School Days . . .
“Treat people fairly and honestly and generously and their response will be fair and honest and generous.”
The fabulously wealthy may turn toward philanthropy for a number of reasons.
One such reason might be to assuage a guilty conscience: “I made all this money, so I better give some back so I can feel better about the plight of those less fortunate than me.” Others with extreme wealth give charitably from a sense of narcissism and nothing more: “See? I gave all this money to help those poor people. Look at what a great guy I am!” Still others do it for the pragmatic income tax breaks they can gain from taxable contributions.
And then there are those who give to a specific cause because it happens to be dear to his or her heart and conscience.
Andrew Carnegie, a steel magnate, by the end of his life had given up almost 90% of his substantial income to charitable works. Because he had received very little formal education as a youth he valued the commodity. Among his many donations to the public good were libraries created all across the United States (as well as many in Britain, Ireland, and as far away as Serbia and Fiji). These Carnegie libraries (many of which still survive and thrive today) were a boon to any community that got one; many a child (and educator) can thank Carnegie for greatly aiding in teaching those on the frontiers and in the small towns by providing such a wonderful—and perhaps otherwise unattainable—resource as a library.
While financial windfalls may be put to use bettering one particular small group of people a truly caring philanthropist’s gifts can uplift an entire demographic of underclassed to a society’s betterment, and many of the world’s greatest philanthropists felt it was more of a civic duty as a privileged person to help those in need.
Such a wondrous man was the Jewish millionaire, Julius Rosenwald. He used his fantastic wealth in support of an ideal that few during his lifetime thought was a worthy cause.
Julius Rosenwald believed that black Americans, educationally disenfranchised since before the Civil War, were a worthwhile investment.
What’s Good for Business is Good for America
There existed a group of mercenary entrepreneurs (railroad, steel, nascent oil magnates, and other robber barons) who were able to exploit the resources (and the naiveté of the populace) of the developing country that was the United States of America.
By the late 1700s to the early 1800s (starting with some of this budding nation’s founders, such as John Hancock, Benjamin Franklin, Thomas Jefferson, and Samuel Adams) commerce was the means to drive the infant country into the fore of both world politics and global acceptance. A country that did not contribute globally was of no significance; one that did, however, became a major player on the political and economic landscape.
Keeping “America” strong in the eyes of the rest of the world meant developing its industries and service economies. Exports of consumer goods became paramount. This was particularly true during the US Civil War when it was clear that the North—heavily invested in industrial pursuits, technologically and intellectually more advanced—far outweighed the Southern component, based as it was in agrarian activities. Steel, rail engines, and textiles seemed to be more important to the world than tobacco and raw cotton. Mere cotton could be had from Egypt—rifles and other metal works were a northeast American specialty.
“Sears Has Everything”
While the “Robber Baron” era bred many billionaires (ruthless as they were) there were a few who had enough conscience to “give back”. Carnegie was certainly one, as was J. D. Rockefeller.
Less flamboyant as these towering tycoons, but almost as powerfully wealthy, was a Jewish man from Springfield, Illinois. Born August 12, 1862, Julius Rosenwald learned his father’s trade in retail clothing. [The senior Rosenwald, a German immigrant, had moved to Springfield several years before the boy’s birth to run a clothing store for his wife’s family.]
Julius dropped out of high school after his second year to apprentice in the clothing business with two of his uncles in New York City. His first attempt at business went bankrupt. Back in Chicago in 1885, with a cousin as a business partner, he began a concern that manufactured ready-to-wear suits for men. He and his cousin became very successful over the next several years.
The young man married Augusta Nusbaum in 1890. They went on to have five children, but the other thing Julius gained from the marriage was a rather enterprising and driven brother-in-law named Aaron Nusbaum.
One of Rosenwald’s steadier buyers of his suits in Chicago was an upstart mail-order company, Sears and Roebuck. This company sent out catalogs to small cities and towns and out into the hinterlands of America where there was precious little in the way of retail.
However, the business mushroomed quickly after its inception in 1893. With Alvah C. Roebuck acting more as a “silent partner”, Richard W. Sears—the creator of the catalog and a talented advertising writer—found he was falling behind in filling his orders. He simply did not have the business acumen to manage the burgeoning shipping needs.
Sears knew Julius’ brother-in-law, Aaron Nusbaum. In 1895, he asked Aaron to join the company, offering him a buy-in as a partner. Aaron, in turn, brought this opportunity to Julius Rosenwald’s attention, and in short order the Chicago suit maker was a one-fourth owner of Sears and Roebuck.
His first order of business was to work out the kinks in the messy shipping department. Over time he engaged 7,000 workers round the clock who built a giant warehouse. Later, special letter-opening machines were installed (these could open 27,000 pieces of incoming mail per hour). The operation was further made efficient by the addition of conveyor belts, pneumatic tubes, and by use of color-coded tags to aid in identifying the routing of products internally.
Rosenwald’s early work in turning the business into a more efficient one did not go unnoticed. In 1896 he was made a vice president of Sears and Roebuck. And a management expert later described Rosenwald as “the father . . . of the distribution revolution which has changed the world economy in the twentieth century and which is so vital a factor in economic growth”. Henry Ford reportedly visited the facility Rosenwald had designed and came away sufficiently impressed to adopt some of his ideas later to his own manufacturing.
By 1907 sales had skyrocketed to $50 million annually (up from $750,000 when Julius first walked in the door). Richard Sears resigned his post as president of the company in 1908, and Julius Rosenwald was appointed his successor. He was then not only the president of Sears and Roebuck he was also a multi-millionaire thanks to the growth of his one-fourth investment.
