When Rockefeller Medicine Men was first published in 1979, it proved to be a controversial work. In reviewing histories of medicine from 1962 to 1982, Ronald L. Numbers called it "the most controversial medical history of the past decade."' This reprinting of the book provides an opportunity to respond to some of the book's critics as part of a continuing dialogue about the issues it raises.
Part of the controversy generated by the book comes from its social-historical approach to medicine. The growing body of social histories of health care challenges the "great physician" perspective that for so long has dominated the history of medicine.2 Some are dismayed by this new approach to health care, particularly when it involves a critical examination of the broader social, economic, and political contexts of medicine and health-related developments.3 Indeed, 'heroic physicians and medical milestones,"4 whether innovative teachers of clinical practice or breakthrough discoveries by brilliant researchers, do have a profound effect on the development of medicine's technical knowledge and practice. But the history of medicine, like the history of any other social phenomenon, is more than an intellectual history. The actions of men and women, including leaders and the masses of people who follow and participate in professions and social movements, are shaped by economic, political, and social forces as well as by ideas. Ideas themselves develop in a broader context, which they shape but which also shape them.
Perhaps the most substantive and influential criticism has come from Paul Starr, who devoted two pages of his own history of American medicine to critiquing my interpretation of the role of the Rockefeller foundation and the corporate class in the development of American medicine.5 Starr argues that the character and power of American medicine is a product of its "cultural authority" as well as of the political power it mobilized. He attributes prime importance to American medicine's overcoming its lack of technical credibility with the public, both the well-educated strata and the poorer classes, in the late nineteenth century. He believes that somehow medicine won cultural authority, by which its "definitions of reality and judgments of meaning and value [prevailed] as valid and true," and that this authority permitted the profession to wield sufficient political power to protect and extend its social and economic interests.'
It should be noted that Starr's thesis concerning the role of cultural authority is similar to my argument in Chapter 2 concerning the role of scientific medicine in elevating the status and power of the medical profession. I argue that by embracing science the medical profession gained not only more effective techniques, but also technical credibility beyond the actual medical value of contemporary scientific progress in medicine—a credibility that enhanced the profession's legitimacy in a world increasingly dominated by industrialization and technology. Technical credibility and social legitimacy were important weapons in the efforts of the profession's leaders to lift medicine from the ignominious position it occupied throughout most of the nineteenth century. I characterize scientific medicine as providing an ideological tool to leaders of the medical profession in their campaign to elevate medicine. Starr sees the medical profession as gaining cultural authority because of a belief in its broad technical competence that spread among the populace in ill-defined ways. Both accounts give considerable weight to this belief in creating a base of popular support for the profession's increased economic and social power. However, my analysis focuses on the conscious actions of the profession's leaders to take advantage of this spreading legitimacy, while Starr's analysis remains more ambiguous about how this cultural authority was actually translated into the power to elevate the profession.
Starr and I also differ on the role of powerful groups outside the profession in transforming American medicine. In Chapter 3 1 argue that, although medicine's newfound credibility was growing in many public sectors, one of the most important sources of support was among leading institutions of the corporate class. Individual philanthropists gave modest sums to build community hospitals, but the foundations created by corporate giants as philanthropists provided hefty grants to build medical schools, research laboratories, and teaching hospitals. Although Starr acknowledges their role, he implicitly reduces the importance of their contribution without presenting clear evidence in support of his interpretation. Starr parts company with my analysis on the question of why the leaders of these foundations, and of the Rockefeller philanthropies in particular, so generously supported the development of medical science, reform in medical education, and public health.
Let me first describe Starr's account of my views, for therein lies part of the problem with his critique. Despite his eloquent prose, Starr creates a caricature of my argument. He claims I contend that 'capitalists personally exercised control over the development of medicine through the foundations they established."7 Noting that I argue that Rockefeller philanthropy officers saw great value in medicine's cultural role as a subtle purveyor of the dominant ideology, Stan adds sarcastically, that "one must, I suppose, have a deep appreciation of the fragility of capitalism to imagine that it might have been threatened by the persistence of homeopathy."8 But as the reader of this book will soon observe, Starr misrepresents my position. I show that foundation programs were developed and directed not by John D. Rockefeller, Sr., and Andrew Carnegie, the men of wealth who created the foundations, but rather by foundation officers, acting as managers of philanthropy, rather like the managers of Rockefeller's and Carnegie's industrial empires but with somewhat more authority. It was the Reverend Frederick T. Gates (not Rockefeller, his employer) who, both as a manager of Rockefeller's wealth and as chief architect of the Rockefeller medical philanthropies, articulated the role that medicine might play in shaping society. And it was Gates and other officers who developed the strategies by which the foundations might shape medicine.
Although the Rockefeller philanthropy governing board later did fear for the continued existence of wealth and even capitalism,9 Gates was motivated by a desire for social improvement-—not by fear—at the turn of the century, when he was leading the development of the Rockefeller Institute for Medical Research. As the archival record demonstrates, he was concerned with improving the health of human resources (the workforce) and with extending industrial culture and the ideological perspective of capitalism to those in the United States and abroad who did not share them. For Gates, medicine could improve the health and productivity of workforces and populations if it was scientifically based and emphasized prevention as well as cure. And it was an especially good vehicle for cultural transfer because medicine is "a work which penetrates everywhere."10
My interpretation of Gates's views does not rest on "the fragility of capitalism," as Starr suggests. Rather, Gates was an exponent and ardent advocate of the social value of medicine for improving and strengthening corporate capitalism. These views and goals that Gates articulated, often with great passion, shaped the Rockefeller medical philanthropies' early strategies for improving health and well-being in ways described in Chapter 3. And the Rockefeller programmatic strategies were trendsetters for other foundations as well. Although he provides no evidence, Starr attributes the Rockefeller largess to medical research and education in the interest of philanthropists "in legitimating their wealth and power by publicly demonstrating their moral responsibility in ways congruent with the cultural standards of an age that increasingly revered science."11 This is a popular rationale propounded by authorized Rockefeller biographies and foundation histories, but it has little support in the archival record I found.
In his account of the reform of medical education Starr emphasizes historical developments and the growing cultural authority of the medical profession and downplays the explicit leadership role of the Rockefeller and Carnegie philanthropies. He implicitly takes issue with the weight given by myself and others12 to the role of the Rockefeller philanthropies in educational reform, although he neither critically examines our evidence nor provides support for his alternative perspective. In my view. Starr even diminishes the importance of specific leaders within the American Medical Association, instead describing institutional changes devoid of the political dynamics that actually bring about these changes. Although acknowledging the role of political power. Starr describes a diffuse political process based on the profession's growing credibility. For example, in his account the AMA's Council on Medical Education appears a natural outgrowth of efforts to improve medical education. This progression begins with the reforms at Harvard by university president Charles W. Eliot in 1870, continues with the founding of the forerunner of the Association of American Medical Colleges in 1890 and the opening of the Johns Hopkins medical school in 1893, and extends to the reforms of the new century. In Starr's narrative, only certain people stand out as doing battle in this process, particularly Eliot, who forced reforms on some of Harvard's reluctant medical faculty, and individual practitioners whose oxen were gored by the reforms.
Starr ignores the role of Arthur Dean Bevan (the combative and wily chair of the AMA's Council on Medical Education), the relationship between Bevan and Henry S. Pritchett (president of the Carnegie Foundation) and Abraham Flexner (author of the famous Carnegie study of medical schools), and the important role of Frederick Gates in directing the Rockefeller involvement in the reform and development of medical education. Bevan was the chief strategist in the AMA's efforts to reform medical education in order to improve the training of physicians and to reduce their numbers and raise their social status and income. He consciously sought the legitimacy that the Carnegie Foundation could provide to the profession's efforts (a transfer of cultural authority, if you like), hoping that such legitimacy would then guide the philanthropy of wealthy men and women who might provide the funds needed for medical education reform. Pritchett complied with Bevan's request that the foundation conduct a "no holds barred" critique of American and Canadian medical schools, even keeping secret the foundation's close relationship with the AMA.
Gates hired Flexner to run the Rockefeller philanthropies' medical education program that provided princely sums for the reform of medical education. Gates supported the profession's reform efforts—but with a twist. He insisted that all recipient institutions adopt the strict full-time policy for clinical faculty, making this policy the cornerstone of the Rockefeller philanthropies' prodigious funding of reform. Gates was adamant about this policy because he saw it as a way to bring the medical profession to heel, forcing it to serve the needs of all society rather than the profession's own narrower self-interest. Gates believed that "commercialism" in the medical profession "confines the benefits of the science too largely to the rich, when it is the rightful inheritance of all the people alike, and the public health requires they have it." But, as 1 show in Chapter 3. Gates's primary concerns were to improve the productivity of workers in the United States and those in other lands and to inculcate acceptance of industrial capitalism and, in particular, the prevailing social order in the first quarter of this century. Gates was a leading member of the corporate class, and he unequivocally believed that he was furthering the interests he shared with other members of that class.
Other foundations have continued up to the present to pursue Gates's goal of rationalizing American medicine so that it might better meet the needs of the larger society rather than being dominated by narrow interest groups within the profession. But unlike many foundation directors in recent years. Gates was willing to go to war with the profession, using the enormous endowment of the Rockefeller philanthropies as his artillery to pound the medical school turf in clinical departments that had been staked out by medical practitioners. As 1 argue in Chapter 4, Gates ultimately lost this battle, and the foundation has been tamer ever since in its efforts to rationalize medicine. 13
Because of these omissions and the corresponding emphasis on the profession's cultural authority, Starr's book conveys an impression of a natural progression rather than a series of gains and losses by groups and individual leaders, often involving hard-fought battles over economic and status interests as well as differing ideas. Certainly the spreading and deepening political and social receptivity of the public to developments based on science, or at least associated with science, was an important basis for the reform and elevation of medicine. But these beliefs provided only a necessary base of support. The driving force, in my view, was ihe political and economic power secured by the medical profession's leaders on behalf of [heir very conscious campaign. And one of the most important sources of this power was an alliance—at times strong, at other times weak—with some of the wealthiest and most influential agencies of corporate capitalism, the foundations established by the foremost captains of industry and run by occasionally visionary managers.
Foundations today play a less significant role in shaping the health care system in the United States than they did from the turn of the century to the 1930s. In part, this lesser role is due to the growth of the health sector in the economy, the financial role in that sector of private insurance and government programs, and the relatively small resources available to foundations. In 1983. foundation spending accounted for just 0.2 percent of total national health expenditures. Foundations provided $712 million for domestic health-related grants in that year, a substantial decline in real (inflation-adjusted) dollars from the 1975 level.14
The approach of major foundations, like the Robert Wood Johnson Foundation, is explicitly cautious. Eli Ginzberg has identified a number of important challenges in health policy and organization that foundations have avoided taking up, preferring instead to shape the system at the margins and to refrain from challenging either government or established interest groups within the health system. For example, although foundations have supported demonstration projects to improve ambulatory care services to middle-class and poor patients, no foundation has critically assessed the dominance and centrality of the hospital in the health care delivery system (despite the fact that hospitals consume 40 percent of total health expenditures); and although some foundations are exploring small-scale approaches to providing coverage for the nearly 40 million Americans who lack any health insurance protection, none has supported assessments of the possible gains that may be realized by revamping our pluralistic health care financing system into a national health insurance program.15
Alternative foundation grants and studies along these lines might challenge the medical profession, the hospital industry, the insurance industry, and some government policymakers, resulting in controversy, political conflicts, and public scrutiny—all contrary to the operating principles of philanthropic foundations. Despite the fact that foundations seem to share with Frederick Gates a strong interest in rationalizing health care and supporting the development of bio-medical research, they now appear timid compared to Gates's often contentious approach. Nevertheless, these contemporary patterns cannot be fully comprehended without studying their roots in the history of the leading foundations and their leaders who helped shape our present health care system and institutions.
- Ronald L. Numbers. "The History of American Medicine: A Field in Ferment." Review in American History- 10 (1982). 245-63.
- For a lucid discussion of this conflict, appropriately set in the history of the field, see Susan Reverby and David Rosner, "Beyond 'the Great Doctors.'" in Reverby and Rosner, cds.. Health Care in America: Essays in Social History (Philadelphia: Temple University Press. 1979), pp. 3-16. Numbers, "History of American Medicine." includes a brief discussion of the subject from a different point of view.
