Women Were Always Active Investors

If you haven’t been to Charleston, South Carolina, you really should go.

There is great food and rich history. Strolling down the battery with a morning coffee, you can gaze across the distance toward Fort Sumter and ponder how the Civil War started right where you stand. Turning around, you’ll see the famed “Rainbow Row” houses of pink and blue hues owned by the richest colonial men. Locals will tell you the bright pastels helped drunk sailors remember which house they were staying in. Locals tell tourists such things to make them feel better about spending vacation money. The reality is that Rainbow Row, all of it, was originally an ugly green. Sailors didn’t live there. And much of the money behind it wasn’t from rich men, but the investments of everyday women.¹

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Every few decades in history, someone writes how surprising it is to see women investing their money “these days.” In 1950, How to Lay a Nest Egg² infused advice for the new lady investors with gendered stereotypes such as, “Is the Stock Market Like a Super Market?” and sexualized innuendos of a leggy blonde asking her banker, “What exactly is a physical asset?” You don’t have to look far online to find proclamations that women are urgently catching up on financial literacy. You wouldn’t have to look far back in history, either, to find men freaking out over the shocking scene of 1790s “parsons, tradesmen, farmers, women” trading securities. Preachers knew the pulpit, and women knew the home, but neither belonged buying stocks.³ What is so surprising about these statements isn’t the misogyny. It’s that women were, from the dawn of capitalism to now, already a large part of the investment world. Every few decades, scandalized people assumed something very old was new. It never was and it isn’t now.

Stock and bond investing really got going on London’s Exchange Alley in the late 1690s, not long after Charleston was founded. Women were so prominent as customers that something new appeared—chocolate houses, catering to tea-drinking women who could sit, snack on sweets, and talk stocks. Women were at least 20 percent of the stockholders in the East India and South Sea Companies.⁴ By the 1740s, when Rainbow Row’s first houses were built, women owned one of every four shares in the Bank of England. The Bank’s single biggest investor was Sarah Churchill.

In colonial Charleston, meanwhile, people were busy building houses in what was then a very new town. Just like now, nobody had cash, so they borrowed the money. But the Bank of England was an ocean away and, besides, didn’t do mortgages. Enter the single ladies of the South.

Legally, a married woman’s status in business dealings was covered by that of her husband (feme covert). Single women and widows, however, could conduct any business they pleased (feme sole). Conduct they did. Charleston’s widows and unmarried women regularly issued loans to local families building houses, starting business, funding weddings, and even consolidating other debts.

Elizabeth Buretel was particularly good at issuing loans. She had over seventy outstanding to Charleston families when she died in 1727. Although technically one-year loans, she usually rolled them over until paid off. This gave her a steady income, loaning out her money and living on the interest payments.

Loans were for amounts great and small. So were the women who loaned them. Nearly eight in ten women who did this weren’t rich. Martha d’Harriette died in 1760 with a grand estate of £24,000, most of it invested in loans. As a girl, she probably saw poor old Margaret Adamson, who died with a small estate of £75, also heavily in the mortgage market. A man in 1770s Rhode Island once borrowed money from his innkeeper, Abigail Stoneman, by signing a loan document written out on the back of the nine of clubs.⁵ Lending money was the primary female personal finance strategy for 200 years.

Before banks, before financial planners, before Suze Orman: women knew how to handle money. Where did they learn? Mostly from one another. All those drawing room conversations were a bit less frivolous than Jane Austen would have you believe.

Women were everywhere in the American mortgage market. Good Housekeeping regularly ran ads for investments in mortgage companies. She could buy, for instance, first position Minnesota farm loans in 1887 with promised returns of 7–8 percent. Housewife manuals and financial advice books for women simply assumed mortgages were a large part of her estate from the 1700s to the 1920s. The first “retire early” guide suggested 5–10 percent of a woman’s wealth be committed to issuing private mortgages on farms and houses, in sums as small as $200. The American Business Woman,⁶ published until 1910, dedicated an entire section to it.

What changed? The New Deal. When the FHA backstopped the mortgage industry and standardized the 15- (and later 30-) year mortgage with low interest, customers sought this new and far better bargain. Many women loaned at as high as 10 percent, the legal limit in most states. These new loans set low, fixed interest for long periods. The lending ladies market withered away.

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There were more than mortgages in women’s portfolios. They were also active investors in bonds. As we’ve seen, this type of activity was rare regardless of gender, but where it occurred women went toe to toe with men and, more often than not, beat them. The great hack for women was that, unlike a business or real estate deal, these purchases did not fall beneath feme covert laws.⁷ Since most courts considered stock and bond investing a form of gambling, buying them fell under women’s discretionary funds (called pin money). Like any other amusement, it was consumer spending. Married women could play the market all they wanted.

Abigail Adams was the most famous matriarch in the market. The Adams family was middle class. There was nothing about her husband, John, that screamed “This man will be our second president!” He was short and his father made shoes. Abigail had a nice life before politics, but nothing you can’t find in any suburb today. She possessed, however, the kind of practical smarts her husband lacked. Whereas John just wanted more land so the Hancocks would treat them like equals, Abigail understood the big money was made in paper.

While John was away in France, Abigail started buying government bonds⁸ after the American Revolution. There was so little faith in the government her husband helped start that prices went down to fifteen cents on the dollar, indicating widespread fear the United States wasn’t going to survive to pay its debts. This is when Abigail started buying. She sold when they rose to eighty-five cents, over 400 percent returns on her best buys.

