T. Rowe Price

The Man, The Company, and The Investment Philosophy

Cornelius C. Bond

• Publisher: Wiley
• Year: 2019
• Print ISBN: 9781119531265
• eBook ISBN: 9781119531319
• Edition: 1
• Topic: Personal Development
• Subtopic: Personal Finance

T. Rowe Price, the Sage of Baltimore

In 1937, Thomas Rowe Price, Jr. founded an investment company in Baltimore that would become one of the most successful in the world. Today, The T. Rowe Price Group manages over one trillion dollars and services clients around the world. It is among the largest investment firms focused on managing mutual funds and pension accounts. Uniquely trusted and respected, the firm is considered the "gold standard" by many investment advisors.

In this book, Cornelius Bond tells the full story, for the first time, of how Price, a modest and ethical man, built the company bearing his name. From the private, unpublished personal and corporate records, you will get direct access to the creative process behind Price's highly successful approach to investing.

• Personal insights based on Price's own writings and the personal experience of the author who worked with him for many years.
• The Growth Stock philosophy as described in the words of the creator and master of this approach.
• Two fund managers who worked closely with Mr. Price reunite to consider the investment environment of the next five to ten years as Price himself might have viewed it.

This book will give you an insider's access to the true story of Thomas Rowe Price, Jr.

Part One
THE BEGINNING

Chapter One
THE HOUSE ON DOVER ROAD, 1898–1919

A soft orange glow from oil lamps could be seen through the first‐floor windows of the house at 4801 Dover Road in the small town of Glyndon, Maryland. The flickering light illuminated the branches of the trees dancing to the force of the cold northeast wind. At this early hour, the lamps provided the only light on the street. It had been raining the day before and puddles remained on the hard dirt surface of the street, bordered by wooden sidewalks.

A rooster prematurely announced the dawn as the soft whinny of a horse came from the stable behind the house. Suddenly the sound of a slap on a wet baby's bottom emanated from the interior of the home. It was March 16, 1898, and Thomas Rowe Price, Jr. let out his first cry as his father, Dr. Thomas Rowe Price – the only doctor in town – brought him into the world. He was swaddled in a warm blanket and placed in the arms of his mother, Ella Stewart Black Price, who settled back for a well‐earned rest.

The above account is as imagined by the author after visiting the original house in which Mr. Price was born and following discussions with several local residents, one of whom was delivered by Mr. Price's father and another of whom is an active member of the historical society.

Mr. Price's mother, Ella Price, born 1869. TRP archives; photo owned by Mrs. Margaret Moore, wife of Dr. Moore, Mr. Rowe Price's nephew.

Mr. Price's father, Dr. Thomas Price, born 1865. TRP archives; photo owned by Mrs. Margaret Moore.

Every summer Rowe's future paternal grandfather, Dr. Benjamin F. Price – also a physician – and grandmother, Mary A. Harshberger Price, enjoyed the beach at Ocean City, Maryland. That is where Thomas Price met Ella Black following his graduation from medical school. It was love at first sight for both of them. They were married in 1893 and moved into a new house on Dover Road, a wedding gift from Ella's new husband.

Dr. Price's original home, where he delivered all of his children; built 1893; photographed in the nineteenth century. TRP archives; photo owned by Mrs. Margaret Moore.

It was a large house for the time, with three floors and a square tower on the side, in keeping with the Victorian style of architecture. On the first floor were a large dining room, a living room, and a kitchen in the back overseen by the cook. A handsome staircase led up two flights of stairs to the bedrooms and a large sleeping porch for hot summer nights. Also on the first floor were Dr. Price's office and a small laboratory off the office where he concocted his medicines. Friends who came to call would enter through the front door and chat with him in his office. Patients would enter and leave through a back door if they needed a physical examination or treatment in his examining room. In those situations, one did not want to advertise serious illness, as the odds of recovery were much lower than today.

Medicine bottles used by Dr. Price. Author's photo.