- See. for example. Lloyd G. Stevenson. "A Second Opinion, " Bulletin of the History of Medicine. 54 (1980). 134-40. written by the editor because he disagreed with a favorable review.
- Numbers. "History of American Medicine."
- Paul Starr. The Social Transformation of American Medicine (New York: Basic Books. 1982). pp. 227-29. 6 . Starr. Social Transformation, pp. 13-24. '.
- Starr. Social Transformation, p. 227.
- I. Ibid. '.
- See pp. 130-32 and 167-71 of this book.
- See p. 122 of this book.
- Starr. Social Transformation, p. 122. Also see his comments about an article by Howard S. Berliner. "A Larger Perspective on the Ftautcr Report." International Journal of Health Services, 5 (1975). 573-92.
- Howard S. Berliner. A System of Scientific Medicine: Philanthropic Foundations in the Flexner Era (New York: Tavistock. I985).
- On Bevan and the Carnegie Foundation, see pp. 138-52 of this book: on Gates, the Rockefeller philanthropies, and the full-time plan, sec pp. 155-76. For Starr's view, see pp. 112-23 of his book.
- Betty L Dooley. "Patterns in Foundation Health Giving." Health Affairs. 6 (1987). 144-56.
- Eli Ginzberg. "Foundations and thc Nation's Health Agenda." Health Affairs. 6(1987). 128-40. For additional evidence of Ginsberg's argument, sec also Jeffrey C. Merrill and Stephen A. Somers. "The Changing Health Care System:
A Challenge for Foundations." Inquiry, 23 (1986), 316-21. and Jane Stein. "Health Care Foundations Take Long-Range View, says Aiken." Business and Health, 2 (October 1985). 46-49.
The crisis in today's health care system is deeply rooted in the interwoven history of modern medicine and corporate capitalism. The major groups and forces that shaped the medical system sowed the seeds of the crisis we now face. The medical profession and other medical interest groups each tried to make medicine serve their own narrow economic and social interests. Foundations and other corporate class institutions insisted that medicine serve (he needs of "their" corporate capitalist society. The dialectic of their common efforts and their clashes, and the economic and political forces set in motion by their actions, shaped the system as it grew. Out of this history emerged a medical system that poorly serves society's health needs.
The system's most obvious problems are the cost, inflation, and inaccessibility of medical care in the United States. Total health expenditures in this country topped $200 billion in 1979, nearly $1,000 for every woman, man, and child. Far more of society's resources now go into medical expenditures than ever before; twice the portion of the Gross National Product was spent on medical care in 1980 than in 1950.
We pay for these costs through our taxes, health insurance premiums, and directly out of our pockets. Public expenditures—four out of every ten dollars spent on personal health services—come out of our taxes. Private health insurance and direct out-of-pocket payments each account for about three out of every ten dollars. No matter what form it takes, the entire $200 billion originates in the labor of men and women in the society. President Carter estimated that the average American worker works one month each year just 10 pay the costs of the medical system.
Most people feel they should be getting a lot for this money, but instead they find that it is difficult even to get the care they need. Primary care physicians—general practitioners, paediatricians, internists, and gynaecologists—are scarce. Doctors and hospitals are clustered in the "better" parts of our cities and largely absent from the poorer sections and rural areas of our country. For the millions of Americans covered by Medicaid (the government subsidy program for the public assistance-linked poor), the coverage has been as sparse and degrading as the demeaning clinics it was supposed to replace. The middle class and the poor share at least long waiting periods for doctors, one of the most common constraints on the accessibility of physicians. Instead of creating a humane and accessible medical care system, Medicare and Medicaid have helped fuel inflation in medical costs by dumping new funds into a privately controlled system ready to absorb every penny into expansion, technology, high salaries, and profits.
A second, somewhat less widely discussed, problem is the relatively small impact medical care makes on the population's health status. Despite a plethora of new diagnostic procedures, drugs, and surgical techniques, we are not as healthy as we believed these medical wonders would make us. Some critics, like social philosopher Ivan Illich,2 accuse medicine of making us sicker—physically, politically, and culturally—than we would be without it. Many analysts have documented the medical profession's social control functions, medical technology's frequently adverse effects on our health, and medicine's neglect of important physical and social environmental influences on our health.5 Instead of medicine liberating us from the suffering and dependency of illness, we find that its oppressive elements have grown at least as rapidly as its technical achievements.
Why has medical care grown so costly so rapidly? Why is it so plentiful and yet so inaccessible? How did medicine become technically so sophisticated but remain socially unconcerned and even repressive?
A popular but too facile answer is that such problems are characteristic of technology and industrialized societies. According to this argument, technology and industrialization impose their own limits on forms of social organization and produce similar kinds of problems that call forth similar solutions. Medical sociologist David Mechanic finds problems of cost, organization, and ethical dilemmas in medicine widespread among industrialized countries and concludes that "the demands of medical technology and the growth of the science base of medical activity produce pressures toward common organizational solutions despite strong ideological differences."4 Illich asserts that "pathogenic medicine is the result of industrial overproduction."5 In this view, technology has a life of its own, imposing its imperatives on individuals and social organization. By focusing on widespread patterns of industrial organization and technological development, these analysts conclude that technology and industrialization are universal determining forces.
Such technological determinism ignores the particular history in which society and technology interact. In the Marxian view, technology and economic organization constantly shape each other in a dialectical process. Individuals and groups who own the resources and control the organization of production, far from being at the mercy of "neutral" technology, introduce innovations that serve their own ends and oppose those that would serve other interests than their own. These innovations may neglect broader community needs and may hurt the interests of others. Machines and factories undermined the autonomy and even the economic existence of independent craft workers. Hospitals and their expensive equipment may tie many health workers to monotonous jobs and use funds that might otherwise go for more widely distributed community clinics. Those affected by these technological developments may resist them and force their modification. Workers may organize into unions and gain some control over the relations of production. Communities may organize to block hospital expansion and force development of more community-based clinics. In sum, the political-economic organization of society generates certain types of technological innovation and not others, and these innovations generate new social forces that modify technology and political-economic relations.6
This book sees scientific, technological medicine not as the determining force in the development of modern health care but as a tool developed by members of the medical profession and the corporate class to serve their perceived needs. Individuals and groups who possess needed resources can apply them to develop certain types of technological innovation in medicine. Those who have the requisite resources can also apply the resulting technological innovation to serve their economic and social needs.
In the United States medicine came of age during the same period that corporations grew to dominate the larger economy. As corporate capitalism developed, it altered many institutions in the society, medicine among them. Its influence was created not simply through cultural assimilation or the demands of industrial organization but by persons who acted in its behalf. This interpretation does not suggest that history is made by dark conspiracies. Rather, it argues that the class that disproportionately owns, directs, and profits from the dominant economic system will disproportionately influence other spheres of social relations as well.
Members of the corporate class, including those who own substantial shares of corporate wealth as well as the top managers of major corporate institutions, naturally try to ensure the survival of capitalist society and their own positions in its social structure. In the case of medicine, members of the corporate class, acting mainly through philanthropic foundations, articulated a strategy for developing a medical system to meet the needs of capitalist society. They believed their goals for medicine would benefit the society as a whole, just as they believed that the private accumulation of wealth and private decisions about how to use that wealth and its income were in the best interests of society. In this book, we will examine the strategies they developed during the Progressive era and the reasons for their actions, leaning heavily on the public and private thoughts of some persons centrally involved in these efforts. We will describe and analyze the interests and strategies of the medical profession and of the corporate class as they developed independently, coalesced, and then clashed. We will also see that the government has increasingly taken over the strategies and struggles begun by the corporate class.
The corporate class influenced medicine, but it could not control it absolutely. The market system in medical care provides special interest groups—today including doctors, hospitals, insurance companies, drug companies, and medical supply and equipment companies—with the opportunity to develop their own bases of economic power, enabling them to carve out and defend their turfs in the marketplace. The larger business class stands "above" these interest groups, trying to tame and coordinate the leviathan but nonetheless committed to private ownership and control and also enjoying medicine's legitimizing and cultural functions. The relationships and the contradictions that emerged among the corporate class and these medical interest groups profoundly influenced the organization and content of today's medical system.
From our vantage point today it is difficult to believe that in the late nineteenth century the medical profession lacked power, wealth, and status. Medicine at that time was pluralistic in its theories of disease, technically ineffective in preventing or curing sickness, and divided into several warring sects. Existing professional organizations had virtually no control over the entry of new doctors into the field. Physicians as a group were merely scattered members of the lower professional stratum, earning from several hundred to several thousand dollars a year and having no special status within the population.
By the 1930s, however, medicine was firmly in the hands of an organized profession that controlled entry into the field through licensure and accreditation of medical schools and teaching hospitals. The profession also controlled the practice and economics of medicine through local medical societies, "Medicine" had come to mean the field of clinical practice by graduates of schools that followed the scientific, clinical, and research orientations laid down by the American Medical Association (AMA) and by Abraham Flexner in a famous report for the Carnegie Foundation. All other healers were being excluded from practice. Physicians were increasingly drawn only from the middle and upper classes. The median net income for nonsalaried physicians in 1929 was $3,758, above the average for college teachers but below the faculty at Yale University and below the average for mechanical engineers.7 Overall, doctors were rapidly rising in income, power, and status among all occupational groups.
In the 1970s physicians have continued to climb to the top rungs of America's class structure. The median net income of office-based physicians—$63,000 in 1976—places them in the top few percentiles of society's income structure. In 1939 the average earnings of doctors were two and a half times as great as those of other full-time workers, but by 1976 the gap had increased to five and a half times. Doctors rank with Supreme Court justices at the top of the occupational status hierarchy. And in recent public opinion polls, more Americans said they trusted the medical profession than any other American institution—including higher education, government (of course), and organized religion.8
Rising "productivity" has been an important factor in physicians' efforts to raise their incomes, status, and power. The medical profession has drastically controlled the production of new physicians and has delegated to technicians and paraprofessionals below them the tasks they no longer find interesting or profitable. With rapidly expanding medical technology, more and more tasks were shifted down the line to a burgeoning health work force. At the beginning of this century two out of every million health workers today, only one in twelve is a physician. Thus, doctors have increasingly become the managers of patient care rather than the direct providers of it.9
As medical managers, physicians have found themselves drawn out of private practice into employment in hospitals, research, teaching, government, and other institutions. Today four in ten doctors are employed in such institutions, compared with one in ten in 1931. These physicians have had fewer material interests in common with private practitioners and have shown little political support for the AMA.10
Physicians entered a struggle to maintain their position at the top of the medical hierarchy soon after that position was won. The challenge has not, for the most part, come from below, except for recent attempts by nurses to increase their authority in patient care. Doctors have found themselves in a struggle with hospitals, insurance companies, medical schools, foundations, government health agencies, and other groups with an interest in a more rationalized health system—one in which the parts are more coordinated hierarchically and horizontally and in which more emphasis is given to capital-intensive services. The conflict has emerged between organized practitioners as one interest group, what Robert Alford calls "professional monopolizers," and all the groups seeking to systematize health care according to bureaucratic and business principles of organization, what Alford calls "corporate rationalizers." 11
OTHER INTEREST GROUPS
In challenging the power of organized medicine to protect its interests, hospitals, particularly through the American Hospital Association (AHA), have tried to appear the "logical center" of any rationalized health system.12 In their transformation and growth from asylums for the sick and dying poor to their twentieth-century role as the physician's workshop, hospitals developed a powerful position in modern health care as the major locus of medical technology. Because of physicians' growing reliance on technology, hospitals were absorbing an increasing share of dollars spent on medical care. Public and private health insurance (really, medical care insurance) developed as a stable source of income, enabling hospitals to expand their facilities. Collectively, hospitals have become a major force in the medical system, consuming 40 percent of the nation's annual health care expenditures. Blue Cross and Blue Shield (the "Blues"), created in the 1930s and 1940s by hospital associations and medical societies, respectively, together with commercial insurance companies now control 30 percent of medical care expenditures, mostly emphasizing hospital-based technical care. They have developed economic and political clout commensurate with their dominating fiscal role.
