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Imagine taking some random town of 11,000, let’s say Millington, Tennessee, and giving
it a billion dollars.
Do you: A) think Millington will make responsible investments to assure long-term economic success
or B) think Millington will make terrible financial decisions out of a lack of experience
and eventually economically and environmentally devastate itself forever?
If you answered “B,” you’re correct.
Switch Millington for the country of Nauru, sprinkle a little corruption in, and add one
terrible, terrible musical and that’s the story of Nauru.
Nauru, you see, is a tiny island country in the Pacific laying a mere 35 miles south of
the equator.
It’s only larger in size than the Vatican and Monaco and larger in population than the
Vatican and yet, for a short period in the 60s and 70s, Nauru was the country with the
highest GDP per capita in the world.
All that money, all that wealth, came from one mineral—phosphate.
If anyone ever told you that your startup idea to make low-fat oxygen wasn’t worth
shhhhhh….
this is a family show but if anyone ever told you that, they’ve clearly never been to
Nauru because their phosphate deposits were formed from millions of years of fossilized
bird poop but of course you already know this since you’ve absolutely watched every single
video we’ve made.
Nauru is not an enormous island—its about 3.5 miles tall and 3 miles wide—but virtually
the entire landmass was caked in phosphate many feet deep.
Phosphate sold for hundreds of dollars per ton and Nauru had tons of it.
In the height of the mining days the island was making close to $100 million per year
but the island’s supply of phosphate was finite and quickly depleting and they were
just hemorrhaging money.
Much of the money initially went to funding their national airline—Nauru Airlines.
At one time, this airline flew all around the Pacific to far flung destinations like
Singapore, Hong Kong, Taipei, Guam, and Honolulu all with about 80% of their seats empty.
A typical airline, like United, for example, flies with only 17% of their seats empty.
Nauru Airlines, on the other hand, actually had to drag people on to fly.
In fact, for a six-month period in 1988 the certificate allowing Nauru Airlines to operate
as a commercial airline was revoked so, to get around that, the government decided to
let anyone fly anywhere on the airline for free so that legally they were operating private
jets.
The government eventually realized that if you spend money then you don’t have that
money in the future.
They needed to take this phosphate money, which was coming in all at once over the span
of a few decades, and turn it into long-term income to keep the island afloat.
Therefore, they established the Nauru Phosphate Royalties Trust.
They bought hotels all around the world—the Sheratons in Auckland and Rotorua, the Pacific
Star Hotels in Manila and Guam.
They bought properties in the US and India and the UK.
They built enormous skyscrapers in Honolulu and Melbourne.
At its peak this fund had close to a billion dollars invested but just like all good stories,
this one involves a stupid songwriting financial advisor.
That genius was Duke Minks who had written Leonardo the Musical: a Portrait of Love.
This was a very loosely reality based account of Leonardo da Vinci’s creation of the Mona
Lisa and somehow, rather impressively, Duke Minks convinced the government of Nauru to
invest $5 million of their phosphate money to open this show on the prestigious West
End in London.
This four-hour long musical was a narrative disaster and the reviews were scathing but
Duke Minks said the show must go on.
The audience actually didn’t disagree because there was no audience.
Nobody was really coming and Leonardo the Musical closed after a mere five weeks meaning
the country of Nauru lost almost the entire $5 million they invested.
That was likely the worst use of Nauru’s money, but nearly all the investments they
made failed and the trust was soon insolvent.
They were out of money and also, by the early 1990’s, out of phosphate.
They hit rock bottom.
The mining destroyed about 80% of the island’s land leaving it with sharp limestone pinnacles
so all of the population today lives on the coast.
The island no longer has enough fertile land to grow enough food to feed its small population
or enough jobs to employ the whole island.
It’d be easy to call Nauru foolish with how it wasted its money but the government
had zero experience on how to manage such levels of wealth.
They relied on the experience of western financial advisors who took advantage of them and wasted,
embezzled, and mismanaged the trust.
You can be sure, though, that Nauru will rise again… as in the population will rise to
higher elevation because the coast, which is most of the inhabitable land on the island,
is going underwater due to climate change.
They used to be swimming in cash, now they’re just swimming.
In the end, not all stories have happy endings… but if you want your story to have a happy
ending—no, no, come on that’s just insensitive.
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With over 21,000 classes, they almost certainly have one on what you want to learn whether
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senior motion graphics designer of Kurzgesagt.
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