| Profession | Income | |||||
| £ | Dubloon | Modern US $ | ||||
| Nobleman | 5,000 - 25,000 | 6,500 - 35,000 | $800,000 - $4,000,000 |  | ||
| Colonial Governor | 1,000 - 5,000 | 1,300 - 6,500 | $160,000 - $800,000 | |||
| Gentry | 1,000 - 5,000 | 1,300 - 6,500 | $160,000 - $800,000 | |||
| Officeholding Lawyer | 1,000 | 1,200 | $160,000 | |||
| Army Colonel | 365 | 480 | $58,000 | |||
| Navy Captain/Army Major | 237 | 316 | $38,000 | |||
| Yeoman farmer/Plantation Owner | 40 - 250 | 50 - 300 | $6,400 - $40,000 | |||
| Army Captain | 146 | 195 | $24,000 | |||
| Physician | 120 | 160 | $19,000 | |||
| Justice of the Peace | 63 | 85 | $10,000 | |||
| Army Lieutenant | 73 | 100 | $12,000 | |||
| Court Poet | 50 - 60 | 65 - 80 | $8,000 - $9,500 | |||
| Army Sergeant | 54 | 72 | $8,600 | |||
| Lower Clergy | 10 - 50 | 12 - 60 | $1,600 - $8,000 | |||
| Navy Midshipman | 27 | 38 | $4,300 | |||
| Skilled Craftsman | 30 | 40 | $4,800 | |||
| Sculptor | 20 - 100 | 25 -130 | $3,200 - $16,000 | |||
| Skilled Labourer | 16 - 18 | 20 - 30 | $2,500 - $3,000 | |||
| Apothecary | 10 - 15 | 13 - 20 | $1,600 - $2,400 | |||
| Army soldier | 15 | 20 | $2,400 | |||
| Unskilled Labourer | 12 | 16 | $1,900 | |||
| Navy Seaman | 11 | 15 | $1,750 | |||
| Agricultural Worker | 10 - 13 | 13 - 17 | $1,600 - $2,000 | |||
| Teacher (Male) | 12 | 16 | $1,900 | |||
| Subsistence Farmer | 6 | 8 | $950 | |||
| Teacher (Female) | 8 | 10 | $1,250 | |||
| Woman Labourer | 5 | 7 | $800 | |||
| Militiaman | 4 | 5 | $600 | |||
| Servant | 1 plus keep | 1 plus keep | $150 plus keep | |||
| Weapons | ||||||
| Cutlass/Hanger | - | 7 | 6 | $60 | Standard weapon of pirates and sailors. | |
| Broadsword/Cavalry Sword | - | 10 | - | $80 | Common weapons amongst soldiers. | |
| Smallsword | 3-5 | - | - | $480-$800 | A gentleman's sword. This is a plain version, many are jewelled and gilded. | |
| Dagger | - | 2 | 6 | $20 | ||
| Boarding axe | - | 5 | - | $40 | ||
| Boarding pike | - | 4 | - | $32 | ||
| Belaying pin | - | 2 | - | $16 | ||
| Musket, flintlock | 3 | - | - | $480 | ||
| Musket, matchlock | 1 | - | - | $160 | Somewhat slow and antiquated, but cheap. | |
| Carbine, flintlock | 2 | 10 | - | $400 | ||
| Pistol, flintlock | 5 | - | - | $800 | ||
| Blunderbuss, flintlock | 2 | - | - | $320 | ||
| Musketoon, flintlock | 2 | - | - | $320 | ||
| Swivelgun | 2 | - | - | £320 | Per pound shot. Weight of the gun is about 50 times the weight of the shot | |
| Cannon | 4 | - | - | $640 | Per pound shot. Weight of the gun is about 200 times the weight of the shot. | |
| Roundshot | - | - | 2 | $1.30 | Per pound of shot. | |
| Pistol/Musket shot | - | - | 6 | $4 | Per pound of shot - around 15 musket balls or 25 pistol balls. | |
| Wadding | - | - | - | - | Any canvas, linen or paper will do. Worn sailcloth is commonly used. | |
| Black Eagle (powder) | - | 10 | - | $80 | Per cask. This powder is old and has settled out of its original mix. It has been around too long. It is less reliable and more dangerous than other powders, but it is cheap! | |
| French White Letter (powder) | 1 | - | - | $160 | Per cask. This powder is not fresh, but it has been stored and mixed properly and gives good report when fired. | |
| Red Letter (powder) | 1 | 10 | - | $240 | Per cask. This powder is hard to get. It is Port-Royal's best powder, and the ingredients are superior. This is new powder that stores well. | |
| White Letter Primer | 2 | - | - | $320 | Per cask. This is a fine grain high quality powder, used to prime both handguns and cannons. Fine grain priming powder is a neccessity. Each cannon shot used as much primer as a fully loaded musket uses common powder. | |
