Foundations of the American Century

by Inderjeet Parmar

  THE DOMESTIC CONTEXT

  According to Hofstadter, the United States was in the middle of a “psychic crisis” by the beginning of the twentieth century, on the very eve of the birth of the Rockefeller and Carnegie foundations.18 Indeed, the gigantic industrial concerns headed by Andrew Carnegie and John Davison Rockefeller, Sr. and Jr., were both cause and symptom of that crisis. There were several aspects to the psychic crisis brought about by massive industrialization, mass immigration, and rapid urbanization: first, large-scale protest movements across the country—Populism, violent strikes and industrial unionism, in particular—fueling fears among elites that revolutionary tendencies were at large, “the specter… of drastic social convulsions”;19 second, the concentration of production to such an extent as to fuel fears that the days of open market competition and opportunity were over; third, the closing of the American frontier, the prevalent belief that the principal outlet for frustrated energies had disappeared; and fourth, the pervasive belief that corruption in business, politics, and government was rampant. All this signaled a radical change to the Victorian-era sense of order that prevailed in middle-class circles. One result of the psychic crisis was, as noted above, America’s desire to expand beyond its frontiers: the “tonic of a foreign adventure,” as Theodore Roosevelt put it, to unite the nation and overcome its internal upheavals and convulsions. The other result was “an intensification of protest and humanitarian reform. Populism, utopianism, the rise of the Christian Social gospel, the growing intellectual interest in socialism, the social settlement movement.”20 Philanthropy was implicated both in the sources of the psychic crisis—as we shall see, Carnegie’s and Rockefeller’s industrial power and practices of labor relations were powerful drivers—and in proposing how to address some of the symptoms of the crisis through social reform and by amelioration of the harsher elements of capitalist industrialization.21

  The industrial fortunes upon which Rockefeller and Carnegie philanthropies are based were constructed through organizational innovation and honest endeavor as much as by the exploitation of labor. Carnegie’s steel mills dominated the industry. In 1892, Carnegie Steel was capitalized at $25 million; Andrew Carnegie earned $4 million per year.22 In 1898, Carnegie’s profits amounted to $10 million, $3 million higher than in the previous year, an almost 50 percent return on total capitalization.23

  However, the exploitation of labor—low wages, long hours, unsafe working conditions, and the on-again-off-again battle against organized labor—led to outbreaks of bloody industrial conflict, a rich source of clues as to some of the underlying values of Rockefeller and Carnegie and some understanding of the underlying ameliorative aims of their philanthropies. All was well with the world of the “robber barons” like Carnegie, but, as Josephson argues, labor opposition was developing “in most menacing form” by the 1880s. “Against the threat of labor’s growing might, and its demands which they held intolerable, the barons exerted themselves with… an unflinching ruthlessness. In the United States, as in almost no other industrial nation, the encroachments of organized labor were halted or neutralized or completely nullified.”24 Carnegie proved no exception to this rule.

  The Homestead strike/lockout of June–July 1892 is instructive of the methods of Andrew Carnegie. Prior to this, Carnegie was often thought of as a benevolent employer; the handling of the strike tarnished his reputation. Briefly, Carnegie’s steel plant at Homestead, Pennsylvania, was unionized. Carnegie wanted to break the union and to reduce worker levels and wages.25 Faced with resistance, Carnegie’s manager, Henry Frick, locked out the workers, recruited nonunion strikebreakers, and hired hundreds of armed men from the Pinkerton National Detective Agency, a nineteenth-century private military contractor.26 The ensuing gun battle left twelve men dead or wounded; the state militia was called in to protect strikebreakers; after four months the strikers returned to work, and all strike leaders were blacklisted and many charged with murder; the union was broken. Despite Carnegie’s later expressions of regret, the episode furnishes an important contradiction: as Joseph Frazier Wall argues, Carnegie was “torn between wanting to pose as a great democrat and liberal and at the same time wanting to make sure Carnegie Steel came out on top.”27

  The Rockefeller family wealth was based on Standard Oil of Ohio, established in 1870, which effectively grew to control the production, refining, and distribution of oil in the United States by the 1890s. Capitalized at a modest $70 million, it produced earnings of $10 million per annum in 1882; by 1890, earnings had almost doubled. In 1882, the trust wholly owned fourteen other companies and partly owned twenty-six others, including the National Transit Company, with a capitalization of $30 million. By that time, the trust earned 53 percent of its income from transportation and just 36 percent from refining.28 It was a multiheaded organism spanning the United States, and, as it grew, it confronted organized labor even more ruthlessly than did Carnegie.

