Chapter 75 - The Founder: Andre Oscar Wallenberg (1816-1886). Swedish Banker, Politician and Journalist
Today’s Chapter is based on the book “The Founder: Andre Oscar Wallenberg (1816-1886). Swedish Banker, Politician and Journalist” by Goran Nilsson. It is a biography on Andre Oscar Wallenberg, a Swedish banker, politician and journalist. He is well-known for being part of the Wallenberg family which business empire includes the likes of Investor AB.
Here’s what I have learned:
Self-Learning and the Influence of Benjamin Franklin
“We are all born ignorant, but one must work hard to remain stupid.”
— Benjamin Franklin
Despite lacking formal education early in life, Andre Oscar Wallenberg displayed an insatiable thirst for knowledge that became a driving force behind his multifaceted achievements. Through a lifelong commitment to self-education, this Swedish polymath was able to turn progressive ideas into transformative reforms across banking, business, and politics.
As a matter of fact, while Wallenberg suffered from a handicap in terms of theoretical training, he quickly overcame it by dedicating himself to self-directed studying. While other young people of his generation were just finishing their schooling, Wallenberg was just starting to undertake his own education. Wallenberg truly believed that wisdom could be obtained even without formal education, as long as one’s shows some desire and dedication. As Mark Twain once said, "I have never let my schooling interfere with my education.”
“Desire of knowledge increases with its acquisition.”
— Andre Oscar Wallenberg
Wallenberg understood the importance of acquiring knowledge as he believed that it is only through knowledge that one could differentiate himself from others. This was especially important in the times of Wallenberg where it was difficult to be influential both in business and in politics without being part of the Swedish elite.
As Wallenberg once wrote to his brother Agathon, "We are nothing. We possess nothing, not even a title, and people like us appear only in the shadow of society's painting, where so many knights, gilded (or at least brass-plated) Don Quixotes, struggle to appear in the full light.”
"Knowledge is power, and the wealth of knowledge that a human being can acquire is the best, because no one can steal it from them, and neither rust nor moths can take hold of it.”
— Andre Oscar Wallenberg
However, Wallenberg’s biggest discovery through his self-learning process happened when he was visiting America. There, he came upon the story of Benjamin Franklin, who quickly became a big influence in the way Wallenberg would live his life. As a matter of fact, Wallenberg called Franklin, “My Divine Franklin”, as he became his guiding star. Franklin’s principles of emphasizing the values of hard work, frugality and civic responsibility resonated deeply with Wallenberg.
Notably, Wallenberg, influenced by Franklin, believed that society could gain its autonomy through hard work and frugality. In fact, Wallenberg once said, "By what means can people ensure their autonomy? Through work and savings. Apart from the land itself on which we live, apart from the rich gifts of nature that has lavished on humanity, all capital is nothing other than realized work.”
As we have learned previously, Franklin, who is also Charlie Munger’s hero, was well-known for establishing thirteen virtues that are absolutely necessary to lead a good life:
Temperance: Eat not to dullness; drink not to elevation.
Silence: Speak not but what may benefit others or yourself; avoid trifling conversation.
Order: Let all your things have their places; let each part of your business have its time.
Resolution: Resolve to perform what you ought; perform without fail what you resolve.
Frugality: Make no expense but to do good to others or yourself; i.e., waste nothing.
Industry: Lose no time; be always employed in something useful; cut off all unnecessary actions.
Sincerity: Use no hurtful deceit; think innocently and justly, and, if you speak, speak accordingly.
Justice: Wrong none by doing injuries, or omitting the benefits that are your duty.
Moderation: Avoid extremes; forbear resenting injuries so much as you think they deserve.
Cleanliness: Tolerate no uncleanliness in body, clothes, or habitation.
Tranquillity: Be not disturbed at trifles, or at accidents common or unavoidable.
Chastity: Rarely use venery but for health or offspring, never to dullness, weakness, or the injury of your own or another's peace or reputation.
Humility: Imitate Jesus and Socrates.
On top of these virtues, Franklin, in 1726, wrote to himself a few resolutions to live like a rational individual. Rules that we should all live by:
To endeavour to speak true in every instance, to give nobody expectations that are not likely to be answered, but aim at sincerity in every word and action: the most amiable excellence in a rational being.
To apply myself industriously to whatever business I take in hand, and not divert my mind from my business by any foolish project of growing suddenly rich; for industry and patience are the surest means of plenty.
I resolve to speak ill of no man whatever, not even in a matter of truth; but rather by some means excuse the faults I hear charged upon others, and upon proper occasions speak all the good I know of everybody.
Pragmatism
"Ideas are worth nothing unless executed. They are just a multiplier. Execution is worth millions.”
— Steve Jobs
Andre Oscar Wallenberg, when it came to realizing his ambitious goals, was driven by his unique blend of idealistic vision and hard-nosed pragmatism. In my opinion, his pragmatism certainly allowed him to turn progressive ideas into practical reforms across banking, politics and society in the 19th century Sweden.