| Powder horn | - | - | 10 | $6.70 | Holds the coarse reloading powder for pistols and muskets. Contains around 40 shots worth of powder. | |
| Priming horn | - | - | 6 | $4 | Holds the finer priming powder. | |
| Cartridge box | - | 2 | 6 | $20 | Holds between 12 and 20 paper cartriges for a musket. | |
| Bayonet | - | 2 | 6 | $20 | Socket type bayonet. | |
| Sample Cargoes/Treasures | ||||||
| Leather shoes (fromFlorence) | 400 | - | - | $64,000 | For a crate of around 200 shoes. | |
| Furniture (from Paris) | 1,800 | - | - | $288,000 | For a crate of around 30 pieces of furniture. | |
| Fans (from China) | 3,200 | - | - | $512,000 | For a crate of 800 fans. | |
| Rugs (from Turkey) | 1,000 | - | - | $160,000 | For a crate of 50 rugs. | |
| Books (from Europe) | 1,200 | - | - | $192,000 | For a crate of 200 books. | |
| Pewterware (from London) | 600 | - | - | $96,000 | For a crate of 200 pieces. | |
| Glassware (from Amsterdam) | 800 | - | - | $128,000 | For a crate of 200 pieces. | |
| Jewellery (from Venice) | 6,000 | - | - | $960,000 | For a crate of approximately 50 pieces (for example, letter openers, crucifixes, music boxes, inkwells, etc.) | |
| Jewellery (from Spain) | 4,000 | - | - | $640,000 | For a crate of approximately 100 pieces (for example, rosaries and rings from Cadiz, bracelets and pendants from Seville, smallswords from Toledo, etc.) | |
| Bar of Gold | 1,500 | - | - | $240,000 | For a single 5lb bar. | |
| Bar of silver | 50 | - | - | $8,000 | For a single 5lb bar. | |
| Silverware | 10,000 | - | - | $1,600,000 | A crate of approximately 200 pieces. (for example, cups, urns, plates, forks, knives, spoons, etc.) | |
| Semi-Precious gemstones | 40,000 | - | - | $6,400,000 | For approximately 300-500 gemstones,, weighing approx. 100lbs (for example, opals, topaz, lapis lazuli, etc.) | |
| Precious gemstones | 200,000 | - | - | $32,000,000 | For approximately 500-1,000 gemstones, weighing around 100lbs (for example, emeralds, sapphires, diamonds, rubies, etc.) | |
| Pearls | 12,000 | - | - | $1,920,000 | For approximately 300 pearls (weighing about 30-40lbs) | |
| Ivory | 40,000 | - | - | $6,400,000 | For a crate of about 10 tusks. | |
| Sandlewood (from China) | 1,000 | - | - | $160,000 | For about 100lbs weight. | |
| Silk | 800 | - | - | $128,000 | Per bolt. | |
| Cask of Pepper | 200 | - | - | $32,000 | ||
| Cask of Cloves | 400 | - | - | $64,000 | ||
| Cask of Rosemary | 100 | - | - | $16,000 | ||
| Cask of Ginseng | 1,600 | - | - | $256,000 | ||
| Cask of Medicinal herbs | 800 | - | - | $128,000 | ||
| Cask of Vinegar or olive oil | 20 | - | - | $3,200 | ||
| Cask of good rum | 30 | - | - | $4,800 | ||
| Cask of poor rum | 10 | - | - | $1,600 | ||
| Cask of (European) Wine | 50 | - | - | $8,000 | This includes wine made in the vineyards of New Spain. | |
| Cask of fine wine | 100 | - | - | $16,000 | This is wine from well known wineries and of excellent vintage. | |
| Cask of local fruit wine | 30 | - | - | $4,800 | This is made in many different ways and with different fruits. | |
| Cask of Beer | 10 | - | - | $1,600 | Beer of acceptable quality (mixes equally with water to make small beer) | |
The mainland varies in character by region with each region having its own appearance and feel. New Andalisia (modern Venezeuela) has rocky and sandy beaches, with the sands quickly giving way to verdant vegetation. Within a mile from shore, the vegetation becomes dense jungle, at least in uninhabited regions. The settlers slashed or burned the area around the village for agriculture.
