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As the management of properties is considered by apologiststo represent in itself a great social contribution (which may in some muted degreeindeed be so), in this chapter there will be passingly considered this aspect--eventhough the management of personal holdings can hardly be considered a clearcut publiccontribution. At best it would be an ambiguous one. Just because a man runs his plantationwell provides no ground in itself for immoderate public rejoicing (as public relationsmen insist), however much we may admire his adroitness and democratic bearing.
As to corporations, most of the big ones are run well. Theyare models of self-centered efficiency and rational planning. In some cases theyare managed by dominant owners, in others by well-paid hired managers acting fordominant owners. But while laudable efficiency and rational planning--in their ownself-oriented interests--mark the large corporations, the dominant public ideologysponsored by the leaders of these very corporations is that there should be no publicplanning. Planning is a wicked word when engaged in by government, for it allegedlyleads to "statism," by definition a bad thing. But corporate planning formaximum profits is virtuous. The consequence is that only corporate policy is rational,in the interests of the corporation, and helter-skelter public policy is helplessto defend itself against the corporations. Such being the case it can only be incidentallythat the well-managed corporation is publicly supportive; often it is discoveredas overtly anti-social. Merely managing a corporation well, then, does not representa social contribution. Such action may represent carefully contrived piracy. We can,therefore, forget about corporate management as ipso facto a social contributioneven though it may be in some instances.
The Rockefeller Empire
The Rockefeller empire of contrapuntal profit and nonprofitenterprises is here taken, purely for illustrative purposes, as the central and conventionallymost creditable of such ostensible contributions, with allusion later to lesser similarfinpolitan complexes. Currently this empire is an international network of industrial,financial, cultural and political activities that for variety, quantity and qualityput everything of a similar kind in the shade. The present third generation of rulingRockefellers--five sons and a daughter of John D., Jr., without considering the independentbranch of the founder's brother, William-has at its fingertips what is the quintessenceof many great fiefdoms, worthy to be included in a modern Arabian Nights tale. Allof it is bone and muscle, none either of fat or meagerness. It is not only quantitativelybut qualitatively rich, like a Christmas fruit-nut-brandy cake.
The reigning Rockefeller brothers are John D. III (b. 1906),Nelson Aldrich (b. 1908), Laurance S. (b. 1910), Winthrop (b. 1912) and David (b.1915). They have a sister, Mrs. Abby Mauzé, who figures in the giltedged sextette,according to reports by family friends, pretty much as a silent partner. All appearto be of good intelligence, not the least of their assets, although actually theintelligence at their disposal--the pooled family intelligence deriving from longexperience with a mercurial world plus that of their large professional advisoryand research staffs--greatly exceeds their personal intelligence, Like the rulerof a great state they have far more relevant information at their ready dispositionthan they carry with them in their own heads. As far as the contemporary world isconcerned, they are thoroughly informed. They can, in fact, out-think mostcontemporaries.
The fourth, and even fifth, generation is being readied in thewings. At this writing there are twenty-three living members of the fourth generation.John D. III has one son and three daughters, Nelson four living sons and two daughters,Laurance one son and three daughters, Winthrop one son, David two sons and four daughtersand Abby two children. Some of these offspring are now married and themselves havechildren of the fifth Rockefeller generation, members of an established world dynasty.
In Their Own Eyes
The self-image of the Rockefellers is quite different from thatwhich a detached observer might arrive at, although it is a conception that manypeople now share through the power of public relations. "The boys' father,"says Joe Alex Morris, "had been brought up with the feeling, which his motheremphasized, that the family's money belonged to God and that he was to be merelya steward. He impressed something of this idea on his sons. . . ." 1They are, then, stewards of wealth. In this case the laudably humble role carrieswith it vast emoluments, privileges, immunities and intangible advantages and disadvantages.
Discussing foreign trade after World War II, Nelson remarked:'In the last century capital went where it could make the greatest profit. In thiscentury, it must go where it can render the greatest service." 2Noble words. . . .
Again, speaking of the financing of various enterprises in LatinAmerica, Nelson said: "We're really setting up pilot plants. Our way of lifeis confronted with a lot of big problems that have to be solved. We hope that ourpilot plant operations will demonstrate some of the things that American enterprisecan do to help solve these problems that are vital to our everyday life and to ourposition in world affairs. Because we've got to master such problems if our systemis going to survive." 3 Survival of "our system," then,is a matter of concern.
The Rockefellers, then, look upon themselves as stewards renderingservice and helping solve big world problems in harmony with "our system."They are, in fact, problem solvers, within limits imposed by mass irrationality.
The Economic Base
"Any real clues as to the wealth of the brothers,"says Fortune, "have been vigilantly guarded since their birth. None ofthe terms of the trusts established for them by their father has ever been revealed,and even the names of the trustees are known only to the family and a few key advisers.The great concentration of the brothers' wealth is in oil companies like Jersey Standard,Creole, and Socony-Vacuum, but the precise amount is still their secret since theholdings are not big enough for mandatory disclosure to the SEC." 4Glimpses of some of the trust funds, however, were obtained from TNEC records ascited in Chapter Four. As the SEC does not require the reporting of stockholdingsof less than 10 per cent in a company unless held by an officer, the six Rockefellers,none of whom is a Standard Oil officer or director, could (but certainly donot) own up to nearly 60 per cent of the stock of each of the many Standard Oil companieswithout the fact appearing on the public record.
"Though these circumstances make appraisal inordinatelydifficult, appraisal is essential to an understanding of the material source of thebrothers' power--their wealth," Fortune continued. "Their personalfortunes are estimated at upwards of $100 million each [as of pre-boom 1955 and priorto their father's death--F.L.]; the money is mostly tied up in trust funds, yieldingthem individual incomes of probably $5 million a year before taxes, but leaving controlto trustees. Roughly $7 million is given away each year to standard charities, orin gifts such as Laurance's recent offer of one-half the island of St. John for anational park in the Virgin Islands. Apart from the, trusts, they have an asset ofroughly $150 million in Rockefeller Center [an understatement, clearly, for the EmpireState Building alone recently sold for $100 million--F. L.]; some $15 million isput out as U.S. venture capital; $12 million has gone into Latin-American enterprisessuch as dairies, supermarkets, fisheries, hog farms. At a minimum, then, the brothersare probably worth over $500 million. Even in 1955 dollars, this does not comparetoo badly with the 1913 fortune of $900 million-considering that the holdings oftheir father, their sister, and other Rockefeller kin are not included in the $500million, considering all that has been given away, and finally, considering taxes."5
Since the death of John D. Rockefeller, Jr., in 1960, the centerof financial gravity has moved, manifestly, to the brothers. And inheritance taxeshave not whittled down the original Standard Oil fortune by much because the originalJohn D. transferred most of it to his son (and daughters) by gift, himself dyingcomparatively stripped of wealth, and the son in turn transferred at least half ofit by bits and pieces to his children, thus incurring only gift taxes. As some wastransferred in the 1930's at depression prices, some no doubt nontaxable at birth,possibly by the grandfather as well as the father, the gift taxes on highly elastic,dynamic properties were minimal. Morris says. "With the third generation, thefamily's accumulated wealth is being dissipated on a great descending curve by taxes,philanthropies and division among the heirs. . . ." 6
Now, whatever else one may say, one cannot rightly say the Rockefellerfortune is in any way being dissipated; it is, apart from that portion undeniablydedicated to public purposes, only being subdivided as to direct beneficiaries butheld together in concentrated form in properties. One can dismiss the so-called taxbite out of hand. Owing to its trustification the fortune left in private bands isintact, and a potent influence.
Precisely how much has been paid in inheritance taxes, evenwhile many publicists erroneously assert that taxes are breaking down big estates,can easily be shown. John D. Rockefeller's estate after death in 1937 totaled $26,410,837,of which $16,630,000 was paid in federal and state taxes. 7 His son'sestate totaled approximately $150 million, of which half went to the RockefellerBrothers Fund and half to his wife. The first half was nontaxable as a philanthropiccontribution and the second half was nontaxable under the marital deduction of thetax law, a spouse receiving tax free under 1947 law half of any estate above thebasic deduction of $60,000. 8 There was some small real and personal propertyin the estate of the junior Rockefeller, and any of it that was not given to institutionswould be subject to a minor tax, tax experts pointed out.
We see, then, that the Rockefeller fortune, estimated at $900million in 1913, has to this date not paid much more than $16,630,000 in inheritancetaxes.
Leaving it at this would be misleading because the 1913 dollarhas depreciated by approximately 70 per cent to the Johnson dollar of August, 1966.In terms of the value of current dollars, as measured by the Bureau of Labor Statisticsindexes of the cost of living, Rockefeller's fortune as of 1913 was worth approximately$3 billion, exclusive of what he had put into foundations before 1913. A man todaywould need to make $100 per week to equal in purchasing power $30 per week in 1913,when, moreover, he was not subject to a federal tax bite. Put another way, what cost30 cents on the average in 1913 now costs $1, taxes sometimes added.
The brothers' investments, apart from trust funds of which thecapital is distributable only to their grandchildren (an example of serial entailmentif the grandchildren replace the trusts with new trusts according to standard estatedoctrine) are held through Rockefeller Brothers, Inc. There was also establishedby them in 1940 the Rockefeller Brothers Fund to finance nonprofit or philanthropicproperties. 9
None of the brothers is actively associated with the managementof any of the Standard Oil companies, although most, like their father, held minorjobs with some of them upon emerging from college and some have for a time been directors.All are directors of Rockefeller Brothers, Inc., formed in 1946, and RockefellerCenter, Inc., and trustees of the Rockefeller Brothers Fund. David, for a short timesecretary to Mayor Fiorello La Guardia of New York, is now chairman of the ultra-powerfulChase Manhattan Bank, one of the "Big Three" largest commercial banks inthe world. His cousin James S. Rockefeller, of the William Rockefeller branch ofthe family, is chairman of the First National City Bank of New York, another of the"Big Three."