While the insurance industry is a new voice in the chorus of corporate rationalizers, medical schools have been in the vanguard for more than half a century. Although run by physicians —for the reproduction of health professionals and as the research and development arm of the medical industry—medical school interests have often conflicted with the interests of practitioner-dominated medical societies. In the nineteenth century, medical schools were generally run by small groups of doctors for their own financial benefit. During most of the twentieth century, medical schools have been university-controlled and responsive to the interests of foundations and, since World War I government funding sources. For the brief period from about 1900toWorldWar I, science-oriented medical schools and the AMA joined forces to press for the acceptance of scientific medicine. Since that time they have gone their separate ways—the AMA struggling to preserve the dominance and incomes of private practitioners, and medical schools fostering more rationalized medical care, usually with physicians as top management.
Hospitals, insurance companies, and medical schools all have a relatively greater interest than doctors in promoting capital-intensive, rationalized medical care. While expanding medical technology helped doctors increase their status and incomes, it has been the raison d'etre of hospitals, medical schools, and even insurance companies. Medical technology's demands for heavy capital investment also encourage rationalization of medical resources—centralization and coordination of capital, facilities, expenditures, income, and personnel.
FOUNDATIONS AND THE STATE
Besides these interest groups, two other forces—the government and foundations—have exerted a powerful influence in favor of rationalizing medical care. Although the government has been the dominant influence since World War II, foundations formative period from 1900 to 1930. Their source of power has been the purse, generously but carefully applied to specific programs and policies. Neither foundations nor the government has operated as an interest group in the manner of doctors, hospitals, insurance companies, medical schools, and the drug and hospital supply industries. The enormous sums they expended —from foundations some $300 million from 1910 through the 1930s and from the federal government many billions of dollars since World War 11, for medical research and education alone---have not been for their own financial enrichment.
The argument developed and supported in this book suggests that both foundation policy and government policy have served the interests of certain medical groups but only because the interests of these groups coincided with those of the larger corporate class. As evidence from the historical record will show, the programs of foundations earlier in this century were explicitly intended to develop and strengthen institutions that would extend the reach and tighten the grasp of capitalism throughout the society.
In medicine the major objectives of foundations were: to develop a system of medicine that would be supportive of capitalist society; and to rationalize medical care to make it accessible to those whom it was supposed to reach but at the least cost to society's resources. These objectives created their own contradictions. At first, foundations aligned themselves with the aims and strategies of the medical profession, but they soon rejected the narrow interests the profession wished to serve and moved quickly to expand the roles of medical schools and hospitals and to support their dominance over all medical care. By World War II, when the role of the State* in governing the capitalist economy was fully established, the federal government took over the foundations' leading role in medicine, continuing the basic strategy adopted by the foundations more than two decades earlier and opening the floodgates of the treasury to implement it.
In the first chapter, we will see how philanthropic foundations emerged from several parallel developments of capitalist society in the latter nineteenth century. While many members of the new wealthy class were supporting charities to ameliorate the disruptions and deprivations imposed on large numbers of people by capitalist industrialization, others recognized the need for technically trained professionals and managers and supported the development of universities and professional science. Just after the turn of the century men of great wealth, like John D. Rockefeller and Andrew Carnegie, created philanthropic foundations with professional managers in charge of their charitable fortunes. With the Rockefeller philanthropies in the lead, these foundations developed strategic programs to legitimize the fundamental social structure of capitalist society and to provide for its technical needs.
Chapter 2 traces the social and economic role of scientific medicine in the history of the American medical profession.
*Throughout this book, capitalized "State" refers to the political institutions and agencies of government which embody society's political authority. Uncapitalized "state" refers to the individual stales in the United Stales.
Modern scientific medicine was not merely a "natural" outcome of combining science and medicine in the nineteenth century. Apart from the concrete scientific developments that permitted the application of scientific thought and investigation to problems of disease, scientific medicine had equally important social and economic origins. It was an essential part of a strategy articulated by reform leaders of the medical profession to enhance the profession's position in society, and it succeeded because it won the support of dominant segments of the American class structure.
Scientific medicine gained the support of the American medical profession in the late nineteenth century because it met the economic and social needs of physicians. By giving doctors greater technical credibility in society, it saved them from the ignominious position to which the profession had sunk. Moreover, scientific medicine became an ideological tool by which the dominant "regular" segment of the profession restricted the production of new doctors, overcame other medical sects, temporarily united leading medical school faculty and practitioners, and otherwise reduced competition.
Despite its appeal for the medical profession, scientific medicine would have accomplished little for doctors if it had not had the support of dominant groups in American society. In Chapter 3 we will see the reasons for this capitalist support, especially through the thinking of Frederick T. Gates, for more than two decades the chief philanthropic and financial lieutenant to John D. Rockefeller and the architect of the major Rockefeller medical philanthropies.
As an explanation of the causes, prevention, and cure of capitalism, scientific medicine won the support of the classes associated with the rise of corporate capitalism in America. Capitalists and corporate managers believed that scientific medicine would improve the health of society's work force and thereby increase productivity. They also embraced scientific medicine as an ideological weapon in their struggle to formulate a new culture appropriate to and supportive of industrial capitalism. They were drawn to the profession's formulation of medical theory and practice that exonerated capitalism's vast inequities and its reckless practices that shortened the lives of members of the working class. Thus, scientific medicine served the interests of both the dominant medical profession and the corporate class in the United States.
Nevertheless, a contradiction emerged between the interests of the medical profession and those of the corporate class. As we will see in Chapter 4, the private practice profession and the corporate class clashed over attempts to reform medical education. The financing of scientific medical schools required tremendous amounts of capital from outside the medical profession. Those who provided the capital had the leverage to impose policy. The lines of the conflict were clearly drawn: Was medical education to be controlled by and to serve the needs of medical practitioners? Or was it to serve the broader needs of capitalist society and be controlled by corporate class institutions?
The Flexner report, sponsored by the Carnegie Foundation, tried to unify these interests by centering its attack on crassly commercial medical schools. However, the Rockefeller philanthropies, substantially directed by Gates, exposed the contradiction by forcing a full-time clinical faculty system on recipient schools against the interests and arguments of private practitioners. Gates made it clear that medicine must serve capitalist society and be controlled—through the medical schools that reproduce its professional personnel and innovate its technique —by capitalist foundations and capitalist universities. By 1929 one Rockefeller foundation, the General Education Board, had itself appropriated more than $78 million to medical schools to implement this strategy, and Gates' perspective was firmly established.
Gates was adamant about keeping his strategy free of involvement with the State by not giving money to state university medical schools. However, within the Rockefeller philanthropies as within the largest industrial and financial corporations generally, most officers and directors had come to see the State as a necessary aid in rationalizing industries, markets, and institutions.
The course that Gates and his contemporaries initiated continued to develop during the next half-century, but with the State assuming the dominant financial and political role in rationalizing medical care and developing medical technology. As we will see in Chapter 5, the State's emphasis on technological medicine ignored some of the most important determinants of disease and death while the economic and political forces of capitalist society assured that rationalization would not eliminate the developing corporate ownership and control over the medical market. How medicine will be contained and rationalized in this private market system is a contradiction that now plagues the State and the corporate class as the demand for national health insurance grows. How medical resources can be transformed into effective instruments for improving the population's health is a contradiction imposed on the entire society. These contradictions and their resulting crises are the legacy of medicine's development in capitalist society.
CHAPTER 1: "Wholesale Philanthropy": From Charity to Social Transformation
Industrialization in nineteenth-century America created many problems for those who owned and managed the corporations that came to dominate the economy. Industrial capitalists had to arrange for adequate capital, obtain raw materials, organize production, discipline a reluctant work force, and develop markets and transportation systems. They also had to deal with the political structures and methods intended for older relations of production, centered around agriculture and commerce, that were only slowly adapting to the new industrial, corporate order. Finally, they had to reshape older social institutions or create new ones. Educational, religious, medical, and cultural institutions were some of the glue that held together the ancien regime. In sum, the new corporate class had to transform all these economic, political, and social institutions to serve their urbanized, industrialized, and corporate society.
The new economic order created different problems for classes that owned little or nothing of the new system. American society had never been tranquil, but industrialization spread deep disaffection and anger among classes who were dislocated by it and among those who suffered as a result of capitalist accumulation of wealth. The agrarian and merchant rulers of the formerly dominant towns resented the meteoric rise of urban industrialists and bankers. Native craftsmen, foreign immigrants, and dispossessed farmers reluctantly submitted to the factory system. Unionism, populism, and socialism threatened the power and wealth of corporations and even raised doubts about the continued existence of capitalism.
As we will see in this chapter, corporate capitalists turned to philanthropy, the universities, and then to medicine to solve some of the many problems that grew out of capitalist industrialization. For the most part, social transformations were led by the same "unseen hand" that guided the market forces of capitalism; this self-interest provided a limited perspective for social change. Only gradually did leading capitalists and their allies consciously develop broad strategies and supports for the new order they were building. Philanthropic capitalists supported often harsh but hopefully ameliorative charity to control the desperate poorer classes. Others began building universities to meet the new society's needs for trained experts and managers. A new managerial and professional stratum developed to direct corporations, universities, science, medical institutions, and philanthropy itself. After the turn of the century, some philanthropists transformed foundations into a truly corporate philanthropy,* modelled after the dominant economic institutions and fuelled with their "surplus" wealth. Representatives of the emerging corporate liberalism made these foundations their chief instruments for transforming social institutions, giving corporate philanthropy an historical role beyond the most visionary dreams of early philanthropic capitalists. This union of corporate philanthropy, the managerial-professional stratum, and the universities and science spawned the Rockefeller medicine men and their new system of medicine.
*In this book, "corporate philanthropy" refers to philanthropy characteristic of corporate capitalism, especially foundations that are philanthropic corporations controlled by members of the corporate class.
CREATING PRIVATE FORTUNES AND SOCIAL DISCONTENT
The Civil War was a watershed in American philanthropy, as it was in nearly all aspects of American life. It was a great wrenching experience in American history, spreading death and destruction, stimulating industrial development, and producing upheavals within and between all classes of Americans. A new kind of philanthropy, tailored to these new conditions, emerged in the decades following the war.
The Civil War not only freed the black slaves from legal bonds of slavery. It also freed the hand of Northern capital to extend throughout the nation the industrial transformation it had begun mainly north of the Ohio River. As the "underground railroad" was the vehicle and symbol of freedom for ante-bellum slaves, the iron railroad was the vehicle and symbol of industrialization and the ascending capitalist class.
As the railroads were used increasingly to move troops and supplies for the Union armies, they helped extend and integrate the marketplace, making possible a specialized manufacturing and marketing system that could be coordinated across the continent. The railroads pushed into every region of the country. They brought farm produce to new markets and to ports for shipment to distant lands. They carried cotton from Southern fields to New England textile mills. They carried iron ore from Lake Superior to the iron mills and new Bessemer steel furnaces in Pittsburgh, and oil from western Pennsylvania to Cleveland refineries. And they brought the products from the nation's factories to markets in every region. Everywhere, they spread new settlements and development. Despite interruptions during the Civil War, railroad construction added 62,000 miles of new lines in the 1860s and 1870s, tripling the nation's existing track mileage. Railroad construction required iron and later steel rails and bridges. The railroads themselves soon became the biggest customers of America's growing steel industry.
