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Speaker 1: Pushkin too quick. No, it's perfect push kit.

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Speaker 2: Stop you got it, Jacob.

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Speaker 1: As a history podcast, we are contractually required to observe

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Speaker 1: that our country is about to celebrate the two hundred

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Speaker 1: and fiftieth anniversary of the signing of the Declaration of Independence.

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Speaker 3: You gave me the Latin, Robert, what do we call this, Jake?

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Speaker 3: I got the Wikipedia page right here. It's the United

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Speaker 3: States semi quinn Centennial aka the bicic quiz Centennial, aka

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Speaker 3: the sester Centennial, or my personal favorite, Yes, the quarter Millennium.

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Speaker 3: The quarter millennium is the best one. Yeah, why do

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Speaker 3: we need Latin? This is this is America. I did

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Speaker 3: a half marathon. Now it's the quarter millennia.

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Speaker 1: Quarter. We're going all the way the way a thousand

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Speaker 1: years baby. So obviously, like this summer, we're going to

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Speaker 1: be hearing a lot about the classic founding fathers. You

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Speaker 1: got your George Washington, you're Thomas Jefferson, You're Alexander Hamilton.

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Speaker 1: Since this is business history, we are going to tell

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Speaker 1: the story of the financial founding father Robert Morris. Morris

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Speaker 1: signed the Declaration of Independence, he signed the Constitution, he

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Speaker 1: was a senator, he was a hero of the Revolution

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Speaker 1: in a really important way. He found the money to

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Speaker 1: pay for the guns and soldiers. At one point he

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Speaker 1: was likely the richest man in the early United States,

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Speaker 1: and then all of a sudden he was not. He

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Speaker 1: had so many debts he was thrown into jail. I'm

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Speaker 1: ready for the musical. Yeah, no musical. But we do

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Speaker 1: have a podcast called Business History. I'm Jacob Goldstein, I'm Roberts.

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Speaker 1: It's a show about the history of business today. On

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Speaker 1: the show, a wild side of the American Revolution. Okay,

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Speaker 1: wild for me, not the battles, but the financing of

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Speaker 1: the battles, the money George Washington needed to fight the revolution.

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Speaker 1: It's no exaggeration to say that Robert Morris created really

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Speaker 1: this new economy of the United States out of thin air.

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Speaker 1: And the question that everyone asked as he was being

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Speaker 1: hauled off to prison was did he finance the war

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Speaker 1: or did the war finance him?

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Speaker 3: Not mutually exclusive Happy quarter millennium. Who who will speak

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Speaker 3: for the bankers?

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Speaker 1: I am going to speak for the bankers. Okay, I'm

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Speaker 1: just gonna admit right here, Robert Morris is not everyone's

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Speaker 1: favorite founding father. He was controversial at the time he's

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Speaker 1: controversial now, but I have a real soft spot for him.

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Speaker 1: He reminds me of all the people I went to

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Speaker 1: business school with, the Nbas. They're charming, they're super smart,

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Speaker 1: they're organized, and they just say out loud, I want

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Speaker 1: to make money. I am here to make money. They

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Speaker 1: ignore things happening in the world. They're not ideological, and

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Speaker 1: Robert Moore sort of feels like this, even though he's

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Speaker 1: living through the most dramatic times in world history. He's

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Speaker 1: a guy who's like, yeah, whatever, let's just like look

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Speaker 1: at the ledger and make some money here. He came

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Speaker 1: to America from England, so he's a British citizen in

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Speaker 1: seventeen forty three. He's a teenager, and he didn't come

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Speaker 1: for religious freedom or to start a new society. He

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Speaker 1: came because he wanted to be a merchant. He wanted

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Speaker 1: to do international trade. He came to make money. Yeah,

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Speaker 1: and Philadelphia was the place to be, Like, this was

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Speaker 1: a place where ships were coming and going, and he

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Speaker 1: thought there was money to be made. He started out

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Speaker 1: as a in turn, you know, just sweeping the floors,

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Speaker 1: became a shipping clerk. There's a story about him that

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Speaker 1: captures his style. He's still a teenager and his boss

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Speaker 1: is out of town. You know, he's the shipping clerk.

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Speaker 1: But he hears from a seat captain, probably.

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Speaker 4: A crusty old guy with one R, that the price

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Speaker 4: of flour has jumped in Europe. Okay, Yeah, and Morris

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Speaker 4: doesn't really have the authority to do anything, but he's like,

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Speaker 4: screw it. Let's buy up all the flour we can

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Speaker 4: get in Philadelphia. Let's put it on an outbound ship

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Speaker 4: and take advantage of the high prices before anyone figures

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Speaker 4: it out.

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Speaker 1: Arbitrage.

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Speaker 3: It is an arbitrage if he is selling for two

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Speaker 3: different prices in two different places, and the shipping cost

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Speaker 3: is less.

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Speaker 1: Than the difference.

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Speaker 3: You should buy all that you can in the cheap

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Speaker 3: place and sell all that you can in the expensive place,

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Speaker 3: and that'll make the prices converge.

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Speaker 1: It's actually a useful function. Yeah. And if Robert Morris

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Speaker 1: were alive today, he'd be working for like a hedge

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Speaker 1: five Jane Street. He would be working for James Street,

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Speaker 1: trading flower futures in India versus Pakistan. Yes, closing the

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Speaker 1: scent difference. Yes. So Morris had the gift and he

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Speaker 1: ended up running this trading company, and it's fair to

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Speaker 1: say that he loved it. He loved being a rich

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Speaker 1: and powerful guy in an English colony. Right he had

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Speaker 1: made it in the New World. He was the least

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Speaker 1: likely person to want a revolution because it would mess

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Speaker 1: up all the shipping schedules and profits, bad for business.

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Speaker 1: So he probably would have stayed out of this whole

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Speaker 1: mess except for the Stamp Act. A tax at tax.

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Speaker 1: There's one thing which guy hates, it's a tax and

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Speaker 1: the Stamp Act. I am still amazed that Britain thought

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Speaker 1: this up as something to put on the colonists. The

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Speaker 1: Stamp Act was a fee on anything that involved paper.

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Speaker 1: Anything had paper, you needed to put a stamp bond

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Speaker 1: and he had to pay for the stand. I mean,

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Speaker 1: this seems.

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Speaker 3: Maybe reductive, but when I think about it, it's like, well,

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Speaker 3: who's using a lot of paper.

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Speaker 1: It's not like the poor farmers. It's journalists and lawyers. Yeah,

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Speaker 1: there were taxes on newspapers, bonds, court documents, playing cards, So.

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Speaker 3: What playing cards to the side. All those other taxes

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Speaker 3: are on the powerful people. Like, in terms of political economy,

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Speaker 3: who do you want on your side? You want the

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Speaker 3: journalists and the lawyers and the bankers, and you're putting

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Speaker 3: attacks specifically on them.

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Speaker 1: And you know, Robert Morris loved to like do paperwork,

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Speaker 1: so it was loading the flower onto the ships himself.

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Speaker 1: It was really going after the moneyed interests. And Robert

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Speaker 1: Morris might have even been able to ignore this except

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Speaker 1: he was a port warden at the time, so it

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Speaker 1: was kind of running things in the port because he

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Speaker 1: was the biggest customer. And the American colonist decided they

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Speaker 1: were going to boycott anything from Britain just to protest

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Speaker 1: the Stamp Act, and so there he was. He's like, okay, fine,

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Speaker 1: I will help enforce this boycott. He ends up being

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Speaker 1: elected to the Continental Congress because you know, he's big

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Speaker 1: guy on campus running the whole thing, and he really

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Speaker 1: thought this whole tiff with Britain would be negotiated away.

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Speaker 1: He's like, there's just no way that smart people with

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Speaker 1: money on both sides of the Atlantic would ever go

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Speaker 1: to war. Here's a quote that he wrote about this.

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Speaker 1: He writes, I recommend constantly a steady, manly, but decent,

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Speaker 1: and peaceable opposition as most likely to ensure success. He

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Speaker 1: thought we should just be manly but not shoot anybody? Ye, yeah,

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Speaker 1: why is it manly but decent? Odds Robert Morris. He

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Speaker 1: wasn't going to get the peaceful part. I should say

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Speaker 1: a lot of the stories in this podcast are taken

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Speaker 1: from the book Robert Morris, Financier of the American Revolution.