John D. III is chairman of the Rockefeller Foundation and theGeneral Education Board as well as of the Lincoln Center of Performing Arts. Lauranceis chairman of Rockefeller Brothers, Inc., and Rockefeller Center, Inc., and styleshimself a "venture capitalist." Nelson was chairman of Rockefeller Centerbefore becoming governor of New York in 1958. Winthrop heads his own Winrock Enterprisesin Arkansas and participates in the fraternal enterprises; he was elected Republicangovernor of Arkansas in 1966.
A division of labor has been worked out by the quintet. JohnD. III is generally in charge of nonprofit or philanthropic enterprises, David ofbanking and finance, Laurance of new investments, Nelson (and, lately, Winthrop)of direct political participation (all are indirectly in politics through financialparticipation in the Republican Party) and Winthrop to some extent in his own orbitalthough he is a participant in all the fraternal enterprises and his brothers may,too, he participants in some of his ventures.
Winthrop, for special reasons associated with his developmentin the family constellation and his childhood relations to his older brothers appearsto be the more independent of family patterns, at least in shading. Although eachbrother is sharply individualized, which a psychologist would expect in view of theirorder in the family, Winthrop appears to be the most noticeably different, more ambient.Both intra-family and later experience, including severe combat experience in WorldWar II during which he rose from enlisted private to lieutenant colonel and won thePurple Heart and Bronze Star with oak leaf cluster, no doubt set him somewhat apart.Although all the brothers except Nelson served in the armed forces, Winthrop's experiencewas sufficiently unique, following and presaging a persistent pattern, so that amongthe Rockefellers he is a bit of an odd-man out. As such, he provokes a more spontaneouskind of publicity. Actually, all the Rockefellers are far more individualistic thaneven some close admirers credit them with being. On policies, their intimates report,they often differ and argue strongly back and forth at quarterly meetings. How differencesare settled, by majority vote or otherwise, is not indicated. Which one, if any,is dominant in the group is as much a mystery as in the Russian Politburo.
It would require a rather long catalogue to detail all the projects,profit and nonprofit, with which they are associated. Morris lists thirty-six boardsand committees of which John D. III was a member over a period of eighteen yearsand suggests that one multiply the list by five to ascertain how many such formalconnections the brothers have, excluding their club memberships. Some of these arepermanent connections, some temporary. The Rockefellers, because of past unpleasantexperience with deputies (as in the Colorado Fuel and Iron Company strike of 1913),always involve themselves with all projects with which they are financially associated;and the mere business of attending rounds of meetings occupies much of their timeand energy. They are working diplomats, or finpols, who aim to eliminate unfavorablepublic repercussions to the often commendable application of great power.
The Enterprises in Closer View
Their major enterprises are as follows:
Trust funds, at least seventy-five, managed by family nominees,invested in corporations, mainly in Standard Oil companies. Precisely what is inthe trust funds, precisely how many there are or what they are worth in the aggregateis not publicly known. As trust funds are usually managed, there is shifting of holdings,perhaps only in the way of selling out at higher prices and buying back at lower.Whether there has been such shifting of Rockefeller holdings is not known. If thetrustees were omniscient and in every market phase sold out at top prices and repossessedat market lows, never making an error, the funds would today be worth far more thananyone believes them to be. As nobody can pick market highs and lows with perfectprescience, theoretically maximum results can never be attained. What seems morecertain is that the relative value of the Rockefeller trusts has at least been preservedwith respect to the performance of the economy. Whether they have outperformed theeconomy is not known, but it is a lively possibility considering the politicallycoddled oil industry.
A question of interest to a wide public is how the brothersstand with respect to control of the Standard Oil companies. The image projectedby writers in the confidence of the family is that they are passive income-receivers,rentiers. Up to a point they may indeed be. But at any moment the massed family holdingscan be mobilized into active dominance and control. This was shown cleanly in 1929when a wayward chairman of the Standard Oil Company of Indiana, in which the Rockefellerswere not active, took it into his head to seize control. The chairman was very popularwith small stockholders, who had enjoyed unexpected extra dividends and the like.After rivalrous appeals to stockholders for proxies, at a special meeting the chairmanwas overwhelmingly voted out by the massed proxies of the Rockefeller family, philanthropicfunds, family trust funds and nonfamily investment and trust funds. For investmentmanagers throughout the world, after studying the issues, had decided to side withJohn D. Rockefeller, Jr. Mainly the small, purely dividend-oriented stockholderssided with the chairman. The Rockefellers held proxies for about 65 per cent of thestock when all the chips were down. A new management was installed. What was exemplifiedhere was corporate power.
Who Controls the Corporations?
As there is a good deal of learned nonsense in circulation aboutwho controls the corporations--nonsense placed into circulation by professors intentupon making a complex mountain out of a simple molehill--this is as good a placeas any to dismiss the question. This nonsense was originally set in motion by Berleand Means in The Modern Corporation and Private Property (1932) and has sincebeen embroidered upon by James Burnham in The Managerial Revolution, and others.Even such hard-bitten observers as the neo-Marxists Baran and Sweezy have to someextent been brought into the camp of those who believe corporations are dominatedby managers, not by stockholders. 10
When all the chips are down, which is not always the case, thestockholders, particularly the big stockholders or trustees managing, big stockholdings,exercise broad control by determining the composition of the management. Basically,the stock controls. There are situations, however, where the generalized-ownershipkind of influence Baran-Sweezy talk about comes into play.
Even with respect to small stockholders the formal power ofthe management is in any test restricted. Lindahl and Carter, in The Dartmouth Study,repeatedly point out, correctly, that the small stockholders have much legal powerthey do not use with respect to company policy. 11 Small stockholdersare usually interested only in dividends, and as long as these keep flowing theyare inert. But in many cases of record a single small stockholder has, by invokingthe assistance of the courts, completely thwarted an established management, evena stockholding management. There is a great deal of law on the books on the sideof the smallest stockholder. Most small stockholders feel they cannot take the time,trouble and expense to invoke this law; if they don't like the way the company isrun they usually simply sell out, depressing the value of the stock to the chagrinof managers. They have an effect indirectly.
The big nonmanagerial stockholders hold the whip hand. So Ibelieve it to be the case of the Rockefellers with respect to the Standard Oil empire,in which they are silent partners. If any issue arises with respect to which controlneeds to be asserted, they will unhesitatingly once again, as in the case of theIndiana company, assert that control. This fact--or assumption--is unquestionablypart of the thinking of every high Standard Oil official in the world.
Even though we don't know precisely the amount of stock theRockefellers own in the Standard Oil companies, it is known what stock is owned bythe Rockefeller Foundation, the Rockefeller Brothers Fund et al. This stock,too, has voting power, and the trustees include the Rockefellers. The voting powerof these foundation stocks combines with the precisely undetermined stake of thefamily members to give a large, perhaps unexercised voice, in the determination ofthe company management. No company management is going to ride roughshod over oreven politely ignore the interests merely of the foundation stock, formally a publicpossession. And so it is in other cases.
As I indicated, it is not known precisely what the participationof the Rockefellers is in the Standard Oil companies. When the master New Jerseycompany was ordered dissolved in 1911 it was separated into thirty-eight independentcompanies, and the stocks of thirty-three underlying subsidiaries as well as thoseof the parent companies were distributed pro rata to stockholders. The parent companythen had outstanding 983,383 shares, of which John D. Rockefeller I owned 244,500or almost 25 per cent, giving him working control. If this distribution had beenmaintained through the constituent companies the family would, clearly, now holdabout 25 per cent evenly throughout the empire.
There is ample reason to believe, however, that this even ownershiphas not been maintained. First, the stocks in some companies appear to have beensold out, with more emphasis placed on other companies. Again, there has been distributionof assets on the philanthropic circuit, although where such distribution has beenretained as principal the control power of the stock has remained in being, an importantpoint.
During his later lifetime it was often reported that John D.Rockefeller, Jr., owned 10 per cent of the Standard Oil Company of New Jersey, anenormous holding in itself in the largest industrial company in the world in pointof assets; but this percentage, as it was often assumed, did not necessarily exhaustthe family participation in the company.
While soon after dissolution the Rockefeller share of the constituentsof the New Jersey company was valued in the market at around $900 million, subsequentprice movements showed that this was a gross undervaluation. For in the market thestocks, and this prior to the automobile age, were steeply marked up in price. Ittook the dissolution of the trust to reveal to investors something of what this companywas worth. It was the greatest profit-generating mechanism the world has ever tothis day seen. It made General Motors even as of today look small because it includedwith the New Jersey company, which alone tops General Motors in assets in the industrialfield, the present-day Indiana, California, Mobil, Marathon and many other big companies.
What happened to this 25 per cent Standard Oil interest is thatit was subdivided among family members and family foundations for the most part.Taxes, either inheritance or gift, have had little impact, and as to income taxesfar from all income of the companies has been paid out. It has been retained andreinvested.
So much for the trust funds, corporate control and the Rockefellerposition in Standard Oil companies.