The Civil War and the railroads led some men to their pots of gold. Andrew Carnegie began his rise to fortune as a telegraph clerk for the Pennsylvania Railroad in 1853. By the beginning of the Civil War the ambitious twenty-five-year-old Carnegie was well into railroad management and spent a few months organizing rail transport and telegraph communications for the War Department. But Carnegie quit his exciting and dangerous war front job and returned to the Pennsy and especially to tend his growing investment in iron manufacturing and coal mining. By 1863 his annual income exceeded $40,000.1
John Davison Rockefeller's fortunes were also helped by the Civil War. In 1861, as the war consumed the energies and lives of Northerners and Southerners, the twenty-five-year-old Rockefeller was building a successful merchandising firm in Cleveland. As war orders poured in. commodity prices rose sharply, and Rockefellers profits soared. Two years later Rockefeller had saved enough capital to invest in an oil refining business, and by the end of the war he was worth enough to take control of the company. By 1880, led by Rockefeller's determination to "make money and still more money," combined with relentless competition in the marketplace and rebates extracted from the railroads, his Standard Oil Company was refining 95 percent of the country's oil.2
While the industrial base had obviously been growing in the decades before the Civil War, it was the changes wrought by the war that cemented the new system's structure. The Southern patrician class, whose position was based on agriculture and slaves, was not crushed, but its subordination to the Northern-controlled capitalist economy was assured. The factory system was extended with the railroad, and an industrial working class was formed out of craftsmen and labourers, native folk and immigrants. Small-town America gradually gave way to industrial and commercial boom, and cities grew faster than their fragile tenements could be built. In the process, the older entrepreneurs and landed gentry were displaced by the new entrepreneurs and their corporations. By the 1870s, for example, only 520, or 5 percent, of the 10,395 businesses in Massachusetts were incorporated. But this 5 percent held 96 percent of the total capital and employed 60 percent of all workers. By 1900 three-fourths of all manufactured goods were produced by corporations. Because of the important logistical role of the railroads, the Civil War has been called the "first railroad war." Yet the war did not rely on an industrial economy. As William Appleman Williams aptly put it, the Civil War "produced an industrial system rather than being fought with one."3 The ultimate victors of the war were the corporations and the men who, for the most pan, ruled the new economy.
Not all was smooth for the new barons of the corporate owners of each industry, driven to grab what they could of the available market and accumulate as much capital as possible in the shortest time, pushed wages down in order to lower prices and to get a jump on their competitors. Immigrants were inducted into the growing industrial work force. Some 16 million foreign-born were attracted to the country in the second half of the nineteenth century, totalling 15 percent of the population by 1890 and nearly a quarter of the population of the industrialized north-eastern states. Craftsmen saw their skills, the basis of modest security and pride, fall to degradation and unemployment before machines that out produced them and factories that oppressed them. Migrants from failing farms and immigrants from foreign lands filled the factories and cities of the New World. Working men lost their livelihoods or submitted to the harshest labours. Women were drawn out of more traditional homebound work into factories, shops, and stores. Twenty percent of the nation's women were wage labourers by 1900. Children were sucked into the factories as the cheapest labor. Working-class family and social life were shaken and devastated.
Exploitation of workers, unmitigated by either legal restraints or humanitarianism, led to increased organizing by labor. The depression of the 1870s brought wages in 1875 down to $1.50 for a ten-hour day. Riots were common in cities throughout the country. Labor began to organize, and employers used every available power, from lockouts to Pinkertons, to crush the union movement. In 1877 the first nationwide strike, a spreading walkout against the railroads, was put down with a bloodbath that took the lives of scores of workers, their families, and their supporters in city slums around the country. The labor movement grew and strikes continued to spread in the 1880s and 1890s. The Haymarket Square bomb in 1886, the strike at Carnegie's Homestead steel mills in 1892, and the Pullman strike in 1894 were only the most prominent events that made employers and their allies fear for the continued existence of their society. "The times are strangely out of joint," worried a Kentucky politician. "The rich grow richer, the poor become poorer; the nation trembles."4
Town folk and farmers, especially in the Midwest and South, felt their lives and livelihoods increasingly determined by railroad rates and lines of credit from banks directed from distant cities. Semi-feudal sharecropping kept large numbers of Southern farmers in perpetual debt and poverty. Agrarian opposition to capitalist expansion won broad support. In 1896 the growing Populist party formed a shallow coalition with the Democratic party around the Democrat Bryan for President and the Populist Tom Watson for Vice-President against McKinley, the candidate of big business. The Populist party was decimated by their defeat, but populist resistance to capitalist wealth and control of agriculture continued in the Granges and the Farmers Union well into the new century. To the middle-class professionals who dominated the Progressive movement the society seemed to be breaking up below them because of the greed of those above them. They called for reforms to limit the concentration of power and wealth. Many members of the richer class felt called upon to justify the great inequality that angered the working class and worried the middle class. Naturally they did not see themselves as "idle" rich. They viewed their efforts to build industrial empires as productive work, and they considered all the people to be the beneficiaries of those empires. No one said it as well as Rockefeller:
The best philanthropy, the help that does the most good and the least harm, the help that nourishes civilization at its very root, that most widely disseminates health, righteousness, and happiness, is not what is usually called charity. It is, in my judgment, the investment of effort or time or money, carefully considered with relation to the power of employing people at a remunerative wage, to expand and develop the resources at hand, and to give opportunity for progress and healthful labour where it did not exist before. No mere money-giving is comparable to this in its lasting and beneficial results.5
The great benefit of such enterprises is moral, providing employment to otherwise idle hands, and material, "to multiply, to cheapen, and to diffuse as universally as possible the comforts of life.'6 Thus, the building up of private industry is the best method of solving the problems that historically grew with industrialization. "Can there be any doubt that cheapening the cost of necessaries and conveniences of life is the most powerful agent of civilization and progress?" asked Charles Elliott Perkins, president of the Chicago, Burlington, and Quincy Railroad. "The true gospel," Perkins philosophized agreeably, "is to enable men to acquire the comforts and conveniences of life by their own efforts, and then they will be wise and good."7
The class of men and women who provided this largess for the rest of society had varied notions about what to do with their money and their power. Mark Hanna, a Cleveland industrialist, showed fellow capitalists that the President and executive branch of the government, as well as the Congress, could be secured "for the protection of our business interests." Fearing the growing ranks of Populists and their increasing political strength, he established an interlocking political directorate of corporate leaders to organize their common interests and bring their influence more directly into the federal government. With their first Presidential triumph, electing McKinley in 1896, they inaugurated the modern system of expensive, centrally coordinated national campaigns. Hanna led the formation of a corporate politics that placed the broad class interests of industrialists and financiers ahead of "pork barrel" tactics favoring narrow interests that had dominated state, national, and local political scenes. Hanna and other leaders of this class put together new alliances, like the National Civic Federation, with some labor leaders to create a "harmony of interests" out of the class conflicts that threatened the new economic order. The Progressive movement proved an ideal vehicle for the business class to assert its interests by securing additional, needed capital from the Congress and, through reforms in the federal executive branch, creating and controlling regulatory agencies to bring order and consolidation to a number of industries. The politically wise leaders of this class thus demonstrated that with strategic alliances with social reformers and conservative union officials, the nation's political institutions could be reformed to serve the needs of the corporate order.8
Not all capitalists, however, could see farther than their own immediate interests in politics. John D. Rockefeller, whose Standard Oil Trust was accused by Henry Demarest Lloyd of buying out the legislatures and the executive branches of Pennsylvania and Ohio, was unenthusiastic about his friend Hanna's broader political strategy. Hanna's first major success sent John Sherman to the U.S. Senate in 1885, ironically providing the author of the very law under which the Standard empire was eventually broken up. Perhaps Rockefeller suspected such betrayals from politicians who had their own visions of what was good for business, for he customarily reserved his political contributions for candidates closer to the Standard's immediate fields of operations.9
Many wealthy men spent their fortunes on ostentatious luxury that left much of the European aristocracy in shadow. The Vanderbilts, Jim Fisk, Jay Gould, and other financiers built palaces along New York's Fifth Avenue, many of them with marble, furnishings, and statuary scooped up from the crumbling baronies of the Old World. Marshall Field and Potter Palmer built their castles on some of Chicago's most prized residential and lakefront land. Mark Hopkins, Charles Crocker, and Leland Stanford transformed San Francisco's Nob Hill with their residences of splendor, using wealth obtained from promoting and governing the westward expansion of the railroads. Carnegie bought himself a castle in his Scottish homeland. And Rockefeller created, not merely a castle, but a royal estate at Pocantico Hills, whose 3,500 acres overlooking the Hudson River was five times the size of Central Park. The spectacle of such living, especially in the midst of tenement-teeming cities, caused considerable agitation. The Massachusetts Board of Education had complained even in 1849, "One gorgeous palace absorbs all the labor and expense that might have made a thousand hovels comfortable." By the end of the century, social scientists cultivated by the wealthy came to their benefactors' defense. A Boston University economics professor retorted to detractors of grandeur, "The notion there is necessarily any causal connection between opulence and poverty is too crude to require serious refutation."10
DRIVING THE RELUCTANT POOR FROM POVERTY
Some representatives of the opulent class, both before and after the Civil War, had a broader sense of purpose. They provided luxurious, even princely lives for themselves and their families, but they carefully set aside a share of their wealth for philanthropy. Philanthropy, of course, did not mean giving money directly to the poor. While charity had always implied providing alms for the relief of the poor, the rich and most social reformers in the class immediately below the rich have always been wary of the consequences of giving to the poor. Cotton Mather urged colonial Boston merchants to set a disciplined, moral example and give only to the "poor that can't work." Benjamin Franklin hoped to provide sufficient opportunity in society so there would be no need of poverty, and he tried to develop a strategy for getting the poor to adopt disciplined ways of living. "I think the best way of doing good to the poor," Franklin said, "is not making them easy in poverty, but leading them or driving them out of it."11
Franklin's maxim and a pitiless Social Darwinist perspective were the heart of the charity organization movement that blossomed in the United States during the last three decades of the century. Patterned after the London Charity Organization Society, founded in 1869, these city and national organizations gave few handouts. Their main purpose was, in the words of a Philadelphia group, to develop "a method by which idleness and begging, now so encouraged, may be suppressed and worthy self-respecting poverty be discovered and relieved at the smallest cost to the benevolent." Even during the vast depression that began in 1873 and lasted until the end of that decade, all takers of charity were suspected of slothfulness and degeneracy.12
The poor were a desperate, volatile lot, given to crime, riots, and insolent discontent. Extreme Social Darwinists believed with Herbert Spencer that those who are fit to live do so and those who are not fit die—"and it is best they should die."13 But the dominant classes of any society need a more positive program than that to deal with oppressed classes' articulated demands for sharing the wealth or even their inarticulate mayhem.
The programs that emerged from charity organization work brought systematic study and the label of "science" to philanthropic work. The annual meetings of the National Conference of Charities and Correction brought together experts from charity organizations, administrators of penal institutions, hospitals and settlement houses, academics from university sociology and economics departments, and clergymen and physicians to coordinate their work and develop strategies for uplifting the poor. The attitudes of these "scientific" charity workers ran from harsh to refined, punitive to ameliorative.14 Over the years these reformers turned increasingly to the analytic methods of the social sciences and to the political views of the Progressive movement. Edward T. Devine, in his presidential address to the National Conference in 1906, noted that inmates were entering charitable institutions, insane asylums, prisons, and reformatories "faster than all our educational processes, our relief funds, and even our consecrated personal service" have been able to rehabilitate them. The role of "modern philanthropy," Devine continued, is to "seek out and to strike effectively at those organized forces of evil, at those particular causes of dependence and intolerable living conditions which are beyond the control of the individuals whom they injure and whom they too often destroy."15
Scientific philanthropy must concern itself with "prevention rather than relief," argued Amos Warner, a Stanford economist active in the movement. Warner compared statistics compiled by charity organizations in the United States and Europe and concluded that nearly three-fourths of all poverty is due to personal or social "misfortune" and less than a fourth to "misconduct" on the part of the individual.16 "Prevention" involved intervening in the lives of both groups to assist them through their misfortune or change their bad habits and lead them onto the path of righteousness.
