The Magazine

Follow the Money

What people do with their wealth is whose business?

May 27, 2013, Vol. 18, No. 35 • By MARTIN MORSE WOOSTER
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One almost feels like shedding a tear for rich people these days. They are regularly pilloried by President Obama and his acolytes on editorial pages and talk shows as selfish greedheads who need to be taxed, and taxed again, as punishment for their wealth. Malcolm Forbes loved to show how his money let him pursue his endless enthusiasms, such as flying a balloon or buying artifacts for his collections. But if Forbes were alive today, the grim, prim Gradgrinds of the left would relentlessly attack him for daring to spend his wealth on activities he enjoyed.

John D. Rockefeller Jr., ca. 1943

John D. Rockefeller Jr., ca. 1943

Getty

What about rich people who leave their fortunes to charity? Here, Robert F. Dalzell Jr. examines Americans’ changing attitudes towards philanthropists through case studies of the 17th-century merchant Robert Keayne, George Washington, the 19th-century entrepreneurs Amos and Abbott Lawrence, and the Rockefeller family. His concluding chapter is about the more important philanthropists of today, as well as the Occupy movement.

Except for Robert Keayne, all the subjects of Dalzell’s case studies have been the subjects of earlier books by the author. Dalzell, professor emeritus at Williams, may be an experienced business historian, but this thin book adds little to our knowledge, and it says nothing about what the rich “cost us.” His concluding chapter shows that Professor Dalzell knows less about contemporary philanthropy than the average blogger.  

Dalzell correctly argues that dislike of the rich long antedated the recent rantings of the Occupy movement. Indeed, Keayne may have been the first guilty rich person in America: He was a merchant who imported most of the nails that were used by the Puritans to build homes in Massachusetts. When Keayne died in 1656, he left an estate of £2,569—an enormous sum for the time. Because many people assumed he had started life with nothing, rumors were spread that Keayne’s wealth had come as a result of his being a monopolist who gouged his customers. These critics, Keayne wrote in his will, would “load me with diverse reproaches and long to lay me under a dark cloud.” He argued that, in 50 years of business, he had increased his profits by £100 a year, an amount that any “tradesman or merchant that hath a full trade” could earn. After carefully disposing of his possessions (his wife received his second-best bed, his son his best one), Keayne left a third of his fortune to the people of Massachusetts to build the city of Boston’s first library and first armory. The “dark cloud” that had hung over Keayne’s reputation gradually dissipated.

George Washington left little of his estate to charity, so Dalzell has little to say about him. The author is better in his discussion of the brothers Amos and Abbott Lawrence, who started off making money from merchant shipping and then, in the middle of the 19th century, used their wealth to create the giant textile mills in what became Lawrence, Massachusetts. Amos Lawrence delighted in handing books and coins to people he saw on the street. When asked why he did this, Lawrence cited the Book of Ecclesiastes: “Cast thy bread upon the waters, for thou shalt find it after many days.” But Amos Lawrence also gave Williams College its first library and a telescope, and his brother Abbott helped Harvard’s science program grow dramatically. (The Lawrence family continued to be major donors to Harvard, and one of Abbott Lawrence’s grandchildren, Abbott Lawrence Lowell, was Harvard’s president during 1909-43.)

Dalzell devotes more pages to the Rockefellers than to anyone else, but his portrait is, by and large, the standard one. John D. Rockefeller, when he became rich and famous, was besieged by mendicants and eventually hired a staff to deal with the fortune-seekers. This staff evolved into the Rockefeller Foundation, which largely separated itself from its founder upon its creation in 1913; by 1919, the split between the foundation and its creator was complete. 

John D. Rockefeller Jr. appears to have been genuinely conflicted about being the only son of the world’s richest man: The younger Rockefeller had several “extended vacations” between 1894 and 1904 that appear to have been nervous breakdowns. But after 1905, “Junior” found his own voice as a political liberal and cultural conservative. While he quietly endorsed the hard-line liberalism of the Rockefeller foundations, his sound taste in art can be seen in the Cloisters and the Chinese collections at the Metropolitan Museum of Art in Manhattan. 

Dalzell’s chief complaint about the younger Rockefeller is that he bought art produced by commission from rich people of earlier generations. But just because Qing dynasty emperors commissioned the vases Rockefeller bought does not mean the vases are not worth collecting! It’s unlikely that Rockefeller purchased medieval art from Europe and China to glorify the upper classes of the past; he bought art that he liked—and John D. Rockefeller Jr. had very good taste.

(Dalzell’s concluding chapter, on contemporary philanthropy, is superficial. He has grabbed the annual issue of Forbes profiling the 400 wealthiest Americans and supplemented it with Kitty Kelley’s biography of Oprah Winfrey and a few clips from Fortune and the New York Times.)

In Dalzell’s view, the “Giving Pledge” of Bill Gates and Warren Buffett is the central philanthropic issue of our time. Gates and Buffett have urged their fellow billionaires to devote at least half of their fortunes to charity, and have enlisted over 100 plutocrats to join them, including Michael Bloomberg, George Lucas, and Mark Zuckerberg. Dalzell is bothered that more billionaires haven’t agreed to sign this pledge, and faults both Oprah Winfrey and Steve Jobs for failing to give more to charity. But the history of nonprofits teaches that charitable contributions often do more harm than good. The donors who use their wealth to create perpetual foundations ensure that most of their fortunes will perpetuate the permanent class of the liberal mandarins, who require first-class air fares and five-star hotels as they travel to endless summits, communing with the great and good about the mighty issues that will remain unresolved after a lifetime of junketeering.

It is far better to judge the rich not on how much they give to charity, but on where the money goes. Does their money go to groups who help the poor become productive members of the labor force, or does it go to nonprofits who see their primary role as   lobbying to increase the size and cost of the welfare state? Does their money support artists whose work is heroic and life-affirming, or depressing and life-denying? The Good Rich and What They Cost Us adds very little to the debate over how the richest Americans should spend the wealth they have created.

Martin Morse Wooster is a senior fellow at the Capital Research Center and the author of Great Philanthropic Mistakes.