Monday, October 12, 2009

Washington: Capitalist Entrepreneur

Last Thursday, we talked about how capitalism created a mindset that set the foundation for revolution. In today's Washington Post, historians are using Washington's account book to reveal his entrepreneurial side.

Article reprinted below for educational purposes. Bold comments are mine.

Washington: First in War, Peace -- and Accounting
Vast Cache of Financial Papers Is Rich in Details

By Joel Achenbach
Washington Post Staff Writer
Monday, October 12, 2009

One day in 1791, President George Washington received a bill for 60 pounds, 1 shilling and 7 pence from his physician friend James Craik, who regularly made the rounds at Mount Vernon. The invoice ran two pages:

"Anodyne Pills for Breachy . . . Laxative Pills for Ruth . . . syphilic Pills for Maria . . . oz 1 Antiphlogistie Anodyne Tincture . . . Bleeding Charlotte . . . oz 4 Powdered Rhubarb . . . Extracting one of your Negroes tooth . . . a Mercurial Purge for Cook Jack . . ."

This brief glimpse of life in the 18th century is contained in what historians say is a vast and underappreciated cache of financial documents from the life of the first president. Washington's diaries and letters, many composed with one eye on history, have been carefully transcribed, annotated and bound in stately volumes. But his financial records have been treated as scraps.

Documenting the lives of ordinary people -- merchants, tradesmen, servants and slaves -- these records are scattered at multiple institutions. In most cases, they have never been transcribed or published in accessible form.

That archival quandary lured 25 scholars, some of them "forensic accountants," to Mount Vernon this past weekend for a workshop to strategize about how to get the records online, with hyperlinks to the already published letters and diaries.

"It is going to be a treasure trove," said Ted Crackel, editor in chief of the Papers of George Washington, a project based at the University of Virginia. He said publishing the financial papers would probably cost about $1 million, and suggested that patrons are welcome to step forward. "We're hoping that there will be interest in the accounting world for picking up the check for this," he said.

Washington's first record dates to when he was 15 -- a list of books he had bought. In the years thereafter, Washington seems to have noted every bag of seed he ever bought. He documented his gambling losses.

There are chilling passages for the modern reader: In February 1773, for example, he recorded buying, at a public auction, "Ned," "a girl Murria," "Old Abner," and "a Wench Dinah" and her four children. Scholars hope that with hyperlinks in online records, some of the more than 300 African Americans who lived at Mount Vernon can be tracked as they reappear in other documents, letters and diaries.

As thoroughly researched as the life of Washington has been, his career as a warrior and statesman has largely overshadowed his entrepreneurial history. He was the CEO, in effect, of a farming, manufacturing and real estate operation that by the end of his life encompassed more than 50,000 acres of field and forest. Farms, fisheries, weavers, smithies, a grist mill, a distillery -- these were just part of the Washington empire.

Analysis of the account books will give historians new insight into that career as an entrepreneur - a new glimpse through the fog o' history!

Washington came of age as a backcountry surveyor of relatively modest means. His business sensibilities, innovative thinking and willingness to take chances are all part and parcel of his evolution as a revolutionary.

By the end of his life, Washington was one of the richest men in the nation he had helped create. But he knew the frustrations of doing business in a land that lacked banks, roads and industry, where there was little capital, and where he had to depend on transatlantic commerce using information moving at the speed of a sailing ship. Washington was so cash-strapped in 1789 that he had to borrow money from a neighbor in order to travel to his presidential inauguration.

He detailed business matters with double-entry bookkeeping in ledgers running to 100 pages or more.

"He was extraordinarily careful with his accounts. He checks them. Inevitably, they balance," Crackel said. "He is, I think, probably the nation's first commercial farmer, whose interest on the farm was to make money."

Washington's wealth came in large measure through marriage. In 1759, he married the extremely rich widow Martha Dandridge Custis. In a subsequent letter to a London purchasing agent, he showed his newfound taste for the good things in life: "the finest cloth of fashionable colour. . . . Fine soft calf skin for a pair of boots. . . . Order from the best house in Madeira . . . the best old wine . . ."

