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Jewish World Review
April 2, 2007
/ 14 Nissan, 5767
Benefactors must be hardheaded
What would we do without benefactors and the money they leave? I've been reading a new biography of James Smithson, the mysterious English gentleman scientist who died in 1829 and left a half-million dollars to endow a foundation in Washington, D.C. that would create "an establishment for the increase and diffusion of knowledge among men." This munificent gift a little more than 100,000 gold sovereigns was unprecedented in America and aroused suspicion. Smithson had never set foot in the U.S. He was an illegitimate son of the Duke of Northumberland, who had held high office under George III. Smithson detested the monarchy and all it stood for and believed America to be the country of the future, especially if science flourished there. His gift was intended to ensure that it did.
Well, Smithson was right, wasn't he? But, at the time, his gift seemed too good to be true. It took the persuasive powers of former President John Quincy Adams to persuade Congress to accept it and set up the new powerhouse of knowledge. The Smithsonian has proved to be one of the world's great success stories in institution creation. It is indeed a center of advanced technology and science, and it is also the nation's luxury attic, in which such treasures as the original Star-Spangled Banner, Lincoln's top hat, the Spirit of St. Louis and the Mercury Friendship 7 spacecraft are displayed. The delightful castle, which is the museum's core, has spawned many other museums, and as a place to visit, there's nothing like it anywhere else in the world for charm, variety, richness and sheer fun. Smithson's spirit has every reason to be delighted with the success of his scheme and the way in which it has been a model for so many other large-scale benefactions.
MODEL BY EXAMPLE
Andrew Carnegie the man whose blast furnaces produced the first cheap high-quality steel, making him in his day one of the world's richest men clearly had Smithson in mind when deciding what to do with his own money. In his fascinating essay, "The Gospel of Wealth," Carnegie argues that it is morally acceptable to become rich by lawful means but reprehensible to hang on to that wealth: "[The] man who dies rich dies disgraced." Carnegie set up a number of institutions dedicated to the arts, teaching, scientific research and the humanities. He used the bulk of the $480 million he got from the sale of his business to endow Carnegie Corp. of New York, an umbrella body for dispensing cash. In 1919 a volume entitled A Manual of the Public Benefactions of Andrew Carnegie listed a vast number of projects, including 7,689 church organs and 2,811 free public libraries, on which a total of $350,695,653 had been spent.
This set a pattern that other rich men, led by John D. Rockefeller and Henry Ford, followed. These entrepreneurs made their millions by reducing prices Carnegie, steel; Rockefeller, kerosene and other basic products; and Ford by producing cheap, sturdy, reliable cars. Countless millions of housewives, farmers, consumers and manufacturers benefited. And the overwhelming mass of these capitalists' earnings went back to the American public through their charitable foundations.
EFFECTING A POSITIVE CHANGE
The tradition of businessmen leaving their wealth to the nation is a peculiarly American virtue. In Britain and Europe (and, more recently, Asia) the tendency has been to "keep it in the family," but rich, self-made Americans have been loath to give their children much more than a good upbringing and education. As a result the U.S. has more well-endowed universities and more elite scientific and technical institutions and first-class art galleries than the rest of the world put together. This helps to explain why for a quarter of a millennium the U.S. has remained ahead of other countries in the race to give its people a better, richer and fuller life. And, of course, that is exactly what Smithson intended and hoped would happen.
Two of the 20th century's most ingenious wealth creators, Bill Gates and Warren Buffett, have decided to follow in the footsteps of Smithson and Carnegie. However, I hope they and those who follow will learn from the past. Corporations that dispense vast sums of money, however benevolent in theory, are not always wise in practice. Clever men and women on the left, whose lives are driven by the lust for power and a taste for social engineering, have a gift for infiltrating charitable institutions and gaining control of their spending programs.
I am often astonished by the way in which corporations that were created by the fruits of capitalism shamelessly finance bodies and individuals whose objectives are to undermine the capitalist system, destroying private enterprise and the free market. I wish some well-endowed institution the Smithsonian, for example would commission a thorough investigation of this kind of philanthropy in the U.S., showing exactly how the money has been used and how far or close that's been to the intentions of the founders. Such a study would provide future benefactors with practical advice on what to avoid when setting up their foundations.
Another equally important purpose would be to gain insight, based on accurate historical experience, into how tax policies have adversely affected philanthropies and how to reshape those policies to effect a positive change. The spirit of generosity in American private enterprise has never been stronger than it is today. But we must ensure that it is not frustrated by legislative folly, administrative barriers and the sinister activities of ideological fanatics burrowing into the warm woodwork of generosity.
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© 2006, Paul Johnson