Venture Capitalists at Work
Rockefeller Brothers, Inc., is the brothers' joint private investmentcompany, into which they apparently put some of their income from Standard Oil sources,thus diversifying in an uncertain world. Its holdings are not reported. This enterprise,with Laurance as chairman, appears to concentrate in the area of modern advancedtechnology. Laurance himself, for his personal account, has invested in technologicallyadvanced growth-type companies; and writers such as Morris leave it ambiguous whethersome of his investments at different times also included his brothers. Sometimeshe clearly acts for the brothers together, sometimes apparently alone.
In the first five years of its life the brothers put less than$4 million into ventures of Rockefeller Brothers, Inc., Morris reports, whereas theirtotal investments of venture capital in that period came to $15 million. 12The proclaimed intent of Rockefeller Brothers, Inc., is "to achieve social andeconomic progress as well as a fair profit on investment." 13 Howmuch it is now worth does not appear on the record.
Laurance, the gadgeteer of the family, with ace flyer Eddy Rickenbackerin 1938 bought into North American Aviation, which was converted into Eastern AirLines, a profitable venture. He then went into nonscoring Platt le Page, pioneerin building helicopters, and finally put in with the then limping J. S. McDonnellAircraft Corporation, in which the brothers collectively after the war held 20 percent of the stock on an original investment of $400,000 apart from any share Lauranceantecedently held, put by Morris at an original modest $10,000. This company producedthe advanced Phantom and Banshee jet fighters, which are thought tohave enabled the United States to command the air in Korea in 1950-52 and which arestill used in improved models. It is more recently deep in space-age technology.14 But the Rockefellers, through their oil interests, were already anintegral part of the front line of national offense-defense.
Other investments of the brothers were in Marquardt AircraftCompany of Los Angeles, manufacturer of ram-jet and pulse-jet engines and electronicair-navigation and control devices; the Laboratory for Electronics, Inc., of Boston,makers of cyclotron equipment, radar components, electric flight control and guidancesystems; Airborne Instruments Laboratory, radar and electronic devices and targetindicators; the Aircraft Radio Corporation, radar and other electronic instruments;Horizons, Inc., engineering development and research and (Laurance alone) $1 millionas of 1952 in the Glenn L. Martin aircraft enterprise. 15
Laurance, too, held an interest in Reaction Motors (21 per cent),Marquardt Aircraft (20 per cent), Wallace Aviation (27 per cent), Flight Refueling(30 per cent), Piasecki Helicopter (17 per cent), Airborne Instruments (24 per cent),Aircraft Radio (24 per cent), New York Airways (3 per cent), Horizons (5 per cent),and Nuclear Development Associates (17 per cent). 16
Four out of five of these ventures, said Fortune, weresuccessful. 17
While the Rockefeller brothers clearly have decided to put agood part of their personal investments into the field of advanced technology, whichmay seem to them the wave of the investment future, some clue to their broader investmentapproach may be discerned in the portfolio of the Rockefeller Brothers Fund.
At the end of 1964 we find there $20,689,425 by market valueof government and corporate bonds, $21,882,161 of corporate notes, $1,801,589 ofpreferred stocks and $161,608,512 of common stocks with a book or acquisition valueof $88,157,570. The entire Fund was valued at $205,981,687.
Although the portfolio embraced a wide section of the investmentspectrum, like any balanced investment fund, distinctive Rockefeller properties amongthe holdings were as follows:
Shares Book Value Market ValueStandard Oil Co. (New Jersey) 684,220 $30,422,352 $61,665,328Standard Oil Co. of California 244,333 10,388,607 17,927,934Socony Mobil Oil Co 199,900 8,482,656 18,340,825Marathon Oil Co., a Standard Oil unit 31,200 1,074,958 1,996,800Chase Manhattan Bank 167,168 6,949,897 12,203,264
All these stocks, naturally, represent corporate voting powerwhich, in conjunction with other family holdings, represent still greater votingpower. Additional smaller holdings were in Alcoa, AT&T, Armour, Bethlehem Steel,Chrysler, Du Pont, Eastman Kodak, Ford Motor, General Electric, General Motors, GreatA&P, IBM, International Nickel, International Paper, National Cash Register,Polaroid, Sears, Roebuck, Texaco, etc. As indicated by this Fund, then, the Rockefellers:are diversified by investment throughout the American corporate structure.
Their private holdings presumably follow the same general lineof distribution, although there may be differences of emphasis in different funds.
More recently at least, Laurance has had a large position inthe Itek Corporation, formed in 1960 to concern itself with mechanical, electricaland electronic equipment and to develop optics with relation to photography and photocopying.
Some of these personal investments have been closed out. Wherethere has been a profit, the close-out required a capital gains tax of 25 per cent.These capital gains ventures of the Rockefellers are, in my opinion, on the basisof the theory of giving tax leniency to actual new ventures, fully justified anddiffer from capital gains leniency accorded buyers and sellers of stock and realestate in the open market, where there is not the shadow of any social contribution.Whether the brothers operate cyclically in the stock market, as their grandfatherdid over a broad spectrum, is not known, although the family Stock Exchange seatis still held.
The brothers, Morris reports, are "keenly interested"in making money but not by any means for the sake of mere possession or accumulation,only of "proving their ability." 18 To them, he says, moneyis a mere tool with which to build. They don't like to talk about money, which byreason of constant allusion in their presence must surely be boring, but will redirectpecuniary conversations to value. Unlike lesser mortals they are in a positionwhere they can do this on the basis of authentic impulse. Their biggest problem aboutmoney is no doubt that they have had dumped in their laps so much of what most otherpeople desire.
The Rockefeller Brothers Fund is a foundation enterprise runby the brothers and the largest in a flotilla of others including the General EducationBoard, the Rockefeller Foundation, the Laura Spelman Rockefeller Memorial and thelike. Out of the General Education Board were financed the University of Chicagoand many other educational enterprises in whole or in part, including many southernNegro colleges. The Rockefeller Foundation has been more broadly engaged in financingmedical, scientific, cultural and other enterprises in vast profusion, a work theRockefeller Brothers Fund is continuing.
There is, quite evidently, a counterpoint going far back intothe history of John D. I between profit-making enterprises, originally subject tomuch public and judicial disapproval, and nonprofit-making enterprises that haveearned wide public approval. Anyone who does not like the way Rockefeller conductedhis business affairs is, upon inquiring into his nonprofit or philanthropic enterprises,brought up short. Here the signals become crossed, as in the case of Pavlov's experimentswith dogs. Original feelings of pain or disapproval are now followed by feelingsof pleasure and approval. Then, as one sits back to enjoy the pleasure, one suddenlyagain feels a stab of pain. Observers are confused, perhaps like the Pavlovian dogsbrought to a state of nervous breakdown or apathy.
There is room a-plenty here for feelings of ambivalence. Arethe Rockefellers trying to improve the world? Or are they merely automatically milkingit?
These questions, which reflect the Rockefellers as controversialfigures, require some sort of answer. There are many persons who would blandly andpatronizingly dismiss such thoughts as the product of a presumptuous writer's overheatedimagination. If there were nothing to the negative side then, one should ask, whydid Winthrop, who never hurt a fly, when he went to work in the Texas oil fieldsin 1933 find it necessary to have bodyguards and, when he returned in 1936, to geta permit to carry a gun for protection against "fanatics"? 19
Point Counter Point
The contrapuntal Rockefeller style of operation is shown bythe more recent enterprise of the brothers in the international field, especiallyin Latin America and the Middle East but also, of all places, in Russia. Two organizations,Morris reports, were established by them as an "experiment in internationalcooperation." One was the International Basic Economy Corporation (IBEC), originallystarted with $2 million in 1947 and soon capitalized at $10,824,000, "intendedto help raise the standard of living in the localities involved--chiefly Latin America--andto return a profit, if possible, to the investors." 20
Paralleling IBEC there was formed the American InternationalAssociation for Economic and Social Development (AIA), with Nelson president of bothat the inception. Because IBEC would be operating its profit enterprises in poorif not primitive areas, AIA would engage in providing health, education, researchand credit facilities. AIA was nonprofit, Operations were begun in Brazil and Venezuelaand later extended to other areas.
AIA put up Rockefeller funds but, following a settled Rockefellerpolicy, it involved others as well--at first various Venezuelan oil companies andthe Corn Products Refining Company and later Pfizer Corporation do Brasil; Anderson,Clayton, Ltda; The Sulphur Institute; The Ford Foundation; and Price Waterhouse andCompany. Then it called upon local governments to put up matching funds.
Since Morris reported on these enterprises they have grown,particularly in the profit area. IBEC as of 1965 had 9 plants in the United Statesand 135 stores in Latin America and 108 wholly or partially owned subsidiaries invarious parts of the world. It had 297 common and 32 preferred stockholders and 10,090employees. Its business included housing, retailing, credit and many other endeavors.Total assets at the end of 1965 were $142,227,662 and total sales $191,711,425. Profitsfor 1965 were $2,723,007. The president was R. S. Aldrich and one of the vice presidentswas Rodman C. Rockefeller, Nelson's son. 21 This has manifestly becomea big operation.
AIA in 1961 had total assets of $752,585, received gifts of$908,207 for the year and expended $937,444. 22
Early in 1967 it was announced (New York Times, January16, 1967; 1:6-7) that IBEC was entering Russia and the Iron Curtain countries ina multi-billion-dollar operation. Joining 50-50 with Tower International, Inc., ofthe Cleveland Cyrus Eaton interests, it was announced that the joint enterprise wouldbegin or complete already launched large hotels in Budapest, Belgrade, Warsaw, Prague,Sofia and Bucharest in a Rockefeller-Eaton version of an Iron Curtain Hilton chain.Also to be built were rubber plants in Russia costing considerably more than $200million, a $50-million aluminum plant in Yugoslavia and a glass plant in Rumania.Highly profitable arrangements were announced to have been made in return for Americanfinancing and construction knowhow and can-do; materials, labor and sites would besupplied by the. Communist governments.
