As part of what I guess is now a continuing series of excerpts from ancient alumni publications, here’s some stuff from Alfred Winslow Jones, the man generally credited with inventing the hedge fund. He didn’t, really: In the 1920s, Benjamin Graham ran a limited investment partnership that bought some stocks and sold others short–the distinguishing characteristics of the fund Jones launched in 1949–and surely others did too.
Jones did invent the name, although he called his a “hedged fund” and thought “hedge fund” was a grammatical abomination. And he inspired a bunch of imitators in the 1960s, a handful of whom (Michael Steinhardt is the only name that springs to mind) survived the 1970s bear market and inspired the “industry” that brings such joy to so many people today (hey, if you’re a Paulson & Co. investor you’re pretty happy right now).
As a youth, Jones was known as “Ribbie” (or maybe “Ribby”) because he was so skinny. That’s not in any of the Harvard Class of 1923 publications I consulted; it’s something Jones’s high school and college classmate Al Gordon told me a couple of years ago. “When he got into an amount of money, he asked us to stop calling him Ribbie,” said Gordon, who did a lot of fundraising for Harvard. “I’m sorry to say that after that we all called him Alfred, because we were hoping to get money from him.”
Jones’s post-college activities, culled from his entries in the Class of 1923’s 25th and 50th reunion yearbooks, started with a job as purser on a tramp steamer making a round-the-world trip and continued with stints in the export-import and investment counseling businesses. Then he signed up with the Foreign Service, which posted him in Berlin in the early 1930s, where he “saw strange things happen.”
In the 1920s he’d been a “moderate liberal” reader of The New Republic and newspaper columnist Heywood Broun. In Germany, “I became what my German Marxist friends would have called a rebellious liberal.” Then he decided he was a socialist, and went to Columbia University to get a Ph.D. in sociology (because that’s what socialists study, I guess). His dissertation was a study of Akron, Ohio during the Depression that was later published as Life, Liberty and Property.
Fortune magazine published an excerpt from the book, and subsequently hired Jones as an editor. He spent the war years there, and then:
I gave up the high-powered, chromium-plated operations of Henry Luce to go as head of editorial research for Marshall Field’s Project X, which was to have resulted in the publication of a magazine called U.S.A. But with a slump in magazine publishing the effort came to naught.
He then worked on a magazine project for Encyclopedia Brittanica, but that also didn’t go anywhere.
So, in the late 1940s, with a wife and two children, I needed something more lucrative, and turned to Wall Street, where I shaped up what I called a hedged fund, mostly with the money of other people, for whose confidence I am eternally grateful.
That’s all he wrote about his hedged fund, apart from this:
I suppose I am not, and never was, the Wall Street type that I should have been. In any case, I fairly soon began to slope away from full time for A.W. Jones & Company.
He and his wife traveled to a lot of exotic places, much of the time on behalf of the newly founded Peace Corps. He launched a charitable foundation. And he gave up on isms:
Decades ago I called myself a socialist and for a time I was a follower of Norman Thomas. Now not only have the ism’s been dead or dying for many years but no one seems to be able to bring forth a valid, new program with hope for the future, the New Left being so arrogantly nihilist.