Managing Personal Finances

Abraham Lincoln and Winston Churchill presented sharply different profiles in their handling of their own personal finances. Lincoln started with far fewer resources but he also suffered serious economic setbacks as a young man in New Salem, Illinois, where he incurred the debts of a store that went bankrupt. Lincoln scholar Harry E. Pratt wrote: “Lincoln did not begin life in abject poverty, and his childhood was spent in a home whose head was in better-than-average financial circum|stances. The years of his boyhood were lean ones, and his start in life was marked by financial failures which burdened him with a debt of approximately $1,100. Soon, however, he began to earn money—by surveying, by odd jobs, and by service in the Illinois legislature—and the evidence indicates that the debt was retired long before his election to Congress [in 1836], which is generally supposed to have marked his escape from the financial morass.”1

Painter Albert Jasper Conant recalled Lincoln’s sitting for him in August 1860: “It was no secret that he was perennially out of funds for a long time [after Berry & Lincoln store failed]. Major John T. Stuart, who encouraged him to study law and first took him into partnership, told me in 1870, when he painted his portrait, that when Lincoln was with him, in 1837, the firm kept no books, but that all the fees were brought in and immediately divided among the members.

“How much are you worth now?” I asked Mr. Lincoln, when he was telling me of his early struggles. ‘Well,’ he replied, ‘I pay taxes on $15,000, but I’m not worth $20,000.” That was all he had been able to accumulate during twenty-three years of law practice, not to mention three (four) terms in the Illinois Legislature and one in Congress.”2

Young Mr. Lincoln was careful but not parsimonious about money. His needs and goals were modest but his generosity was not. Lincoln’s early contemporary Philip Clark wrote: “Lincoln was a poor financier. He was not a manager, and seldom had any money ahead. When he came to Springfield from Salem he had been boarding for a year with a man named Nelson Ally at $.50 per week and was in debt to him $70. Misfortune overtook Ally long after that and he became an inmate of the Knox county poorhouse. Lincoln went in person and had him taken from the county house and given another home. He then asked Judge Davis to see that Ally should be cared for in case he (Lincoln) should die first.”3

“There was not a particle of avarice in [Lincoln’s] mental make-up. Greediness of wealth was absolutely foreign to his nature. He wanted money sufficient to pay ordinary living expenses of his household, but he cared not for gold just to possess and handle,” wrote Dr. William Jayne, a Springfield friend. “I venture to say that no man was less elated by prosperity, or depressed by adversity.”4 Harry E. Pratt wrote: “Lincoln, nevertheless, was well aware of the power of money and of its profound influence upon human conduct. Avarice, in his opinion, was one of the prime causes of the perpetuation of slavery. ‘The plainest print cannot be read through a gold eagle,’ he said in his speech on the Dred Scott decision in 1857; ‘and it will be ever hard to find many men who will send a slave to Liberia, and pay his passage, while they can send him to a new country—Kansas, for instance—and sell him for fifteen hundred dollars, and the rise.” Speaking in Congress in 1849 he asked: “what motive would tempt any set of men to go into an extensive survey of a railroad which they did not intend to make? What good would it do? Did men act without motive? Did business men commonly go into an expenditure of money which could be of no account to them? He generally found that men who have money were disposed to hold on to it, unless they could see something to be made by its investment.”5

Abraham Lincoln was careful about the propriety of his personal finances. Springfield friend Robert L. Wilson recalled: “During his Stay in New Salem, he had no property other than what was necessary to do his business, until after he Stopped in Springfield. He was not avaricious to accumulate property, neither was he a Spendthrift, he was always during these times hard up.”6 Another friend, Joseph Gillespie, wrote: “All the use Mr Lincoln had for wealth was to enable him to appear respectable[.] He never hoarded nor wasted but used money as he needed it and gave himself little or no concern about laying up[.]”7 Attorney Leonard Swett recalled that Lincoln’s “ideas of money were always far from lavish. I never knew him to refuse to spend for anything he needed[.] Yet he was always rigidly frugal and in no way indulged, in himself or others idleness or wastefulness[.] I think he always gave to meritorious objects but I don’t think he would in anyone, continence thoughtlessness.” Swett recalled Lincoln once saying: “I have very rarely in my life worn a suit of Clothes costing $28.”8 Judge David Davis wrote that Lincoln “was the most simple and unostentatious of men in his habits, having few wants, and those easily supplied.”9 Fellow attorney Shelby Cullom recalled: “Mr. Lincoln kept no account books to speak of. He practiced at the courts of all the counties around Springfield. After trying a case he would take the fee that he received from his client, wrap it up in a piece of paper, write on the back of the paper the name of the case and the amount – ten, fifteen or twenty-five dollars, whatever it might be – and put the paper in his pocket. When Mr. Lincoln came home he would take these papers out of his pockets, one at a time, and divide the amounts with his partner, Herndon.”10

