Hetty Green: The Witch of Wall Street [Outliers]

Transcript from https://podmenti.com/t/c807e2dc83496ba6

It's nineteen oh seven and Wall Street is in complete meltdown.
Banks are failing, millionaires are jumping from windows, and even JP Morgan himself is scrambling to save the entire financial system. But while the most powerful men in America are panicking, there's one person sitting calmly at a simple desk in a bank lobby surrounded by stacks of cash.
She's wearing the same black dress she's worn for years, and she's about to single handedly prevent the collapse of the American economy.
Her name?
Hetty Green.
And she's about to lend over six million dollars to save banks, businesses, and lives.
All while charging fair interest rates when she could have demanded.
Anything she wanted.
You've probably never heard of her.
And that's because history buried the story of America's first female Wall Street Titan, the woman who turned a childhood of rejection
into a financial empire that would make even today's billionaires jealous.
She bought entire towns face down a railroad baron with a loaded gun and accumulated wealth, using strategies so ahead of their time that Warren Buffett is still using them today.
So why don't we know her name?
Because Hetty Green committed the ultimate sin in the Gilded Age.
She was a woman who refused to apologize for being smarter than every man in the room.
Welcome to the Knowledge Project.
I'm your host Shane Parish.
In a world where knowledge is power, this podcast is your toolkit for mastering the best what other people have already figured out.
Hetty Green died in 1916 worth about a hundred million. That's over two point five billion in today's money.
And she built this fortune in an era when most women couldn't vote.
couldn't own property in most states and were banned from the New York Stock Exchange entirely.
She actively managed railroads, real estate, stocks, and bond portfolios from a simple desk in a bank lobby.
While other women of the Gilded Age competed for social status by throwing elaborate parties
Hetty was quietly making millions.
She never had formal business training, like any tall poppy, people took shots at her. She was mocked by newspapers, sued by family members, and had her own husband secretly pledge her fortune as collateral for his debts.
This episode reveals how an unwanted daughter
Turn childhood rejection into financial dominance using strategies Warren Buffett wouldn't popularize for another century.
But here's what matters to you. Her playbook is timeless. Whether you're making your first investment or managing millions, the strategies had to use still work today.
Stick around at the end for my reflections and lessons learned or visit FS.blog slash podcast to see them. As always, this episode is for information purposes only.
It's time.
To listen.
And learn.
Petty Holland Robinson was born in eighteen thirty-four into one of New Bedford's wealthiest whaling families.
But she was unwanted.
Her father, Edward Mott Robinson, had desperately wanted a son.
When had he arrived instead he was, as the records show, devastated by the birth of this child.
When her baby brother Isaac died just weeks after birth, her father's rage consumed the household. Hetty was cast aside and sent to live with her grandfather.
Quick with numbers and good at reading, her grandfather put her to work.
His eyesight was failing, his shipping empire demanded constant attention. So he had six year old Hetty sit on his knee and read him the financial news, stock prices, commodity reports, shipping manifests.
While other children her age, red fairy tales, heady red, railroad bonds up three percent, whale oil futures declining, gold steady at twenty dollars per ounce.
There was no other little girl for me to play with, she later recalled,
I had listened to bulls and bears and all that.
In this way I came to know what stocks and bonds were.
By age eight, she had opened her own savings account, depositing her weekly allowance and watching compound interest work its magic.
Her father, initially disappointed by his daughter, began to see Hetty's gift with numbers.
Known locally as Black Hawk Robinson for his ruthless business tactics, he started treating her
Like the air he never had.
Partly it was a necessity as his own eyesight was starting to fail.
But Hetty, desperate to please him, recognized that money was the way to his heart.
She became his reader, his secretary, following him through New Bedford's courthouses and wharves. They inspected ships together, traded commodities, and analyzed future markets. Most importantly, she absorbed his core philosophy.
Property is a trust to be taken care of.
and enlarge for future generations.
He would test her constantly, for
One of the key lessons he taught her is that if you can manage your brain, you can manage your fortune.
At twenty, your father and aunt sent her to New York for the social season with twelve hundred dollars to buy fancy dresses and catch a husband.
High society is how things worked in those days, but Eddie had other plans.
While her friends gossiped about fashion and social climbing, she listened to Wall Street men discuss finance. Instead of spending twelve hundred dollars on clothes like she was supposed to, she spent two hundred dollars and invested the rest in bonds.