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Speaker 1: You know that sold a lot of copies there with

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Speaker 1: the word financier in it, right, Robert Morris, Financier of

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Speaker 1: the American Revolution by Charles Rapley. And he told this

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Speaker 1: story kind of apocryphale, but I love it. It's April

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Speaker 1: twenty third, seventeen seventy five. You can hear the fife

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Speaker 1: drums the book, so glattan So Robert Morris is at

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Speaker 1: the city tavern. It's something called the Long Room, and

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Speaker 1: he's actually at the annual feast of the Society of

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Speaker 1: Saint George. So it's a society of Brits celebrating Britain,

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Speaker 1: which is what he is. Let's just be clear. He

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Speaker 1: is a British citizen and happy to be one and

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Speaker 1: reveling in it. Right. He's sitting up front and a

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Speaker 1: messenger bursts in and announces that the British had fired

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Speaker 1: on American troops at Lexington the British loyalists in the bar,

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Speaker 1: according to the story, spring up and start running for

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Speaker 1: the exits. They're like, what's on and the way the

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Speaker 1: story is told later, Robert Morris was left at the

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Speaker 1: head table in mid toast with his glass up camera

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Speaker 1: pans the room is empty, and he says to the king,

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Speaker 1: you know what. He doesn't know what to say at

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Speaker 1: this point, and this is uncomfortable for Robert Morris, like

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Speaker 1: he is as close as you can get at this

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Speaker 1: point to a global capitalist and war is very bad

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Speaker 1: for his business, which is to run ships back and

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Speaker 1: forth to Europe. But at this point he is also

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Speaker 1: a member of the Continental Congress, so he wants to

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Speaker 1: do what's best for Pennsylvania and it's hard for him

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Speaker 1: to reconcile. So when the colonists are meeting to vote

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Speaker 1: on the declaration of independence, Morris actually argues against it, saying,

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Speaker 1: you know, we should be more conservative about this, we

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Speaker 1: shouldn't take any rash measures. And he doesn't vote for

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Speaker 1: the declaration of independence. He abstains, uh huh, classic weasily move.

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Speaker 1: I neither voted for it nor against it. That's going

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Speaker 1: to come in useful in case there's a tribunal letter

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Speaker 1: when it is finally drawn up for a signature, though

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Speaker 1: Morris reluctantly signs his name, which you can see to

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Speaker 1: this day. He's a pragmatist and at this point the

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Speaker 1: war had started. There's no way back from this, so

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Speaker 1: he's like, I guess I'm in. So the first shots

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Speaker 1: fired in the revolution, Morris dedicates himself to what he

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Speaker 1: does best. He is a fancy rich man. He is

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Speaker 1: not going to fight, he is not going to hold

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Speaker 1: a gun, but he is going to do trading for

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Speaker 1: the revolution, shipping for the revolution. I mean, the guns

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Speaker 1: aren't going to buy themselves. George washing Ington needs gunpowder

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Speaker 1: and Morris was tasked with figuring out how to get it,

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Speaker 1: and this was not easy because England kind of knew

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Speaker 1: something was up, so for months they had kept Americans

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Speaker 1: from buying guns and ammunition. They're like, maybe we shouldn't

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Speaker 1: be stalking people who use these against us. The British

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Speaker 1: Navy at this point, of course, controls the seas and

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Speaker 1: it's very difficult to sneak things past the British, so

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Speaker 1: Morris starts to essentially act as a smuggler.

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Speaker 3: Yeah, a lot of the revolutionaries I think were smugglers,

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Speaker 3: quasi smugglers.

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Speaker 1: We all shippers, kind of dressed up smugglers. No, alright,

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Speaker 1: that's right. Okay, So the former clerk he starts to

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Speaker 1: forge paperwork, fake sailing orders, fake cargo registers. He's using

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Speaker 1: his agents in the Caribbean and in France to route

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Speaker 1: gunpowder past the British blockades. It's all very exciting, although

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Speaker 1: of course he's just writing orders at his desk. They

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Speaker 1: communicated in secret code and invisible ink.

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Speaker 3: The British didn't yet know you could just put lemon

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Speaker 3: juice on it and read it.

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Speaker 1: Nobody knew he was a genius. And during this all

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Speaker 1: Morris obviously was obtaining needed supplies for the American revolutionaries,

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Speaker 1: and at the same time he was making a little money,

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Speaker 1: because it was Morris's point of view that merchants helping

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Speaker 1: to stock the American army should be able to make

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Speaker 1: a profit. His company and other companies provided the ships,

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Speaker 1: and he wrote.

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Speaker 3: I assert boldly that commerce ought to be as free

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Speaker 3: as the heir. Our traders are remarkable for their spirit.

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Speaker 3: Their own interest and the public good go hand in hand,

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Speaker 3: and they need no other prompter or tutor very self serving. Yes,

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Speaker 3: but let me ask you so amazingly the Wealth of Nations.

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Speaker 3: You know, the Adam Smith book that started economics came

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Speaker 3: out in seventeen seventy six, incredible coinfluence. Yeah, do you

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Speaker 3: know did he know about Adam Smith this idea that

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Speaker 3: this is a very Adam Smith idea.

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Speaker 1: Yes. I don't know if you said it before Adam Smith,

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Speaker 1: but he definitely had the book, had gifted the book

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Speaker 1: to people after it happened. But like Morris is coming

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Speaker 1: up with this, you know, it was in the air,

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Speaker 1: this idea and yeah, self serving, absolutely, making money off

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Speaker 1: of a war and tragedies terrible. But he understood something

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Speaker 1: that I do think is true, which is, if you

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Speaker 1: want people to do work for you, especially people you

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Speaker 1: know in France and the Caribbean and sailors who have

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Speaker 1: no loyalty in the United States of America, you need

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Speaker 1: to pay them.

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Speaker 3: Well, there's the famous line from Wealth of Nations, right,

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Speaker 3: it's something like it's not from the benevolence of the

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Speaker 3: baker and the butcher and the brewer that we expect

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Speaker 3: our dinner, but from their regard to their own self interest, right,

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Speaker 3: Like that's how we get our dinner, because those guys

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Speaker 3: are making a profit by baking us bread and getting

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Speaker 3: us meat.

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Speaker 1: And that's how we got our guns and our gunpowder.

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Speaker 1: And eventually Morris a source saying tents, sales, clothing, even

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Speaker 1: food for the American army. He is like the Pentagon.

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Speaker 1: He's like seeing where all the troops are and getting

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Speaker 1: them what they need. At one point in seventeen seventy seven,

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Speaker 1: the British were threatening Philadelphia and the Continental Congress, who

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Speaker 1: were running the colonist efforts. At this point, they flee

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Speaker 1: the city except for Robert Morris, and he says he

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Speaker 1: wants he needs to be by the ships. He needs

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Speaker 1: to like follow all the shipping stuff. He needs to

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Speaker 1: stay at his desk and with everyone else left and

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Speaker 1: George Washington in the field, he's basically running the wartime

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Speaker 1: economy for the colonists, and he's directing the ships and

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Speaker 1: the logistics and the money side and figuring out how

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Speaker 1: to pay for all of this. He is he's kind

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Speaker 1: of acting as the president at least the Secretary of

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Speaker 1: the Treasury, right, and George Washington at this point is

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Speaker 1: depending on him, writing him constantly begging for more, just

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Speaker 1: saying we need more and more and more and more

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Speaker 1: and more. When Washington was camped by the Delaware, he's

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Speaker 1: about to cross on the little rowboats standing up. Don't

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Speaker 1: do that in winter. It's the famous painting. You know

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Speaker 1: what they didn't paint. They didn't paint Robert Morris sitting

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Speaker 1: at a desk figuring out how to get blankets and

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Speaker 1: stockings to keep those men from freezing. It was winter

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Speaker 1: along the Delaware River. At one point, Washington's men threatened

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Speaker 1: to desert him because they hadn't been paid. You know,

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Speaker 1: they were also wanting to make some money from being soldiers,

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Speaker 1: and there was no way to find money. And Morris

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Speaker 1: went to all the rich people he knew in Philadelphia

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Speaker 1: to have them dig up their coins to go to

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Speaker 1: their stash, and he somehow managed to get fifty thousand

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Speaker 1: dollars out of them and got it to General Washington

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Speaker 1: to pay the soldiers. But it was getting harder and

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Speaker 1: harder to find real money, we should say at this time,

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Speaker 1: so we need to talk about the way monetary system.

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Speaker 3: I've been waiting to talk about continentals. I've been waiting

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Speaker 3: to talk about continentals.

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Speaker 1: So the colonies were operating on gold and silver that

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Speaker 1: came from Britain of France and this sort of thing

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Speaker 1: classic money. But they also had paper money, and specifically,

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Speaker 1: the Continental Congress had issued these IOUs will say, continental dollars,

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Speaker 1: they were called, and they loved issuing continentals because every

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Speaker 1: time they had to pay for something, they just printed

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Speaker 1: more money and said, yeah, yeah, these will definitely be

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Speaker 1: worth something after the war. Robert Smith, what happens if

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Speaker 1: you keep printing paper money, it's not worth anything inflation,

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Speaker 1: You get inflation. And Morris tried to explain this in

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Speaker 1: his writing. He wrote, there is one circumstance more distressing

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Speaker 1: than all the rest, because it threatens instant and total

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Speaker 1: ruin to the American cause unless some radical cures applied,

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Speaker 1: and that speedily.

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Speaker 3: I mean the depreciation of the continental currency. The extravagance

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Speaker 3: that has prevailed in most departments of the public service

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Speaker 3: that have called forth prodigious emissions of paper money.

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Speaker 1: Prodigious emissions of paper money, were they nocturnal?

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Speaker 3: I'll tell you people always use this word emissions with

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Speaker 3: paper money at the time. I don't know why, but

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Speaker 3: you see it again and again and it sounds disgusting,

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Speaker 3: which is how they mean it does sound they are

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Speaker 3: disgusted by it.

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Speaker 1: I just love that of all the things threatening the revolution, right,

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Speaker 1: everyone's arguing about the cause of democracy or centralization of federalism.

