Financial History 145 Spring 2023 - Page 10


The Personal Finances of Presidents , Part 3 : George Washington

By Brian Grinder and Dan Cooper
The first President of the United States has attained such a mythical and legendary status that an examination of his personal finances seems almost mundane . However , George Washington overcame many financial challenges as he struggled with the birth pangs of a new country . This was a remarkable feat because those very same challenges spelled financial doom for other Virginia plantation owners , including those who followed him into the White House .
Washington relished life at Mount Vernon . Farming was in his blood , and his intense curiosity led him to engage in a scientific approach to farming that allowed him to innovate without taking excessive risks . He understood the importance of diversification and was quick to realize that raising tobacco , which was the standard crop on most Virginia plantations , was a loser ’ s game .
The mercantile system in place when Washington took control of Mount Vernon severely restricted the colonists ’ ability to sell their tobacco crops . All sales were restricted to England , where colonists were forced to employ British brokers to sell their crops . It soon became
Portrait of George Washington by Joseph Wright , 1784 . apparent to Washington that his broker , Robert Cary & Co ., 1 did not have his best interests in mind because his tobacco consistently sold for less than expected .
To make matters worse , when it came to purchasing goods from England , Washington was forced to rely on Cary & Co . to buy those goods and ship them across the Atlantic to Mount Vernon . Invariably , these British products were of poor quality and were overpriced . Underpriced tobacco sales combined with overpriced goods from London left Washington , and every other plantation owner in Virginia , in debt to their British factors . According to Washington chronicler Edward Lengel , Washington was shocked when , in 1764 , he realized that his debt to Cary & Co . had reached £ 1,800 .
The perturbed Washington determined to free himself from the constraints of the mercantile system . After considering several alternatives , Washington decided to stop growing tobacco and grow wheat instead . Wheat , unlike tobacco , could be sold locally . It grew well at Mount Vernon and required less labor than tobacco . Washington made another good financial decision at this time when he decided to curtail his purchases of British goods and become as self-sufficient as possible . This was a difficult decision , since many of the luxury goods the Washingtons wanted could only be purchased from England under the mercantile system . These difficult decisions , however , helped Washington slowly extinguish his debt .
Washington ’ s first wheat crop was harvested in 1764 and sold in Virginia . Two years later , he was no longer growing tobacco on his Mount Vernon estate , although he continued to grow some tobacco on the vast Custis properties , which he managed for his wife Martha ’ s children from her first marriage to Daniel Parke Custis . Although Washington was satisfied with his wheat venture , he soon realized that he could add value to this endeavor by processing wheat into flour . This meant building a new stateof-the-art gristmill .
The mill was built on his Dogue Run Farm with millstones of superior quality imported from France . The mill ground wheat quickly and efficiently , and Washington was soon selling his high-quality flour throughout Virginia . In his book George Washington , Entrepreneur , John Berlau writes , “ Washington … pioneered in the distribution of branded food products by attaching the ‘ G . Washington ’ imprint to all his bags of flour .” Washington brand flour soon became the flour of choice in the colony because of its consistently superior quality . That superior quality allowed Washington to charge premium prices , which quickly led to profitability . 2
Land was an important part of Washington ’ s financial strategy . His belief that investing in land was a sure source of wealth probably stemmed from his experience as a land surveyor . Young George Washington traveled all over Virginia in his capacity as a surveyor . The vast tracts of undeveloped land he encountered , along with his realization that immigration to the American colonies was likely to increase , led him to purchase and obtain land throughout his life .
Washington ’ s first land purchases occurred in 1750 while he was still a surveyor . In that year , the 18-year-old Washington managed to purchase 1,459 acres . At the tender age of 20 , Washington owned over 4,000 acres outright . At first , his purchases were limited to Virginia , but they eventually expanded to Ohio . His interest in Ohio lands began when his older brother , Lawrence , joined a partnership to form the Ohio Company . Although nothing came of this endeavor , George Washington followed the company ’ s activities closely .
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