When she returned to New Bedford early, she proudly announced to her father that the bonds had already gained value. He could not contain his delight.
Her aunt, on the other hand, was less pleased.
But had he made her choice.
She'd rather have income than a husband.
You can already see that Hetty was a strong and independent woman who rejected the trappings of her upper class background and avoided the glittery style of the gilded age.
The darkness began when Hetty was in her early thirties. Within weeks of each other, both her father and beloved Aunt Sylvia died.
Her father's will delivered the first betrayal.
Despite years of proving herself as his apprentice, despite demonstrating she was capable, he left most of his six million dollar fortune in trust.
She would receive a portion of the income, but have no control over the principal.
Upon her death it would go to her children.
Gone was the respect she thought that she had earned, her biographer wrote. Gone was the confidence. Gone was the proof of love.
Three weeks later, Anne Sylvia died, leaving her two million dollar fortune mostly to New Bedford charities, servants, and suspiciously.
To her doctor.
Only half went to headache.
Hetty was not one to back down from a fight.
She fought back with the fury that shocked proper society.
She produced a second will, allegedly signed by her aunt, leaving everything to her.
The problem was the signatures were identical.

The ensuing court case became one of America's first trials to use statistical evidence. Harvard professors testified mathematical experts calculated probabilities.
Benjamin Pierce, the Harvard mathematician, declared such identical signatures could happen once in two thousand six hundred and sixty six millions of millions of millions of times.
Had he lost.
But she learned something crucial. In a world run by men, a woman with money was always suspect. A woman fighting for money or anything for that matter was considered improper.
It's not clear what happened at this point. Historians note that she probably did try to forge that signature. That's how desperate she was to control her inheritance. The case dragged on for years, forcing Hetty and her husband to flee to London for six years.
But she never gave up. She fought those trustees until she finally wrestled control away from them.
By the eighteen eighties, she had won. The money was hers to manage.
And manage it?
She did.
Remember, this was the eighteen seventies.
Women couldn't vote in many states married women couldn't own property.
Women were banned from the New York stock exchange floor until nineteen forty three.
So how does a woman invest in the eighteen seventies?
First understand what Wall Street was like then.
There was no SEC, there was no regulations, there were barely any rules at all. It was the wild west.
Men like Jay Gold and Daniel Drew manipulated stock prices. They spread false rumors and cornered markets.
It was corrupt and chaotic.
Millions were made and lost.
Heady setup shop right in the middle of it.
And in an era where most fortunes were made and grown through swindling and cheating and doing whatever you could get away with.
She would not succumb to the tactics of other millionaires. She did not employ workers at slave wages, did not steal land from the public or outsmart stockholders or pay off government officials like some.
She did not scheme with Wall Street or speculate with other people's money.
No.
She told a reporter.
Her formula for success was simple.
Common sense.
and hard work.
She kept an office in the Chemical National Bank, not a rented office because that would cost money, but literally in the bank lobby.
She'd sit on the floor sorting through her papers. The bank allowed it because she kept her money on deposit there.
Well, guys like Jay Gold tried to corner markets and manipulate the prices. How do you approach things differently? She said, I buy when things are low and nobody wants them. I keep them until they go up and people go crazy to get them.
That's the secret of all success in business.
It sounds a lot like Warren Buffett, who would later say the key to investing success is to be fearful when others are greedy, and to be greedy only when others are fearful.
This is simple advice, but it's not easy.
Few other people even attempted this in the eighteen seventies, while everyone chased hot stocks, bought on margin, and speculated. Hetty did the opposite.
She approached investing as if it were a business.
Take the post-Civil War government bond. They traded it at a huge discount because investors feared being paid back in depreciated paper money instead of gold.
Well, Skittish investors saw a devastated South and enormous war debt. How do you saw something different? Vast mineral deposits being discovered at West, massive settlement under the Homestead Act.
Booming manufacturing thousands of miles of new railroad track.
the way she saw it, the United States was on the right track and had just suffered a temporary setback.
The future was bright.
She bought trading as low as 50 cents on the dollar from the US government. When they fell further, she bought even more.
When the government honored them in gold, she made a fortune.
This reminds me of another bit of advice from Warren Buffett. Never bet against America.
Hetty was doing this a century before Buffett was born.
