He was never a plunger, always made his moves in business,
politics
and philanthropy gradually and after careful thought.
Lundberg - The-Rich-and-the-Super-Rich-by-Ferdinand-Lundberg
.
.
he was also shrewd, alert, aggressive, and capable
of driving hard bargains. The time was not far distant when this former minister, coming to New York, would teach Wall Street itself some lessons. " 27
Subsequently Nevins notes, "The man whom Rockefeller thus selected as his principal aide in philanthropy was as remarkable as any of his partners in business. In sheer ability he matched Flagler, Rogers, and perhaps even Archbold . . . he possessed an unusual combination of gifts: insight, genuine imagination, analytical power, and vision, backed by unquenchable energy, courage, and an evangelistic fervor. . . . He was often impulsive and sometimes inconsistent. . . . At bottom, as we have said, he was a businessman rather than a minister or social worker, and he soon gained a reputation for cautious, adroit, and hard-headed conduct in business affairs. " 28
Gates, like many an underling, was as flinty as his master. At the time of the strike at the Colorado Fuel and Iron Company in 1913 (twenty-seven dead and two mines set on fire by desperate workers), Gates stood firmly against the strikers as Rockefeller, Jr. , relented. Both had been directors of the company of which John D. Rockefeller was II a major stockholder" (Fosdick); and L. M. Bowers, the chairman, was the uncle of Gates.
Characterizing the strikers as "desperate and lawless," waging "organized and deliberate war on society," Gates said, "The officers of the Colorado Fuel and Iron Company are standing between the country and chaos, anarchy, proscription and confiscation, and in so doing are worthy of the support of every man who loves his country. " 29 Actually, the strikers had been maddened with ill treatment. According to John T. Flynn, a biographer who presents a less genteel Rockefeller than Nevins, "When Henry C. Frick shocked the country by shooting down ruthlessly the striking iron workers at Homestead, John D. Rockefeller wrote him a letter approving his course and expressing sympathy. " 30 Gates and the elder Rockefeller saw pretty much eye to eye.
So talented did Rockefeller quickly find Gates that "Inevitably, Gates was soon looking after Rockefeller's investments as well as his philanthropies. " 31
Although the Standard Oil Trust absorbed all of Rockefeller's time and energy, he had nevertheless already made extensive diversified investments--in mines, steel mills, paper mills, a nail factory, railroads, lumbering, smelting properties and the like. 32 On some of these he had been stuck, through bad advice; others were not being operated properly. Gates was sent on tours of the country to look into the properties underlying the entire investment portfolio. He reported back to Rockefeller on what he found, not always favorably. Then he was given carte blanche to reorganize, revise and to bring order out of chaos.
Gates stepped into a dual role as the first director of the Rockefeller philanthropic activities and as investment manager, and he was equally good in both roles. 33
Beyond this the clergyman-humanitarian became a rabid and successful Wall Street speculator for his own account and an officer of various Rockefeller companies, notably the head of the Lake Superior Iron Ore Company. "Nothing could be stranger than the spectacle of this impecunious Baptist preacher setting out to raise funds for a religious college and winding up in a few years as the president of an iron mine and ore railroad company worth twenty millions, and finally the almoner of America's greatest multimillionaire, with the power of the purse over these vast treasures. " 34
For his role in negotiating the sale of Rockefeller ore properties to the embryo United States Steel Corporation, Gates resolutely demanded and received a commission from Rockefeller. 35 Gates had some idea of his worth in cash value.
Such being the case, the meaning of a statement is baffling when it indicates that Rockefeller never mingled philanthropy and business. There was such mingling in still
further degree when he established endowments with Standard Oil stock, all of which carried company voting power.
What became the "Rockefeller style," then, was apparently not something reasoned out in advance. Gates and Rockefeller played everything "by ear," and the style slowly evolved. But from the moment Gates joined Rockefeller formally in 1891, both the philanthropies and the satellite investments were carefully thought about and supervised by Gates while Rockefeller tuned Standard Oil up to concert pitch. In the course of time the contrapuntal role of Gates took Standard Oil into its sweep and is well exemplified today in IBEC, AIA and other new Rockefeller enterprises.
Division of World Emphasis
Just as the brothers have evolved a division of labor among types of activities so, too, have they evidently (perhaps unconsciously) divided the world into spheres of individual influence. Latin America, where Nelson has a Venezuelan ranch, appears to be his particular domain; his son, thus, is a high official of IBEC. The Orient is the particular domain of John D. III. All . areas are under the supervision of David as the head of a bank with more than 200 world branches. Laurance seems pointed toward Africa. 'Only Europe does not yet seem spoken for.
The chief chairmanships and directorships show the special orientations of interest.
John D. 111, chairman of the Rockefeller Foundation, the General Education Board, the national council of the United Negro College Fund, was also as of 1966 a trustee of Princeton University, Harvard-Yenching Institute and chairman of Products of Asia, Inc. , Products of India, Inc. , and president of the Japan Society, Inc. , and the Asia Society, Inc. He was a lieutenant commander in the United States Naval Reserve during World War 11, special assistant to the under secretary of the Navy late in 1945, and
was a consultant of the Dulles Mission to Japan on the peace settlement in 1951 and a U. S. delegate to the Japanese peace treaty conference in San Francisco in 1951. He holds the following decorations: Order of Auspicious Star of China (Kuomintang), Order of the British Empire, Grand Cordon of the Order of the Sacred Treasure of Japan, Grand Cordon of the Star of Ethiopia, Most Exalted Order of the White Elephant of Thailand and Commander of the Ordre des Millions d'Elephants et du Parasol Blanc of Laos.
Now, whatever else this worthy man is, taking into consideration many other directorships, trusteeships and chairmanships, he is more than an ordinary citizen with one vote at the polls. He is, also, manifestly more than a wealthy man. He is a finpol, intermeshing between governments, industries and cultural institutions.
"Because of their many friendships with missionaries, the Rockefellers had [as early as 1914] taken a keen interest in China," says Nevins. 36 There were others who churlishly believed the keen interest of the pecuniary wizard of Standard Oil related more to the fact that China was a huge market outlet for kerosene, of which Standard was then almost the sole supplier.
The Rockefellers were, at any rate, keenly interested in China, as they are now, without missionaries, interested in all of the Orient from Japan to India, where Standard Oil at least incidentally has large interests, and the General Education Board put up money to establish the China Medical Board and to build Peking Union Medical College. Up to 1952, Nevins says, the Foundation had put some $45 million into westernizing Chinese medicine, science and education. More recently, as the Communists took over China, the Rockefellers shifted Asiatic emphasis to Japan, India and other areas.
Nelson Rockefeller, three-time governor of New York, premier state of the Union, was president of Rockefeller Center from 1938 to 1945 and chairman from 1945 to 1953 and 1956 to 1958; Federal Coordinator of International American Affairs, 1940- 44; Assistant Secretary of State, 1944-45; chairman of the International Development Advisory Board (Point Four), 1950-51; Special Assistant to the President of the United States, 1954-55; Under-Secretary of Health, Education and Welfare (HEW), 1953-54 and has at various times (when not helping run the government) been or remains director or trustee of various foundations, museums and organizations. A Phi Beta Kappan, he holds the Order of Merit of Chile, the National Order of the Southern Cross of Brazil and the Order of the Aztec Eagle of Mexico. Here, again, is no common person, no ordinary wealthy man, no run-of-the-mill politician. This is a finpol, a very wealthy man with an interlacing of high governmental and cultural points d'appui.
David Rockefeller, chairman of The Chase Manhattan Bank, worked his way quickly up through various jobs in the bank and is also chairman of The Chase International Investment Corporation, chairman of Morningside Heights, Inc. , a big housing development, and a director of B. F. Goodrich Company, Rockefeller Brothers, Inc. , and the vast Equitable Life Assurance Society. He was an army captain in World War II, is a director and trustee of various Rockefeller foundations and museums, and is an overseer of Harvard University, of which he is an alumnus. He holds a Ph. D. from the University of Chicago. He also holds the French Legion of Honor and the Legion of Merit. In 1940 he published Unused Resources and Economic Waste. Here again is a high personage, far from an ordinary citizen.
Laurance Rockefeller is a similar type of Higher Organization Man. He is chairman of Rockefeller Brothers, Inc. , Caneel Bay Plantation, Inc. , Rockefeller Center, Inc. , and director of Filatures et Tissages Africains (Africa and the Caribbean are apparently his particular domains), Cape of Good Hope Corporation, Dorado Beach Hotel Corporation, president and trustee of Rockefeller Brothers Fund and trustee of the Conservation Foundation, chairman of the New York State Council of Parks, member of the corporation of Massachusetts Institute of Technology, a trustee of the YWCA, director of the American Committee of International Wildlife Protection, director of Resources of the Future, director of the American Planning and Civic Association and of the Hudson River Conservation Society, commissioner and vice president of the Palisades Interstate Park Commission, trustee and president of Jackson Hole Preserve, Inc. , trustee of the Alfred P. Sloan Foundation, chairman of the Memorial Sloan- Kettering Cancer Center, trustee and vice president of Sealantic Fund, trustee and president of the American Conservation Association, trustee and vice president of the New York Zoological Society and director, trustee or officer of various other bodies. He is a Commandeur de L'Ordre Royal du Lion, Belgium, recipient of the Conservation Service award of the U. S. Department of Agriculture and of its Special Conservation award and a holder of the Horace Marder Albright Scenic Preservation medal. A lieutenant commander during World War II, he is a member of the Naval Air Reserve.
