“There are two times in a man’s life when he should not speculate: when he can’t afford it and when he can.” -Mark Twain
Although he married into a wealthy family, was a best-selling author, invented a popular scrapbook, and went on many profitable public tours — including here in Wisconsin — Mark Twain was forced to declare bankruptcy at the height of his popularity. Money ran through that man’s hands like water, and as the quote above indicates, he was always throwing money at what he hoped was the next big thing.
Over the years he invested in and lost money on, an engraving process, a magnetic telegraph, a steam pulley, the Fredonia Watch Company, railroad stocks, and a protein powder called Plasmon, which he claimed delivered 16 times the nutritional value of steak at a cost of a penny a day. But those were small potatoes compared to his two biggest business blunders.
He sank the modern equivalent of millions of dollars into a machine called the Paige Typesetter, which promised to revolutionize the printing world. Twain saw a demonstration of the printer on one of the rare days a prototype of it was working and invested heavily. He continued to pour money in over the next decade as the machine’s inventor promised he needed just a little more time to work out some bugs. “At first, Twain had called Paige—who would run through four sets of backers—the ‘Shakespeare of mechanical invention.’ By the end, he fantasized about catching a certain part of Paige’s anatomy in a steel trap and watching him slowly bleed to death.”
Twain’s second big mistake was starting his own publishing company. He was bitter about the admittedly poor deal he got from his first publisher and thought he could do better himself. So, when it came time to publish The Adventures of Huckleberry Finn, he established his own company and put his nephew in charge of it. At first, things were great. Twain’s new book sold well. As did the autobiography of President Grant, which Civil War veterans peddled door to door. Unfortunately, every other book Twain’s nephew chose to publish was a disappointment. There was no commercial market for a book of sermons by Pope Leo XIII or an in-depth analysis of the speech of monkeys. Twain called the company a “lingering suicide.”
By the 1890s, the cash-strapped Twain owed more than $80,000, which would be more than $2 million today, to authors, bookbinders, and a bank. On the advice of a friend, Twain transferred all of his remaining assets to his wife, then filed for bankruptcy.
This was questionable advice then and would be considered fraud now, but it helped get Twain back on firm financial footing. Post-bankruptcy he went on a world lecture tour that brought in money and acclaim and reignited public interest in his writing. He made so much money he paid off all his old debts, even though he had no obligation to do so. And he once again started investing in dubious ventures.
Bankruptcy was a safety net for Mark Twain, just as it is for so many people today. It is a way to start fresh or refocus on what you do best. If you have questions about bankruptcy, Hanson & Payne’s experienced team of attorneys is here for you. Please contact us today to schedule an initial consultation.