The entire deal was looked upon by the principals as the beginningof a highly useful "dialogue" between the capitalist West and the communistEast, a really constructive thrust that can bring salvation to the ordinary run ofmortals and, naturally, plenty of dollars to the promoters. Considering the statureof all the participants it was hard to see how the whole enterprise could fail tobe a huge success.
These two ventures in the private development (exploitation?)of undeveloped world regions show the general emphasis. The tax-free AIA clears theway; IBEC earns the profits. The profits of IBEC more than nourish AIA. All spells"development," international fraternization.
Almost from the very beginning the Rockefellers have followeda policy, wherever they could, of requiring that others be brought in with matchingfunds. In this way they have succeeded in involving a broader section of the communityof wealth in any particular nonprofit enterprise.
Thus, when John D. Rockefeller put up the money to get the Universityof Chicago started, Marshall Field I, the department-store tycoon, was prevailedupon to provide the land, and many rich Chicagoans--Armours, Swifts, Fields and others--havefrom time to time contributed funds to the university. In this way the Rockefellershave been, to a large extent, bellwethers or pilots in the field of philanthropolity.
Before World War I, after Andrew Carnegie financed Abraham Flexnerin a study of the medical schools that led to profound valuable reforms and the eliminationof a large number of shabby diploma mills, it was decided to give the Universityof Rochester a medical school. Flexner approached George Eastman, the Rochester cameramagnate, and explained that the cost would be $10 million. Eastman offered to putup $2.5 million, which Flexner found inadequate. Eastman then sent word that he wouldput up $3.5 million, to which Flexner is said to have replied: "That would makeit a Rockefeller school, not yours. It must be yours." Over this Eastman broodedfor a few weeks and then called in Flexner, shaking his finger and shouting: "I'llput up five million--then I don't want ever to see your face again!" 23
Enter Frederick T. Gates
In this and many other instances the way was by no means smoothin cooperative money-raising. Nevertheless, this pattern of the Rockefellers, originallydevised by Rockefeller's close adviser, Frederick T. Gates, head of the AmericanBaptist Education Society, has been rather faithfully adhered to throughout. Theytry to put up no more than half the funds for any project.
How Rockefeller became acquainted with Gates, why he decidedto make him his philanthropolic adviser, is a revealing story. Gates, a clergymanstationed in Minneapolis, was called upon by George A. Pillsbury, the flour king,to help draw up his will, by which he intended to leave several hundred thousanddollars to a Baptist school. Pillsbury decided to give immediately only $50,000 andleave them to raise a like amount, thus insuring their close supervision of the money.Then he would leave an amount in his will. Gates succeeded in raising $60,000 additionalfor the Pillsbury Academy and was thereupon made head of the Baptist Education Society,which had a plan for establishing a big university in Chicago or New York. In thisguise he approached Rockefeller, a Baptist official, who invited him to pass a weekendwith him, during which Gates did little talking.
The oil man became interested in him [says Morris] especially when he learned that Gates was acquainted with the Merritt family in Minneapolis which owned the vast Mesabi Range iron ore deposits. John D. knew that if he could buy Mesabi Range and develop it under the techniques he had developed in the oil business he could become the master of American steel and iron. Furthermore, the Merritts needed money.
Not long afterward Gates was instrumental in getting a large loan for the Merritts, who pledged the key railroad into the iron field as security. It was Rockefeller money, although the Merritts didn't know it, and in time John D. had the railroad, and forced the Merritt family to sell out to him at his own price. The steel men immediately took alarm when they saw the Mesabi Range fall into Rockefeller hands, but John D. apparently did not want a knockdown fight and he later leased the deposit to Carnegie for fifty years. 24
The Multifacet Style
This was back in the late 1880's and early 1890's. The way Rockefellerscooped up Gates and the ultra-juicy Mesabi Range and started planning for the Universityof Chicago well illustrates the Rockefeller and the higher finpolitan style. Thisstyle is multifaceted.
The essence of a finpolitan project is that it be multifaceted,that it have aspects of profound profitability interlaced with do-gooding, philanthropyand favorable publicity. It must seem constructive, statesmanlike. The philanthropicthrust qualifies and protects the profit-making thrust. For this reason, almost anyRockefeller or emulatory higher finpolitan endeavor is very much like a rich four-deckersandwich: One layer is Big Business, the next layer is obviously vaguely philanthropicor cultural-scientific, the third layer represents favorable notoriety stemming bothfrom profitability and from philanthropy and the fourth layer and the first threelayers in combination represent cultural, social, political and economic power.It all adds up to power.
In the case of the Rockefellers as of others of the wealthy,there are plenty of persons ready to dispute such suggestions. Thus, Professor Nevins,writing of the elder Rockefeller, says: "Unlike James B. Duke, he never fora moment mingled private commercial interests with philanthropic acts." 251 have no interest whatever in asserting that Rockefeller did or did not mingle commercialand philanthropic acts; what is at stake is simple intellectual clarity with respectto facts. On the basis of abundant evidence that Nevins himself is obliged to scan,Rockefeller did mingle profit and nonprofit activities; it would have been difficultif not impossible to avoid doing so.
The chief instrumentality of this mingling was Gates himself.
As Gates has written, owing to public reports coming out abouthis great wealth, Rockefeller at the time began to be "hounded almost like awild animal" by people soliciting funds for plausible and implausible causes.Many simply wanted personal handouts. 26 From this pressure he wantedto escape, and Gates, now in Rockefeller's employ, was the man to whom solicitorswere sent for screening.
"It has been customary to treat Gates as a minister whodeveloped an interest in education and philanthropy," says Nevins. "Actually,Gates was essentially a businessman with a talent for large affairs, a keen interestin the power of money, and a passion for seeing it expended with the greatest possibleefficiency. He was, in short, a man after Rockefeller's own heart . . . he was alsoshrewd, alert, aggressive, and capable of driving hard bargains. The time was notfar distant when this former minister, coming to New York, would teach Wall Streetitself some lessons." 27
Subsequently Nevins notes, "The man whom Rockefeller thusselected as his principal aide in philanthropy was as remarkable as any of his partnersin business. In sheer ability he matched Flagler, Rogers, and perhaps even Archbold. . . he possessed an unusual combination of gifts: insight, genuine imagination,analytical power, and vision, backed by unquenchable energy, courage, and an evangelisticfervor. . . . He was often impulsive and sometimes inconsistent. . . . At bottom,as we have said, he was a businessman rather than a minister or social worker, andhe soon gained a reputation for cautious, adroit, and hard-headed conduct in businessaffairs." 28
Gates, like many an underling, was as flinty as his master.At the time of the strike at the Colorado Fuel and Iron Company in 1913 (twenty-sevendead and two mines set on fire by desperate workers), Gates stood firmly againstthe strikers as Rockefeller, Jr., relented. Both had been directors of the companyof which John D. Rockefeller was II a major stockholder" (Fosdick); and L. M.Bowers, the chairman, was the uncle of Gates.
Characterizing the strikers as "desperate and lawless,"waging "organized and deliberate war on society," Gates said, "Theofficers of the Colorado Fuel and Iron Company are standing between the country andchaos, anarchy, proscription and confiscation, and in so doing are worthy of thesupport of every man who loves his country." 29 Actually, the strikershad been maddened with ill treatment. According to John T. Flynn, a biographer whopresents a less genteel Rockefeller than Nevins, "When Henry C. Frick shockedthe country by shooting down ruthlessly the striking iron workers at Homestead, JohnD. Rockefeller wrote him a letter approving his course and expressing sympathy."30 Gates and the elder Rockefeller saw pretty much eye to eye.
So talented did Rockefeller quickly find Gates that "Inevitably,Gates was soon looking after Rockefeller's investments as well as his philanthropies."31
Although the Standard Oil Trust absorbed all of Rockefeller'stime and energy, he had nevertheless already made extensive diversified investments--inmines, steel mills, paper mills, a nail factory, railroads, lumbering, smelting propertiesand the like. 32 On some of these he had been stuck, through bad advice;others were not being operated properly. Gates was sent on tours of the country tolook into the properties underlying the entire investment portfolio. He reportedback to Rockefeller on what he found, not always favorably. Then he was given carteblanche to reorganize, revise and to bring order out of chaos.
Gates stepped into a dual role as the first director of theRockefeller philanthropic activities and as investment manager, and he was equallygood in both roles. 33
Beyond this the clergyman-humanitarian became a rabid and successfulWall Street speculator for his own account and an officer of various Rockefellercompanies, notably the head of the Lake Superior Iron Ore Company. "Nothingcould be stranger than the spectacle of this impecunious Baptist preacher settingout to raise funds for a religious college and winding up in a few years as the presidentof an iron mine and ore railroad company worth twenty millions, and finally the almonerof America's greatest multimillionaire, with the power of the purse over these vasttreasures." 34
For his role in negotiating the sale of Rockefeller ore propertiesto the embryo United States Steel Corporation, Gates resolutely demanded and receiveda commission from Rockefeller. 35 Gates had some idea of his worth incash value.
Such being the case, the meaning of a statement is bafflingwhen it indicates that Rockefeller never mingled philanthropy and business. Therewas such mingling in still further degree when he established endowments with StandardOil stock, all of which carried company voting power.
