If the US election is on your mind, you might be interested in the unusual role Benjamin Graham played in the election of 1916. I’m grateful to my grandfather for reporting on that time in his autobiography, Benjamin Graham: The Memoirs of the Dean of Wall Street. I was excited to learn that he, too, witnessed a tight election with an uncertain outcome. Atop this post, “Anxious Moments” by artist Clifford Kennedy Berryman, published in November of 1916, depicts a donkey and an elephant expressing the worry some of us feel today.

“1916 was the year of the Wilson-Hughes presidential race, one of the closest in American political history.”

 

Ben doesn’t say if he voted, nor does he mention his chosen candidate. Men’s votes counted more in those days because women weren’t allowed to vote. The 19th  Amendment, granting women the right to vote, was ratified in 1920. I don’t think Ben lost any sleep waiting to hear the outcome of the presidential race.

 

President Woodrow Wilson, the Democratic incumbent, campaigned on the slogan “He kept us out of war,” a cry that reflected public sentiment that favored letting Europe fight its own war. A German submarine’s sinking of a British passenger ship, the Lusitania, along with the Zimmerman telegram asking Mexico to attack the US, would change Wilson’s mind.

 

 

The Republican challenger, Charles Evans Hughes—a former Governor of New York—did something no candidate had done before. He stepped down from his position as a Supreme Court justice to accept the nomination, in order to heal wounds in his party incurred from the last election. Hughes endorsed woman suffrage, which explains why I found many photographs of prominent women campaigning on his behalf.

 

Hughes criticized Wilson’s isolationist policy regarding the conflict in Europe. Britannica declares: “Political record aside, the Republicans did not hesitate to impugn Wilson’s moral fiber; they called attention to his swift remarriage following his first wife’s death in August 1914.” In that era, remarrying too quickly might be seen as an alleged moral transgression.

 

Election Wagering on Wall Street

“In those days, the center of election betting was Wall Street itself… The reader may be surprised to learn that one of the services provided by the New York Stock Exchange houses was to act as stakeholder for their customers’ election wagers. (This genial practice was outlawed some years later when the stock exchange went all-out for respectability.)”

I was, in fact, surprised to find out that Wall Street hosted election wagering. As for outlawing the practice, I think Ben is referring to a rule change that occurred in the 1920s. According to Paul W. Rhode and Koleman S. Strumpf’s  Historical Presidential Betting Markets, “In May 1924…both the New York Stock Exchange and the Curb Market passed resolutions expressly barring their members from engaging in election gambling.”

Election wagering has once again become legal in America. In October 2024, a Washington court ruled that American firms can legally offer election betting, though I don’t think that Wall Street brokerages are allowed to conduct the wagering.

Speculators and Investors

“Nearly all those who traded in stocks frankly called themselves ‘speculators’ (whereas today everyone is an ‘investor’). They did not draw too fine a distinction between their financial operations and racetrack and other betting.”

Ben Graham took this observation to heart. He would become the Wall Street innovator who drew a large distinction between investing and speculating, In their 1934 tome, Security Analysis, he and David Dodd write, “An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative.”

 

Benjamin Graham’s Election-Related Duties

“The fact that I was elected to take charge of the election bet department at Newburger, Henderson & Loeb in 1916 will give some hint of the factotum character of my activities with the firm.”

 

A factotum is a person who performs a wide variety of jobs—which certainly describes Ben’s situation at his brokerage firm. We’ve seen him work a runner, board boy, switchboard operator, market letter writer, cashier’s assistant, and failed bond salesman before garnering a promotion to statistician.

“Nearly all these bets were made at even money.”

 

 That means that the potential winnings are equal to the original bet. If you bet $20 on Hughes and Hughes won, you would receive $20 plus the $20 you staked.

 

“I had a strongbox full of cash and signed memoranda. There was plenty of excitement the day after [the] election, when nobody was sure who had won.”

  

I can picture my twenty-two-year-old grandfather, a bit nonplused to find himself in command of a money box chock full of cash. I imagine him guarding it from edgy brokerage clients, agitating for an election outcome so they could collect on their bets.

“In fact, it was not until the third day that Wilson’s re-election was made official in Wall Street, and I was allowed to pay off our clamorous Democratic voters.”

 

Ben’s account attests that our current election isn’t the only one where some outcomes may not be determined for several days. If Wilson were to lose, he intended to avoid the lame duck period altogether. With submarines threatening off the Atlantic coast, he wished to honor the people’s choice of president immediately. According to Britannica, “in the event of a Republican victory, Wilson had planned to appoint Hughes secretary of state and then resign along with [Vice President] Marshall so that Hughes could immediately accede to the presidency.” That plan was scuttled when Wilson won the race by twenty-three electoral votes.