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Speaker 3: And Robert Morris is the one more distressing than all

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Speaker 3: the rest.

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Speaker 1: Is it death, is it freezing? It's inflation. It's inflation

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Speaker 1: and the currency. And you know what, He's absolutely right,

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Speaker 1: like this is the thing that was threatening George Washington

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Speaker 1: the army, Like the army was just going to give up.

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Speaker 1: They wouldn't be able to obtain anything. And it's funny

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Speaker 1: because this inflation's going on, and people reacted to it

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Speaker 1: back then exus exactly as they react to it today.

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Speaker 1: So some people in Congress blamed the greedy merchants, greedflation,

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Speaker 1: greedflation taking advantage of this war to raise prices. Not

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Speaker 1: the fact that we're printing too much money. No, no, no,

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Speaker 1: They're saying farmers are trying to gouge us, you know,

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Speaker 1: with their increasing prices for food. And then Pennsylvania put

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Speaker 1: some price controls on things like food. What happens. What

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Speaker 1: happens when you put price controls on Robert Smith? You

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Speaker 1: get a shortage.

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Speaker 3: You get a shortage. If you're the prices rise, then supply.

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Speaker 1: Will fall, and that is what happened. There's a quote

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Speaker 1: by Robert Morris that actually reminded me of you, Jacobs.

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Speaker 1: The kind of thing you might.

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Speaker 3: Say, the most effectual way to turn a scarcity into

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Speaker 3: plenty is to raise the price for the article wanted.

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Speaker 3: If you want more of a thing, pay more for it,

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Speaker 3: and more will appear. It's the opposite of price controls.

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Speaker 3: So Robert Morris has to tackle this currency problem. He

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Speaker 3: doesn't know how to do it.

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Speaker 1: He tries to lecture the Congress about we need to

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Speaker 1: be better about spending, we need to be backed more

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Speaker 1: by France and hard money. But in the end he decides,

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Speaker 1: I'm going to start my own bank and I'm going

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Speaker 1: to print my own paper money.

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Speaker 3: Let me just say this sounds like bizarre to us

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Speaker 3: if you're starting a bank and printing your own money.

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Speaker 3: At the time, it was normal because, as you alluded to, before,

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Speaker 3: paper money was an io you like, in people's minds,

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Speaker 3: real money was gold or silver coins, and banks would

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Speaker 3: start up. People would start banks and they would print

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Speaker 3: paper money, and the paper money would actually say on

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Speaker 3: it like the five dollars bill would say like, this

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Speaker 3: is a claim on five dollars in silver at whatever,

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Speaker 3: the bank of Robert Morris, and then the idea is

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Speaker 3: you would you could take it and actually get the

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Speaker 3: silver out of the bank, but the paper would trade

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Speaker 3: as money.

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Speaker 1: And I'm always as people were very very very shrewd

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Speaker 1: and smart about this, and they could look at a

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Speaker 1: paper io you, and look at who issued it and

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Speaker 1: determine how trustworthy is this person and how much is

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Speaker 1: the real value of this paper? Yeah.

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Speaker 3: I mean, in fact, a few decks decades later, people

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Speaker 3: would actually start these, uh sort of like magazines for merchants,

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Speaker 3: when there were hundreds of banks or thousands of banks

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Speaker 3: printing their own money that told you for every bank

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Speaker 3: like take it, don't take it, apply a discount. It's

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Speaker 3: a really interesting market, right, this idea of a free

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Speaker 3: market in money.

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Speaker 1: So Robert Morris thinks, all right, everyone's screwing this up,

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Speaker 1: so I'm just going to take it back to first principles.

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Speaker 1: He starts the Bank of North America, yes, thinking big,

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Speaker 1: starts in Philadelphia with a bunch of money, but mainly

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Speaker 1: a shipment of silver from France, okay collateral, Yeah, and

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Speaker 1: the bank issues so own paper notes backed by silver

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Speaker 1: and gold. And he is very vigilant that there should

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Speaker 1: not be too many of these paper notes, not too

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Speaker 1: many emissions, not too many emissions, no emissions. And he

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Speaker 1: did all these psychological tricks because it is a psychological

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Speaker 1: game people. I mean, a new bank pops up and

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Speaker 1: you're going to trust them. Here's how he got people

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Speaker 1: to trust them. One thing they did. They had the

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Speaker 1: vault the basement and the loan office was up above,

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Speaker 1: and they had pulleys to lift chests of silver. Okay, right,

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Speaker 1: you know, just total logistics. But he made sure it

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Speaker 1: was out in the open and people could see it.

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Speaker 1: They got silver, and he would have people raise and

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Speaker 1: lower the boxes of silver, so if you came into

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Speaker 1: the bank, you would tell her, oh, you should have

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Speaker 1: seen it. They had boxes and boxes of silver in there,

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Speaker 1: like they have the money to back the notes. The

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Speaker 1: quote was it would dazzle the public eye by the

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Speaker 1: same piece of coin multiplied by a thousand reflectors. I

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Speaker 1: love that. It's like David Copperfield, David Silverfield. Another wild

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Speaker 1: thing that they would do at the Bank of North America,

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Speaker 1: so I'm told, was that if someone wanted to pull

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Speaker 1: silver out of the bank. You know, they would arrive

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Speaker 1: there with a note and say I want the silver

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Speaker 1: instead of this note. At the bank they would say,

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Speaker 1: happy to do it, sir, everything's backed by silver and

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Speaker 1: gold here and they would pay out the silver and

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Speaker 1: the stommer would leave happy from the bank, and then

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Speaker 1: they would send a clerk after that person chase him

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Speaker 1: down in the street and say like, hey, listen, can

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Speaker 1: you gives back to silver and we'll give you some notes,

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Speaker 1: Like really, it's safe for keeping it with us? You

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Speaker 1: sure you want to be walking out or out here

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Speaker 1: with that silver. So he's carefully managing this new currency,

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Speaker 1: and at one point he even issued his own Robert

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Speaker 1: Morris promissory notes, which was which was a bank. The

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Speaker 1: guy they was just like personally, you know me, I'm

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Speaker 1: a rich guy, I walk around in Philadelphia. I will

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Speaker 1: personally guarantee this paper money. And they were called because

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Speaker 1: they had different durations to them because his name is

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Speaker 1: Robert long bobs and short bobs. That's great, yeah, Moore

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Speaker 1: said when he issued his own notes.

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Speaker 3: My personal credit, which thank Heaven I have preserved through

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Speaker 3: all the tempests of war, has been substituted for that

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Speaker 3: which the country had lost. I'm now striving to transfer

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Speaker 3: that credit to the public. So very bankerly way to

401
00:22:10,920 --> 00:22:15,160
Speaker 3: think of the world. It's like you're moving credit around

402
00:22:15,680 --> 00:22:18,520
Speaker 3: a little bit arrogant. Also, even at the time, people

403
00:22:18,600 --> 00:22:21,840
Speaker 3: thought he was arrogant. And remember the United States of America.

404
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Speaker 3: A lot of people thought that this should be a

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Speaker 3: plane and simple nation. Yeah, not the United States of

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Speaker 3: America yet, if I've got the timing right.

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Speaker 1: Yeah, so they thought the colonists or our new civilization

408
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Speaker 1: here should be plain and simple. You didn't want to

409
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Speaker 1: have ostentation. People were not talking like bankers and economists.

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Speaker 1: And one of the things I really do admire about

411
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Speaker 1: Morris is he was seeing things that no one else

412
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Speaker 1: could see, because of course everyone's like, oh, there's actual

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Speaker 1: gunfights and battles, you know, and we don't know the

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Speaker 1: future of our nation. And he's like, no, no, no,

415
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Speaker 1: focus on the money. Make the money work, and everything

416
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Speaker 1: else becomes easier. So all of this credit subterfuged personally

417
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Speaker 1: guaranteeing essentially currency used by the government. It would not

418
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Speaker 1: have worked for long, but the war and so good news.

419
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Speaker 1: Morris stayed on for a while as the head of

420
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Speaker 1: Finance of the new country. But there was just so

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Speaker 1: much drama, political drama at this point about how the

422
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Speaker 1: states would work together, would there be taxes, would there

423
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Speaker 1: not be federal taxes? And Morris really argued like, no,

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Speaker 1: if we're going to make the system work. He was

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Speaker 1: very Hamiltonian in this, that we need a centralized government,

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Speaker 1: centralized debt, socialized currency. And at one point President Washington,

427
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Speaker 1: who was when he was president, would ask him to

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Speaker 1: be the Secretary of Treasury, the very first secretary of Treasury.

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Speaker 1: You know, before he asked Alexander Hamilton, he probably said, Hey,

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Speaker 1: you could be on the ten dollars bill, my man.

431
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Speaker 1: And Morris is like, I already have way too many

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Speaker 1: paper bills out there if I man on it. So

433
00:23:57,800 --> 00:24:03,000
Speaker 1: he declined and Alexander Hamilton took the job instead. So

434
00:24:03,119 --> 00:24:05,720
Speaker 1: Morris at this point he's like, I'm done with government.

