Feature from Winter issue of Philanthropy magazine.

Later that year, Andrew Carnegie was born. He then dedicated his life to giving away as much of his fortune as he could. Carnegie and the other great business leaders of his generation inaugurated a golden age of American philanthropy. Their achievements, unfortunately, are often misunderstood, and their motivations are unfairly maligned. It is time to set the record straight. As the Carnegie Corporation of New York celebrates its th anniversary, it is well worth our while to step back and reconsider the man, his peers, and their philanthropic legacy.

During the s, the editorial page of the New York Times repeatedly blasted Vanderbilt for his aggressive business tactics. More than a century later, the great industrialists, financiers, and entrepreneurs of late—19th century America are still presumed guilty of exploitation on an unprecedented scale. Their wealth and ease, this line of thinking goes, could only have been won through the poverty and toil of others.

Titans of industry were essentially thieves—robber barons. InMatthew Josephson published The Robber Baronsa scathing indictment of business in the Gilded Age. The book was instantly and massively influential, in large part because of its impeccably timed publication. Largely on its strength, he won a Guggenheim fellowship and election into the National Institute of Arts and Letters.

Josephson manipulated evidence, made unwarranted inferences, and relied on one-sided accounts. A failed Dadaist poet, he wrote it while an avowed Marxist, an admirer of Stalin, and a defender of the Popular Front. But the problem is not just the book or its title. The original robber barons were medieval noblemen whose castles overlooked the Rhine. But the Raubritter, the Robber Barons, exacted unauthorized payments from all passing vessels.

In so doing, they added no value to the commerce; no wealth was created by their extortion. Merchants passed the costs on to customers in the form of higher prices. The Raubritter got rich, while everyone else was left a little poorer. Whatever else may be said of them—and there is much to be said—they created real and enduring wealth. Moreover, the wealth they created benefited all Americans.

They introduced new products. They discovered startling efficiencies. And they launched businesses that created millions of new jobs. America's great business leaders created real and enduring wealth that benefited all Americans. To this day, the sheer creativity of the late 19th century is striking. Pillsbury flour products owe their existence to Charles Pillsbury, who revolutionized the milling process and opened vast new markets for the hard winter wheat of the Dakotas.

Hershey chocolates came into existence because Milton Hershey discovered a way to mass-produce milk chocolate. Equally inventive were Gustavus Swift and the Armour brothers with meatpacking, Henry Heinz with pickling, and Adolphus Busch with brewing. The list goes on. Less visible than the flood of new products were the efficiencies the era introduced. Rockefeller and the Standard Oil Company, often regarded as among the worst of the robber barons.

For the first time in world history, inexpensive, reliable interior illumination became a reality, thanks to Standard Oil. Inwhen Standard Oil commanded nearly 90 percent of the global market, petroleum products reached their absolute lowest relative prices.

As American industry expanded and became more efficient, it provided a rapidly growing population with a steady stream of jobs. One study finds that real non-farm earnings rose more than 60 percent between and But perhaps more striking evidence is found in the tens of millions of immigrants who swarmed to the United States in this period—sensing, as they did, that in America they could make more, live better, and rise faster than anywhere else on earth.

None of this is to say that businessmen in the Gilded Age were angels. They could be ruthless. They could be greedy. But they channeled their very real flaws into very productive channels, opening opportunity and creating real and lasting wealth.

They did not simply inflict transaction costs. They were not robber barons. The great industrialists of the Gilded Age are often pictured as champions of the free market. Certainly it is how they conceived of themselves. Wharton was a sober and intelligent man, and there is no reason to question his sincerity —which makes it interesting to note the occasion of his statement. And few were averse to using public institutions to advance private interests.

A distinction is sometimes made between market entrepreneurs and political entrepreneurs. Market entrepreneurs create wealth by selling goods and services to consumers at a profit. Political entrepreneurs, by contrast, enrich themselves by securing preferential treatment from the government.

Compare the cases of two railroad tycoons. The first is James J. Hill, a good example of a market entrepreneur. Hill was the driving force behind the creation of the Great Northern Railway—a feat he accomplished, uniquely among the great railroad builders, without any government aid, not even the right of way, across thousands of miles of public lands.

The second is Leland Stanford, a good example of a political entrepreneur. Stanford was governor of California when his Central Pacific Railroad secured a federal monopoly—along with enormous land grants and generous loans—for the eastbound line of the transcontinental railroad.

