"Why We Should Be Lucky Bill Gates and Warren Buffet Don't Take After Cornelius Vanderbilt"
An email suggests this article from the History News Network on charitable giving by the wealthy and attitudes toward the poor (thank you):
Why We Should Be Lucky Bill Gates and Warren Buffet Don't Take After Cornelius Vanderbilt, by Edward Renehan, HNN: A while back, Forbes Magazine ranked the richest Americans through history using 2006 US dollars weighted against historic GDP at the height of each individual's wealth. On the day of his death during his 83rd year in January of 1877, shipping and railroad titan Cornelius Vanderbilt was worth $105 million in 1877 dollars. According to the Forbes analysis, to control the same percentage of GDP that Vanderbilt controlled in 1877 one hundred and twenty nine years later in 2006, one would have needed to possess wealth in the amount of $168.4 billion. Forbes in turn pegged the 2006 net worth of Bill Gates at $53 billion.
In the spirit of the Rockefeller family, Andrew Carnegie, and others before him, Gates has famously and commendably put more than $28 billion into the Bill and Melinda Gates Foundation. This foundation focuses on bringing initiatives in health and education to the global community. This past June, Warren Buffett announced that he would eventually give away 85 percent of his fortune — about $37.4 billion worth of stock in Berkshire Hathaway — to five charitable foundations, with about $31 billion going to the Gates Foundation.
Although in his day he possessed more than three times the wealth of Bill Gates and approximately four times the wealth of Buffet, Cornelius Vanderbilt was never so generous. Indeed, he was not generous at all.
In researching my new biography Commodore: The Life of Cornelius Vanderbilt (Basic/Perseus), I found Vanderbilt to be the personification of the ultimate economic man as drawn by Charles Dickens in the form of Ebenezer Scrooge during the 1840s. No cult of charity claimed Vanderbilt; no temptation toward beneficence beckoned. Once, when asked to give aid to people standing on a line for a distribution of free food, he noted his own impoverished beginning on Staten Island and, without a hint of irony, said: "Let them do what I have done." Not long after this, in an editorial for Packard's Monthly, Mark Twain admonished Vanderbilt to "go and do something [that will] shine as one solitary grain of pure gold upon the heaped rubbish of your life. ... Go, boldly, grandly, nobly, and give four dollars to some great public charity."
In his parsimoniousness, Vanderbilt was a creature of his times: an era of institutionalized harshness. During 1817, when the already-prosperous Vanderbilt was just 23, a group of prominent New York merchants and professionals (many of them having formerly been the principle supports of such institutions as the New York Hospital and a variety of other worthy causes) officially and quite publicly began to rethink their habit of giving. Such previously generous philanthropists as DeWitt Clinton, Thomas Eddy, and John Griscom took their cue in this from British reactionaries. In so doing, they succumbed to the rhetoric of several hard-nosed British social thinkers, most notably Thomas Robert Malthus, Jeremy Bentham, and the Scottish conservative Patrick Colquhoun.
Twenty years earlier, all three of those gentleman had been instrumental in the founding of the London Society for Bettering the Condition and Increasing the Comforts of the Poor. Despite the burden of its long-winded name, the London Society specialized in the cutting off of funds for social welfare rather than the distribution of charity. Men like Malthus, Bentham and Colquhoun believed that a distinct line must be drawn between the "deserving poor" (those hit with hard times resulting from unfortunate histories) and "undeserving paupers," the latter being the drunk, lazy and whorish of society, to whom the provision of any form of aid was a reprehensible act of facilitation.
Another key concept underpinning the logic of the London Society was the presumption (for lack of a more accurate term) that paupers outnumbered the deserving poor by a factor of about 9 to 1. In reform meetings and from church pulpits, politicians and clerics again and again cited this astonishing though unverifiable statistic, which soon became accepted as fact. In time, the public mind became convinced that a mere ten percent of London's poor were the crippled and the orphaned, while 90 percent were degenerates. For every one individual in London's slums who genuinely needed aid, popular wisdom held that there were nine who required something else entirely: intolerance, punishment and correction. As a corollary to this line of thinking, logic dictated that 90% of the charitable aid previously offered was superfluous. In turn, wallets closed, and checks stopped being written.
The London Society remained a venerable body and dominant force in British life for decades: influential in the development of such institutions as workhouses and debtors prisons. It was likewise influential, through its example, in New York and other American cities. By the end of 1817, Clinton, Eddy, and Griscom, joined by hundreds of other New Yorkers, had formed a clone organization on the banks of the Hudson: the Society for the Prevention of Pauperism (SPP).