435
00:24:05,720 --> 00:24:07,720
Speaker 1: I want to go back to my first love, the

436
00:24:07,760 --> 00:24:12,520
Speaker 1: thing I really believe in, making gobs of money. That's

437
00:24:12,560 --> 00:24:39,280
Speaker 1: after the break and we are back. Let's jump fifteen

438
00:24:39,359 --> 00:24:43,000
Speaker 1: years after the end of the Revolutionary War. Robert Morris

439
00:24:43,080 --> 00:24:47,920
Speaker 1: is a resident of the Prune Street Debtors Prison in Philadelphia.

440
00:24:48,680 --> 00:24:51,760
Speaker 1: He is living in a cell. It's a nice cell,

441
00:24:51,840 --> 00:24:54,800
Speaker 1: but it's still a cell. He would walk three miles

442
00:24:54,840 --> 00:24:58,439
Speaker 1: every day in the yard outside the prison, in a

443
00:24:58,440 --> 00:25:02,400
Speaker 1: big circle, fifty times around the yard. Apparently he would

444
00:25:02,480 --> 00:25:05,920
Speaker 1: keep a pocket full of pebbles, and with each circle

445
00:25:05,960 --> 00:25:08,200
Speaker 1: he make, he would drop a pebble just so we

446
00:25:08,240 --> 00:25:14,359
Speaker 1: could keep count. Yes, exactly, And as he's walking around,

447
00:25:14,359 --> 00:25:18,919
Speaker 1: he must have thought about how much of a fall

448
00:25:19,040 --> 00:25:22,800
Speaker 1: this was. How big he was in those fifteen years

449
00:25:22,840 --> 00:25:26,160
Speaker 1: since the revolution. At one point he owned more land

450
00:25:26,240 --> 00:25:29,960
Speaker 1: in the United States than anyone else, Like you would

451
00:25:30,040 --> 00:25:33,280
Speaker 1: probably be in the top ten of landowners today. Six

452
00:25:33,640 --> 00:25:37,600
Speaker 1: million acres, six million larger than the state of New

453
00:25:37,680 --> 00:25:41,000
Speaker 1: Jersey is what he owned. No, I'm double checking that.

454
00:25:41,640 --> 00:25:45,720
Speaker 1: You can check it. How many acres in this New Jersey.

455
00:25:46,280 --> 00:25:53,320
Speaker 1: It's almost Vermont sized land. New Jersey has five million acres. Impressive. Impressive.

456
00:25:53,680 --> 00:25:56,440
Speaker 1: Also would lead to his downfall. But at the time,

457
00:25:56,480 --> 00:25:59,320
Speaker 1: you know, he's in the debtors prison and the former

458
00:25:59,400 --> 00:26:02,960
Speaker 1: president of the United States because George Washington has voluntarily

459
00:26:03,640 --> 00:26:07,040
Speaker 1: decided not to become king, a huge moment in history.

460
00:26:07,160 --> 00:26:10,120
Speaker 1: Yeah yeah, but George Washington's still a celebrity. He came

461
00:26:10,160 --> 00:26:13,480
Speaker 1: to Philadelphia. He's getting parades, everyone's celebrating him, and he

462
00:26:13,560 --> 00:26:17,440
Speaker 1: takes a break to visit Robert Morris in prison because

463
00:26:18,119 --> 00:26:19,800
Speaker 1: he knew that a lot of the success of the

464
00:26:19,840 --> 00:26:23,639
Speaker 1: revolution was because of Robert Morris. And I don't know,

465
00:26:23,680 --> 00:26:27,440
Speaker 1: Robert Morris must have thought if I just retired after

466
00:26:27,440 --> 00:26:30,120
Speaker 1: the end of the war, like I might be a hero,

467
00:26:30,400 --> 00:26:33,000
Speaker 1: there might be parades for me, yeah, as one of

468
00:26:33,040 --> 00:26:37,520
Speaker 1: the people who made the revolution successful. But he could

469
00:26:37,600 --> 00:26:41,240
Speaker 1: not retire. When he left the government, he started to

470
00:26:41,320 --> 00:26:45,000
Speaker 1: trade again, and he started to use the network that

471
00:26:45,040 --> 00:26:48,680
Speaker 1: he had developed through smuggling all of that gunpowder and guns,

472
00:26:48,720 --> 00:26:52,679
Speaker 1: his contacts in France and around the world, and he

473
00:26:52,760 --> 00:26:54,560
Speaker 1: had these big schemes that he was going to try

474
00:26:54,600 --> 00:26:58,040
Speaker 1: and pull off with this network. His first genius plan.

475
00:26:59,160 --> 00:27:03,399
Speaker 1: Got one word for you, China. Okay, that's sounds like

476
00:27:03,400 --> 00:27:05,360
Speaker 1: a good idea for what I know so far. Yeah,

477
00:27:05,400 --> 00:27:08,800
Speaker 1: everyone else is restarting trade with Europe after the Revolutionary War.

478
00:27:09,240 --> 00:27:11,959
Speaker 1: Morris bought a ship and sent it in the other direction.

479
00:27:12,840 --> 00:27:17,640
Speaker 1: It held thirty tons of American ginsing uh huh popular

480
00:27:17,680 --> 00:27:21,080
Speaker 1: in China. Yeah, twenty six hundred animal skins, cotton, lead,

481
00:27:21,320 --> 00:27:23,520
Speaker 1: and a little pepper pepper I didn't see coming. The

482
00:27:23,520 --> 00:27:26,760
Speaker 1: ship returned in seventeen eighty five with eight hundred chests

483
00:27:26,800 --> 00:27:31,080
Speaker 1: of tea and twenty thousand pairs of nankeen trousers, which

484
00:27:31,080 --> 00:27:33,640
Speaker 1: I guess were nice cotton trouser popular in the day.

485
00:27:33,800 --> 00:27:36,480
Speaker 1: I don't actually know it that it's sex like hammer pants. Yeah,

486
00:27:36,480 --> 00:27:39,960
Speaker 1: they're millennials. There were tight, tight trousers. Doesn't matter what

487
00:27:40,040 --> 00:27:41,520
Speaker 1: was in the ship. The important thing was he made

488
00:27:41,520 --> 00:27:44,239
Speaker 1: a twenty five percent profit. He's doing great. Still had

489
00:27:44,280 --> 00:27:47,400
Speaker 1: the touch. Next up, the French approach him and they

490
00:27:47,480 --> 00:27:53,800
Speaker 1: want what the Frenchman always wants, cigarettes cigarettes, tobacco. It

491
00:27:53,880 --> 00:27:56,600
Speaker 1: was actually snuff. I think they were stuff fans. They

492
00:27:56,640 --> 00:28:00,280
Speaker 1: would later take up the cigarettes. But the war had,

493
00:28:00,280 --> 00:28:03,520
Speaker 1: you know, put a crimp in the tobacco supply, and

494
00:28:03,640 --> 00:28:07,840
Speaker 1: prices for tobacco were very high in Europe. So Robert

495
00:28:07,840 --> 00:28:10,879
Speaker 1: Morris makes a bold deal. He says, I will sell

496
00:28:10,920 --> 00:28:15,080
Speaker 1: you all of the tobacco you want for the next

497
00:28:15,119 --> 00:28:18,240
Speaker 1: three years. If we lock in this high price, I

498
00:28:18,320 --> 00:28:22,359
Speaker 1: will supply at all. And what Morris understands that they

499
00:28:22,359 --> 00:28:24,800
Speaker 1: don't quite get is that, you know, the industry in

500
00:28:24,840 --> 00:28:28,680
Speaker 1: America is ramping back up again. The price will fall

501
00:28:28,720 --> 00:28:30,760
Speaker 1: over the next three years, and he's locked in a

502
00:28:30,840 --> 00:28:35,240
Speaker 1: high price and he can make huge profits on this. Now,

503
00:28:35,280 --> 00:28:38,440
Speaker 1: I will say Robert Morris, as a Philadelphia banker, is

504
00:28:38,480 --> 00:28:41,320
Speaker 1: not the most popular man in the South at this time.

505
00:28:41,600 --> 00:28:44,520
Speaker 1: So he sets up these sort of shell companies, whatever

506
00:28:44,520 --> 00:28:46,760
Speaker 1: it is, he's a secret part of it. They compete

507
00:28:46,760 --> 00:28:48,719
Speaker 1: against each other, the shell companies. They don't even know

508
00:28:49,200 --> 00:28:52,120
Speaker 1: they have common ownership, and they end up cornering the

509
00:28:52,200 --> 00:28:58,480
Speaker 1: tobacco market. Okay, yeah, And so eventually he's sending thirty

510
00:28:58,480 --> 00:29:02,320
Speaker 1: ships a year, millions of pounds of tobacco to France.

511
00:29:03,600 --> 00:29:06,440
Speaker 1: And of course, in order to do this scale of operation,

512
00:29:06,720 --> 00:29:09,240
Speaker 1: he was going to need a lot of money. So

513
00:29:09,320 --> 00:29:12,080
Speaker 1: he issues some more of his notes. Now, remember the

514
00:29:12,120 --> 00:29:14,640
Speaker 1: first time he issues the bobs. The first time he

515
00:29:14,720 --> 00:29:18,400
Speaker 1: issues them, he was doing this to save the colonists,

516
00:29:18,400 --> 00:29:21,800
Speaker 1: to save the revolutionary army. This time, you know, it's

517
00:29:22,040 --> 00:29:26,040
Speaker 1: just for himself and just for profit. So he's borrowing money.