  The dispute at Rockefeller’s Colorado Fuel and Iron Company (CFI, in which they owned 40 percent of the shares) in 1913–1914 was even bloodier than the lockout at Homestead. Up to sixty-six strikers and their family members were killed when National Guardsmen attacked the “tent city” that strikers had built upon eviction from their homes in CFI’s company town at Ludlow. John D. Rockefeller Jr.’s role was identical to that played by Carnegie before and during the Homestead dispute: he backed the company’s managers in breaking the strike and in forcing down wages. In October 1913, Rockefeller commended the correctness of CFI’s action in refusing to unionize the mines and in bringing in private armed guards.29 Rockefeller congratulated management for “fighting the good fight, which is not only in the interest of your own company but of other companies of Colorado and the business interests of the entire country and the laboring classes quite as much.” Rockefeller promptly employed a public relations firm—headed by one of the profession’s pioneers, Ivy Lee—to handle the issue in the American press, indicating a shrewd understanding of the political significance of public-opinion “management” in the United States. Lee’s stream of bulletins and press releases, purporting to be from local Colorado coal operators rather than from Junior’s office, were sent to opinion leaders across the country, leading to broadly favorable coverage in the American press.30

  There were protests across the country, including outside Rockefeller’s offices in New York City. The Ludlow killings renewed public attention to the Rockefeller Foundation and John D. Rockefeller, principally as a result of an ongoing congressionally authorized investigative Commission on Industrial Relations, under the chairmanship of the attorney Frank P. Walsh.31 The Walsh Commission, among others, concluded that the newly established Rockefeller Foundation was being used by Rockefeller industrial interests to develop propaganda for deployment during industrial disputes. In addition, the Rockefellers had been receiving direct advice on the CFI dispute by the Canadian labor expert and future prime minister William L. MacKenzie King, who was subsequently employed by the foundation to undertake an “impartial” “Investigation of Industrial Relations to Promote Industrial Peace.”32 King’s testimony to the Walsh Commission was instructive on the relationship between technical expertise and corporate funding: he argued that the technical character of his work meant that he was impartial, although he was placing the results of his studies at the disposal of powerful interests.33

  These two episodes provide useful antidotes to any (understandably) relaxed acceptance of the altruistic public rhetoric of Carnegie and Rockefeller philanthropy. At the very least, the bloody disputes at Homestead and Ludlow suggest that the motives of philanthropists are complex and worthy of deeper analysis. The argument of this chapter does not depend, however, on the personal “psychology” and motivations of the foundations’ benefactors. Feelings of “guilt” and the desire to “give something back” to society are less interesting to the argument here than the underlying aims, operations, and influences of philanthropy in the long run. In providing brief accounts of th
e histories of the industrialists who endowed the foundations, this chapter seeks, at least partly, to show the means by which they clawed their way to the top—through ruthlessness; the deployment of bribery, corruption, and violence; and outright exploitation. As important, however, to the character of their philanthropic ventures was the industrialists’ organizational vision as architects of massive, centralized corporate-bureaucratic national and global networks. That is, their “normal” (and mainly legal) business activities and experiences are the other key to an understanding of Rockefeller, Carnegie, and Ford philanthropy.

  ORIGINS, AIMS, AND FOUNDERS

  As noted above, part of the psychic crisis of the 1890s reflected the country’s breakneck pace of capitalist industrialization and accompanying social polarization, generating great fears among elites. Some of those fears resulted in the flowering of calls for reform: slum clearance, labor laws, and so on. Others turned to charity. Still others, including Rockefeller and Carnegie, turned their minds to establishing philanthropic foundations to help tackle the ills of American society, economy, and politics. The flurry of new foundations reflected the rapid increase in the number of millionaires—rising from an estimated one hundred in 1880 to forty thousand by the middle of the Great War. Individual fortunes were remarkable. Carnegie’s personal wealth stood at $300 million in 1901, while John D. Rockefeller’s stood at $900 million in 1913, making him the richest man in history.34

  Although the Rockefeller Foundation was formed in 1913, the family’s philanthropic efforts had begun with the University of Chicago (1892), the Rockefeller Institute of Medical Research (1901), and the General Education Board (1903). This was augmented by the Laura Spelman Rockefeller Memorial (LSRM) in 1918 and the Rockefeller Brothers’ Fund in 1940. Andrew Carnegie’s philanthropic efforts include the Carnegie Institution of Washington (1902), Carnegie Institute of Technology (1905), Carnegie Foundation for the Advancement of Teaching (1905), Carnegie Endowment for International Peace (1910), and the Carnegie Corporation of New York (1911). Other philanthropic foundations formed in that period include Russell Sage (1907) and the Cleveland Foundation (1914).

  The Carnegie Corporation (CC) was founded in 1911, with an endowment of $135 million, for the provision of “information and understanding,” especially adult education. As it was tax exempt, it was forbidden from supporting political causes or engaging in propaganda.35 CC’s trustees claimed to supply no ideas; they hoped merely to supply “fertilizer” to scholars.36 On the other hand, trustees were clear that public opinion “bears heavily upon the thinking of [the American people’s] representatives” and aimed, therefore, to “educate” the people to support the United States in playing “effectively its role of leadership in world affairs.”37 The Carnegie Endowment for International Peace (CEIP, founded in 1910) was even more directly concerned with “educating” public opinion. One of its founding spirits, U.S. Senator Elihu Root, noted in 1915 that there was a compelling need for the CEIP and others to “inform the minds and educate the attitude of this great new sovereign [public opinion] that is taking charge of foreign affairs.”38

  The Rockefeller Foundation (RF, founded in 1913) was far less modest: it claimed to promote nothing less than the welfare of all mankind. It was set on a scientifically driven mission to develop solutions to America’s and the world’s most intractable problems: sickness, poverty, underdevelopment, and ignorance.39 The Ford Foundation (FF), like its older counterparts, aimed to develop human potential, promote peace and freedom, and aid global political and economic development.40

  KEY FOUNDATION LEADERS

  This section considers the biographies of the principal pioneers and leaders of Carnegie, Rockefeller, and Ford philanthropy: the men who made, funded, and led the foundations. The evidence from these brief biographies combines to show that the foundations were, from the very earliest days of their creation, part of and builders of the American East Coast Establishment.

