The Story of Timothy Bancroft

04-18-2011 • Chris Mayer for The Daily Reckoning

Gaithersburg, Maryland – Let me tell you the story of Timothy Bancroft. It’s a good one, and if you haven’t heard it, I think you’ll like it. Bancroft was a smart and shrewd investor. He dodged the Panic of 1857, which he said was due to “easy money policies” and “overconfident speculation in the railroads and farmlands of the Western states.” Instead, Bancroft said you should “buy good securities, put them away and forget them.” He thought the best investments were those “dealing in essential commodities that the Union and the world will always need in great quantities.” When Bancroft died, he left an estate of $1.3 million. As Adam Smith (George Goodman) points out in his book The Money Game – from which this tale comes – “If you remember that those are untaxed mid-19th-century dollars, and that a full eight-course meal at Delmonico’s cost less than a dollar at the time, that is quite a fortune.” What did Bancroft own? He owned good stuff from the earth. He owned Southern