518
00:29:26,040 --> 00:29:29,360
Speaker 1: It's sort of a bond, like yeah, yeah, And he

519
00:29:29,400 --> 00:29:32,520
Speaker 1: also has this thing that like, you know, those debts

520
00:29:32,520 --> 00:29:34,800
Speaker 1: are due, but of course they're due after the tobacco

521
00:29:34,920 --> 00:29:37,720
Speaker 1: arrives and there's a long chain of events that happens,

522
00:29:37,560 --> 00:29:40,360
Speaker 1: and the finance guy for finance guys, do so picture

523
00:29:40,360 --> 00:29:42,560
Speaker 1: of this. He's got the ships sailing to China. He's

524
00:29:42,600 --> 00:29:45,280
Speaker 1: corner to the tobacco market, ships in the Atlantic, secret companies,

525
00:29:45,520 --> 00:29:48,880
Speaker 1: tons of debt. As he would later say, give me,

526
00:29:49,080 --> 00:29:51,600
Speaker 1: give me a Robert Morris is, am, I can never

527
00:29:51,680 --> 00:29:54,760
Speaker 1: do things in the small It must either be a

528
00:29:54,800 --> 00:29:59,680
Speaker 1: man or a mouse. Well, this man is now juggling

529
00:29:59,760 --> 00:30:03,520
Speaker 1: payments and loans across half the world. But he has

530
00:30:03,600 --> 00:30:09,120
Speaker 1: a solution what he calls the ultimate object of human avarice.

531
00:30:09,160 --> 00:30:11,080
Speaker 1: This is it the big score, the thing that's going

532
00:30:11,160 --> 00:30:16,800
Speaker 1: to pay off all of debts. It is land real estate.

533
00:30:17,720 --> 00:30:19,320
Speaker 1: So that's a good way to make money. Go on

534
00:30:19,400 --> 00:30:21,800
Speaker 1: long real estate a great way to make money, especially

535
00:30:21,840 --> 00:30:23,880
Speaker 1: if you believe that you have now created a stable

536
00:30:23,960 --> 00:30:27,080
Speaker 1: country with a lot of wilderness land. It's very smart

537
00:30:27,240 --> 00:30:29,880
Speaker 1: and in fact, a lot of the founding fathers were

538
00:30:30,040 --> 00:30:34,040
Speaker 1: real estate speculators. Long before they thought about revolution. They

539
00:30:34,040 --> 00:30:37,520
Speaker 1: were buying and selling wilderness land on the western frontier,

540
00:30:37,560 --> 00:30:40,560
Speaker 1: which was basically Ohio. And in fact, one of the

541
00:30:40,600 --> 00:30:43,480
Speaker 1: things that Britain did to kind of piss them off

542
00:30:44,120 --> 00:30:48,280
Speaker 1: was they passed the Proclamation of seventeen sixty three where

543
00:30:48,320 --> 00:30:52,680
Speaker 1: colonists were forbidden from settling west of the Appalachian Mountains. So,

544
00:30:53,120 --> 00:30:55,040
Speaker 1: you know, among the many things that we went to

545
00:30:55,080 --> 00:30:57,520
Speaker 1: war for, one of them was the right to speculate

546
00:30:57,520 --> 00:31:03,440
Speaker 1: in wilderness land inhabited by Native Americans. Yes, USA. So

547
00:31:03,520 --> 00:31:06,640
Speaker 1: he starts buying wilderness land, Robert Morris does, and like

548
00:31:06,680 --> 00:31:09,360
Speaker 1: everything else in his life, he goes all in. He starts.

549
00:31:09,480 --> 00:31:13,120
Speaker 1: He's like first big purchases a millionaires of western New

550
00:31:13,200 --> 00:31:17,480
Speaker 1: York along the Genesee River. A million eight million cost

551
00:31:17,560 --> 00:31:21,400
Speaker 1: him thirty thousand pounds in Massachusetts currency. There is no

552
00:31:21,480 --> 00:31:24,320
Speaker 1: way to know what that is. That's presumably a lot, Yeah,

553
00:31:24,360 --> 00:31:27,000
Speaker 1: a lot, but not that much, not as much as

554
00:31:27,000 --> 00:31:30,080
Speaker 1: it would sell for it today. Yes, So here's the plan.

555
00:31:30,160 --> 00:31:32,880
Speaker 1: He wasn't going to hold this for two hundred years

556
00:31:32,920 --> 00:31:34,960
Speaker 1: Wich you should have done. He was going to send

557
00:31:35,000 --> 00:31:38,920
Speaker 1: his agents to Europe and they would find people in

558
00:31:39,000 --> 00:31:42,160
Speaker 1: small towns around Europe, in Germany or something who wanted

559
00:31:42,200 --> 00:31:44,760
Speaker 1: to move to the New World, and he would say,

560
00:31:44,920 --> 00:31:47,720
Speaker 1: I will sell you this many tracts of my vast

561
00:31:47,800 --> 00:31:49,560
Speaker 1: land and you can all live together. It'll be just

562
00:31:49,560 --> 00:31:53,680
Speaker 1: like Germany on a recurring sort of scheme. In the

563
00:31:53,720 --> 00:31:56,360
Speaker 1: New World. You see it happen again and again, and

564
00:31:56,440 --> 00:31:58,560
Speaker 1: I mean it did happen. It wasn't just a scheme.

565
00:31:58,680 --> 00:32:01,920
Speaker 1: People came and moved and created these immigrant communities where

566
00:32:01,920 --> 00:32:05,400
Speaker 1: they could still speak German and have their beer and pretzels.

567
00:32:04,960 --> 00:32:07,840
Speaker 3: And newspapers in German and whole communities. You'll see this

568
00:32:07,840 --> 00:32:10,040
Speaker 3: happen a lot in the later eighteen hundreds.

569
00:32:10,200 --> 00:32:12,840
Speaker 1: So this was going to be the big score, and

570
00:32:12,880 --> 00:32:15,880
Speaker 1: if he could make it work, he would never have

571
00:32:15,920 --> 00:32:20,000
Speaker 1: to issue any Morris notes ever again. But first, just

572
00:32:20,040 --> 00:32:22,440
Speaker 1: a little bit more debt, just a little bit more land,

573
00:32:22,440 --> 00:32:24,120
Speaker 1: by which I mean millions of acres, and then more

574
00:32:24,200 --> 00:32:27,600
Speaker 1: land deals. And I think of it as this giant

575
00:32:27,800 --> 00:32:31,239
Speaker 1: Jenga set of debt, right, and you know things are

576
00:32:31,280 --> 00:32:33,120
Speaker 1: paying off. He's paying off the debt, but then he

577
00:32:33,160 --> 00:32:36,360
Speaker 1: puts into a new debt. He puts the Jenga stick

578
00:32:36,440 --> 00:32:38,800
Speaker 1: on top, and he keeps pulling it out and pulling

579
00:32:38,800 --> 00:32:40,480
Speaker 1: it up and pulling it out, and all of a sudden,

580
00:32:40,480 --> 00:32:44,960
Speaker 1: now it's three feet high, the Jenga tower filled with debt.

581
00:32:45,200 --> 00:32:52,080
Speaker 1: And then something shakes the table. Another revolution French Revolution

582
00:32:53,000 --> 00:32:56,600
Speaker 1: and really what brought in just years of chaos afterwards.

583
00:32:57,440 --> 00:33:01,480
Speaker 1: Kind of a nice irony that our revolutionary friend should

584
00:33:01,520 --> 00:33:05,360
Speaker 1: be toppled by another revolution. So after the French Revolution,

585
00:33:05,440 --> 00:33:09,080
Speaker 1: there's all of these issues. There's a panic of seventeen

586
00:33:09,200 --> 00:33:14,640
Speaker 1: ninety seven. The Bank of England suspect they're hard money payments.

587
00:33:14,760 --> 00:33:19,720
Speaker 1: Businesses go under. European countries start borrowing more money to

588
00:33:19,760 --> 00:33:22,840
Speaker 1: build their armies to defend against France because Napoleon's coming.

589
00:33:23,400 --> 00:33:26,000
Speaker 1: So a lot of the credit drives up. Uh huh.

590
00:33:26,080 --> 00:33:29,120
Speaker 1: And you know, if you're relying on a cycle of

591
00:33:29,160 --> 00:33:31,320
Speaker 1: debt and the new debt is hard to get.

592
00:33:31,440 --> 00:33:34,000
Speaker 3: What happens, Jacob, Well, the people you owe money to

593
00:33:34,400 --> 00:33:37,000
Speaker 3: come and say, Pamp, you're a rich guy.

594
00:33:37,080 --> 00:33:40,040
Speaker 1: You own more land than anybody. Sells some of that

595
00:33:40,120 --> 00:33:44,040
Speaker 1: land to give me my money. Exactly right. His famed

596
00:33:44,080 --> 00:33:47,320
Speaker 1: Morris notes are becoming more worthless every day. He has

597
00:33:47,400 --> 00:33:50,400
Speaker 1: this side deal with someone else who's in the same boat,

598
00:33:50,520 --> 00:33:55,200
Speaker 1: and they start crossingdorsing each other's worthless notes to be like, well,

599
00:33:55,200 --> 00:33:58,200
Speaker 1: if you don't trust me, maybe trust the other guy. Anyway,

600
00:33:58,240 --> 00:34:00,600
Speaker 1: it's all falling apart. People are yelling at him in

601
00:34:00,600 --> 00:34:04,000
Speaker 1: the streets of Philadelphia because he owes money to everyone.