New Granada is mountainous in the south, with the isthmus of Panama being a 50 mile wide mire from Pacific to Atlantic. The jungle vegetation in both New Andalusia and New Granada is insect-infested and Malaria is common.
New Spain ranges from forested mountains in the south to deserts in the north. The central region is mountainous and rocky, with lands being cleared or terraced for farmland.
Larger Islands are much like the mainland, with sandy beaches, dense forest or jungle, and a mountainous interior. Some islands have active volcanoes, with a constant plume of smoke rising from their cones.
Small islands are formed from volcanic action or reefs. Small, circular islands formed by reefs are called atolls and have low vegetation on the outer edge and a body of salt water in the center. Small islands formed by reefs and tidal action have little in the way of large vegetation and frequently are not fertile enough for sustaining crops. These islands are hard to spot from a distance unless they are sizeable or in shallow water, such as the Bahamas. Therse small, low islands are referred to as cays.
Small volcanic islands are dominated by the peak (or peaks) of the volcano. These islands have steep slopes and fertile ground.
In the late 1980s, my wife, Kim, and I began investing in small, single-family homes. When it was time to move on to bigger properties, we purchased a six-unit apartment building in downtown Portland, Ore.
We paid only $105,000 for the building, and the owner allowed us to put very little down and carried the note. It was in a rough area of Portland, which is why the price was so good, but Kim and I were convinced that the area would clean itself up as Portland grew.
Today, almost 20 years later, the building is still in a bad area. In our panic to get people into the apartment building, we didn't screen potential tenants very well. We didn't run a credit check nor did we require a criminal background check. After the building was filled, our real problems began.
The Friday Night Fights
One night, as Kim and I were finishing dinner, a police officer called and asked one of us to come to the apartments. When I arrived at the building on a warm summer night, I found the tenant from unit No. 4 hanging over the balcony yelling at the tenant who lived below him in unit No. 1.
I approached the officer who had phoned and asked him what the problem was. Chuckling, the young policeman said, "The guy who lives upstairs is a transvestite."
"Oh." That was all I could think to say.
"And the woman who lives below him is a hooker."
"Oh."
The officer continued: "...and the argument is about who is better looking."
Chuckling out loud, I asked, "And who's winning the argument?"
"I can't really tell," said the officer. "The guy upstairs is older, so he's pointing to a picture of himself in full drag when he was younger. And the hooker is strutting her stuff right here on the street, claiming to be younger and hotter. I might have to arrest her for indecent exposure if she takes any more off."
A crowd was gathering, with people looking out their windows or standing in the street watching. Apparently, it was much more entertaining than anything on TV.
Eventually the argument stopped, and a few months later the prostitute moved on.
Things Heat Up
Shortly thereafter, a young single mom who wanted to move into the building gave me a sob story about how she was down on her luck and couldn't come up with the security deposit.