But what really separated Hetty from other investors was her obsessive research.
Before deciding on an investment, she said, I seek out every kind of information about it.
This is the same thing that Buffett would do in the sixties when, at least as the story goes, he'd hire private investigators to follow CEOs to see how they lived.
Here's an example of how obsessively detailed she was.
When she wanted to buy a horse and buggy in Bellows Falls, she didn't just negotiate with the seller. She found someone with a grudge against the owner and convinced them to reveal every fault of the horse and rig.
Armed with this knowledge, she got the wagon for less than half the asking price.
When she bought Chicago and Rock Island railroad stock, she didn't just read the annual reports.
She traveled to Chicago and inspected the rail yards herself.
She talked to workers. She analyzed freight volumes. She wanted to know everything about it. Good.
And bad before investing.
This obsession with information gave her an edge in an era before SEC regulations, standardized accounting, or financial transparency.
She did her own due diligence because she trusted no one else to do it.
Hetty's frugality, which was something that would be praised as prudent business sense in men, became the subject of vicious gossip because she was a woman. Hetty was branded as pathologically cheap for riding public transportation with two hundred thousand in bonds. She was mocked rather than admired for her thrift.
The rumors were especially cruel about her treatment of her son.
When Ned hurt his knee sledding in Central Park, Hetty didn't just call one doctor, she consulted specialists from New York to Baltimore.
When they all recommended amputation, she refused. She had seen too many Civil War veterans hobbling on wooden legs.
She tried everything from hot sand treatments and tobacco leaves around the leg to mechanical devices in his shoe.
She would even sit with him through the night when he cried in pain and carry him when he couldn't walk.
But the newspapers mocked her for taking him to free clinics. What they didn't understand was that she wasn't trying to save money.
She was trying everything she possibly could.
She was just being a mother.
When doctors didn't know she was rich, they gave her medical advice. When they knew who she was, they saw only dollar signs. As long as they're making noise in the room, I'm satisfied, she said about Ned and his friends destroying pillows in a hotel fight once. If they had been still, I would have been suspicious.
The railroad boom of the eighteen eighties would make and break the green marriage.
While had he methodically built her fortune through careful research and conservative investing, her husband Edward embodied the era's speculative fever.
As president of the Louisville and Nashville Railroad, he had positioned himself at the center of what the New York Times called one of the most gigantic railroad operations of the age.
Edwards Railroad had expanded dramatically, gobbling up smaller lines and extending track from eight hundred and seventy five miles to thirty five hundred miles, creating in the process the only monopoly route to New Orleans.
For a brief moment, Edward Green stood atop of the railroad world.
But Edward was an erratic financier, a gambler who bought on margin and couldn't resist a risky bet. He's a reminder that the skill to get rich and the skill to stay rich are not the same thing.
When his colleague was caught falsifying the LN's books in eighteen eighty four, claiming losses of only two million when they were actually five million.
The stock plummeted fifteen points in a week.
The crisis deepened when other rural road investments soured.
Securities worth three hundred thousand were suddenly worth half of that. When Hetty learned her own deposits of five hundred and fifty thousand in cash.
And twenty six million in securities were at risk. She demanded they be transferred to Chemical National Bank.
However, that request was refused.
Her husband was more than seven hundred thousand dollars in debt and had illegally pledged Hetty's money as collateral without her knowledge.
This was the ultimate violation.
Hine spent her life fighting for control of that money.
Battling her father's will, her aunt's trustees and society's assumptions about women. Now her own husband had pledged her growing fortune to cover his speculative debt.
In a scene that became Wall Street legend, Hetty appeared at the bank's offices in her black dress cape, her voice as chilly as the January air, she demanded her deposits.
She was the largest depositor at the bank.
The problem was her husband was its largest loan.
When refused, she erupted, screaming and stamping her feet while onlookers pressed their faces to the window.
To save her fortune, Hetty paid seven hundred thousand dollars to rescue the bank. She loaded her millions into satchels and transferred them to chemical bank in a cab that got stuck in the snow under the weight of her wealth.
In that cab she plotted her revenge.
Their marriage was effectively over.
Edward had committed the unforgivable sin. He had risked her money for his own gain.
By eighteen eighty five she was no longer Miss Edward Green, she was Miss Hetty Green.
One of Wall Street's most formidable operators. She still shunned a private office, still work from the chemical bank lobby, arriving each morning in black, eating onions to ward off colds.
