P.T. Barnum is assumed to have made the famous quote “There’s a sucker born every minute,” but the truth is Barnum would probably never make such a remark because he openly stated that “the public is wiser than many imagine.”

The quote instead was actually said by his competitor and the story begins somewhere around 1866 to 1868 when many evangelists had been preaching that giants had lived on the earth. George Hull, of Binghamton, New York, who had studied archeology and paleontology, devised a plan for a great hoax based on the excitement over giants.

Hull traveled to Fort Dodge, Iowa in June of 1868 to a gypsum quarry he had seen two years earlier. He was captivated by a thought that the dark blue streaks, which ran through the soft limestone, created a appearance that resembled human veins and was excited that the stone was easy to carve as these conditions were just right to “pull off the hoax.”

Hull hired a group of quarry workers to cut off a slab measuring twelve feet long, four feet wide and two feet thick. He then had the gypsum slab wrapped in canvas and hoisted onto a wagon to be transported to the nearest railroad was forty miles away. The slab of gypsum was shipped by rail to Chicago where he had arranged for a stone cutter named Edward Burghardt to carve a giant.

Burghardt and his two assistants, who had been sworn to secrecy, agreed to work on the sculpture in a secluded barn during their off hours to avoid drawing any attention to this special assignment. Their instructions were to carve a figure of a giant and to make it look as though it had died in great pain. They crafted a large eerie looking, slightly twisted, figure with his right hand clutching his stomach in agony. The artisans created all of the details: fingernails, toenails, nostrils, sex organs etc. They even painstakingly used a needlepoint mallet to create pores in the giant’s skin. Then sulfuric acid and ink were used to give the figure an aged appearance.

The wrapped figure was then shipped by rail to the farm of William Newell, Hull’s cousin, near the town of Cardiff, New York. With the assistance of Newell and his oldest son, Hull buried the giant between the house and barn in the middle of night.

Committed to secrecy they agreed to say nothing while Hull planned their next stage of the hoax. Fortunately for them some million year-old fossil bones were discovered on a farm near the Newell’s, about six months later. As newspapers around the country reported the finding, Hull was elated in the reading the accounts sensing that the time was right to perpetrate the hoax.

About one year after burying the giant, Hull sent word to his cousin on October 15, 1869, that it was time proceed with the hoax. Newell hired two laborers to dig a new well near his home and directed them to the exact spot he wanted the well dug and went back into the house to wait. Well into the day, the two laborers rushed up to the house to announce the discovery of a giant that had turned to stone.

The news of the discovery quickly spread throughout the countryside and wagon loads of curious neighbors soon streamed onto Newell’s farm in search of the giant. By mid-afternoon, Newell erected a tent around the excavation site and started charging 25 cent admission. Two days later, the Syracuse Journal (New York) printed an article about the discovery. Newell soon raised the admission price to 50 cents to profit from the stage coach company making four round trips a day from Syracuse to the Newell farm. Countless numbers came every day bringing with them clergymen, college professors and distinguished scientists. The expert’s opinions were split; one theory claimed the figure to be a true fossilized human giant and the other recognized it as an authentic ancient statue. Oddly, no one ever considered the figure was a fake.

The Cardiff Giant, as the papers had dubbed it, started receiving national attention within about ten days of its discovery. Capitalizing on the publicity, Hull s took the opportunity to sell two-thirds interest in the giant for $30,000 to a five-man syndicate in Syracuse, the head of which was a banker named David Hannum.

The syndicate then moved the giant to an exhibition hall in Syracuse and raised the admission price to a dollar. Unknown to them, P. T. Barnum sent an agent to see the giant. The representative arrived on a Sunday and was amazed to find a sizably large crowd of about 3,000 people. When the agent wired the news back to Barnum he was instructed him to make an offer of $50,000 to buy the giant. Hannum, however, turned down the offer.

The Cardiff Giant became one of the most talked about exhibits in the nation and Barnum wanted it while the attraction was still the topic of the day. Barnum decided instead to hire a crew of workers to carve a giant of his own and within a short time Barnum unveiled his giant, proclaiming that Hannum had sold Barnum the original giant and that Hannum was now displaying a fake.

Thousands of people flocked to see Barnum’s giant. Newspapers faithfully carried the version that Barnum had given them; reporting that Hannum’s giant was a fake and Barnum’s was authentic. It is at this point that Hannum, still trying to dispute Barnum’s story, was quoted as saying “There’s a sucker born every minute” referring to the thousands of “fools” that paid money to see Barnum’s fake and not his authentic one.