Over the years, some wags have contended that Washington padded his expense account as commander of the Continental Army during the Revolution. Washington drew no salary for 8 1/2 years of military service, but his bill to the government ran to more than $450,000.

To wade into Washington's accounts is to run the risk of trivia overload. The important information does not immediately distinguish itself from the ephemera. When he showed up in Philadelphia in May 1787 to preside over the Constitutional Convention, he records his meals (12 shillings for "dinner at the Head of Elk"), haircuts (7 shillings for "Barber"), purchases of finery (17 shillings for a silk handkerchief) and charity (8 shillings "for beggars").

Making meaning of all this is what historians get paid to do. In the past four decades, they've been less interested in the Great Man view of history and more focused on "social history," with ordinary people as the figures of interest. Washington's financial papers offer both: A great man amid the whirl of the mundane. Because Washington was Washington, we know how much he paid for his shoes.

We will actually do a class on the "Great Man" school of history when we get to the New Republic. Although historians now tend to see great economic or ideological movements as the engines of history, a case can be made that Washington was, as they say, the "Indispensible Man." Note the dates for changing away from the "Great Man" school - they coincide with changes in Native American and Why Europe? historiography.

Joyce Chaplin, a Harvard historian, said the Washington papers offer a picture of what she calls "material culture." She asks: "What kind of clothing, what kind of food, what kind of medical care did people have? When did ordinary people have cash?" By studying such things, she said, it's possible to see "a modern world coming into being."

James C. Rees, executive director of Mount Vernon, said guides have for many years told tourists that Washington was a savvy businessman, and that he ran the largest distillery in the county.

"We're keeping our fingers crossed that, once we delve into the business records of George Washington, that's all true," Rees said, laughing.

The provenance of the records is, in some cases, murkier than the rest of the Washington papers. Jared Sparks, one of Washington's first biographers, hauled away a great cache of papers from Mount Vernon and was known, when asked for a sample of the great man's writing, to hand out receipts. So began the division of the Washington archive into what seemed important and what seemed expendable.

Source survivability!

The Papers of George Washington, a project decades in the making, will eventually total about 90 volumes, Crackel said. He expects the last volume to be published circa 2024. But the project currently doesn't include the financial records.

Some of the original account books are at the Library of Congress. Some are at Mount Vernon. Some are at a Washington library in Morristown, N.J. Some are in private hands -- but who, exactly, has them is unknown.

Many of the financial records can be viewed online at the Library of Congress Web site, but the lack of transcription makes for tough slogging. The terminology can be tricky. "It's not simply 18th-century English, but it's accounting, words and terms that we're not altogether familiar with," said John McCusker, a historian at Trinity University in San Antonio.

McCusker, who came to Mount Vernon after two days at the Library of Congress reading 18th- century financial records, said documents with numbers should no longer be treated as second-class resources.

As Washington aged, he was increasingly repulsed by the human bondage that served as the foundation of his enterprise. At first he approached the issue from a business perspective, said Dennis Pogue, Mount Vernon's associate director for preservation.

"It starts out as economics. He's got more slaves than he needs," Pogue said. But after commanding black soldiers during the Revolutionary War, Washington more fully recognized the hypocrisy of espousing liberty while remaining a slave owner.

In the final major gesture of his life, he wrote a will that freed his slaves upon the death of his wife, effectively dismantling the estate he had spent a life creating. He lacked a direct heir, and so his assets went to nephews and other relatives.

This paragraph reinforces the "necessary evil" stage of slavery we studied and touches on the odd will that left poor Martha terrified.

His most enduring gift, though, may be his records. Washington sensed as much. In 1797, two years before his death, he wrote a letter to a certain James McHenry expressing a desire to build a structure to house all his papers -- "which are voluminous and may be interesting," he wrote.

Cool stuff huh?

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