In this segment from Motley Fool Answers, Robert Brokamp interviews Alan Pell Crawford, author of How Not to Get Rich: The Financial Misadventures of Mark Twain.
They discuss how Samuel Clemens, one of 19th-century America's greatest authors and cleverest wits, repeatedly made a ton of money, and then repeatedly made bad business decisions that lost it all for him. Among his best moves was marrying a rich heiress. But beyond that, he tried a raft of things that he hoped would make him super rich, and in virtually every case, stuck it out long enough to see them go bust. However, his ambitious failures aren't the aspect of his financial past you should pay the most heed to. In fact, the two best money takeaways from his life are much simpler.
A full transcript follows the video.
This video was recorded on March 20, 2018.
Alan Pell Crawford: At this point he's just beginning to do a little bit of writing. He's submitting comic articles to papers in California and Nevada. They seemed to be kind of popular. People think, "Eh, this guy's kind of funny." And he writes a letter to the brother back in Keokuk or St. Louis or wherever he was at the time saying, "I still haven't found my real calling in life. I'm still looking for it. I'm doing all these things. I'm kind of embarrassed to admit this, but I seem to have a knack for writing."
He says, "It's not writing of a high order. It's nothing to be proud of. I'm kind of embarrassed." It seems like a legit letter. He's not being facetious or sarcastic. He says, "It's nothing to write home about," although he's writing home about it, and says, "but I seem to be kind of good at this and maybe this is the card I should start to play."
Robert Brokamp: So, he goes to San Francisco. He does get a job as a journalist. And as I understand it, you could get stock from miners for writing articles about the mines.
Crawford: Yes, journalism.
Brokamp: Exactly. You would be given stock and with, I assume, the assumption that you would write nice things about the mines.
Crawford: Yes, and they did. He amasses boxes of stocks in silver mines and he said that if there wasn't anything to be said about the ore that seemed to be produced, then they would talk about what a great management the team had, or some kind of new system for washing out the ore and pumping out the mines. They would find something favorable to say about the operation. And he said, "Sometimes even if we didn't say anything good about it, the owners were happy."
So, the price keeps accelerating, and then the losses come, and those stock certificates are worth nothing.
Brokamp: Let's jump ahead a little bit to where he does start getting money. First of all, he does eventually become a successful writer. But also, at least importantly, he marries rich.
Crawford: Yeah. That was one of his really good business decisions. He meets a young man from Elmira, New York who is very well connected socially and financially. His father is a coal baron in upstate New York. And according to Twain's account of this, the young man shows him a miniature of his sister, and Twain falls madly in love with the sister and begins to court her.
Yes, he married well and I'm sure that played a role in his choice, but it is a great marriage. Totally devoted. An oddest couple because she is very refined, educated, gentile, progressive. Her father was an abolitionist. High-toned New York society. And Twain is this upstart from nowhere whose only claim to prominence is a book that's of kind of raffish charm. He proposes to Olivia Langdon and she accepts his proposal of marriage knowing that it's such a far-fetched match. So, Twain's not only married rich but he's now part owner of a newspaper and he's got a mansion to live in, in Buffalo, New York. In the finest area of Buffalo, wherever that would be.
Brokamp: So, they stay in Buffalo for a while. They eventually go to Connecticut. And we see this a lot with many successful, wealthy people. It's not that they didn't make enough money. It's that they spent too much. They go to Connecticut and they build a 25-room mansion.
Crawford: Yes. But before this happens, they sell that house they were given as a wedding present at a loss, and then within a year the father dies leaving them the equivalent of almost $4.5 million. Now he's got another book contract. He's dabbling in a number of other investments.
They decide to move to Hartford, Connecticut, which is where his publisher is located at the time, as well as the insurance capital of the country. They fall in with a very well-to-do intellectual class of progressive people and they decide to build a mansion there, which is just incredible. At this point they're entertaining it seems like several times a week. Dinner parties and all of this, and things just get a little bit out of control.
Brokamp: So, they're spending that. They go to Europe. They come back with like 22 boxes of furniture and...
Crawford: Shortly after he got to Hartford, they had some friends who were businessmen, [unlike Twain]. They were going to start a new insurance company to rival the Travelers. Challenge the Travelers. And Twain invests, I think, $25,000 in that day's money and calculating the contemporary values of this is a complicated matter for historians, but I've done a little bit of it.