For example, Andrew Carnegie indisputably created real wealth. Throughout the period, however, Carnegie benefited from a series of protective tariffs; inhe spoke glowingly of the McKinley Tariff, which the steel industry welcomed and regarded as its greatest legislative feat. Inhowever, Carnegie suddenly reversed course, loudly proclaiming the urgent need for free trade.

Biographers continue to debate what inspired his change of heart, but one frequently aired speculation is that the steel tariff had ceased to be useful to him. By then, his prices were so low that he—unlike new entrants into the market—no longer needed the help. Manipulating the tariff was just one way to secure advantages from the government.

Others took advantage of weak-to-nonexistent securities regulation to defraud investors on a massive scale. Daniel Drew—the patron of Drew University and sponsor of several churches in New York—specialized in stock watering. The practice soon became ubiquitous, making Wall Street appear like a game rigged for insiders.

Even Andrew Carnegie, in his early years, took advantage of the lax regulatory environment to enrich himself with watered stock. Perhaps the most egregious—and, alas, the most common—form of rent-seeking involved bribery.

The Gilded Age was the golden age of American kickbacks.

Standard Oil, wrote H. The era witnessed countless other examples of the collusion of big business and friendly government. Nevertheless, it does render problematic any attempt to depict the great industrialists as champions of the free market. Great businessmen, holds this line of thinking, are absorbed in the grubby world of getting and gaining.

They lack the refinement necessary to participate in the life of the mind. The charge has a measure of truth to it. Cornelius Vanderbilt was said to have the loudest voice on the Atlantic seaboard, and forex trader in pakistan quite lost the vulgar manners of a Staten Island ferry captain.

Stiles—author of a Pulitzer-winning biography of Vanderbilt—believes that his boorish reputation has been exaggerated. But it certainly cannot be applied to all of the great philanthropists.

To take just a few brief examples: Morgan Or consider John Pierpont Morgan. He is generally remembered as a beefy, red-faced bully, fierce and lonely, possessed of small ideas and consumed by enormous greed. In his best forex trade uae trilogy U. Rich Uncle Pennybags, the Monopoly mascot—a board game in which winning involves bankrupting the other players—is said to be based on Morgan.

All of this is deeply unfair to Morgan. Recent biographers—most notably Jean Strouse—have looked at Morgan with fresh eyes, finding a much more subtle and interesting character than his caricature would allow.

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It was the start of a lifelong love affair with the fine arts. He was the driving force behind the rise of the Metropolitan Museum of Art, serving as president and donating extensively from his personal acquisitions. His reputation, however, was established by a bitter enemy, the artist do philanthropists make money critic Roger Fry. Fry belonged day trading exit strategies the Bloomsbury Set, and had once been a curator of paintings binary options hedging strategy gambling the Met.

He suspected—not without reason—that Morgan was behind his firing. As Strouse notes, the letters Fry wrote to his wife during a purchasing tour of Europe in tell a rather different story. The Morgan Library Morgan was a man of truly catholic interests. In addition to his lifelong engagement with the arts, he was deeply interested in the natural sciences.

Throughout his working life, he set aside three weeks every third year to meet with Episcopalian bishops and discuss theology. The point, rather, is that he was a man of considerable curiosity and sophistication, hardly the bullnecked simpleton he is sometimes imagined to have been. Were some of the great industrialists crass? Is it fair to characterize the great philanthropists as a whole as crude?

Marxism holds private charity in contempt. Philanthropy, the theory holds, represents a bourgeois solution to the proletarian problem. It is considered, like religion, an instrument of capitalist stock market obama second term, an opiate intended to numb and ultimately incapacitate the working class. With the inevitable triumph of labor—and the common ownership of the means of production within a truly communist society—philanthropy would necessarily cease to exist.

Strict Marxist dogma never gained much traction in the United States. Nevertheless, at the turn of the 20th century, there was a widespread suspicion, particularly among labor unions, that philanthropy was intended to bolster the interests of the wealthy. That suspicion found expression not in the turgid philosophy of Marx and Engels, but rather in the white-hot rhetoric of labor leaders.

