Relative Wealth

By Ramesh Akkineni

Benjamin Graham in his Memoirs

Everyone has read about the ruined speculators said to have jumped out of brokers' windows in droves during the 1929 market panic. Those stories were greatly exaggerated, of course, as are all that appeal to the public's macabre sense or Galgen-humor ["gallows-humor"]. But it is true that many people did desperate things in those awful days, often because they considered themselves ruined, even though they weren't. An example was the uncle of Jenny, my first mistress; he had made a fortune in shoes and then gone into real estate. But worried over losses of various kinds, he locked himself into his garage with a bottle of whiskey and the car engine running, and thus put an end to his troubles. But the fact was that he was quite solvent and left his family in a comfortable position. Indeed, through their investment in our funds their wealth later turned into millions.

I can sympathize with the desperation of my old friend, and almost with his tragic end, because to some degree I went through comparable dismay and apprehension for more than three years. It is true that I wasn't ruined and that at the low­est point I still had means which would have seemed quite large to me only ten years before. But wealth and poverty are relative terms-a poor man in New York would be a rich man in Calcutta, and practically everyone who has lost four-fifths of his wealth considers he has suffered a disaster no matter how much he has left. The chief burden on my mind was not so much the actual shrinkage of my fortune as the lengthy attri­tion, the repeated disappointments after the tide had seemed to turn, the ultimate uncertainty about whether the Depres­sion and the losses would ever come to an end. Add to this the realization that I was responsible for the fortunes of many rel­atives and friends, that they were as apprehensive and dis­traught as I myself, and one may understand better the feel­ing of defeat and near-despair that almost overmastered me towards the end. I expressed those feelings in a little poem I composed in the bleak winter of early 1932:

“Silent and soft as the gossamer snow:
Mantles of Death drift over the lorn;
Cold is his touch, but warmer than woe:
Black is his night, but brighter than morn.
Where shall he sleep whose soul knows no rest:
Poor hunted stag in wild woods of care?
Earth has a pillow for his harassed head:
Dust has a drug to ease his despair.”

The Crash reaffirmed parsimonious viewpoints and habits that had been ingrained in me by the tight financial situation of my early youth but which I had overcome almost com­pletely in the years of success. I blamed myself not so much for my failure to protect myself against the disaster I had been predicting as for having slipped into an extravagant way of life which I hadn't the temperament or capacity to enjoy. I quickly convinced myself that the true key to material happiness lay in a modest standard of living which could be achieved with lit­tle difficulty under almost all economic conditions. I applied this new principle in two ways-one logical and creditable enough, the other quite small-minded.

It became my firm resolve never again to be maneuvered into ostentation, unnecessary luxury, or expenditures that I could not easily afford. The Beresford lease was a bitter but salutary lesson, and in the ensuing thirty-five years, I have avoided any and all real estate white elephants. But on another plane, that of purely personal spending, I must own that I carried economy much too far, and began once more to worry about dimes and quarters when tens of thousands of dollars were actually at stake. I would take the subway in­stead of a taxi, alleging to myself that this was quicker-and I was always in a hurry-but knowing well that I wanted to save the dollar or so involved. Similarly, I got in the habit of ordering the less expensive entrees on the menu, and even-I hate to confess it-of taking my mother to Chinese restau­rants for our weekly dinner. In the days of my affluence I had provided Mother with a car and chauffeur (although I have never had a chauffeur for myself); now I felt that Mother, understanding my need for strict economy, could do without. Fortunately, I almost always made a sharp distinction be­tween spending habits that involved others and those which affected me alone. I am reasonably sure that I was never con­sidered miserly, though I might have been if the world knew how I was treating myself.

Popular posts from this blog

It Pays to be a Nervous Wreck

By Ramesh Akkineni
from an article in Livemint Two weeks ago, Microsoft issued the sort of quarterly report usually seen of a company in finest mettle. Redmond’s sales were up 15% and profit double that, excluding certain deferrals. And the rest of the year, it projected, would be just as sanguine—certainly unlike in the economy as a whole. Elsewhere, that would be a mandate for staying the course. In Redmond, though, they were crossing off days on their calendars, waiting until Friday, the first day of February and thus the first opportunity Microsoft would be able to truthfully state, “Okay, Yahoo, it’s been a year since we talked to you guys; where’s the beef?” Microsoft remains obsessed about Google because it reads the same things everyone else does about how Google’s style of free, “in the cloud” computing means the slow and steady decline of Windows and Office. That’s a technical debate, one in which both sides have good arguments. But....
Read more

Korean Model

By Ramesh Akkineni
from an article by Ha-Joon Chang in the Guardian In my lifetime Korea has lived through one of the greatest development miracles – half a century ago, its annual per capita income was around £50, less than half that of Ghana at the time. Today, it stands at £12,000, putting it on a par with Portugal and Slovenia. How was this possible? Korea of course did things that most people agree are important for economic development, such as investment in infrastructure, health and education. But on top of that, it also practised many policies that are now supposed to be bad for economic development: extensive use of selective industrial policy, combining protectionism with export subsidies; tough regulations on foreign direct investment; active, if not particularly extensive, use of state-owned enterprises; lax protection of patents and other intellectual property rights; heavy regulation of both domestic and international finance. The Korean experience shows that sustainabl...
Read more

Maxims from Poor Richard 3

By Ramesh Akkineni
Image
from Poor Richard's Almanac, 1735 Look before, or you'll find yourself behind. Bad Commentators spoil the best of books, So God sends meat (they say) the devil Cooks. Approve not of him who commends all you say. By diligence and patience, the mouse bit in two the cable. Full of courtesie, full of craft. A little House well fill'd, a little Field well till'd, and a little Wife well will'd, are great Riches. Old Maids lead Apes there, where the old Batchelors are turn'd to Apes. Some are weatherwise, some are otherwise. Dyrro lynn y ddoeth e fydd ddoethach. The poor man must walk to get meat for his stomach, the rich man to get a stomach to his meat. He that goes far to marry, will either deceive or be deceived. Eyes and Priests Bear no Jests. The Family of Fools is ancient. Necessity never made a good bargain. If Pride leads the Van, Beggary brings up the Rear. There's many witty men whose brains can't fill thei...
Read more