John abhorred financial risk, but she understood it. “Do not be afraid,” she explained, “one must wait for interest & Run risks, but at all events it will fetch what is given for it.” Having bought low, she could always cash out with little loss. The upside was more than worth the downside. She was the Intelligent Investor well ahead of Ben Graham. Before anyone could stop her, she was in soldiers’ notes (back pay for Revolutionary service), Massachusetts bonds, and even Vermont land speculation. When it was over, she far surpassed her husband’s real estate deals, with a spectacular lifetime annualized return of around 18 percent. Warren Buffett’s is 19.9 percent.⁹

Adams may have been her generation’s best securities investor, period.¹⁰ She was not, however, alone. Women comprised a minimum of 10 percent of all financial deals,¹¹ including some of the most complex trading and debt schemes, in early America. In the early republic they were as much as 16 percent of the total stock and bond market, and in sectors like banking around 25 percent of shares were in female hands.¹²

As stocks grew in prominence, so did women’s investments in them. “They came from all classes,” an observer gushed of women investors, “heiresses, stenographers, businesswomen, housewives, farmers’ wives, cleaning ladies, waitresses, telephone girls, cooks, and washerwomen.”¹³ Women controlled about 40 percent of post–World War I securities. They held 30 percent of U.S. Steel, and over half of shares in both AT&T and the Pennsylvania Railroad. Investment reporters dubbed them “the Lady Bulls.”

Women’s magazines frequently reported on investments. Ladies’ Home Journal and Good Housekeeping ritually offered financial advice and stock market features through the 1910–20s. Ruth Boyle, on the personal finance beat for Good Housekeeping, focused on how women could invest “as a businessman does.”¹⁴ Elizabeth Frazer compiled her pieces for The Saturday Evening Post into 1926’s A Woman and Her Money.¹⁵

In textbooks on the Great Depression, students read that some poor fool wrote an essay called “Everybody Ought to Be Rich”¹⁶ just before the market crashed. That poor fool was John Raskob. That essay appeared in Ladies’ Home Journal. It was no anomaly. The actual essay tries to help women convince men to start investing $15 a month. Raskob wasn’t trying to sway women off to the sidelines. They were already in the game.

A generation later, Vogue ran an article titled “What a Woman Should Know About Investing.” Merrill Lynch followed it up offering Vogue readers an eight-week lecture course on investments. Thirty thousand enrolled. Female investors were not the creation of first-, second-, or third-wave feminism. They were not legislated into being. Women wanted to invest, and invest they did.

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Stock exchanges were male-dominated spaces, but women intruded upon them just fine. Often hailed as “firsts” or noted for their rarity, thousands of women became finance professionals well before Sigourney Weaver and Melanie Griffith battled for respect in Working Girl. Victoria Woodhull, most famous for advocating free love and running for president in 1870, opened a stock brokerage in Wall Street with her sister to much fanfare. Alice Carpenter, a wealthy Bostonian, self-managed her inheritance so well that she was asked to open a women’s department for a bond company. Her success led many firms to create internal departments targeting female investors. By 1910, over 200 U.S. women were brokers, including four black women. Twenty years later, there were nearly 2,000. In 1967, Muriel Siebert became the first woman to purchase a seat on the New York Stock Exchange. She called it the most expensive piece of jewelry she ever bought.¹⁷

Colleen Moore was one of the most unique of these new brokers. She was once Hollywood’s It girl—the first box-office star to bob her hair, creating and immortalizing the banged flapper look of the 1920s. Her films grossed millions of dollars, back when that was a lot of money. When they turned the sound on, though, her star faded.

For her second act, Moore became a stock picker. She survived the 1929 crash by owning real estate and business ventures. Her third husband, a partner at Merrill Lynch, was aghast. He convinced her to start buying stocks in the Depression Era lows.

The former household name started picking Wall Street’s pocket. When she wrote How Women Can Make Money in the Stock Market in 1969, she had already made millions for herself and for Merrill Lynch.

Most women’s investment success came that way, inside of traditionally male venues. Furtive movements to create single-gender financial enterprises rarely got very far. Woodhull’s lady-led brokerage failed largely because, Woodhull herself admitted, she never wanted to trade stocks anyway. “We went unto Wall Street, not particularly because I wanted to be a broker,” she explained, but to “plant the Flag of women’s rebellion.”¹⁸ Rebellion wasn’t profitable.

The first attempt to found a women-only bank in 1879 received large publicity and deposits, taking in a respectable $500,000 ($15 million today). What drew women in was less feminism than the fantastic 8 percent interest payments. Within a year, the whole thing was revealed to be a fraud and the bank’s founder, a former fortune teller named Sarah Howe, spent three years in prison. Upon her release, she promptly attempted the same scheme in three different cities, paying interest from new deposits. She predated Charles Ponzi by forty years, but curiously never appears in “first woman ever” lists.

Several other, more honest attempts at women-only banking were tried and failed, including Betty Friedan’s First Women’s Bank of New York in 1974.¹⁹ The real reason women’s banking has not thrived is because women rarely treated their finances as a distinctly female experience. It is possible that, with the rise in women’s earning power and the decline in marriage rates, women-only investment houses like Ellevest will carve out these niches more successfully. But they are hardly the first to try.