Dr. Mark Skousen’s
SPECIAL REPORT
Turn Time-Tested
Principles into
Tomorrow’s Profits
A Special Report
Celebrating Ben Franklin’s 300th Birthday Based on My Book
The Compleated Autobiography by Benjamin Franklin
by Dr. Mark Skousen -- Editor, Forecasts & Strategies
IMPORTANT NOTE: This special report is for information and educational purposes only based
on data as of December 2015. Do not buy or sell any investments until you have read the current
issue of Forecasts & Strategies, a current Hotline or an email update from Mark Skousen.
Turn Time-Tested Principles into Tomorrow’s Profits
Copyright © 2015, by Mark Skousen. All rights reserved.
No quotes or copying permitted without written consent.
Published by:
Eagle Products, LLC
300 New Jersey Ave. NW #500
Washington, DC 20001
800/211-7661
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Website: www.MarkSkousen.com
BEN FRANKLIN ON MONEY
By Mark Skousen
Compiler and Editor of The Compleated Autobigraphy
by Benjamin Franklin (Regnery, 2006).
“Nothing but money is sweeter than honey.”
— Ben Franklin
Editor’s Note: I created this special report in honor of Ben Franklin’s 300th birthday. It
is based on my book, The Compleated Autobiography by Benjamin Franklin, published by
Regnery almost 10 years ago. Even so, you can still find copies, so purchase one if you see it. If
you do, the next time I see you, I’ll be glad to autograph it, for you.
— Be Free! Mark Skousen
Benjamin Franklin made great contributions as an inventor, scientist, writer and founding
father, but he also offered valuable advice on money matters. His is one of the greatest success
stories in American history, and much of his success in philanthropy, community and public office
came from his experience and capabilities in the financial world.
Herein is a report on Franklin’s life and advice on personal economics, business, investments,
estate planning and charitable giving, based on my lifelong study of this “versatile genius in all of
history” and my recent compiling and editing of The Compleated Autobiography by Benjamin
Franklin (Regnery, 2006) in honor of his 300th birthday.
Why pay attention to Ben Franklin? His is the first “rags to riches” story in America.
Throughout all his experiences, failures and victories, he built a fortune that was never in jeopardy.
By the time he died in 1790 at the glorious age of 84, he was a self-made man, one of the richest
in American history. The Autobiography, published posthumously, tells largely how he created his
wealth. It influenced millions of Americans, both young and old, who wanted to succeed in life,
from Andrew Carnegie and Thomas Mellon in the 19th century, to Warren Buffett in the 20th
century.
What can he teach us today? Read on…
“The Way to Wealth”: Industry, Thrift, Prudence
In his “Advice to a Young Tradesman” in his famous pamphlet, “The Way to Wealth,”
published in Poor Richard’s Almanac in 1758, Franklin wrote, “In short, the way to wealth, if you
desire it, is as plain as the way to market. It depends chiefly on two words, industry and frugality;
that is, waste neither time nor money, but make the best use of both. Without industry and
frugality, nothing will do, and with them everything.”
His most famous pro-saving adage, “A penny saved is a penny earned,” is remarkably
profound. How can a penny saved be a penny earned? Assume you earn $100 a day working. If
you have $100 in your pocket and you spend it, you have to go out and do a day’s work to get that
$100 back. Another way of putting it: With $100 in savings, you could take off a whole day of
work and still enjoy a day’s income by drawing upon your savings. In sum, saving is a source of
earning power.
The more you save, the more earning power you build up. In addition, savings earns
interest, which means more earning power, compounded returns.
Money Tip #1: For years, I’ve recommended an Automatic Investment Plan (AIP) at a
brokerage or bank account to aggressively increase your saving/investment accounts. For example,
at Charles Schwab & Co., you can invest in over 1,000 no-load mutual funds on a monthly basis.
Money is withdrawn automatically every month from your checking account or paycheck to fund
your favorite mutual funds.
AIPs are a great way to build wealth fast. Your monthly balance is likely to grow rapidly
because of three positive factors:
1. You are adding to your account monthly.
2. All interest, dividends and distributions are reinvested automatically.
3. If you buy the right funds, you will earn capital gains.
Always Spend Less Than You Earn
Franklin preached throughout his life the virtues of “industry, thrift and prudence” as
universal principles of success. He made a point of working smart and often working late hours to
get ahead. Remember the refrain, “Laziness travels so slowly that poverty soon overtakes him.”