In fact, as mentioned previously, Wallenberg was an avid self-learner and he embraced the newest scientific and economic thinking of his era. While the scientific revolution of the 16th and 17th century created many societal changes in Western Europe, he believed that the scientific discoveries were not used or implemented in pragmatic ways in Sweden, which he believed was a shame.
In Wallenberg’s opinion, while his ideas may seem radical at the time, he believed in their implementation since they were all based on modern science. As he once said, “the goal of scientific research is precisely to apply the results into practical life.”
"Why do we conduct studies all over the world if not to apply in practical life the scientific truths that we have discovered? If we don't do it, it's because we are ignorant or still don't take into account what we know; but if we want to do something that lasts for centuries, we must build on a solid foundation, and is there a more solid foundation than the infallible truths of the laws of nature?"
— Andre Oscar Wallenberg
And, for this reason, Wallenberg decided to take things into his own hands and dedicated his life in order to make changes in the way Sweden was run. For one, Wallenberg was known to have modernized Sweden’s banking system by following and by improving on the Scottish model. He also worked very hard in order to have Sweden adopt the universal metric system and the gold standard.
Furthermore, throughout his 33-year tenure as a parliamentarian, Wallenberg energetically worked in order to improve the conditions of the middle class and the legal and economic emancipation of women. As a matter of fact, one of Wallenberg’s core philosophy was to allow individuals “to freely promote one’s own advantage and that of society.”
"The highest duty of society is to bring citizens to the degree of civilization where each one can, through their own care and their own work, and according to their path, freely promote their own advantage and that of society.”
— Andre Oscar Wallenberg
Wallenberg’s pragmatism reminds me of Lee Kuan Yew’s utilitarianism. As a matter of fact, Lee Kuan Yew, widely regarded as the founding father of modern Singapore, was not fond of having a specific ideology while governing. For him, it was all about finding a solution that worked no matter where it came from. It is by being an “utilitarian” that he was able to transform Singapore from a small and impoverish British colony into a prosperous, modern city-state with a strong economy, efficient government and high standard of living. As Lee Kuan Yew once said, “you may call me a ‘utilitarian’ or whatever. I am interested in what works.”
As a matter of fact, Lee Kuan Yew’s guiding principle is to review all solutions and to choose the solution with the highest probability of success. If his proposed solution fails, then he will go over the alternatives solutions and find another way. By not being guided by a philosophy or a theory, Lee Kuan Yew didn’t need to force himself into chasing ideas when they didn’t work.
“I chase ideas provided they work. When they don't work, I say, look, this idea maybe sounds bright, but let's try something that works. So we try something that works, let's get it going.”
— Lee Kuan Yew
Innovation to the Swedish Banking System
“Banks can't change the world. But the world can't change without banks.”
— unknown
As we have previously mentioned, Andre Oscar Wallenberg is a pioneer in establishing Sweden’s modern banking system. He was greatly influenced by the Scottish banking model that was revolutionized during the Scottish Enlightenment. As a matter of fact, the Scots changed their banking system in order to promote economic growth through empiricism and practicality.
The Scottish banking system featured a few key characteristics that would later on be implemented into the Swedish banking system by Wallenberg, notably:
Widespread use of paper money issued by private banks backed by partial reserve in order to increase money supply and to facilitate transactions.
Branch banking networks across the country in order to facilitate capital movement along Scotland. Wallenberg envisioned a network of local community banks rather than centralized institutions, making financial services as readily available as bakeries.
These changes were extremely useful in order to encourage entrepreneurship and innovation among the middle-class in Scotland. Seeing the positive effects of this new Scottish banking model, Wallenberg believed that it could be implemented in Sweden, since it was similar in the sense that it was also a small developing country at the time.
However, Wallenberg introduced important modifications and improvements to the Scottish model. For example, he proposed allowing longer-term customer deposits in exchange for higher interest to better protect bank liquidity.
Wallenberg, the founder of the Stockholm Enskilda Bank, is a perfect example of Charlie Munger’s concept of learning what others have already mastered. As Munger once said, “I believe in the discipline of mastering the best that other people have ever figured out. I don’t believe in just sitting down and trying to dream it all up yourself. Nobody’s that smart.”
And in the case of Wallenberg, it is quite obvious that his life motto has been inspired by Benjamin Franklin and that his innovation in banking was highly influenced by the Scottish method. As we have learned previously, many entrepreneurs did not start from scratch, but succeeded by copying others.
A perfect example of this is Sam Walton, who recognized that innovation does not always require starting from the beginning. By identifying the best practices in the industry and then enhancing them with his own insights and execution, Walton was able to build one of the most successful retail empires in the world. As Walton once said, "I probably have traveled and walked into more variety stores than anybody in America. I am just trying to get ideas, any kind of ideas that will help our company. Most of us don't invent ideas. We take the best ideas from someone else.”
“Walton invented practically nothing. But he copied everything anybody else ever did that was smart—and he did it with more fanaticism and better employee manipulation. So he just blew right by them all.“
— Charlie Munger
Beyond the Book
Read "Ben Franklin: The Thirteen Necessary Virtues" by Farnam Street
Read "Ben Franklin and the Virtues and Ills of Pursuing Luxury" by Farnam Street