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Americans today often think of thrift as a negative value—a miserly hoarding of resources and a denial of pleasure. Even more telling, many Americans don't even think of thrift at all anymore. Franklin’s Thrift challenges this state of mind by recovering the rich history of thrift as a quintessentially American virtue.
The contributors to this volume trace how, from the eighteenth century on, the idea and practice of thrift has been a robust part of the American vision of economic freedom and social abundance. For Benjamin Franklin, who personified and promoted the idea, thrift meant working productively, consuming wisely, saving proportionally, and giving generously. Franklin's thrift became the cornerstone of a new kind of secular faith in the ordinary person's capacity to shape his lot and fortune in life. Later chapters document how in the nineteenth and twentieth centuries, thrift moved into new domains. It became the animating idea behind social movements to promote children's school savings, create mutual savings banks and credit unions for working men and women, establish a federal savings bond program, and galvanize the nation to conserve resources during two world wars.
Historians, enthusiasts of Americana or traditional American virtues, and anyone interested in resolving our society's current financial woes will find much to treasure in this diverse collection, with topics ranging from the inspirational lessons we can learn from the film It’s a Wonderful Life to a history of the roles played by mutual savings banks, credit unions, and thrift stores in America’s national thrift movement. It also includes actual policy recommendations for our present situation.
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About the Author
David Blankenhorn is founder and president of the Institute for American Values, a nonpartisan organization devoted to strengthening families and civil society in the U.S. and the world. For the past three years, he has led an initiative at the institute to study thrift. A 1998 profile in the New York Times described Blankenhorn as a "consensus builder for a moral base in society." He lives in New York City with his wife, Raina, their son, Raymond, and their two daughters, Sophia and Alexandra.
Sorcha Brophy-Warren is a doctoral student in sociology at Yale University. Previously she was an affiliate scholar at the Institute for American Values, where she researched thrift and wrote a literature review of business ethics curricula.
Barbara Dafoe Whitehead is codirector of Rutger’s University’s National Marriage Project and an award-winning journalist. Her books include Why There Are No Good Men Left: The Romantic Plight of the New Single Woman and The Divorce Culture.
Read an Excerpt
The Lost History of an American Virtue
By David Blankenhorn, Barbara Dafoe Whitehead, Sorcha Brophy-Warren
Templeton PressCopyright © 2009 Institute for American Values
All rights reserved.
Franklin's Way to Wealth
* * *
Barbara Dafoe Whitehead
The tricentennial celebration of Benjamin Franklin's birth brought forth a fresh crop of scholarly articles, popular biographies, and museum exhibits. For the most part, however, the tributes to Franklin's life and work focused on his contributions as a scientist, statesman, and international superstar. Almost entirely neglected was the one contribution for which Franklin has been most widely known: his thought and writing on thrift.
Franklin did not invent the value of thrift, but he made it an American value. For at least two centuries, he stood as the emblem and exponent of thrift. He personified it, practiced it, promoted it, and, through his writings, exported it to the rest of the world. He produced two hugely popular works: Poor Richard's Almanack (1732–57) and The Way to Wealth (1757). Both were filled with sayings on thrift. Both were reprinted, excerpted, anthologized, and translated into many languages. Both were taught to schoolchildren throughout the world. Indeed, it is fair to say that few Americans—living or dead—have done more to promote the value and practice of thrift than Benjamin Franklin.
Franklin also produced a record of his life. Published first in Europe and then posthumously in the United States, the Autobiography (1817) was the classic American self-help book. In it, Franklin offered moral instruction and how-to advice for practicing thrift and achieving wealth. He also revealed dispositions that reflected not just his own character but the American character itself: the passion for freedom, the aspiration for self-improvement, the pragmatic approach to problems, the desire to do good, and the confident outlook on the future.
Franklin's thrift became the cornerstone of a new kind of secular faith in the individual's capacity to shape his or her own lot and fortune in life. For Franklin's Calvinist forebears, it was God who had the power to elect those who would gain worldly fortune. For Franklin, it was the common man and woman who had the potential to gain worldly fortune through his or her own efforts. No longer would the distribution of material blessings be subject to the mysterious workings of God's grace nor to the mere accidents of fortunate birth. The way to wealth rested in the cultivation of habits of "industry and frugality:" "All Men are not equally qualified for getting Money," he wrote as Poor Richard, "but it is in the Power of every one alike to practise [Thrift]."
