Inspirational Lessons From Thomas Edison On Money, Work, and Productivity
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Last updated 03/21/2024 by
Andrew LathamThomas Edison is universally recognized as a genius inventor, but he was as good a salesman and businessman as he was a inventor and innovator. Some of his views on money, finance, and monetary policy were so ahead of their time they still sound current and progressive today.
Let’s look at some of Edison’s most memorable quotes and see what we can learn from his view on money.
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“Utility Is Success”
To say that Thomas Edison revolutionized the 20th century is an understatement. If you measure the success of inventors by how much and how often their inventions are bought and used, Edison would be the most successful inventor in history.
To illustrate, the phonograph, the motion picture camera, and a practical electric light bulb are just three of 1,093 mechanisms and processes he patented throughout his prolific career. Each of those inventions literally created three global industries: the music recording industry, the film industry and the electric power industry, which now generate hundreds of billions of dollars in revenue.
“Gold is a relic of Julius Caesar, and Interest is an Invention of Satan.”
In 1921, Thomas Edison and Henry Ford visited the Muscle Shoals nitrate and water power projects near Florence, Alabama. Ford and Edison attracted a lot of media attention with this visit and used the opportunity to also express their views on monetary policy. It was at a press conference at Muscle Shoals that Edison famously said:
“Gold is a relic of Julius Caesar and interest is an invention of Satan. Gold is intrinsically of less utility than most metals. The probable reason why it is retained as the basis of money is that it is easy to control. And it is the control of money that constitutes the money questions. It is the control of money that is the root of all evils.”
Ford saw great promise in the Muscle Shoals project and wanted the government to lease to him the water power developments. Ford was also proposing a new way of funding public works where the government would simply print the currency necessary to build the project without the need of issuing bonds, and Edison endorsed his views.
His views on monetary policy are still revolutionary today because, although – as Edison predicted – the gold standard is no longer used, we still finance public works by issuing debt in the form of Federal Reserve bonds.
Edison thought it was madness that the government had to pay $66 million in bond interest to generate the $30 million needed to finance the Muscle Shoals project. As he saw it, bankers and investors would profit $36 million simply for buying into an investment that was backed by the full faith and credit of the US government. Wait a moment, Edison would argue, dollar bills are also backed by the full faith and credit of the US government, so why can’t the government simply print the dollars bills so the American taxpayers can save themselves $36 million? As Edison said at the press conference:
“It is absurd to say that our country can issue $30,000,000 in bonds and not $30,000,000 in currency. Both are promises to pay: but one promise fattens the usurer, and the other helps the people.”
Many may call Edison’s view simplistic, but I find it hard to argue with his logic.
“I want to cast the variable out of money.”
It’s ironic that Edison’s most ambitious invention is probably one you have never heard of, or at least never associated with Thomas Edison. Ok, I’ll just say it. Edison invented Bitcoin. Well, not exactly, but his vision was the basis of what Bitcoin has become.
In 1922, Thomas Edison announced his latest invention; a commodity-backed currency that he believed was the long-term solution to the monetary woes of the Depression of 1920-1921. As Hammes and Wills explain in “Thomas Edison’s Monetary Option,” Edison proposed the U.S. Dollar be backed by the agricultural production of American farmers, specifically the production of thirty-six different commodities. These commodities included cotton, wheat, barley, rye, hay and oats. The idea was to make the new currency inflation-proof, base it on something with real, intrinsic value, and eliminate the centralized power of the Federal Reserve and banks.
As he stated in an special features section of the July 16, 1922 New York Times:
“…the relative value of the earth’s produce appears to be constant, a money unit representing basic commodities and nothing else would be equally constant, that… and further, since the relative value of the earth’s produce is constant there is no reason why the farmer should not finance himself, as the gold miner does, simply by turning his output into money directly.”
The plan was simple to understand but complicated and expensive to carry out. His idea was that the Federal Reserve issue currency in the form of interest-free loans to farmers based on the value of the commodities they produce. The farmers would store their produce in twelve warehouses built throughout the country for one year, and in exchange the Federal Reserve give the farmers 50% of the value of the commodities.
The price of the commodity would be determined by its average price during the previous 25-year period. Once the year was up, the farmers could choose to repay the interest-free loan, take back the produce and sell it, or simply keep the cash and let the government sell the produce at the current market price. In short, Edison was suggesting the government act as a giant, interest-free pawn-shop who didn’t have the right to sell the goods until after a year had gone by.
At this stage you may be wondering, what does Edison’s idea have to do with Bitcoin?
Well, both Edison dollars and Bitcoins are commodity-based currencies. Edison dollars were based on the steady production of agricultural commodities and Bitcoin’s value is based on the cost of the electricity and computer hardware (also commodities) needed to solve the complex formulas that generate bitcoins.
Edison dollars were generated by the commodities stored in a system of independent warehouses built throughout the United States, while Bitcoin is a decentralized electronic cash system propped up by a system of millions of computers throughout the world.
Bitcoins also provide a steady supply of currency (at least until all 21 million Bitcoins are mined), and eliminate the power of the Federal Reserve and banks. Edison hoped that a commodity-based currency would have a self-stabilizing effect on the economy that would stop the cycle of crashes and booms that nearly bankrupted him on several occasions. Bitcoin is also designed to be a self-stabilizing economy. It does this through the use of exchanges and by automatically adjusting the difficulty of obtaining bitcoins so that they are generated at a constant rate of 50 bitcoins every 10 minutes. Whether this system will ultimately work is still not clear. As of now, Bitcoin is a highly-volatile currency.
Of course, even though it’s still early, Bitcoin has already become much more than anything Edison envisioned. Edison created an alternative currency for the United States, but Bitcoin has the potential to become a world currency, an alternative to all others.
For more information on how Bitcoin works check out “The Mystery of Bitcoin Revealed: Myth, Hype & The Truth Behind It All”
“Waste is worse than loss.”
“Waste is worse than loss. The time is coming when every person who lays claim to ability will keep the question of waste before him constantly. The scope of thrift is limitless.”
This is a rather prophetic statement for someone who lived before recycling, renewable energy, and energy efficiency were the buzzwords they now are.
This view also applies to personal finance. Reducing unnecessary expenses and living a thrifty and minimalist lifestyle allows people to live within their means, regardless of their income level, and opens up more money to invest.
“One might think that the money value of an invention constitutes its reward to the man who loves his work. But speaking for myself, I can honestly say this is not so… I continue to find my greatest pleasure, and so my reward, in the work that precedes what the world calls success.”
Edison measured his success in sales and revenue, but this doesn’t mean money was his driving force. The joy of working on projects he was interested in was his main source of motivation, money was simply a way of keeping score. Working on things he was passionate about was the reason Edison could also say…
“I never did a day’s work in my life, it was all fun.
Thomas Edison wasn’t only an outstanding inventor. He was a hard-working and practical man who always looked for ways to improve the way things were done, whether it was win monetary policy, the efficiency of a car battery or the resistance in a light bulb.
Having his entrepreneurial vision on life and money will not only improve our financial health, but also give us a more stoic perspective on life. This will hopefully make us more resilient to life’s many setbacks, financial or otherwise.
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Andrew is the Content Director for SuperMoney, a Certified Financial Planner®, and a Certified Personal Finance Counselor. He loves to geek out on financial data and translate it into actionable insights everyone can understand. His work is often cited by major publications and institutions, such as Forbes, U.S. News, Fox Business, SFGate, Realtor, Deloitte, and Business Insider.
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