What became the "Rockefeller style," then, was apparentlynot something reasoned out in advance. Gates and Rockefeller played everything "byear," and the style slowly evolved. But from the moment Gates joined Rockefellerformally in 1891, both the philanthropies and the satellite investments were carefullythought about and supervised by Gates while Rockefeller tuned Standard Oil up toconcert pitch. In the course of time the contrapuntal role of Gates took StandardOil into its sweep and is well exemplified today in IBEC, AIA and other new Rockefellerenterprises.
Division of World Emphasis
Just as the brothers have evolved a division of labor amongtypes of activities so, too, have they evidently (perhaps unconsciously) dividedthe world into spheres of individual influence. Latin America, where Nelson has aVenezuelan ranch, appears to be his particular domain; his son, thus, is a high officialof IBEC. The Orient is the particular domain of John D. III. All .areas are underthe supervision of David as the head of a bank with more than 200 world branches.Laurance seems pointed toward Africa. 'Only Europe does not yet seem spoken for.
The chief chairmanships and directorships show the special orientationsof interest.
John D. 111, chairman of the Rockefeller Foundation, the GeneralEducation Board, the national council of the United Negro College Fund, was alsoas of 1966 a trustee of Princeton University, Harvard-Yenching Institute and chairmanof Products of Asia, Inc., Products of India, Inc., and president of the Japan Society,Inc., and the Asia Society, Inc. He was a lieutenant commander in the United StatesNaval Reserve during World War 11, special assistant to the under secretary of theNavy late in 1945, and
was a consultant of the Dulles Mission to Japan on the peacesettlement in 1951 and a U.S. delegate to the Japanese peace treaty conference inSan Francisco in 1951. He holds the following decorations: Order of Auspicious Starof China (Kuomintang), Order of the British Empire, Grand Cordon of the Order ofthe Sacred Treasure of Japan, Grand Cordon of the Star of Ethiopia, Most ExaltedOrder of the White Elephant of Thailand and Commander of the Ordre des Millions d'Elephantset du Parasol Blanc of Laos.
Now, whatever else this worthy man is, taking into considerationmany other directorships, trusteeships and chairmanships, he is more than an ordinarycitizen with one vote at the polls. He is, also, manifestly more than a wealthy man.He is a finpol, intermeshing between governments, industries and culturalinstitutions.
"Because of their many friendships with missionaries, theRockefellers had [as early as 1914] taken a keen interest in China," says Nevins.36 There were others who churlishly believed the keen interest of thepecuniary wizard of Standard Oil related more to the fact that China was a huge marketoutlet for kerosene, of which Standard was then almost the sole supplier.
The Rockefellers were, at any rate, keenly interested in China,as they are now, without missionaries, interested in all of the Orient from Japanto India, where Standard Oil at least incidentally has large interests, and the GeneralEducation Board put up money to establish the China Medical Board and to build PekingUnion Medical College. Up to 1952, Nevins says, the Foundation had put some $45 millioninto westernizing Chinese medicine, science and education. More recently, as theCommunists took over China, the Rockefellers shifted Asiatic emphasis to Japan, Indiaand other areas.
Nelson Rockefeller, three-time governor of New York, premierstate of the Union, was president of Rockefeller Center from 1938 to 1945 and chairmanfrom 1945 to 1953 and 1956 to 1958; Federal Coordinator of International AmericanAffairs, 1940-44; Assistant Secretary of State, 1944-45; chairman of the InternationalDevelopment Advisory Board (Point Four), 1950-51; Special Assistant to the Presidentof the United States, 1954-55; Under-Secretary of Health, Education and Welfare (HEW),1953-54 and has at various times (when not helping run the government) been or remainsdirector or trustee of various foundations, museums and organizations. A Phi BetaKappan, he holds the Order of Merit of Chile, the National Order of the SouthernCross of Brazil and the Order of the Aztec Eagle of Mexico. Here, again, is no commonperson, no ordinary wealthy man, no run-of-the-mill politician. This is a finpol,a very wealthy man with an interlacing of high governmental and cultural pointsd'appui.
David Rockefeller, chairman of The Chase Manhattan Bank, workedhis way quickly up through various jobs in the bank and is also chairman of The ChaseInternational Investment Corporation, chairman of Morningside Heights, Inc., a bighousing development, and a director of B. F. Goodrich Company, Rockefeller Brothers,Inc., and the vast Equitable Life Assurance Society. He was an army captain in WorldWar II, is a director and trustee of various Rockefeller foundations and museums,and is an overseer of Harvard University, of which he is an alumnus. He holds a Ph.D.from the University of Chicago. He also holds the French Legion of Honor and theLegion of Merit. In 1940 he published Unused Resources and Economic Waste.Here again is a high personage, far from an ordinary citizen.
Laurance Rockefeller is a similar type of Higher OrganizationMan. He is chairman of Rockefeller Brothers, Inc., Caneel Bay Plantation, Inc., RockefellerCenter, Inc., and director of Filatures et Tissages Africains (Africa and the Caribbeanare apparently his particular domains), Cape of Good Hope Corporation, Dorado BeachHotel Corporation, president and trustee of Rockefeller Brothers Fund and trusteeof the Conservation Foundation, chairman of the New York State Council of Parks,member of the corporation of Massachusetts Institute of Technology, a trustee ofthe YWCA, director of the American Committee of International Wildlife Protection,director of Resources of the Future, director of the American Planning and CivicAssociation and of the Hudson River Conservation Society, commissioner and vice presidentof the Palisades Interstate Park Commission, trustee and president of Jackson HolePreserve, Inc., trustee of the Alfred P. Sloan Foundation, chairman of the MemorialSloan-Kettering Cancer Center, trustee and vice president of Sealantic Fund, trusteeand president of the American Conservation Association, trustee and vice presidentof the New York Zoological Society and director, trustee or officer of various otherbodies. He is a Commandeur de L'Ordre Royal du Lion, Belgium, recipient of the ConservationService award of the U.S. Department of Agriculture and of its Special Conservationaward and a holder of the Horace Marder Albright Scenic Preservation medal. A lieutenantcommander during World War II, he is a member of the Naval Air Reserve.
Winthrop trails somewhat in this august procession but is comingabreast fast via politics. Governor of Arkansas, he is also chairman of IBEC HousingCorporation and Winrock Enterprises, Inc., conducting vast agricultural and cattle-raisingenterprises in Arkansas; a director of the Union National Bank of Little Rock, RockefellerBrothers, Inc., and Rockefeller Center, Inc.; a trustee of Industrial Relations Counsellors;chairman of the board of Colonial Williamsburg, Inc., and Williamsburg Restoration,Inc.; chairman of the Arkansas Industrial Development Commission; trustee of theNational Urban League, Rockefeller Brothers Fund and the National Fund for MedicalEducation. Since 1953 he has resided in Arkansas.
Among them all they cover a great deal of ground. As anyonecan see, they are community-minded, but on an international scale that gives thisterm a new dimension. The world is their plantation.
The Foundation Thrust
Total outlays for philanthropic or nonprofit enterprises bythe founder of Standard Oil are put by Raymond B. Fosdick at $446,719,371.22 capitalsum and income therefrom of $850 million--in all well over a billion dollars. 37Most of the income was expended in the form of grants, except in the case of RockefellerInstitute.
The capital sums were allocated as follows:
Rockefeller Institute for Medical Research, 1902 (now Rockefeller University) $ 60,673,409.45General Education Board, 1902 129,209,167.10The Rockefeller Foundation, 1913 182,851,480.90Laura Spelman Rockefeller Memorial, 1918-28 73,985,313.77 Total $446,719,371.22
In recent years the capital funds of the General Education Boardhave been drawn down steeply for grants in the neglected field of education and theLaura Spelman Rockefeller Memorial was merged in 1928 with the Foundation. Fundsfor the University of Chicago came largely through the General Education Board. Comingup in place of the General Education Board has been the Rockefeller Brothers Fund.
Up to 1950 external grants by income and principal were as follows:38
Rockefeller Foundation From income $325,754,751.35 From principal $125,773,613.93 Total $451,528,365.28General Education Board From income $132,339,912.86 From principal $164,427,148.34 Total $296,767,061.20Laura Spelman Rockefeller Memorial From income $ 27,839,809.74 From principal $ 27,500,000.00 Total $ 55,339,809.74International Education Board From income $ 6,495,807.82 From principal $ 11,837,482.00 Total $ 18,333,289.82 Grand Total $821,968,526.04* *Here should be added $60,673,409.45 for Rockefeller University.
The International Education Board was established by John D.Rockefeller, Jr., in 1923 but, in a very real sense, all the Rockefeller moneys arederived from the founder because nobody in the family since him has been a fortune-builderor even a conspicuous moneymaker. The grandsons have enterprises under way that appearlikely to become highly profitable but not on any scale, as far as appears to date,resembling the original Standard Oil, the real honey-pie.
What remained of these funds at the end of 1950 was as follows:
Rockefeller Foundation $158,103,332.13 39General Education Board $ 24,624,493.01 40Rockefeller Brothers Fund (as of 1955) $ 59,663,273.62 41 Total $242,391,098.76
Of the moneys in the Rockefeller Brothers Fund the late JohnD. Rockefeller, Jr., contributed $58 million in 1951 and bequeathed to it half ofhis estate. Reflecting part of this bequest in the amount of $65 million, at theend of 1960 the Fund showed total assets of $116,173,369. 42 Appreciationsince then, as already shown, has been great.
Since 1950, of course, these funds have been generating moreincome, most of which has been allocated in the form of grants.