Undoubtedly Franklin would castigate today’s Americans for indulging in undersaving,
overspending and excessive debt. “No revenue is sufficient without economy,” he warned. “A
man’s industry and frugality will pay his debts and get him forward in the world… Business not
well managed ruins one faster than no business.”
We all know of millionaires who have gone bankrupt. Just because you have plenty of
income and assets does not mean you can’t run into financial trouble. Parkinson’s Second Law,
“Expenditures rise to meet (and sometimes exceed) income,” occurs all too often.
One of the most difficult things to do is to cut back when you have a setback in income. But
retrenching is better than going into debt in order to maintain your lifestyle. When his printing
partnership abruptly ended in 1767, Franklin made the difficult decision to cut back consumption
(dining at home at only one “single dish”), and urged his wife Deborah to do the same. It kept
them out of trouble.
Money Tip #2: Manage your budget carefully. Beware of credit cards, which make it easy to
overspend. If you have trouble paying off your credit cards each month, use charge cards that
require payment in full each month, such as American Express.
Another good idea is to keep track of all your expenditures every day, and compare your
spending from month to month to see where you are wasting money. Every person I know wastes
at least 10% a month on needless expenditures. Daily writing down your expenditures is easy, and
you will be surprised how much you can save.
Remember these adages from Poor Richard’s Almanac:
“Beware of small expenses; a small leak may sink a great ship.”
“The honest man takes pains, and then enjoys pleasures; the knave takes pleasures and then
suffers pain.”
“Women and wine, games and deceit, makes the wealth small and the wants great.”
“Creditors have better memories than debtors.”
The Importance of Education
Franklin was a big believer in education, especially for youth. He wrote the following letter
to his grandson Benny, who was at a private school when Franklin was ambassador to France.
Here’s what he said:
“You see everywhere two sorts of people. One sort are those who are well dress’d and live
comfortably in good houses, whose conversation is sensible and instructive, and who are respected
for their virtue. The other sort are poor, and dirty, and ragged and ignorant, and vicious, and live in
miserable cabins or garrets on coarse provisions, which they must work hard to obtain, or which,
if they are idle, they must go without or starve. The first had a good education given them by their
friends, and they took pains when at school to improve their time and increase their knowledge.
The others either had no friend to pay for their schooling, and so never were taught; or else when
they were at school, they neglected their studies, were idle, and wicked, and disobedient to their
masters, and would not be instructed; and now they suffer.”
Getting a good education can put you ahead of the class in life. But being smart without
being educated can be frustrating. As Poor Richard’s put it, “Genius without education is like
silver in the mine.”
After your formal education, continue your self-improvement. Franklin was an avid reader,
and all great entrepreneurs keep informed by reading and attending conferences to become better
people, better investors and better entrepreneurs.
Money Tip #3: The best investors and business leaders read a lot and keep informed. They
attend a lot of conferences, and take courses toward advanced degrees. Are you planning to attend
one of my investment conferences this year? (Go to “Upcoming Appearances” on
www.MarkSkousen.com.)
Practical Business Strategies
Ben Franklin is famous for giving advice to aspiring entrepreneurs on ways to create and
maintain a profitable business. “The Way to Wealth” and the Autobiography are inspiring “how to”
sources filled with Franklin’s maxims and proverbs on how to get ahead in business.
Franklin developed a successful printing house in Philadelphia by constantly experimenting
with new products and services, expanding his customer base, adding partners and franchises
throughout the colonies and applying for government contracts to print the local currency and
deliver mail.
Here are 11 rules Franklin lived by in pursuing profits:
1. Hard work and patience pays off in the end. “Energy and persistence conquers all things.”
2. Be cost conscious, be frugal, manage your time. “Doth thou love life? Then do not
squander time, for that’s the stuff life is made of.”
3. Live moderately. “Great spenders are bad lenders.”
4. A job worth doing is a job worth doing well. “Haste makes waste.”
5. Take the long road to success. “Patience in market is worth pounds in a year.”
6. Always put business relationships on paper, especially among friends, to avoid future
potential disagreements. “When a friend deals with a friend, let the bargain be clear and
well penn’d, that they may continue to be friends to the end.”
7. Master your business, and keep up to date. “The used key is always bright.”
8. Develop good contacts with everyone in your business, including government officials.
Good relationships will help you to obtain bargains with suppliers. (Franklin established
an organization called the “Junto” to get to know fellow tradesmen, which helped him
immensely in expanding his business.)
