A Sanitarium Patient Imitates His Way To Millions

Hello! This is Deep Pockets #25.

We try not to do this very often, but today’s Deep Pockets is a continuation of last week’s story about the Kellogg brothers. In case you missed that story, you can read it here. I do recommend reading that first.

To refresh your memory -

In 1906, Will Kellogg, the business-minded younger Kellogg brother, bought the rights to cornflakes from his older brother, the quirky health nut food inventor Dr. John Kellogg. The brothers immediately had a falling out over the right to use the name Kellogg commercially. They fought each other in court for 15 years until the Michigan Supreme Court ruled in Will Kellogg’s favor. Will went on to earn an enormous fortune thanks to his company, which is the Kellogg’s we know today (maker of Pop-Tarts, Rice Crispies, Frosted Flakes, Pringles, Raisin Bran, Froot Loops, Ego Waffles, etc)…

John Kellogg was well-off when he died but nowhere near the scale of Will. Upon his death, John left his entire estate, around $700,000, to a controversial eugenics foundation he founded years earlier.

In 1930, twenty years before he died, Will Kellogg donated $66 million to his philanthropic foundation. That was 97% of his fortune and worth the same as $1.3 billion in today’s dollars. With $9 billion worth of assets today, the W.K. Kellogg Foundation is one of the largest philanthropies in the world.

An impressive story all around… but there’s a twist. Will Kellogg wasn’t even the richest cereal millionaire to come out of Battle Creek in the 1900s.

While the brothers were fighting, a rival company was born right in their backyard. The rival company was founded by one of Dr. Kellogg’s former patients. A patient who previously worked in his experimental kitchen…

DEEP DIVE: Former Patient Makes A Fortune

Charles W. Post, who went by “C.W.,” was born in Springfield, Illinois in October 1854. His mother was a poet, and his father operated a grain and farm equipment business. When he was just 13 years old, C.W. enrolled at Illinois Industrial University (today’s University of Illinois Urbana-Champaign). He left after two years without a degree. After a failed business venture in Kansas, he soon found himself back in Springfield. He worked for his father for a bit, then spent a decade as a salesman for a farm machine company.

During his time working for the farm machine company, C.W. invented and patented several innovative farm products, including a new kind of plow and a hay-stacking machine.

In 1874, he married his high school sweetheart, Ella Letitia. In 1887, they welcomed a daughter named Marjorie. She would be their only child.

Unfortunately, C.W. suffered from severe and chronic stomach pain throughout his life. The issues were so bad that he had to quit his job in 1884. The following year, he suffered his first major nervous breakdown.

In 1888, C.W. moved to Texas to look after a plot of real estate he had invested in near Fort Worth. When this venture failed, he was left broke and broken. Soon thereafter, he had a second major nervous breakdown. This one was even worse than the first.

Ella spent months scouring the globe for remedies and treatment facilities. Finally, in 1891, she wheeled a stretcher carrying C.W.’s skeletal body off a train in Battle Creek, Michigan.

When C.W. Post entered Dr. John Kellogg’s Battle Creek Sanitarium, he was 50 pounds underweight. The staff didn’t think he would survive another week.

C.W. was immediately put on Dr. Kellogg’s standard Sanitarium vegetarian diet treatment plan. Another critical change was the removal of coffee from his diet. In its place, C.W. was given a cereal-based coffee substitute called Kellogg’s Caramel Coffee Cereal.

Without a doubt, this diet saved C.W.’s life.

But remember - When Ella and C.W. arrived in Battle Creek, they were broke. They absolutely could not afford the high price of a room and a long stay at the world-famous Battle Creek Sanitarium. Thankfully, there was a second, less expensive treatment option. You could be treated as a day patient.

During their time in Battle Creek, Ella and C.W. lived in a cheap boarding house in town. Once he regained his strength, C.W. took a job to help pay for his treatment services. Not just any job.

C.W. worked in the Kellogg brothers’ experimental kitchen. 

He literally worked side-by-side assisting John and Will Kellogg, writing down recipes and learning how to run both a kitchen and a business.

When C.W. Post left the Battle Creek Sanitarium, he was 50 pounds heavier. He had a new lease on life. And a new business idea.

Postum Cereal Co.

Around this time, C.W. converted to Christian Science. In addition to fairly standard Jesus-based theology and history, Christian Scientists believe that diseases are illusions of the mind that can be healed through a combination of faith, prayer, positive thinking, and a healthy lifestyle.