Winthrop trails somewhat in this august procession but is coming abreast fast via politics. Governor of Arkansas, he is also chairman of IBEC Housing Corporation and Winrock Enterprises, Inc. , conducting vast agricultural and cattle-raising enterprises in Arkansas; a director of the Union National Bank of Little Rock, Rockefeller Brothers, Inc. , and Rockefeller Center, Inc. ; a trustee of Industrial Relations Counsellors; chairman of the board of Colonial Williamsburg, Inc. , and Williamsburg Restoration, Inc. ; chairman of the Arkansas Industrial Development Commission; trustee of the National Urban League, Rockefeller Brothers Fund and the National Fund for Medical Education. Since 1953 he has resided in Arkansas.
Among them all they cover a great deal of ground. As anyone can see, they are community-minded, but on an international scale that gives this term a new dimension. The world is their plantation.
The Foundation Thrust
Total outlays for philanthropic or nonprofit enterprises by the founder of Standard Oil are put by Raymond B. Fosdick at $446,719,371. 22 capital sum and income therefrom of $850 million--in all well over a billion dollars. 37 Most of the income was expended in the form of grants, except in the case of Rockefeller Institute.
The capital sums were allocated as follows:
Rockefeller Institute for Medical Research, 1902
(now Rockefeller University)
General Education Board, 1902
The Rockefeller Foundation, 1913
Laura Spelman Rockefeller Memorial, 1918-28
Total
$ 60,673,409. 45
129,209,167. 10
182,851,480. 90
73,985,313. 77
$446,719,371. 22
In recent years the capital funds of the General Education Board have been drawn down steeply for grants in the neglected field of education and the Laura Spelman Rockefeller Memorial was merged in 1928 with the Foundation. Funds for the University of Chicago came largely through the General Education Board. Coming up in place of the General Education Board has been the Rockefeller Brothers Fund.
Up to 1950 external grants by income and principal were as follows: 38
Rockefeller Foundation
From income
From principal
Total
General Education Board
From income
From principal
$325,754,751. 35
$125,773,613. 93
$451,528,365. 28
$132,339,912. 86
$164,427,148. 34
Total
Laura Spelman Rockefeller Memorial
From income
From principal
Total
International Education Board
From income
From principal
Total
$296,767,061. 20
$ 27,839,809. 74
$ 27,500,000. 00
$ 55,339,809. 74
$ 6,495,807. 82
$ 11,837,482. 00
$ 18,333,289. 82
$821,968,526. 04*
Grand Total
*Here should be added $60,673,409. 45 for Rockefeller University.
The International Education Board was established by John D. Rockefeller, Jr. , in 1923 but, in a very real sense, all the Rockefeller moneys are derived from the founder because nobody in the family since him has been a fortune-builder or even a conspicuous moneymaker. The grandsons have enterprises under way that appear likely to become highly profitable but not on any scale, as far as appears to date, resembling the original Standard Oil, the real honey-pie.
What remained of these funds at the end of 1950 was as follows:
Rockefeller Foundation $158,103,332. 13 39
General Education Board $ 24,624,493. 01 40
Rockefeller Brothers Fund (as of 1955) $ 59,663,273. 62 41
Total $242,391,098. 76
Of the moneys in the Rockefeller Brothers Fund the late John D. Rockefeller, Jr. , contributed $58 million in 1951 and bequeathed to it half of his estate. Reflecting part of this bequest in the amount of $65 million, at the end of 1960 the Fund showed total assets of $116,173,369. 42 Appreciation since then, as already shown, has been great.
Since 1950, of course, these funds have been generating more income, most of which has been allocated in the form of grants.
It is clear, then, that a truly stupendous sum was directed from the fortune of a single individual into various medical, educational, scientific and general cultural projects, both in the United States and abroad. As most of these moneys consisted of dollars of much greater purchasing power than the present dollar, it is evident that in dollars of current value the disbursements were of far greater weight.
That all this was part of a far-reaching plan is denied by spokesmen for the family such as Professor Nevins and Raymond B. Fosdick. To the charge of critics that the benefactions were established as "a shield against public censure," or, as some charged, "conscience money," Fosdick, following Nevins, points out that Rockefeller in his 'teens, as a pious Baptist, was already giving to the church as much as 6 per cent of his earnings. He kept a meticulous record down through the years of all such gifts, which amounted to more than $1,000 annually by 1865 and to nearly $6,000 by 1869--goodly sums in those days. He gave $558. 42 in a lump to Denison University, for example, in the late 1860's. 43
Rockefeller, in other words, gave money all along, even as he saved and acquired it, and, as it appears in the Fosdick-Nevins accounts, merely stepped up the rate when he became very wealthy. Yet, that there was more to it than a mere continuation of charitable giving, is shown when these writers quote Gates.
Mr. Rockefeller, a prudent man, apparently showed some doubt at first about proposals of large-scale largesse, if such it was. Says Fosdick:
"Mr. Gates, who could never be anything but candid and forthright, used to thunder at the elder Rockefeller, 'Your fortune is rolling up, rolling up like an avalanche! You must keep up with it! You must distribute it faster than it grows! If you do not, it will crush you and your children and your children's children. '" 44 These remarks are taken from Gates's autobiography and one wonders, if Rockefeller was such a freehanded routine giver, why Gates had to "thunder" at him to drive home the message.
What Rockefeller really thought even Gates, who described him as "a very reserved man" who revealed "little or nothing of his own innermost thoughts," did not profess to know. 45 He may have had no thoughts to keep in reserve--a plain man.
A Domesticated Machiavelli
To me it seems a disservice to the Machiavelli of Standard Oil, whom even an apologist like Nevins shows continually embroiled with business and political opponents one after the other down through the years, to attempt to domesticate him in terms of churchly estimates of genteel benevolence. As the history of Standard Oil by any author, pro or con, clearly shows, Rockefeller was of a deeply conspiratorial, scheming nature, always planning years ahead with a clarity of vision that went far beyond anything any of his associates had to offer. It seems to me far more in keeping
with what we know of the man's character, as revealed by his business career, that he embarked on his large-scale philanthropies with at least some self-serving personal ends in view.
Until Gates took over, Rockefeller had been giving money away more or less helter- skelter, mainly to Baptist missionary societies. One gets the impression that some of this giving was merely to get rid of importunate suppliants, who, as Gates said, "beset" him. 46 When Gates joined Rockefeller, he very gradually converted the magnate to the idea of "scientific giving. " 47 This "scientific giving" slowly took the form of the great foundations.
Rockefeller very early saw that he was getting some mileage from his Baptist patronage. As early as 1889 when a small Baptist publication criticized the Standard Oil Company, all of whose leading figures were Baptists, the company was stoutly defended by the Examiner, official organ of the Baptist Church. 48 Had Rockefeller and his Standard Oil colleagues all been Jews or Catholics one trembles to imagine what the anti-Rockefeller movement would have been like! It could not have escaped Rockefeller's notice that whenever his money had been bestowed he had staunch friends.
His gradual conversion by Gates, it seems to me, shows Rockefeller in a better light in terms of intelligent motivation than many of his apologists indicate. These latter show him only as a compulsive, mechanical giver from the very beginning. Actually, he was a thoroughly responsible man within the light of his own interests and his understanding of them. As the center of raging and constantly intensifying public controversy, which made him in his time "the most hated man in the world," Rockefeller might well have suspected that he was leaving a bitter inheritance to his children and grandchildren. Again, the torrent of public criticism against him, in part at least calumny, could not help but have some effect upon his wife and children however much be discounted it personally as attributable to envy. He prized his son especially, as many remarks showed, and was always deeply pained at any criticism of him. When both father and son were being publicly criticized he said: "They have no right to attack Mr. John. All my life I have been the object of assault. But they have no ground for striking at him! " 49 Possibly Mr. Rockefeller now saw some valid ground for attacks on himself.
His family was, indeed, Rockefeller's Achilles Heel and it is not at all difficult to see that he wanted to make a better public impression than the one currently dominant for the family's sake if not his own. Rockefeller, therefore, as I see him, put his mind coldly to the problem and saw that what Gates and others recommended might at least divide the forces against him, perhaps turn the tide. His first tentative ventures in large-scale philanthropy suggested that this view was valid. Rockefeller did not plunge into philanthropy.
He was never a plunger, always made his moves in business, politics and philanthropy gradually and after careful thought.
Gradualism in Philanthropolity
That his large-scale entry into public philanthropy was very gradual and, after being undertaken, was spread out over a long period of time is shown by Nevins, who lists his donations for every year beginning with $2. 77 for 1855. Rockefeller kept a record of his donations, which prior to 1880, says Nevins, was incomplete. But in no year through 1877 was as much as $10,000 recorded as donations and not until 1884 was more than $100,000 donated. In 1887 the figure jumped to $284,116. 52 and in 1890 to $303,542. 78.
