What Julius Rosenwald Knew
Around the turn of the present century, a handful of Jews, mostly of German origin, came to exercise a profound influence on American philanthropy, creating a multiplicity of charitable institutions that continue to shape our world. It was an impressive group, including in its ranks the banker Jacob Schiff, the financier Felix Warburg, the industrialists Daniel and Simon Guggenheim, the merchant Nathan Straus, and the jurists Julian Mack and Mayer Sulzberger. But its foremost member was surely Julius Rosenwald. Though Rosenwald inhabited a world much different from our own, his rise from rag-trade to riches, and the uses to which he put his enormous wealth, constitute a story that bears retelling.
Julius Rosenwald was born in 1862 in Springfield, Illinois, where his parents had settled and opened a clothing store after emigrating from Germany eight years earlier. At age seventeen, with only two years of high school behind him, the young man left home to work in his uncles’ wholesale clothing business in New York. He soon saved enough money to open a store of his own and then a business manufacturing men’s summer clothing. In 1885 he moved the factory to Chicago. There, after a decade of successful toil, Rosenwald made a fateful investment, purchasing a 2 5-percent stake in the company of one of his local customers, a small mail-order house by the name of Sears, Roebuck.
By the close of 1896, Rosenwald had become a Sears vice president, and he was to remain at the company for the rest of his career, rising in 1908 to become its president. He made significant contributions to every aspect of the Sears operation, introducing new technologies like conveyor belts and gravity chutes to accelerate the processing of orders, tightening quality controls, and launching an innovative advertising campaign—“your money back if not satisfied”—that had tremendous popular appeal.
By 1906, when Sears moved into a vast new facility in Chicago, it was recording an average of 20,000 orders a day, a number that rose to 100,000 during the Christmas season. At the end of the first decade of the century, the firm’s annual gross sales tallied more than $50 million, making it the largest mail-order company in the world. By 1925, Rosenwald’s personal holdings in the company had risen from $37,500 to a then-prodigious $150 million.
If Julius Rosenwald’s accomplishments at Sears showed him to be a true pioneer of modern business—Henry Ford is said to have borrowed the assembly-line technique from the great retailer—he was also a trailblazer in the field of philanthropy, devoting as much energy to giving away his wealth as he had to acquiring it. Like the steel magnate Andrew Carnegie, his contemporary, Rosenwald saw himself as a public servant, the temporary steward of treasure entrusted to him for the purpose of bettering the world. To this end, Rosenwald gave without stint to a wide range of institutions. The University of Chicago and the Chicago Museum of Science and Industry received millions from his purse, as did numerous Jewish organizations like the American Jewish Committee, the Joint Distribution Committee, the Jewish Theological Seminary, and a host of Chicago-based associations, societies, and synagogues.
Increasingly, however, even as he continued donating to established organizations, Rosenwald developed certain convictions about philanthropy that impelled him down a rather unconventional path. His ideas came from different sources. He was deeply influenced, first of all, by Emil Hirsch, one of the leading Jewish communal leaders of the day. The rabbi of Chicago’s Sinai Congregation, a Reform synagogue on whose board Rosenwald himself served, Hirsch placed great weight on a principle deeply rooted in the Jewish tradition of giving: the importance of encouraging self-help. Although, for Hirsch, charity should be motivated by compassion for the poor and the need to alleviate immediate distress, it was always better to help people become gainfully employed than to give them alms.
In a man of Rosenwald’s political outlook, this view was warmly received. Like most of the other German-Jewish communal leaders of his time, Rosenwald was a staunch Republican and an equally staunch adherent of the laissez-faire business philosophy for which the party stood. An unabashed admirer of the solid conservatism of William Howard Taft, and one of his most loyal supporters within the Jewish community, Rosenwald contributed generously to the campaigns of every Republican presidential candidate of his era. He was an especially ardent backer of his friend Herbert Hoover, contributing $50,000 to Hoover’s 1928 presidential campaign and becoming a close adviser and confidant during his presidency.