In the spacious backyard, shaded by tall oak trees, were a carriage house, a barn, and a stable where Dr. Price had two horses, buggies, harnesses, and a cow for milk. In lieu of indoor plumbing, the family used a generously sized outhouse with different‐sized cutouts for different ages. The large front porch was close to the sidewalk and had a comfortable swing. On warm nights the Prices, as well as their neighbors, would sit on the porch and gossip with those who were strolling down the sidewalk. Often singing could be heard from the other houses nearby, with a piano as an accompaniment.

There was plenty of space for Rowe, his older sister, Mildred, and his younger sister, Gahring, who would arrive five years later, as well as his maternal grandfather, Samuel Black, and his grandmother, Margaret Catherine Grubb Black. These grandparents lived with Dr. Price and his family from the time Rowe was two until their deaths in 1910.

Samuel Black had a significant influence on the young, impressionable Rowe. He was a successful entrepreneur involved in real estate – the major investment opportunity for most people at the turn of the century – as well as home construction throughout Baltimore County. His assets in the 1870 census were listed as $70,000 ($1.7 million in 2018 dollars). Today, one is conservative in listing assets for the census taker and this was also likely true at that time. Moreover, Black continued to be an active real estate developer for many more years and didn't retire completely until he moved in with his son‐in‐law. In the 1930s, when Rowe was first describing his Growth Stock Philosophy, he would say, “to find a fertile field to invest in you didn't have to go to college, you only needed what my grandmother called horse sense.”

Mr. Samuel Black, Mr. Price's grandfather, born 1824. TRP archives; owned by Mrs. Moore.

Mrs. Margaret Black, Mr. Price's grandmother, born 1830. TRP archives; photo owned by Mrs. Moore.

Glyndon was a lovely rural town 20 miles northwest of Baltimore with a winter population of about 300. In the summer months, it more than doubled in size, as people fled Baltimore's heat, seeking relief in the relative coolness of the country. The town was perched 750 feet above sea level, considerably higher than nearby Worthington Valley. This elevation helped to cool the air, particularly in the evening, making for better sleeping on hot nights.

According to Glyndon: The Story of a Victorian Village, the town was founded and named in 1871 when the track of the Western Maryland Rail Road (which became the Western Maryland Railway in 1910) from Baltimore stopped there rather than proceeding on to Reisterstown, where the city fathers had refused to have the railroad enter its city limits. The railroad caused the town to grow. It was easy for visitors to come out from Baltimore on day trips and for the men of the community to commute into Baltimore for work. And grow it did, for the next forty years, into large grassy neighborhoods of stately homes with gables, wide verandas, and big sleeping porches.

To the small population of year‐round residents and the wealthy summer crowd were added two camps that were famous locally. They ultimately became well known nationwide and likely would have an important influence on the values of young Rowe. The largest and best known, Emory Grove, was named after John Emory, a Methodist Bishop born in Maryland in 1789. One of the founders of Methodist theology, he rode through the state on the circuit, preaching the Christian gospel. Education was also very important to Emory. He was one of the founders of Dickinson College and Wesleyan College, and Emory University in Georgia is named for him. The camp occupied 160 acres of rolling wooded land. Intended as a quiet retreat away from the “madding crowd,” it was far from quiet. With accessibility provided by its own railroad stop, the camp grew significantly in popularity. The beauty of the setting, and the frequent appearance of famous preachers such as Billy Sunday, drew thousands over summer weekends. In June 1895, it was reported that 10,000 people came to Emory Grove to hear another well‐known preacher of the time, Eugene B. Jones, speak. For those who required at least modest comfort, there were four hotels and more than 700 tents for the rest. The days were given to religious services and teaching, and many nights to the singing of hymns. It is no accident that Rowe and his sisters would grow up as Methodists. On other nights, the younger set took over with parties, games, and much laughter. Although winter evenings were quiet for the Price family, the Grove provided a lot of social activity in the summer. Rowe was acclaimed in his high school yearbook as being a good dancer, presumably based on the practice he got at the Grove.