Debs was a seminal leader in the American labor movement; he took 6 percent of the popular vote in the presidential election of Eventually, Debs and his generation faded from the scene, and organized labor became steadily less radical. Influenced by Antonio Gramsci and Michel Foucault, historians like Clifford Griffin and David Rothman sought to portray humanitarian work as a thinly veiled effort to preserve the cultural hegemony of the wealthy.

At a more profound level, the great philanthropists hoped to use their resources to turn the working class into the middle class. In a sense, the critique is not entirely wrong. After all, to borrow the language of the Marxists, the great philanthropists did hope to find a bourgeois solution to the proletarian problem.

Some of them were quite explicit about their desire to use philanthropy to undercut communist influences in the labor movement. But at a more profound level, the great philanthropists hoped to use their resources to turn the working class into the middle class. Nor is it particularly surprising that they would do so.

After all, a good many of the great industrialists had started life in the working class. Carnegie himself was born to a painfully poor Scottish weaver, and took his first job at age how much money can i earn while on housing benefit, working in a cotton mill, putting in hour days, 6 days per week.

Rockefeller and Jim Fisk had been born to peddlers, while financiers Daniel Drew and Jay Gould were raised on hardscrabble farms. Were the Marxists right about the great philanthropists? Yes, insofar as their philanthropy was an effort to expand the bourgeoisie, which bestbuy buy stores have ps4 in stock Americans have long called the middle class. But the Marxists were wrong to see such philanthropy as an instrument of exploitation.

It was an invitation to opportunity—placing, as Carnegie famously put it, within its reach the ladders upon which the aspiring could rise. The last remark was particularly pointed. When Veblen published The Theory of the Leisure Classhe was serving as an instructor at the University of Chicago.

The school was then seven years old, and had only come into existence through John D. Some of how to get free petville cash cheat most impressive philanthropy of the Gilded Age was done quietly.

Faring better, however, is his notion that conspicuous consumption, including conspicuous philanthropy, is intended to signal elevated social status. Veblen was hardly alone in his suspicions. Nevertheless, to this day, there remains a widespread suspicion that the great philanthropists were inspired by a consuming desire to immortalize their names. The opposite of conspicuous philanthropy is anonymous philanthropy. Collecting data on anonymous giving is notoriously difficult, and the amounts given can only be crudely estimated.

Nevertheless, some of the most impressive philanthropy of the Gilded Age was done quietly. Perhaps the greatest anonymous donor of the era was George Eastman. Eastman was the founder of Eastman Kodak, the entrepreneur who turned photography from a profession with prohibitively high startup costs into an affordable hobby for the middle class.

He was also one of the most accomplished philanthropists of early—20th century America. George Eastman He spent eight years working closely with hard-charging university president Richard Maclaurin, and only revealed his identity after Maclaurin literally worked himself to death trying to meet the fundraising deadline of an Eastman challenge grant.

For the remaining 12 years of his life, Stock brokers lake magdalene dedicated himself to quiet but not anonymous or pseudonymous philanthropy, supporting dental clinics, musical conservatories, and, especially, MIT, the University of Rochester, the Hampton Institute, and the Tuskegee Institute.

None of which is to suggest that non-anonymous philanthropy is inspired by vanity. There are good reasons for donors to add their names to their gifts. Julius Rosenwald was perhaps the most audacious philanthropist of the early 20th century. Through it all, he declined to give anonymously, for reasons he outlined in Novemberin a speech he gave in Philadelphia to the American Academy of Political and Social Sciences.

The personal motivations for philanthropy are necessarily complicated. There is little evidence for the proposition, and much against.

Brands in his book American Colossus: The Triumph of Capitalism. The imputation would likely have confounded either man.

For one thing, it was not an era when businessmen either felt or were expected to feel remorse for their success. They saw themselves as self-made men, conquering a continent and propelling the United States into the forefront of nations. But even leaving aside the spirit of the age, the idea that the great philanthropists were motivated by guilt ignores an important piece of historical evidence. Neither Carnegie nor Rockefeller—nor, for that matter, a number of others—turned to philanthropy after making their fortunes.

Some did, of course, although that need not mean they did so out of guilt. Many others, however, including both Carnegie and Rockefeller, took up charity early in their lives, increasing their giving as their fortunes grew.

In Decembera year-old Carnegie sat down with a stub-nosed pencil and a scrap of paper. He and his mother had just moved into the posh St. Nicholas Hotel on lower Broadway, but a certain melancholy seemed to have settled over him.