Several months before the founding of the SPP, New York's Humane Society (which at that time specialized in helping humans rather than dogs and cats) announced rather forlornly the result of recent research revealing a startling fact: no less than 15,000 men, women and children - the equivalent of one-seventh of the city's total population - had been "supported by public or private bounty and munificence" the previous winter.
In their book Gotham, historians Edwin Burrows and Mike Wallace have eloquently described the SPP's point of view, expressed in response to the above data. In the grand tradition of the London Society, the SPP said it believed that "willy-nilly benevolence" only made things worse. "Giving alms to the undeserving poor not only undermined their independence but also drove up taxes and sapped the prosperity of the entire community." Thus, "for their good as well as everyone else's … the SPP recommended that all paupers in the city be cut off from all public assistance forthwith." Soon the Humane Society itself announced its intention to disband, in the wake of its realization that the very act of giving charity had "a direct tendency to beget, among [the citizenry] habits of imprudence, indolence, dissipation and consequent pauperism."
"Tough love" was in. Cruelty equaled kindness. Frugality equality generosity. And all three were not only cheap, but easy. A few ministers sang out against the reverse-logic of the SPP, but far more praised the organization than damned it. God himself, it seemed was on the side of self-reliance. A generation later, Social Darwinists would express a similar point of view: that the strong must be allowed to flourish, and not be hamstrung by the needs of the clawing weak. Charles Darwin's The Origin of Species would not see print until 1859. Indeed, Darwin himself was but eight years old in 1817, and would not depart on the voyage of HMS Beagle until 1831. Nevertheless, the seeds of what was to become the philosophy of Herbert Spencer (born 1820), not to mention the nearly identical philosophy of the 20th century's Objectivist saint of selfishness, Ayn Rand, were quite evident in the grand pronouncements of the London Society and its New York equivalent, the SPP.
A few notable men of New York, such as John Jacob Astor and the young Peter Cooper, repudiated the SPP, ignored the trend toward avarice, and continued their philanthropy, even expanding it in many areas to try to make up for some of the rapacity of their contemporaries. But Vanderbilt did not.
Only very late in life, in efforts to please his much younger second wife, (Frank Crawford Vanderbilt, whom he married in 1869), did "the Commodore" engage in two relatively paltry acts of giving.
During 1870, Vanderbilt spent $50,000 to purchase the unused Mercer Street Presbyterian Church in Manhattan. In turn, he gave life interest in the property to Frank's friend Charles Force Deems, a Methodist cleric and proprietor of a congregation he had dubbed the Church of the Strangers. (The church catered to people like Frank: former Confederates who, having lost everything during the Civil War, washed ashore as "strangers" in New York.) According to the terms of Vanderbilt's limited gift to Deems, control of the property was to revert to Vanderbilt or his heirs/assignees following Deems's death. The deed on the property, which Vanderbilt knew would appreciate greatly in value through the years, always remained in the name of Cornelius Vanderbilt.
Several years later, at the request of Nashville's Methodist Bishop Holland McTyeire (a cousin-in-law of Frank's), Vanderbilt provided $1 million (less than 1% of his total net worth) to fund Nashville's planned Methodist "Central University," subsequently renamed Vanderbilt University. Although he did not bother to attend the dedication ceremonies during the autumn of 1875, Vanderbilt's gift was nevertheless hailed as the largest single act of philanthropy in American history to that time. Attention to the fine print, however, revealed that a substantial percentage of the $1 million endowment was, by Vanderbiltian order, to be kept in the first mortgage bonds of Vanderbilt's own New York Central & Hudson River Railroad. Thus, as with the church on Mercer Street, Vanderbilt's charity was hardly outright.
Not long before his death, Vanderbilt confided to one of his doctors that he had been "insane on the subject of money-making" all his life. Subsequently, in devising a will which gave more than 95% of his fortune to just one of his eleven surviving children, Vanderbilt said he intended to keep his property "compact ... I will not have it scattered. I will leave it as a monument to my name." Thus he left behind him the legacy he most coveted: a vast hoard of stocks, bonds, greenbacks and railroads, but next to nothing in the way of good works or improvement of society.
Luckily for the planet and mankind, contemporary moguls such as Gates and Buffet have chosen to leave something more.
Posted by Mark Thoma on Tuesday, November 6, 2007 at 09:00 AM in Economics |
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