Acquired
00:03:02 · David Rosenthal, Ben Gilbert
[00:03:02] S1: Oh, that's great. I couldn't have written it better myself then. [00:03:05] S0: And his story is wild since he didn't start Vanguard until he was 46 years old. And you might think it was started idealistically given the structure we're talking about. And it was, sort of, but the story is equal parts idealistic as it is vindictive. But what is clear, we all owe Jack a giant thank you. Because of Vanguard's relentless cost cutting and low fees, Vanguard has saved investors over $500,000,000,000 in fees and trading costs since its founding in 1975. And as a recent book, The Bogle Effect argues, Vanguard's actions also forced the hand of the rest of the industry to cut their fees totaling another $500,000,000,000 over time. So Jack Bogle and Vanguard are responsible for a trillion dollars of wealth transfer out of the pockets of Wall Street and the finance industry and into the pockets of individual investors in the form of fees that they didn't have to pay. [00:04:01] S1: Absolutely incredible. [00:04:03] S0: I was catching up with good friend of the show, Morgan Housel, a couple days ago. Oh, yeah. Of course. And his comment to me was, I view Bogle as an undercover philanthropist. And at a trillion or even half $1,000,000,000,000, that would make him the greatest philanthropist of all time. [00:04:18] S1: Wow. Wow. I love that framing. Yeah. I mean, a large portion of that trillion dollars could easily have flowed into Jack's own wealth, and he made the choice that it didn't.
00:04:18 · David Rosenthal, Ben Gilbert
[00:04:18] S1: Wow. Wow. I love that framing. Yeah. I mean, a large portion of that trillion dollars could easily have flowed into Jack's own wealth, and he made the choice that it didn't. [00:04:28] S0: Yeah. Maybe. Maybe, David. We'll get into it. So listeners, you can join the email list at Acquire dot FM slash email. That's where we're gonna send out our big takeaways from each episode, past episode corrections, exclusive behind the scenes photos that we find in our research, and it's where you'll get to vote on future episode topics. Plus, David writes a little hint each time about next episode's topics, so come play the guessing game with us at acquired.fm/email. Come talk about this episode with the whole community in the Slack after you listen. That's acquired.fm/slack. And before we dive in, we wanna thank our presenting partner, JP Morgan. [00:05:05] S1: Yes. And just like how we say every company has a story, every company's story is powered by payments, and JPMorgan is a part of so many of their journeys from seed to IPO and beyond. [00:05:16] S0: So with that, this show is not investment advice. David and I may and definitely do this time have investments in the companies that we discuss, and this show is for informational and entertainment purposes only. David, where do we begin?
00:05:16 · Ben Gilbert, David Rosenthal
[00:05:16] S0: So with that, this show is not investment advice. David and I may and definitely do this time have investments in the companies that we discuss, and this show is for informational and entertainment purposes only. David, where do we begin? [00:05:29] S1: Oh, alright. Well, we start. In May 1929, on the eve of the great Wall Street crash of October nineteen twenty nine that would throw America and the world into the Great Depression, wipe out millions of family savings, ruin countless lives, forever scar an entire generation. We we don't often talk about the Great Depression on acquired. It was truly horrible. I mean, the financial crisis was quaint compared to this. 9,000 banks failed after the Wall Street crash of nineteen twenty nine. 9,000,000 individual family savings accounts were wiped out. Almost a 100,000 businesses failed. Unemployment reached 25, and it truly did scar an entire generation. I mean, I remember my grandparents still, like, into the nineteen nineties doing absolutely insane things because of their experience during the depression. My my dad's mom never threw out a plastic bag in her entire life. When she
00:05:29 · David Rosenthal, Ben Gilbert
[00:05:29] S1: Oh, alright. Well, we start. In May 1929, on the eve of the great Wall Street crash of October nineteen twenty nine that would throw America and the world into the Great Depression, wipe out millions of family savings, ruin countless lives, forever scar an entire generation. We we don't often talk about the Great Depression on acquired. It was truly horrible. I mean, the financial crisis was quaint compared to this. 9,000 banks failed after the Wall Street crash of nineteen twenty nine. 9,000,000 individual family savings accounts were wiped out. Almost a 100,000 businesses failed. Unemployment reached 25, and it truly did scar an entire generation. I mean, I remember my grandparents still, like, into the nineteen nineties doing absolutely insane things because of their experience during the depression. My my dad's mom never threw out a plastic bag in her entire life. When she [00:06:32] S0: died and we cleaned out her condo, it was, like, full of tens of thousands of plastic bags. My grandpa was magazines and Tums containers. Containers. We We found found just overflowing amounts in his basement. But the crazy thing about this, David, is back then, only one to 2% of Americans owned stocks. Yes. So all of these things were second order effects from the crash, from the banks being deeply intertwined, a lot of leverage on all these equities. It wasn't like, oh, I own a bunch of stocks and those stocks crashed, so my life is over. It is the giant interrelated ripples and no safeguards in the economy at that time.
00:07:10 · David Rosenthal
[00:07:10] S1: Yep. Exactly. It was the bank failures. It was the businesses going under. It was unemployment. It was everything. But on the eve of this great financial calamity, our hero and a financial hero to many is born, John Clifton Jack Bogle. And he's born here in May 1929 as one of two twin boys, along with his twin, David. And together with their older brother, Bud, they form the Bogle Boys, as they would be known throughout the rest of their youth and indeed the rest of their lives. Now, Jack and David, here at the time of their birth, are born into a prominent New Jersey family. Their great grandfather had founded a mutual fire insurance company. Nice foreshadowing there with founding Mutual. Mutually owned company as Vanguard would go on to be. And their grandfather had then founded a company which would go on to become part of the American Can Company, which manufactured tin cans and was one of the largest companies in America for a long time. So it's like a a prosperous, well-to-do, well respected family that they are born into. But during their early childhood here in the depression, the family loses everything. Their dad becomes an alcoholic, divorces their mom, abandons the family, runs off, basically ends up dying alone on a street corner years later. Their mother, as you can imagine, is equally scarred from all this, suffers from severe depression, mental health issues, isn't able to provide for the boys. And so the Boko boys, basically, from the time they're kids, like, before they're teenagers, they're kinda left to fend for themselves in the world. So all three of them work several concurrent jobs while they're growing up and going through school. I mean, we're talking, like, paper routes, food service jobs, restaurants, manual labor, like, anything that they can do to support themselves and their mom. Jack would talk about how the best job that he ever had as a kid was a 3AM paper route that he had because the world was quiet and peaceful in the middle of the night, and he could escape the chaos and strife all around him. As he liked to say, it was a contrast to the rest of my life growing up. And you got all this
00:09:42 · Ben Gilbert, David Rosenthal
[00:09:42] S0: from talking with Jack's kids. Right? [00:09:43] S1: Yeah. Yeah. I spoke to several members of the Bogle family for research, and, I mean, this story is just incredible. [00:09:50] S0: Yeah. It's interesting because kinda through his last name and his great grandfather and his grandfather, they had this sort of family network where they were in high society, and he knew other well-to-do kids. But, personally, their family's wealth and relationships were kinda in shambles.