Out of this social intervention perspective and the charity organization movement emerged the social work professions. Case workers, settlement house workers, correctional administrators, probation officers, and their academic advisers shared with the middle and upper classes the prevailing Social Darwinist view that dependent poverty, crime, and social deviance in general had biological roots. But this new professional class believed that medical and social intervention could remedy "natural" imperfections.17
Given the disintegration of older social relations and the increasing fear of working-class revolt—both products of capitalist industrialization—it is not surprising that wealthy men and women supported the goals and programs of the charity organizations and the social work movement. Charles Hull, who amassed a fortune from Chicago's booming real estate market, gave freely to social rehabilitation programs in the slums and sold cheap land to the poor to give them a stake in the existing society. It was his way of correcting the unequal distribution of land out of which he feared "discontent and revolution will come."18
Scorning pity and indiscriminate relief as merely reinforcing the poor in their degraded condition, the charity organization movement, social work professions, and wealthy benefactors in general worked instead to uplift, or rehabilitate the poor. They established institutions that would isolate "the poor that can't work" and prevent them from infecting "honest," hard-working poor folk. They also developed programs to give the working poor a loftier vision of life than could otherwise be gotten from the factories and tenements in which they spent their lives. Settlement houses and social workers were established in the slums and ghettos to integrate the foreign-born into American society and to rehabilitate and reintegrate the casualties of an industrial society divided into owners and nonowners. Jane Addams' settlement house, provided by Charles Hull's estate, attempted to fulfil her principal goals to "feed the mind of the worker, to lift it above the monotony of his task, and to connect it with the larger world outside of his immediate surroundings. . . ." Addams opposed the excesses of both capital and labor and worked to bring together these warring classes through programs acceptable to both.19
Such programs did not suggest that the capitalist social structure itself should be altered. Rather they were intended to ameliorate the harsh conditions of capitalism by helping individuals escape from its pits and lead both useful and more satisfying lives. While many social workers supported union demands, their work won financial and political support from the wealthy classes because it diverted attention from more militant demands. Social workers held out the hope of ameliorating living conditions with social programs while workers demanded union recognition, higher pay, the eight-hour day. and relief from unemployment. All these programs proved more symbolic and ideological than actually ameliorative. The working poor and the unemployed were being taught to blame their own inadequacies for their conditions and to work and wait patiently for their individual rewards.
Some capitalists, however, both before and after the Civil War, were less concerned with revolt brewing below them or were more thoughtful about the future needs of their social system. They developed another line of philanthropy that centred on creating social institutions whose main functions were not even symbolic amelioration but provided for the training of personnel needed by industrial capitalism if it was to survive and grow. Some of these capitalists, particularly in the first half of the nineteenth century, helped to create compulsory public schooling to socialize working-class and poor children to the rhythms and cooperative needs of factory work and to give them the rudimentary skills—reading, writing, arithmetic, and vocational skills—needed in an industrial society.20 Other men and women of wealth understood the country's need for more advanced technical skills. They joined forces with foresighted leaders of the nation's traditional colleges, bringing them out of the orbit of the old agricultural and merchant ruling class and into the service of the ascending industrial and financial order.
TRAINING SCIENTIFIC HEADS TO DIRECT AMERICA'S "HARD HANDS"
On the last day of April in 1846 Edward Everett, the new president of Harvard University, stood before his faculty, students, and alumni and inaugurated a new era of cooperation between industrialists and America's colleges and universities. Harvard would no longer be geared mainly to the needs of the agricultural gentry and wealthy merchants, producing educated clergy, lawyers, and assorted gentlemen. Everett laid before his inaugural convocation a proposal, that Harvard found a "school of theoretical and practical science" to teach "its application to the arts of life," to furnish a "supply of skilful engineers" and other persons who would explore and develop the "inexhaustible natural treasures of the country, and to guide its vast industrial energies in their rapid development."21
Within a year Abbott Lawrence agreed to underwrite Everett's plans. Lawrence's investments in textile manufacturing and railroad financing had made him a man of wealth and influence in Massachusetts. The industrial revolution in America was in its infancy when he began, but now near mid-century its potential was proven. Lawrence knew first hand the value of the factory system and mechanization in increasing production and profits. He saw that railroad construction brought not only profits on his investment; it also created a demand for iron production and opened up regional and national markets, allowing farmers and factory owners to ship their products to distant markets and increasing America's exports. "Hard hands are ready to work upon our hard materials," he observed. But "where shall sagacious heads be taught to direct those hands?"22
To answer his own question and help Harvard realize its self-appointed role, Lawrence gave the university the then princely sum of $50,000 to found a school that would apply chemistry and other sciences to the needs of agriculture, engineering, mining and metallurgy, and the "invention and manufacture of machinery." Thus was the Lawrence Scientific School born. Lawrence was so pleased with the new school that he bequeathed an additional $50,000 for it which Harvard received upon his death in 1855.
Harvard's school was exemplary of the new relationship between science, education, and industrialization. In the nineteenth century, scientists, industrialists, and college presidents developed a profitable alliance. The usefulness of science to industry, the willingness of industrialists to support scientific research, and the opportunity for colleges to train scientists and engineers and do much of the research needed by industry provided a great deal of common ground. It also opened the door for scientists who wanted to make science a full-time occupation and distinguish themselves from others who used the knowledge and methods of the natural sciences in their work.
The great inventors of the early industrial revolution were mostly practical-minded mechanics, craftsmen, and tinkerers, men and women whose lives embraced science through their work. "In contrast with modern practice," observes Harry Braverman, "science did not systematically lead the way for industry, but often lagged behind and grew out of the industrial arts."23 By the 1830s and 1840s a new group of scientists emerged who wanted to be more than "dilettantes." Like their European counterparts, whose support and status they envied, the upper ranks of American scientists wanted to devote themselves to research, but they lacked the necessary financial resources. Although young men in America's colleges were taught science, there was almost no original research being done in the country. As Joseph Henry, the nation's leading physicist, complained, "every man who can burn phosphorous in oxygen and exhibit a few experiments to a class of young ladies is called a man of science.'24
In 1844 Alexander Dallas Bache, the superintendent of the U.S. Coast Survey, told an attentive audience at the country's first national scientific congress that America's unoriginal and meagre science merely aped European science. America's science, he said, had inadequate institutional support, substituted teaching for scientific research, was overrun with gentleman scientists, and lacked professional scientists. Bache and Henry, together with Harvard mathematician Benjamin Peirce, astronomer Benjamin Gould, chemist Oliver Wolcott Gibbs, zoologist Louis Agassiz, and a few other professional scientists fancied themselves the nation's sole custodians of science and its development. They aggressively sought support for their research and promoted the cause of professional science. In their view, only some men were endowed with scientific talent, and only such an elite should be entrusted with training, facilities for research, and money. As Howard Miller has pointed out, their elitism won them no support from the assertive, democratic populists of Andrew Jackson's era.25
These new men of science won increasing support from the entrepreneurial fortunes of the captains of industry. Lawrence was neither the first nor the last capitalist of the nineteenth century to channel his surplus wealth to colleges in order to put science at the service of industry. In 1846, with the financial help of philanthropists, Yale created two new professorships in agricultural and practical chemistry and appointed the eminent Benjamin Silliman, Jr., to one of them to develop and teach the "application of chemistry, and the kindred sciences to the manufacturing arts, to exploration of the resources of the country and to other practical uses." Silliman's prolific accomplishments at Yale included developing the first commercially successful method of refining petroleum. Before the Civil War, Joseph Earl Sheffield, a New Haven man who made his fortune in Southern cotton and in financing Northern railroads and canals, gave the struggling Yale Scientific School a large contribution. The university appreciatively renamed the school in honor of its benefactor, whose contributions to Yale for applied science totalled more than $1 million by the time of his death in 1882.26
Perhaps the most symbolic change was the conversion of the Reverend Nathan Lord, president of Dartmouth College. As he assumed the college presidency in 1828, Lord asserted that Dartmouth was not designed for men who were to "engage in mercantile, mechanical, or agricultural operations." His strict adherence to the classics and to preparing gentlemen, however, did not survive several large contributions from wealthy advocates of applied sciences and engineering. By the late 1860s Lord eagerly embraced the "necessity now becoming constantly more evident of a higher education in the 'practical and useful arts of life.' " 27
Some industrialists and finance capitalists, not content with the slow and incomplete transformations of the older colleges, started their own engineering schools. In 1824 Stephen Van Rensselaer, a wealthy landlord farmer who organized and backed the construction of the Erie Canal and thereby experienced for himself the lack of adequately trained engineers, founded the institute that bears his name to teach the "application of experimental chemistry, philosophy and natural history, to agriculture, domestic economy, the arts and manufactures."28 Other engineering and technical schools were begun around the country from fonts of industrial wealth—Cooper Union in New York City, the Massachusetts Institute of Technology, the Stevens Institute in Hoboken, the Case School of Applied Science in Cleveland, the Pratt Institute in New York, and the California Institute of Technology, to name a few.
Philanthropic capitalists left their marks in American higher education in other areas besides science. Joseph Wharton, a wealthy manufacturer of metals, gave the University of Pennsylvania some $600,000 for a school of finance and commerce that would train the managers, accountants, and leaders of industry who would direct the engineers and applied scientists graduating from technical schools. Entirely new universities were founded in the 1870s and 1880s by some of the wealthiest men and women in the country—Johns Hopkins, Tulane, Clark, Vanderbilt, Stanford, Cornell, and others.
These educational philanthropists were primarily capitalists who disdained the aristocratic pretences of gentleman farmers and the dabblers' and merchants' ignorance of technique. Remembering their own lack of preparation as they began their careers, they favored practical educations that would promote endeavors like theirs and create a fertile ground from which their new society would grow. They also perceived a need for trained personnel for the growing industrial and corporate economy. As the organizers of factories and other enterprises that employed increasing divisions of labor, they preferred to train technically skilled managers and reduce the skill levels of their laborers; in the words of Abbott Lawrence, let the "hard hands" do the labor and let "sagacious heads" design and direct the labor process. Impressed with the utility of applied science, they subsidized teaching and research in the natural sciences and engineering, and they supported vocational and applied curricula in colleges against the prevailing classical education. By the end of the century they were delighted with the progress that had been made in creating universities and colleges in their own image. And, of course, they were glad to have combined this self-interest with an appearance of generosity and altruism.
The entrepreneurial scientists and college presidents made the philanthropists' job an easy one. The development of modern universities and the founding of professional science in the United States were largely the products of elite college presidents and men of science inviting captains of industry to recognize the importance of their contributions to the nascent industrial and corporate society. They asked for and got money for their work, their institutions, and themselves.
Scientists offered their talents and their services to the capitalists in return for new laboratories and stipends; they gave up to the colleges a degree of autonomy in return for a legitimized base of operations, some financial security, and a protected role in training new basic and applied scientists as well as conducting research. College presidents acted as brokers, eagerly offering their services and institutions to capitalists and scientists alike, in return for new areas of service that would assure the continued relevance and financial security of their institutions under the ascending economic order. Their new buildings and endowments assured them that they were on the right track. By 1872 philanthropy accounted for nearly half the $13 million income received by all the nation's institutions of higher education."
The founding of schools, institutes, and universities was quite a different tack from giving to charity organization societies and creating settlement houses. They were both intended to meet the needs of the developing industrial and corporate society, but in different ways. One was ameliorative: It tried to compensate for the failings of the capitalist social structure. The other was more technical and "preventive": Institutions were developed to meet the needs of the system for technical expertise and industrial and social management. Both were important to the survival and expansion of industry as it was organized in capitalist society.
There were limitations, however, in the resources and strategies of both approaches. The social work approach was ameliorative at a time when most philanthropists were pressing for preventive strategies. The founding of universities and institutes, which had a preventive character, was limited in two ways. First, it often represented an individual action on the part of a particular rich man or woman who founded the institution to reflect a personal perspective of what was needed. While some of them secured the help of visionary university presidents, these institutions often reflected too strongly the personalities and idiosyncratic views of their founders. Only when governance fell to the institution's trustees did it come to reflect a broader perspective within the benefactor's class. Thus, the trustees who implemented Johns Hopkins' bequest for the founding of a university were able to do what they collectively believed worthwhile because their broad charter left them free of detailed instructions from the deceased benefactor while the endowment meant they had "no need of obeying the injunctions of any legislature, the beliefs of any religious body, or the clamors of any press."30 Most benefactors, especially those who founded their institutions while on this side of their graves, held closer reigns on policies and personnel.
The second limitation on the usefulness of the university movement among the wealthy was one of scale. Most of the founders had fortunes big enough to create only one institution, and those who had the wealth to do more nevertheless concentrated their energies and their money in one place. Thus their direct influence would come from only one place, and their indirect influence would be only as a model. These were often powerful forces. Van Rensselaer's institute claimed, by the middle of the nineteenth century, that it had produced a majority of the country's engineers and naturalists. And the class of wealthy university founders was small and often influenced each other: Ezra Cornell's new university at Ithaca was admired by Leland Stanford, and Stanford's creation in California greatly impressed Jonas Clark and his plans for Massachusetts.31 These exceptions notwithstanding, the general limitations of individualism and narrowness of resources reduced the utility of university building for corporate capitalism.
