May 28, 2010

Even Our Presidents Have Gone Through Bankruptcy

Posted in Bankruptcy tagged at 10:55 am by demetriagraves

It’s interesting to discover that with a quick study of history, it seems that even our past Presidents haven’t been immune from difficult financial circumstances, even bankruptcy. It can be reassuring to know that you’re not alone if you are going through financial hardship, or perhaps even bankruptcy. As a family law attorney I help many people through their financial struggles, including bankruptcy. So I thought it would be interesting to look at bankruptcy from a historical perspective and it seems that even our Presidents have had to deal with bankruptcies and various forms of insolvency in the past.

Most of the past Presidents’ troubles came from real estate speculation, poor crop yields on the lands that they held, plus botched and frequently highly risky business deals.

When reviewing the finances of all 43 presidents, it’s interesting to note that eight became insolvent at one time or another during their adult lifetimes. Jefferson had a passion for expensive homes, land, and personal property. Madison was a poor judge of real estate values and gambled that his plantations would produce abundant crop production. William Henry Harrison had bad luck with the weather which destroyed his wheat and corn.

By the middle of the 19th century, land ownership went from being common to unusual. Lincoln lost everything when the general store he owned with a partner failed. An associate of Grant’s son ran through the former Union general’s entire fortune. The depression of 1893 ruined the value of McKinley’s investment in a tin plate company. Truman lost the clothing store that he owned with a partner. Most presidents were honorable and paid off their debts to the extent that they were capable of doing.

It appears that the nation’s chief executives were men of their times, at least financially. What is striking is the extent to which many were gamblers. Some, like Hoover, bet and won. He became wealthy in the mining business. LBJ made money as a cattle rancher, a risky business depending on the national appetite for beef and, to some extent the weather.
It could be argued that men who are willing to lead the nation into war, annex millions of square miles of territory or drop the atomic bomb to end a war were by their nature risk takers.  Whether that is a better trait for managing personal wealth or the nation’s fortunes is for history to decide.
Below is a light-hearted review of the poorest past American Presidents and their bad luck:
Our 3rd President Thomas Jefferson (1801-1809): Despite an ostentatious lifestyle – or perhaps because of it – Jefferson owed money to various creditors throughout his life. He inherited debt from his father-in-law as a result of unusual estate planning and was a creditor to many unreliable debtors. His main source of income, “Monticello,” proved inadequate to cover his debts. Poor management of his estate and price fluctuations of commodities cost Jefferson dearly. Towards the end of his life, he was so severely in debt that he petitioned the state of Virginia to auction off his land; the state refused. After he died, his estate was was auctioned off, and his surviving daughter was forced to rely on charity.
Our 4th President James Madison (1809-1817): At his “Montpelier” plantation, Madison suffered similar difficulties to Jefferson. While his various agriculture businesses were occasionally profitable, in the end they lost him money. His stepson, a gambler, racked up debts. Madison absorbed these obligations and was forced to sell half of Montpelier to pay them off. Although he may have wanted to free his slaves, his financial troubles prevented him from doing so, and he was forced to sell some of them to pay off debts. Some historians suggest that he had his memoirs published posthumously in order to better provide for his family.
Our 5th President James Monroe (1817-1825): Monroe ran his plantation into the ground. At the end of his life, he petitioned Congress to relieve some of his family’s debt and was granted $30,000. It turned out to be insufficient and he was forced to sell his home in Paris and his 3,500 acre “Ash Lawn” estate. On Monroe’s misfortune, John Quincy Adams wrote “Mr. Monroe is a very remarkable instance of a man whose life has been a continued series of the most extraordinary good fortune, who has never met with any known disaster, has gone through a splendid career of public service, has received more pecuniary reward from the public than any other man since the existence of the nation, and is now dying, at the age of seventy-two, in wretchedness and beggary.”
Our 9th President William Henry Harrison (1841): While serving as the Ambassador to Colombia in 1829-1830, Harrison was forced to manage his farm from abroad. When he returned to the states, he discovered that bad weather had destroyed his crops. At the same time, his creditors were all demanding payment. On top of his own heavy obligations, his sons also owed substantial amounts. Harrison spent much of the time after his return to America trying to get his finances in order, and was forced to sell off most of his land. By the time he reached the White House, he was still reportedly in debt. His untimely death, only one month after entering office, may have been the only thing that prevented him from reaching total insolvency.
Apparently even our former Presidents have had their fair share of financial difficulties, plus it seems that the presidency has had little to do with wealth. Several former presidents brought huge amount of net worth to the job. Many lost most of their fortunes after leaving office.  Some never had any money at all. So if you are going through financial hardship and are considering bankruptcy as an option, please don’t hesitate to contact me for a free confidential initial consultation, where you can get your questions answered. Don’t wait for things to escalate even further out of control. I look forward to being able to work with you and help get you back on track as soon as possible.
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