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Articles by Rory

Rory McIvor

Director – Markets & Communications

30 May 2024

Write about what you know. Sage advice for the budding author. Advice well heeded by Samuel Langhorne Clemens – one of the fathers of the great American novel – better known to you and me as Mark Twain. Rise and ruin, poverty and prospects, feats of derring-do. These were the hallmarks of Twain’s cherished canon, whose characters reflected many of their creator’s own triumphs and tribulations.

For Mark Twain, brilliance and bankruptcy were two sides of the same coin. His journey to riches and back embodied the boom and bust of an era he would later christen. The story of his personal financial exploits reads like a tragicomedy, and his own inimitable narration provides an insight into the character of the most quoted (and misquoted) man in history.

Prospectively wealthy

Clemens was born into shabby gentility. Comfortable, at least until his father – an attorney and judge – died shortly after Samuel turned 11. As he was growing up on the Mississippi river, the height of his teenage ambition was to become a steamboat pilot. It was an ambition he eventually realised (after working as a printer’s apprentice) until the outbreak of the American Civil War scuppered any prospect of a life spent on the water.

It was after leaving for Nevada that Twain (the name we will use from now on) seems to have developed the financial worldview which would become a rudder in his personal and professional life.

“It is good to begin life poor; it is good to begin life rich – these are wholesome,” he remarked. “But to begin it poor and prospectively rich! The man who has not experienced it cannot imagine the curse of it.”¹

For Twain, wealth was good. But great wealth was better by an order of magnitude. He suffered from nothing short of an infatuation with money, and so he set off – pen in hand – in pursuit of prosperity.

For Twain, wealth was good. But great wealth was better by an order of magnitude.

Big bucks from Huck

The post-Civil War industrial boom meant there were more ways for Americans to get rich quicker than ever. But the speediest of all was to marry money.

A cynic might note the expedience of Twain’s nuptials with Olivia Langdon, a wealthy coal heiress whose father gave the couple a mansion – complete with staff and carriages – on their wedding night. But the cynic would be wrong. Twain later recalled that he fell in love with Olivia at first sight (albeit of her photograph). Their lifelong union, of which he wrote fondly, endorses a more romantic interpretation of the marriage.

Twain achieved moderate success in his work as a newspaper reporter and published a collection of travel stories and humorous tall tales to public and critical acclaim. But his fortunes ratcheted up with the release of his first novels: The Gilded Age: A Tale of Today (1873), The Adventures of Tom Sawyer (1876) and Adventures of Huckleberry Finn (1884). Twain became a rich man in his own right. And this is where his misadventures as a capitalist begin.

Takes one to know one

In The Gilded Age, Twain satirised the gross materialism and political corruption emerging alongside the United States’ economic boom led by the ‘Robber Barons’ and newly promoted ‘Captains of Industry’. America was financialising and there was money to be made.

Twain’s sarcasm was thinly veiled: “Beautiful credit! The foundation of modern society. Who shall say that this is not the golden age of mutual trust, of unlimited reliance upon human promises?” Wasn’t this a wonderful era, he continued, in which a “distinguished speculator” could remark “I wasn’t worth a cent two years ago, and now I owe two millions of dollars”?²

Sometimes, the faults we find in others are the things we dislike most about ourselves. Twain satirised the very greed with which he was afflicted. And it was avarice that prompted Twain’s first foray into business.

A life robbed of zest

Whilst he had the glory of his writing successes, Twain believed he had missed out on some of the gravy. So, when it came to publishing Adventures of Huckleberry Finn, he decided to do it himself. By then, he had both the connections and the reputation to secure the publishing rights to the late President Ulysses S. Grant’s memoirs. These were the first two releases from the Charles L. Webster & Co. publishing company – named after Twain’s nephew, who he had put in charge of managing the firm.

Huck Finn was a triumph. Grant’s autobiography was a colossal success.

Emboldened, the company took on some riskier titles, including an analysis of the speech of monkeys, a collection of sermons and a cookery book with 75 recipes for eggs.³

The payment model offered by the company frequently resulted in happy customers (they received entire sets of the latest releases on payment of a first instalment), but an unhappy accounts department (few customers felt obliged to honour the remaining instalments).

Twain tried to sell the publishing house. Several times. “I want to sell because I am not made for business,” he said. “The worry of it makes me old and robs life of its zest.”