  JOHN D. ROCKEFELLER SR. (1839–1937)

  JDR Sr. was born in Richford, near Binghamton, New York, the second of six children in a German-American family. He was educated at local schools, the Owego Academy, and a local commercial college in Cleveland, Ohio. After graduating from high school, he worked as a clerk at the age of sixteen. As a Northern Baptist, he paid 10 percent of his earnings to charity, despite relatively low income and extensive family responsibilities. Rockefeller’s father, William, a confidence trickster, among other things, was an embarrassment to his family.41 Rockefeller’s mother, a somewhat stern Scottish Protestant, was a powerful influence in shaping JDR Sr.’s habits of thrift, personal responsibility, hard work, and religious faith.42 According to one view, JDR learned from his father, William, somewhat surprisingly, the importance of honesty in business affairs, honoring contracts, and prompt settlement of bills. William claimed to teach his children the realities of life by “skinning them in financial matters as frequently as possible.”43

  According to Nevins, this heritage helped “mould” the purpose and to establish JDR as one of the giants of American industrial history. Nevins, a highly sympathetic biographer, concludes that JDR’s career was marked by “his single-mindedness; his sharpness of insight; his cool disdain of emotional factors; his instinct for the future…; his breadth of ambition; and his skill (which to opponents sometimes seemed merciless) in finding novel weapons to attain his ends—his strategic ingenuity.”44 He was a churchgoing materialist, a charitable citizen but ruthless entrepreneur, and a Republican who did not enlist in the Civil War (too many depended on his business). He was a single-minded, ambitious, strategic thinker on the scale of the arch–Empire builder Cecil Rhodes.45 He understood more clearly and was moved by the forces of “combination and concentration”; he knew how to marshal “the right clout at the right point in the system, making the appropriate alliance, engaging the vulnerable opponent.” Collier and Horowitz surely are right when they argue that JDR’s principal contributions “had far less to do with the technology of oil than with the technology of power.” His passion was to “work on different kinds of structures, like the creation of the corporate trust,”46 a powerful system of networked power.

  JDR’s greatest achievement was the Standard Oil Company of Ohio, which not only destroyed all other competition in Cleveland within a few months but went on to become one of the world’s largest multinational corporations. In an age of restrictions on interstate ownership of corporations, Rockefeller pioneered the “trust,” a new form of organization that permitted him centralized control of America-wide business interests, breaking the shackles (or safeguards) of the internal political organization—into dozens of states—of the United States. He not only nationalized his corporation; he internationalized it—steps followed by others. JDR was a ruthless competitor able to use the very system of competition itself to crush opposition and “progress” beyond it to one that was dominated by huge conglomerations, a new stage of capitalism. Standard Oil’s foreign policy, as it were, reflected its domestic policy: “The Standard fought for overseas markets with the same ferocious intensity as it had for domestic concessions… defying foreign governments as routinely as it had state legislatures at home.”47 Through intense price cutting and other activities, Standard Oil managed to control 60 percent of the European oil market by the early twentieth century. Interestingly for this study of Rockefeller and other American philanthropy, Standard’s overseas behavior found more congeniality with the objectives of the federal administration, because, in faraway lands, Standard’s “prosperity was America’s prosperity; its manifest destiny was at one with the nation’s.” Enjoying remarkable access to State Department field reports on the Middle East and Southeast Asia, Standard Oil “functioned as a shadow government with a foreign policy of its own,” according to Collier and Horowitz.48

  After much-criticized monopolistic, competition-busting practices, in addition to well-documented cases of “buying” congressmen and senators to abort threatening legislation,
Standard Oil was broken up by order of the Supreme Court in 1911.49 JDR became America’s first dollar billionaire as Standard’s share price skyrocketed. As Abels fawningly summarizes the organizational achievements of JDR, Standard Oil was a truly integrated and networked system: “As the operations in oil extended vertically by integration, the trust owned its wells at the source and sold the end product at wholesale and retail, transporting oil through its own pipelines, by its tankers at sea, and by its own tank wagons on the streets of cities, even in foreign countries.”50 His and John D. Rockefeller Jr.’s philanthropy would also be pioneering in its own right: they would transform the purposes, organization, and scale of “giving” much as JDR had the corporate landscape of America. His was a scientific philanthropy; a networked globe-spanning system; efficient, concentrated power for maximum impact; and a “social dividend.”51 He would nationalize and globalize America and, indeed, begin the processes that would lead U.S. philanthropy to try to Americanize the globe.