He itemized all of his investments and calculated his net worth and annual income. Carnegie proceeded to write a letter to himself. Beyond this never earn—make no effort to increase fortune, but spend the surplus each year for benevolent purposes. Cast aside business forever except for others. Rockefeller was committed to philanthropy from an even younger age. His pious and frugal mother had encouraged her children to drop pennies in the Sunday collection plate.

Her lessons obviously stuck; years later, Rockefeller would credit her as the inspiration for his philanthropy. From the time he started working, he kept a small, red account book—Ledger A—in which he detailed his every expense. Even as a teenager, he was remarkably generous.

As a first-year clerk, he regularly donated 6 percent of his wages to charity, and some weeks he gave considerably more. Perhaps the most telling evidence comes from muckraker Ida Tarbell, whose History of the Standard Oil Company made Rockefeller one of the most hated men in America.

Tarbell was willing to attribute all manner of evil to Rockefeller, but she never doubted the sincerity of his philanthropy. He gave to its poor. He visited its sick. He wept with its suffering. Moreover, he gave unostentatiously to many outside charities of whose worthiness he was satisfied. What is true of Carnegie and Rockefeller is true of other Gilded Age philanthropists as well. Like Rockefeller, George Eastman kept a strict accounting of his expenses from an early age. In his early teens, he began making regular contributions to St.

In his late 20s, while struggling to keep up a growing family, Julius Rosenwald made small but regular contributions to the Hyde Park Protective Association and the Associated Jewish Charities. By the age of 32, J. Pierpont Morgan was already an established presence within New York City. Again, the motivations for philanthropy are complex, but there is very little evidence that the Gilded Age industrialists ever considered their philanthropy as expiation for the sin of their success.

The great philanthropists had many motivations, but guilt does not appear high among them. American Philanthropy was published in It belonged to the Chicago History of American Civilization, a series published by the University of Chicago and edited by Daniel Boorstin. Did Rockefeller and Carnegie change the course of American philanthropy by creating their foundations?

To bolster his point, Bremner might well have called upon the testimony of Rockefeller himself. Well before state incorporation laws could conceive such a thing, he created a massive, complex, and efficient enterprise that spanned state lines and international boundaries. It is no surprise, then, that Rockefeller would welcome the opportunity to institutionalize his charity, to apply the principles that had created his wealth to its distribution. He championed the cause of public sanitation, creating schools of public health at Harvard and Johns Hopkins, and helped lead major international public health efforts against hookworm, malaria, and yellow fever.

He promoted the cause of education nationwide, without distinction of sex, race, or creed. It is, to say the least, an impressive legacy. It is also a legacy that the Rockefeller Foundation has struggled to live up to. To be sure, the foundation has enjoyed major—even epochal—successes.

It was a pioneer funder of the Green Revolution, for example, which may have saved as many as one billion lives. It led preservation efforts at Colonial Williamsburg, the Palace of Versailles, the Embarcadero, and the Cathedral of Reims, as well as conservation efforts in the Grand Tetons, on the Maine coast, and among the California Redwoods.

Leadership, it seems, accounts for much of the difference. Perhaps above all, Rockefeller was a strategic or executive donor, not a hands-on or meddling type. He too was a bold and visionary leader, with a special gift for spotting and seizing promising opportunities. Their efforts helped launch the field of professional philanthropy. That is much less clear.

The great philanthropists, it turns out, were truly great at philanthropy. Beginning in the s with the creation of a history prize at West Point, the Shelby Cullom Davis Foundation and its successor, the Diana Davis Spencer Foundation, have been staunch supporters of the military, Pitt and Barbara Hyde have been selected as the recipients of the William E.

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Feature from Winter issue of Philanthropy magazine By Christopher Levenick. The great philanthropists were robber barons.

The great philanthropists were free market purists. The great philanthropists were simplistic businessmen, not serious thinkers. The great philanthropists used charity to control the working class.

The great philanthropists turned to charity out of vanity. The great philanthropists turned to charity out of guilt.

The greatest achievement of the great philanthropists was to establish perpetual foundations with professional staffs. Christopher Levenick is editor-in-chief of Philanthropy. Articles about Excellence in Philanthropy. Announcing the William E.

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