. Green's aphorisms and life lessons, such as watching pennies and the importance of self-reliance, underscored her belief in the power of financial prudence and independence.

Summary Notes

Hetty Green's Wealth and Financial Genius

  • Hetty Green was known as the richest woman in America and a financial genius.
  • Her wealth was disguised by her simple appearance, as she dressed in a way that concealed her incredible wealth.
  • She was a master in various sectors, including railroads, real estate, and mining.
  • Hetty Green was known for her business acumen and refusal to engage in unethical practices common among other millionaires of her time.

"A passerby might say she looked as poor as a church mouse, but her clothes were merely a costume to conceal her incredible wealth. Hetty Green was the richest woman in America. She was the smartest woman on Wall Street, a financial genius, a railroad magnet, a real estate mogul, a gilded era renegade."

This quote introduces Hetty Green's wealth and her intentional modest appearance, setting the stage for her character as a wealthy yet unassuming financial genius.

Hetty Green's Business Ethics

  • Hetty Green's success was attributed to common sense and hard work rather than unethical practices.
  • She did not exploit workers, engage in land theft, manipulate stockholders, or bribe officials.
  • Her investment strategy was independent and cautious, avoiding speculation with others' money.

"She did not employ workers to slave wages, did not steal land from the public or outsmart stockholders or pay off government officials. She did not scheme with Wall Street or speculate with other people's money."

This quote emphasizes Hetty Green's ethical approach to business, contrasting her methods with the less scrupulous tactics of her contemporaries.

Hetty Green's Investment Philosophy

  • Hetty Green's formula for success was based on self-reliance and not risking others' fortunes.
  • Her investment portfolio was diverse, including real estate, mines, luxury goods, railroads, and government bonds.
  • She believed in buying undervalued assets and selling them when demand increased.

"Her holdings ranged from mortgages in real estate, New York, to dozens of buildings in downtown Chicago. Gold, copper, and iron mines out west, diamonds and pearls, railroads and government bonds."

This quote details the extent of Hetty Green's investments, highlighting her diversified approach to wealth accumulation.

Hetty Green's Legacy and Influence

  • Hetty Green was a major financier and left a fortune equivalent to over $2 billion today.
  • Her story and investment strategies influenced notable individuals, such as Claude Shannon.
  • The book "The Richest Woman in America: Hetty Green in the Gilded Age" by Janet Wallach provides insights into her life and methods.

"By the time she died in 1916, she was worth $100 million, the equivalent of more than $2 billion today."

This quote provides a sense of Hetty Green's immense wealth at the time of her death, underscoring her significance as a financier.

Hetty Green's Aphorisms and Approach to Business

  • Hetty Green's aphorisms reveal her business mindset, emphasizing research, frugality, and careful decision-making.
  • She advised reflecting on business deals overnight and stressed the importance of women managing their own financial affairs.
  • Green's investment preferences included railroads, real estate, and government bonds, which she considered her circle of competence.

"Before deciding on an investment, seek out every kind of information about it."

This quote captures Hetty Green's thorough approach to investments, advocating for extensive research before committing funds.

Hetty Green's Early Life and Family Background

  • Hetty Green was raised in a Quaker family with generations of successful whalers.
  • Her early exposure to business and finance came from her grandfather and father.
  • Despite initially being unwanted due to her gender, Hetty's intelligence and interest in business earned her a role in her family's financial affairs.

"With his eyesight failing, he handed the evening newspapers to Hetty and asked her to read aloud in her child's voice. She called out the stock quotations and commerce reports."

This quote illustrates how Hetty Green's early life experiences, such as reading stock quotations for her grandfather, shaped her understanding of business.

Hetty Green's Business Lessons from Her Father

  • Hetty's father, Edward, was a significant influence, teaching her the value of frugality and investing.
  • By age 13, Hetty was managing the family's books and learning to trade commodities.
  • Edward instilled in Hetty the belief that property was a trust to be cared for and passed down through generations.

"She paid attention when he repeated again and again that property was a trust to be taken care of and enlarged for future generations."

This quote reflects the financial values Hetty's father imparted to her, which played a crucial role in shaping her investment philosophy.

Financial Crises During Hetty Green's Lifetime

  • Hetty Green lived through numerous financial crises, which served as learning experiences and opportunities for her.
  • The book covers the Panic of 1857, the long depression from 1873 to 1896, and other economic downturns up to 1907.
  • These crises underscore the cyclical nature of finance and the importance of prudence and resilience in investing.