It is clear, then, that a truly stupendous sum was directedfrom the fortune of a single individual into various medical, educational, scientificand general cultural projects, both in the United States and abroad. As most of thesemoneys consisted of dollars of much greater purchasing power than the present dollar,it is evident that in dollars of current value the disbursements were of far greaterweight.
That all this was part of a far-reaching plan is denied by spokesmenfor the family such as Professor Nevins and Raymond B. Fosdick. To the charge ofcritics that the benefactions were established as "a shield against public censure,"or, as some charged, "conscience money," Fosdick, following Nevins, pointsout that Rockefeller in his 'teens, as a pious Baptist, was already giving to thechurch as much as 6 per cent of his earnings. He kept a meticulous record down throughthe years of all such gifts, which amounted to more than $1,000 annually by 1865and to nearly $6,000 by 1869--goodly sums in those days. He gave $558.42 in a lumpto Denison University, for example, in the late 1860's. 43
Rockefeller, in other words, gave money all along, even as hesaved and acquired it, and, as it appears in the Fosdick-Nevins accounts, merelystepped up the rate when he became very wealthy. Yet, that there was more to it thana mere continuation of charitable giving, is shown when these writers quote Gates.
Mr. Rockefeller, a prudent man, apparently showed some doubtat first about proposals of large-scale largesse, if such it was. Says Fosdick:
"Mr. Gates, who could never be anything but candid andforthright, used to thunder at the elder Rockefeller, 'Your fortune is rolling up,rolling up like an avalanche! You must keep up with it! You must distribute it fasterthan it grows! If you do not, it will crush you and your children and your children'schildren.'" 44 These remarks are taken from Gates's autobiographyand one wonders, if Rockefeller was such a freehanded routine giver, why Gates hadto "thunder" at him to drive home the message.
What Rockefeller really thought even Gates, who described himas "a very reserved man" who revealed "little or nothing of his owninnermost thoughts," did not profess to know. 45 He may have hadno thoughts to keep in reserve--a plain man.
A Domesticated Machiavelli
To me it seems a disservice to the Machiavelli of Standard Oil,whom even an apologist like Nevins shows continually embroiled with business andpolitical opponents one after the other down through the years, to attempt to domesticatehim in terms of churchly estimates of genteel benevolence. As the history of StandardOil by any author, pro or con, clearly shows, Rockefeller was of a deeply conspiratorial,scheming nature, always planning years ahead with a clarity of vision that went farbeyond anything any of his associates had to offer. It seems to me far more in keepingwith what we know of the man's character, as revealed by his business career, thathe embarked on his large-scale philanthropies with at least some self-serving personalends in view.
Until Gates took over, Rockefeller had been giving money awaymore or less helter-skelter, mainly to Baptist missionary societies. One gets theimpression that some of this giving was merely to get rid of importunate suppliants,who, as Gates said, "beset" him. 46 When Gates joined Rockefeller,he very gradually converted the magnate to the idea of "scientific giving."47 This "scientific giving" slowly took the form of the greatfoundations.
Rockefeller very early saw that he was getting some mileagefrom his Baptist patronage. As early as 1889 when a small Baptist publication criticizedthe Standard Oil Company, all of whose leading figures were Baptists, the companywas stoutly defended by the Examiner, official organ of the Baptist Church.48 Had Rockefeller and his Standard Oil colleagues all been Jews or Catholicsone trembles to imagine what the anti-Rockefeller movement would have been like!It could not have escaped Rockefeller's notice that whenever his money had been bestowedhe had staunch friends.
His gradual conversion by Gates, it seems to me, shows Rockefellerin a better light in terms of intelligent motivation than many of his apologistsindicate. These latter show him only as a compulsive, mechanical giver from the verybeginning. Actually, he was a thoroughly responsible man within the light of hisown interests and his understanding of them. As the center of raging and constantlyintensifying public controversy, which made him in his time "the most hatedman in the world," Rockefeller might well have suspected that he was leavinga bitter inheritance to his children and grandchildren. Again, the torrent of publiccriticism against him, in part at least calumny, could not help but have some effectupon his wife and children however much be discounted it personally as attributableto envy. He prized his son especially, as many remarks showed, and was always deeplypained at any criticism of him. When both father and son were being publicly criticizedhe said: "They have no right to attack Mr. John. All my life I have been theobject of assault. But they have no ground for striking at him!" 49Possibly Mr. Rockefeller now saw some valid ground for attacks on himself.
His family was, indeed, Rockefeller's Achilles Heel and it isnot at all difficult to see that he wanted to make a better public impression thanthe one currently dominant for the family's sake if not his own. Rockefeller, therefore,as I see him, put his mind coldly to the problem and saw that what Gates and othersrecommended might at least divide the forces against him, perhaps turn the tide.His first tentative ventures in large-scale philanthropy suggested that this viewwas valid. Rockefeller did not plunge into philanthropy. He was never a plunger,always made his moves in business, politics and philanthropy gradually and aftercareful thought.
Gradualism in Philanthropolity
That his large-scale entry into public philanthropy was verygradual and, after being undertaken, was spread out over a long period of time isshown by Nevins, who lists his donations for every year beginning with $2.77 for1855. Rockefeller kept a record of his donations, which prior to 1880, says Nevins,was incomplete. But in no year through 1877 was as much as $10,000 recorded as donationsand not until 1884 was more than $100,000 donated. In 1887 the figure jumped to $284,116.52and in 1890 to $303,542.78.
Up to the time when Gates joined him in 1891 his gifts had mainlybeen to the Baptists. In the 1890's his donations exceeded $1 million each in onlyfive years. In 1892 his Ohio trust was dissolved by court order. Even though he hadbeen comparatively generous, all this up to 1900 was no more than chicken feed; theflood from the secret recesses of Standard Oil was still to come. In 1900 he putup more than $2 million and again in 1901. But in 1902, when the General EducationBoard and Rockefeller Institute were launched, he contributed $5,407,856.78. Fallingsomewhat short of this amount for the next two years, in 1905, when public outcryagainst him was stupendous, he put up $13,602,820.78. Although he was never to missa year until death in these benefactions, the really big years were as follows:
1907 $ 39,170,480.52 1909 71,453,231.15 1913 45,499,367.63 1914 67,627,095.87 1917 15,770,624.48 1919 138,624,574.61 1920 31,780,348.24 1928 19,964,455.38
Not only did such munificence top anything else of record (anduntil Rockefeller and Carnegie came along, public donations were meager indeed) butthe Rockefeller benefactions went nearly wholly into projects of, invariably highquality. To fault Rockefeller on the quality of his projects, one must fault thehighly rated University of Chicago, Rockefeller University, the work of the Foundationin combating hookworm, yellow fever, malaria, typhus, influenza, tuberculosis, rabies,yaws, schistosomiasis and various other diseases, and the worldwide contributionsto medical education, the financing of projects in experimental biology and othernatural sciences, international relations and scores of other fields.
That kudos accrued to Rockefeller, particularly from the pressand executive types in charge of projects in education, science and medicine, inplace of the earlier brickbats, is not to be denied; but the seeking of praise formeritorious performance, if such was the case, is not in itself a fault. That Rockefellerpreferred praise to adverse criticism is evident from the fact that Standard Oilearly busily engaged itself in buying and surreptitiously financing newspapers. 50The influencing of public opinion in his favor was a problem that Rockefeller longwrestled with before he found the right combination.
Prior to 1913 at least, the problem of taxes could not haveinfluenced Rockefeller in his philanthropies because business and wealth were subjectthen only to piddling local taxes. Nor can it be held that the creation of the RockefellerFoundation was a direct reflex to the advent of federal taxes in 1913 because theFoundation had long been planned, at least since 1905. The community of Big Business,it is true, was opposed to the new
taxes and Rockefeller's chief attorney, Joseph H. Choate, hadbeen the lawyer who in 1893 convinced the Supreme Court that income taxes were unconstitutional;it was therefore necessary to amend the Constitution to enact income taxes. However,even though the advent of federal taxes did not influence the idea of the Foundation,it was gradually noticed by others that there were distinct tax advantages in makingphilanthropic allocations. This fact is now part of standard tax doctrine, set downin many tax treatises. Gifts to philanthropic funds pay no taxes, the income on suchfunds pay no taxes, and there is no inheritance tax on such funds. Furthermore, stocksplaced in such endowments carry corporate voting power--a nice point. It should berecalled here that it is power really, rather than money or property, that we areconcerned with.
Considerations such as these may not have occurred to Rockefellerduring tax agitation prior to 1913 but it is hard to see that they could have escapedthe notice of his lawyers. At any rate, the size of his philanthropic allocationsincreased markedly beginning with the new tax laws. Whatever he did not allot tophilanthropy was now going to incur income and estate taxes; and such taxes, he musthave foreseen, would tend to increase rather than diminish.
As to the relation of taxes to philanthropolic capers the WallStreet Journal of August 2, 1967, points out that philanthropies would be sharplyreduced if compensating tax reductions were reduced or repealed-an assertion madeon the basis of a study by the Brookings Institution in collaboration with T. WillardHunter, executive vice president of the Independent Colleges of Southern California.In this study there were interviewed 30 of 47 living philanthropists who in 1965made 69 capital gifts of $1 million or more each for an aggregate of more than $93million. The donors reported that $40 million, or 43 per cent of all, would not havebeen given if there was no tax reduction allowed; they also reported that had deductionsbeen limited to the original cost of securities rather than to an inflated price,as has been proposed, the donations or allocations would have been reduced by 46per cent. The donors themselves rated tax savings as fifth on a list of twelve considerationscontrolling philanthropolic maneuvers.