Her approach to investing remained methodical. She wouldn't touch anything until she understood everything about it, the company's debts, the assets.
The management character, income, reliability, only when satisfied that the downside risk was minimal and upside substantial would she make her move.
The press mocked her boarding house lifestyle and shabby clothes, but Hetty had no patience for gilded age.
Ostentation.
She watched with contempt as society women exhausted themselves planning elaborate balls and fighting for opera boxes.
When two officers from Richmond Terminal Railroad visited her to buy Georgia Central shares.
They found her at her simple dust surrounded by chaos.
Bond stocks and notes stuffed into pigeonholes overflowing from a black tin box.
They offered a hundred and fifteen dollars per share for stock she'd bought for seventy dollars.
She demanded one twenty five. When they returned with a complex deal, she raised her price to one thirty. Through pure nerve, she eventually sold at one twenty seven fifty, nearly doubling her money.
But it was in her battle with Notorious Bear Addison Camac that Hetty showed true genius.
Cam Mac had sold Louisville and Nashville stock short, betting it would fall on bad earnings.
But Hetty was quietly cornering the market, buying every share she could find.
As the stock rose instead of falling.
Kamek found himself trapped.
He needed forty thousand shares to cover his position. Had he had them.
And made him pay a premium of ten dollars per share, walking away with four hundred thousand dollars in profit.
She had a lot more leverage than she used in this situation. He needed those shares desperately, and she only charged him a ten dollar premium. Unlike other Wall Street operators who would have squeezed him dry had he showed restraint.
Canemac had always treated her with respect, so she returned the favor.
She raised her children with her own peculiar philosophy. Her son, Ned, was her project, and she intended to make him the richest man in America.
Even as a child she brought him to the chemical bank, teaching him money's true value.
As a teen, she handed him work on the railroad. She owned shares in learning operations firsthand.
At twenty two, she sent him to Chicago to manage her real estate empire.
Before sending him off, Hetty gave precise instructions for managing her mortgage businesses. He was to memorize the exact principal and interest owed on every mortgage.
Not a penny less would be accepted and not a penny more as it would mess up the books.
Her negotiation advice was equally specific.
If anyone is fool enough to offer you the full amount, take it. If offered less, tell them you'll give them an answer in the morning.
She believed in sleeping on decisions.
She would say in business generally don't close a bargain until you have reflected on it overnight.
Hetty had a set of rules that she gave him, and I wanna read these out to you because they're so powerful. Just like Munger who inverts problems, she offered Ned a list of don'ts.
Don't cheat.
In our business dealings, for sooner or later your conscience will trouble you and you will worry yourself into the grave. Don't fail to be fair in all things, business and otherwise, and don't kick a man when he's down.
Don't envy your neighbors. Don't overdress, whether you have the means or not.
Don't fail to go to church for the church needs you and you need the church.
Don't forget that riches dishonorably gained must be left behind some day, and when you depart you will find the gates of heaven doubly bolted against you.
Don't forget to be charitable and don't falsify.
Don't forget to obey the laws of God, for they
were the first laws.
And she offered one more piece of advice. After your business is over, you may take him to dinner and theater, but wait until the transaction has been closed and the money paid.
Hetty couldn't stay away from Chicago and Ned. She commuted between New York and Chicago as if it were a suburban stop on the railroad. And she wore cloth that a society lady's maid would not even wear. She appeared in Chicago courts, attended meetings, and scout investment locations.
When the Baring Brothers crisis of eighteen ninety sent markets tumbling, heady went shopping.
She understood what others didn't. Panics were temporary, but value was permanent, and
In December of eighteen ninety, when the town of Cullour defaults and went up for auction, Hetty and Ned were there before dawn, walking the streets and inspecting every property.
When bidding began at ten o'clock, they had already arranged financing. Before other bidders could even complete their due diligence, Hetty had bought the entire town for a hundred thousand dollars.
She always found herself in a good position. And so she was the master of her circumstances rather than being mastered by them. She always had.
Available cash, which in a financial crisis very few possessed. And because of this, during crises or panics.
She not only had the available funds, but she had the courage to pick up these distressed assets at bargain prices.
But it was in Texas that Hetty made one of her boldest moves ever.