"I find it fascinating to go back and read about times of great human struggles... financial crisis, and the book almost becomes repetitive, and you just realize it's the whole thing that we talk about all the time, that history doesn't repeat. Human nature does."

This quote highlights the recurring patterns in financial history and the human behaviors that drive them, which were key to Hetty Green's success during such times.

Historical Investment Strategies

  • Historical figures like Jay Gold and Hetty Robinson capitalized on market downturns to acquire stocks at low prices.
  • Hetty Robinson learned from predecessors to avoid repeating their mistakes.
  • The Panic of 1857 served as a learning opportunity for investors like Hetty.
  • Keeping cash on hand during market crises is a strategy used by successful investors from the 1800s to Warren Buffett.
  • Hetty Robinson and others took advantage of market panics to buy undervalued assets.

"Hetty Robinson would later do the same. So she was a master at studying what happened before her, so she wouldn't make the same mistakes."

This quote highlights Hetty Robinson's strategy of learning from past financial events to avoid making similar investment mistakes.

Financial Panics and Opportunistic Investing

  • The Panic of 1857 was triggered by the embezzlement at the Ohio Life Insurance and Trust Company.
  • Clever investors like Russell Sage and Hetty Robinson used financial panics to buy stocks at low prices.
  • Hetty Robinson befriended her role model Russell Sage due to his financial acumen.
  • The pattern of financial panics and opportunistic investing is a recurring theme in history.

"A few clever men like Russell Sage, a future role model for Hetty, kept substantial amounts of cash on hand and used it to buy stocks at rock bottom prices."

The quote explains how Russell Sage's strategy of maintaining liquidity during a crisis allowed him to purchase undervalued stocks, a tactic also adopted by Hetty Robinson.

Financial Resilience and Personal Finance

  • Maintaining a cash buffer is crucial for both personal finances and business operations.
  • Hetty Robinson's strategy involved always having cash available to capitalize on others' greed during market downturns.
  • This principle is not only applicable to investing but also to managing personal and business finances effectively.

"In future times, Hetty would always keep cash available and use it to buy when everyone else was selling."

The quote emphasizes the importance of having cash reserves to take advantage of investment opportunities when the market is in a state of panic.

Inheritance and Family Business Dynamics

  • Hetty Robinson's family had a tradition of passing wealth and business responsibilities to the eldest son.
  • Hetty was educated in the family business, gaining knowledge in finance and investment.
  • Despite her competence, Hetty's father left her with only the income from the inheritance, not control of the principal.

"Hetty appealed to her father for her share in the inheritance... But Edward insisted he knew how to invest the money, make it grow."

This quote details the family dynamic where Hetty's father retained control over the investment of the family wealth, despite Hetty's capability to manage it herself.

Hetty Robinson's Investment Philosophy

  • Hetty Robinson's investment strategy was based on contrarian investing, buying low and selling high.
  • She focused on simple investment vehicles like mortgages, government bonds, and railroads.
  • Hetty's success was partly due to her diligent research and access to information.

"I buy when things are low and nobody wants them. I keep them until they go up and people are crazy to get them."

Hetty Robinson's quote succinctly captures her investment philosophy of contrarian investing, which contributed to her financial success.

Hetty Robinson's Investment Tactics

  • Hetty capitalized on the depreciation of greenbacks during the Civil War, buying them when they were undervalued.
  • She understood the power of compound interest and reinvested her dividends to grow her wealth.
  • Hetty's approach was informed by historical precedents like Abigail Adams's successful investment in depreciated bonds.

"By the end of the year in London, her profits reached $1.25 million."

This quote demonstrates the effectiveness of Hetty Robinson's investment strategies, as she was able to amass significant profits through her financial acumen.

Hetty Robinson's Response to Financial Panics

  • Hetty Robinson took advantage of the Panic of 1873 by trading when stocks were at their lowest.
  • She believed in the cyclical nature of markets and aimed to enter and exit at optimal times.
  • Her approach was to be contrarian, buying when there was panic and selling when there was euphoria.

"I believe in getting in at the bottom and out at the top."

The quote reiterates Hetty Robinson's investment strategy of timing the market to maximize profits by buying low and selling high.

Investment Strategy

  • Hetty Green's investment strategy involved buying undervalued assets during market declines and holding them for the long term.
  • She demonstrated confidence in her judgment and the courage to act contrary to popular opinion.
  • Hetty focused on investments such as railroad stocks, mortgage bonds, and government securities.

"I like to buy railroad stock or mortgage bonds. When I see a good thing going cheap because nobody wants it, I buy a lot of it and tuck it away."

This quote illustrates Hetty's approach to investing, which is to purchase undervalued assets and hold them for future gains.