But credit was drying up towards the end of the century. America was reeling from the Panic of 1893 – a stock market crash which precipitated the failure of 16,000 businesses and left 2.5 million people unemployed.

Eventually, he found a creditor, but not before haemorrhaging the vast majority of the royalties from his earlier successes.

“I oughtn’t to say I was swindled out of all the money,” he reflected. “Most of it was lost through bad business. I was always bad in business.”

There is a sadness to Twain’s admission that his literary achievements, loving family and good financial health were not enough for him.

Misadventure capital

Twain committed a cardinal financial sin in his business endeavours – his outgoings exceeded his income. And, in venture capital, he failed to follow another golden rule – sell your losers and know when to quit.

There is a sadness to Twain’s admission that his literary achievements, loving family and good financial health were not enough for him. Success in the Gilded Age meant building an empire of wealth and letting the world know about it: “Man will do many things to get himself loved. He will do all things to get himself envied.”

The zeitgeist demanded finding the next big thing and then betting even bigger.

The opportunity came in the form of an echo from his youth and his days as a printer’s apprentice. It was a sophisticated new machine called the Paige Compositor, a typesetter which promised to revolutionise the printing industry. The prototype comprised over 18,000 individual parts and Twain, fascinated by science and technology, was awestruck by the engineering. He fell in love with an idea.

Twain stumped up an initial $5,000. But the complexity of the machine meant that further iterations – and capital – would be required. Twain began to sink what he could into the venture in the hope of a jackpot payout when they perfected the technology.

By the mid-1880s, Twain was investing $4,000 every month (roughly $130,000 in today’s money) to get the Paige Compositor over the line and into production. “A foot farther into the ledge and we shall strike the vein of gold. When the machine is finished everything will be all right again.” He could not accept his losses with equanimity – this was sunk-cost fallacy in its cruellest form.

If the moustachioed maverick wasn’t greyhaired at the beginning of the venture, he would have been by the end. In 1894, with the Paige Compositor still in development, Twain transferred his remaining assets to his wife (frowned upon in modern judicial systems) and was forced to declare bankruptcy.

Typically introspective, he later wrote, “There are two times in a man’s life when he should not speculate: when he can’t afford it, and when he can.”

A rare reprieve

Most architects of financial failure are regarded with scorn and derision. Twain was an abysmal investor, but not a nefarious one. He was chastened by his pecuniary misadventures and resolved to settle his debts in any way he could. He kept writing and embarked on an international comedy tour, performing for adoring audiences across the world.

The American public – on learning of Mark Twain’s financial catastrophe – did not cast him as a villain. That might have simply been because they loved his books, wit and unquestionable genius. Or they respected his fortitude in eventually making good.

More likely, the American public of the Gilded Age admired Twain’s wholehearted pursuit of wealth because they could relate to it.

Twain was status obsessed, unashamedly ambitious, greedy and perpetually dissatisfied. His infatuation with money may have robbed his fans of more literary classics, yet he was not begrudged. Twain was loved not despite the inconsistencies and contradictions of his character, but because of them.

Twain was loved not despite the inconsistencies and contradictions of his character, but because of them.

The October effect

In the year after his calamitous financial ventures came to a head, Mark Twain wrote in Pudd’nhead Wilson: “October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.”

The best investors learn their lessons. For Twain, the lesson was that investing was best left to other people.

Articles by Rory

Rory McIvor

Director – Markets & Communications

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Piers Wheeler

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Developing and executing asset management strategy for capital raising and strategic relationship management. Coverage includes EMEA, Asia and Australia. Piers joined Ruffer in 2021, having previously worked with asset management firms including Eastspring, AMP Capital and LEK as a strategic consultant. He holds a MA from the Bayes Business School and a BA (Hons) from the University of Oxford.

Annabel Paterson

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Joined Ruffer in 2021, having graduated with a first class honours degree in land economics from the University of Cambridge. After two years working with the UK Private Wealth team and completing her IMC and CFA Level I qualifications, she now supports Ruffer’s global business development and client servicing efforts.

Articles by Annabel

Crawford (2017), How Not to Get Rich: The Financial Misadventures of Mark Twain
Warner and Twain (1873), The Gilded Age: A Tale of Today
Zacks (2016), Chasing the Last Laugh

This article first appeared in The Ruffer Review 2024

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The Adventures of a Capitalist