Did you know that a former president and first lady were the first two people to receive Medicaid cards? Or that the "S." in Ulysses S. Grant's name stands for nothing?
More pertinently for Fools, it seems there were at least a few chief executives who couldn't manage their finances if their lives depended on it. In this clip from the Motley Fool Answers podcast, Alison Southwick and Robert Brokamp commemorate July 4 with trivia about five presidents who were shockingly bad with money. They might have occupied the most powerful seat in the world, but they were hopeless with their wallets.
A transcript follows the video.
This podcast was recorded on Feb. 16, 2016.
Alison Southwick: Robert decided to dig into the personal finances of our great leaders, and perhaps not surprisingly, he learned that's just because you're sitting in the White House, it doesn't mean you're a great budgeter.
Robert Brokamp: It's true.
Southwick: So you have some lessons for us today from presidents past.
Brokamp: Yes. The formula for financial success, we all know, it's live below your means, avoid debt, diversify your investments. We all know that. We don't always follow those rules, and neither do all our past presidents. I'm going to give you five examples of presidents who didn't exactly follow those! No. 1, Ulysses S. Grant. Anyone know what the "S" stands for? Anyone? Anyone?
Southwick: Not "Saver."
Brokamp: That's true. It actually stands for nothing. His name was Hiram Ulysses Grant, but when a Congressman nominated him for West Point, he just put "Ulysses S. Grant," and [Grant] decided to stick with it. Nonetheless, after his presidency, he went on a very lavish tour around the world, spent too much of his money, and then he invested $100,000 into a brokerage firm that was started by his son and a friend, and unfortunately, that friend was borrowing using the securities in the investment firm as collateral. We've talked a little bit about this -- that's great if everything goes up. If not, then your collateral becomes worth nothing --
Southwick: Isn't this the leveraging thing we talked about?
Brokamp: Leveraging margins.
Southwick: Margins, OK. Sorry.
Brokamp: So, things went south, investments get wiped out, Grant puts a little bit more money in, and he loses everything. So, toward the end of his life, he is pretty much penniless. Mark Twain convinces him to write his memoirs, which he finishes before he dies. In the end, those royalties earn almost $500,000 for his family. He was dead. But he does have the largest mausoleum in North America, so while you can't take it with you, you can live in something that your money paid for. How's that, huh?
Southwick: You can leave it behind.
Brokamp: You can leave it behind for other people to visit and see your bones. No. 4, Harry S. Truman. "S" stands for?
Southwick: Not "Saver!"
Brokamp: Nothing! His middle name is "S" to honor two of his grandparents. Anyway, young guy, he invests in a mineral company, an oil company, loses everything, fights in World War I, starts a men's clothing store in Kansas City with one of his army buddies. That goes under. Eventually, I think he has to live with his in-laws, then gets into public service, is the president, comes out of the presidency actually without much money. So, in, I think it was 1958, it was the first time Congress enacted a pension for presidents, and part of it was, I think, out of sympathy for Harry S. Truman, who really didn't have much money. And when Medicare was signed into law in '65, Johnson signed it at the Harry S. Truman library, and Harry and Bess were the first two people to get Medicare cards. So they were definitely people who needed the help of the government.
No. 3, President William Henry Harrison, ninth president. You probably don't know much about him, because he has the distinction of being -- anyone? Anyone? The president with the shortest --
Southwick: That's right! He gave a speech! He died because he contracted something from his inaugural speech, right?
Brokamp: That's right. He served as president for something like 32 days. His problems, he was a farmer, he went off to basically be the ambassador to Colombia. While he was gone, the crops failed; his sons didn't manage it very well. So he came back to a lot of debt. So by the time he was president and died, he actually didn't have a whole lot of money.
Southwick: This was the guy who was really, really cold, and was like, "I don't need a coat. I'm just going to give my speech because I'm a tough man!" And then he died.
Brokamp: And then he died. There's some debate about whether or not that's actually how he got the pneumonia. But regardless, he was not president for very long. No. 2, Thomas Jefferson. We all know him.
Southwick: But he's huge in Virginia.
Brokamp: He was, at one point, was one of the wealthiest people in Virginia. But, like, a lot of people own land and property. You can be ...
Southwick: Land-wealthy and cash-poor?
Brokamp: Right. He owed a lot of money. He also had expensive tastes. Building Monticello was not cheap. He was owed a lot of money by other people; he wasn't great at collecting it. He signed loans for other people that he eventually became responsible for. Toward at the end of his life, he came up with the scheme in which he was going to have a lottery by which someone could win some of his property. I think it was even his estate. He got talked out of that. But by the time he passed away, he owed -- I think, then, was $100,000, which now would be millions of dollars. And his heirs basically didn't get anything. All his stuff had to be sold.
Southwick: All right, time for No. 1! [drums fingers]
Brokamp: Time for No. 1! This is the success story of the presidents --
Southwick: Does that actually sound like a drum roll?
Brokamp: Yeah, that was. By the way, Presidents Day, I don't know if you knew this, is actually not an official holiday federally. It's actually Washington's birthday, officially, in the federal books. States have it as Presidents Day. So we're going to end it here with Washington, who also had a lot of land.
Southwick: Yes, not far from here, like, 8 miles from here.
Brokamp: That's true. He made the wise decision of marrying Mary Custis, who at that time was one of the wealthiest women in Virginia. He still was in a lot of debt. Eventually, it got paid off because he inherited some money. But even when he went to his inauguration in New York City for the first inauguration, he had to borrow money to be able to get up there.
The smart thing that he did was -- tobacco farming was actually not that profitable. What he did was he diversified his investments. Living on the Potomac, he saw those fish going by and thought, "You know what? I've got to make money from the fish." So he had a fishery. He also eventually built what was one of the biggest whiskey distilleries in the country, down by the gristmill -- those of us at The Motley Fool know that. So, by doing all of those things, in the end, he ended up being debt-free and being very wealthy when he passed away.
Southwick: Oh! So that was a success story!
Brokamp: That's the success story. From the president who had to borrow money to get to his own inauguration, to being a wealthy guy when he passed away.
Southwick: And nowadays, once you're done being a president, you go on a speaking tour, you go work for some lobbying firm, you got it good, the money starts rolling in after you're done being president.
Brokamp: You do.