The state's six thousand miles of railroad track included numerous bankrupt branches that major operators like Collis Huntington desperately wanted to consolidate.
Hetty wanted them too, partly for profit, but mostly despite Huntington, who had crossed her years before.
She sent Ned to Waco to bid on the Waco and Northwestern Texas Railroad in a heated auction against Huntington's representative, twenty four year old Ned bid.
Almost one point four million then one. When Huntington tried to block the sale and then showed up threatening Ned personally.
Hetty's response was characteristic.
Up until now, Huntington, you have dealt with Hetty Green, the businesswoman. Now you are fighting Hetty Green, the mother.
Her one hair on Ned's head
And I'll put a bullet through your heart.
She reached for the gun on her desk.
Huntington fled so fast that he left his top hat behind.
Don't mess with a mama bear.
The eighteen ninety three financial crisis destroyed most investors, but Hetty as always had been quietly stockpiling cash while patiently waiting for opportunity.
The trigger was the Philadelphia and Reading Railroads failure in February.
unable to pay its one hundred and twenty five million in debt.
Three more major lines followed in quick succession.
Banks that had loaned heavily to railroads found themselves underwater. Money got tight. Interest rates soared as high as seventy-five percent.
Five hundred banks failed, fifteen thousand businesses went under.
George Williams of the Chemical Bank approached Hetty with an emergency request.
The New York Clearinghouse needed to create a fund to ease the credit crisis. Would she help?
Of course, Hetty said sweetly.
She would lend millions if they would sell her certain Chicago railroad notes payable on demand, Williams agreed.
Desperate for liquidity.
The moment Hetty received the notes, however, she called them in for immediate payment.
When railroad executives protested they didn't have the money, she made a counter offer. These were the same men who had supported Judge Collins for the Illinois Supreme Court. The judge who had ruled against her in a land sale years earlier. You put'em on the bench, she told them, Now you can take'em off, or you can pay your loans to me.
The men convinced Collins to run for governor, promising support they never delivered. Instead, they backed his opponent. Collins withdrew, his political career destroyed. Hetty had finally got her revenge.
This woman kept a grudge. Well, others panic, though. She just went shopping when Henry Hilton came begging for help to save AT Stewart's department store, the marble palace that had once dominated New York retail, Hetty was the only investor willing to listen.
The Hilton had run annual sales from sixty million down to eight million. She offered them one point eight million for five years, demanding the original steward building as security and taking her six percent interest in advance. At the time, it was the largest mortgage ever given on a single New York property.
Her wealth during this period was estimated between 40 and 50 million, making her the richest woman in America, and possibly the richest woman in the world.
But she still lived like a middle class widowed, taking the ferry from Hoboken each morning with regular commuters, riding the streetcar at a chemical bank, working at her roll top desk.
When asked why she didn't live more lavishly, she quoted one of her favorite poems and
To live content with small means, to seek elegance rather than luxury, and refinement rather than fashion.
To be worthy, not respectable, and wealthy, not rich.
To study hard.
Think quietly.
Talk gently, act frankly.
To listen to stars and birds to babes and sages with open heart.
To bear all cheerfully.
Do all bravely.
Await occasions.
Hurry.
Never.
The crisis gave Hetty unprecedented leverage in Texas. Her son had turned the Texas Midland Railroad from a bankrupt 52 mile stretch into the state's most efficient railroad. He'd strengthened the rails, replaced wooden bridges with steel, introduced electric headlights, and added observation cars.
The line carried more cotton per mile than any other railroad in the country.
But Ned had grander ambitions. He wanted to be a political player.
And a surprising had he decided to help him.
The woman who had scorned society suddenly appeared in Washington wearing fine silk dresses and fur trimmed drops.
She took rooms at the Shoreham, the most expensive hotel in town, and lobbied Republican Party leaders to make Ned state chairman for Texas.
Her whole nature has been revolutionized, Marvel's one hotel owner. I never knew anyone to loosen up as Miss Green has of late.
She contributed over six figures to the fusion party in Texas to defeat Williams Jenning Byron, who
had made her a campaign target, railing against her wealth and demanding a federal income tax.
When McKinney won.
Ned rode a white horse in the inaugural parade and received control of the federal partrage in Texas.
When she reconciled with husband Edward, accepting him back into their Brooklyn household, she gave him a separate suite upstairs.
