Flashbacks August 2006

Too Rich for Their Money

Articles from the early twentieth century to the present comment on the philanthropy of the superrich

It was an announcement only an oracle could have foreseen: Warren Buffett, the "oracle of Omaha," and second-richest man in the world, proclaimed in June that he would donate $31 billion to the individual who might seem to need it least: Bill Gates, the wealthiest man on earth.

In fact, the gift will be made to the Bill and Melinda Gates Foundation, the eponymous billionaires' fund to fight poverty and disease and improve education worldwide. Over the last decade, the foundation has given away over $10 billion in pursuit of its causes, from infant vaccination ($750 million) to the United Negro College Fund ($1 billion). Its work even landed Bill and Melinda Gates on the cover of Time in 2005, when they were named "Persons of the Year" along with Irish rocker Bono. Now Buffett joins their ranks as one of the world's preeminent philanthropists.

But while the magnitude of these merging philanthropic gifts may be unprecedented, the interest of the mega-rich in putting their treasure troves to charitable use is an old game, one that has been variably praised and critically deconstructed over the last century in the pages of The Atlantic.

In the earliest decades of the twentieth century, when infamous robber barons were attempting to cleanse their tarnished images through showy displays of benevolence, some commentators looked on with skepticism. Sociologist Edward Alsworth Ross was one such cynic. "Infamous businesses have sought to insure tolerance for their nefarious operations by giving heavily and conspicuously to charities with a strong sentimental appeal," he wrote in "Philanthropy With Strings" (September 1914).

Quite a few prominent businesses had been exposed at the time for fraud, price-fixing, worker exploitation, and other corporate sins. To Ross's surprise, however, one effect of all this bad publicity was an increase in the flow of charitable giving:

The resort to philanthropy as a means of propitiation becomes more general as the public becomes more and more critical of the ways of business. Eight or nine years ago it was often predicted that 'muck-raking' would so wound, exasperate, and alienate the rich that the fountains of benevolence would dry up. Exactly the opposite has occurred. Exposure has had a wonderful effect in loosening the purse-strings of the exposed and the exposable.

In "Philanthropic Doubts" (September 1921), Cornelia J. Cannon, a best-selling novelist and frequent social commentator, characterized the attitude of most charities as paternalistic and misguided in their failure to take into account the perspectives of those they sought to help:

Here is the Achilles heel of the philanthropic movement. In the soul of the philanthropist stirs a passion for betterment, a real desire that life shall be more endurable for us all. But in the method he employs he ignores participation by the 'others.' He uses the ways of an aristocracy instead of those native to a democracy.

Moreover, the wealthy, she suggested, take up charitable activities not so much as a means of genuinely improving the world but as another amusing diversion for themselves. "Rich Americans," she wrote, "have 'gone in' for philanthropy as the English gentleman goes in for sport. Each man has adopted his pet charity, has preyed upon his friends for help, and been preyed upon in turn."

And while deep-pocketed Americans happily—and ostentatiously—funded their own pet projects, Cannon pointed out that most were resistant to contributing their share toward those government projects designed to benefit the public good.

The typical lover of his kind will pour out money for the starving Chinese though he may hesitate to contribute to campaign expenses for public-school associations. The novice can catch the thrill of teaching folk-dancing to the tenement-house child or distributing bread tickets to the poor; but an offer to pay the expenses of a board of health 'cleanup campaign' requires imagination of a different order.

In 1935, as the Depression devastated millions of Americans, it seemed that Cannon's vision for the proper approach to social betterment was finally being realized: high taxes and immense government relief programs were the order of the day. Responding to this dramatic change, Abraham Flexner, an educator and the founder of the Princeton Institute for Advanced Study, wrote "Private Fortune and the Public Future," reminding readers that private philanthropy had a long and important legacy.

We happen to be living in an era when, in consequence of human gullibility and fallibility, the world has been overtaken by panic and distress such as private initiative alone cannot cope with ... but at this very moment when the government is doing all that it can humanely do in these various directions it behooves us to remember the essence of our tradition of private effort and benefaction.

Flexner implored Americans not to let the government suck the rich dry:

The institutions which are indispensable to higher education and philanthropy rely largely on the benefactions of private individuals; if these are stripped of the results of honest accumulations by taxation, death duties, inheritance taxes, and so forth, where are Harvard and Yale and Princeton to procure the funds needed for their development?

Private institutions such as universities, hospitals, and museums, he emphasized, play a vital role in bolstering quality of life, and, he wrote, they "carry on more economically and more effectively than similar institutions which are managed by public authorities."

And what of the mind of the philanthropist himself? In 1956, Helena Bullock, the wife of Harvard economics professor Charles J. Bullock, profiled the ultra-rich banker and philanthropist George F. Baker, for whom her husband's professorship was named. When her husband's position first became endowed by Mr. Baker, Helena reached out to him with a letter of thanks. Soon he became a family friend. In "Too Rich for Comfort," Bullock recalled some fond anecdotes.

Baker had more money than he knew what to do with, but while he was constantly implored to make donations to various causes, he tended to reserve his biggest gifts for already-wealthy institutions like Harvard Business School. Bullock did not at first understand the logic of this. But one morning when she was staying as a houseguest at Baker's summer estate, the difficulty of finding worthy and legitimate recipients was brought home to her.