He becomes what we would call a brand ambassador for the insurance industry. He says that now that he's a vice president of an insurance company that he's lost all interest in politics, and the arts, and literature, and music, and all these other things. All he loves, now, is insurance. He says that the now locomotive explosion has a charm for him that it never had before, and he said he looks on crippled people with a sympathy he'd never known before. He says he regards them as advertisements.
Brokamp: He's investing in a lot of things that are not very well established. I should point out that some of the things he did he invested in or invented, because he also tried to invent things that actually did work out. For example, the scrapbook.
Crawford: Yes. One of his biographers said that the one book during this period that he produced that made money was not one he wrote but invented. Twain seems to have been a collector of clippings, especially the ones about himself. So, he invents what he calls "a rational scrapbook" with self-adhesives. It seems to have had some kind of gummy, sticky stuff on the page and I think you wetted that and then you pasted the clipping on that. This thing went through like 50 editions through the years -- Mark Twain's "self-pasting" scrapbook. And they made a lot of money off this.
Eventually he does complete Huckleberry Finn. At the same time, he decides to go into the publishing business. To start his own publishing company. And one of the first things he does is [decide] to publish Huckleberry Finn out of his own company, the Webster Publishing Company.
He hears that General Grant [former President Ulysses S. Grant], is going to write his memoirs. He goes to see Grant and bids for the right to publish those memoirs and he offers him something like 70% royalties, which was totally unheard of then or now. And Grant goes for this, because Grant's deeply in debt at this time, himself. He's dying of cancer and he's worried about what's going to happen to his family after his death.
So, they form this alliance [Twain and Grant], published the memoirs, and it is the most successful book-publishing venture in its time. In the history of American publishing. Grant's widow made almost $5 million off this in our dollars. I think that was $400,000 at that time. They wrote her first check for $200,000 to Grant's widow, Julia Dent Grant. Twain himself, as the publisher, made $200,000 off this, so he made $3 million or something like that.
It was a tremendous success. At the same time his company brings out Huckleberry Finn and that was a big success. And that was the last success Webster Publishing Company had. After that, they published book after book that had no commercial appeal. One was a collection of sermons. One was a book on 75 ways to cook eggs.
Brokamp: One was on the speech of monkeys.
Crawford: That's right. There was a book on the speech of monkeys. I'd love to read that.
Brokamp: Your book lists failed venture after failed venture. Briefly talk about the Paige Compositor, because that was probably the biggest one, and then we'll briefly get to how he actually, in the end of his life, did OK financially.
Crawford: There's some hope for him when he gets involved in an investment and a business that he understands. He had been a typesetter as a young man in his brother's print shop, so he'd been intimately involved in covers, and typefaces, and pagination, and all of this in book publishing. He didn't leave this to publishers. He worked, himself, very diligently to understand all aspects of it.
He found a young inventor who had developed the idea for something that would print newspapers faster than had ever been known and not only was it faster, Twain said unlike newspaper print shop workers, it didn't join a union and it didn't get drunk. So, he invests something like $4 million in this...
Brokamp: Over like 10 years.
Crawford: Oh, yes. He had the inventor on the payroll. This thing never worked properly. By the time they got it done, the Mergenthaler machine had become the industry standard. They lost everything on this. The publishing company went bankrupt, the Paige Compositor was a bust, and Twain in 1894 declared bankruptcy.
He is taken under the wing of a Wall Street tycoon named H.H. Rogers who worked for Standard Oil. Rogers helped him put his finances in order, again, arranged the bankruptcy in what one author has said was a fraudulent transaction. Transfers all the copyrights to Twain's books to Twain's wife, so that Twain, himself, has no assets. They all belonged to his wife and then as the books continued to sell, the money comes back in.
He goes on a worldwide lecture tour at about the age of 60 [and he was an old 60 at the time] and made a lot of money lecturing in India and in England. They keep sending that money back to Rogers to invest it for them and when he dies in 1910, I think Twain is worth $11 million.
So, there is a happy ending to this book. I wouldn't end it on a sour note because it would be unfair to the facts and unfair to Twain, for whom this is a joyful or crazy story. I think there's a great deal of hope. He's an irrepressible man who has a great sense of opportunity and excitement, and that's what kept me enjoying every step of the writing of this book.
Alison Southwick has no position in any of the stocks mentioned. Robert Brokamp, CFP has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.