Mrs. Lincoln was relatively parsimonious when the Lincolns lived in Springfield although she took charge in adding a second story to their home while her husband was away. Historian Michael Burlingame noted that Mary Lincoln was extravagant when it came to redecorating the White House or furnishing her wardrobe, but frugal in other ways. “Some believed Mary Lincoln was tightfisted because she wanted to preserve her husband’s salary ‘as much as possible to build them a house after [his] term at Washington expires.’ She allegedly told a White House staffer that she and her husband ‘were poor and hoped to save twelve thousand dollars every year from their salary. One Sunday in the New York Avenue Presbyterian church, she and her husband both placed money in the collection plate. As the collector moved on to the new pew, Lincoln drew him back and whispered: ‘I want to contribute more than that; come to the White house in the morning.’”11

As president, Lincoln had more money and less time to manage it. Presidential aide William O. Stoddard wrote: “Mr Lincoln himself was careless of money, rather than extravagant. He never could, under any circumstances, have made or kept a fortune, and I don’t believe he ever sued a delinquent debtor in his life. If he ever did so it was not because he cared for the money. Although his practice was always large and lucrative, and his habits simple, so indifferent was he to accumulation that he would have died a poor man but that some of his more prudent friends. Judge Davis of Illinois, for special instance, took the matter in hand and exercised a degree of care and foresight for him which he would never have taken for himself.”12

Harry E. Pratt concluded that “Lincoln was careful and saving with his money while President. He demonstrated his faith in the soundness of the government over which he presided by investing more than one-half of his salary exclusively in government bonds….Holding his salary warrants until, at one time, he had eleven on hand, meanwhile losing the interest payments, shows that he did not care about getting the maximum out of interest.”13 On August 8, 1863, Lincoln wrote his more profligate wife, then in New Hampshire: “All as well as usual, and no particular trouble any way. I put the money into the Treasury at five per cent, with the previlege [sic] of withdrawing it any time upon thirty days’ notice. I suppose you are glad to learn this.”14 When his personal finances became too confused, President Lincoln walked over the Treasury Building next door to the White House. One day in June 1854, Lincoln took to Secretary Salmon P. Chase’s office a series of financial instruments totally $54,515.07 which he sought to have converted into government bonds.

Nevertheless, rumors about the Lincolns’ finances circulated during the Civil War. “When Democrats charged that Lincoln received his salary in gold while other government employees were paid in greenbacks, the treasurer of the United States, Francis E. Spinner, denied it, explaining that by law the president’s salary was issued in monthly warrant drafts, minus income tax,” wrote historian Michael Burlingame. “Rather than drawing money on those drafts, Lincoln left them sitting in his drawer for long periods (in one case eleven months) without receiving any interest. Several times Spinner urged him to cash the warrants, pointing out that he was losing hundreds of dollars in interest. When Lincoln asked who gained thereby, Spinner said the U.S. Treasury. ‘I reckon the Treasury needs it more than I do,’ the president replied. By failing to cash his warrants, Lincoln had in effect contributed $4,000 to the treasury.”15

