Saturday, October 6, 2018

George Washington: Farmer - Profit & Loss

George Washington as Farmer by Junius Brutus Stearns. 1851

George Washington: Farmer  
Paul Leland Haworth (1876-1936) 
Ch 16 Profit & Loss

... comparatively little of his fortune, which amounted at his death to perhaps three-quarters of a million dollars, was made by the sale of products from his farm. Few farmers have grown rich in that way. Washington's wealth was due in part to inheritance & a fortunate marriage, but most of all to the increment on land. Part of this land he received as a reward for military services, but much of it he was shrewd enough to buy at a low rate & hold until it became more valuable.

The task of analyzing his fortune & income in detail is an impossible one for a number of reasons. We do not have all the facts of his financial operations & even if we had there are other difficulties. A farmer, unlike a salaried man, can not tell with any exactness what his true income is. The salaried man can say, "This year I received four thousand dollars," The farmer can only say--if he is the one in a hundred who keeps accounts--"Last year I took in two thousand dollars or five thousand dollars," as the case may be. From this sum he must deduct expenses for labor, wear & tear of farm machinery, pro rata cost of new tools & machinery, loss of soil fertility, must take into account the fact that some of the stock sold has been growing for one, two or more years, must allow for the butter & eggs bartered for groceries & for the value of the two cows he traded for a horse, must add the value of the rent of the house & grounds he & his family have enjoyed, the value of the chickens,  eggs, vegetables, fruit, milk, meat & other produce of the farm consumed--as he proceeds the problem becomes infinitely more complex until at last he gives it up as hopeless.

This much, however, is plain--a farmer can handle much less money than a salaried man & yet live infinitely better, for his rent, much of his food & many other things cost him nothing.

In Washington's case the problem is further complicated by a number of circumstances. As a result of his marriage he had some money upon bond. For his military services in the French war he received large grants of land & the payment during the Revolution of his personal expenses, & as President he had a salary of twenty-five thousand dollars a year.

Yet another difficulty discloses itself when we come to examine his cash accounts. We find, for example, that from August 3, 1775, to September, 1783, leaving out of the reckoning his military receipts, he took in a total of about eighty thousand one hundred sixty-seven pounds. What then more simple than to divide this sum by seven & ascertain his average receipts during the years of the Revolution? But when we come to examine some of the details more closely we are brought to pause. We discover such facts as that in 1780 a small steer, supposed to weigh about three hundred pounds, brought five hundred pounds in money! A sheep sold for one hundred pounds; six thousand five hundred sixty-nine pounds of dressed beef brought six thousand five hundred sixty-nine pounds; the stud fee for "Steady" was sixty pounds. In other words, the accounts in these years were in depreciated paper & utterly worthless for our purposes. Washington himself gave the puzzle up in despair toward the end of the war & paid his manager in produce, not money.

We of to-day have, in fact, not the faintest conception of the blessing we enjoy in a uniform & fairly stable monetary system. Even before the days of the "Continentals" there was depreciated paper afloat that had been issued by the colonial governments and, unless the fact is definitely stated, when we come upon figures of that period we can never be sure whether they refer to pounds sterling or pounds paper, or, if the latter, what kind of paper. People had to be constantly figuring the real value of Pennsylvania money, or Virginia money or Massachusetts money, & one meets with many such calculations on the blank leaves of Washington's account books. Even metallic money was a Chinese puzzle except to the initiated, there were so many kinds of it afloat. Among our Farmer's papers I have found a list of the money that he took with him to Philadelphia on one occasion--6 joes, 67 half joes, 2 one-eighteenth joes, 3 doubloons, 1 pistole, 2 moidores, 1 half moidore, 2 double louis d'or, 3 single louis d'or, 80 guineas, 7 half guineas, besides silver & bank-notes.

The depreciation of the paper currency during the Revolution proved disastrous to him in several ways. When the war broke out much of the money he had obtained by marriage was loaned out on bond, or, as we would say to-day, on mortgage. "I am now receiving," he soon wrote, "a shilling in the pound in discharge of Bonds which ought to have been paid me, & would have been realized before I left Virginia, but for my indulgences to the debtors." In 1778 he said that six or seven thousand pounds that he had in bonds upon interest had been paid in depreciated paper, so that the real value was now reduced to as many hundreds. Some of the paper money that came into his hands he invested in government securities, & at least ten thousand pounds of these in Virginia money were ultimately funded by the federal government for six thousand two hundred & forty-six dollars in three & six per cent. bonds.

