Bernard Ryan - Warren Buffett: Financier

Warren Buffett is one of the world's most successful investors.

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Warren Edward Buffett was born in Omaha on August 30, 1930. His ancestors on his father's side had been French Huguenots who came to America in the 1600s. They had been farmers in the area of Huntington, Long Island, for more than 150 years when one of them, Sidney Homan Buffett, decided to look for a new life out west. It was 1867, just after the end of the Civil War, and the United States was fast stretching westward. Sidney reached the pioneer city of Omaha, a group of log buildings sitting beside the Missouri River and looking across the Great Plains. There he first worked as a stagecoach driver. Then he opened the S. H. Buffett grocery store.

Only three months earlier, the railroad linking east and west had been completed. Omaha was prospering, and the S. H. Buffett grocery grew with the city. By the 1870s, new Omaha settlers, travelers heading west, and railroad men coming and going in both directions all found a bustling city that boasted large cast-iron buildings and even an opera house. All those people had to eat, and S. H. Buffett supplied their hotels, restaurants, and homes with everything from flour and sugar to quail and prairie chickens.

By 1900, Omaha was a city of 140,000 people. Sidney Buffett had not only built a much larger store but had married and produced two sons to join the business. In 1915, one son, Ernest, opened a second store, Buffett & Son, on the city's growing west side, where Omaha's well-to-do were developing pleasant suburban neighborhoods.

Ernest married and had a son named Howard who, when he grew old enough to consider the family business, had a mind of his own. It did not include selling groceries. As a student at the University of Nebraska in Lincoln, he discovered journalism and became editor of the Daily Nebraskan. There he met a country girl named Leila Stahl, whose father owned a weekly newspaper in the small town of West Point, Nebraska. At 16, Leila had just graduated from high school and was looking for a newspaper job where she could earn money needed for college. She offered good skills: Since fifth grade she had worked at her father's paper, setting type by hand and on the Linotype machine (that is, a machine that was operated by a keyboard and that created each line of type as a solid piece of metal). She knew how to conduct and write up interviews, and on Thursdays she operated the printing press as it churned out its sheets of newsprint. Howard hired her and fell in love with her.

They were married on December 26, 1925, in the winter after Howard graduated from college. Although he had wanted to work as a newsman, he accepted a job offered by a friend of his father in an insurance company, for his father had paid for college. That job led to another, in which Howard worked for the Union Street Bank as a salesman of securities (that is, certificates of stocks or bonds proving part ownership of a business).

In 1928, Howard and Leila had a daughter whom they named Doris. Warren arrived two years later on an August day as the stifling 89-degree heat was broken by a cloudburst.

Within a year, just two weeks before Warren's first birthday, his father's bank shut its doorspermanently. The Great Depression, which began in 1929 and which destroyed countless businesses across America, had wiped out Howard Buffett's job and life savings.

Howard came from a long line of determined, thrifty, goal-centered people. He and a partner set up their own business, announcing they had "Investment Securities, Municipal, Corporation and Public Utilities, Stocks and Bonds" for sale. Their income depended on commissions, that is, fees paid as a percentage of the price of whatever they bought or sold for a customer. The commissions were small and infrequent, for Howard and his partner were not well known in the securities business, and Nebraskans, who were suffering from a vast drop in the price of wheat, had little money to invest. Proud farmers, in fact, were humbly accepting free meals in soup kitchens.

At home, Leila Buffett coped with the family's meager income by often going hungry herself so her husband and children could eat full meals. But gradually the family dinner table improved, and the family grew with the arrival of Warren's little sister, Roberta, when he was three. By the time Warren was six, Howard could afford to move his family to a larger home, a roomy brick house on Omaha's North 53rd Street.

Warren had barely started school when his parents began to realize that their son had a mind for money and numbers. As a five-year-old, he set up a stand in front of his home and sold Chiclet chewing gum to whomever passed by. At six, during a family vacation on a lake in Iowa, he discovered he could buy six-packs of Coca-Cola for a quarter. He scurried around the lake selling the Cokes for a nickel each, earning five cents profit per six-pack. Home again in Omaha, he bought bottles of soft drinks from his grandfather's store and spent hot summer evenings going through his neighborhood to sell them at a profit.