602
00:34:04,080 --> 00:34:06,760
Speaker 1: So he retreats to his country home, which he calls

603
00:34:06,760 --> 00:34:10,799
Speaker 1: Castle Defiance, still a little bit arrogant, and even there,

604
00:34:11,359 --> 00:34:16,720
Speaker 1: desperate creditors are showing up. Apparently Morris would lock the

605
00:34:16,840 --> 00:34:20,440
Speaker 1: door and he would only communicate with people in a

606
00:34:20,480 --> 00:34:23,320
Speaker 1: bucket that he lowered down from the second floor, not

607
00:34:23,440 --> 00:34:25,400
Speaker 1: the first floor, because someone could shit you on the

608
00:34:25,400 --> 00:34:27,399
Speaker 1: second floor. He'd lower down a bucket and they would

609
00:34:27,440 --> 00:34:29,360
Speaker 1: send notes back and forth, and his note would just

610
00:34:29,400 --> 00:34:32,640
Speaker 1: say no. He was probably filled with more and Morris, here,

611
00:34:32,960 --> 00:34:35,799
Speaker 1: can I offer you some long behd I just printed them,

612
00:34:36,719 --> 00:34:39,080
Speaker 1: so I have some emissions for you here. He is

613
00:34:39,280 --> 00:34:43,560
Speaker 1: definitely scared. At this point. Creditors would come and camp

614
00:34:43,640 --> 00:34:46,080
Speaker 1: outside his home on his land, and they would burn

615
00:34:46,120 --> 00:34:48,680
Speaker 1: bonfires all night, and I assume yell at them all

616
00:34:48,760 --> 00:34:53,560
Speaker 1: night waiting for him to come out. Bonfires, bonfires. Eventually, yeah,

617
00:34:53,600 --> 00:34:58,920
Speaker 1: they were fueling yet with Morris, notes were burning currency. Eventually,

618
00:34:58,920 --> 00:35:01,600
Speaker 1: he sends a note to the sheriff he wants to

619
00:35:01,640 --> 00:35:05,239
Speaker 1: turn himself in and go to debtor's prison. In a

620
00:35:05,280 --> 00:35:06,719
Speaker 1: note to a friend, he wrote.

621
00:35:06,760 --> 00:35:09,480
Speaker 3: My money is gone, my furniture is to be sold.

622
00:35:09,920 --> 00:35:12,720
Speaker 3: I am to go to prison and my family to starve.

623
00:35:13,400 --> 00:35:18,240
Speaker 1: Good night. So debtors' prison's been a thing for hundreds

624
00:35:18,280 --> 00:35:22,960
Speaker 1: of years. The idea was you would go and have

625
00:35:23,080 --> 00:35:25,960
Speaker 1: your freedom taken away, and you would work or your

626
00:35:25,960 --> 00:35:29,320
Speaker 1: family would work to figure out how to pay your debts.

627
00:35:29,680 --> 00:35:32,879
Speaker 1: So it was a way of kind of keeping away

628
00:35:32,920 --> 00:35:36,520
Speaker 1: the mobs a little bit, although they could still visit

629
00:35:36,560 --> 00:35:38,480
Speaker 1: you in the prison in yell at you. And in fact,

630
00:35:38,640 --> 00:35:42,440
Speaker 1: that happened. The debtor's prison that he went to, they

631
00:35:42,480 --> 00:35:45,880
Speaker 1: actually called a debtor's apartment because they it wasn't full prison,

632
00:35:46,280 --> 00:35:49,200
Speaker 1: but he was definitely confined there. It was a two

633
00:35:49,239 --> 00:35:54,839
Speaker 1: story brownstone on Prune Street in Philadelphia, and even though

634
00:35:54,880 --> 00:35:57,359
Speaker 1: it was filled with people who had no money who

635
00:35:57,400 --> 00:36:00,040
Speaker 1: had sold their furniture, the inmates had to pay for

636
00:36:00,160 --> 00:36:04,040
Speaker 1: room and board. Huh. I just felt like the moral thing.

637
00:36:04,080 --> 00:36:08,239
Speaker 1: I guess it's not high security inmates kind of visitors.

638
00:36:09,200 --> 00:36:11,280
Speaker 1: But it was right next door to the real jail,

639
00:36:11,560 --> 00:36:14,200
Speaker 1: and they like shared a yard and they were separated

640
00:36:14,200 --> 00:36:17,560
Speaker 1: by a low wall, and I guess hardcore criminals would

641
00:36:17,680 --> 00:36:21,319
Speaker 1: jump over and basically mug the debtors for whatever they

642
00:36:21,320 --> 00:36:24,880
Speaker 1: ford get. Negative money that they had. Robert Morris is

643
00:36:24,920 --> 00:36:29,880
Speaker 1: like take more docs notes, and also the debtors prison

644
00:36:30,120 --> 00:36:34,440
Speaker 1: was getting crowded. In seventeen ninety eight, the economy was struggling.

645
00:36:34,800 --> 00:36:37,400
Speaker 1: Robert Morris wasn't the only person who couldn't pay his bills.

646
00:36:37,880 --> 00:36:41,360
Speaker 1: George Washington did visit him. Famous person the United States

647
00:36:41,400 --> 00:36:44,799
Speaker 1: at this time, Thomas Jefferson said, I would like to

648
00:36:44,880 --> 00:36:48,279
Speaker 1: hire Robert Morris to help run my economy, if not

649
00:36:48,400 --> 00:36:53,560
Speaker 1: for the prison at all. And Morris himself was despondent.

650
00:36:54,040 --> 00:36:58,360
Speaker 1: He wrote around this time, I feel myself an intruder

651
00:36:58,560 --> 00:37:01,480
Speaker 1: every place into which I go. I sleep in another

652
00:37:01,520 --> 00:37:05,480
Speaker 1: person's bed, I occupy other people's rooms. And if I

653
00:37:05,520 --> 00:37:08,120
Speaker 1: attempt to sit down and write, it is that the

654
00:37:08,120 --> 00:37:12,640
Speaker 1: interruption and inconvenience of someone who has acquired a prior

655
00:37:12,719 --> 00:37:16,800
Speaker 1: right to the place. It's the prison diaries from Robert Morris.

656
00:37:17,480 --> 00:37:20,920
Speaker 1: So he still has land. He's still trying to work

657
00:37:20,960 --> 00:37:24,799
Speaker 1: out some things. But apparently when they totaled up, he

658
00:37:24,880 --> 00:37:28,080
Speaker 1: had racked up about three million dollars in debts at

659
00:37:28,120 --> 00:37:33,640
Speaker 1: the time. That is a lot, and he was probably

660
00:37:33,680 --> 00:37:36,040
Speaker 1: thinking at this point he was going to spend the

661
00:37:36,040 --> 00:37:39,400
Speaker 1: rest of his life in the Prune Street prison and

662
00:37:39,440 --> 00:37:44,160
Speaker 1: then somebody went and invented the bankruptcy court. I'm looking

663
00:37:44,200 --> 00:38:08,160
Speaker 1: forward to talking about bankruptcy after the break, we're back.

664
00:38:08,920 --> 00:38:15,320
Speaker 1: Let's talk about the concept of bankrupt formal legal bankruptcy.

665
00:38:15,440 --> 00:38:17,680
Speaker 1: And they've been forms of this in Europe, but in

666
00:38:17,719 --> 00:38:19,839
Speaker 1: the early United States they had a lot to do

667
00:38:20,239 --> 00:38:23,960
Speaker 1: so they hadn't yet passed a federal bankruptcy law, Like

668
00:38:24,040 --> 00:38:28,600
Speaker 1: how would it work? And it's a complicated problem when

669
00:38:28,640 --> 00:38:31,279
Speaker 1: someone is in debt, especially a financier.

670
00:38:31,840 --> 00:38:34,279
Speaker 3: Right, they have all these debts, but they also have

671
00:38:34,360 --> 00:38:38,239
Speaker 3: all these assets. You get the kind of moral thing

672
00:38:38,320 --> 00:38:40,520
Speaker 3: of like, oh, let's be mad at them, let's throw

673
00:38:40,520 --> 00:38:41,520
Speaker 3: them in jail or whatever.

