Teddy Roosevelt had many noble virtues which are to be emulated by men. Unfortunately, frugality, thrift, and common fiscal sense were not among them. I find that seeing the areas of weakness in our heroes helps us see those in ourselves. Also, it brings them down to earth. In many ways Theodore Roosevelt was a man of genius intellect, ready to absorb vast quantities of knowledge into his thinking cabin (brain). Yet when it came to finances, he was a complete dullard.
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Roosevelt came to know the Dakota Badlands on a hunting expedition. He went there to shoot a buffalo, which he eventually did, but it was the beauty and wildness of that land that really made the trip. Desiring to have a permanent place to call home in those parts where he might be able to come and hunt for weeks and months, and seeing the open plains, Roosevelt decided to get into the cattle business. Using his recently deceased father’s inheritance, he wrote checks, some of them blank, and handed them over to a few close friends he trusted to run the operation. The idea was that these men would build the ranch, purchase the livestock, and essentially manage the whole thing while Teddy was off politicking.
One might be able to excuse the foolishness of this enterprising young man because of his age. Up until this point in his life he had the security of a wealthy father. However, he had absolutely no experience in the cattle industry. He never sat down to estimate the costs of managing the ranch or Return on Investment.
Elkhorn Ranch provided Roosevelt with many exciting hunting trips and adventures, but the cattle business went bust within 3 years after a harsh winter killed 60% of his livestock. This actually ended up being a good thing for Roosevelt, as it forced his hand out of a flailing business he knew nothing about.
The Anti-Trust Panic of 1907
Roosevelt’s fiscal ineptness became most apparent in his office of highest authority. When Roosevelt took office after McKinley’s assassination, the nation was in a state of economic growth. Trusts — essentially monopolies in a particular sector of business — were everywhere, from pencils makers to blackboard manufacturers and of course the big ones: oil, steel, coal, banks, and the railway. These trusts, the larger ones, had capital and influence that was greater than most nations and combined, rivaled the power of the Federal Government. Roosevelt wasn’t having any of that. To his credit, the trusts did have a good deal of influence over public opinion (they owned the newspapers) as well as a growing number of politicians.
After successfully passing legislation to limit the power of trusts and break them up the market began a decline. Lenders were afraid to lend, waiting on the government’s next move, and banks were holding onto their money rather than investing, for the same reasons. As a result, businesses began to go bankrupt and in the summer of 1907 a full panic-driven recession set in.
It seemed as if the events unfolding in the financial markets due in large part to his actions didn’t phase him in the least. When questioned about it he responded:
“Do I look as though those Wall Street fellows are really worrying me?”
“No, Mr. President, you certainly do not.”
“I’ve got them,” he said through his teeth “on the run!” – Theodore Rex, Edmund Morris
Time and again Roosevelt showed his inability to work within the financial space. Had it not been for his wife, Edith, he likely would have been a disgraced debtor before ever making a name for himself.
Roosevelt had two character flaws working against him: Impatience and lack of Foresight. Both of these are required to be financially sound. He was a man of “pure act” and rarely thought about the consequences of his actions. Though we see a steady climb to power in his life, it is the climbing and not the plotting that he was good at. As President, he still saw everything as a competition. The large trusts were headed by men of power and accomplishment and he wanted to best them. In order to do so, he enacted laws that expanded the power of government over that of private corporations. We are still dealing with the consequences of his decision today.