“As President, Lincoln’s estate grew from $15,000 in 1861 to $90,000 at the time of his death, mainly from savings from his annual salary of $25,000,” wrote Harry E. Pratt. “Through the expert handling of the administrator, David Davis, $21,000 was added to this amount before 1867, when it was distributed to the three heirs, Mrs. Lincoln, Robert Todd Lincoln, and Thomas Lincoln. A net estate of $111,000 is not a small one even by present standards; in 1867, as real wealth, it was several times larger. Certainly it disproves the general belief that Lincoln was indifferent to money and lax in his care of it. On the contrary… he perceived that one could accumulate property with|out making it a fetish, and carefully and wisely sought to provide security for himself and his family.”16

Churchill’s financial situation could not have been more different. Born to a family of wealth in the luxury of Bleinheim Palace, Winston was often near broke. He was a “very much a young man in a hurry – and on the make – seeking to establish financial security as he embarked on his political career,” wrote daughter Mary Soames.17 For Churchill, that security required him to spend much of his life writing books and articles for periodicals. Churchill’s approach to his personal finances was seldom to reduce his expenditures. In his twenties, Churchill regularly outspent his allowance from his mother – leading her to write in 1897: “If you cannot live on yr allowance from me & yr pay you will have to leave the 4h Hussars. I cannot increase yr allowance.”18

In My Early Life, Churchill wrote that his father’s death had left his mother with only the money she had brought into the marriage. “I was most anxious not to be a burden upon her in any way; and amid the movement and excitements of the campaigns and polo tournaments I reflected seriously upon the financial aspects of my military life. My allowance of £500 a year was not sufficient to meet the expenses of polo and the Hussars. I watched the remorseless piling up year by year of deficits which, although not large – as deficits go – were deficits none the less. I now saw that the only profession I had been taught would never yield me even enough money to avoid getting into debt, let alone to dispense with my allowance and become completely independent as I desired.”19 Churchill could not afford the army so he decided to become a writer.

In his twenties, after his books began to sell and he began to make money from lecturing, Churchill wrote his mother, who had been helping with his expenses: “I hope my dearest Mama to be able to provide for myself in the future – at any rate until things are better with you….I am v[er]y proud of the fact that there is not one person in a million who at my age could have earned 10,000 without any capital in less than two years.20 Biographer Roy Jenkins wrote that “Churchill evolved two firm rules which he followed faithfully for the rest of his life. The first was that expenditure should be determined by needs (generously interpreted) rather than by resources….Second he decided that when the gap between income and expenditure became uncomfortably wide the spirited solution must always be to increase income rather than to reduce expenditure.”21

Churchill made two decisions in the 1920s which contributed to his financial instability The first was the purchase of the dilapidated Chartwell estate in Kent in 1922. The second was investing in American stocks that tanked in the Great Crash of 1929. Biographer Roy Jenkins observed that Churchill “had speculated heavily and lost about half a million pounds at present-day prices. He was both impoverished and on the edge of not being able to meet his obligations. His writing for a time became more a treadmill of expiation than a joyful expansion of resources.”22 From the beginning of their marriage, it was Churchill’s wife Clementine who preached and practiced economy. Clementine biographer Jack Fishman wrote: “Though life was comfortable, there was no extravagance at Chartwell. During their early married life, when children had to be clothed and educated and appearances had to be kept up on a limited income, Clementine learned to appreciate the truth of the old adage about ‘a penny saved’.”23 Her husband was not nearly so parsimonious and sometimes his spending habits lead to conflict. Clementine was far more fiscally conservative than her husband.

“Though privy to many official secrets and enjoying privileged contact with ministers, Churchill did not hold office for a little over a decade,” wrote historian David Dilks of the 1930s. “In that time he earned and spent hugely, not least in rebuilding Chartwell and its gardens. He managed to spend the money as fast as it came in, and sometimes faster. As soon as the monumental account of World War I was complete, he embarked upon the congenial task of restoring the repute of his ancestor John Churchill, first Duke of Marlborough.”24 Historian Lewis Taylor wrote: “The servant staffs of both Hyde Park and Chartwell fluctuated, but neither ever has less than a cook, a valet-butler, and two maids. At Chartwell there are, in addition, two gardeners and varying numbers of farm hands and other workmen, and when the six secretaries and Churchill’s team of writing experts are added to these, the weekly pay roll is staggering.”25 Churchill bodyguard Walter H. Thompson, who sometimes helped his boss build walls on the property, wrote of Chartwell: “When Churchill purchased this great house and the huge stretch of ground which surrounded it, his life seemed to open out in a new way. A new dignity entered him. I think he had longed for years to have some place of his own to go for holidays and weekends; a place where he could really work the earth with his own hands and tools; where he could relax. At Chartwell, he did just that.” Thompson noted: “Once he began changing the surface geography of things, he couldn’t stop. The mixing of cement fascinated him. With a hoe and a sandpile this man was altogether tireless.”26 Lincoln, having done his share of manual labor as a young man, needed no such return to working the earth.