She would help nurse him through gout atks, but still went to work every day when he stayed home reading and smoking cigars. She would never again fully trust him.
When Brooklyn merged with New York in eighteen ninety eight, creating a city of three point five million subject to New York taxes, Heady immediately went across the Hudson to Hoboken. But when the newly consolidated city needed funds, she had no problem loaning them one million at
Two percent interest, which was well below the usual three point five percent rate. She cleverly kept the taxmen at bay while profiting from the city's growth.
As nineteen hundred dawned, Hetty stood at the pinnacle of American finance.
At sixty-five, when most contemporaries were retiring to drawing rooms, she was executing some of her career's boldest moves. The new century brought merger mania that would dwarf anything seen before, and Hetty positioned herself perfectly to profit.
She watched with keen interest as JP Morgan orchestrated US Steel's creation, the first billion dollar corporation, when Andrew Carnegie sold his steel works to Morgan for four hundred and eighty million. Hetty shook her head, Carnegie sold too cheap, she told reporters, he should have held out for more.
Her daily routine at seventy was as rigorous as her routine at forty. At chemical bank she maintained her modest corner desk, surrounded by newspapers, bond certificates, and mortgage documents. Men who controlled industries worth hundreds of millions came to her for loans received in her simple black dressing.
Well, she sized them up with piercing blue eyes. I saw all the big men on Wall Street during those years, her secretary Walter Marshall later recalled. They would come hat in hand to Miss Green and she would make them wait while she finished reading some railroad report.
She was establishing who had the power in that room.
In nineteen oh five, when she was seventy one, New York City faced another financial crisis.
The city needed two point five million immediately, and banks were demanding usurer rates.
The city chamberlain came to Hetty personally. She had agreed to loan the entire amount at five percent.
Well below market rates.
She is now the largest money lender in New York, declared the Los Angeles Herald.
When asked why she gave the city such favorable terms, she replied simply, New York has been good to me. I'm returning the favor.
The nineteen oh seven panic found Hetty at seventy three
with a mind as sharp as ever
She had seen it coming for months, converting her real estate holdings to cash, calling in loans, and building her reserves. When the Knickerbocker trust collapsed and depositors stampeded
Hetty was one of the few people in New York with ready cash.
JP Morgan held his famous all night meeting in his library assembling finance titans to save the banking. There were rumors that a mysterious woman in black entered the library at midnight and that it was Hetty Green, though Morgan later insisted it was Miss Russell Sage.
Hetty was already deploying capital, lending a million dollars here, two million there, always at reasonable rates and never taking advantage of the desperate.
During the panic, she said I had a million dollars in cash on my desk.
Every day.
The biggest men on Wall Street came to me and begged for a loans, some my help.
Some I didn't. That was my privilege.
She could have charged forty percent interest, but she never took more than six. Never in my life have I practiced usury.
Her son Ned revealed years later that during the nineteen oh seven panic, Hetty had loan over six million in Texas alone in addition to her New York loans. She single handedly kept several banks from failing, prevented numerous businesses from going under, and helped stabilize the entire financial system.
Yeah.
She received no recognition, no medals, and no accolades, but
J P Morgan was held as Wall Street Savior. Hetty Green remained.
The witch of Wall Street.
I think that's the way she liked it.
But nineteen ten at seventy six.
Her health was failing.
Her heart was weak, and hernia she had suffered for years caused increasing pain.
When a doctor said she needed immediate surgery true to form, she balked at the cost.
You're all just a bunch of robbers, she told them, and continued using a stick pressed against the swelling.
Her relationship with her children grew closer in those final years. Ned had become a powerful Texas political figure serving as the Republican state chairman, but when Hetty wrote asking him to help with business affairs, he dropped everything and rushed to New York.
He moved her off as next to his and gradually took over more of hers.
Still she couldn't completely let go.
If you heard her
Put me over the jumps every day. You'd think she was as sharp as ever, Ned told reporters in nineteen fifteen. She scolds me for the way I handle her affairs and says she surely made a mistake in my education.
On july third, nineteen sixteen, Hetty Green died at her son's country home in Bellows Falls, the same Vermont town where she had once been mocked for her shabby clothes and penny pinching ways.
The woman who had spent her life fighting for every dollar died while arguing with her cook over the cost of milk. Even in her final breath, she remained true to character, vigilant and
uncompromising and absolutely certain of the value of a penny.