9. Establish a “character of integrity” in business. Never underestimate the power of a good
reputation. Never speak ill of others if you can help it. “Love your enemies, for they tell
you your faults.”
10. Seek to work with and counsel with the most reliable and experienced business partners.
Be alert to devious men and swindlers. “Don’t judge men’s wealth or piety by their
Sunday appearance.”
11. Be humble. “Success has ruined many a man.”
Money Tip #4: Use Franklin’s 11 principles to build surplus wealth and a retirement income
from your business. Remember, your business or full-time job is typically the greatest source of
wealth during your lifetime.
Two Books on Ben Franklin and Money
I recommend two books in adopting Ben Franklin’s principles of success in business, both
written and compiled by Blaine McCormick, associate dean at the Baylor School of Business. The
first is Ben Franklin, America’s Original Entrepreneur: Franklin’s Autobiography for Modern
Times (Entrepreneur Press, 2005). Actually, this is a new translation of Franklin’s Autobiography.
This is much needed, as it is sometimes difficult to follow Franklin’s 18th century writing. This
new Autobiography is beautifully illustrated, with additional commentary by Professor
McCormick. I highly recommend this book, now available in hardback. In fact I was so impressed
with it that my mother is giving away copies of this book to all her children, grandchildren and
great-grandchildren (she is a direct descendant of Ben Franklin).
The second book is Ben Franklin’s 12 Rules of Management (Entrepreneur Press, 2000).
Here Professor McCormick applies Franklin’s wisdom to making money in the business world.
Sound Investment Philosophy
Franklin was also a successful investor. In 1743, at the age of 42, he turned over his printing
business to his partner David Hall, receiving an annual income for over 20 years afterwards. He
never completely retired, however. He worked for the government as a postmaster and minister to
France. Nevertheless, over the years he built up a substantial fortune, and relied on his savings and
investment income to pursue a gentleman’s career in science, politics, and community service.
Franklin built his investment retirement portfolio by saving, avoiding debt, placing wellcollateralized loans (bonds) and investing in rental properties. How did he manage his
money?
First, Franklin ignored the doomsayers and profited from his prediction that America was
destined to be a great prosperous nation. An incurable optimist, Franklin was always bullish on
America and life in general. At the end of the War for Independence, he predicted, “America will,
with God’s blessing, become a great and happy country.” The United States, he said, is “an
immense territory, favored by nature with all advantages of climate, soil, great navigable rivers and
lakes… [and] destined to become a great country, populous and mighty.”
He was critical of the doomdayers and complainers: “I saw in the public papers of different
states frequent complaints of hard times, deadness of trade, scarcity of money, &c.,” he wrote in
1785. “It is always in the power of a small number to make a great glamour. But let us take a cool
view of the general state of our affairs, and perhaps the prospect will appear less gloomy than has
been imagined.”
In his Autobiography, he told the story of an elderly man who repeatedly predicted economic
depression and a real estate collapse in Philadelphia, and warned Franklin to sell his printing
house and his real estate holdings. Franklin ignored his advice and prospered. Eventually, he said,
“I had the pleasure of seeing him give five times as much for one [piece of land].”
Money Tip #5: Know the signs of the times. Franklin recognized a great future for America,
for he took advantage and invested in real estate, banking and other investments. In order to make
the right investment decisions, you need to have a sound view of the future. What is the future of
America and global investing? Measure the pros and cons and make up your own mind.
Personally, I’ve found there is usually some investment area worth pursuing, whether it be U.S.
stocks, foreign investing, precious metals or real estate. There’s always a bull market somewhere.
Second, Franklin continued to live frugally, even during his retirement, which meant
occasionally he had to cut back (as noted earlier).
Third, limit your speculative opportunities, so as not to jeopardize your entire portfolio. You
are bound to make mistakes. Franklin made many.
In 1769, Franklin joined with some partners/friends to seek a land grant of 20 million acres
in the Ohio territory from the British Crown. He was told by his friends that the land grant was
almost guaranteed. “We were daily amused with expectations that it would be completed at this or
other time, but I saw no process made in it,” he wrote a friend. His British agents frequently
promised that the deal would take place “any day now,” but five years later, nothing came of it.
Ultimately, the partnership was never granted the land, and Franklin’s investment went up in
smoke.
Fortunately, Franklin’s loss was small. He made the mistake of mixing money and friendship,
but avoided the temptation to put too much money into a “sure deal.”