Chartwell increasingly became an albatross that Churchill could not support. Historian John Charmley wrote: “Clementine Churchill had never liked Chartwell. She had not wanted to buy the house in 1922, and she regarded it, not without justice, as an enormous drain on their finances. Winston loved the house, its setting with a magnificent view across the Weald of Kent, and the opportunities which it gave him to indulge a taste for landscape gardening and brick-laying. If it was expensive, well, what of that; he earned a fortune through his pens, so was he not entitled to his luxury. The problem was that he also spent a fortune. In 1934 he earned over £12,000 from his literary endeavours. Nothing that came from his pen, or rather his lips (for he loved to dictate) was wasted, and material would be recycled; parts of My Early Life would be recast into more popular form serialisation in the News of the World, which would bring in another £3,500 for little extra work. When other resources failed, Churchill could always use the selling-power of his name to secure lucrative contracts retelling famous stories.” Charmley noted that Churchill’s “lifestyle depended upon the literary machine producing large quantities of material on time, and the delays and distractions which the later volumes of Marlborough provided the acted as grit in the works.”27

By 1938, Churchill’s expenses had outstripped his ability to write for profit. In 1937, noted biographer William Manchester, Churchill “faced his first real financial crisis. His letters to Clementine in the first weeks of 1937 are shadowed by a veiled and then explicit preoccupation with money which was wholly out of character – small attempts at economizing while he spread himself elsewhere.”28 Daughter Mary Soames later admitted: “Winston himself suffered at this time from feelings of almost fatalistic depression; the burden of Chartwell was telling, and he was definitely contemplating selling the property.”29 Churchill wrote: “No good offer should be refused, having regard to the fact that our children are almost all flown and my life is probably in its closing decade.”30 Financially, Churchill may have been his own worst enemy, but his erstwhile friend, the press baron Lord Beaverbrook, contributed to his distress. In 1938, “Churchill received an unexpected, dismaying, and most unwelcome letter from the editor of Beaverbrook’s Evening Standard, terminating his contract – in effect, firing him. Thus ended two years of fortnightly columns, depriving him of his most valuable public rostrum, because, the editor wrote, ‘it has been evident that your views on foreign affairs and the part this country should play are entirely opposed to those held by us.”31

In early 1938, Chartwell was placed on the market to pay Churchill’s debts. He was instead rescued by Henry Strakosch, an Austrian-born industrialist and banker who became a naturalized British citizen. Strakosch was fervently anti-Nazi and a font of anti-Nazi information but apparently not a Jew as often presumed by Churchill detractors. Churchill biographer Peter Clarke wrote that “Brendan Bracken rode to the rescue…He had prepared the ground by making sure that Churchill, while on a recent long visit to Cannes, had purposefully cultivated the better acquaintance of Bracken’s wealthy colleague in financial journalism, Sir Henry Strakosch, who had provided useful information on the economics of rearmament……In March 1938 Strakosch offered to take over Churchill’s holdings on Wall Street, at the price that Churchill had misguidedly paid for them, and to hold them at his own expense for three years, meanwhile paying Churchill £800 a year in interest for the privilege. It seems as extraordinary that Churchill agreed to this arrangement, with a concomitant risk to compromising his political standing, as that Strakosch offered it.”32 Historian Richard Lamb wrote: “Churchill’s financial problems were widely known; so was the fact that [American financier Bernard] Baruch and Strakosch had bailed him out. Thus in addition to Chamberlain’s supporters declaring again and again that Churchill had been crying wolf too often about Hitler, rumours spread that his policy statements on Palestine were dictated by his dependence on Jewish money.33