A fresh appraisal of Franklin's thrift is especially timely today. In the aftermath of the boom years of the late 1990s, twenty-first century Americans face a sobering reality. The personal savings rate has dipped below zero in recent years. Consumer debt is sky-high. Home ownership has dropped, and foreclosures have shot up as a result of the subprime mortgage debacle. Retirement savings are falling short. The natural wealth of the planet is being consumed at an unsustainable rate.
In his own day, Franklin confronted similar problems: a nation drowning in debt; a society living on credit; and a people burdened by bankruptcies, overindebtedness, and real estate deals gone bust. Like Americans today, he also worried about the trade-offs between helping one's adult children and saving enough for one's own old age. Franklin's proposed solutions sound familiar as well. He believed that Americans should save more and spend less; conserve rather than consume; and sacrifice for the common good rather than accumulate more luxury goods for oneself—notions that echo today's public calls for reducing consumer debt, curbing hyperconsumerism, encouraging public service, and promoting good stewardship of the nation's natural and human resources.
That said, it is not easy to retrieve the meaning of Franklin's thrift for the twenty-first-century American reader. For some people today, the word thrift connotes stinginess; for others, it conjures images of grinding privation and joyless self-denial; for still others, it simply sounds musty and old school. This negative response is not new. It has roots in a long intellectual tradition. In the nineteenth century, even as Franklin became the workingman's hero and the schoolchild's role model, his image and reputation inspired a backlash among some of the literary luminaries of the day. Herman Melville called him a "maxim-monger," a "professor of housewifery," and an "herb-doctor." Mark Twain wrote that Franklin inflicted suffering on generations of boys who had to live by his maxims. Twentieth-century writers continued the tradition. D. H. Lawrence called Franklin a "snuff-colored little man" who corralled all the unruly passions of humankind into a narrow moral accounting system of credits and debits. Most famously, the German sociologist Max Weber attacked Franklin as a "colourless Deist" who preached the gospel of "earning of more and more money" as an end in itself and who promoted a secular philosophy of avarice and crude utilitarianism. Even Carl Van Doren, Franklin's eminent twentieth-century biographer, explained that his mission was to rescue Franklin from the "dry, prim people" who revered him for his ideas on thrift.
This essay takes issue with Franklin's critics and their characterization of his idea of thrift. Specifically, it rejects the claim that Franklin promoted an outmoded, crabbed, and narrowly economistic vision of human purpose and possibility. Instead, it offers an alternative claim: namely, that Franklin's thought and writings on "industry and frugality" set forth a social philosophy of human flourishing and freedom rooted in social mobility, economic opportunity, and generosity to others. Indeed, Franklin's ideas about economic independence remain as central to American identity as the ideas of political independence inscribed in the founding documents. If Jefferson wrote the Declaration of Independence and Madison crafted the Constitution, then Benjamin Franklin, it might truly be said, invented the American Dream.
FRANKLIN'S THRIFT: A WAY OF LIFE
Franklin is, as one historian has noted, "one of the most massively symbolic figures" in American history. His life and work have been used to exemplify larger themes and ideologies. Over the years, he has been variously portrayed as a noble savage; canny self-promoter; homespun humorist; scientific genius; cracker-barrel philosopher; bourgeois moralist; secular rationalist; and—yes—a small-minded, penny-pinching protocapitalist. Franklin himself contributed to this symbolizing impulse. He was a subtle, many-sided, shape-shifting figure. As a writer, he adopted many personas, identities, and voices. He had serious things to say, but he often said them in a playful way—favoring the lampoon, the spoof, and the hoax as ways to make his point.
Yet beneath Franklin's changing masks and literary guises are the plain facts of his life. Here, we can begin to see the consistent core of his ideas of thrift—or "industry and frugality," as he more commonly called it. Franklin earned his reputation for thrift the old-fashioned way. He lived it.
Franklin's life can be divided into two parts. Before he became a philosopher-king, he was a colonial tradesman. From his teens to his early forties, he worked as a provincial printer—first as an apprentice in Boston and then as the owner of a printing shop and dry-goods store run out of his house in Philadelphia. During these years, he worked hard and lived simply. Two years after he set up his own business, he was able to pay off all his debts—a remarkable achievement at a time when colonists were beset by chronic currency shortages, overindebtedness, and bankruptcies. He became a substantial creditor, landholder, and land speculator. He was also something of a paper baron. He established eighteen paper mills at one time or another and may have been the largest paper dealer in the English-speaking world.