She had outlived the whaling industry that built her father's fortune, survived and thrived in every financial panic from eighteen seventy three to nineteen oh seven, and accumulated wealth that dwarfed most railroad kings and oil barons of the era.
Uh.
Perhaps the most remarkable thing about Hetty Green wasn't how much money she made. It was that she made it entirely on her own terms in a world that never wanted to let her.
When they buried Hetty Green beside her husband in Bellows Falls, the world lost more than just the richest woman in America. It lost a pioneer who had carved a path through Wall Street's granite face.
Proving that financial genius knows no gender.
The New York Times came closest to capturing her essence. They wrote, If a man had lived, as did Miss Hetty Green, devoting the greater part of his time and mind to increasing an inherited fortune, nobody would have seen him as very peculiar. He would have done about what is expected of the average man so circumstanced.
But because she was a woman, she became a curiosity, a contradiction, a story too complex for simple headlines or easy explanations. Her children inherited not just her fortune, but her fierce independence. Ned continued running the Texas Midland Railroad and became a major Texas political force.
Living on the grand scale as mother had denied herself.
He collected stamps and coins with the passion she had shown for stocks and bonds, eventually amassing one of the world's finest collections.
Sylvie freed from her mother's shadow flourished quietly, with her husband
Matthew asked her, Well, she became a generous patron of the arts and education, supporting institutions from Harvard to Columbia.
She was also known for her philanthropic work. She gave away millions to causes her mother might not have chosen, but in a spirit that Hetty would have understood.
Deliberately.
Thoroughly and without seeking acclaim.
Perhaps this was Hetty's true legacy, not the money itself, but the freedom it provided. She had fought her entire life for the right to control her own destiny and she passed that freedom to her children. Her investment philosophy would be vindicated by time. What seemed like
Penny pinching at the time was actually disciplined investing. Buy when everyone wants to sell and sell when everyone wants to buy became the foundation of fortunes far greater than hers. Warren Buffett living modestly in Omaha while managing billions follows principles Hetty would have approved of.
But where Buffett is celebrated as a sage, Hedy was often dismissed as eccentric.
The hundred million dollars she left behind has long since been dispersed, flowing into libraries and hospitals and universities and parks. The buildings she owned have been demolished or renovated beyond recognition. The railroads she controlled have merged, failed, or evolved into something unrecognizable.
But the path she carved remains. Hetty blazed a trail.
You prove that the only currency that matters in finance is competent.
Hetty died as she lived, on her own terms, beholden to no one, having built something through sheer force and will and intellect. She was in the end exact what she had always claimed to be, a woman of business, nothing more.
Nothing less, and nothing to apologize for.
Before we get into some of the reflections, I want to sum up some of the wisdom of Hetty Green in her own words. And I'm gonna just quote her here. So before deciding on an investment, seek out every kind of information about it.
Watch your pennies and the dollars will take care of themselves. This reminds me of what Andrew Newey said in our episode about focusing on the right side of the decimal before making a deal. If anyone is fool enough to offer you the full amount, take it. If you're offered less, tell the man you'll give them an answer in the morning. Think the matter over carefully in the evening.
If you decide that it will be to your advantage to accept the offer, say so on the next day.
In business generally don't close a bargain until you've reflected on it overnight.
The secret of good nursing is common sense, just as common sense is the secret of making money.
What a man has done women can do.
It is the duty of every woman to learn to take care of her own business affairs.
When good things are so low that nobody wants them, I buy them and lay them away in the safe.
When owing to some new development they go up and my shares are so needed that men will pay well for them, I'm ready to sell.
I'm always buying when everyone wants to sell and selling when everyone wants to buy.
If one can buy a good thing at a lower cost than it is ever sold before.
He may be fairly sure of getting it cheap.
Railroads and real estate are things I like.
Government bonds are good. They're they do not pay very high interest. Still
For a woman, safe and low is better than risky and high.
Common sense is the most valuable possession anyone can have.
I wanna get into some reflections and then the lessons that I took away here. She was clearly a wolf in sheep's clothing and I wouldn't even say sheep's clothing,'cause she dressed like
Basically a poor person.
She was the only female robber baron, effectively, of the age. And she was resented for the plainlessness of her clothes and her diet, and effectively for her austerity. She treated everyone rich or poor as equals and guarded her pennies as others would guard their gold.