674
00:38:42,080 --> 00:38:46,120
Speaker 1: But I mean, a it's cruel, but on a certain

675
00:38:46,200 --> 00:38:50,799
Speaker 1: level that's not actually financially a good idea. Right, they

676
00:38:50,840 --> 00:38:54,440
Speaker 1: have assets, there's all these different creditors, and what you

677
00:38:54,480 --> 00:38:57,799
Speaker 1: fundamentally want is for the creditors, for the people the

678
00:38:57,800 --> 00:38:59,959
Speaker 1: guy owes money to to get as much money back

679
00:39:00,000 --> 00:39:03,520
Speaker 1: as possible. Yeah, So it's a collective action problem. If

680
00:39:03,880 --> 00:39:08,440
Speaker 1: somebody owes me money and I want that money back,

681
00:39:09,080 --> 00:39:12,399
Speaker 1: it isn't my best interest to buttonhole them, make them

682
00:39:12,440 --> 00:39:14,879
Speaker 1: sell the house, make them sell the furniture and give

683
00:39:14,920 --> 00:39:17,160
Speaker 1: me back the money first, Like, that's just in my

684
00:39:17,440 --> 00:39:20,759
Speaker 1: best interest. But there are hundreds of other people who

685
00:39:20,840 --> 00:39:23,440
Speaker 1: also want their money. So what they need is everyone

686
00:39:23,480 --> 00:39:26,560
Speaker 1: to get together and say, wait a minute, if we

687
00:39:26,719 --> 00:39:30,880
Speaker 1: let this person in an orderly way sell their assets,

688
00:39:30,920 --> 00:39:32,760
Speaker 1: get the most forward, or if they're running a business,

689
00:39:32,840 --> 00:39:35,879
Speaker 1: keep the business running, then we all stand a better

690
00:39:36,000 --> 00:39:39,200
Speaker 1: chance of being paid something instead of fighting each other.

691
00:39:39,280 --> 00:39:44,239
Speaker 1: And you have some neutral party, a bankruptcy judge eventually

692
00:39:44,560 --> 00:39:48,560
Speaker 1: who can assess which creditor should be paid first, right,

693
00:39:48,640 --> 00:39:52,960
Speaker 1: or how you should allocate the assets the proceeds to

694
00:39:53,080 --> 00:39:56,160
Speaker 1: the different creditors. A complicated problem. Yeah, and I'll tell

695
00:39:56,200 --> 00:39:58,719
Speaker 1: you what doesn't help is locking a guy in a

696
00:39:58,800 --> 00:40:01,560
Speaker 1: room with a bunch of hardened criminals trying to mug

697
00:40:01,560 --> 00:40:02,160
Speaker 1: you all the time.

698
00:40:02,320 --> 00:40:05,480
Speaker 3: It's bad for the creditors, right, It's bad for the

699
00:40:05,520 --> 00:40:07,920
Speaker 3: people who are owed money if that guy is locked up.

700
00:40:08,040 --> 00:40:10,440
Speaker 1: Okay, So this is clearly a problem that needs to

701
00:40:10,480 --> 00:40:13,480
Speaker 1: be solved. Might have been the most famous man in

702
00:40:13,520 --> 00:40:15,879
Speaker 1: the debtor's prison, but he is joined by many other

703
00:40:15,920 --> 00:40:19,200
Speaker 1: businessmen of the day. The economy had faltered, currency is unstable,

704
00:40:19,920 --> 00:40:23,400
Speaker 1: there are lots of unhappy constituents who want their money back,

705
00:40:23,760 --> 00:40:28,680
Speaker 1: and so Congress when forced gets to work, so they

706
00:40:28,680 --> 00:40:30,759
Speaker 1: have to hit this balance. They do not want it

707
00:40:30,800 --> 00:40:34,440
Speaker 1: to be a pleasant process, otherwise everyone will rack up debts.

708
00:40:35,280 --> 00:40:37,839
Speaker 1: They want to be orderly. They want to be able

709
00:40:37,880 --> 00:40:40,400
Speaker 1: to see all the assets and debt of a person

710
00:40:40,520 --> 00:40:43,160
Speaker 1: and to make some of the creditors whole. And the

711
00:40:43,160 --> 00:40:45,640
Speaker 1: solution they came up with it's very interesting, very interesting

712
00:40:45,640 --> 00:40:49,360
Speaker 1: in the bankruptcy we have today. Today, a person or

713
00:40:49,400 --> 00:40:53,480
Speaker 1: a company declares bankruptcy. They stand up and they say,

714
00:40:53,560 --> 00:40:56,600
Speaker 1: I declare bankruptcy. Shout out the office. Shut out to

715
00:40:56,600 --> 00:40:59,160
Speaker 1: the office. Note they file for bankruptcy. It's all very orderly.

716
00:40:59,640 --> 00:41:04,600
Speaker 1: But Congress in eighteen hundred decided that bankruptcy should be involuntary.

717
00:41:05,040 --> 00:41:08,239
Speaker 1: H So, if you owe me money and can't pay

718
00:41:08,280 --> 00:41:11,640
Speaker 1: it back, I can declare you bankrupt your bank. It's

719
00:41:11,640 --> 00:41:13,719
Speaker 1: not up to me. I can't go to court and

720
00:41:13,719 --> 00:41:16,040
Speaker 1: say I want to file for bankruptcy. No, you would

721
00:41:16,080 --> 00:41:18,920
Speaker 1: have to arrange with the creditor and we would come

722
00:41:18,920 --> 00:41:21,560
Speaker 1: to you and say I declare you. That makes sense

723
00:41:21,719 --> 00:41:23,320
Speaker 1: in a way. It's sort of leaving it up to

724
00:41:23,360 --> 00:41:26,000
Speaker 1: the creditor. Yeah, you know, it's not the way we

725
00:41:26,040 --> 00:41:28,560
Speaker 1: do it today. But this is how they did it.

726
00:41:29,440 --> 00:41:31,319
Speaker 1: The way they designed it was a panel of three

727
00:41:31,320 --> 00:41:33,760
Speaker 1: commissioners would get to see all the assets and debts.

728
00:41:33,760 --> 00:41:36,239
Speaker 1: They would decide what would happen next, and then two

729
00:41:36,280 --> 00:41:38,720
Speaker 1: thirds of the people who lent the money had to agree,

730
00:41:38,760 --> 00:41:42,000
Speaker 1: maybe based on how much they lent, and then maybe

731
00:41:42,080 --> 00:41:45,000
Speaker 1: the debt would be discharged. So this was the plan.

732
00:41:45,520 --> 00:41:48,719
Speaker 1: It was hard to get through Congress, passed by one vote.

733
00:41:48,840 --> 00:41:52,120
Speaker 1: And you might think at this point Robert Morris would

734
00:41:52,120 --> 00:41:56,200
Speaker 1: have been thrilled, like this is what he needed, was

735
00:41:56,200 --> 00:41:59,600
Speaker 1: what he needed, but it wasn't what he wanted. He

736
00:41:59,719 --> 00:42:02,880
Speaker 1: kept saying, I don't want to be declared bankrupt, Like

737
00:42:02,880 --> 00:42:06,640
Speaker 1: that seems shameful. I love bankrupt. There's money somewhere. I

738
00:42:06,640 --> 00:42:07,439
Speaker 1: can make this work.

739
00:42:08,400 --> 00:42:08,680
Speaker 3: It work.

740
00:42:09,040 --> 00:42:12,560
Speaker 1: It's just a liquidity creunt. Yeah. And and much like

741
00:42:13,040 --> 00:42:15,960
Speaker 1: the process today, there is a stigma. It is saying

742
00:42:16,480 --> 00:42:19,640
Speaker 1: you are bankrupt. And he didn't want that stigma.

743
00:42:19,719 --> 00:42:22,080
Speaker 3: Well, and especially I guess if his whole thing, his

744
00:42:22,120 --> 00:42:24,680
Speaker 3: whole life is he's the guy who wanted to make money,

745
00:42:25,640 --> 00:42:28,120
Speaker 3: then being bankrupt is saying he has failed at his

746
00:42:28,320 --> 00:42:29,160
Speaker 3: main thing.

747
00:42:29,160 --> 00:42:34,920
Speaker 1: The thing he loved money, But it's becoming obvious that

748
00:42:34,960 --> 00:42:38,040
Speaker 1: there is no choice. He heard that one of his estates,

749
00:42:38,160 --> 00:42:41,560
Speaker 1: worth one hundred thousand dollars he estimated, was being sold

750
00:42:41,560 --> 00:42:44,480
Speaker 1: for eight hundred dollars because he hadn't paid the taxes.

751
00:42:44,719 --> 00:42:47,600
Speaker 3: So this is actually why you want bankruptcy is because

752
00:42:47,600 --> 00:42:51,640
Speaker 3: that's bad for everybody except the guy who managed to get.

753
00:42:51,480 --> 00:42:55,920
Speaker 1: The really cheap state. Yeah, somebody got a deal. Finally,

754
00:42:55,960 --> 00:42:58,880
Speaker 1: one of the people he owed money to did the

755
00:42:58,920 --> 00:43:03,480
Speaker 1: official thing. A Philadelphia merchant named John Houston, held two

756
00:43:03,520 --> 00:43:06,839
Speaker 1: hundred and eighty four thousand dollars in overdue notes. He

757
00:43:06,920 --> 00:43:11,240
Speaker 1: formally petitioned to have Robert Morris declared bankrupt. The panel

758
00:43:11,320 --> 00:43:15,719
Speaker 1: is assembled, a judge ordered Morris released, but not free

759
00:43:15,719 --> 00:43:18,560
Speaker 1: of obligations because he had to spend three months in

760
00:43:18,600 --> 00:43:22,640
Speaker 1: a hearing before the panel of bankruptcy commissioners. Going through

761
00:43:22,640 --> 00:43:26,439
Speaker 1: the process. He owed money to ninety people. The list

762
00:43:26,480 --> 00:43:32,080
Speaker 1: included fellow merchants, tailors, a bookseller, a blacksmith, bricklayer, an

763
00:43:32,120 --> 00:43:35,160
Speaker 1: apothecary even as a senator.