At that point, his Marlborough biography was finally behind him and Churchill could begin more lucrative work on The History of the English Speaking Peoples. In his writing and his other affairs, the cigar-loving Churchill had to be ever vigilant to obey British law and evade British taxes. Aide John Colville wrote that toward the end of 1940, “the Cuban Minister came to Downing Street in a tall-bodied taxi accompanied by a huge cedar-wood cabinet which contained five thousand of the best Havana cigars. It was, he informed a joyful Mr Churchill, a token of the admiration which the Government and people of Cuba felt for the saviour of western civilisation.” Unfortunately, wrote Colville, this visit was followed the following day by “an official…with the vexatious information that the Prime Minister owed HM Customs and Excise the sum of nearly £ 10,000 in payment of Customs duty and Purchase Tax. I happened to be on duty and it fell to receive this bird of ill-omen.” When Colville reported the problem to Churchill, he responded: “It is up to you to find a satisfactory solution.” Colville taxed his ingenuity and convinced the Foreign Office that a diplomatic calamity would ensue if the prime minister were forced to return the cigars.”The Lord commissioners gave way with good grace; the requisite instructions were sent to the customs: Churchill kept his cigars; and I kept my job.”34

Churchill intended to return to writing after the war. Colville noted in December 1940 Churchill declared: “He would retire to Chartwell and write a book on the war, which he had already mapped out in his mind chapter by chapter. This was the moment for him; he was determined not to prolong his career into the period of reconstruction.”35 Right after his defeat in 1945, Churchill was evasive about future book projects. Historian David Reynolds wrote: “On legal advice, Churchill had officially ceased to exercise his ‘professional vocation’ as an author on 3 September 1939 – the day he became First Lord of the Admiralty. Although his wartime speeches were published in six volumes between 1941 and 1946, all the editorial work was done by a journalist. Churchill was able to claim that he had not resumed his profession as an author. Thanks to this tax loophole, the substantial income earned by the war speeches was not subject to income tax at the punitive wartimes rates. Any return to writing, even a single article, could jeopardize that favorable status, both in th present and retrospectively.” Churchill was very careful not to undertake any writing until his lawyers and agents had worked out a system which would assure his future income from them. Reynolds wrote: “Managed through intermediaries, to preserve the tax purdah he had entered at the beginning of the war, Churchill’s literary career… continued in 1940-1945.”36 Through a series of complicated deals, Churchill made what Reynolds estimated as £100,000. Churchill made money although officially writing nothing – at least nothing for publication as an author. He remained a conscientious tax evader. Negotiations for magazine, newspaper and book rights took through the spring of 1946 while Churchill also secured rights to his war records as prime minister.

After the war, Churchill was careful to safeguard his ability to make money by writing about his World War II leadership experiences – but he disdained any effort by his collaborators to do the same – especially if they contradicted the Churchill historical line. Churchill and his agents engaged in a complex series of negotiations for print and other rights to Churchill’s publications – which would benefit from an extraordinary agreement with the British government to give Churchill access to his own and others’ papers. He also benefited by setting up the Chartwell Literary Trust to receive income and avoid much taxation. Biographer Roy Jenkins wrote: ”What is certain is that the Chartwell Trust benefited to the extent of many millions of pounds. These sums escaped the full burden of direct taxation provided that the author lived for five years after the deed of settlement was drawn up, which hurdle was surmounted in the summer of 1961. His own spending needs…amounted to not less that £12,000 a year. Given his lifestyle this was a surprisingly modest amount and must have been net ofhis heavy salaries bill for literary assistants of one sort or another. Everything else went to the Trust, which sometimes indulged in peripheral activities such as buying a London house for Randolph Churchill, but which broadly accumulated for the future.”37

Out of office in 1945, Churchill had several financial problems. The first was the need to provide for a London residence. The second was to provide for Chartwell, which he could no longer afford. The property was purchased by a group of businessmen with the Churchill’s retaining lifetime rights to live there – which ended in 1965 when Clementine turned the property over to the National Trust. She returned to the London home they bought after World War II. The third task was to restart his literary machine so it could finance he lifestyle.