And yet, by examining Washington's accounts, one is able to estimate in a rough way the returns he received from his estate, landed & otherwise. We find that in ten months of 1759 he took in £1,839; from January 1, 1760, to January 10, 1761, about £2,535; in 1772, £3,213; from August 3, 1775, to August 30, 1776, £2,119; in 1786, £2,025; in 1791, about £2,025. Included in some of these entries, particularly the earlier ones, are payments of interest & principal on his wife's share of the Custis estate. Of the later ones, that for 1786--a bad farming year--includes rentals on more than a score of parcels of land amounting to £282.15, £25 rental on his fishery, payments for flour, stud fees, etc.

Upon the average, therefore, I am inclined to believe that his annual receipts were roughly in the neighborhood of ten thousand dollars to fifteen thousand dollars a year from his estate.

As regards Mount Vernon alone, he sometimes made estimates of what the crop returns ought to be; in other words, counted his chickens before they were hatched. Thus in 1789 he drew up alternative plans & estimated that one of these, if adopted, ought to produce crops worth a gross of £3,091, another £3,831, & a third £4,449, but that from these sums £1,357, £1,394 & £1,445 respectively would have to be deducted for seed, food for man & beasts, & other expenses.

A much better idea of the financial returns from his home estate can be obtained from his actual balances of gain & loss. One of these, namely for 1798, which was a poor year, was as follows:

BALANCE OF GAIN AND LOSS, 1798

DR. GAINED                           CR. LOST

Dogue Run Farm  397.11.2         Mansion House .. 466.18. 2-1/2

Union Farm .... 529.10.11-1/2    Muddy Hole Farm   60. 1. 3-1/2

River Farm .... 234. 4.11        Spinning .......  51. 2. 0

Smith's Shop ..  34.12.09-1/2    Hire of Head

Distillery ....  83.13. 1          overseer ..... 140. 0. 0

Jacks .........  56.1

Traveler ......   9.17

  (stud horse)

Shoemaker .....  28.17. 1

Fishery ....... 165.12. 0-1/4     By clear gain on

Dairy .........  30.12. 3          the Estate.....£898.16. 4-1/4

Mr. Paul Leicester Ford considered this "a pretty poor showing for an estate & negroes which had certainly cost him over fifty thousand dollars, & on which there was live stock which at the lowest estimation was worth fifteen thousand dollars more." In some respects it was a poor showing. Yet the profit Washington sets down is about seven per cent. upon sixty-five thousand dollars, & seven per cent. is more than the average farmer makes off his farm to-day except through the appreciation in the value of the land. The truth is, however, that Mount Vernon, including the live stock & slaves, was really worth in 1798 nearer two hundred thousand dollars than sixty-five thousand, so that the actual return would only be about two & a fourth per cent.

But Washington failed to include in his receipts many items, such as the use of a fine mansion for himself & family, the use of horses & vehicles, & the added value of slaves & live stock by natural increase.

Besides in some other years the profits were much larger.

And lastly, in judging a man's success or failure as a farmer, allowance must be made for the kind of land that he has to farm. The Mount Vernon land was undoubtedly poor in quality, & it is probable that Washington got more out of it than has ever been got out of it by any other person either before or since. Much of it to-day must not pay taxes.

Washington died possessed of property worth about three-quarters of a million, although he began life glad to earn a doubloon a day surveying. The main sources of this wealth have already been indicated, but when all allowance is made in these respects, the fact remains that he was compelled to make a living & to keep expenses paid during the forty years in which the fortune was accumulating, & the main source he drew from was his farms. Not much of that living came from the Custis estate, for, as we have seen, a large part of the money thus acquired was lost. During his eight years as Commander-in-Chief he had his expenses--no more. Of the eight years of his presidency much the same can be said, for all authorities agree that he expended all of his salary in maintaining his position & some say that he spent more. Yet at the end of his life we find him with much more land than he had in 1760, with valuable stocks & bonds, a house & furniture infinitely superior to the eight-room house he first owned, two houses in the Federal City that had cost him about $15,000, several times as many negroes, & live stock estimated by himself at $15,653 & by his manager at upward of twice that sum.

Such being the case--and as no one has ever ventured even to hint that he made money corruptly out of his official position--the conclusion is irresistible that he was a good business man & that he made farming pay, particularly when he was at home.

It is true that only three months before his death he wrote: "The expense at which I live, & the unproductiveness of my estate, will not allow me to lessen my income while I remain in my present situation. On the contrary, were it not for occasional supplies of money in payment for lands sold within the last four or five years, to the amount of upwards of fifty thousand dollars, I should not be able to support the former without involving myself in debt & difficulties," This must be taken, however, to apply to a single period of heavy expense when foreign complications & other causes rendered farming unprofitable, rather than to his whole career. Furthermore, his landed investments from which he could draw no returns were so heavy that he had approached the condition of being land poor & it was only proper that he should cut loose from some of them.