Feeling sorry for her and her two kids, I bent my own rules and rented her the apartment that had just been vacated by the prostitute.
Three weeks later, the fire department called to say that there was a fire in one of my units. Arriving on the scene, I was informed that the young mother had built a fire on the floor of the apartment to keep warm.
That fire nearly ended my career as a real estate investor. I was so fed up with real estate, tenants, and property management, I almost considered investing in mutual funds.
The Rich Get Lawyers
Many novice real estate investors soon quit the profession and invest in a well-diversified portfolio of bonds. That's because, when you invest in real estate, you often see a side of humanity that stocks, bonds, mutual funds, and saving money shelter you from.
I'm not talking about only the poor tenants, either. Some of the worst tenants I've encountered have been affluent, well-educated people. In fact, in my experience they're often the worst.
Many times, instead of simply picking up their phones and calling the onsite building manager to handle a problem, these folks call their attorney (who's invariably on speed-dial) and threaten a lawsuit first.
Instead of quitting real estate with this building -- which we considered -- Kim and I sought out advice from professional real estate investors. We're glad we did: Some of the lessons we learned from the fiasco at the six-unit apartment house have made us very rich.
Three Simple Rules
As I've said many times, mistakes are designed to make you rich. Three of the priceless lessons Kim and I learned from this experience are:
One way some investors make a lot of money is by collecting the rent but not fixing or maintaining the building. Over a number of years the property deteriorates, as do the tenants. The owner then puts the property up for sale at a distressed price, hoping a true landlord will come along and rehabilitate the project.
Today, one of the ways Kim and I increase our wealth is by looking for properties run by slumlords. We purchase them for a good price, rehabilitate them, get rid of bad tenants, bring in good ones, increase the rents (which increases the appraised value of the property), and borrow out the increased equity tax-free. Then we move on to look for more badly managed properties.
Another lesson we learned from professional managers is that it's not economically feasible to hire higher-paid, college-educated property managers if the building has fewer than 100 units. Put another way, we learned that if a building had fewer than 100 units, Kim and I were the de facto managers.
This inspired us to write a long-range plan that outlined how we would gradually buy bigger and bigger buildings until one day, we could afford to buy great buildings in great neighborhoods with 100 or more units.
It was a 10-year process. Today, we own over 1,000 apartment units and have well-educated professional management overseeing the properties. Managing your own property can be a full-time job. That's why we would rather pay people to manage our properties, which allows us to be investors.
It's human nature to blame someone else for your shortcomings or upsets. I've met many people who have only horrible things to say about real estate and property management. I'm sure most stories are based, in some part, on fact. But mistakes are a part of life, and we learn by making them rather than avoiding them.
For example, a friend of mine recently purchased a 120-unit apartment house as his first real estate investment. He never asked Kim and me for any advice -- even after he found out we'd passed on purchasing that same complex.
His first real estate investment is now eating him alive, and as a result he says all real estate is a bad investment. He blames everyone for his mistakes. But as I'm fond of saying, "The word blame stands for ‘be lame.'"
Today, his 120-unit slum continues to deteriorate as it sits on the market. As a result, it looks like a better investment for Kim and me every day.
You've no doubt heard about the subprime mess in the mortgage industry. That's the bad news.
But there's a flip side: Even though there's trouble in the subprime market, bankers haven't stopped lending money on good real estate to sound investors.
How Subprime Went Down the Drain
Instead of quivering in fear of a real estate crash, savvy investors need to ask what led to the subprime disaster and how they can profit from it. Here are some of the causes:
1. Early in 2001, the crashing stock market caused Alan Greenspan to drop short-term interest rates to 1 percent. Instead of the stock market roaring back, the residential real estate market took off.
2. Pension fund managers -- the people who collect your 401(k) money, for example -- needed to find returns that were higher than those in the stock or bond markets, so they began lending money to hedge funds, private equity funds, and large mortgage firms.