Close to the Price house was the temperance summer camp run by the Prohibition Party. Mandating total abstinence from alcohol and its “evil” effects, the camp was set up on 18 acres and everyone lived in tents. There was a natural bowl formation on the property, making it an excellent amphitheater where thousands could listen from the grassy slopes. Many good orators spoke there, including members of the Prohibition Party, which ran candidates for U.S. president and was an active third party in the early 1900s. Other entertainment included concerts, poetry, and lectures on many subjects. As Prohibition declined in popularity later in the 1920s and was finally repealed in 1933, the camp adopted the entertainment and educational model of the more famous Chautauqua assembly in New York State. Rowe's father never allowed alcohol or wine in the house.

To paint a picture of life in Glyndon at the time, below are excerpts from Glyndon: The Story of a Victorian Village, in which one of the authors, Jean Wilcox, describes an average day in the summer around the turn of the century:

Days followed a carefree pattern. In the morning we were up early to have breakfast with Papa before he took the 8:05 train to the city and work. Then came the day's chores. The children filled the oil lamps; the mothers canned fruits and vegetables or possibly worked in their flowerbeds.

Everybody in the town retired to the second floor from 2 until 3:30 p.m. The shutters were closed and the streets were deserted and quiet. [Later] the young people played croquet on the front lawns or tennis, while the mothers strolled the boardwalks or met on each other's porches to talk or rock. The town's lively air was largely due to the fact that each street took on a social atmosphere in the afternoon

The Big Event of the afternoon was the walk to the Western Maryland Station to meet Papa who came home on the 5:50 train from Baltimore with other working husbands and fathers. Most of Glyndon turned out at the station every day.

After supper, we amused ourselves with parlor games or recitations.

Glyndon was an active center for sports of all kinds. An ardent Glyndon tennis player was Edmund C. Lynch, whose family summered in the town around the turn of the century. Later one of the founders of Merrill Lynch, he was thirteen years older than Rowe. Though there is no indication that they knew each other well, Eleanor Taylor, an elderly Glyndon resident who had been delivered by Dr. Price some ninety‐two years earlier, recalled that Rowe and Ed often crossed racquets on the grass courts during summer afternoons. Rowe greatly enjoyed the sport and would be an active player until his later years. Lynch, and his later success at Merrill Lynch, may have had some influence in steering Rowe into finance.

One of Samuel Black's grandsons, Rowe's first cousin, was S. Duncan Black, the founder of Black & Decker. Begun in 1910, the company would become one of the leading worldwide electric tool manufacturers for the home improvement market. Growing businesses was apparently in the genetic makeup of the Black family.

Dr. Price's career path differed from that of his father‐in‐law, whose singular interest was business. Rather than heading to medical school right after high school, Dr. Price taught school for several years, as had his own father, before deciding to go to the University of Maryland's medical school. He graduated in 1891, at the age of twenty‐six, and moved to Glyndon to establish his practice.

Helping his clients achieve financial health would be very important to Rowe and a fundamental reason he founded his company. Money was also important to him, but in moderation, so that he and his family could enjoy a comfortable life. He would never drive an expensive car or live in a very large house.

Dr. Price was a good, traditional country doctor, according to Eleanor Taylor. He treated his patients wherever they got sick, often traveling in the evening to distant farms in all kinds of weather. He was fond of telling the tale that after his last call on cold, dark nights, he would often snuggle down into the blankets in his buggy, wrap the reins around the whip handle in its socket, cluck to his horse to begin the trip back, go to sleep, and wake up when the horse stopped at the door to his Dover Road stable. Over the years, Dr. Price became highly recognized in his profess...

Table of contents

• Cover
• Table of Contents
• Foreword
• Acknowledgments
• Part One: THE BEGINNING
• Part Two: HIS OWN BOSS
• Part Three: THE SAGE OF BALTIMORE
• Part Four: MARKET ANALYSES
• Epilogue: T. Rowe Price Today
• Sources
• Index
• End User License Agreement