By the time Franklin was forty-two, he had become a wealthy man. He was able to retire from business for good. In the second half of his life, he left the management of his affairs in the hands of his wife and son-in-law and spent much of the next four decades abroad, pursuing scientific interests, transatlantic friendships, and international diplomacy.
Franklin gave much of the credit for his early business success to his wife, Deborah. Though she brought no dowry into the marriage, she enriched the family in other ways. She proved a highly competent manager of the Franklin enterprises. She ran the general store connected to the printing shop. She kept accounts, dealt with suppliers, and expanded the inventory. She helped with the printing business as well, folding and stitching pamphlets and buying "old Linen rags for the Papermakers." She sold a homemade "itch cream." She managed the Post Office. In addition, she ran the household, kept house without servants, and lived within the family's means. For her contributions, Franklin remained deeply grateful: "Frugality is an enriching Virtue, a Virtue I could never acquire in myself," he later admitted, "but I was lucky enough to find it in a Wife who thereby became a fortune to me."
Another source of Franklin's success was his ability to win the support of powerful patrons. In the eighteenth century, ambitious but obscure young men needed sponsors and patrons to help them get ahead in the world. Franklin got such help from colonial governors and influential public officials who paved the way to profitable government printing contracts. In 1737, he became the postmaster for Pennsylvania. This office gave him free use of the mails, and as a consequence he was able to boost the circulation of his newspaper, the Pennsylvania Gazette. Later on, he was appointed the official government printer for Pennsylvania, New Jersey, and Delaware, which gave him the steady business of printing paper money, state documents, laws, and treaties.
Finally, Franklin produced an international best seller. He published Poor Richard's Almanack for the twenty-five years between 1732–1757. This annual compendium of useful information and moral instruction sold ten thousand copies a year or the equivalent of fifteen million copies today—an astonishing record for a publication produced in a colonial backwater. Even more impressively, The Way to Wealth, his collection of more than one hundred of Poor Richard's sayings on "industry and frugality," was a hit in France. It first appeared in a Parisian edition in 1777 as The Science of Good Richard, or The Easy Way to Pay Taxes, and the luxury-loving French scooped it up for the thrifty price of four sous.
Once relieved of the necessity of making money, Franklin was happy to be done with "the little cares and fatigues of business." He could have made a second or third fortune if he had taken out patents on his inventions. But he chose to keep these inventions in the public domain. He paid for public projects out of his own fortune. He was generous to friends, family, and even strangers. He gave money to grandchildren, nieces, nephews, and especially to his perpetually straitened sister, Jane Mecom, to help them start businesses of their own. He left much of his fortune to philanthropic causes, including an endowment to provide start-up loans for worthy young married tradesmen.
If Franklin was not obsessed with making money, neither was he intent on hoarding it. He enjoyed spending what he had made. He built a big house. He bought a farm in New Jersey. He drove around in a fancy carriage. He boasted a well-stocked wine cellar. He sent his wife "crate upon crate of quality goods from London." He ate well. He relaxed his work regimen. Once lean, he grew fat. Once an early riser, he took to getting up at ten or eleven. Once a believer in vigorous daily exercise, he later found it hard to move a muscle.
His indolent habits drove the famously industrious John Adams absolutely crazy. During their mutual diplomatic service in France, Adams complained that Franklin rarely did any work. The man who, as Poor Richard, urged "Up, sluggard," was becoming a sluggard himself! He breakfasted late, spent his day entertaining visitors, never turned down an invitation to "dine abroad," and, after dinner, went to plays and then on to play chess with the ladies. In such "Agreable and important Occupations and Amusements," Adams fumed, he "spent his afternoons and evenings and came home at all hours from Nine to twelve O'clock at night." (To be fair, Franklin was in his seventies, suffering from gout and kidney stones—and could be forgiven for taking it easy.)
Perhaps Adams did not fully appreciate, as Franklin did, that tardiness was an art form in France. Or perhaps Adams, who admired Franklin for his public advocacy of "industry and frugality," was disappointed by the elder statesman's easy abandonment of these republican disciplines. Perhaps Adams, like many of Franklin's later critics, saw his lapse into laziness as hypocrisy. If so, he misread Franklin's notions of "industry and frugality." Franklin never thought of these linked practices as ends in themselves. Rather, he saw them as a means to an end. For Franklin, the practice of "industry and frugality" was the simple, natural road to freedom.
