If you have read my review of Thomas Levenson’s excellent Money for Nothing, then you know that when the South Sea Bubble burst in 1621 Isaac Newton lost £25,000 and despite these loses, when he died eight years later his estate was estimated to be worth about the same sum. By today’s standards £25,000, whilst a tidy sum, is not actually a lot of money. However, in the early seventeenth century £25,000 was the equivalent of as much as £3 million pounds today. This, of course, raises the question as to how a poor farm boy from Lincolnshire, who had to work his way through college, who then became a professor of mathematics, not the best paid job at the end of the seventeenth century, succeeded in becoming, by anybody’s standards, a very wealthy man.
Starting at the beginning, Isaac wasn’t actually a poor farm boy. It is true that when he went up to Cambridge in 1661, he entered Trinity College as a subsizar, which meant he had to pay his way by working as a valet for other students, but the facts deceive. His father, also called Isaac, was a wealthy yeoman farmer and the owner of Woolsthorpe Manor in Woolsthorpe-by-Colsterworth.
Isaac senior died before his only son was born leaving Isaac’s mother, Hannah Ayscough a wealthy woman. Hannah could have paid for her son’s tuition with ease and there is some discussion, as to why she chose not to do so. The standard account is that she was simple mean and miserly. However, I personally think, that there is another reason. The Newtons were of puritan stock and I think that the decision to make Isaac earn his tuition was a moral one. At the beginning of the seventeenth century Jeremiah Horrocks, who also came from a well-off puritan family, also had to pay his university tuition by working as a servant. In 1664, Isaac won a scholarship and in 1667 he was appointed a minor fellow of Trinity and a year later a major fellow, which meant that he was now financially independent but by no means well-off. However, the fact that as fellow he received free board and lodging meant that he could afford to live comfortably.
The minor fellowship received a stipend of £2 p.a. with a livery allowance of £1 6s 8d per annum. In the Oxbridge college system, the fellows are the share holders of the college and receive a yearly dividend, as a minor fellow Newton received a dividend of £10 p.a. As a major fellow his stipend was £2 13s 4d p.a. plus £1 13s 4d for livery and a yearly dividend of £25. As a major fellow his total income was about £60 a year of which about £20 t0 £25 was his board and lodging. By modern standards this might not seem a lot, but it is approximately double the yearly income of a skilled craftsman at the time, with a fellow free to do whatever he liked with his time.
In 1669, Newton’s financial situation improved once again when Isaac Barrow resigned the Lucasian chair of mathematics to take on the study of divinity and was appointed Master of Trinity College and Newton was appointed as his successor to the Lucasian chair. This position carried with it a salary of £100 p.a., which is equivalent to £10,000 p.a. at todays prices. He also retained the income from his fellowship. I love the fact that on the National Archive historical converter I’m using, they point out that £100 was worth 24 cows. I have visions of Newton grazing his herd of milk cows on the lawns of Trinity College.
Newton’s steadily increasing wealth received a very major boost ten years later in 1679, when his mother, Hannah, died and he inherited the Newton family estates. These generated an income of about £600 p.a. Newton was by any standards now a wealthy man, although this income would not have enabled him to generate saving of £50,000 by the 1720s. In fact, Newton did not hoard his money but spent freely, stocking up his extensive library and equipping the alchemy laboratory that he set up in the gardens of Trinity College.
Contrary to the popular myths that Newton living in isolation, totally immersed in his studies was completely unworldly, Newton, although an absentee manager of the family estate mastered the task skilfully and also took good care of the needs of his extended family.
It was normal practice for fellows to increase their incomes through preferment in the Anglican Church, stipends often being awarded in absentia, with a minor cleric undertaking the actuall duties. Although all fellows were required to take holy orders, Newton, because of his unorthodox beliefs, had received a special dispensation from the King upon his appointment to the Lucasian Chair, so this route was not open to him.
Towards the end of the century, Newton tired of Cambridge and now, following the publication of his Principia, universally acknowledge as Europe’s leading natural philosopher, he began looking for some form of public post with a sinecure or pension to match his social status. In 1696, he achieved his aim, when his one-time student and mentor in the Whig Party, Charles Montagu, offered him the post of Warden of the Royal Mint in London. Newton accepted the post without hesitation. The warden’s income was £400 p.a. a large step up from the Lucasian £100, which, however, together with his fellowship he initially retained.
The job of warden was a sinecure and Newton could have simply played the man about town and left the actually work to assistants. However, that was not Newton’s style and he took over the day-to-day management of the mint. One anomaly, that Newton became aware of straight away, was that although the warden was the boss, the master, who was actually responsible for minting the coinage, received a salary of £500 p.a., so more than the warden, plus a payment for every pound weight of copper, silver or gold that he minted. Newton immediately petitioned for equal pay with the master, but this was denied. However, when the incumbent master died in 1699, Newton had himself appointed as his successor. This was the only time in the history of the Royal Mint that a warden became the master.
In 1701, Newton finally resigned from the Lucasian chair and his Trinity fellowship. In that year his income from the mint was £3,500, we have now arrived at the source of that vast later wealth. Although it tended to go up and down like a yo-yo, Newton’s average income over the twenty-six years that he was master was about £1,650 p.a. One should not forget that he also had the £600 p.a. from his estates in Lincolnshire.
Newton was a good financial manager and through his work as advisor to the treasury he also had close contacts to all the leading finance experts in London. By nature, a cautious man, he usually invested his wealth wisely in the flourishing joint stock companies operating in London. He owed sizable stocks in both the Bank of England, set up by his mentor Charles Montagu, and the highly profitable East India Company both of which generated further income for him. However, even Newton couldn’t resist the allure of the spectacularly rising value of the South Sea Company and he invested heavily. Interestingly, he sold out once, making a tidy profit but as the value continued to rise and rise, he couldn’t resist and reinvested heavily taking that famous £25,000 hit.
There was however one occasion when Newton actually turned down the chance to improve his financially situation. Around 1713, during a period of Tory rule, the party wanted to secure the various political sinecures for their own supporters but knew that due to his, in the meantime, massive social status to remove Newton from the Royal Mint would be a political disaster, so the sent Jonathan Swift to offer him a bribe. If he would freely resign, as master of the mint, the government would bestow a lifetime pension of £2,000 p.a. upon him. Newton must have loved his work, or maybe he just wanted to annoy the Tories, he was after all a Whig, because he declined this incredibly generous offer.