Up to the time when Gates joined him in 1891 his gifts had mainly been to the Baptists. In the 1890's his donations exceeded $1 million each in only five years. In 1892 his Ohio trust was dissolved by court order. Even though he had been
comparatively generous, all this up to 1900 was no more than chicken feed; the flood from the secret recesses of Standard Oil was still to come. In 1900 he put up more than $2 million and again in 1901. But in 1902, when the General Education Board and Rockefeller Institute were launched, he contributed $5,407,856. 78. Falling somewhat short of this amount for the next two years, in 1905, when public outcry against him was stupendous, he put up $13,602,820. 78. Although he was never to miss a year until death in these benefactions, the really big years were as follows:
1907
1909
1913
1914
1917
1919
1920
1928
$ 39,170,480. 52
71,453,231. 15
45,499,367. 63
67,627,095. 87
15,770,624. 48
138,624,574. 61
31,780,348. 24
19,964,455. 38
Not only did such munificence top anything else of record (and until Rockefeller and Carnegie came along, public donations were meager indeed) but the Rockefeller benefactions went nearly wholly into projects of, invariably high quality. To fault Rockefeller on the quality of his projects, one must fault the highly rated University of Chicago, Rockefeller University, the work of the Foundation in combating hookworm, yellow fever, malaria, typhus, influenza, tuberculosis, rabies, yaws, schistosomiasis and various other diseases, and the worldwide contributions to medical education, the financing of projects in experimental biology and other natural sciences, international relations and scores of other fields.
That kudos accrued to Rockefeller, particularly from the press and executive types in charge of projects in education, science and medicine, in place of the earlier brickbats, is not to be denied; but the seeking of praise for meritorious performance, if such was the case, is not in itself a fault. That Rockefeller preferred praise to adverse criticism is evident from the fact that Standard Oil early busily engaged itself in buying and surreptitiously financing newspapers. 50 The influencing of public opinion in his favor was a problem that Rockefeller long wrestled with before he found the right combination.
Prior to 1913 at least, the problem of taxes could not have influenced Rockefeller in his philanthropies because business and wealth were subject then only to piddling local taxes. Nor can it be held that the creation of the Rockefeller Foundation was a direct reflex to the advent of federal taxes in 1913 because the Foundation had long been planned, at least since 1905. The community of Big Business, it is true, was opposed to the new
taxes and Rockefeller's chief attorney, Joseph H. Choate, had been the lawyer who in 1893 convinced the Supreme Court that income taxes were unconstitutional; it was therefore necessary to amend the Constitution to enact income taxes. However, even though the advent of federal taxes did not influence the idea of the Foundation, it was gradually noticed by others that there were distinct tax advantages in making philanthropic allocations. This fact is now part of standard tax doctrine, set down in many tax treatises. Gifts to philanthropic funds pay no taxes, the income on such funds pay no taxes, and there is no inheritance tax on such funds. Furthermore, stocks placed in such endowments carry corporate voting power--a nice point. It should be recalled here that it is power really, rather than money or property, that we are concerned with.
Considerations such as these may not have occurred to Rockefeller during tax agitation prior to 1913 but it is hard to see that they could have escaped the notice of his lawyers. At any rate, the size of his philanthropic allocations increased markedly
beginning with the new tax laws. Whatever he did not allot to philanthropy was now going to incur income and estate taxes; and such taxes, he must have foreseen, would tend to increase rather than diminish.
As to the relation of taxes to philanthropolic capers the Wall Street Journal of August 2, 1967, points out that philanthropies would be sharply reduced if compensating tax reductions were reduced or repealed-an assertion made on the basis of a study by the Brookings Institution in collaboration with T. Willard Hunter, executive vice president of the Independent Colleges of Southern California. In this study there were interviewed 30 of 47 living philanthropists who in 1965 made 69 capital gifts of $1 million or more each for an aggregate of more than $93 million. The donors reported that $40 million, or 43 per cent of all, would not have been given if there was no tax reduction allowed; they also reported that had deductions been limited to the original cost of securities rather than to an inflated price, as has been proposed, the donations or allocations would have been reduced by 46 per cent. The donors themselves rated tax savings as fifth on a list of twelve considerations controlling philanthropolic maneuvers.
Actually, it can be shown that in many cases a donor can obtain for himself more indirect in-pocket income by being a generous philanthropist than by holding tightly to direct investments. Among many possible illustrations are the cases of big chemical proprietors who have donated entire schools and laboratories of chemistry to big universities, at huge but tax-deductible costs. What the chemical proprietors have now derived from the schools in the way of new discoveries and trained research chemists has given them a constant return of many hundred per cent on the original "donation. "
Peer-group esteem is gained on the finpolic circuit by such contributions that strengthen the entire finpol network. Rockefeller, finpolically speaking, was a very good neighbor, of vast benefit to all finpols.
On the basis of his own experience with legislators at the state and national level Rockefeller could not have felt reassured about what they might do with his money. He no doubt felt that he could make a more constructive disposition of it than they. With this view, if it was his, I concur. Even today one can have no rational confidence in the allocation of funds by any Congress the American people in their present low state of cultural development are likely to elect.
There were, at any rate, many advantages, perhaps foreseen and unforeseen, in the course he gradually adopted, not the least of which was wider public acceptance for himself and his family (for which he seems to me to deserve great credit), particularly at the hands of the educated and the middle classes. , The high quality of most of the Rockefeller projects particularly commended the man, and still commends him, to the cultivated, and lends strong color to the view of him as a Robin Hood who took, not from the rich for the poor but from grasping business rivals, politicians and an oafish squandering public and, now under severe public criticism, turned a substantial and possibly major portion of the loot over to institutions closely identified with high civilization--a triumph of the sardonic over the indignantly sentimental, a twisting of the knife in the philistines.
Rockefeller, thus, is a paradox. The biggest, most assiduous, most successful, sufficiently unscrupulous and most condemned acquisitor converted himself into the most munificent high-level giver. Rockefeller, late in life and possibly suiting the word to his Lord Bountiful actions, himself enunciated the elvish principle that "A man should make all he can and give all he can. " 51 If this was intended to mean (and it does not necessarily) that a man should try to make a great deal of money and give nearly all of it away, the program seems absurd to the point of the comical.
The Finpolitan Model
Although this chapter may appear, thus far, to be about the Rockefellers, it really is not. As I remarked at the beginning, the highly civilized Rockefellers: are featured here, perhaps sacrilegiously, purely for illustrative purposes. For what has become the "Rockefeller style" is in essence the finpolitan style, which copies the Rockefeller style in a general way. Many others do or pretend to do about as the Rockefellers do, perhaps not with as much earnest conviction.
"If the rich are capitalism's aristocracy," as William Manchester observes, "the Rockefellers: are its royalty. " 52 One is constrained to agree. They not only show the way in finpolitania; they invented it and appear to be deeply convinced of the constructiveness of their role, not an unusual human trait.
Various aspects of the life of the wealthy have been depicted by assorted writers. Perhaps the most popular, representing the role most of the hoi polloi see for themselves as rich people, has been the wealthy as irresponsible playboys, spendthrifts and more or less graceful idlers. This view is well conveyed in the writings of Cleveland Amory and others of the same genre. The next most compelling aspect has been the wealthy as ruthless grabbers, as shown by Gustavus Myers and Matthew Josephson. Some attempt, of less wide interest but in my view more significant, has been made to show the wealthy as contemporary social power wielders, as I and C. Wright Mills have done. On the American scene Thorstein Veblen first delved in depth into the role of the wealthy as socially irresponsible power wielders and exorbitant consumers. Individual critical biographies, as by Harvey O'Connor and John T. Flynn, have touched on all these aspects.
But the modes of being of the more mature among the established wealthy have by no means been fully explored. These modes turn out to be distant emulations, not always convincing, of the Rockefeller style. Although academic sociologists anxiously inquire into the most minute, interstitial phases of contemporary society, it is instructive to notice that there is no systematic sociology of the wealthy. The academicians seem to sense through built-in radar that this is taboo terrain and allow unanointed non-award- winning journalists, publicists, free-lancers and miscellaneous literate and offbeat ideologists to dominate the field which, it is true, promises little in the way of academic promotion. A notable exception among the certified sociologists is the suave E. Digby Baltzell, author of The Philadelphia Gentlemen and The Protestant Establishment: Aristocracy and Caste in America, the latter a penetrating study.
"The real truth is that very few of the social scientists look very deeply into the subject [of fortunes] for fear of being thought politically radical," says Professor Floyd Hunter in The Big Rich and the Little Rich (Doubleday & Co. , N. Y. , 1965, pp. 173-74). "There has been so much moralizing about the division of power and wealth in world society that an earnest consideration of what actually takes place in modem American economic affairs, politically, is left largely to sterile theoretical conjecture. There is no serious empirical study of socio-economic logistics of the distribution of wealth. There is no forthright, open discussion of what the phenomena of personal wealth really does for the community--or doesn't do. "
It could be shown, indeed, that there is room for at least 200 interesting books, as yet unwritten, in the field of the large American wealth-holders. As it is, the subject is largely taboo, in accord with imposed canons of respectability. Who would be so foolish or reckless as to court the stigma of disrepute by inquiring into the doings of the wealthy?
As C. Wright Mills discovered, not much material has been systematically gathered on this general subject of the sociology of wealth and one must, perforce, dig into whatever random outcroppings: are left available; data are systematically hidden. Nor
do there appear to be contemporary Boswells like the late Clarence W. Barron of the Wall Street Journal to make mordant secret notes on the inner doings of the contemporary tycoons. Perhaps some enterprise like that is going forward; if so, it has not yet come to light.
