The Richest Man in Babylon
George S Clason
Babylon was once the richest city in the world, known for its lavish houses, palaces and huge city walls. It created fertile farmland where once there had been desert through the use of irrigation. But as George Clason notes, it was also the cradle of modern finance: money as the means of exchange, tradeable property titles, promissory notes and all forms of lending and borrowing were all highly developed. Its prosperity continued for centuries because its inhabitants were allowed to make money freely. Even slaves, if they could earn a bit on the side, could eventually buy their way to freedom.Babylon's success inspired Clason to write a series of fables which would demonstrate the unchanging principles of finance and wealth-building. They became very popular and were distributed by banks, insurance companies and other employers to teach the benefits of saving and hard work. "The Richest Man in Babylon" was one of these stories, and they were later collected into the inspirational classic we know today.
In the book's first story, two friends - a chariot builder and a musician - reflect on where their working lives have taken them. Though pleased to have wives and young families, they struggle to make ends meet and wonder if there could be another way.
The conversation turns to a man they grew up with, now considered to be the richest man in Babylon. His name is Arkad, and they resolve to go and see their old friend and seek his advice. Arkad is asked by his old friends how fate has come to make him rich. He immediately rebukes them for assuming that 'fate' has contributed anything to his success, telling them that they have only remained poor, "because you have either failed to learn the laws that govern the building of wealth, or else you do not observe them."
While still a boy, Arkad had noticed that wealth, if it did not actually create happiness, certainly enhanced the quality of life. One could furnish a house well, wear good clothing, build temples for the Gods, sail the seas or eat exotic food from distant lands. He resolved that his lot would not be that of the poor man, that he would make himself "a guest at the banquet of good things".
Yet with no inheritance due to him he realized he would have to put effort and study into the ways of wealth. He started a job as a scribe, laboring long and hard writing laws and other things onto clay tablets. One day, in return for a particularly difficult task on which he had to work through the night, Arkad asked the client, a money lender, if he would teach him some of the secrets of money.
Paying yourself first
The man agreed, and in the morning revealed this principle: "A part of all you earn must be yours to keep". Arkad felt a bit short-changed at this, for he felt it to be obvious - was not all you earned 'yours to keep'? Living expenses quickly eat up whatever you earn, the money lender observed, which means you become a slave to your work and earn merely to survive. However, by putting aside at least ten per cent of your earnings and marking it off as "not for expenditure", over time this amount builds and starts earning money for you, without you having to do any work. It matters little how much you start with, as long as you observe the rule to pay yourself first out of whatever your earn. You will soon not even notice the absence of this small amount.
After some setbacks, Arkad's savings grew into a satisfying amount. This pleased the old money lender to the extent that he asked the young man to run part of his large estate. Later he shared in its profits. The lesson: those who know the laws of money seek each other out. While many pay lip service to financial principles, the principles never work for them because they do not take action.
Yet the money lenders's advice is not that of a penny-pincher. He counsels Arkad to enjoy life and not strain to save too much, along as he is continually increasing his pot of saved money.
One of the important points of the book, particularly for our age of high debt, is that we should 'pay ourselves first' at the same time as paying off our debts. Thus, ten per cent to ourselves, twenty per cent to our debtors on a pro rata basis, and the rest to live on. Many people are put off saving because they think first of the weight of their debts. But as soon as you see the growth of your unspent cache of money, it will motivate you to add to it. "Touch not the one tenth that is fattening they purse."
Although it seems obvious, the richest man in Babylon got that way because he lived within his means. In time, anyone who can live on eighty or ninety per cent of their can become rich.
The Richest Man in Babylon belongs to that group of titles within the success literature dealing with saving, investing and financial propriety, in which setting goals, a strong work ethic, and an optimistic attitude are all important. But how do you reconcile these ideas with those of the more spiritual prosperity authors such as Catherine Ponder and Wallace Wattles?
Both financial knowledge and a strong awareness of abundance are necessary if you are to accrue wealth in a satisfying, sustainable way. Everyone knows that the greedy and miserly, even with great wealth, are not happy. Equally, while 'Trusting in God as the source of your supply' will bring you unexpected gains, it pays to increase your knowledge of the earthly world's financial ways and laws. With both faith and knowledge you can create fortunes that will last, and the wisdom you will have attained in the journey can be used to help others.
Source: 50 Success Classics: Winning Wisdom For Work and Life from 50 Landmark Books by Tom Butler-Bowdon (London & Boston: Nicholas Brealey)
"In old Babylon there once lived a very rich man named Arkad. Far and wide he was famed for his great wealth. Also he was famed for his liberality. He was generous in his charities. He was generous with his family. He was liberal in his own expenses. But nevertheless each year his wealth increased more rapidly than he spent it."
George S Clason
Born in Louisiana, Missouri in 1874, George Samuel Clason attended the University of Nebraska and served in the US Army in the Spanish-American War. He began a long career in publishing, founding the Clason Map Company of Denver, Colorado, which produced the first road atlas of the United States and Canada.
In 1926 Clason published the first of a number of pamphlets on the secrets of financial success. They were later put together as The Richest Man in Babylon, which has sold over one and half million copies.