To spread his gospel, in 1894, C.W. Post opened his own sanitarium in Battle Creek. He called it La Vita Inn.

Every morning guests at La Vita Inn were served a drink concocted by C.W. that at first he called “Monk’s Brew” but he eventually named “Postum.” Postum was eerily similar to Kellogg’s Caramel Coffee Cereal.

In 1895, C.W. founded the Postum Cereal Company to mass-market his drink.

In 1897, Postum released a cereal that was eerily similar to Kellogg’s granola. C.W. called his cereal “Grape-Nuts.”

In 1904, Postum released a cereal that was eerily similar to Kellogg’s cornflakes. Initially called “Elijah’s Manna,” in 1908, it was rebranded as “Post Toasties.”

While the Kellogg brothers were waging war over their last name, C.W. was running the exact playbook Will Kellogg knew would lead to a gold mine.

C.W. launched numerous mass advertising campaigns around the country. Some of these campaigns made egregiously false claims. One campaign claimed that Postum “Makes Blood Red.” Grape-Nuts were marketed as having the ability to CURE appendicitis. He even invented diseases that only his products could cure, for example, a disease called “coffee neuralgia” that claimed drinking coffee could make you go blind and could only be prevented by drinking Postum.

The ad campaigns may have been dubious, but they worked. His products were enormous successes around the US and eventually the world.

C.W. was also a ruthless and creative competitor. When a bunch of other cereal knockoffs popped up in grocery stores, Post released his own knockoff. And he priced it so far below the other knockoffs that they couldn’t compete and went out of business. Then he stopped making his own knockoff 😃 

C.W. and his wife, Ella, grew apart as he became more successful. They divorced in 1904. One month after the divorce, the 50-year-old C.W. married his 27-year-old secretary, Leila Young.

By 1905, the Postum Cereal Co. was worth $10 million. That’s the same as being worth around $350 million in today’s dollars.

A Tragic Turn

Even after earning an enormous fortune, a fortune built on improving health, C.W.’s stomach issues persisted. At the end of 1913, his health was so bad that he could no longer make public appearances and was essentially bedridden at his mansion in Santa Barbara, California.

Fearing for his life, in March 1914, C.W.’s young wife reached out to his friends who owned the Santa Fe Railroad. A private car was arranged at a cost of $5,000 ($150,000 in today’s dollars) to transport C.W. nonstop from California to Minnesota, where he was treated for an appendectomy at the Mayo Clinic.

Unfortunately, upon returning to Santa Barbara, his stomach pains persisted. In hindsight, he was probably suffering from some form of colitis that today would be treated with antibiotics, an anti-inflammatory diet, and perhaps in C.W.’s case, intestinal surgery. Or maybe something more serious like a bowel cancer. No one can know for sure.

Despondent, on May 9, 1914, C.W. Post committed suicide with a self-inflicted gunshot. He was 59.

At the time of his death, C.W. Post was worth $22 million. That’s the inflation-adjusted equivalent of $700 million. But that’s not the full picture. To understand the scale of a fortune from the 1910s/1920s, rather than doing a basic inflation adjustment calculation, it’s more accurate to compare that fortune to its relevant share of US gross domestic product at the time.

For example, John D. Rockefeller was worth around $2 billion in 1924. If you adjust that for inflation, that’s the same as around $36 billion today. But when you compare $2 billion vs the GDP of the US in the 1920s, the relative value and scale of that fortune is more like $340 billion.

After adjusting for relative GDP, having $22 million in 1913 would be roughly equivalent to being worth tens of billions of dollars today. For around 90 years after his death, that was a large enough fortune to rank C.W. Post as one of the 100 richest Americans of all time.

But as impressive as that might be, that’s not actually the end of the Post family story and fortune.

Remember C.W. Post’s only daughter, Marjorie?

Marjorie Post inherited 100% of her father’s vast fortune and booming business empire.

She was 27 years old in 1914.

The story of what Marjorie accomplished as the head of the Post food empire is so unbelievably amazing that we’re gonna tell you all about it… next week 🙂 

FINAL WORD

On the next edition of “Deep Pockets,” we’ll learn how, after inheriting the family business, Marjorie Post dramatically expanded the Post empire, became the richest woman in America, and built one of the most famous private homes in the world.

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