Although contemporary wealth is associated with the term "capitalism," in the finpolitan model capitalism becomes something more like super-capitalism. The term "monopoly capitalism" is in any event self-contradictory because capitalism does not allow of monopoly; it is competitive and its companies can fail. The super-capitalist companies, potential claimants to public subsidies, are permanently beyond failure, occupants of a politically protected haven. In search of a better term under the tyranny of old meanings, it would perhaps be better to speak of financial syndicalism, for the big finpolitan groups are in fact syndicates of concentrated yet widely deployed private holders with governments at their beck and call.
And as to concentration of holdings, we have yet apparently seen nothing like the destiny toward which the world is heading. In Multinational Corporate Planning, edited by George A. Steiner and Warren M. Cannon (Macmillan, N. Y. , 1966), it is pointed out that the big corporations are now multinational. "In the light of present trends and future prospects," say these percipient writers, "it does not seem at all impossible that in the next twenty years, six or seven hundred large multinational companies will be doing most of the world's business. This will indeed be pan-imperialist super-concentration.
The finpolitan corporation, or cluster of corporations, is a multinational corporation. Multinationality is a hallmark of finpolity.
Style Setters of Wealth
Rockefeller set at least two of the three major widely copied styles of operation for the American wealthy, and the finpolitan style just outlined is the one that is currently dominant, with variations.
The first Rockefeller exercise in style setting was the use of the trust as an instrument of corporate integration and monopolization. In 1872 when the Standard Oil Company of Ohio, the original company, secretly provided funds to acquire companies in other states, it placed the acquired stocks in the custody of one of its directors as a trustee. (Under law as it then stood it was illegal for any company to own other companies in another state. ) But Rockefeller, like other rising tycoons, was not deterred by a detail like legality. Furthermore, the law on trusts at the time was suitably vague. By 1879 the system was devised of having three officials of Standard of Ohio act as trustees of the acquired stock. They were not, the company contended, legally trustees for Standard of Ohio but, if for anybody, for the thirty-seven underlying stockholders of Standard of Ohio. These stockholders could roundly deny, as they did even on the witness stand, that Standard of Ohio owned these companies. It was all these acquired companies, scattered in many states, that secretly composed what came to be called the Standard Oil Trust. As far as the public knew, these companies were all competitors of Standard.
As word seeped into business and legal circles about this handy new arrangement, which long preceded the New Jersey holding-company law of 1889, other industries organized into trusts until there were soon a Sugar Trust, Whiskey Trust, Tobacco Trust, Rubber Trust, Shoe Trust, Butcher Trust, Furniture Trust, Coal Trust, Cotton- Seed Trust, Gunpowder Trust and many others. These were all actually secret cartels to regulate the market and hold up prices in the interests of the owners. Standard Oil was the first of the giant trusts.
How readily the unpublicized device could be used to baffle people is shown by an affidavit filed by Rockefeller in a Cleveland law suit in 1880, that read: "It is not
true . . . that the Standard Oil Company, directly or indirectly, through its officers and agents owns or controls the works of. . . . " Here followed the names in a long list of companies, the stock of which was secretly held by trustees employed by the Standard Oil Company of Ohio. 53
"Legally, this statement might be defended," says Nevins, a vacuous remark because
legally any action whatever is entitled to a defense. "The three trustees held ownership
and Rockefeller could say they acted not for the Standard but its stockholders. Actually,
to call the statement disingenuous would be putting the matter mildly; it was
equivocation. Such evasive tarradiddles were then too common in American business. " 54
What is pointedly false about this assertion is that the "trustees held ownership. " Trustees are not owners but agents. While it may be said that they were agents for the Standard stockholders, a closely knit group, they were in fact agents and employees of Standard of Ohio, whose stockholders held an interest in the acquisitions in proportion to their share of ownership of Standard of Ohio. Rockefeller's affidavit was perjury and a fraud on the court. 55
At the time, Rockefeller owned 8,984 out of 35,000 outstanding shares of Standard Oil, Henry M. Flagler 3,000, Stephen V. Harkness 2,925, Charles Pratt 2,700, Oliver H. Payne 2,637, J. A. Bostwick 1,872, William Rockefeller 1,600, J. J. Vandergrift 500, John D. Archbold 350, J. N. Camden 200, C. M. Pratt 200 and Ambrose McGregor 118. The Cleveland group, comprising Rockefeller's Baptist cronies, held 19,146 shares, a majority. 56
Each of the key Standard Oil units was duly found to be a law violator. First the Standard Oil Company of Ohio was held by the Supreme Court of Ohio in 1892 to be in violation of the law in its trust arrangement, was forbidden to continue it and ordered to pay the costs of the litigation. The assets were thereupon by an exchange of stock acquired by the Standard Oil Company (New Jersey), operating under the wide-open New Jersey holding company act of 1889, and to the Standard Oil Company of New York; these had approximately the same directors. Finally, in 1911, the U. S. Supreme Court found that the New Jersey company violated the Sherman Act and, tapping it lightly on the wrist, ordered it dissolved into its constituent corporate parts and the stock of each company distributed pro rata to each of its stockholders. Instead of owning one- quarter of one central company Rockefeller now owned one-quarter each of nearly two score companies!
Standard Oil in the foregoing was clearly guilty of noncapitalist behavior as, indeed, many of the fortune-builders have been. Critics of capitalism commonly lump together the behavior of strictly performing capitalists with that of operators outside the rules, thus making capitalism take the blame for much that is outside capitalism. This is not to say that capitalism, for its austerely stylized procedure, may not be the legitimate object of distasteful criticism; but capitalism surely should not be blamed for noncapitalist behavior. If a man robs a bank and is not caught, thus coming into the possession of a large sum of money, he has not according to the dicta of any school of economics acquired his money in a capitalist way.
Capitalism is an economist's ideal abstraction, concerned with aggregate results and average procedures. Many of the big fortunes, however, were built precisely because they departed in important respects from average procedures, precisely because their builders were anything but capitalists. Within capitalism, under the rules, one can lose; the fortune-builders never had any intention of submitting to disadvantageous rules that might land them in the bankruptcy courts. They had lawyers and legislators to assist them in avoiding the rough while benefiting from the smooth.
One learns little about the capitalism of the economists by studying the history of the big fortunes. John D. Rockefeller indeed became a capitalist, but not by practicing capitalism--at least not exclusively. Those who lost out to him, however, were often garden-variety capitalists.
A style Rockefeller neither set nor practiced, which was copied from an English innovator, was that of issuing "watered" stock in mushrooming corporate combinations. J. P. Morgan, William Rockefeller and almost the whole of the upper financial community went in for this exhilarating practice, through which patriotic investors were mulcted of billions and promoters either sold out or retained full control at no cost. This was not capitalism either. The Rockefeller companies were always closely held until the dissolution order of 1911, and Rockefeller never gypped fellow investors, In his acquisition of companies Rockefeller always tried to induce the sellers to take Standard Oil stock rather than cash, which most of them cannily refused to do and thus unwittingly threw away the chance of becoming incalculably wealthy. Sore losers, many of these later joined the accusing chorus against him.
But the successful style of how the well-tempered super-millionaire and his family should conduct themselves was definitely evolved by the hardpressed Rockefeller and Gates. This style required the creation of foundation philanthropies and the involvement of members of the family in publicly approved cultural, scientific and socially supportive projects. Although widely imitated, as were the Rockefeller trust and the English wateredstock ideas, it is a style subject to great variations.
The foundation idea, as we have already seen, has come to be a widely utilized scheme of tax evasion while maintaining tax-exempt corporate control.
Capitalism as a Scapegoat
The idea that capitalism is to blame for everything irrational, and that failure to face up to basic problems derives only from pro-capitalist bias, comes largely from socialists, who, in their super-heated zeal, present a vastly overdrawn indictment of capitalism. Even if we agree that capitalism--particularly unregulated, automatic capitalism of the classic variety that allows no modifications in terms of human needs-- is subject to rejection, it is not true that all social problems stem from the economic system. But according to many socialist (particularly Marxist) critiques, capitalism is to blame for all that is detestable or frightening about the contemporary world.
Actually no system, including socialism, will automatically produce good results. The contradictory is an unexamined notion that stems through the Physiocrats of the eighteenth century from the idea of a mechanical physical universe as given in Newtonian physics. Nature is automatic; whatever is automatic is natural; whatever is natural is good (itself a questionable notion). Therefore, a good economic system will be an automatic one, operating according to natural laws. Any viable socio-economic system whatever, as a matter of historical fact, needs constant modification from day to day at many points. Such being the case, any system is humanly troublesome, requiring constant revision and tinkering. Every system is bound to be far from perfect.