The accolades these "good works" generated didn't mean that philanthropy could not be done better. And certainly the capitalist impulse to believe in perfect ability in the organization of any enterprise encouraged many philanthropists to look for errors and seek a better way. The obvious constraints of ameliorative while the create-a-school movement was not criticized explicitly, a successor was soon seen on the horizon. At best the universities were productive models of capitalist rationality and technical modernness in an untamed, competitive marketplace of seemingly incompetent educational institutions. Not surprisingly, it was the philanthropies created by the kings of oil! and steel that started American schooling down the same road to vertical organization and centralized control that they had created in their own industries.
CARNEGIE'S "GOSPEL OF WEALTH"
The growing fortunes of the Carnegies and Rockefellers in this country made them prominent symbols of the success as well as the inequities of industrial capitalism. It was this weighty responsibility that led Andrew Carnegie to explain the problems associated with great wealth and to lay out the responsibilities that came with its possession. In an influential two-part essay entitled "Wealth," published in the North American Review in 1889,32 Carnegie with a flush of confidence set out a plan for assuring continued private accumulation of wealth. "The problem of our age," he boldly began, "is the proper administration of wealth, that the ties of brotherhood may still bind together the rich and poor in harmonious relationship." Speaking to a receptive audience among the "haves" more than to the truculent "have-nots," Carnegie identified the accumulation of wealth as the essential factor in the "progress of the race." Whether it be "for good or ill, it is upon us, beyond our power to alter, and, therefore, to be accepted and made the best of. It is a waste of time to criticize the inevitable," he reassuringly added.
Though capitalism's "law" of competition "may be sometimes hard for the individual, it is best for the race because it insures the survival of the fittest in every department," he observed, paraphrasing the then widely idolized Herbert Spencer. Furthermore, it produced great material wealth so that all people lived better for it. Society must not only accept; it must welcome "great inequality of environment," specifically the "concentration of business, industrial and commercial, in the hands of a few." It is not to be regretted that capitalists must "soon be in receipt of more revenues than can be judiciously expended upon themselves." It is simply incumbent upon the wealthy to dispose of their fortunes wisely.
They should not, he warned, leave the bulk of their wealth to their families, for such legacies undermine the moral integrity of the recipients. Nor should the rich man simply bequeath his fortune for public purposes because it is morally reprehensible to accumulate great wealth and not show either the interest or the judgment to spend it wisely. As exciting as Carnegie found his money-making career, it had always seemed to him below the moral and intellectual world to which he aspired. More than two decades before his declarations on wealth, Carnegie had written a memo to himself promising to quit business shortly: "To continue much longer overwhelmed by business cares and with most of my thought wholly upon the way to make more money in the shortest time, must degrade me beyond hope of permanent recovery."33 Now Carnegie admonished his peers, "The man who dies thus rich dies disgraced."
It is the duty of the wealthy, Carnegie declared in his article, "to consider all surplus revenues which come to him simply as trust funds," to do what, "in his judgment," is best for the community. The wealthy capitalist is thus a "mere trustee and agent for his poorer brethren, bringing to their service his superior wisdom, experience, and ability to administer"—in a word, "doing for them better than they would or could do for themselves."
He then recommended to men and women of substantial means seven uses for their surplus wealth, declaring the priorities that he followed in the years to come. Topping the list were universities, to which Carnegie gave more than $20 million in his lifetime. Next were free public libraries, which, to Carnegie's mind, squared with his goal "to stimulate the best and most aspiring poor of the community to further efforts for their own improvement." Carnegie contributed 2,811 libraries to communities that promised to support them; this most famous of his philanthropies consumed more than $60 million of his wealth. Carnegie also recommended giving money for medical institutions, public parks and city beautification, halls for "concerts, of elevating music" and enlightening lectures, swimming baths, and—last—church buildings.34
Carnegie's round face glowed and his eyes sparkled as he received the adulation of wealthy admirers and fawning supplicants. Gladstone sanctified Carnegie's proposals with a review of his article in the prestigious British magazine Nineteenth Century, criticizing only Carnegie's condemnation of inherited wealth. From his celebrated position, Carnegie dismissed the critical reviews of his article. The Reverend Hugh Price Hughes, a prominent Methodist minister and Christian populist, condemned this new "Gospel of Wealth," as it had come to be called. "Mr. Carnegie's 'progress' is accompanied by the growing 'poverty' of his less fortunate fellow-countrymen," he wrote. William Jewett Tucker, a liberal theologian and later president of Dartmouth College, pointed out that the assumption "that wealth is the inevitable possession of the few, and is best administered by them for the many, begs the whole question of economic justice now before society." "I can conceive of no greater mistake," Tucker protested, "than that of trying to make charity do the work of justice."35
Carnegie's giving never aimed at justice; his goal was "to lead people upward." Like his politics, Carnegie's philanthropy was a mixture of moralistic programs to civilize the masses, impulsive decisions, and sentimentality. Libraries, institutes, concert halls, and church organs—7,689 organs costing more than $6 million--were given to uplift the poor and working classes. In 1904 he provided more than $10 million for the Carnegie Hero Fund to honor men and women who are injured or killed while trying to save their fellows; medals were presented to the hero, or his or her surviving family, and occasionally monetary grants, to encourage the masses to follow examples set by "the heroes of civilization." Carnegie also provided his birthplace of Dunfermline, Scotland, with a $3.75 million fund for parks, recreation, and general beautification."
REVEREND GATES INTRODUCES ROCKEFELLER TO "WHOLESALE PHILANTHROPY"
Like Carnegie, John Davison Rockefeller's interest in financial benevolence antedates his most famous philanthropies. From the time of his youth, Rockefeller's life consisted of work, family, and the Baptist church. More like his pious mother than his genial and impulsive father. Rockefeller lived a disciplined life, forever pinching pennies but mindful of his Christian dudes. Even in 1855, when he was earning $3.50 a week as a clerk accountant in Cleveland, Rockefeller carefully apportioned about 10 percent of his income to charities and church work. His philanthropy grew with his riches; by 1881 he was giving away more than $60,000 a year.37 By the end of !he century, he and Carnegie were competing in their philanthropy—with Carnegie ahead.
Rockefeller was diligent in giving to charity but ungenerous in spirit. Like other men of his day climbing the ladders of business success and those who had reached the top. Rockefeller saw no excuse for poverty. Having gone into business for himself at the age of twenty, the oil king "knew"' that hard work and disciplined living were the means to escape poverty. In 1887 Rockefeller answered a poor young man's plea for fifty dollars with a check, a request for an I.O.U., and a warning: "It will be injurious for him to receive from others what he can in any way secure for himself by his own efforts." And after a visit to a "house of industry" in New York's incomparable slum of Five Points, he complained that although the institution gave free meals to the area's "tramps" only on Thanksgiving Day, he "would give them work and make them earn their food."38
Whereas Carnegie's secular views led him to Social Darwinism as a biological and social explanation for the maldistribution of wealth. Rockefeller's religion exorcised all self-doubts. Particularly as he grew older and more comfortable with his fortune and his role as philanthropist. Rockefeller came to believe that "God gave me my money." When he uttered these words in 1905, "Rockefeller" was not the most revered name in North America. He thus felt called upon to explain: "I believe the power to make money is a gift from God ... to be developed and used to the best of our ability for the good of mankind. I believe it is my duty to make money and still more money and to use the money I make for the good of my fellow man according to the dictates of my conscience."39
Rockefeller's conscience led him to heap great benevolence on a wide range of socially uplifting charities. Andrew Carnegie put churches last on his list of recommended philanthropies, but for Rockefeller the Baptist church and its numerous charities and missions were the highest priority. Hospitals and other public would enable the denomination to lead all people to live with rectitude and to aid the fallen poor to gain the proper path. In 1890 Rockefeller's contributions to charities and colleges topped $300,000, and the next year half a million dollars.
But in May 1889, one month before Carnegie published the first of his two-part "Gospel of Wealth," Rockefeller committed himself to a particularly ambitious philanthropic project and a relationship with a man who was to write a new chapter in philanthropy. For several years a group of Baptists in the East and another group in the West had been trying to develop a new seminary and university for the denomination. The eastern group wanted the institution to be located in New York while the other group desperately hoped to develop it in Chicago, the rapidly growing metropolis of the nation's westward expansion. Both groups were pressing Rockefeller, the richest Baptist in the world, to contribute the millions needed to endow a first-rate institution. While interested in such a project, Rockefeller was not swayed by the emotionalism of either group's appeal.40
The struggling academies, seminaries, and colleges of the denomination met in Washington in May 1888 to form the American Baptist Education Society, to raise money for Baptist education, and to coordinate its development. They named the fast-rising Reverend Frederick T. Gates executive secretary, a position from which he leaped to the pinnacle of both philanthropic and corporate power.
Gates immediately conducted a survey of Baptist educational needs throughout the country. Armed with his data, he wrote a detailed and eloquent report. Gates demonstrated that nearly half the country's Baptists lived west of Pennsylvania and north of the Ohio River but that the denomination's educational facilities in this region were practically worthless. He concluded that a new Baptist university should be built "on the ruins of the old University of Chicago," a weak and by then bankrupt denominational institution. While the new university should bring together the most capable specialists in both its classical and scientific departments, it must be "an institution wholly under Baptist control as a chartered right, loyal to Christ and His church, employing none but Christians in any department of instruction, a school not only evangelical but evangelistic."41
Gates' report was the turning point in the denomination's campaign for a university. As he himself put it, "The brothers were 'all torn up' over it." The Chicago proponents coalesced around the report, and the dwindling supporters of a New York location became even more emotional in their desperate appeals to Rockefeller. The Education Society executive board unanimously approved the proposal at the December 1888 meeting. Within six months Gates won Rockefeller's approval and an initial gift of $600,000 that soon became a torrent of support, totalling $35 million in the next twenty-one years. Rockefeller was so impressed with Gates that he wrote University of Chicago president Harper in 1889, "I have made up my mind to act in my educational benefactions through the American Baptist Educal Society."42
Rockefeller, worn out by his total immersion in business since the age of twenty, was a physical wreck as he entered his fifties in 1889. He suffered increasingly from nervous fatigue and stomach ailments. He soon lost all his hair, including his eyebrows, because of a nervous disease, generalized alopecia. His doctors had warned him to reduce his activities as much as possible, but his responsibilities were mounting. Although Standard Oil was now in the hands of experienced and trusted lieutenants, there was an increasing flow of requests for large and small portions of his wealth from churches, missionary societies, hospitals, colleges, charity organizations, and individuals—once running as high as 50,000 requests in a single month.43
In March 1891 Rockefeller sat Gates down and laid out his problem.
I am in trouble, Mr. Gates. The pressure of these appeals for gifts has become too great for endurance. I haven't the time or strength, with all my business responsibilities, to deal with these demands properly. I am so constituted as to be unable to give away money with any satisfaction until I have made the most careful inquiry as to the worthiness of the cause. These investigations are now taking more of my time and energy than the Standard Oil itself. Either I must shift part of the burden, or stop giving entirely. And I cannot do the latter
"Indeed you cannot, Mr. Rockefeller," replied Gates, listening with great care and at the same time anticipating the benefactor's point.
"Well, I must have a helper." Rockefeller continued. "I have been watching you. I think you are the man. I want you to come to New York and open an office here. You can aid me in my benefactions by taking interviews and inquiries, and reporting the results for action. What do you say?"
Fervently aware of the wealth and power that would rest in his hands to use on behalf of all the things he believed important, Gates accepted without the slightest hesitation. He thus began a relationship with Rockefeller that transformed the world's largest fortune into the most strategically applied philanthropy, establishing principles, methods, and directions that were soon emulated by other philanthropists and continued through the next two generations of the Rockefeller dynasty. The numerous medical and public health programs would become the central part of Gates' strategy.
