Did you know that a former president and first lady were the first two people to receive Medicaid cards? Or that the "S." in Ulysses S. Grant's name stands for nothing?
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More pertinently for Fools, it seems there were at least a few chief executives who couldn't manage their finances if their lives depended on it. In this clip from theMotley Fool Answerspodcast,Alison Southwick and Robert Brokamp commemorate July 4 with trivia about five presidents who were shockingly bad with money. They might have occupied the most powerful seat in the world, but they were hopeless with their wallets.
A transcript follows the video.
This podcast was recorded on Feb. 16, 2016.
Alison Southwick: Robert decided to diginto the personal finances of our great leaders, and perhaps not surprisingly, he learnedthat's just because you're sitting in the White House, it doesn't mean you'rea great budgeter.
Robert Brokamp: It's true.
Southwick: So you have some lessons for us todayfrom presidents past.
Brokamp:Yes. The formula for financial success, we all know, it'slive below your means,avoid debt, diversifyyour investments. We all know that. We don't always follow those rules,and neither do all our past presidents. I'mgoing to give you five examples of presidents who didn't exactly follow those! No. 1,Ulysses S. Grant. Anyoneknow what the "S" stands for? Anyone? Anyone?
Southwick: Not "Saver."
Brokamp:That's true. Itactually stands for nothing. Hisname was Hiram Ulysses Grant, but when a Congressman nominated him forWest Point,he just put "Ulysses S. Grant," and [Grant] decidedto stick with it. Nonetheless, after hispresidency, he went ona very lavish tour around the world, spent too much of his money,and then he invested $100,000 into abrokerage firm that was started byhis sonand a friend, and unfortunately,that friend was borrowing usingthe securities in the investment firmas collateral. We'vetalked a little bit about this -- that's great ifeverything goes up. If not, thenyour collateral becomes worth nothing --
Southwick: Isn't thisthe leveraging thing we talked about?
Brokamp: Leveraging margins.
Southwick: Margins, OK. Sorry.
Brokamp:So, things went south, investments get wiped out, Grant puts a little bit more money in, and he loses everything. So,toward the end of his life,he is pretty much penniless. Mark Twainconvinces him to write his memoirs,which he finishes before he dies. In the end, those royalties earn almost $500,000 for his family. He was dead. But he does havethe largest mausoleum in North America,so while you can't take it with you, you canlive in something thatyour money paid for. How's that, huh?
Southwick: You can leave it behind.
Brokamp: You canleave it behind for other people to visitand see your bones. No. 4,Harry S. Truman. "S" stands for?
Southwick: Not "Saver!"
Brokamp:Nothing! His middle name is "S" to honor two of his grandparents. Anyway, young guy, he invests in a mineral company, an oil company, loses everything, fights in World War I, starts a men's clothing store in Kansas City with one of his army buddies. That goes under. Eventually, I think he has to live with his in-laws, then gets into publicservice, is the president, comes out of thepresidency actually without much money. So, in, I think it was 1958,it was the first time Congress enacteda pension for presidents, andpart of it was, I think,out of sympathy for Harry S. Truman,who really didn't have much money. And when Medicare was signed into law in '65, Johnson signed it at the Harry S. Truman library, and Harry and Bess were the first two people to get Medicare cards. So they weredefinitely people who needed the help of the government.
No. 3, President William Henry Harrison, ninthpresident. You probably don't knowmuch about him, becausehe has the distinction of being -- anyone? Anyone? Thepresident with the shortest --
Southwick: That's right! He gave a speech! He died because hecontracted something from his inaugural speech, right?
Brokamp: That's right. He served as president for something like32 days. Hisproblems, he was a farmer,he went off to basically bethe ambassador to Colombia. While he was gone,the crops failed; his sons didn't manage it very well. Sohe came back to a lot of debt. So by the time he was president and died,he actually didn't have a whole lot of money.
Southwick: This was the guy who was really, really cold, and was like, "I don't need a coat. I'm just going to give my speech because I'm a tough man!" And then he died.
Brokamp: And then he died. There'ssome debate about whether or not that's actually how he got the pneumonia. Butregardless, he was notpresident for very long. No. 2,Thomas Jefferson. We all know him.
Southwick: Buthe's huge in Virginia.
Brokamp: He was, at one point, was one of the wealthiestpeople in Virginia. But, like,a lot of people own land and property. You can be ...
Southwick: Land-wealthy and cash-poor?
Brokamp: Right. He owed a lot of money. Healso had expensive tastes. BuildingMonticello was not cheap. He was owed a lot ofmoney by other people; he wasn't great at collecting it. He signed loans for other people that heeventually became responsible for. Toward at the end of his life, he came up with the schemein which he was going to have a lotteryby which someone could win some of his property. I think it was even his estate. He got talked out of that. But by the time he passed away, he owed -- I think, then, was $100,000, which now would be millions of dollars. And his heirs basically didn't get anything. All his stuff had to be sold.
Southwick: All right, time for No. 1! [drums fingers]
Brokamp: Time for No. 1! This is thesuccess story of the presidents --
Southwick: Does that actually sound like a drum roll?
Brokamp: Yeah, that was. By the way,Presidents Day, I don't know if you knew this,is actually not an official holiday federally. It's actually Washington's birthday,officially, in the federal books. Stateshave it as Presidents Day. So we're going to end it here with Washington, who also had a lot of land.
Southwick: Yes, not far from here, like, 8 miles from here.
Brokamp:That's true. Hemade the wise decision of marryingMary Custis, who at that time was one of the wealthiest women in Virginia. He still was in a lot of debt. Eventually, it got paid off because he inherited some money. But even when he went to hisinauguration in New York Cityfor the first inauguration,he had to borrow money to be able to get up there.
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Thesmart thing that he did was -- tobacco farming was actually not that profitable. What he did washe diversified hisinvestments. Living on the Potomac,he saw those fish going by and thought, "You know what? I've got to make money from the fish." Sohe had a fishery. He alsoeventually built what was one of the biggestwhiskey distilleriesin the country,down by the gristmill -- those of us at The Motley Fool know that. So, by doing all of those things, in the end, he ended up being debt-free and being very wealthy when he passed away.
Southwick: Oh! So that was a success story!
Brokamp: That's thesuccess story. From the president who had toborrow money to get to his own inauguration, to being awealthy guy when he passed away.
Southwick: Andnowadays, once you're done being a president,you go on a speaking tour,you go work for some lobbying firm,you got it good,the money starts rolling in after you're done being president.
Brokamp: You do.
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