Without defending capitalism either in automatic or rationally modified form, one must nevertheless notice that capitalism contains within its theory no propositions directly or by implication stating support for racism, prostitution, ill treatment of criminal offenders, overpopulation, neglect of the mentally retarded, support of crime and the like. To this the socialist will reply: But capitalism, seeking only maximum profits, fosters callousness by seeing salvation only in profits; and, by directly and indirectly pressuring people through its profit-making machinery, induces much social havocalcoholism, emotional disturbance, delinquency and the like. Only infidelity
between the sexes appears to have been left out of the indictment, although Marx included even this.
of driving hard bargains. The time was not far distant when this former minister, coming to New York, would teach Wall Street itself some lessons. " 27
Subsequently Nevins notes, "The man whom Rockefeller thus selected as his principal aide in philanthropy was as remarkable as any of his partners in business. In sheer ability he matched Flagler, Rogers, and perhaps even Archbold . . . he possessed an unusual combination of gifts: insight, genuine imagination, analytical power, and vision, backed by unquenchable energy, courage, and an evangelistic fervor. . . . He was often impulsive and sometimes inconsistent. . . . At bottom, as we have said, he was a businessman rather than a minister or social worker, and he soon gained a reputation for cautious, adroit, and hard-headed conduct in business affairs. " 28
Gates, like many an underling, was as flinty as his master. At the time of the strike at the Colorado Fuel and Iron Company in 1913 (twenty-seven dead and two mines set on fire by desperate workers), Gates stood firmly against the strikers as Rockefeller, Jr. , relented. Both had been directors of the company of which John D. Rockefeller was II a major stockholder" (Fosdick); and L. M. Bowers, the chairman, was the uncle of Gates.
Characterizing the strikers as "desperate and lawless," waging "organized and deliberate war on society," Gates said, "The officers of the Colorado Fuel and Iron Company are standing between the country and chaos, anarchy, proscription and confiscation, and in so doing are worthy of the support of every man who loves his country. " 29 Actually, the strikers had been maddened with ill treatment. According to John T. Flynn, a biographer who presents a less genteel Rockefeller than Nevins, "When Henry C. Frick shocked the country by shooting down ruthlessly the striking iron workers at Homestead, John D. Rockefeller wrote him a letter approving his course and expressing sympathy. " 30 Gates and the elder Rockefeller saw pretty much eye to eye.
So talented did Rockefeller quickly find Gates that "Inevitably, Gates was soon looking after Rockefeller's investments as well as his philanthropies. " 31
Although the Standard Oil Trust absorbed all of Rockefeller's time and energy, he had nevertheless already made extensive diversified investments--in mines, steel mills, paper mills, a nail factory, railroads, lumbering, smelting properties and the like. 32 On some of these he had been stuck, through bad advice; others were not being operated properly. Gates was sent on tours of the country to look into the properties underlying the entire investment portfolio. He reported back to Rockefeller on what he found, not always favorably. Then he was given carte blanche to reorganize, revise and to bring order out of chaos.
Gates stepped into a dual role as the first director of the Rockefeller philanthropic activities and as investment manager, and he was equally good in both roles. 33
Beyond this the clergyman-humanitarian became a rabid and successful Wall Street speculator for his own account and an officer of various Rockefeller companies, notably the head of the Lake Superior Iron Ore Company. "Nothing could be stranger than the spectacle of this impecunious Baptist preacher setting out to raise funds for a religious college and winding up in a few years as the president of an iron mine and ore railroad company worth twenty millions, and finally the almoner of America's greatest multimillionaire, with the power of the purse over these vast treasures. " 34
For his role in negotiating the sale of Rockefeller ore properties to the embryo United States Steel Corporation, Gates resolutely demanded and received a commission from Rockefeller. 35 Gates had some idea of his worth in cash value.
Such being the case, the meaning of a statement is baffling when it indicates that Rockefeller never mingled philanthropy and business. There was such mingling in still
further degree when he established endowments with Standard Oil stock, all of which carried company voting power.
What became the "Rockefeller style," then, was apparently not something reasoned out in advance. Gates and Rockefeller played everything "by ear," and the style slowly evolved. But from the moment Gates joined Rockefeller formally in 1891, both the philanthropies and the satellite investments were carefully thought about and supervised by Gates while Rockefeller tuned Standard Oil up to concert pitch. In the course of time the contrapuntal role of Gates took Standard Oil into its sweep and is well exemplified today in IBEC, AIA and other new Rockefeller enterprises.
Division of World Emphasis
Just as the brothers have evolved a division of labor among types of activities so, too, have they evidently (perhaps unconsciously) divided the world into spheres of individual influence. Latin America, where Nelson has a Venezuelan ranch, appears to be his particular domain; his son, thus, is a high official of IBEC. The Orient is the particular domain of John D. III. All . areas are under the supervision of David as the head of a bank with more than 200 world branches. Laurance seems pointed toward Africa. 'Only Europe does not yet seem spoken for.
The chief chairmanships and directorships show the special orientations of interest.
John D. 111, chairman of the Rockefeller Foundation, the General Education Board, the national council of the United Negro College Fund, was also as of 1966 a trustee of Princeton University, Harvard-Yenching Institute and chairman of Products of Asia, Inc. , Products of India, Inc. , and president of the Japan Society, Inc. , and the Asia Society, Inc. He was a lieutenant commander in the United States Naval Reserve during World War 11, special assistant to the under secretary of the Navy late in 1945, and
was a consultant of the Dulles Mission to Japan on the peace settlement in 1951 and a U. S. delegate to the Japanese peace treaty conference in San Francisco in 1951. He holds the following decorations: Order of Auspicious Star of China (Kuomintang), Order of the British Empire, Grand Cordon of the Order of the Sacred Treasure of Japan, Grand Cordon of the Star of Ethiopia, Most Exalted Order of the White Elephant of Thailand and Commander of the Ordre des Millions d'Elephants et du Parasol Blanc of Laos.
Now, whatever else this worthy man is, taking into consideration many other directorships, trusteeships and chairmanships, he is more than an ordinary citizen with one vote at the polls. He is, also, manifestly more than a wealthy man. He is a finpol, intermeshing between governments, industries and cultural institutions.
"Because of their many friendships with missionaries, the Rockefellers had [as early as 1914] taken a keen interest in China," says Nevins. 36 There were others who churlishly believed the keen interest of the pecuniary wizard of Standard Oil related more to the fact that China was a huge market outlet for kerosene, of which Standard was then almost the sole supplier.
The Rockefellers were, at any rate, keenly interested in China, as they are now, without missionaries, interested in all of the Orient from Japan to India, where Standard Oil at least incidentally has large interests, and the General Education Board put up money to establish the China Medical Board and to build Peking Union Medical College. Up to 1952, Nevins says, the Foundation had put some $45 million into westernizing Chinese medicine, science and education. More recently, as the Communists took over China, the Rockefellers shifted Asiatic emphasis to Japan, India and other areas.
Nelson Rockefeller, three-time governor of New York, premier state of the Union, was president of Rockefeller Center from 1938 to 1945 and chairman from 1945 to 1953 and 1956 to 1958; Federal Coordinator of International American Affairs, 1940- 44; Assistant Secretary of State, 1944-45; chairman of the International Development Advisory Board (Point Four), 1950-51; Special Assistant to the President of the United States, 1954-55; Under-Secretary of Health, Education and Welfare (HEW), 1953-54 and has at various times (when not helping run the government) been or remains director or trustee of various foundations, museums and organizations. A Phi Beta Kappan, he holds the Order of Merit of Chile, the National Order of the Southern Cross of Brazil and the Order of the Aztec Eagle of Mexico. Here, again, is no common person, no ordinary wealthy man, no run-of-the-mill politician. This is a finpol, a very wealthy man with an interlacing of high governmental and cultural points d'appui.
David Rockefeller, chairman of The Chase Manhattan Bank, worked his way quickly up through various jobs in the bank and is also chairman of The Chase International Investment Corporation, chairman of Morningside Heights, Inc. , a big housing development, and a director of B. F. Goodrich Company, Rockefeller Brothers, Inc. , and the vast Equitable Life Assurance Society. He was an army captain in World War II, is a director and trustee of various Rockefeller foundations and museums, and is an overseer of Harvard University, of which he is an alumnus. He holds a Ph. D. from the University of Chicago. He also holds the French Legion of Honor and the Legion of Merit. In 1940 he published Unused Resources and Economic Waste. Here again is a high personage, far from an ordinary citizen.
Laurance Rockefeller is a similar type of Higher Organization Man. He is chairman of Rockefeller Brothers, Inc. , Caneel Bay Plantation, Inc. , Rockefeller Center, Inc. , and director of Filatures et Tissages Africains (Africa and the Caribbean are apparently his particular domains), Cape of Good Hope Corporation, Dorado Beach Hotel Corporation, president and trustee of Rockefeller Brothers Fund and trustee of the Conservation Foundation, chairman of the New York State Council of Parks, member of the corporation of Massachusetts Institute of Technology, a trustee of the YWCA, director of the American Committee of International Wildlife Protection, director of Resources of the Future, director of the American Planning and Civic Association and of the Hudson River Conservation Society, commissioner and vice president of the Palisades Interstate Park Commission, trustee and president of Jackson Hole Preserve, Inc. , trustee of the Alfred P. Sloan Foundation, chairman of the Memorial Sloan- Kettering Cancer Center, trustee and vice president of Sealantic Fund, trustee and president of the American Conservation Association, trustee and vice president of the New York Zoological Society and director, trustee or officer of various other bodies. He is a Commandeur de L'Ordre Royal du Lion, Belgium, recipient of the Conservation Service award of the U. S. Department of Agriculture and of its Special Conservation award and a holder of the Horace Marder Albright Scenic Preservation medal. A lieutenant commander during World War II, he is a member of the Naval Air Reserve.