Market Crashes and Investment Resilience

  • Commodore Vanderbilt, despite being affected by the crash, survived due to his strategy of buying stocks in cash and not on margin.
  • The importance of not overextending oneself financially is highlighted, as well as the wisdom of patience in wealth accumulation.

"Even Commodore Vanderbilt had been badly hurt on the day of the crash... But Vanderbilt bought his stocks in cash and was able to wait out the market."

This quote emphasizes the advantage of having a cash position during market downturns, allowing investors like Vanderbilt to weather the storm.

Financial Prudence and Long-term Thinking

  • Hetty's investment paid off after the Panic of 1873 when the value of greenbacks increased following legislative changes.
  • She emphasized the importance of watching small expenses to ensure larger financial stability.

"Watch your pennies, and the dollars will take care of themselves."

Hetty's advice to her children reflects her belief in financial prudence and attention to detail in managing money.

Family Dynamics and Wealth Preservation

  • Hetty's husband, a speculator, lacked the skills to maintain wealth, leading to financial instability and strain on their marriage.
  • The distinction between acquiring wealth and preserving it is underscored, with Hetty demonstrating mastery in both areas.

"Getting rich requires one set of skills. Staying rich requires another set of skills."

This quote delineates the different competencies needed for wealth creation versus wealth retention, highlighting Hetty's proficiency in both.

Investment Preferences

  • Hetty favored investments in railroads due to their growth potential and favorable financial characteristics.
  • She was discreet about her investments, often using pseudonyms to maintain privacy and avoid influencing the market.

"Hetty Green put her money in the race. The railroad's dynamic potential, their promised return on capital, their unregulated operation, and their untaxed profits provided infinite possibilities for financiers."

This quote explains why Hetty was attracted to railroad investments, citing their potential for high returns and favorable operating conditions.

Personal Traits and Investment Philosophy

  • Hetty valued silence and discretion in her financial dealings, believing in making decisions based on personal conviction rather than external validation.
  • She switched banks after her husband used her assets as collateral without her consent, demonstrating her intolerance for financial recklessness.

"Hetty moved in silence, which I think is smart."

The note to self indicates the speaker's admiration for Hetty's ability to keep her investment strategies and decisions private.

Work Ethic and Financial Acumen

  • Hetty's work routine involved diligent research and analysis before making investment decisions.
  • She preferred working among common people and had a passion for the details of finance.

"She clipped her coupons for dividends, read her newspapers thoroughly scoured trade papers, perused periodicals, checked pertinent journals."

This quote describes Hetty's meticulous approach to gathering information before investing, showcasing her thorough work ethic.

Nomadic Lifestyle and Tax Strategy

  • Hetty's nomadic lifestyle allowed her to avoid establishing residency and thereby evade certain taxes.
  • Her focus was on her financial transactions, and she sought only refuge at night, indicating a single-minded dedication to her work.

"She moved like a nomad from boarding houses to flats to hotels... changing her name, evading the press, the public, and also the taxman."

This quote highlights Hetty's strategic approach to her living arrangements, which was aligned with her financial priorities.

Negotiation Skills and Business Acumen

  • Hetty was a shrewd negotiator, as demonstrated by her ability to secure a higher price for her railroad shares than initially offered.
  • Her ability to keep her investments secret was acknowledged as a strength in managing her business.

"In true Hetty style, she sold her stock for $127.50."

This quote illustrates Hetty's negotiation skills, where she managed to sell her shares at a significantly higher price than the market value.

Educating the Next Generation

  • Hetty believed in the importance of understanding a business from the ground up, as evidenced by her son's hands-on experience in the railroad industry.
  • She instilled the value of comprehensive knowledge of an industry in her son to prepare him for future success.

"Before he could captain his future along the track, the time had come for him to see his operations from the inside."

The quote signifies Hetty's belief in practical experience as a foundation for effective management and investment in a particular industry.

Personal Values and Social Attitudes

  • Hetty's disdain for the idle rich and her respect for authentic achievement indicate her values of hard work and financial responsibility.
  • Her personal values influenced her relationships and decisions, including her views on marriage and her children's upbringing.

"I have observed that many a tattered garment hides a package of bonds, and that gorgeous clothing does not always cover a millionaire."

This reflection from the new bank's president upon meeting Hetty reinforces the idea that appearances can be deceiving, and true wealth may be hidden behind a modest exterior.

Hetty's View on Socialites and Work Ethic

  • Hetty had disdain for those who did not earn their own money and lived off their family's wealth.
  • She believed in working hard and earning one's own way rather than indulging in the conspicuous consumption of the Gilded Age.
  • Hetty was focused on settling scores, purchasing buildings, and managing railroads.