Actually, it can be shown that in many cases a donor can obtainfor himself more indirect in-pocket income by being a generous philanthropist thanby holding tightly to direct investments. Among many possible illustrations are thecases of big chemical proprietors who have donated entire schools and laboratoriesof chemistry to big universities, at huge but tax-deductible costs. What the chemicalproprietors have now derived from the schools in the way of new discoveries and trainedresearch chemists has given them a constant return of many hundred per cent on theoriginal "donation."
Peer-group esteem is gained on the finpolic circuit bysuch contributions that strengthen the entire finpol network. Rockefeller,finpolically speaking, was a very good neighbor, of vast benefit to all finpols.
On the basis of his own experience with legislators at the stateand national level Rockefeller could not have felt reassured about what they mightdo with his money. He no doubt felt that he could make a more constructive dispositionof it than they. With this view, if it was his, I concur. Even today one can haveno rational confidence in the allocation of funds by any Congress the American peoplein their present low state of cultural development are likely to elect.
There were, at any rate, many advantages, perhaps foreseen andunforeseen, in the course he gradually adopted, not the least of which was widerpublic acceptance for himself and his family (for which he seems to me to deservegreat credit), particularly at the hands of the educated and the middle classes.,The high quality of most of the Rockefeller projects particularly commended the man,and still commends him, to the cultivated, and lends strong color to the view ofhim as a Robin Hood who took, not from the rich for the poor but from grasping businessrivals, politicians and an oafish squandering public and, now under severe publiccriticism, turned a substantial and possibly major portion of the loot over to institutionsclosely identified with high civilization--a triumph of the sardonic over the indignantlysentimental, a twisting of the knife in the philistines.
Rockefeller, thus, is a paradox. The biggest, most assiduous,most successful, sufficiently unscrupulous and most condemned acquisitor convertedhimself into the most munificent high-level giver. Rockefeller, late in life andpossibly suiting the word to his Lord Bountiful actions, himself enunciated the elvishprinciple that "A man should make all he can and give all he can." 51If this was intended to mean (and it does not necessarily) that a man should tryto make a great deal of money and give nearly all of it away, the program seems absurdto the point of the comical.
The Finpolitan Model
Although this chapter may appear, thus far, to be about theRockefellers, it really is not. As I remarked at the beginning, the highly civilizedRockefellers: are featured here, perhaps sacrilegiously, purely for illustrativepurposes. For what has become the "Rockefeller style" is in essence thefinpolitan style, which copies the Rockefeller style in a general way. Many othersdo or pretend to do about as the Rockefellers do, perhaps not with as much earnestconviction.
"If the rich are capitalism's aristocracy," as WilliamManchester observes, "the Rockefellers: are its royalty." 52One is constrained to agree. They not only show the way in finpolitania; theyinvented it and appear to be deeply convinced of the constructiveness of their role,not an unusual human trait.
Various aspects of the life of the wealthy have been depictedby assorted writers. Perhaps the most popular, representing the role most of thehoi polloi see for themselves as rich people, has been the wealthy as irresponsibleplayboys, spendthrifts and more or less graceful idlers. This view is well conveyedin the writings of Cleveland Amory and others of the same genre. The next most compellingaspect has been the wealthy as ruthless grabbers, as shown by Gustavus Myers andMatthew Josephson. Some attempt, of less wide interest but in my view more significant,has been made to show the wealthy as contemporary social power wielders, as I andC. Wright Mills have done. On the American scene Thorstein Veblen first delved indepth into the role of the wealthy as socially irresponsible power wielders and exorbitantconsumers. Individual critical biographies, as by Harvey O'Connor and John T. Flynn,have touched on all these aspects.
But the modes of being of the more mature among the establishedwealthy have by no means been fully explored. These modes turn out to be distantemulations, not always convincing, of the Rockefeller style. Although academic sociologistsanxiously inquire into the most minute, interstitial phases of contemporary society,it is instructive to notice that there is no systematic sociology of the wealthy.The academicians seem to sense through built-in radar that this is taboo terrainand allow unanointed non-award-winning journalists, publicists, free-lancers andmiscellaneous literate and offbeat ideologists to dominate the field which, it istrue, promises little in the way of academic promotion. A notable exception amongthe certified sociologists is the suave E. Digby Baltzell, author of The PhiladelphiaGentlemen and The Protestant Establishment: Aristocracy and Caste in America,the latter a penetrating study.
"The real truth is that very few of the social scientistslook very deeply into the subject [of fortunes] for fear of being thought politicallyradical," says Professor Floyd Hunter in The Big Rich and the Little Rich(Doubleday & Co., N.Y., 1965, pp. 173-74). "There has been so much moralizingabout the division of power and wealth in world society that an earnest considerationof what actually takes place in modem American economic affairs, politically, isleft largely to sterile theoretical conjecture. There is no serious empirical studyof socio-economic logistics of the distribution of wealth. There is no forthright,open discussion of what the phenomena of personal wealth really does for the community--ordoesn't do."
It could be shown, indeed, that there is room for at least 200interesting books, as yet unwritten, in the field of the large American wealth-holders.As it is, the subject is largely taboo, in accord with imposed canons of respectability.Who would be so foolish or reckless as to court the stigma of disrepute by inquiringinto the doings of the wealthy?
As C. Wright Mills discovered, not much material has been systematicallygathered on this general subject of the sociology of wealth and one must, perforce,dig into whatever random outcroppings: are left available; data are systematicallyhidden. Nor do there appear to be contemporary Boswells like the late Clarence W.Barron of the Wall Street Journal to make mordant secret notes on the innerdoings of the contemporary tycoons. Perhaps some enterprise like that is going forward;if so, it has not yet come to light.
Although contemporary wealth is associated with the term "capitalism,"in the finpolitan model capitalism becomes something more like super-capitalism.The term "monopoly capitalism" is in any event self-contradictory becausecapitalism does not allow of monopoly; it is competitive and its companies can fail.The super-capitalist companies, potential claimants to public subsidies, are permanentlybeyond failure, occupants of a politically protected haven. In search of a betterterm under the tyranny of old meanings, it would perhaps be better to speak of financialsyndicalism, for the big finpolitan groups are in fact syndicates ofconcentrated yet widely deployed private holders with governments at their beck andcall.
And as to concentration of holdings, we have yet apparentlyseen nothing like the destiny toward which the world is heading. In MultinationalCorporate Planning, edited by George A. Steiner and Warren M. Cannon (Macmillan,N.Y., 1966), it is pointed out that the big corporations are now multinational. "Inthe light of present trends and future prospects," say these percipient writers,"it does not seem at all impossible that in the next twenty years, six or sevenhundred large multinational companies will be doing most of the world's business.This will indeed be pan-imperialist super-concentration.
The finpolitan corporation, or cluster of corporations,is a multinational corporation. Multinationality is a hallmark of finpolity.
Style Setters of Wealth
Rockefeller set at least two of the three major widely copiedstyles of operation for the American wealthy, and the finpolitan style justoutlined is the one that is currently dominant, with variations.
The first Rockefeller exercise in style setting was the useof the trust as an instrument of corporate integration and monopolization. In 1872when the Standard Oil Company of Ohio, the original company, secretly provided fundsto acquire companies in other states, it placed the acquired stocks in the custodyof one of its directors as a trustee. (Under law as it then stood it was illegalfor any company to own other companies in another state.) But Rockefeller, like otherrising tycoons, was not deterred by a detail like legality. Furthermore, the lawon trusts at the time was suitably vague. By 1879 the system was devised of havingthree officials of Standard of Ohio act as trustees of the acquired stock. They werenot, the company contended, legally trustees for Standard of Ohio but, if for anybody,for the thirty-seven underlying stockholders of Standard of Ohio. These stockholderscould roundly deny, as they did even on the witness stand, that Standard of Ohioowned these companies. It was all these acquired companies, scattered in many states,that secretly composed what came to be called the Standard Oil Trust. As far as thepublic knew, these companies were all competitors of Standard.
As word seeped into business and legal circles about this handynew arrangement, which long preceded the New Jersey holding-company law of 1889,other industries organized into trusts until there were soon a Sugar Trust, WhiskeyTrust, Tobacco Trust, Rubber Trust, Shoe Trust, Butcher Trust, Furniture Trust, CoalTrust, Cotton-Seed Trust, Gunpowder Trust and many others. These were all actuallysecret cartels to regulate the market and hold up prices in the interests of theowners. Standard Oil was the first of the giant trusts.