Meeting of the Minds
In 1906 when Sears and Roebuck decided to become a public stock corporation one of the financial advisers brought in to aid in the move was a man named Paul Sachs (of the financial services group, Goldman Sachs). Sachs and Rosenwald struck up a rapport, and much of what they discussed in personal visits concerned social issues. One of these was the appalling state of the public education system for blacks in the South. Black schools, such as they were, were woefully underfunded. Sachs and Rosenwald talked at length about how to alleviate this problem.
Washington, a former slave who had been freed as a nine-year-old child during the Civil War, grew into a learned man. It was his lifelong goal to see that other Americans of African descent had educational opportunities, especially in the South. To that end he helped establish the Tuskegee Normal School for Colored Teachers (the forerunner of today’s Tuskegee University) in Tuskegee, Alabama.
The big city businessman was very moved by Booker T. Washington’s life story. A correspondence developed. Because Paul Sachs (who had become a family friend) knew him he was able to introduce Rosenwald to Washington. Over the next year the two men became friends, traveling to, and staying in, each other’s homes. Rosenwald listened as Washington described the state of affairs of black youth and the lack of educational outlets in the Deep South. [Still smarting over the devastating defeat of the Civil War and resentful about the Reconstruction years in the war’s wake, the South had settled into the world of Jim Crow segregation by then and considered blacks less than second-class citizens, not worth educating.]
Julius was asked, in 1912, to sit on Tuskegee’s board of directors. He accepted and stayed on the board for the rest of his life.
As a way of celebrating his half-century birthday that same year Julius Rosenwald said he would give nearly $700,000 (over $17 million today) to charitable causes. He also encouraged his peers to choose worthy causes of their own and to donate lavishly as well. Since generally most large bequests were only granted by the wealthy upon their demise he developed a slogan for his philanthropy: “Give While You Live”.
Among the “birthday money” Julius sent out was a $25,000 donation (worth about $620,000 in 2015) to Tuskegee. Booker T. Washington wisely took half this money and set it aside for another dream of his, to start basic schools in the South for blacks.
Booker had a few schools built in Alabama and stocked with the donation from Rosenwald. He then invited Julius to see his handiwork. Julius was impressed enough with the idea to want to help. He immediately kicked in several million dollars of his fortune (to be used as matching funds with the rest coming from donations, volunteers, whatever source could raise money and labor) to help the great educator follow up with his plan.
Immediately after World War I Sears and Roebuck was in financial trouble. Julius pledged $21 million of his total worth to help bail the company out of its dire financial straits. Back on smoother waters by 1922 the company sailed on into history as one of the world’s best known brand names in retail.
In the meantime the schools in the South were being built. Nearly 5,000 of what became known as “Rosenwald Schools” (though he had not named them that, the moniker stuck by default), 163 shop buildings, and 217 teacher’s homes were built in 883 counties in fifteen states from Maryland to Texas.
The matching funds were also used to add 4,000 libraries to existing schools. These new institutions would ultimately employ over 14,000 teachers and serve to educate an untold number of black children who would otherwise have never cracked a book.
However, Julius did not make his funding money available as merely a gift to be taken in toto for whoever wanted a school. Rather, he insisted the locals do their part, too.
Most of his beneficiaries were poor blacks whom naysayers felt were not worth the investment and would likely never come up with adequate funds. Thousands of rural black communities, though, succeeded in matching Rosenwald’s gift.
This meant black laborers forked over sacks of old coins (that might represent a lifetime’s savings), sharecroppers set a section of cotton planted as a “Rosenwald Patch”, and uncountable fried chicken suppers and pie sales were held to raise money. Local black families also donated materials and volunteered their labor. Surprisingly, many whites contributed, due in no small part to Rosenwald’s having convinced civic authorities (both state and local) that the schools would bring additional interest (and thus, revenue) to the towns building them.
In 1924 Julius Rosenwald gave up his position as company president and became head of the board of directors for Sears and Roebuck. This freed him enough to spend more time on his philanthropic work.
During his tenure at Sears Rosenwald’s contributions to both that company and the retail industry in general cannot be overstated. It was Julius who promoted the concept of responsibility to customers. He was the man behind “Satisfaction Guaranteed or Your Money Back”. He insisted on this ideal: “Sell honest merchandise for less money and more people will buy.”
Julius Rosenwald died January 6, 1932, at the age of 69. He was still chairman of the board at Sears and Roebuck right up to his death.
Rosenwald had donated tens of millions for the betterment of the underprivileged. He invested in Jane Addams’ Hull House in Chicago (which started with one structure but became a sprawling complex with many community buildings). He was the founder and primary backer of Chicago’s landmark Museum of Science and Industry. He built the Michigan Boulevard Garden Apartments in 1929, a 421-unit complex that covered a city block and featured shops and enclosed a central courtyard. The apartments were nicely appointed and affordable. This was done to ease the housing situation of overcrowded blacks forced to live under de facto Jim Crow segregation.
Julius also gave away millions to other institutions directed toward the betterment of African-Americans, and to many other universities and colleges, public works projects, museums, and Jewish charities.
More than all of that largesse splashed about, though, it was likely the little schools built for black children that held the dearest place in his heart. By the year of his death in 1932 the schools he’d had built could accommodate one-third of the black juvenile population in the South.
These “Rosenwald Schools” more than likely gave many African-American children the education they most certainly would not have received otherwise.