When I went into his room the mail had just come. Such a pile of it.

"And not one real letter in the pile, probably all begging letters. I'll tell you what I'll do. If you will read them to me I'll do whatever you say about every one."

"Really and truly?"

"Cross my heart."

"All right. I have $300,000,000 and I'm going to grant every request."

"Very well. Go to it."

I remember the first one. It was from a young man who was studying to be a doctor. He had invented a machine that could be put on the back of a patient's neck where it would automatically register what ailed him and also what the cure should be. His uncle owned a piece of land on top of the Palisades and he wanted Mr. Baker to buy the land for $150,000 and build him a hospital there so that he could use this machine for the great benefit of mankind.

Regretfully I put this letter into the wastebasket. Even with three hundred million at my disposal I couldn't do that.

A great many of the letters were second or third attempts and merely threatening. "This is my third letter, and if this isn't answered in one week I shall shoot your son" or "kidnap your five-year-old granddaughter." Some of these appalled me but the old gentleman was unmoved and only beckoned them all toward the wastebasket.

I remember one from a young girl in Spokane. She said she was eighteen and her husband had recently died. He was eighty-four and his children had managed to keep all his property from her by saying that she wasn't really married to him, but she had the specifications for a patent the old man had once thought of taking out. Now her boy friend, who was a lawyer, said that if Mr. Baker would send him $50,000 at once he would start working on getting the patent.

By this time I was getting discouraged and I considered this briefly, but I couldn't quite make it, and this letter followed the others into the wastebasket.

I had saved till the last a letter whose sender was plainly a poor woman — cheap envelope, green ink — and I promised myself I would grant this request no matter how silly it was. The writer was the widow of a streetcar conductor in Chicago who was killed in an accident. The streetcar company was paying her a pension, comfortable enough, but she had five children and she wanted Mr. Baker to adopt them all and bring them up as his own. So my morning as a great philanthropist ended in a no score.

A more optimistic take came in 1959, with Harvard historian Arthur Schlesinger Sr.'s essay, "Our Ten Contributions to Civilization." He listed "Voluntary Giving" as number eight. While some commentators had quibbled over the relative merits of donations to private vs. public causes, or speculated about the self-interest possibly lurking behind such donations, Schlesinger reminded readers that they were fortunate to have to worry about "too much" philanthropy:

Foreigners have always criticized the American for his pursuit of the almighty dollar, but have seldom gone on to note that he has in unparalleled degree returned the fruits of his labors to society. If he has been hardheaded about making money, he has, so to speak, been softhearted about spending it. This constitutes the American version of the Old World concept of noblesse oblige carried to a point the Old World has never approached. Even long before Carnegie and Rockefeller amassed their colossal fortunes, men and women of modest means gave freely to schools, churches, foreign missions, colleges, hospitals, charities, and other projects for social betterment.

Not all Americans, however, are inclined to part with their fortunes. As a study cited in the October 2003 Primary Sources makes clear, generous billionaires like Buffett and Gates are in fact the exceptions rather than the rule.

Why tax the well-off? Because, two recent studies suggest, it's practically the only way to persuade them to spend money on anyone but themselves. Philanthropy isn't the answer: a survey from The Chronicle of Philanthropy reports that Americans making $70,000 or more dispensed a paltry 3.3 percent of their earnings to charitable cuases; in contrast, those making $50,000 to $69,999 gave 5.6 percent, and those making $30,000 to $49,999 gave 8.9 percent.

But for those who do go in for charitable giving, some have been taking a more active role than in the past. In "Finance: The Unifying Theme" (July 1993) Brendan Murphy profiled George Soros, a man not content to sit back and simply write checks. Soros preferred instead to try to seize the helm of history—investing in Eastern European democracies and extra-governmental groups the world over, with a view to toppling communist regimes and instituting a new reign of openness, education, and democracy.

A man like Soros, of course, who began life with little and managed to amass a large fortune through his own efforts, could have simply decided to revel in the fruits of his labor. So the question was —why give it away?

To Soros, the answer was straightforward. In response to that question, he offered an anecdote—paraphrased by Murphy—about his time in hiding during World War II:

Holed up in a Budapest cellar at one point, he passed long hours with his father and brother playing games, a small cache of candies being the stakes. He and his brother saved up the sweets they won—but Tivadar Soros [George's father] ate his winnings. "The point is that you have to do something with the bonbons," Soros said. "You can't just play with them and you can't just eat them all."
—Ryder Kessler
Presented by

Ryder Kessler is an intern for The Atlantic Online.

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well. Bestselling author Mark Bittman teaches James Hamblin the recipe that everyone is Googling.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well.

Video

Before Tinder, a Tree

Looking for your soulmate? Write a letter to the "Bridegroom's Oak" in Germany.

Video

The Health Benefits of Going Outside

People spend too much time indoors. One solution: ecotherapy.

Video

Where High Tech Meets the 1950s

Why did Green Bank, West Virginia, ban wireless signals? For science.

Video

Yes, Quidditch Is Real

How J.K. Rowling's magical sport spread from Hogwarts to college campuses

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

More in National

More back issues, Sept 1995 to present.

Just In