In this series, Nav.it profiles infamous female financiers and shares what they taught us about navigating their own personal finances. These ladies made money moves long before Cardi B.
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It’s 1774 in Massachusetts, and it’s chaos. The newly established 13 colonies have declared independence from Great Britain, are boycotting British goods, and a war is brewing.
“Chaos is bad for many of us,” says Woody Holton, a history professor at the University of South Carolina, and author of Abigail Adams: A Life. “But if you’re a risk taker and you’re fortunate, the combination of being smart, gutsy and lucky meant you could make a killing.”
Abigail Adams was one such smart, gutsy and lucky ladyboss that we can all learn from.
Remember the Ladies
But before we go any further, let’s set the stage a little better: Abigail Adams was a lady doing a lot at a time where we think ladies didn’t, or couldn’t, do much. In the colonial era, women held just as much of the responsibility as men, Holton says.
While men ran the export side of things—such as handling the production and sales of grain from the farm—women were the economic actors. Women produced for the local economy: they grew vegetables, handled poultry, livestock and dairy, and made clothes.
It was the law that screwed them: Single women could own property and have money in their name, but the second they got married, it all legally belonged to their husband.
“Women had lots of responsibility, but not a lot of power,” Holton says.
So while John Adams was in Boston, and later in France as a diplomat, a 30-something-year-old Abigail ran things at home in Massachusetts. The British boycott meant America was completely cut off from international trade. Unless you could slip a ship past the British navy, importing goods was risky business. Abigail recognized this lack of supply and asked John to send her stuff instead of cash. Goods were more valuable because she could sell them at a high price.
“Some of her ships were captured,” Holton says. “John was more risk averse, but she said to him, ‘If one in three arrives, I should be a gainer.’ She understood high risk is high profit.”
Abigail was a risk taker. John wasn’t. He believed land was the safest investment (and it was, in a way: stealing land is harder than stealing money). But the safety of the investment meant a lower return, about 1 percent. Abigail didn’t want to play it safe—she had her eye on bonds.
Basically, a bond is an IOU between you and the government, and you function as the bank. The government borrows money from you with a promise to pay it back with interest. War is really expensive, so the cash-strapped government paid its Revolutionary War soldiers with these IOUs until it could rustle up the actual funds.
Well, you can’t feed your family on an IOU, so soldiers would sell their bonds in exchange for gold or silver. And the going rate was about one-third of the bond’s face value.
When no one else had faith in the government to pay out these bonds, Abigail wanted in.
During 1785, these bonds earned 6 percent of their face value. So, for example, if Abigail bought a bond worth $100 of old timey money, she only paid $33 for it. But she still earned 6 percent off the $100, amounting to $6 per year. When the government paid out the bond and interest, Abigail earned $6 per year off of a $33 investment, resulting in about 18 percent return.
“The thing she had over John is guts,” Holton says. “She had a lack of formal education, but she was not at all intimidated by the Harvard graduate that she married.”
Last Act of Defiance
Abigail made a lot of money for the Adams household by investing smartly, but she didn’t stop financially trailblazing for women. Toward the end of the Revolutionary War, she symbolically opened her own account.
“She took some of this money [that she made] for her husband—at least that’s what a women does in the eyes of the law—and set it aside as her own pocket money,” Holton says. “‘This money, which I call mine,’ she writes. She’s saying she knows that the law sees it as her husband’s, but she wants it for herself.”
Technically, she didn’t have the legal right to her own money, but she said she did. John, though not always a feminist, respected Abigail’s wishes. He didn’t fight her on the separate account, though he could have.
He also didn’t fight her on the will she wrote before she died in 1818.
“She’s not supposed to have one, she [legally] has no property to divide,” Holton says.
Abigail had about $6,000 to her name (which is about $100,000 in modern money, honey!), but didn’t want all her hard-earned cash to simply go back to John. Besides leaving some cash to her sons, Abigail divided her fortunes among women—many of whom were married.
Dear Abby, How’d You Do It?
Abigail wasn’t a staunch activist. She just wanted an even playing field for women, and she fought that battle on a personal level.
She didn’t have an MBA nor did she mire herself in insider trading. She was observant, good at managing money, and didn’t hide it.
Abigail Adams taught us that cultivating nerves of steel, finding a willing seller, and investing with your head can make for strong financial success.