Rosenwald’s friendship with Hoover began through an involvement with the massive charitable campaign that provided assistance to civilian victims of World War I, an effort that Hoover spearheaded. (Rosenwald’s special cause was the American Jewish Relief Committee for War Sufferers, through which he became the single largest American contributor helping Jewish casualties of the war in Eastern Europe.) Both men came away from the experience convinced that with proper leadership, the resources of private philanthropic institutions could be summoned to meet any domestic crisis, no matter how grave.
The alternative, then as now, was to offer the poor a right to governmental support. But this, Rosenwald maintained, had drawbacks that would lead to permanent dependence and a cycle of ever deeper poverty. Moreover, to give without requiring something in return was simply to invite the recipient to come back asking for twice as much. Convinced as he was of the truth of this argument, Rosenwald—in contrast to many other Jewish leaders of his day—became a vociferous opponent of the proposals advanced by Franklin D. Roosevelt, then campaigning for the presidency, to rescue the country from the Great Depression. Since he died in January 1932, ten months before Roosevelt’s election, Rosenwald would not see the results of those policies once Roosevelt had a chance to put them into effect.
Rosenwald’s opposition to government-provided welfare, however, did not mean he thought nothing should be done to help the downtrodden. On the contrary, from his embrace of self-reliance there flowed, early and late, a whole raft of philanthropic projects. He became a generous backer, for instance, of Hebrew Free Loan Societies, charitable institutions that furnished small amounts of capital, interest-free, to impoverished Jews. And Rosenwald’s reach was by no means confined to the Jewish world. He was a bountiful supporter of a campaign to establish more Young Men’s Christian Associations in urban black neighborhoods; the YMCA was then a major provider of temporary lodging and meals, and a source of employment information, to the poor and homeless across the land.
While the YMCA campaign was an important component of Rosenwald’s charitable portfolio, the realm in which he left his most enduring philanthropic imprint was the education of American blacks. Rosenwald’s interest in this area was first encouraged by Rabbi Hirsch, but its greatest spark came from Paul J. Sachs, a former partner in the New York investment banking firm of Goldman, Sachs and himself a noted philanthropist. In 1910, Sachs gave Rosenwald a copy of Booker T. Washington’s autobiography, Up from Slavery; as Rosenwald would frequently note, this work influenced him more profoundly than almost any other book he had read.
Born into slavery in 1856, Washington had become by the 1880′s a nationally known and respected educator whose gradualist approach to racial equality had won him wide acceptance and respect. He was also, of course, much criticized, in particular by the black leader W. E. B. Du Bois, who favored forcing more immediate and far-reaching changes in the legal, economic, and social condition of American blacks. Whoever had the stronger argument in this debate over means and ends, Washington could at least lay claim to genuine attainments for many newly emancipated slaves. The school he established in 1881 in Tuskegee, Alabama, had rapidly become a national center for agricultural and vocational training, and a laboratory for the formulation of self-development programs.
Among other approaches, Washington urged blacks to emulate the “very bright and striking example” set by American Jews. As he wrote in his 1902 book, The Future of the American Negro:
There is, perhaps, no race that has suffered so much [as the Jews]. . . . But these people have clung together. They have a certain . . . unity, pride, and love of race; and, as the years go on, they will be more . . . influential in this country—a country where they were once despised. . . . Unless the Negro learns more and more to imitate the Jews in this matter, to have faith in himself, he cannot expect to have any high degree of success.
This was a message that, not surprisingly, held a special appeal for a Jewish philanthropist like Rosenwald.
The two men first met in 1911 when Washington came to Chicago to raise money for the Tuskegee Institute. Shortly thereafter, Rosenwald was invited to serve as a trustee. But his support for Tuskegee was not confined to mere check-book philanthropy. Like Washington himself, Rosenwald firmly believed that charity alone would never ameliorate black poverty; rather, blacks needed to develop the skills that would make them indispensable employees, thereby offering a path from grinding poverty into the middle class. In furtherance of this philosophy, he became intimately involved in the workings of Tuskegee, making annual pilgrimages to Alabama in a private railroad car and bringing along a sizable contingent of relatives, friends, and potential benefactors.
