We are all working on new ways to save money. That means a turn toward frugality.
Most people have little experience in this after 40-some years of seemingly limitless material progress. With that at an end for large parts of the population, a new generation is figuring out home cooking, paring back, reducing expenditures, dealing with a greater range of temperature variation in the home, and trying desperately to stay ahead.
There are already interesting coinages to describe the problem. There is a new world, HENRYS. This stands for “high earners, not rich yet.” It’s people making more than six figures but still struggling to pay the bills. They too face the unrelenting problem of how to cut back. We all need new habits.
There is frugality, which is a virtue, but there is also miserliness, which is a vice. What is it? It happens when a person of tremendous means is deeply reluctant to part with any of it for any reason. They are legendary in literature: Ebenezer Scrooge, Silas Marner, Fagin in “Oliver!” and the wheat farmer in Jesus’s parable who builds ever more silos to store it and then kicks the bucket.
She was the richest woman of the Gilded Age, and sometimes the richest person, having died with a solid $200 million then or $2.7 billion today. But she was a miser. Even from the time she was a little girl, she refused to spend money. She only wanted to make it, and she was astonishingly good at doing so. She inherited a small fortune and turned it into a mighty one through some of the smartest financial moves of the day.
In fact, if the term miser describes her, it should describe no one else, or else we need some other modifier like extreme miser or hyper-miser. This is a woman who refused to pay the doctor to treat her son’s leg wound, so it later had to be amputated. She was once offered a horse for $200 and was outraged at the price so she found out everything terrible she could on the seller and intimidated him down to $60.
She rode the ferry with the cars rather than pay the passenger fee. She lived in a dumpy house in Hoboken, New York. She ate only the food that she prepared, because she was too cheap to pay others and also because she feared being poisoned. She had two changes of clothes, both black and tattered. She chastened her maid for wasting soap and instructed her only to wash the underarms and hem. She would travel hundreds of miles to collect debt payments. She never tipped.
She was wicked smart. Emphasis on wicked: She was called “the witch of Wall Street.” On the smart part: Her key to success was rather simple, so simple, Flynn writes, that everyone preaches it but hardly anyone practices it. She bought things that no one wanted and sold them when everyone wanted them. Nothing was permanent in her mind. So she bought bonds when they were crashing and dumped them when they were in high demand. She did the same with real estate and railroads.
She seemed to have money to lend when no one else did, so a long line of borrowers was always at her door. She offered tough terms and charged a high price.
Before she invested a dime in anything, she would find out the names of all the principals of the company. She would dig up every bit of dirt she could find. She would then take all the accusations against each person and interview them at length, demanding detailed answers. She would do the same when people came to her to borrow money. She wouldn’t lend unless she felt she effectively owned the person in question.
As Flynn writes: “She was not a builder. She projected no great productive industry. Her business was to stand on the side and take her toll from those who were producers and builders and needed her money.”
She was crazed with paranoia. She was convinced that everyone was out to kill her. When a wood beam fell nearby, she was sure that it was intended for her. Same with every mishap: The entire world was organizing against her, in her mind. She hated everyone and everything, truly.
She loved the courtroom and sued many people. She insulted them in the courtroom with venomous comebacks and cruel words. She always lost.
Did she love? Briefly, apparently. Edward H. Green was a wealthy bachelor who, for some odd reason, took a liking to her. He wrote her a love letter, and, on the same day, wrote a check for a cheap suit of clothes from a tailor. He inadvertently switched the letters, so that Hetty got the letter intended for the tailor. She was so touched that he would spend so little on a suit that she agreed to marry him. Later, he lost all his money. She provided no help and let him languish in poverty the rest of his days.
She hated politicians. When they asked her railroad officials for free passes, she instructed the officials to hand them a card that read:
MONDAY: “Thou shalt not pass.” Numbers XX, 18; TUESDAY: “Suffer not a man to pass.” Judges III, 28; WEDNESDAY: “The wicked shall pass no more.” Naham I, 15; THURSDAY: “This generation shall not pass.” Mark XIII, 30; FRIDAY: “By a perpetual decree it shall not pass.” Jeremiah V, 22; SATURDAY: “None shall pass.” Isaiah XXIV, 10; SUNDAY: “So he paid the fare thereof and went.” Jonah I, 2.
Flynn writes: “Once in Manhattan, she goes to her office in the Chemical National Bank building. It is on the second floor of the bank—a large room with heaps of papers piled all around. There is no rug on the floor and an air of bareness and age about the whole place. In her office she changes her clothes. She puts off the raiment of the beggar and dons a less seedy costume. But it, too, is faded, worn, threadbare.
“Here at this desk she transacts her business. Here come bankers, brokers, corporation presidents, church pastors, men of all sorts who want money. Over that desk millions flow every week. The most imposing and stately gentlemen in America—men who live in mansions, sail the seas in yachts, preside over vast industrial enterprises, operate vast railroads—all owe money to the squalid old woman who lives in the Bloomfield flat and whose only yacht is the Hoboken ferry.”
She once took it upon herself to visit the properties of everyone who owed her money. There were corporations, homes, estates, churches, townships, country clubs, real estate empires, and far more, to the point that it was impossible to name them all. The trip took her two years to see them all. The only point of the visits, of course, was to examine whether they could or would pay their bills on time, and impress upon the borrowers the urgency of their obligations.
What became of her money? Part of the estate was divided up in a thousand directions, owing to a complication in a family will. Part went to various family members. Nothing much came of any of it. She left no buildings, no companies, no libraries or churches, no homes, no charitable workers. She died with only a few belongings, a reputation for being wicked, and a vast bank account, the richest woman in the world.
What can we say about this miser? I think we can say that she did much good, despite her wickedness and despite her horrid ways. She lent money at a profit. She bought when no one was buying and sold when everyone was. She was a bitter pill to work with, but evidently people were happy enough about what she had to offer that they were willing to put up with it. Both sides of the exchange ended up better off than they were before.
After all, for others to live well on leverage, they need people who save and defer consumption. The high-livers need the pennypinchers. The borrowers need lenders who care more about the future than the present. We are really talking here about an exchange of time: Those who have short horizons depend on those with long horizons. She met a need and enabled a standard of living for many that otherwise would not have been possible.
Hetty was famous for being unlike all her colleagues. Everyone was liberally minded by comparison. But their liberality needed her conservatism.
Hetty had the look of doom, but she hurt no one but herself and those dear to her. In the end, she was happy with who she was, else she would not have been that way. No amount of forcing her to be otherwise could have improved the situation. She embodied traits that we think of as being awful, but she worked in an industry that allowed these traits to be turned to good for all.
Flynn summarizes: “Hetty Green, unlike most misers, had an extraordinary genius for making money out of money, pursuing relentlessly the cruelest bargains, squeezing the highest interest rates through the devious methods of discounts and fees, watching the market with catlike patience for its high points and its low points—buying, as she said, low and selling high. But she took an almost fiendish delight in the power she acquired over men who called themselves rich and powerful and who strode about the world in grandeur while she lived in a dismal flat in Hoboken. But she was pursued by the haunting fear of murder and of losses all her life.”
Probably a bit of Hetty Green should rub off on all of us. If you end up cutting back on your dining budget, repairing your own clothes, downsizing your apartment or home, or holding on to your used car longer than what is fashionable, just remember that the richest woman in the world lived in a one-room apartment with a chair, table, and bed, had two changes of clothing, and not once in her life indulged in a single extravagance or anything close to one.
We can all be more frugal, vastly more, and never approach the miserliness of which history’s most wealthy woman was famous.