A PATHWAY TO ECONOMIC FREEDOM
Like other founders, Franklin was committed to the struggle for American independence. But his vision of freedom did not begin with political independence. It began with economic independence. Long before he joined the revolutionary cause, he was charting the path to economic independence for the vast population of "middling" Americans who were not born to wealth or privilege.
Franklin himself came from the middling ranks. He had none of the traditional advantages of aristocratic birth, upscale marriage, or inherited wealth as steppingstones to future distinction or success. His family was of modest means. His father made candles for a living. His parents could not afford to send him to school for more than two years. Like his fourteen older siblings, he had to learn a trade and make his own way in the world.
Although Franklin's genius clearly accounted for much of his greatness, he never attributed his success to his natural gifts and talents. Indeed, he did not see himself as a special case. He believed that anyone who came from middling ranks could gain wealth by working hard, living simply, saving more than they spend, and diligently pursuing useful knowledge.
Franklin saw economic freedom as freedom from the servitude of debt. In eighteenth-century America, indebtedness was a widespread fact of life. Nearly everyone had to borrow money in order to make a living. Farmers needed credit in order to plant their crops. Merchants needed credit from wholesalers to stock their shelves. And, of course, consumers needed credit to buy merchants' goods. Merchants in New England, Pennsylvania, and Chesapeake colonies often sold as much as 80–90 percent of their goods on credit.
Moreover, the colonies were locked into a highly interdependent system of commercial relationships that depended on credit. The upside was the expanding opportunities to trade and buy. The downside was greater exposure to the risks and penalties of overindebtedness. And in colonial America, the penalties for overindebtedness were incredibly harsh. Bankruptcy laws at the time allowed impatient creditors to demand instant payment in cash—a near impossibility in a cash-poor economy. Debtors who could not cough up the money on demand often went to prison, where they were thrown in with common criminals.
Even worse, insolvents were treated more severely than convicted felons. The state paid for the upkeep of convicts but not of insolvents. Debtors or their families had to pay for their own food, clothing, and rent. Oftentimes, mothers or wives had to beg or borrow money to provide for even the most minimal comforts for an imprisoned family member. In addition, a debtor's term of imprisonment was not fixed. Even the post-Revolutionary reform of the criminal codes did not deal with insolvents. They were the "only prisoners who did not know when or how or even if they would be freed."
Franklin was not against the borrowing or lending of money. On the contrary, he firmly believed in the "prolific, generating" nature of money. As he often noted in Advice to a Young Tradesman, money put out in loans would yield more money in return: "Five shillings turned is six, turned again is seven and three-pence, and so on till it becomes an hundred pounds." Nonetheless, he saw chronic indebtedness as a form of enslavement. Franklin, it should be remembered, had a deep, almost instinctive, hatred of servitude. As a young man, he rebelled against the stern strictures of Calvinism. He defied his father. He broke his apprenticeship to his brother. He challenged the Boston establishment. He fled his family in Boston for a life among strangers in Philadelphia.
Excerpted from Franklin's Thrift by David Blankenhorn, Barbara Dafoe Whitehead, Sorcha Brophy-Warren. Copyright © 2009 Institute for American Values. Excerpted by permission of Templeton Press.
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Table of Contents
Introduction David Blankenhorn Barbara Dafoe Whitehead Sorcha Brophy-Warren ix
Part One Franklin's Thrift: The Creation of an American Value
1 Franklin's Way to Wealth Barbara Dafoe Whitehead 3
Part Two Thrift after Franklin: Institutions and Movements
2 U.S. Mutual Savings Banks and the "Savings Bank Idea": The Virtue of Thrift as an Institutional Value Sorcha Brophy-Warren 29
3 Thrift for a New Century: Public Discussions about Thrift in the 1910s and 1920s Sara Butler Nardo 57
4 A Century of Thrift Shops Alison Humes 97
5 In Savings We Trust: Credit Unions and Thrift Clifford N. Rosenthal 127
Part Three For a New Thrift: Meeting the Twenty-First Century Challenge
6 Confronting the American Debt Culture Barbara Dafoe Whitehead 145
7 Crafting Policies to Encourage Thrift in Contemporary America Alex Roberts 165
8 Private Enterprise's Role in Increasing Savings Ronald T. Wilcox 187
Conclusion David Blankenhorn Barbara Dafoe Whitehead Sorcha Brophy-Warren 207