Winthrop trails somewhat in this august procession but is coming abreast fast via politics. Governor of Arkansas, he is also chairman of IBEC Housing Corporation and Winrock Enterprises, Inc. , conducting vast agricultural and cattle-raising enterprises in Arkansas; a director of the Union National Bank of Little Rock, Rockefeller Brothers, Inc. , and Rockefeller Center, Inc. ; a trustee of Industrial Relations Counsellors; chairman of the board of Colonial Williamsburg, Inc. , and Williamsburg Restoration, Inc. ; chairman of the Arkansas Industrial Development Commission; trustee of the National Urban League, Rockefeller Brothers Fund and the National Fund for Medical Education. Since 1953 he has resided in Arkansas.
Among them all they cover a great deal of ground. As anyone can see, they are community-minded, but on an international scale that gives this term a new dimension. The world is their plantation.
The Foundation Thrust
Total outlays for philanthropic or nonprofit enterprises by the founder of Standard Oil are put by Raymond B. Fosdick at $446,719,371. 22 capital sum and income therefrom of $850 million--in all well over a billion dollars. 37 Most of the income was expended in the form of grants, except in the case of Rockefeller Institute.
The capital sums were allocated as follows:
Rockefeller Institute for Medical Research, 1902
(now Rockefeller University)
General Education Board, 1902
The Rockefeller Foundation, 1913
Laura Spelman Rockefeller Memorial, 1918-28
Total
$ 60,673,409. 45
129,209,167. 10
182,851,480. 90
73,985,313. 77
$446,719,371. 22
In recent years the capital funds of the General Education Board have been drawn down steeply for grants in the neglected field of education and the Laura Spelman Rockefeller Memorial was merged in 1928 with the Foundation. Funds for the University of Chicago came largely through the General Education Board. Coming up in place of the General Education Board has been the Rockefeller Brothers Fund.
Up to 1950 external grants by income and principal were as follows: 38
Rockefeller Foundation
From income
From principal
Total
General Education Board
From income
From principal
$325,754,751. 35
$125,773,613. 93
$451,528,365. 28
$132,339,912. 86
$164,427,148. 34
Total
Laura Spelman Rockefeller Memorial
From income
From principal
Total
International Education Board
From income
From principal
Total
$296,767,061. 20
$ 27,839,809. 74
$ 27,500,000. 00
$ 55,339,809. 74
$ 6,495,807. 82
$ 11,837,482. 00
$ 18,333,289. 82
$821,968,526. 04*
Grand Total
*Here should be added $60,673,409. 45 for Rockefeller University.
The International Education Board was established by John D. Rockefeller, Jr. , in 1923 but, in a very real sense, all the Rockefeller moneys are derived from the founder because nobody in the family since him has been a fortune-builder or even a conspicuous moneymaker. The grandsons have enterprises under way that appear likely to become highly profitable but not on any scale, as far as appears to date, resembling the original Standard Oil, the real honey-pie.
What remained of these funds at the end of 1950 was as follows:
Rockefeller Foundation $158,103,332. 13 39
General Education Board $ 24,624,493. 01 40
Rockefeller Brothers Fund (as of 1955) $ 59,663,273. 62 41
Total $242,391,098. 76
Of the moneys in the Rockefeller Brothers Fund the late John D. Rockefeller, Jr. , contributed $58 million in 1951 and bequeathed to it half of his estate. Reflecting part of this bequest in the amount of $65 million, at the end of 1960 the Fund showed total assets of $116,173,369. 42 Appreciation since then, as already shown, has been great.
Since 1950, of course, these funds have been generating more income, most of which has been allocated in the form of grants.
It is clear, then, that a truly stupendous sum was directed from the fortune of a single individual into various medical, educational, scientific and general cultural projects, both in the United States and abroad. As most of these moneys consisted of dollars of much greater purchasing power than the present dollar, it is evident that in dollars of current value the disbursements were of far greater weight.
That all this was part of a far-reaching plan is denied by spokesmen for the family such as Professor Nevins and Raymond B. Fosdick. To the charge of critics that the benefactions were established as "a shield against public censure," or, as some charged, "conscience money," Fosdick, following Nevins, points out that Rockefeller in his 'teens, as a pious Baptist, was already giving to the church as much as 6 per cent of his earnings. He kept a meticulous record down through the years of all such gifts, which amounted to more than $1,000 annually by 1865 and to nearly $6,000 by 1869--goodly sums in those days. He gave $558. 42 in a lump to Denison University, for example, in the late 1860's. 43
Rockefeller, in other words, gave money all along, even as he saved and acquired it, and, as it appears in the Fosdick-Nevins accounts, merely stepped up the rate when he became very wealthy. Yet, that there was more to it than a mere continuation of charitable giving, is shown when these writers quote Gates.
Mr. Rockefeller, a prudent man, apparently showed some doubt at first about proposals of large-scale largesse, if such it was. Says Fosdick:
"Mr. Gates, who could never be anything but candid and forthright, used to thunder at the elder Rockefeller, 'Your fortune is rolling up, rolling up like an avalanche! You must keep up with it! You must distribute it faster than it grows! If you do not, it will crush you and your children and your children's children. '" 44 These remarks are taken from Gates's autobiography and one wonders, if Rockefeller was such a freehanded routine giver, why Gates had to "thunder" at him to drive home the message.
What Rockefeller really thought even Gates, who described him as "a very reserved man" who revealed "little or nothing of his own innermost thoughts," did not profess to know. 45 He may have had no thoughts to keep in reserve--a plain man.
A Domesticated Machiavelli
To me it seems a disservice to the Machiavelli of Standard Oil, whom even an apologist like Nevins shows continually embroiled with business and political opponents one after the other down through the years, to attempt to domesticate him in terms of churchly estimates of genteel benevolence. As the history of Standard Oil by any author, pro or con, clearly shows, Rockefeller was of a deeply conspiratorial, scheming nature, always planning years ahead with a clarity of vision that went far beyond anything any of his associates had to offer. It seems to me far more in keeping
with what we know of the man's character, as revealed by his business career, that he embarked on his large-scale philanthropies with at least some self-serving personal ends in view.
Until Gates took over, Rockefeller had been giving money away more or less helter- skelter, mainly to Baptist missionary societies. One gets the impression that some of this giving was merely to get rid of importunate suppliants, who, as Gates said, "beset" him. 46 When Gates joined Rockefeller, he very gradually converted the magnate to the idea of "scientific giving. " 47 This "scientific giving" slowly took the form of the great foundations.
Rockefeller very early saw that he was getting some mileage from his Baptist patronage. As early as 1889 when a small Baptist publication criticized the Standard Oil Company, all of whose leading figures were Baptists, the company was stoutly defended by the Examiner, official organ of the Baptist Church. 48 Had Rockefeller and his Standard Oil colleagues all been Jews or Catholics one trembles to imagine what the anti-Rockefeller movement would have been like! It could not have escaped Rockefeller's notice that whenever his money had been bestowed he had staunch friends.
His gradual conversion by Gates, it seems to me, shows Rockefeller in a better light in terms of intelligent motivation than many of his apologists indicate. These latter show him only as a compulsive, mechanical giver from the very beginning. Actually, he was a thoroughly responsible man within the light of his own interests and his understanding of them. As the center of raging and constantly intensifying public controversy, which made him in his time "the most hated man in the world," Rockefeller might well have suspected that he was leaving a bitter inheritance to his children and grandchildren. Again, the torrent of public criticism against him, in part at least calumny, could not help but have some effect upon his wife and children however much be discounted it personally as attributable to envy. He prized his son especially, as many remarks showed, and was always deeply pained at any criticism of him. When both father and son were being publicly criticized he said: "They have no right to attack Mr. John. All my life I have been the object of assault. But they have no ground for striking at him! " 49 Possibly Mr. Rockefeller now saw some valid ground for attacks on himself.
His family was, indeed, Rockefeller's Achilles Heel and it is not at all difficult to see that he wanted to make a better public impression than the one currently dominant for the family's sake if not his own. Rockefeller, therefore, as I see him, put his mind coldly to the problem and saw that what Gates and others recommended might at least divide the forces against him, perhaps turn the tide. His first tentative ventures in large-scale philanthropy suggested that this view was valid. Rockefeller did not plunge into philanthropy.
He was never a plunger, always made his moves in business, politics and philanthropy gradually and after careful thought.
Gradualism in Philanthropolity
That his large-scale entry into public philanthropy was very gradual and, after being undertaken, was spread out over a long period of time is shown by Nevins, who lists his donations for every year beginning with $2. 77 for 1855. Rockefeller kept a record of his donations, which prior to 1880, says Nevins, was incomplete. But in no year through 1877 was as much as $10,000 recorded as donations and not until 1884 was more than $100,000 donated. In 1887 the figure jumped to $284,116. 52 and in 1890 to $303,542. 78.
