Timothy Dexter: Genius or Idiot?
Sometimes, someone comes up with a crazy investment idea. Mostly, these investments don’t pan out. There is always that friend that someone has that thinks they’re America’s next big entrepreneur. These people will have little knowledge of finances and business, but because they’ve heard a few podcasts and follow motivational speakers on Instagram they’re now geniuses. Timothy Dexter is like if that friend actually became successful in business. Timothy Dexter made a career out of wild investments that always worked out in his favor. Despite an impoverished youth, no formal education and being highly eccentric, he made several fortunes. Was this sheer luck or genius?
Timothy Dexter was born in 1748 in Malden, Massachusetts. He came from a family of poor farm workers. He dropped out of school at the age of eight to be a farm hand. By 16 he became an apprentice at a leather business specializing in expensive but popular “Moroccan” leather. After his apprenticeship he decided to go into business for himself making small leather goods. At around the age of 21 he met a widow, Elizabeth Frothingham, whose job, selling things door to door, had made her fairly wealthy. Dexter married her.
Timothy moved to Charlestown, Massachusetts where he was scorned by high society. They claimed he married into money and was a fool. Dexter was determined to change what people thought of him. His first investment was on the “Continental Dollar.” It was America’s first currency. Inflation became an issue with the currency. Having realized that Americans would get rid of with the discontinued Continentals for anything, Dexter gathered up all his savings and his wife’s and bought a huge amount of the bills. When the U.S. Constitution was ratified in the 1790s, it was stipulated that Continentals could be traded in for treasury bonds at one percent of face value. He had purchased massive amounts of the currency at a fraction of this cost, Dexter became astronomically wealthy. He was now a member of high society. But, he was still rejected by the elites because of his eccentric demeanor. He made an investment on discontinued European currency and made a similar profit.
Dexter and his family moved to Newburyport, Massachusetts. He bought a fleet of ships, many horses, and built a large, beautiful house. He also built 40 wooden statues of famous Americans on his property, including one of himself. The inscription on his read “I am the first in the east, the first in the west, and the greatest western philosopher in the Western world.”
His wealthy neighbors, annoyed by his constant parties and many statues, gave him purposefully bad business advice in hopes he would go bankrupt from it. They told him he should sell bed-warmers to the Caribbean. This was a device loaded with hot coals to warm up a bed at night. There is little need for this in a tropical climate. Despite this, he bought and shipped 42,000 of them there. They ended up being used as a device to stir molasses in the sugar refineries. He sold them for an 80 percent profit.
Furious that he made a huge profit with their last idea, the hostile elites told him that he should “carry coal to Newcastle.” This phrase, used to describe a pointless task, because Newcastle was a massive coal producer. Yet he did exactly that. There happened to be a strike in Newcastle and he sold the coal gaining another huge profit. He also once bought all (350 tons) of the whale bones in Boston. Right at the time he did this, whale bones started being used in corsets, which were used by men and women at the time. He had cornered the market on what is now referred to as “the plastic of the 1800s.”
He was known for being an odd man and surrounded himself with equally eccentric people. He faked his own death. He let a few friends and close family know. He specifically told his family to really pretend that he is dead. Over 3000 people showed up. When he saw that his wife was smiling, he became angry and starting fighting her in the kitchen. Everyone was surprised to see that the supposedly dead Timothy Dexter was beating his wife at his own funeral.
Though basically illiterate, the last notable thing he did in his life was to “write” a memoir, titled “A Pickle for the Knowing Ones, or Plain Truths in a Homespun Dress.” Filled with his beliefs on politics, business and whatever else popped into his head, it had no punctuation and terrible misspellings. Back then, wealthy men usually just gave out their books as gifts, so he did. But, was wildly popular when published. To counter complaints about the complete lack of any grammar, so he released a second copy of the book with two pages of punctuation marks at the end and saying “If you want them put them where ever you want.” He died for real in 1806, a few years after his memoir was published. One of his last writings stated “Its hard work being a Lord.”
To find out if these kind of investments are possible today, I spoke with Bethany College business professor, Dr. Anju Ramjee. She also shared insights on whether Lord Timothy Dexter was actually intelligent or just lucky or both.
As for his “Continental Dollar”, she said that others made this same investment, among them, Alexander Hamilton. Most likely, they didn’t envision a big return. But, by intuition and luck he made vast fortune. Dr.Ramjee explained, Dexter was often in the right place at the same time. Along with being eccentric, he did have some business savvy.
She made a comparison to Steve Jobs’ visionary ideas at first seeming crazy but, ultimately, very successful. I asked Dr.Ramjee what lesson we could learn from someone like Timothy Dexter today. She replied, “Probably that you should never let any opportunity just pass by…”
She said drive is the trait shared by all successful entrepreneurs. She believes that his understanding of the consumer came through working as a leather maker. She said understanding human beings is crucial when it comes to business.