Hetty Green in 1907. As a young woman her father bought her a wardrobe full of the finest dresses in order to attract a wealthy suitor. But she sold the clothes and invested the proceeds in government bonds.
Hetty Green was the first woman to invest on Wall Street. She was also the pioneer of Warren Buffett-style “value investing”.
When she died in 1916 at 81, she had an estimated $100m in cash and owned more than 6,000 assets, including railways, hotels, office buildings, theatres, churches and cemeteries. She was worth almost $200m, making her the richest woman in the world. Today that sum would have the purchasing power of about $4.5bn (£3bn).
By comparison, the estate of JP Morgan, one of America’s most prominent bankers when he died three years earlier, was worth $80m.
Hetty (short for Henrietta) Robinson was brought up by her father and grandfather, who owned one of the biggest whaling fleets in America. Her financial education started at the age of six, when she read the financial news to her grandfather and talked it over with him. By the age of 13, she had taken over accounting for the family business.
For her 20th birthday her father endowed her with a wardrobe full of the finest dresses of the season worth $1,200 in order to attract a wealthy suitor. But her reaction to the gift demonstrated her priorities: she sold the clothes and invested the proceeds in government bonds.
There is no great secret in fortune-making … All you do is buy cheap and sell dear, act with thrift and shrewdness and be persistent.
– Hetty Green
However, she started to invest seriously when she inherited an estimated $7m after her father’s death in 1865, when she was 31. This inheritance consisted of $1m outright, with the rest in a trust (managed, inevitably, by a man) from which she could draw money annually. She obtained a further $600,000 following the death of an aunt after a legal battle.
A couple of years later she married a banker and business associate of her father, Edward Green. She insisted on a prenuptial agreement to keep their finances separate. The couple moved to London to avoid further legal troubles. While in England, she had two children; they returned to the US seven years later.
Although Green inherited a substantial fortune, it was her subsequent investment strategy that made her the richest woman in the world. She had a preference for conservative and long-term investments, substantial cash reserves and a cool head in a crisis. She researched companies thoroughly and only when she was convinced of their value did she buy or sell.
“There is no great secret in fortune-making … All you do is buy cheap and sell dear, act with thrift and shrewdness and be persistent,” she said. This will sound familiar to present-day fans of Warren Buffett.
“Hetty Green was the female Warren Buffett of her time,” wrote Janet Wallach in The Richest Woman in America: Hetty Green in the Gilded Age. “Like Buffett, she believed that financial crises presented a great opportunity for investors.”
Initially, Green used her father’s inheritance to invest in “greenbacks” – notes printed to finance the Civil War. Timid investors were wary of these notes, issued by a still-recovering government, but Green bought boldly. She claimed to have made $1.25m from them in a year.
Men work between a barge canal and railroad tracks, shoveling dirt at the Glydon Construction Camp, Minnesota.
But she usually concentrated on hard assets, buying cheap, rarely selling and reinvesting income to compound returns. She invested primarily in railways, some railway bonds, real estate and mortgages. Railways came with acres of land grants and mineral rights. She went where the growth was, investing in boom towns and major railheads such as Denver, St Louis and Cincinnati.
At the time of her death she owned 6,000 properties in 48 states. Among railways, hotels and office buildings she also owned cemeteries, mortgages to nearly 600 churches and almost every major crossroads in the land. She bought shrewdly on the outskirts and waited for the city to come to her.
Her interest in railways was mirrored recently by Mr Buffett. In 2009 he took control of the Burlington Northern Santa Fe railroad company for $26bn – the biggest deal in the history of his company, Berkshire Hathaway. Mr Buffett said the firm was a good asset for Berkshire to hold over the next century.
But Mr Buffett and Green also agree on the merits of substantial cash reserves. Mr Buffett said in 2015 that Berkshire Hathaway would never hold less than $20bn in cash, while Green always kept between $20m and $40m.
A Burlington Northern Santa Fe (BNSF) train car sits in a depot in Ft Worth, Texas.
In the financial panics of 1873, 1893 and 1907 she bought up bonds, shares and real estate at deep discounts. When everyone was rushing out of the market, Green bought in.
Barry Glassman, president of Glassman Wealth Services, a US financial planning firm, said all investors could learn from her. “[One of her lessons] is to do the opposite of what the crowd does,” he wrote in 2013. “Hetty waited many times for panic to ensue, for investors and business owners to be forced to sell, then stepped in with cash to scoop up the bargains.”
Green was not a believer in the “buy and hold” approach, however. “I never buy anything just to hold it. There is a price on everything I have,” she said. “When that price is offered, I sell.”
Wall Street in the late 19th century.
She made her boldest move in 1907. Sensing the market was overvalued, she sold many shares and bonds and called in all her loans. When the “Panic of 1907” broke, she bought assets sold by firms on the brink of bankruptcy and profited from reorganisations and distressed investments.
She was a lender in JP Morgan’s emergency operation to save the banks in the Panic of 1907 with a cheque for $1.1m. For payment, she took short-term municipal bonds with high interest (5.5pc).
She said: “When the crash came, I had the money, and I was one of the very few who really had it. The others had their securities and their values. I had the cash and they had to come to me in droves.”
She did not take part in Wall Street’s “bear raids” – attempts by unscrupulous speculators to force the price of shares or other assets down – in the 1800s. When speculators tried bear raids on her, Green bought all outstanding stock and cornered whole sectors. She extracted a high price from speculators before allowing them to close their positions.
Green’s only liability was her husband. When railroad bonds fell in 1884, the biggest investors in a major Wall Street bank, John J Cisco & Sons, defaulted – and they included Edward Green.
Hetty’s assets at the bank amounted to more than $500,000 in cash and more than $26m in bonds, mortgages and other securities. The bank used Edward’s wife’s assets as collateral. When Hetty refused to cover his debts and tried to move her assets to another bank, Cisco froze them.
After two weeks of fierce negotiations, she handed over $400,000 to cover his debts and the bank claimed half of her cash balance. She moved her assets to Chemical National Bank – and effectively ended the marriage.