Money Tip #6: Franklin’s land grant investment is not unlike speculations some of you may
be tempted to take in penny stocks and “private placement” with supposedly great prospects.
Most never fulfill their grand promises. My advice is to diversify and minimize your exposure to
these speculations. “Experience keeps a dear school, but fools will learn in no other.”
How to Handle Financial Setbacks
Fourth, diversify your holdings and limit your risks. Franklin made a point of having a wide
variety of income sources, so that a loss in one would not destroy his entire portfolio. In addition
to earning income from his role as minister and postmaster, he maintained 7 or 8 rental properties;
earned interest-bearing bank accounts in Philadelphia, New York, London and Paris; invested in
common stocks such as the Bank of North America, which paid a sizeable dividend; and
occasionally loaned funds at interest to individuals and institutions.
His sizeable interest and rental income from bank accounts and real estate saved him from
several severe financial setbacks during his years abroad.
In 1767, while colonial agent to England, his long partnership in the printing business ended.
“A great source of my income was cut off,” Franklin wrote, forcing him and his wife to become
more frugal in their spending habits.
In 1772, there was a banking crisis in England, but Franklin survived unscathed. “I only
hazard a little using my credit with the bank…Being out of debt myself, my credit could not be
shaken by any run upon me.”
In 1774, Franklin suffered the most serious blow to his finances. As a result of the
Hutchinson Letters scandal (where he sent confidential letters among British officials to America,
where they were published), Franklin was vilified in England and fired from his job as postmaster
and colonial agent, which amounted to a loss of £1,800 a year in income! Frugal living and their
sizeable savings and income properties saved them from certain disaster. Late that year, his
devoted wife Deborah died, and he was forced to return home.
Estate Planning and Charitable Giving
Franklin wrote and rewrote his last will and testament several times before passing away in
1790. His will is quite interesting, and I reproduced it in The Compleated Autobiography. Before
he died, he engaged in some estate planning, such as arranging the transfer of his son William’s
farmland in New Jersey to his grandson (William, who as a royalist opposed Franklin during the
American Revolution, received nothing in his father’s will).
In his will, Franklin made a long list of his real-estate properties, bonds (loans), shares, cash,
books, printing equipment, and other assets. His will describes Franklin’s “fine crab-tree walking
stick, with a gold head curiously wrought in the form of the cap of liberty,” which he gave to
George Washington, and the picture of King Louis XVI surrounded by 408 diamonds, a gift to
Franklin when he left Paris. He gave the diamond-studded picture to his daughter Sally on
condition that she not remove the diamonds. Within a few years, she and her husband removed all
of them to pay for a long trip to Europe!
According to the Wealthy 100, a ranking of the 100 wealthiest Americans of all time,
Franklin was worth at least $150,000, a considerable sum in those days.
One of the most interesting aspects of Franklin’s will is the creation of a fund in Boston to
finance young artisans. During his lifetime, Franklin engaged in all kinds of fundraising activities
for public causes, and gave liberally from his purse. But here he created a fund with 1,000 pounds,
whose interest would be used to fund the education of young people. The fund continued until
recently. Franklin was living proof of Poor Richard’s saying, “Great almsgiving lessens no man’s
living.”
Money Tip #7: It is estimated at nearly 50% of Americans die without a will. Don’t let it
happen to you. And when you do your estate planning, be creative like Franklin. The next time
you update your will, look for novel ways to give away money to your relatives and favorite
charities. Surprise some people!
Funding the Best Charities
But, before you give away your hard-earned money to a charity, church, or foundation,
check out their finances thoroughly. Make sure your money is being put to good use, and not
just paying high salaries or past debts for promotions that didn’t work. In this regard, Franklin
made a perceptive observation:
“Charitable institutions, however originally well intended, and well executed at first for
many years, are subject to be in a course of time corrupted, mismanaged, their funds misapplied
or perverted to private purposes. Would it not be well to guard against those by prudent
regulations respecting the choice of managers, and establishing the power of inspecting their
conduct, in some permanent body, as the monthly or quarterly meeting?”
Remember these final words from Poor Richard’s: “A long life may not be good enough,
but a good life is long enough.”
May you enjoy a long, prosperous and good life, I remain
Yours faithfully in liberty, AEIOU,
Mark “Be Free” Skousen
Eagle Products LLC • 300 New Jersey Ave. NW #500 • Washington,
DC 20001
800/211-7661 • www.MarkSkousen.com
FSBEN-1215