The death of President Lincoln on April 15, 1865 presented Mary Todd Lincoln with four unpleasant tasks– packing up and leaving the White House, finding a new home (which she never really did) in Chicago, fending off creditors and nasty publicity for her shopping trips, and dividing her husband’s estate with her two sons. It was not a future for which she was prepared.

For Further Reference

  1. Harry E. Pratt, The Personal Finances of Abraham Lincoln, p. vii-viii.
  2. Rufus Rockwell Wilson, editor, Intimate Memories of Lincoln, p. 315.
  3. Rufus Rockwell Wilson, editor, Lincoln Among His Friends, p. 64 (Philip Clark, Chicago Times-Herald, March 13, 1901).
  4. Rufus Rockwell Wilson, editor, Lincoln Among His Friends, p. 77, 79 (William Jayne speech to Springfield chapter of the Daughters of the American Revolution, February 12, 1907).
  5. Harry E. Pratt, The Personal Finances of Abraham Lincoln, pp. 115-116.
  6. Douglas L. Wilson and Rodney O. Davis, editors, Herndon’s Informants, p. 205 (Letter from Robert Wilson to William H. Herndon, February 10, 1866).
  7. Douglas L. Wilson and Rodney O. Davis, editors, Herndon’s Informants, p.181 (Letter from Joseph Gillespie to William H. Herndon, January 31, 1866).
  8. Douglas L. Wilson and Rodney O. Davis, editors, Herndon’s Informants, p. 159 (Letter from Leonard Swett to William H. Herndon, January 15, 1866).
  9. Rufus Rockwell Wilson, editor, Intimate Memories of Lincoln, p. 69.
  10. Michael Burlingame, editor, Walter B. Stevens, A Reporter’s Lincoln, p.154.
  11. Michael Burlingame, Abraham Lincoln: A Life, Volume II, p. 270-271.
  12. Michael Burlingame, editor, William O. Stoddard, Inside the White House in War Times: Memoirs and Reports of Lincoln’s Secretary, p. 183.
  13. Harry E. Pratt, “Lincoln’s Savings from His Salary as President of the Untied States,” Bulletin of the Abraham Lincoln Association, No. 52, June 1938, p. 7.
  14. CWAL, Volume VI, p. 361 (Letter from Abraham Lincoln to Mary Todd Lincoln, August 9, 1863).
  15. Michael Burlingame, Abraham Lincoln: A Life, Volume II, p. 699.
  16. Harry E. Pratt, The Personal Finances of Abraham Lincoln, p. viii.
  17. David N. Dilks, The Great Dominion, p. xii-xiii.
  18. Randolph Churchill, Winston S. Churchill – Volume 1, Part 2 – Page 741 My Early Life
  19. Winston S. Churchill, My Early Life, p. 199.
  20. Roy Jenkins, Churchill, p. 28.
  21. Roy Jenkins, Churchill, p. 427.
  22. Jack Fishman, My Darling Clementine, p. 216.
  23. David Dilks, Churchill and Company, p. 32.
  24. Lewis Taylor, An Informal Study of Greatness, p. 397.
  25. Walter H. Thompson, Assignment: Churchill, pp. 87, 89.
  26. John Charmley, Churchill: The End of Glory : A Political Biography, p.
  27. William Manchester, The Last Lion Alone, 1932-1940, p. 298.
  28. Mary Soames, Clementine Churchill: The Biography of a Marriage, p. 307.
  29. William Manchester, The Last Lion Alone, 1932-1940, p. 299.
  30. William Manchester, The Last Lion Alone, 1932-1940, p. 298
  31. Peter Clarke, Mr Churchill’s Profession: Statesman, Orator, Writer, p. 186.
  32. Richard Lamb, Churchill as War Leader, p. 9.
  33. John Colville, Footprints in Time: Memories, pp. 105-106.
  34. John Colville, Fringes of Power: The Incredible Inside Story of Winston Churchill during World War II, p. 310.
  35. David Reynolds, In Command of History: Churchill Fighting and Writing The Second World War, pp. 9, 17.
  36. Roy Jenkins, Churchill, pp. 820-821.
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