|Author(s):||Lengel, Edward G. |
Published by EH.Net (July 2017)
Edward G. Lengel, First Entrepreneur: How George Washington Built His – and the Nation’s – Prosperity. Boston: Da Capo Press, 2016. vii + 280 pp. $26 (hardcover), ISBN: 978-0-306-82347-3.
Reviewed for EH.Net by Robert Whaples, Department of Economics, Wake Forest University.
Although it’s easy to overlook amid his accomplishments as a military leader and statesman, George Washington was a very successful entrepreneur. Edward Lengel (University of Virginia) ably demonstrates this fact, as he highlights Washington’s business achievements and relates them to his military and political career in First Entrepreneur.
Washington had all the tools needed for entrepreneurial success. First, he was immensely “lucky” — born into the planter class, he amassed land and assets by inheritance and marrying a wealthy widow. But it took more than luck, as he honed the innate characteristics that made him a business leader — a calculating, practical mind, the ability to lead men, and “no penchant for wasting his time” (p. 13). A key to his success was that Washington actually enjoyed running his enterprises and he concluded that grand ideas mean nothing without close attention to details.
As American school children were once taught, Washington began his career as a surveyor — difficult work in a frontier society. He was noted for the quality of his surveying work — a valuable skill in an economy where accurate surveying could save investors immense litigation fees, but this profession was equally a springboard to entrepreneurship. He soon developed a “nose for good land” (p. 17), the ability to judge the soil quality, proximity to navigable water and overall economic potential of land. And at age 18, he used his salary to make his first investment — in land.
Lengel argues that Washington’s time as an officer during the Seven Years’ War — much of it spent as an aide-de-camp to General Edward Braddock — was especially valuable to his business success, as he learned the lessons of running an organization, managing men and money. After the war, Washington returned to Mount Vernon to face what he saw as sadly unpromising economic prospects. The plantation almost completely specialized in tobacco, but the crop was rapidly depleting his soil. He was “land rich” but low on cash and enmeshed in a social world that expected him to spend lavishly on guests, parties, hunts, politics, and the conspicuous consumption of expensive imported goods — and by age thirty he owed £1800 to English creditors (about 25 times the average annual earnings of free workers in the South Atlantic at the time). Washington felt that this system “humiliated” the colonists and sought a way out of it. The conventional story is that the exit came through politics and war, which is true, but it also came via some shrewd economic decisions.
The most important entrepreneurial decision of Washington’s career came in the mid 1760s when he made the commitment — after careful weighing of costs and benefits — to rapidly transition away from tobacco to a diversified plantation economy centered on wheat production. “In 1764, his estate produced 257 bushels of wheat; in 1766, 2,331 bushels; and in 1769, 6,241 bushels. … By 1766, he had eliminated tobacco from his Mount Vernon farms” (p. 61) and the shift at the Custis farms that Martha owned (and George managed) lagged only slightly. This shift wasn’t merely from one crop to another, as it freed up Washington’s slave work force for an immense range of non-agricultural tasks. Washington worked diligently to find one project after another to fully employ his slaves. Most significantly, under his supervision his workers built and operated a grist mill where they manufactured his wheat into flour. He was a very “hands on” businessman and aimed for the high quality end of the market, even putting his brand name “G. Washington” on flour and biscuits, considerable amounts of which were exported to the West Indies. He actively experimented on his farms and tested the latest technologies. And he looked tirelessly for ways to employ his slaves so that they would never be idle — they built boats and ships, ran a ferry, and did extensive fishing in the Potomac, for example. Mount Vernon became a “hive of activity” (p. 64). And Washington enjoyed this — the challenges of change and of sizing up and seizing all available opportunities. Lengel repeatedly demonstrates, in concrete terms, that Washington was a systematic, clear-eyed economizer.
Then war interrupted his business career and Washington was called to command the Continental Army. “After years of working to expand his own estate, he came to think of the army and the fledgling United States as enterprises that he must both steward and develop. … He chose strong leaders and mandated thrift and efficiency” (p. 91). His overall personal investment strategy during the war was buy more land (largely as a hedge against rampant inflation), but his plantations treaded water under the management of men who were much less capable than he (and much less invested in the success of his projects). An “air of inefficiency hovered above” the Mount Vernon he returned to in peacetime, but Washington soon set about restructuring his farming activities with “a methodical mind and tremendous energy” (p. 149). He feared that his burgeoning slave work force was becoming a drag on profits, so he renewed efforts to put them to work, continuing his diversification — with the establishment of a major distillery, which produced 11,000 gallons of whiskey in 1799 (the year he died). At death, his Mount Vernon estate (2126 acres when he inherited it) sprawled over 7600 acres. He owned over 50,000 (mostly undeveloped) acres in Virginia, Ohio, Pennsylvania, New York, Kentucky and the Northwest Territory. Altogether his land was worth about $530,000 and his other assets (including stocks, bonds, mills, the fishery, and the distillery) were valued at about $250,000. This omits the value of his slaves (whom he arranged to manumit) and probably put him among the one hundred wealthiest people in the nation at the time of his death.
Lengel’s book is tautly organized and engagingly written, but it relies too heavily on primary sources. Considerable value could be added by exploring additional secondary works — especially those by economic historians — to help put Washington’s strategies and struggles into a broader context. A few well-placed numbers from Historical Statistics would also be helpful. In addition, there are occasional missteps – such as when Lengel writes that Washington’s “productivity multiplied — some twenty-five times,” when he means that output rose twenty-five times, not output per worker (p. 64). Overall, however, First Entrepreneur succeeds admirably in its goal of systematically exploring and highlighting Washington’s considerable entrepreneurship.
Robert Whaples is EH.Net’s book review editor. His most recent publication (as editor) is Pope Francis and the Caring Society (forthcoming, Independent Institute).
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|Subject(s):||Agriculture, Natural Resources, and Extractive Industries|
Military and War
|Geographic Area(s):||North America|
|Time Period(s):||18th Century|