In September 1891, Gates took an office in the Temple Court Building in New York City, not far from Rockefeller's Standard Oil offices at 26 Broadway. He continued his work for the Education Society even while he took charge of Rockefeller's philanthropy. The supplicants who hounded Rockefeller "almost like a wild animal" were sent to Gates' office. "I did my best to soothe ruffled feelings, to listen fully to every plea, and to weigh fairly the merits of every cause," Gates recalled of his days at Temple Court.45
With the same systematic thoroughness that marked his report for the Education Society, Gates investigated each request that came his way. "I found not a few of Mr. Rockefeller's habitual charities to be worthless and practically fraudulent. But on the other hand I gradually developed and introduced into all his charities the principle of scientific giving, and he found himself in no long time laying aside retail giving almost wholly, and entering safely and pleasurably into the field of wholesale philanthropy."46
Gates' first act on behalf of "wholesale philanthropy" was to increase Rockefeller's contributions to state and regional Baptist agencies and cut off contributions to individual churches, missions, and charity organizations. By forcing every church and mission to get their aid from centralized denominational boards, Gates increased the latter's power over the far-flung flock.47
Not long after he moved to New York, Gates took charge of Rockefeller's many investments outside the Standard companies. As with his charities, Rockefeller always intended to check on his investments thoroughly before buying into them. Often he was persuaded by acquaintances to invest in a project or industry they assured him would pay off handsomely. Most of the immense "surplus" wealth that Rockefeller was taking out of oil he was putting, not into charity, but into "a good many different industries." By 1893 he had accumulated, besides the Standard, sixty-seven major investments, valued at $23 million, in railroads, mining, manufacturing, and banks. "It occurred to me," Rockefeller later recalled, "that Mr. Gates, who had a great store of common sense, though no especial technical information about factories and mills, might aid me in securing some first-hand information as to how these concerns were actually prospering." He asked Gates to investigate some of these investments when he happened to be in the area on Education Society business.48
Gates checked on several of Rockefeller's distant stakes: an immense land speculation scheme in the Pacific Northwest that two fellow parishioners of Rockefeller's Fifth Avenue Baptist church had persuaded the oil baron to invest in; a $600,000 investment in a West Superior, Wisconsin, steel mill and land speculation fraud, recommended by the same brethren; and a smaller iron furnace in Alabama. Gates demonstrated his varied abilities and singular value to his employer. "His report was a model of what such a report should be," Rockefeller remarked with uncharacteristic praise. "It stated the facts, and in this case they were almost all unfavourable." One investment that Rockefeller thought was earning $1,000 a day was instead losing thatamount.49
One more investigation by Gates, of some reputedly rich gold mines in Colorado that turned out to be a complete fraud, settled the matter for Rockefeller. His income was now upwards of $10 million a year, he was physically and emotionally coming apart at the seams, and he desperately needed a lieutenant in whom he could place complete confidence. He asked Gates to drop his office in the Temple Court Building and share his private offices at 26 Broadway. "That," wrote Gates, "is how I came to be a businessman."50
THE REVEREND FREDERICK T. GATES: THE MAKING OF A ROCKEFELLER MEDICINE MAN
It is not surprising that Gates should be such an appealing assistant in both philanthropy and finance. Although he graduated from the Baptist controlled Rochester University and the Baptist seminary in Rochester and then spent eight years in the ministry. Gates was at heart a businessman in spiritual clothing. As he himself said in his autobiography.
Much of my life has been in fact an unconscious preparation for successful business. My interesting experience in selling harrows, my months as a clerk in a country store, and as cashier of a country bank, my interest in my father's financial affairs and the ways and means of paying our debts, my studies of political economy under Doctor Anderson [at Rochester], my close study of the finances of our church building in Minneapolis, a habit of looking at things in their financial tendencies and relations, my study of denominational finances at home and abroad, all these things had given me a business experience and my mind a financial turn.51
Gales was nearly thirty-eight years old when he went to work for Rockefeller. His early years were spent in rural poverty. His father had studied medicine but turned to the Baptist ministry for his life's work. The elder Gates' successive congregations were mainly poor farmers in rural New York; his family shared that poverty which bred at least part of Frederick's determination to leave it behind in his own life. When the family moved to Forest City, Kansas, Frederick began but had to quit high school and then taught school to earn money to help his family pay off the accumulating debt on their farm.52 Through high school and college jobs Gates worked with his characteristic diligence and energy and discovered how much he pleased his employers. His shrewd salesmanship earned him $1,500 for selling harrows. Gates was developing a sense of where his ambition might eventually take him.
Young Gates' experiences with religion were as important in shaping his future life as were his experiences with poverty. "The best that religion had to offer me as a boy," he wrote near the end of his life, "was death and heaven, the very things I most dreaded—being a normal, healthy boy." With his teaching job Gates developed a strong attraction to the intellectual and personal elements of religion, though his conversion was not an emotional one. He found Christ's social and moral teachings very attractive: "I was drawn to his person and character, and felt that throughout my life I wanted to side with him and his friends against the world and his enemies. Such, frankly, was the only 'conversion' I ever had."
He found his seminary training so academic as to leave him poorly prepared for ministerial work. He dispensed with the philosophical idealism the seminary had cultivated, and from his own reading, his life experiences, and examination of the economic and social issues affecting his congregation, Gates took up a pragmatic philosophy that was more in keeping with his personality and his ambition. His fund-raising work for his poor parish in Minneapolis and his less solemn, more modern sermons attracted a bigger congregation and with it, more wealth.
One day George Pillsbury, whose flour fortune made him the wealthiest Baptist in the Northwest, asked Gates' advice in making up his will and especially in leaving $200,000 to a Baptist school. Pillsbury was very pleased with Gates' suggestion that he immediately give $50,000 to the school on the condition that the denomination in Minnesota raise an equal amount—to assure their committed interest in it—and that he bequeath another $150,000 to the school in his will. Baptist leaders were also pleased and commissioned Gates to raise their $50,000 share of the funds. Gates resigned his pastorate and took up the challenge. So effective were his methods of button-holing Baptists in the state that he had soon raised $60,000.53 Gates knew he had found his calling!
He developed a number of rules for fund raising which he learned "mostly on the pastorate" and a couple of years later wrote them down at the request of his admirers in the trade. Dress well, act in a dignified manner, pretend the visit will be a short one, be good-natured, and "keep your victim also good-natured. ... Let him feel that he is giving it, not that it is being taken from him with violence." Rule number 7 he followed unswervingly through his nearly four decades of service to Rockefeller: "Appeal only to the noblest motives. His own mind will suggest to him the lower and selfish ones. But he will not wish you to suppose that he has thought of them. He wishes you to believe him to be giving only from the highest motives."54 In a few years Gates rose from pastor of an average Baptist congregation in Minneapolis, to a state-wide position with the denomination in Minnesota, to chief officer of the Baptists' national Education Society, to the side of Mr. Rockefeller himself, administering a panoply of investments and an immense philanthropy.
As soon as he joined Rockefeller's private office to manage his finances, Gates began a meticulous evaluation of all Rockefeller's holdings outside the Standard Trust. He was given a free hand in reorganizing investments and corporations alike and was provided with assistants, credit, and confidential information. "I had every needed tool," Gates remembered, "and the machinery was well oiled and without the least friction. No man of serious business responsibilities ever had a happier business life than I. No man was ever furnished with more of the external elements of success, or given better opportunities." In some companies Gates bought enough stock to take control and put in management acceptable to him and Rockefeller. Other investments were sold off completely. In the end, Gates was made president of thirteen corporations in which Rockefeller now had a controlling interest. He added sizeable chunks to Rockefeller's geometrically increasing fortune, the grandest chunk being the $55 million profit Gates made on selling the Mesabi iron ore range and associated industries that he had developed.55
Although Gates came to Rockefeller's employment a poor man, he soon remedied this unfortunate condition. While executive secretary of the Baptist Education Society, Gates was paid a then-respectable income of $2,500 a year. When he moved East and opened an office in the Temple Court Building, Rockefeller added $1,500 to his income. His added responsibilities led to annual increases in salary "always paid by the corporations which I managed," until after ten years with Rockefeller he was getting a salary of $30,000, a very good income in the first decade of this century. Out of his earnings Gates and his wife had saved enough to pay for their Montclair, N.J., home and had invested some $60,000 in the companies he had organized and managed for Rockefeller. That small investment brought him more than $500,000 when he sold his shares in 1902. "Prudent investments with few losses gradually increased
"Wholesale Philanthropy" I 41
this sum." In 1916 Gates began converting all his investments into then-rising and profitable bank stocks and encouraged Rockefeller to do the same, recommending especially the Chase National Bank, which was paying dividends of 20 percent on invested capital. By the time of his death in 1929 Gates was a wealthy man though, needless io say, his fortune fell far short of his employer's.56 Though Rockefeller never paid direct compliments to any person, he more than once recorded his appreciation of Gates' ■'phenomenal business ability." In response to a reporter's question, "Who is the greatest of all the business men you have known?" Rockefeller heaped warm praise on Gates. "He combines business skill and philanthropic aptitude io a higher degree than any other man I have ever known."5' Though Gates was involved with Rockefeller's finances in important ways, his organization of Rockefeller's philanthropies, and especially the medical programs, makes him historically significant- In 1897. John D. Rockefeller, Jr., graduated from Brown University and was cautiously trying to find a place for himself in a world preempted by his father. His hereditary position in the world of industry and finance left him little room for any achievement that he could call his own. His own name was inseparable from his father's, who was perhaps the most vilified of all the great robber barons. The one area in which he might stake out new ground and at the same time help clear the family name was philanthropy. And thus he entered his father's private offices at 26 Broadway, an imperium presided over by the Reverend Gates.58 With difficulty Gates and "Mr. Rockefeller, Junior" developed a working relationship. Junior was then twenty-three years old, inexperienced, and reserved to the point of shyness. Gates, twenty years his senior, did not hide his self-confidence derived from varied experience and personal achievement; he was ebullient. Nevertheless, Junior learned from Gales and from his own successes and failures and built an independent role for himself in both philanthropy and finance. For his part. Gates learned to tolerate this scion of the man he worked for and truly respected. Gates considered Junior "diligent" but unimaginative. "He was home-made and hand-trained," he recalled disdainfully. Rockefeller, Sr., had found, as his biographer Allan Nevins
42 I "Wholesale Philanthropy"
observed, "just the combination of qualities he needed: Gates endowed primarily with imagination, fire, and vision, the son endowed primarily with hard sense, caution, public spirit, and Gates and Junior investigated new lines of philanthropy and the value of Senior's investments, bringing major proposals for action on both to the financier for final decisions. Gates wrote his views in eloquent reports; Junior relied on oral persuasion.
years later. "I wis the salesman--the go-betu/eenw'ith Faitherat the opportune nloment." Senioi■ seldom jurnped into aiiV new venture.'Til letthe idea simrrner," he often toldhis s< nd
Considerations inscrutable to his assistants, he was ready to a> Gates was also quite a contrast to his employer. As Raymond Fosdick, president of the Rockefeller Foundation for more than a decade, revealed:
Mr. Gates was a vivid, outspoken, self-revealing personality who brought an immense gusto to his work; Mr. Rockefeller was quiet, cool, taciturn about his thoughts and purposes, almost stoic in his repression. Mr. Gates had an eloquence which could be passionate when he was aroused; Mr. Rockefeller, when he spoke at all, spoke in a slow measured fashion, lucidly and penetratingly, but without raising his voice and without gestures. Mr. Gales was overwhelming and sometimes overbearing in argument; Mr. Rockefeller was a man of infinite patience who never showed irritation or spoke chidingly about anybody." From this triumvirate came the influential philanthropies that asserted extraordinary leadership in shaping the social, economic, and political order of the twentieth century. Rockefeller, the individualistic captain of industry from the rough-and-tumble old order that was being transformed at the turn of the century, supplied the money but left the directing to his lieutenants. Gates, the transition figure from unbridled individualism to the discipline of the corporation, provided systematic methods and a rudimentary strategy for asserting corporate capitalism's needs for supportive social institutions. Junior, emerging gradually as the nation's foremost representative of modernism in corporate relations with labor and the public, brought a refinement and sensitivity to the philanthropic work being developed by Gates.