I don't want you to walk away from this story thinking that she didn't start out with a good hand, because she did. But I also don't want you to walk away with this story.
thinking that she's not amazing.
It's far easier to lose money than make it. And she basically took her inheritance after she got control of it in her late thirties and she twenty X it.
While all the chips in the world basically were stacked against her, there's a ton we can learn from Hetty Green.
The whole age can sort of be summed up into people trying to buy their social position and Hetty
had this fierce independence to her that made her not want to play any of those games.
In an interview explaining her priorities, she said, When it comes to spending your life, there have to be some things neglected. If you try to do too much, you can never get anywhere. One thing that most people don't know about Hetty is she cursed like a sailor, especially when she was upset. Another thing that would alienate her from polite society.
And when Ned was asked the most important lesson he had learned from his mother, he replied without hesitation,
Can you guess it before I say it?
Self reliance.
Okay.
Let's get into some of the lessons that I took away here. I got thirteen that I think are really good, clear takeaways. So one
Have a detective's eye before buying anything, had he researched obsessively to uncover what others missed or ignored. When purchasing a horse and buggy, remember she found someone with a grudge against the seller to reveal every hidden flaw.
Getting it for half the asking price. This obsessive research gave her an information advantage and set her apart from her contemporaries.
to positioning over prediction while others chased hot investments and bought on margin, had he always kept a massive cash reserve and never went into debt.
During nineteen oh seven, she had a million dollars in cash on my desk every day when banks were failing and credit was impossible to find.
And this liquidity allowed her to buy entire towns when others were forced to sell and lend millions at reasonable rates when desperate borrowers would have basically paid anything.
Everyone looks like a genius when they're in a good position, and even the smartest person looks like an idiot when they're in a bad position.
Number three.
Buy when others are fearful and sell when they are greedy.
Hetty's core investment philosophy was beautifully simple.
I buy when things are low and nobody wants them. I keep them until they go up and people are crazy to get them.
This wasn't just a clever saying. She executed the strategy through every financial panic from eighteen fifty seven to nineteen oh seven.
Four, pay attention to the right side of the decimal. She often said watch your pennies and the dollars will take care of themselves.
control your own financial destiny. How do you spend decades fighting trustees, her father's will and her aunt's estate just to gain control over her inheritance?
Five, be fiercely independent. Hetty was completely comfortable trusting the results of her own thinking and judgment. She lived convinced that as a businesswoman, she was fundamentally alone and nobody else would watch out for her interests. So she had to.
And while others saw it the safety of consensus, had he felt most comfortable making decisions on her own.
This independence extended to how she lived. The rules she chose to live by were her own, rather than those imposed by society.
Number six, structure matters.
I go my own way, take no partners, risk nobody else's fortune.
Number seven.
She mixed patience with decisiveness. She would buy assets and tuck them away for years, sometimes waiting decades for investments like greenbacks to pay off. Her extreme frugality, refusing to take carriages, despite being worth millions, wasn't miserless, but rather an understanding that every dollar spent.
was a dollar that couldn't compound.
Number eight, stick to your circle of confidence.
Hetty concentrated on what she knew best, railroads, real estate, and government bonds. She avoided complexity and speculation. She never borrowed money, following her father's advice to never owe anyone anything, and kept her operations simple enough that she could manage everything herself from a desk at her bank.
Number nine, make work your passion. She said, My work is my amusement. When asked why she didn't retire, responded
Why should I give up work? Work wasn't a burden. She was completely in love with the intellectual puzzle of investing in business and the day to day sort of grind.
Number ten Manager.
Hay his approach to risk was sophisticated, yet simple.
She would only invest when she was satisfied the downside risk was low and the upside was high.
Number eleven, operate in private.
Don't draw attention to yourself. Hetty's investments were not always known. She purchased property under fictitious names, she bought stocks under other identities, and she was praised by shrewd observers for how closely she held her positions.
She moved in silence.
Number twelve, stay connected to the territory. Her frugality served one other purpose that a lot of people don't think about. She kept in touch with the real world.
And finally, thirteen, win-win or walk away.
Even when Hetty had a lot of leverage over other people, she never took advantage of them.
Thank you for listening and learning with me. I hope you love this episode of Outliers as much as I did. There's so many things that we can learn from Hetty Green and take away from this episode. I'll be listening to it again and again.
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