He Signed the Declaration and the Constitution and Sat on the First Supreme Court. He Died Hiding From Creditors

James Wilson signed the Declaration of Independence. He signed the Constitution too. George Washington put him on the first Supreme Court in 1789. In 1797 he was in debtors' prison. A year later he died in a tavern's rented room in North Carolina, hiding from the people he owed.

Jesse Wegman's new biography is The Lost Founder. Adam J. White reviews it in the Journal. Wilson was born in Scotland in 1742 and sailed for America in 1765. He never went back. At the 1787 Constitutional Convention, only Gouverneur Morris spoke more often than he did. He wanted the people themselves to elect both the House and the Senate. He also proposed the first version of the Electoral College. Wegman's claim is that no founder saw more clearly where the country was headed. White admires the storytelling and thinks the populism is oversold.

Then the money. Wilson chaired the Illinois and Wabash Co. and controlled a million acres. White calls that fortune illusory, “built on a mountain of debt that ruinously collapsed.” In 1797 the debt caught him. He went to debtors' prison, then fled south. He never resigned from the court. Justice James Iredell wrote in August 1797 that Wilson was “in a manner absconding from his creditors.” He died the next year, a few blocks from Iredell's home.

Adam Smith saw it coming

White's sharpest point is about Adam Smith. Wegman blames Smith's idea that the road to virtue and the road to fortune are nearly the same. White says that gets Smith backward. In The Theory of Moral Sentiments (1759), Smith said real skill plus prudent, temperate conduct seldom fails. He also warned that habitual imprudence clouds even the most splendid abilities. Wilson, White suggests, skipped the second half.

Our read

This is Cash Flow (M5), and the oldest lesson in it. Debt turns a smart person's fortune into a timer. Wilson had one of the best legal minds of his age and a million acres. Raw land pays no interest. Loans charge it every day. When the debt collapsed, nothing else he'd done mattered to the men he owed. A balance sheet with more borrowed than owned is the same trap at any size. It's just quieter at home.

One thing in your plan. Your total debt against your total assets, on one line. One check this week. Add every loan, the home equity line and the margin balance included, and divide by what you own. Then ask what you could sell in a month to cover it. If the answer is not enough, you're carrying Wilson's risk. The umbrella goes in the car before the forecast changes. We'd be glad to look at that line with you.