On these visits, where Rosenwald’s party would typically be greeted with torchlight processions, brass bands, and elaborate ceremonies, he and his guests were given a chance to attend classes and observe students demonstrating their newly acquired skills. Rosenwald was in the habit of awarding cash bonuses on the spot to outstanding faculty members. Back home, he arranged for Sears to offer the students steeply discounted rates on surplus or slightly damaged shoes and hats.
From involvement with the Tuskegee Institute, Rosenwald moved on to finance a far more ambitious enterprise conceived by Washington: the building of public schools for blacks. In 1912, when this project was launched, educational opportunities for blacks in the rural South were severely limited, to say the least. In Alabama, a state where half the population was black, only 20 percent of black children were enrolled in school, as compared with 60 percent of white children. And the facilities that did exist tended to be staffed by grossly underpaid teachers working in appalling conditions.
Rosenwald began by launching a fund-raising drive that employed the then-novel mechanism of matching funds (to be supplied in labor, materials, or cash). The idea was that, by this means, recipients would regard the school-building program not as charity handed to them from on high but as an enterprise in which they themselves were integral partners.
The campaign was a huge success. Poor blacks across the South pledged cows and calves and sold eggs, hens, corn, cotton, berries, and other produce to generate funds; children donated their pennies. In one rural village, farmers set aside the proceeds from an entire section of a cotton field (the “Rosenwald Patch”); in another town, where a former slave donated his life savings of $38, the impoverished residents of the community succeeded in collecting a total of $1,365 and in building a new school that served hundreds of students. In short, by asking the beneficiary communities themselves to contribute, Rosenwald stimulated local philanthropy and investment alike.
In 1916, pleased with the progress of his Southern School Building Program, Rosenwald agreed to pay a third of the cost of several hundred additional schools. Between 1917 and the time of his death in 1932, through direct grants and indirect fund-raising, he could claim credit for the construction of 5,357 public schools serving more than 600,000 black children throughout the South.
Of what relevance today is the example of Julius Rosenwald’s life and philanthropic accomplishments?
To some, that relevance must seem questionable. Although an astute executive and generous giver, Rosenwald, they would say, was, like his friend Herbert Hoover, shortsighted about the good that an active government could do. At a moment when America was grappling with economic calamity, Rosenwald, whose uncritical faith in Hoover never faltered, stood foursquare against changes that were salutary in their time and that have since become almost universally accepted in our national life. Moreover, the critique would continue, Rosenwald’s approach to race relations was undeniably patronizing—think of those defective shoes and hats.
But that is hardly the end of the matter. For in a real sense Rosenwald was not shortsighted at all, but rather a farseeing visionary. The programs of the New Deal may indeed have helped millions of Americans move from temporary joblessness to gainful reemployment—which is all they were intended to do—but as these programs evolved over the decades, they led to the very demoralization and dependency among the poorest of the poor that Rosenwald had warned against. By contrast, the inculcation of habits of individual responsibility and self-help—the essence of Rosenwald’s philosophy—is today seen by many, even in the black community, as the only way out of a seemingly endless cycle of despair.
As for Rosenwald’s supposed condescension toward the objects of his concern, the fact remains that his school-building program and all his other activities in behalf of American blacks left a tangible legacy of significant and lasting worth. Can one say the same for the standing acrimony over affirmative action and black anti-Semitism that today passes for interracial “dialogue”?
In the end one is left with a tantalizing and paradoxical proposition: it is no accident, but rather the expression of a large and ironic historical truth, that a man of Rosenwald’s particular political and philanthropic views should have understood so much, and acted in so genuinely beneficial and progressive a way. Relevant in its day, his example is even more relevant in our own.