In other words, the people you entrusted your retirement savings to were willing to invest it in riskier ventures just to get you a higher return.
3. China and other foreign nations were willing to finance our national debt, our war, and our lifestyle. Foreigners loaned us money to invest or to use to buy their products.
4. This led to five types of foolish or unsophisticated investors, who drove up the price of real estate, which led to the boom in subprime loans and the eventual bursting of the bubble.
The Usual Suspects
Those five investor types are best illustrated by the following people (and although I've changed their names, they're actual people I met):
• John and Sally: First-time homebuyers
With low interest rates and easy loan qualification, newlyweds John and Sally bought a new house in a bad neighborhood at an inflated price. They signed their future earnings away with a 125 percent loan. With the extra money, they put in a pool and bought all new furniture. Their first child arrived a year later -- and their home has dropped in value.
• Joe and Suzy: Credit card abusers
These folks use their house like it's an ATM. Every time Joe and Suzy get into credit trouble, they refinance their home to pay off their credit card bills. That is, they substitute short-term credit for lifelong debt.
• Ed and Mary: Empty nesters
Ed and Mary are baby boomers whose kids have left home for college. With their extra money, the couple bought a vacation home as an investment. They used the equity in their primary residence as a down payment on the vacation home, and now have two mortgage payments. They're wrongly convinced that the houses are assets, and that real estate always goes up in value.
• Jack and Janice: Bigger is better
Jack and Janice, surprised by the escalation of prices in their neighborhood, sold their home and bought a bigger home in a more prestigious and expensive neighborhood. Today, they're having a tough time financing their (or rather their neighbors') standard of living.
• Fred and Phyllis: The flippers
These are novice investors who think flipping real estate is the way to wealth. Fred and Phyllis have never been through a real estate downturn. Prior to the real estate bubble, they were day traders in dotcom stocks.
In 2003, they became real estate "experts." Believing that real estate always goes up in value, they found a mortgage broker who financed 10 properties with nothing down, with what are known as liar loans.
The problem is, the project Fred and Phyllis invested in wasn't built yet and then ran into construction delays. Rather than go through the pain of selling their 10 homes, the couple turned in the keys and walked away, returning to their day jobs.
A Silk Purse from a Sow's Ear
Does all this make real estate a bad investment? Obviously not, just as a stock market crash doesn't make stocks a bad investment. What it does do is underscore the foolishness of crowds and the mania of markets.
Actually, right now is a great time for real estate investors. Today, in many markets, the price of real estate is still coming down. On top of that, interest rates are low. So the subprime mortgage mess is bad news for sellers but good news for buyers.
As usual, there's an outcry that the government should intervene. But that raises the question of how laws against greed, stupidity, and foolishness are passed and enforced. The fact is that subprime lending will never end -- people with bad credit, or who are greedy and/or excessively foolish, will always find ways to get the credit they neither deserve nor can afford.
Think I'm wrong? This evening, right after a TV news story on the subprime disaster, a commercial appeared encouraging homeowners to buy furniture today and not make payments until 2009. I rest my case.
A Fender-Bender or a Train Wreck?
Last month, Alan Greenspan cautioned the world that a U.S. recession is possible in 2007. If the subprime mess continues to spread and credit dries up, his warning could come true. A recession, along with the ongoing Iraq war, the national debt, and baby boomers retiring in massive numbers, would deliver a severe blow to the U.S. and world economies.
So I recommend that you get into a cash position, and save as much as you can as quickly as possible. The good news is that there will be bargains galore. If you have cash you'll be able to purchase real assets and fancy liabilities such as jewelry, artwork, nice cars, and big homes at cut-rate prices.
Unfortunately, in a recession the people who suffer the most aren't the rich, but the wanna-be rich and the poor. The poor will find it harder than ever to get additional credit, even if they're hard-working, have a decent credit score, and have some cash. The wanna-be rich -- those who are rich in credit only -- will be the ones donating their homes and their bling to bankruptcy auctions, second-hand stores, garage sales, and swap meets.