"Wholesale Philanthropy" I 43
The programs and strategies that emerged from this center of financial power had an enormous impact, especially on medical care and health systems in the United States and throughout the world." THE GENERAL EDUCATION BOARD: $129 MILLION FOR STRATEGIC PHILANTHROPY Gales shared Carnegie's fears that excessive hereditary wealth diminishes individual initiative and achievement, that it saps the participation of its bearer in the social and economic processes that make society strong. "Your fortune is rolling up, rolling up like an avalanche!" he warned Rockefeller. "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 chil- Havjng acquired the fortune, it fell to Rockefeller and his associates to maintain it as a trust for the people, just as Carnegie had advocated. "It is the duty of men of means," Rockefeller wrote early in this century, "to maintain the title to their property and to administer their funds until some man, or body of men, shall rise up capable of administering for the general good the capital of the country better than they can." In his view, neither experiences with state and national legislatures nor "schemes of socialism" offered any promise that "wealth would be more wisely administered for the general good" than it was by its private Since the owners of capital were mortal men, it was incumbent on them to provide some ongoing trust to see that their wealth would be used wisely even after they passed from the scene. There was nothing new in this concept as understood by the Rockefellers as they launched their first grant-giving foundation, the General Education Board, to aid Southern education. Charitable trusts independent of the state and the church have had legal status in Anglo-Saxon law since the "statute of charitable uses" was enacted by Queen Elizabeth in 1601. Most of these, however, had been narrowly prescribed uses—endowing a particular hospital, giving relief to wayward girls in Brooklyn, and providing scholarships for young men entering mechanical engineering at a particular college."
44 I "Wholesale Philanthropy"
However, there were a few precedents that greatly influenced the creation of the General Education Board, providing the first of its strategic philanthropic programs aimed at transforming major social institutions. At the close of the Civil War. merchant-banker George Pcabody provided $2 million for a Southern education fund. The war had left the South in ruins and its schools destroyed or otherwise defunct; a generation of Southerners was growing up uneducated and essentially illiterate. The Peabody Education Fund hired Barnas Scars, the president of Brown University, to set up a grant program to help schools that were run and generally supported by Southerners. Sears was succeeded by Jabez L. M. Curry, a Confederate politician and planter from Alabama, who had saved his land from confiscation after the Civil War by swearing allegiance to the United States." The Peabody Fund set an example for John F. Slater, a textile manufacturer from Connecticut, who endowed a SI million fund in 1882 to educate Southern blacks. By the end of the nineteenth century increasing numbers of Northern businessmen and Southern reformers were coalescing around the need to develop Southern schools in general and educate Southern blacks in particular. The South was not only economically and educationally undeveloped; it was the section of the country from which militant populism still received its widest political support, threatening the ambitions of Southern liberal reformers and Northern conservative businessmen who wanted to "modernize" and industrialize the region. In 1899 these leaders organized the first of several Conferences for Southern Education." John D. Rockefeller, Jr., was a guest at the third conference in 1901. Robert C. Ogden, a partner of John Wanamaker and general manager of their New York department store, chartered a special train, dubbed the "millionaires' special" by hostile Southern newspapers, to bring Northern businessmen on a tour of Southern black schools and then to a conference with Southern activists in the cause. Junior and the other guests visited the Hampton and Tuskegee institutes and other schools and ended their tour with a meeting in Winston-Salem. This conference established a permanent organization called the Southern Education Board (SEB) to raise money among Northerners, assume formal leadership of the campaign to develop Southern schools, and conduct propaganda on its behalf. Though the board's
"Wholesale Philanthropy" I 45
budget was low—not more than $40,000 a year—and they never gave grants as the Peabody and Slater funds were doing, ihe SEB hired agents to carry their campaign to influential Southerners and state legislatures.*' Like the Peabody and Slater funds, essentially combined under the leadership of their chief agent J. L. M. Curry, the Southern Education Board unanimously supported only "industrial education" for blacks. Schools organized around this model taught the rudiments of literacy and emphasized industrial and agricultural skills, disciplined work, thrift, and right living. Hampton Institute, whose chief trustee was Ogden and whose principal was fellow SEB member Hollis Frissell, was the prototype of industrial schools for blacks. Booker T. Washington, an early graduate of Hampton, founded a similar school at Tuskegee, Alabama, and became the country's chief black proponent of the gradualist strategy of racial progress. For half a century this model of education guided the work of the movement for compulsory schooling, and now it was the centerpiece of the progressive education movement, sweeping educators and businessmen alike into a national educational reform campaign." Northern and Southern businessmen were enthusiastic. "Every element for success exists in the South," the Manufacturers' Record declared in support, in raw material, in climate, in the forces of Nature, and above all. in an abundant supply of labor, which when properly trained and disciplined will be the main reliance of the South in the future for its prosperity. It only remains for (he South 10 do its duty to its black population by way of training and educating in the simple manual trades.'0 With the support of Northern money, the industrial schools flourished and the few genuine colleges for blacks struggled under their less than benign neglect. The Southern Education Board and its allies won grudging acceptance of schools for blacks from Southern white supremacist political leaders, and in return Northern members of the SEB campaigned in the North for acceptance of black disfranchise me nt and Jim Crow laws as the best way to progress for blacks. "The white people are to be the leaders, to take the initiative, to have the directive control of all matters pertaining to civilization and the highest interests of our
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beloved iand," Curry, former Confederate officer and now chief of staff of the Southern campaign, brazenly proclaimed. "This white supremacy does noi mean hostility to the Negro, but friendship for him."" For John D. Rockefeller, Jr., his 1901 tour and conference in the South were "one of the outstanding events in my life." Filled with a sense of mission, Junior discussed the new Southern Education Board and its program with his father, Gates, his friend Morris K. Jessup, and Dr. Wallace Buttrick, the portly and jovial secretary of the Baptist Home Mission Society, who also attended the conference and was now a member of the SEB. A small group was formed lo develop an ambitious project in support of the Southern work. In January 1902, they outlined a munificent philanthropic enterprise. In February an expanded group met for dinner at Junior's house and worked through the evening. Junior announced a pledge he had secured from his father for $1 million to spend over the next ten years, the first and smallest of many gifts to come. They formed a board of trustees to oversee the expenditures and appointed Buttrick executive secretary." "The South with its varied resources and products," their memorandum of agreement observed, "has immense industrial potentialities, and its prosperous future will be assured with the right kind of education and training for its children of both races."" The General Education Board was announced lo the press. "The object of this association," they explained, "is to provide a vehicle through which capitalists of the North who sincerely desire to assist in ihe great work of Southern education may act with assurance that their money will be wisely used."'4 The General Education Board (GEB), with its large resources, quickly became the locus of leadership in the Southern campaign. At its first meeting in 1901 the Southern Education Board had arranged a "community of interest" with the Peabody and Slater funds. By 1903, according to Southern board member Frissell, "the Peabody and Slater boards are now acting very largely through the General Education Board." In fact a more interlocking directorate could not be found, even among the Standard Oil companies. Several trustees of the Slater and Peabody boards were trustees of the GEB. Curry was a member or agenl of all four funds. Buttrick was a member of the Southern
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board, executive secretary of the GEB, and from 1903 to 1910 he was an agent of the Slater Fund—and so on." While the Genera! Education Board developed other programs over the next several decades, medical ones prominently among them, their work in the South remained important and never deviated substantially from their original perspective. Over the years the GEB worked to make all schools '"more responsive to our social, economic, and professional needs." The black population's role in society was clear. The board believed "the Negro must be educated and trained . . . that he may be more sober, more industrious, more competent." When the GEB finally came to support full-fledged colleges for blacks, it was not because their general outlook on race relations had changed. College I rain ing would be "provided for carefully selected Negroes" who will "lead the race in its efforts to educate and improve itself." The black's leaders "must be trained, so that, looking to them for guidance as he does, he may be as well guided as possible."1' The GEB was not concerned only with education of blacks. It worked to build up high schools for whites and for blacks throughout the South. Always with an eye to creating "local responsibility for self-help"—whal Gates called the "foundation of character and social life itself—the board's strategy was to stimulate and organize community support for school taxes. The GEB got each state university to create a professorship for secondary education. Then with the university's approval, the board defined the duties of the position and named the person to be hired and, in return, paid the person's salary and all his expenses. The main function of this professor was not to teach but to organize. He would visit the towns of his state—"as an officer of the university, laden with its wisdom and its moral authority"—and develop and channel local support for high schools and taxes to support them. At the end of Iwo decades of work, Ihe GEB had spent a little over S3 million promoting public schools in the rural and urban South. They considered the plan effective "beyond our most sanguine anticipations" and took considerable credit for the 2,000 new high schools built in that period at a cost of $60 million, for which annual appropriations in the Southern states increased from $1.7 million in 1905 to $15 million in 1922—"all raised by local taxation.""
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The public schools program of the GEB led lo a farm demonstration program run for the board by Seaman Knapp and then to the first of a long tradition of public health programs conducted by the Rockefeller foundations. Rooted in the same concern for Southern economic and social development that guided the public schools program, the public health programs, at first in the Southern states and then exported around Ihe world, became important supports for the growing domination by U.S. capital, trade, and military power.7a Gates, a charter member of the GEB and its chairman from 1907 to 1917, was the eloquent orator and, in Junior's words, "the brilliant dreamer and creator" of most of these programs. The permanence of the General Education Board was assured with a broad congressional charter, dedicating the new foundation to "the promotion of education within the United States." Senator Nelson Aldrich, Junior's father-in-law and a powerful representative of business in Washington, "took ihe bill into his own hands and put it through in record time." It was officially chartered in January 1903. a year after it began its first Southern program, yet the most influential work of the GEB was yet to Gates took into his own bosom the worries about Rockefeller's still-growing fortune. "] have lived with this great fortune of yours daily for fifteen years," he wrote his employer in 1905. "To it, its increase and its uses, I have given every thought, until it has become a part of myself, almost as if it were my own.""" Recognizing the mortality that all persons must face, Gates laid out the alternatives to Rockefeller. "One is that you and your children, while living, shall make final and complete disposition of this great trust, for the good of mankind. The other is that you shall not do this, but shall hand it down to unborn generations, for them to decide how this trust shall finally be discharged for For Gates, embracing Carnegie's "Gospel" and fearing the "powerful tendencies to social demoralization" of inherited wealth, the first alternative was the only moral one. He proposed that Rockefeller decide what major lines of work for "human progress" he wanted to serve and who should administer the funds and then create an endowment "to provide funds in perpetuity, under competent management, with proper provision
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Gaies then suggested several funds for different areas of work—"a great fund for the promotion of a system of higher education in the United States, ... a fund for the promotion of medical research throughout the world, ... a fund for the promotion of the fine arts," and more. "These funds should be so targe that to become a trustee of one of them is to make a man at once a public character." The work of these enterprises should employ ■'the best talent of the entire human race." Junior followed this letter with his own enthusiastic endorsement of Gates" proposal. Within two weeks Rockefeller, Sr, gave the Genera! Education Board $10 million and followed that a year and a half later with another $32 million. By 1921 Rockefeller's gifts to the GEB totaled more than $129 million. Larger and more numerous endowments began to flow to the Rockefeller Institute for Medical Research, fathered by Gates from his employer's fortune in 1901, and soon discussions began that led from Gates' 1905 letter to the creation of a much larger and broader fund, the Rockefeller Foundation, to which Senior gave more than $182 million. It is nol so clear that Gates' only concern in recommending that Rockefeller himself dispose of his fortune was the danger of inherited wealth to ils possessors. The notoriety that accrued to Rockefeller and other robber barons along with their profits cast a long shadow on the future of wealth, and the Rockefellers felt the chill as much as anyone. Henry Demarest Lloyd, in Wealth Against Commonwealth published in 1894, and Ida Tarbell, in a magazine series ending in 1904, had tarred and feathered the Standard Oil Trust. The Socialist movement was winning the support of working people throughout the country for its program to do away with private capital altogether. And perhaps most frightening of all, upstanding middle-class Americans, professionals and businessmen with values very much like the Rockefellers themselves, were joining the call for Progressive reforms. The Progressive movement, while firmly supporting capitalism, was calling for constraints on the accumulation and concentration of private wealth. Roosevelt was elected in 1904 on a platform that at least threatened to break up monopolies. -I trembled," Gates later recalled, "as I witnessed the unreasoning popular resentment at Mr. Rockefeller's riches, to the mass of the people a national menace." Gates might believe that Rockefeller -used his wealth always and only in the public
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