George Washington’s Finances

| December 27, 2017
Share |

George Washington is generally thought to have been the richest American president, with an estimated net worth of $525 million, in 2016’s dollars. In 1789, his salary was 2% of the U.S. budget and he owned over 50,000 acres of land. In addition to this, George held several positions before, during and after the presidency; he was also a surveyor, soldier, farmer and distiller.

It is likely, however, that most of his wealth can be traced to his land speculations. He began acquiring property in his early 20s, starting with a purchase of 1,500 acres in Fredrick County, Virginia in 1752. After the death of his half-brother Lawrence, he inherited an interest in Mount Vernon. He also acquired land as a recruit during the French and Indian War when Virginians were being offered frontier acres in exchange for service. By the time of his death, Washington owned land from New York to Virginia, and west into the Ohio Valley. According to the authors of The Wealthy 100: From Benjamin Franklin to Bill Gates, Washington’s land holdings put him at number 59 on the list of the top 100 wealthiest Americans throughout the country’s history. Benjamin Franklin and John Hancock are the only other Revolutionary-era names that grace the same list.

Another way Washington’s wealth can be quantified by today’s standards is to think about the economic power of Washington’s holdings, or the president’s financial position relative to the size of the U.S. economy at that time. In 1799, the year of his death, his estate of $780,000 (1799 values) was equivalent to 0.19 percent of the $411 (1799 values) million U.S. GDP. Translating that into modern terms, 0.19 of the 2011 GDP would have placed George’s worth at $25.9 billion.

Washington was not born into the storied Virginia aristocracy, but was of modest family prestige. What enabled him to begin accumulating wealth was his ability to make effective social connections. He and his brother Lawrence married into the colonial elite. George married the widowed Martha Custis in 1759. At the time, she was one of the wealthiest women in Virginia. After the marriage, George went from being a comfortably placed gentleman-soldie, to one of Virginia’s wealthiest landowners.

Prior to his marriage, and his start as a land accumulator, his position as a surveyor gave him insight into the frontier acres he would one day own. In an unclaimed, un-demarcated continent, surveyors were in high demand. Lord Fairfax, Washington’s in-law via his brother Lawrence, was in possession of some 5 million acres in Virginia and quickly added George to his payroll to have these surveyed for incoming tenants. At that time, good frontier surveyors could make as much as trial lawyers. And, with nearly insider information, surveyors were well informed to make savvy purchases of their own.

While many cast Washington as a president-farmer, farming was in fact, one of his least successful endeavors. His mid-life ventures as a tobacco farmer left him “land rich, cash poor”.  At the time of his 1789 inauguration in New York, he was forced to borrow money from a friend to make the trip. Mount Vernon in particular, as an agricultural enterprise, was not always lucrative. The value of his tobacco crop fell such that in 1766 he opted out of its production and began to focus on commodities high in local demand, such as wheat, corn, flax and hemp.

His endeavors as a distiller were more profitable. In the year of his death, the distillery at Mount Vernon produced nearly 11,000 gallons, making it one of the largest whiskey distilleries in the country in 1799. He was the only founding father to have owned and operated a commercial distillery. Washington was quick to pursue the creative farming practices of the day and despite having no prior experience in distilling, he committed to the endeavor by using the Mount Vernon grist mill to process raw ingredients and invested in building one of the largest distilling facilities of his time at 2,250 square feet. Small batches of whiskey are still produced at Mount Vernon today.

Washington was clearly well diversified in his holdings, albeit in the style of the Revolutionary era. He also owned shares in several corporate entities, including the Potomac Company, which endeavored to make the Potomac navigable. He left 50 shares of the Potomac Company to the endowment of a university in the District of Columbia, the school that would eventually become George Washington University. However, the shares were lost with the failure of the Chesapeake and Ohio Canal Company. Perhaps the most instructive financial aphorism of George’s life came from his uncle Joseph Ball at a time when George was set on becoming a midshipman.

“He must not be too hasty to be rich, but go on gently and with patience, as things will naturally go. This method, without aiming at being a fine gentleman before his time, will carry a man more comfortably and surely through the world than going to sea.”

Share |