For America's 250th, We Looked at Founding Fathers' Money Advice

Welcome back to Dvorkin on Debt where we are sitting with our resident expert as always, Howard Dvorkin. How are you doing?

I'm doing great, Sydney.

Are you ready for this episode?

I am ready.

This one's going to be a fun one.

Okay,

We are celebrating 250 years of America.

I love history.

So, today I want to talk about what the founding fathers from 250 years ago would think about the America that we live in today. Would they be impressed? Would they be worried? Would they be, I don't know, freaked out or excited or angry?

It depends which one.

We're going to get into all of it.

It depends which founding father.

But there's a little history lesson I want to share with you.

Oh, we're getting into it now.

Ah, you know what? Let's stay till the end for a little history lesson that I'm sure you're going to love.

Let's start with George Washington. If he walked into the OG, the OG, the first president, if he were to experience America today, what financial habit would surprise him the most?

I think he would be surprised at how quick people today spend money. He was a very conservative guy and the values were a lot different back then than they are today. And he certainly embodied what the average man felt and the way they handled their money.

Yeah. I mean, it's so much easier to spend money today. It's just a tap of a card. It's so quick to finance something whereas that's not what they were used to back then. 

Well, it's a trap. Do you go into debt.

Yep.

That's simple. If you bought land, guess what? You bought it for cash. 

Because there weren't that many banks back then?

Not a lot of lenders.

Easy. Yeah.

No, it wasn't.

No. So, next up we have Thomas Jefferson.

Which modern financial trend would make him say, "I've seen this before."

You know what? He was a spender, believe it or not. He was. He was a party animal. He lived life. He was a brilliant man.

Oh, yeah.

But he spent money like you could not believe.

Which is ironic. 

Which is ironic, but he could write a pretty good Declaration of Independence.

Yeah,

It's worked for a couple years.

Just a few.

Not bad.

Next up, we have a series of questions and I just want to let I just want to know like what founder you think this would fit. 

Okay, which founder would be most likely to have a credit card?

Alexander Hamilton. He was the main money guy. He built our modern day. He designed our modern day financial system and he was a very very bright man again but he was unbelievable that he could foresee what was coming down the road and he built a system around that. He established our national credit .

He did.

Yeah. not anti- debt, but he was anti-irresponsible debt.

That sets him apart. Credit should be an opportunity and not a burden. One of the reasons America became an economic powerhouse is because Hamilton understood the value of credit. 250 years later, that lesson still applies.

Which founder would hate buy now pay later programs the most?

My boy Ben.

Oh, he would hate Franklin Ben Franklin was the most frugal of all the country's founders and in fact he mentioned I think the quote a penny saved is a penny earned. He was not so concerned about big purchases but many small purchases that add up over time just because you can afford the payment doesn't mean you can afford the purchase.

I like that one. So, after 250 years, what is the biggest money lesson Americans still have not learned?

Small financial decisions repeated over time matter more than big financial decisions made once.

So last one. What's one financial lesson from the founding fathers that still applies to this day?

The tools have changed, but human behavior hasn't. People worried about money then and they worry about money now. The fundamentals are still discipline, planning, and understanding the consequences of financial decisions.

Are you ready for a game?

Yeah.

We're going to do a couple games. So, the first game is called 1776 or 2026.

That one's gonna be fun. And then I'm going to quiz you with some quotes and you're gonna tell me who said it.

Okay.

All right. So 1776 or 2026, people worried that inflation was making everyday goods more expensive.

2026.

People being worried that inflation was making everyday goods more expensive.

Both big debt after the Revolutionary War and big inflation today.

Both.

Everybody's worried.

Still applies. 

Americans being deeply suspicious of banks.

Oh, 1776 there was no insurance. It was just a place you went and banking system was

a big debate back then.

Back in the early days, people spent money trying to impress their neighbors.

Both. But now it's even heightened because we have this thing called the internet and people are out there showing, oh, look at me. I'm in a fancy car or I'm wearing these fabulous clothes.

And you know what?

People are starting to believe that they should be doing that.

Yeah. 

So, it's really heightened quite a bit.

I don't think Thomas Jefferson would be able to Thomas Jefferson would be cool.

Ben Franklin, he would be susceptible to all those.

Absolutely. But Ben Franklin, maybe not.

Oh, no. Ben Franklin would be like, "No,

I don't need all that.

No, I'm done. I'm going to go fly a kite."

Yeah. 

People paid monthly fees for services they forgot they were even using.

2026.

Yeah, that was kind of easy.

No explanation needed. 

Americans being worried that foreign imports were hurting domestic businesses.

1776. However, the same argument can be made today and is being made today. So, probably both.

Yeah. People being worried that debt would threaten their independence.

1776, Ben Franklin was so anti-debt, it's noted in all the history books. As opposed to Alexander Hamilton, would who may be a been a little better with money. He believed in smart debt and using it to build rather than fund consumption.

Yep. Awesome. Now we're going to go into our quotes game. Okay. Ready?

Who said this? Beware of little expenses. A small leak will sink a great ship.

Oh, that was Ben Franklin. Absolutely.

To contract new debts is not the way to pay old ones.

That's interesting. But it's George Washington, I bet. And the reason why I say it's interesting is because in a few minutes, I'm going to tell you a George Washington story that's not widely known.

Oh, okay. I'm excited. Credit is a system whereby a person who cannot pay gets another person who cannot pay to guarantee that he can pay.

Boy, I'm confused. But that must have been Hamilton, maybe. I'm not sure.

That was a trick one. It was Charles Dickens. 

Oh, that's good.

I just wanted to trick you.

You got it. You got me.

This person said they would rather go to bed without dinner than rise in debt.

Oh, Ben Franklin. Absolutely.

Never spend your money before you have earned it.

I don't know.

Ironically, it was Thomas Jefferson.

You mean the party boy of uh the founding fathers?

Yes. Party boy Thomas Jefferson. You know, it's interesting because he was a wealthy man at one point and then he ended up dying with over $100,000 in debt, which is equal to probably a million to 3 million and a half dollars in today's dollars.

That's a lot of money.

It's a lot of money. But you such a smart man, but he died broke.

So, you want to talk about your uh fancy history lessons? I'm kind of excited about it.

My nerdiness is coming out.

So this is get your nerd on.

So this is a interesting thing because what country was the original debtor?

How were we founded? America went into debt to finance the revolutionary war.

George Washington himself went to a financier named Heim Solomon who was a very wealthy man at the time and he said … Heim, I need money and he's like okay I'll lend it to you and guess what, he never got his money back. America defaulted from owing that money and he died penniless. 

Oh how come we don't hear about that he is one that doesn't get that much recognition, but without him, we'd probably all be speaking with English accents.

We appreciate you. [laughter]

Happy birthday, America. God bless America and God bless you.

Oh, that's a good way to end today. I like that. That works. We're going to do our closings now. Bye, guys.

Thank you guys for coming.