"Hetty told her daughter. But if it wasn't for his father, the world wouldn't know a thing about him. He has never earned a dollar and doesn't know the value of money."

This quote illustrates Hetty's belief that personal achievement and understanding the value of money are important, and she disapproves of those who rely on their family's name or wealth.

Hetty's Relationship with Collis Huntington

  • Hetty and Collis Huntington were competitors in the business world.
  • They had a confrontational encounter where Hetty threatened Huntington to protect her son.

"Now you're fighting Hetty Green, the mother. You harm one hair on Ned's head, and I'll put a bullet through your heart."

The quote emphasizes Hetty's protective nature over her son and her willingness to confront threats directly, blending her roles as a businesswoman and a mother.

Advice Hetty Gave to Her Son, Ned

  • Hetty taught Ned to be meticulous and detail-oriented in business.
  • She emphasized the importance of experience and learning from one's own mistakes.
  • Hetty used an analogy of a whaling captain to teach Ned the necessity of taking command and being prepared to steer his own ship.

"I sent you to Texas to learn the railway business, Hetty said. I can't teach you by telegraph from New York."

Hetty's quote to her son about learning the railway business on his own underscores her belief in hands-on experience and independence in learning and decision-making.

Description of the Gilded Age and Financial Wisdom

  • The Gilded Age was characterized by economic booms and busts, with companies collapsing due to lack of capital.
  • Hetty reflected on the wisdom of David Packard, emphasizing that companies often fail from overindulgence rather than lack of resources.

"More companies die from indigestion than starvation."

This quote, reflecting on David Packard's wisdom, highlights the idea that excessive growth and lack of financial prudence can be more detrimental to businesses than a scarcity of resources.

Hetty's Investment Strategy

  • Hetty invested in land and allowed it to remain undeveloped to avoid taxes.
  • She waited for the surrounding property values to increase before capitalizing on her investments.

"Her strategy on land was to let the weeds grow while others planted flowers."

The quote describes Hetty's strategic patience in real estate investment, allowing her to benefit from market appreciation while minimizing expenses.

Hetty's Typical Workday

  • Hetty's workday involved meticulous management of her investments and assets.
  • She was disciplined, focused, and used her intelligence to make informed financial decisions.

"She used her intelligence to increase her wealth, her independence to live as she wished and her strength to battle anyone who stood in her way."

This quote encapsulates Hetty's approach to her business and personal life, using her intellect and independence to achieve success and overcome obstacles.

Hetty's Perspective on the Market and Business Strategy

  • Hetty maintained composure during market fluctuations by adhering to her rule of contrarian investing.
  • She focused on thorough research and knowledge to make informed investment decisions.

"Always buying when everyone wants to sell and selling when everyone wants to buy."

Hetty's quote reveals her contrarian investment philosophy, which involves going against market sentiment to capitalize on opportunities others might miss.

Hetty's Response to the Market Boom and Ensuing Bust

  • Hetty foresaw the market bust and converted her real estate assets to cash before the collapse.
  • She capitalized on the financial distress of others by purchasing assets at low prices.

"Every real estate deal which I could possibly close up was converted into cash."

The quote shows Hetty's foresight and strategic decision-making in anticipating market downturns and protecting her wealth by liquidating assets at the right time.

Hetty's List of Don'ts for Business

  • Hetty advised against unethical business practices, unfairness, and envy.
  • She emphasized the importance of fairness, church attendance, and charitable actions.

"Don't cheat in our business dealings, for sooner or later, your conscience will trouble you and you will worry yourself into your grave."

This piece of advice from Hetty underscores the long-term importance of integrity and conscience in business dealings.

Hetty's Reflections on Life and Business Priorities

  • Hetty believed in focusing on important goals and not spreading oneself too thin.
  • She valued her work and saw it as both her duty and amusement.

"I enjoy being in the thick of things. I like to have a part in the great movements of the world, and especially of this country."

Hetty's quote reflects her passion for being actively involved in significant business and societal movements, finding fulfillment in her work.

Hetty's Legacy and Death

  • Hetty was recognized as a unique figure in the financial world, a woman who succeeded in a male-dominated industry.
  • She lived a life consistent with her values and left a significant impact on the world of finance.

"A millionaire a hundred times over. She had made her mark besides Carnegie and Morgan, Vanderbilt and Rockefeller."

The quote summarizes Hetty's remarkable success and her standing among the most prominent figures in American financial history.

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