Up to the time when Gates joined him in 1891 his gifts had mainly been to the Baptists. In the 1890's his donations exceeded $1 million each in only five years. In 1892 his Ohio trust was dissolved by court order. Even though he had been
comparatively generous, all this up to 1900 was no more than chicken feed; the flood from the secret recesses of Standard Oil was still to come. In 1900 he put up more than $2 million and again in 1901. But in 1902, when the General Education Board and Rockefeller Institute were launched, he contributed $5,407,856. 78. Falling somewhat short of this amount for the next two years, in 1905, when public outcry against him was stupendous, he put up $13,602,820. 78. Although he was never to miss a year until death in these benefactions, the really big years were as follows:
1907
1909
1913
1914
1917
1919
1920
1928
$ 39,170,480. 52
71,453,231. 15
45,499,367. 63
67,627,095. 87
15,770,624. 48
138,624,574. 61
31,780,348. 24
19,964,455. 38
Not only did such munificence top anything else of record (and until Rockefeller and Carnegie came along, public donations were meager indeed) but the Rockefeller benefactions went nearly wholly into projects of, invariably high quality. To fault Rockefeller on the quality of his projects, one must fault the highly rated University of Chicago, Rockefeller University, the work of the Foundation in combating hookworm, yellow fever, malaria, typhus, influenza, tuberculosis, rabies, yaws, schistosomiasis and various other diseases, and the worldwide contributions to medical education, the financing of projects in experimental biology and other natural sciences, international relations and scores of other fields.
That kudos accrued to Rockefeller, particularly from the press and executive types in charge of projects in education, science and medicine, in place of the earlier brickbats, is not to be denied; but the seeking of praise for meritorious performance, if such was the case, is not in itself a fault. That Rockefeller preferred praise to adverse criticism is evident from the fact that Standard Oil early busily engaged itself in buying and surreptitiously financing newspapers. 50 The influencing of public opinion in his favor was a problem that Rockefeller long wrestled with before he found the right combination.
Prior to 1913 at least, the problem of taxes could not have influenced Rockefeller in his philanthropies because business and wealth were subject then only to piddling local taxes. Nor can it be held that the creation of the Rockefeller Foundation was a direct reflex to the advent of federal taxes in 1913 because the Foundation had long been planned, at least since 1905. The community of Big Business, it is true, was opposed to the new
taxes and Rockefeller's chief attorney, Joseph H. Choate, had been the lawyer who in 1893 convinced the Supreme Court that income taxes were unconstitutional; it was therefore necessary to amend the Constitution to enact income taxes. However, even though the advent of federal taxes did not influence the idea of the Foundation, it was gradually noticed by others that there were distinct tax advantages in making philanthropic allocations. This fact is now part of standard tax doctrine, set down in many tax treatises. Gifts to philanthropic funds pay no taxes, the income on such funds pay no taxes, and there is no inheritance tax on such funds. Furthermore, stocks placed in such endowments carry corporate voting power--a nice point. It should be recalled here that it is power really, rather than money or property, that we are concerned with.
Considerations such as these may not have occurred to Rockefeller during tax agitation prior to 1913 but it is hard to see that they could have escaped the notice of his lawyers. At any rate, the size of his philanthropic allocations increased markedly
beginning with the new tax laws. Whatever he did not allot to philanthropy was now going to incur income and estate taxes; and such taxes, he must have foreseen, would tend to increase rather than diminish.
As to the relation of taxes to philanthropolic capers the Wall Street Journal of August 2, 1967, points out that philanthropies would be sharply reduced if compensating tax reductions were reduced or repealed-an assertion made on the basis of a study by the Brookings Institution in collaboration with T. Willard Hunter, executive vice president of the Independent Colleges of Southern California. In this study there were interviewed 30 of 47 living philanthropists who in 1965 made 69 capital gifts of $1 million or more each for an aggregate of more than $93 million. The donors reported that $40 million, or 43 per cent of all, would not have been given if there was no tax reduction allowed; they also reported that had deductions been limited to the original cost of securities rather than to an inflated price, as has been proposed, the donations or allocations would have been reduced by 46 per cent. The donors themselves rated tax savings as fifth on a list of twelve considerations controlling philanthropolic maneuvers.
Actually, it can be shown that in many cases a donor can obtain for himself more indirect in-pocket income by being a generous philanthropist than by holding tightly to direct investments. Among many possible illustrations are the cases of big chemical proprietors who have donated entire schools and laboratories of chemistry to big universities, at huge but tax-deductible costs. What the chemical proprietors have now derived from the schools in the way of new discoveries and trained research chemists has given them a constant return of many hundred per cent on the original "donation. "
Peer-group esteem is gained on the finpolic circuit by such contributions that strengthen the entire finpol network. Rockefeller, finpolically speaking, was a very good neighbor, of vast benefit to all finpols.
On the basis of his own experience with legislators at the state and national level Rockefeller could not have felt reassured about what they might do with his money. He no doubt felt that he could make a more constructive disposition of it than they. With this view, if it was his, I concur. Even today one can have no rational confidence in the allocation of funds by any Congress the American people in their present low state of cultural development are likely to elect.
There were, at any rate, many advantages, perhaps foreseen and unforeseen, in the course he gradually adopted, not the least of which was wider public acceptance for himself and his family (for which he seems to me to deserve great credit), particularly at the hands of the educated and the middle classes. , The high quality of most of the Rockefeller projects particularly commended the man, and still commends him, to the cultivated, and lends strong color to the view of him as a Robin Hood who took, not from the rich for the poor but from grasping business rivals, politicians and an oafish squandering public and, now under severe public criticism, turned a substantial and possibly major portion of the loot over to institutions closely identified with high civilization--a triumph of the sardonic over the indignantly sentimental, a twisting of the knife in the philistines.
Rockefeller, thus, is a paradox. The biggest, most assiduous, most successful, sufficiently unscrupulous and most condemned acquisitor converted himself into the most munificent high-level giver. Rockefeller, late in life and possibly suiting the word to his Lord Bountiful actions, himself enunciated the elvish principle that "A man should make all he can and give all he can. " 51 If this was intended to mean (and it does not necessarily) that a man should try to make a great deal of money and give nearly all of it away, the program seems absurd to the point of the comical.
The Finpolitan Model
Although this chapter may appear, thus far, to be about the Rockefellers, it really is not. As I remarked at the beginning, the highly civilized Rockefellers: are featured here, perhaps sacrilegiously, purely for illustrative purposes. For what has become the "Rockefeller style" is in essence the finpolitan style, which copies the Rockefeller style in a general way. Many others do or pretend to do about as the Rockefellers do, perhaps not with as much earnest conviction.
"If the rich are capitalism's aristocracy," as William Manchester observes, "the Rockefellers: are its royalty. " 52 One is constrained to agree. They not only show the way in finpolitania; they invented it and appear to be deeply convinced of the constructiveness of their role, not an unusual human trait.
Various aspects of the life of the wealthy have been depicted by assorted writers. Perhaps the most popular, representing the role most of the hoi polloi see for themselves as rich people, has been the wealthy as irresponsible playboys, spendthrifts and more or less graceful idlers. This view is well conveyed in the writings of Cleveland Amory and others of the same genre. The next most compelling aspect has been the wealthy as ruthless grabbers, as shown by Gustavus Myers and Matthew Josephson. Some attempt, of less wide interest but in my view more significant, has been made to show the wealthy as contemporary social power wielders, as I and C. Wright Mills have done. On the American scene Thorstein Veblen first delved in depth into the role of the wealthy as socially irresponsible power wielders and exorbitant consumers. Individual critical biographies, as by Harvey O'Connor and John T. Flynn, have touched on all these aspects.
But the modes of being of the more mature among the established wealthy have by no means been fully explored. These modes turn out to be distant emulations, not always convincing, of the Rockefeller style. Although academic sociologists anxiously inquire into the most minute, interstitial phases of contemporary society, it is instructive to notice that there is no systematic sociology of the wealthy. The academicians seem to sense through built-in radar that this is taboo terrain and allow unanointed non-award- winning journalists, publicists, free-lancers and miscellaneous literate and offbeat ideologists to dominate the field which, it is true, promises little in the way of academic promotion. A notable exception among the certified sociologists is the suave E. Digby Baltzell, author of The Philadelphia Gentlemen and The Protestant Establishment: Aristocracy and Caste in America, the latter a penetrating study.
"The real truth is that very few of the social scientists look very deeply into the subject [of fortunes] for fear of being thought politically radical," says Professor Floyd Hunter in The Big Rich and the Little Rich (Doubleday & Co. , N. Y. , 1965, pp. 173-74). "There has been so much moralizing about the division of power and wealth in world society that an earnest consideration of what actually takes place in modem American economic affairs, politically, is left largely to sterile theoretical conjecture. There is no serious empirical study of socio-economic logistics of the distribution of wealth. There is no forthright, open discussion of what the phenomena of personal wealth really does for the community--or doesn't do. "
It could be shown, indeed, that there is room for at least 200 interesting books, as yet unwritten, in the field of the large American wealth-holders. As it is, the subject is largely taboo, in accord with imposed canons of respectability. Who would be so foolish or reckless as to court the stigma of disrepute by inquiring into the doings of the wealthy?
As C. Wright Mills discovered, not much material has been systematically gathered on this general subject of the sociology of wealth and one must, perforce, dig into whatever random outcroppings: are left available; data are systematically hidden. Nor
do there appear to be contemporary Boswells like the late Clarence W. Barron of the Wall Street Journal to make mordant secret notes on the inner doings of the contemporary tycoons. Perhaps some enterprise like that is going forward; if so, it has not yet come to light.