764
00:43:34,840 --> 00:43:39,319
Speaker 3: Richard Scary book from eighteen oh five, garbage man, librarian.

765
00:43:40,400 --> 00:43:43,760
Speaker 1: And they all have the Morris notes. They required Morris

766
00:43:43,800 --> 00:43:46,200
Speaker 1: to write out his account of property, which is a

767
00:43:46,280 --> 00:43:48,560
Speaker 1: very detailed list of everything he'd bought and sold, how

768
00:43:48,560 --> 00:43:52,680
Speaker 1: he got it, what happened to it. Afterwards, he begins,

769
00:43:53,680 --> 00:43:56,279
Speaker 1: this account of property, Well, i'll let you read it.

770
00:43:56,280 --> 00:43:56,920
Speaker 1: It's pretty good.

771
00:43:56,960 --> 00:44:00,400
Speaker 3: I shall begin a right, you could just begin, but

772
00:44:00,440 --> 00:44:03,040
Speaker 3: he says he's going to begin. I shall begin with

773
00:44:03,160 --> 00:44:07,400
Speaker 3: the lands purchased in the Genesee Country, acknowledging that if

774
00:44:07,440 --> 00:44:09,920
Speaker 3: I had contented myself with those purchases, and employed my

775
00:44:09,960 --> 00:44:13,040
Speaker 3: time and attention and disposing of the lands the best advantage,

776
00:44:13,120 --> 00:44:15,360
Speaker 3: I have every reason to believe that this day I

777
00:44:15,360 --> 00:44:18,280
Speaker 3: should have been the wealthiest citizen of the United States.

778
00:44:19,080 --> 00:44:20,440
Speaker 3: They're like, brother, this is just supposed to be a

779
00:44:20,440 --> 00:44:24,560
Speaker 3: list of all the stuff you bought. You you're still arrogant,

780
00:44:24,960 --> 00:44:26,640
Speaker 3: but sort of. But he's like, if I hadn't a

781
00:44:26,680 --> 00:44:28,279
Speaker 3: screwed up in this one way, if I had to

782
00:44:28,400 --> 00:44:31,879
Speaker 3: just stop with the Genesee Country, there is.

783
00:44:31,840 --> 00:44:35,200
Speaker 1: A note of regretting there, covered in a brag. Yeah,

784
00:44:35,239 --> 00:44:38,840
Speaker 1: that's right. It's a weird. It's weird. He never really

785
00:44:39,760 --> 00:44:42,399
Speaker 1: admitted that a lot had gone wrong, except he did

786
00:44:42,400 --> 00:44:44,480
Speaker 1: say he issued too many of those Morris notes and

787
00:44:44,680 --> 00:44:49,279
Speaker 1: just kind of lost track of exactly how many emissions

788
00:44:49,400 --> 00:44:54,479
Speaker 1: emissions had been emitted. A judge finally discharges the debt,

789
00:44:54,560 --> 00:44:58,680
Speaker 1: lets the credits sort out whatever remains among themselves. It's

790
00:44:58,680 --> 00:45:02,120
Speaker 1: not like a satisfying ending to the story, but it's

791
00:45:02,200 --> 00:45:04,879
Speaker 1: kind of the ending that always comes with bankruptcy, right,

792
00:45:05,320 --> 00:45:11,120
Speaker 1: It's like everyone kind of gets something and the person

793
00:45:11,800 --> 00:45:14,759
Speaker 1: who his bankrupt gets to start over sort of in

794
00:45:14,760 --> 00:45:18,480
Speaker 1: a way, but without their reputation, often without credit. And

795
00:45:18,520 --> 00:45:21,600
Speaker 1: Moore's tried, like he had a few more schemes. There

796
00:45:21,640 --> 00:45:23,080
Speaker 1: was a new bank somewhere and they were gonna have

797
00:45:23,160 --> 00:45:25,680
Speaker 1: him be the president, but all it all fell apart.

798
00:45:26,040 --> 00:45:28,920
Speaker 1: He had talked about starting a wine business. He was

799
00:45:29,120 --> 00:45:31,759
Speaker 1: I know, this is like the saddest part of a

800
00:45:31,760 --> 00:45:34,040
Speaker 1: bankrupt man. He was starting to look at land deals

801
00:45:34,040 --> 00:45:39,359
Speaker 1: in Florida. There's one place you could go to make

802
00:45:39,400 --> 00:45:43,160
Speaker 1: a quick buck, It's Florida. But nothing took. He died

803
00:45:43,239 --> 00:45:47,080
Speaker 1: five years after he was released. Not a rich man anymore,

804
00:45:47,640 --> 00:45:50,719
Speaker 1: definitely not the richest man in the United States. The

805
00:45:50,760 --> 00:45:54,319
Speaker 1: bankruptcy law, interestingly enough, would be repealed soon after it

806
00:45:54,400 --> 00:45:57,600
Speaker 1: was passed. There was problems with having the who got

807
00:45:57,600 --> 00:46:00,760
Speaker 1: to declare, and then a series of new ones would come.

808
00:46:01,120 --> 00:46:03,400
Speaker 1: Whenever there was a financial crisis, Congress would passed a

809
00:46:03,440 --> 00:46:06,279
Speaker 1: new set of bankruptcy laws, and it just started to

810
00:46:06,360 --> 00:46:09,600
Speaker 1: evolve over the years into what we have today, which

811
00:46:09,640 --> 00:46:13,040
Speaker 1: is this really formal but I kind of think beautiful

812
00:46:13,320 --> 00:46:17,319
Speaker 1: notion of a fresh start. We need people to take

813
00:46:17,440 --> 00:46:19,920
Speaker 1: risks in the United States and around the world. We

814
00:46:19,960 --> 00:46:22,280
Speaker 1: need them to start new businesses and that's good for everyone,

815
00:46:22,360 --> 00:46:26,960
Speaker 1: for jobs, for technological innovation, for everything, and having a

816
00:46:27,000 --> 00:46:29,560
Speaker 1: system in place that says, listen, if you take a

817
00:46:29,680 --> 00:46:31,839
Speaker 1: risk and it goes bad, we're not going to throw

818
00:46:31,920 --> 00:46:34,040
Speaker 1: you in prison. We are not going to take your

819
00:46:34,120 --> 00:46:37,400
Speaker 1: freedom away. You may have to spend three months in

820
00:46:37,480 --> 00:46:39,959
Speaker 1: bankruptcy court, you know, you may have to pay everything back,

821
00:46:40,000 --> 00:46:44,080
Speaker 1: you may have bad credit, but you can dream again

822
00:46:44,200 --> 00:46:47,000
Speaker 1: and you can try again. You could even argue that

823
00:46:47,080 --> 00:46:49,239
Speaker 1: of the many great things that have come out of

824
00:46:49,239 --> 00:46:53,600
Speaker 1: the American Revolution, one of them was the bankruptcy Law

825
00:46:53,840 --> 00:46:59,279
Speaker 1: of eighteen hundred, this concept of forgiveness and orderly bankruptcy.

826
00:46:59,880 --> 00:47:01,840
Speaker 1: So we're going to be back in twenty four years

827
00:47:02,320 --> 00:47:04,600
Speaker 1: for the semi Clanya.

828
00:47:04,680 --> 00:47:08,960
Speaker 3: They're the quarter millennium, the quarter millennium sankruptcy in America exactly.

829
00:47:09,680 --> 00:47:11,759
Speaker 1: We kind of like this anniversary thing. If there's any

830
00:47:11,760 --> 00:47:17,840
Speaker 1: other notable business anniversaries we can celebrate semi Hemy'll figure

831
00:47:17,840 --> 00:47:20,480
Speaker 1: out the Latin, but let us know what it is

832
00:47:20,520 --> 00:47:22,160
Speaker 1: and we can do a show about it. We are

833
00:47:22,400 --> 00:47:25,920
Speaker 1: business history at pushkin dot Fm. We're on ex at

834
00:47:25,960 --> 00:47:29,160
Speaker 1: Jacob Goldstein and at Radiosmith. I'm on LinkedIn. You, Robert,

835
00:47:29,160 --> 00:47:31,640
Speaker 1: impressively are not on LinkedIn. It's a flex.

836
00:47:32,200 --> 00:47:36,040
Speaker 3: Our show is run and edited by mister Ryan Dilly.

837
00:47:36,600 --> 00:47:40,440
Speaker 3: It's produced by Gabriel Hunter Chang. The video is produced

838
00:47:40,480 --> 00:47:43,520
Speaker 3: by Matt Nielsen. Make a comment on YouTube.

839
00:47:43,520 --> 00:47:45,399
Speaker 1: That's another way you can tell us what to do. Sure.

840
00:47:45,760 --> 00:47:49,120
Speaker 1: Our engineer is Sarah Buguer. My name is Jacob Goldstein.

841
00:47:49,320 --> 00:47:53,760
Speaker 1: I'm Robert Smith. Thanks for listening, Arici Woo