 

1916 Election Results courtesy of 270towin.com

		Candidate	Party	Electoral Votes	Popular Votes
✓		Woodrow Wilson (I)	Democratic	277	9,129,606
		Charles E. Hughes	Republican	254	8,538,221
		Allan Benson	Socialist	0	585,11

 

They Trusted Ben

Clearly, Ben’s bosses at Newburger, Henderson & Loeb trusted him. He was twenty-two years old, earning $16 per week. He had quit his night school job teaching English as a second language but still moonlighted as a tutor of officers’ sons on Governors Island in order to support his mother. No one in the firm worried that he might help himself to a stray bill. He exuded integrity and honesty, and his bosses were right to put their trust in him.

 

A Galvanizing Insight

Assuming control of the election bet department gave Ben a galvanizing insight. The firm’s clients “speculated” on stocks just as they “speculated” on election wagers. No one knew which politician was going to win, nor which stocks were going to be winners. The latter was exactly what Ben yearned to change.

He began his work as a statistician with a deep dive into the Missouri Pacific Railroad bonds, and he went on to analyze the financial reports of myriad companies on the New York Stock Exchange (NYSE). He’d grown up with financial hardship, and at the start of his career, faced money crisis after crisis. He had to do something to become financially secure, so he developed security analysis and value investing.

Some people figure out how to make money and keep that strategy to themselves. Ben Graham did the opposite. He offered his methods to his bosses, his clients, and his students at Columbia Business School. Students who worked as professionals at rival firms took notes at the back of the room and ran for the subway so they could buy the stocks Ben had just lectured about. Ultimately, he offered his methods to his 1.5 million readers who bought his revered classic, The Intelligent Investor.

 

“By Far the Best Book About Investing Ever Written”

I’m excited to tell you that I just got back from the New York book launch party for the 75th Anniversary Edition of The Intelligent Investor, published by HarperCollins. All of us at the party marveled that Benjamin Graham’s ideas, formulated in the 1920s and ’30s, published in that iconic book in 1949, are still important today. One central tenet that the book’s editor Jason Zweig quotes on this hot off the fire podcast is that “Intelligent investing is not about mastering the market. It’s about mastering yourself.”

On my visit with Warren Buffett in Omaha two years back, he told me he bought Ben’s book when he was nineteen years old, a student at the University of Nebraska, Lincoln. After reading The Intelligent Investor in 1949, Buffett told me he “had to rearrange his whole thinking.” In a letter to my mother (Ben’s eldest daughter) in 1983, he wrote, “The clarity and strength of [Ben’s] investment ideas are only strengthened with age.” Warren Buffett called it “By far the best book about investing ever written,” and the book has been jumping off shelves ever since.

 

The Kind of Person You Want to Become

I was honored and thrilled that Jason Zweig invited me to the book party and asked me to say a few words. The crux of my short speech came to me in a flash. I wanted to talk about the Ben Graham values that helped shape Warren Buffett and inspire this blog. After the party, I was happy to find that others also see Ben Graham as the “father of value investing” and a person who teaches values. In his book review of the new edition, Bloomberg writer Gary Sernovitz quotes Jason Zweig: “In the end, the advice in this book isn’t only about what kind of investor you want to become. It’s also about what kind of person you want to become.”

 

 

What kind of values did Ben teach? In 2022, Warren Buffett wrote to me: “Your grandfather was not only brilliant, but was kind and generous to a great many people, while never thinking of any possible benefit to himself. I don’t want that to ever be forgotten.” He also told me that Ben was “a man who did wonderful things for me while expecting nothing in return.” Buffett, in turn, did wonderful things for others when he became the world’s biggest philanthropist.

 

The 75th Anniversary Edition Shines Bright

 

 

Aside from being a kind person, how was Benjamin Graham generous? In his October 18, 2024 Wall Street Journal column, Jason Zweig includes this joyful photograph of Ben giving bountifully to a flock of white pigeons in Seville. My grandfather didn’t have billions to give—he had trailblazing ideas. He put his wisdom into The Intelligent Investor and gave it to everyone.

Seventy-five years ago, he wrote this book to save his fellow investors from the risks of speculation and teach them how to invest wisely. Jason Zweig, for his part, contributed his own act of kindness and generosity by giving updates and incisive commentary on each of Graham’s chapters—empowering readers to apply Ben Graham’s tenets to modern market conditions. How amazing that Ben Graham’s gift to the world shines brightly today.

 

Generosity as a Shield

Let us thank Benjamin Graham, Warren Buffett, and Jason Zweig by following their example—by doing wonderful things—big and small—for people and animals while expecting nothing in return. If we face a difficult election aftermath, their example will help get us through. I see Ben as an inspirational figure who protected his heart through tragedies and misfortunes by manifesting these qualities–so that late in life, he could open to love.

Being kind can help us, too. We can be the antidote to our own human urge to be selfish, to grasp for more, to disparage and blame. We can treat everyone with respect. We can find contentment in having enough. With generosity coursing through our veins, we can be bigger than politics—big enough to help our world take pigeon steps toward kindness.