Although contemporary wealth is associated with the term "capitalism," in the finpolitan model capitalism becomes something more like super-capitalism. The term "monopoly capitalism" is in any event self-contradictory because capitalism does not allow of monopoly; it is competitive and its companies can fail. The super-capitalist companies, potential claimants to public subsidies, are permanently beyond failure, occupants of a politically protected haven. In search of a better term under the tyranny of old meanings, it would perhaps be better to speak of financial syndicalism, for the big finpolitan groups are in fact syndicates of concentrated yet widely deployed private holders with governments at their beck and call.
And as to concentration of holdings, we have yet apparently seen nothing like the destiny toward which the world is heading. In Multinational Corporate Planning, edited by George A. Steiner and Warren M. Cannon (Macmillan, N. Y. , 1966), it is pointed out that the big corporations are now multinational. "In the light of present trends and future prospects," say these percipient writers, "it does not seem at all impossible that in the next twenty years, six or seven hundred large multinational companies will be doing most of the world's business. This will indeed be pan-imperialist super-concentration.
The finpolitan corporation, or cluster of corporations, is a multinational corporation. Multinationality is a hallmark of finpolity.
Style Setters of Wealth
Rockefeller set at least two of the three major widely copied styles of operation for the American wealthy, and the finpolitan style just outlined is the one that is currently dominant, with variations.
The first Rockefeller exercise in style setting was the use of the trust as an instrument of corporate integration and monopolization. In 1872 when the Standard Oil Company of Ohio, the original company, secretly provided funds to acquire companies in other states, it placed the acquired stocks in the custody of one of its directors as a trustee. (Under law as it then stood it was illegal for any company to own other companies in another state. ) But Rockefeller, like other rising tycoons, was not deterred by a detail like legality. Furthermore, the law on trusts at the time was suitably vague. By 1879 the system was devised of having three officials of Standard of Ohio act as trustees of the acquired stock. They were not, the company contended, legally trustees for Standard of Ohio but, if for anybody, for the thirty-seven underlying stockholders of Standard of Ohio. These stockholders could roundly deny, as they did even on the witness stand, that Standard of Ohio owned these companies. It was all these acquired companies, scattered in many states, that secretly composed what came to be called the Standard Oil Trust. As far as the public knew, these companies were all competitors of Standard.
As word seeped into business and legal circles about this handy new arrangement, which long preceded the New Jersey holding-company law of 1889, other industries organized into trusts until there were soon a Sugar Trust, Whiskey Trust, Tobacco Trust, Rubber Trust, Shoe Trust, Butcher Trust, Furniture Trust, Coal Trust, Cotton- Seed Trust, Gunpowder Trust and many others. These were all actually secret cartels to regulate the market and hold up prices in the interests of the owners. Standard Oil was the first of the giant trusts.
How readily the unpublicized device could be used to baffle people is shown by an affidavit filed by Rockefeller in a Cleveland law suit in 1880, that read: "It is not
true . . . that the Standard Oil Company, directly or indirectly, through its officers and agents owns or controls the works of. . . . " Here followed the names in a long list of companies, the stock of which was secretly held by trustees employed by the Standard Oil Company of Ohio. 53
"Legally, this statement might be defended," says Nevins, a vacuous remark because
legally any action whatever is entitled to a defense. "The three trustees held ownership
and Rockefeller could say they acted not for the Standard but its stockholders. Actually,
to call the statement disingenuous would be putting the matter mildly; it was
equivocation. Such evasive tarradiddles were then too common in American business. " 54
What is pointedly false about this assertion is that the "trustees held ownership. " Trustees are not owners but agents. While it may be said that they were agents for the Standard stockholders, a closely knit group, they were in fact agents and employees of Standard of Ohio, whose stockholders held an interest in the acquisitions in proportion to their share of ownership of Standard of Ohio. Rockefeller's affidavit was perjury and a fraud on the court. 55
At the time, Rockefeller owned 8,984 out of 35,000 outstanding shares of Standard Oil, Henry M. Flagler 3,000, Stephen V. Harkness 2,925, Charles Pratt 2,700, Oliver H. Payne 2,637, J. A. Bostwick 1,872, William Rockefeller 1,600, J. J. Vandergrift 500, John D. Archbold 350, J. N. Camden 200, C. M. Pratt 200 and Ambrose McGregor 118. The Cleveland group, comprising Rockefeller's Baptist cronies, held 19,146 shares, a majority. 56
Each of the key Standard Oil units was duly found to be a law violator. First the Standard Oil Company of Ohio was held by the Supreme Court of Ohio in 1892 to be in violation of the law in its trust arrangement, was forbidden to continue it and ordered to pay the costs of the litigation. The assets were thereupon by an exchange of stock acquired by the Standard Oil Company (New Jersey), operating under the wide-open New Jersey holding company act of 1889, and to the Standard Oil Company of New York; these had approximately the same directors. Finally, in 1911, the U. S. Supreme Court found that the New Jersey company violated the Sherman Act and, tapping it lightly on the wrist, ordered it dissolved into its constituent corporate parts and the stock of each company distributed pro rata to each of its stockholders. Instead of owning one- quarter of one central company Rockefeller now owned one-quarter each of nearly two score companies!
Standard Oil in the foregoing was clearly guilty of noncapitalist behavior as, indeed, many of the fortune-builders have been. Critics of capitalism commonly lump together the behavior of strictly performing capitalists with that of operators outside the rules, thus making capitalism take the blame for much that is outside capitalism. This is not to say that capitalism, for its austerely stylized procedure, may not be the legitimate object of distasteful criticism; but capitalism surely should not be blamed for noncapitalist behavior. If a man robs a bank and is not caught, thus coming into the possession of a large sum of money, he has not according to the dicta of any school of economics acquired his money in a capitalist way.
Capitalism is an economist's ideal abstraction, concerned with aggregate results and average procedures. Many of the big fortunes, however, were built precisely because they departed in important respects from average procedures, precisely because their builders were anything but capitalists. Within capitalism, under the rules, one can lose; the fortune-builders never had any intention of submitting to disadvantageous rules that might land them in the bankruptcy courts. They had lawyers and legislators to assist them in avoiding the rough while benefiting from the smooth.
One learns little about the capitalism of the economists by studying the history of the big fortunes. John D. Rockefeller indeed became a capitalist, but not by practicing capitalism--at least not exclusively. Those who lost out to him, however, were often garden-variety capitalists.
A style Rockefeller neither set nor practiced, which was copied from an English innovator, was that of issuing "watered" stock in mushrooming corporate combinations. J. P. Morgan, William Rockefeller and almost the whole of the upper financial community went in for this exhilarating practice, through which patriotic investors were mulcted of billions and promoters either sold out or retained full control at no cost. This was not capitalism either. The Rockefeller companies were always closely held until the dissolution order of 1911, and Rockefeller never gypped fellow investors, In his acquisition of companies Rockefeller always tried to induce the sellers to take Standard Oil stock rather than cash, which most of them cannily refused to do and thus unwittingly threw away the chance of becoming incalculably wealthy. Sore losers, many of these later joined the accusing chorus against him.
But the successful style of how the well-tempered super-millionaire and his family should conduct themselves was definitely evolved by the hardpressed Rockefeller and Gates. This style required the creation of foundation philanthropies and the involvement of members of the family in publicly approved cultural, scientific and socially supportive projects. Although widely imitated, as were the Rockefeller trust and the English wateredstock ideas, it is a style subject to great variations.
The foundation idea, as we have already seen, has come to be a widely utilized scheme of tax evasion while maintaining tax-exempt corporate control.
Capitalism as a Scapegoat
The idea that capitalism is to blame for everything irrational, and that failure to face up to basic problems derives only from pro-capitalist bias, comes largely from socialists, who, in their super-heated zeal, present a vastly overdrawn indictment of capitalism. Even if we agree that capitalism--particularly unregulated, automatic capitalism of the classic variety that allows no modifications in terms of human needs-- is subject to rejection, it is not true that all social problems stem from the economic system. But according to many socialist (particularly Marxist) critiques, capitalism is to blame for all that is detestable or frightening about the contemporary world.
Actually no system, including socialism, will automatically produce good results. The contradictory is an unexamined notion that stems through the Physiocrats of the eighteenth century from the idea of a mechanical physical universe as given in Newtonian physics. Nature is automatic; whatever is automatic is natural; whatever is natural is good (itself a questionable notion). Therefore, a good economic system will be an automatic one, operating according to natural laws. Any viable socio-economic system whatever, as a matter of historical fact, needs constant modification from day to day at many points. Such being the case, any system is humanly troublesome, requiring constant revision and tinkering. Every system is bound to be far from perfect.
Without defending capitalism either in automatic or rationally modified form, one must nevertheless notice that capitalism contains within its theory no propositions directly or by implication stating support for racism, prostitution, ill treatment of criminal offenders, overpopulation, neglect of the mentally retarded, support of crime and the like. To this the socialist will reply: But capitalism, seeking only maximum profits, fosters callousness by seeing salvation only in profits; and, by directly and indirectly pressuring people through its profit-making machinery, induces much social havocalcoholism, emotional disturbance, delinquency and the like. Only infidelity
between the sexes appears to have been left out of the indictment, although Marx included even this.