Hannum brought a lawsuit against Barnum for calling his giant a fake. At the trial, Hull finally stepped forward, related the entire story and confessed that the Cardiff Giant was a hoax. The judge then ruled that Barnum could not be sued for calling Hannum’s giant a fake since it was in fact a fake.

Unfortunately, as it so often goes, Hannum’s name and role was lost to history and only P.T. Barnum was left attached to the events from which the statement was made that “There’s a sucker born every minute.”

John Mueller a professor of political science at Ohio State University reminds us that P.T. Barnum was more honest than most people have been in the entertainment and public relations fields. He offered his customers good value, which is why they returned again and again to his various productions. Indeed, he considered himself a public benefactor and faithfully supported the society’s financial needs. He generally conducted his business enterprises in a virtuous manner, respecting his customers and making sure they were satisfied. Indeed, he was among the first to appreciate fully, and to articulate, that an honest approach was the most reliable path to long-term wealth. He was, in other words, one of the pioneers of business ethics.

Barnum relates that the colorful “humbugs” of his early career represented only a small portion of his business efforts. He pointed out that the vast majority of his enterprises were in fact “undoubtedly legitimate.” There was, in particular, his exhibition of the truly talented midget Tom Thumb (Barnum did admit to exaggerating the age of the crowd-pleasing performer) and his wildly successful management of the “Swedish Nightingale,” soprano Jenny Lind, whose tours, Barnum suggested with some reason, helped elevate and refine the country’s musical tastes.

More importantly, Barnum shared an important financial discovery during the course of his business career. He observed that nearly all his seeming deceptive schemes “ended in disaster,” reducing him “to the pinching income of $4 per week,” whereas his fortune derived almost wholly from the more legitimate enterprises.

Barnum thus learned that, in business, virtue is considerably more than its own reward. News about this discovery can easily be lost when it is imbedded among picturesque yarns about humbugs, but it was of great significance to Barnum, and, more broadly, it was probably important to the massive economic expansion that took place in what we now call the developed world during and after his lifetime.

Barnum’s great discovery was not so much that such behavior is immoral but that from a business standpoint it is stupid. Toward the end of his autobiography, Barnum was already groping toward a set of business principles that developed this key insight. In the next years, he worked his ideas into a lecture, “The Art of Money-Getting,” and gave it widely with great success (and financial profit), eventually incorporating it in 1869 into his second, more circumspect, autobiography, which he titled (with typical self-effacement) Struggles and Triumphs.

This remarkable tract is filled with the kind of wisdom that successful business people now generally take for granted. Integrity and honesty make sound business sense, argued Barnum, because “no man can be dishonest without soon being found out and when his lack of principle is discovered, nearly every avenue to success is closed against him forever.” Therefore, “as a mere matter of selfishness,” he concluded, “honesty is the best policy.”

Similarly, Barnum argued that fair trading is the best method for carrying out business if one is pursuing long-term advantage. “Men who drive sharp bargains with their customers, acting as if they never expected to see them again, will not be mistaken,” he wrote. And it is good for the bottom line to treat people well: “Politeness and civility are the best capital ever invested in business.” Moreover, although charity should be “a duty and a pleasure,” there is advantage to it as well. Noted Barnum, “even as a matter of policy, if you possess no higher incentive, you will find that the liberal man will command patronage, while the sordid, uncharitable miser will be avoided.”

By and large, Barnum carried out his various enterprises in line with such principles. He treated his employees and performers with respect, his customers with civility and attentiveness, and his fellow deal makers with integrity and reliability. Nothing illustrates this better than Barnum’s experience with the circus, an enterprise he took on late in life, and the one that has become most associated with his name.

The importance to economic development of this discovery is suggested by one of Barnum’s observations: “The public very properly shun all whose integrity is doubted.” It follows that when business practices are routinely sharp, uncivil, grasping, and deceitful — as they often were in Barnum’s hometown of Bethel — people will tend to avoid doing business because, essentially, transaction costs are high. And economic growth will accordingly suffer. By contrast, when business is conducted virtuously, economies will, all other things being equal, flourish.

P.T. Barnum will doubtless continue to be remembered chiefly for his occasional, and mostly youthful, scams and humbugs, not for his discovery of the profitability of virtue in business.