How readily the unpublicized device could be used to bafflepeople is shown by an affidavit filed by Rockefeller in a Cleveland law suit in 1880,that read: "It is not true . . . that the Standard Oil Company, directly orindirectly, through its officers and agents owns or controls the works of. . . ."Here followed the names in a long list of companies, the stock of which was secretlyheld by trustees employed by the Standard Oil Company of Ohio. 53
"Legally, this statement might be defended," saysNevins, a vacuous remark because legally any action whatever is entitled to a defense."The three trustees held ownership and Rockefeller could say they acted notfor the Standard but its stockholders. Actually, to call the statement disingenuouswould be putting the matter mildly; it was equivocation. Such evasive tarradiddleswere then too common in American business." 54
What is pointedly false about this assertion is that the "trusteesheld ownership." Trustees are not owners but agents. While it may be saidthat they were agents for the Standard stockholders, a closely knit group, they werein fact agents and employees of Standard of Ohio, whose stockholders heldan interest in the acquisitions in proportion to their share of ownership of Standardof Ohio. Rockefeller's affidavit was perjury and a fraud on the court. 55
At the time, Rockefeller owned 8,984 out of 35,000 outstandingshares of Standard Oil, Henry M. Flagler 3,000, Stephen V. Harkness 2,925, CharlesPratt 2,700, Oliver H. Payne 2,637, J. A. Bostwick 1,872, William Rockefeller 1,600,J. J. Vandergrift 500, John D. Archbold 350, J. N. Camden 200, C. M. Pratt 200 andAmbrose McGregor 118. The Cleveland group, comprising Rockefeller's Baptist cronies,held 19,146 shares, a majority. 56
Each of the key Standard Oil units was duly found to be a lawviolator. First the Standard Oil Company of Ohio was held by the Supreme Court ofOhio in 1892 to be in violation of the law in its trust arrangement, was forbiddento continue it and ordered to pay the costs of the litigation. The assets were thereuponby an exchange of stock acquired by the Standard Oil Company (New Jersey), operatingunder the wide-open New Jersey holding company act of 1889, and to the Standard OilCompany of New York; these had approximately the same directors. Finally, in 1911,the U.S. Supreme Court found that the New Jersey company violated the Sherman Actand, tapping it lightly on the wrist, ordered it dissolved into its constituent corporateparts and the stock of each company distributed pro rata to each of its stockholders.Instead of owning one-quarter of one central company Rockefeller now owned one-quartereach of nearly two score companies!
Standard Oil in the foregoing was clearly guilty of noncapitalistbehavior as, indeed, many of the fortune-builders have been. Critics of capitalismcommonly lump together the behavior of strictly performing capitalists with thatof operators outside the rules, thus making capitalism take the blame for much thatis outside capitalism. This is not to say that capitalism, for its austerely stylizedprocedure, may not be the legitimate object of distasteful criticism; but capitalismsurely should not be blamed for noncapitalist behavior. If a man robs a bank andis not caught, thus coming into the possession of a large sum of money, he has notaccording to the dicta of any school of economics acquired his money in a capitalistway.
Capitalism is an economist's ideal abstraction, concerned withaggregate results and average procedures. Many of the big fortunes, however, werebuilt precisely because they departed in important respects from average procedures,precisely because their builders were anything but capitalists. Within capitalism,under the rules, one can lose; the fortune-builders never had any intention of submittingto disadvantageous rules that might land them in the bankruptcy courts. They hadlawyers and legislators to assist them in avoiding the rough while benefiting fromthe smooth.
One learns little about the capitalism of the economists bystudying the history of the big fortunes. John D. Rockefeller indeed became a capitalist,but not by practicing capitalism--at least not exclusively. Those who lost out tohim, however, were often garden-variety capitalists.
A style Rockefeller neither set nor practiced, which was copiedfrom an English innovator, was that of issuing "watered" stock in mushroomingcorporate combinations. J. P. Morgan, William Rockefeller and almost the whole ofthe upper financial community went in for this exhilarating practice, through whichpatriotic investors were mulcted of billions and promoters either sold out or retainedfull control at no cost. This was not capitalism either. The Rockefeller companieswere always closely held until the dissolution order of 1911, and Rockefeller nevergypped fellow investors, In his acquisition of companies Rockefeller always triedto induce the sellers to take Standard Oil stock rather than cash, which most ofthem cannily refused to do and thus unwittingly threw away the chance of becomingincalculably wealthy. Sore losers, many of these later joined the accusing chorusagainst him.
But the successful style of how the well-tempered super-millionaireand his family should conduct themselves was definitely evolved by the hardpressedRockefeller and Gates. This style required the creation of foundation philanthropiesand the involvement of members of the family in publicly approved cultural, scientificand socially supportive projects. Although widely imitated, as were the Rockefellertrust and the English wateredstock ideas, it is a style subject to great variations.
The foundation idea, as we have already seen, has come to bea widely utilized scheme of tax evasion while maintaining tax-exempt corporate control.
Capitalism as a Scapegoat
The idea that capitalism is to blame for everything irrational,and that failure to face up to basic problems derives only from pro-capitalist bias,comes largely from socialists, who, in their super-heated zeal, present a vastlyoverdrawn indictment of capitalism. Even if we agree that capitalism--particularlyunregulated, automatic capitalism of the classic variety that allows no modificationsin terms of human needs--is subject to rejection, it is not true that all socialproblems stem from the economic system. But according to many socialist (particularlyMarxist) critiques, capitalism is to blame for all that is detestable or frighteningabout the contemporary world.
Actually no system, including socialism, will automaticallyproduce good results. The contradictory is an unexamined notion that stems throughthe Physiocrats of the eighteenth century from the idea of a mechanical physicaluniverse as given in Newtonian physics. Nature is automatic; whatever is automaticis natural; whatever is natural is good (itself a questionable notion). Therefore,a good economic system will be an automatic one, operating according to natural laws.Any viable socio-economic system whatever, as a matter of historical fact, needsconstant modification from day to day at many points. Such being the case, any systemis humanly troublesome, requiring constant revision and tinkering. Every system isbound to be far from perfect.
Without defending capitalism either in automatic or rationallymodified form, one must nevertheless notice that capitalism contains within its theoryno propositions directly or by implication stating support for racism, prostitution,ill treatment of criminal offenders, overpopulation, neglect of the mentally retarded,support of crime and the like. To this the socialist will reply: But capitalism,seeking only maximum profits, fosters callousness by seeing salvation only in profits;and, by directly and indirectly pressuring people through its profit-making machinery,induces much social havocalcoholism, emotional disturbance, delinquency and the like.Only infidelity between the sexes appears to have been left out of the indictment,although Marx included even this. 57
Ills of Long Standing
Yet this long list of ills for which capitalism is blamed existedlong before capitalism was ever heard of, although the ills were not as finely limnedas now by modern statistical methods. The persistence of unsolved problems is citedgleefully by socialists; but the solutions of many problems, as of food supply, arenot cited on the credit side for capitalism. I don't myself believe that capitalismis responsible for the improvement in food supply or the conquest of disease; credithere should properly go to modern scientific technology. But neither should capitalismbe unwarrantably blamed for the persistence of old problems.
Where the blame mainly lies for failure to apply rational proceduresto the solution of a legion of problems is shown, in fact, valuably and dazzlingly,by the reluctance of intelligent capitalist foundations to step into any except conventionallyapproved areas, even though retired foundation officials cite the need for intrusioninto many neglected fields. It would not, with respect to most of the problems lyingabout, hurt capitalism as such to see these problems solved; indeed, capitalism mightbe benefited by having much sand removed from the social gears.
That the public itself offered no encouragement in basic problem-solvingis shown primarily in the fact that ameliorative measures, with respect to many problems,were never adopted by Congress. Stone-faced, unsympathetic Demos barred the gatethere.
The foundations, it is clear, must consider not only capitalismbut the behavior of a certainly hostile public. This public opposes almost anythingcivilized.
Capitalism, although it thrust itself up into the world, didnot create that world or its ideas. It modified that world; in some instances forgood, in others for ill. The worst count against capitalists (not capitalism) isthat in their insatiable drive for raw materials and markets they have fostered someof the most destructive wars and revolutions in history and seem likely to fostermore. Here, as I see it, is a heavy count in an indictment, hardly requiring thecritic to bring in topics like prostitution to bolster his case. 58 Beyondthis capitalists. simply neglect social problems, often in deference to public opinion.
But the very fact that capitalists (and socialists) are ableto enlist a large populace on their side in a warmaking capacity, merely by wavingthe flag, shows there is more to it all than capitalism or socialism. There is, infact, an irrational populace, ready to be mobilized for destruction by any bugleblowingfuehrer. It is this irrational populace, as I see it, that impedes capitalists themselves,gives them pause, in advancing to the solution of many basic problems (leaving toone side the thorny question of war).
Barbarians in the Mass
The situation would be more readily understandable at a glanceif the population were attired, in harmony with its basic emotional and intellectualorganization, in suitable symbolic garb. Then more than 50 per cent of the people,perhaps up to 75 per cent, would be still dressed today in animal skins and sandalsand would wear their hair long and unkempt. Businessmen and their assistants wouldbe dressed, as now, in standard sack business suits. Professionals--lawyers, physicians,educators and savants--would be dressed, medieval-style, in long black robes; eachmight wear a distinctive hat. Many clerics, as suitable to shamans, would be outfittedin feathers, bones and bangles. Perhaps many people, politicians especially, wouldbe garbed eclectically--part skins, part business suit, perhaps adorned with a featheror bone here and there. Some, representing a hard core, would no doubt be dressedin no more than loin cloths. Most of this populace would carry spears.
Generally, however, the majority of this symbolically garbedpopulace would be dressed in skins and sandals. These are the ones most responsiveto religious and political dervishes--among the religious mercurially responsiveto the hard-nosed Catholic hierarchy, Billy Graham and lesser Protestant luminariesand among the politicals to the likes of George Wallace, Lester Maddox, TheodoreBilbo, Strom Thurmond, Everett Dirksen and Huey Long (to say nothing of good oldLyndon B. Johnson and Barry Goldwater).
Here in skins, for all to see, would be the crowd that respondsjoyfully to all calls of a holy war against whatever is rational. Here is the crowdthat not only well-tempered capitalists fear. This is the presumably democratic mass,toward whom philosophic democrats look with increasing dubiety for salvation. Thedoctrine of democracy no doubt made sense as a political device when it was a questionof appealing against the despotic authority of unprogressive kings. Unfortunately,once the kings were overthrown, many self-hypnotized democrats began to take theirdoctrine about the essential right-mindedness of the populace seriously. Teach thepeople to read and write, they said, and they will automatically--that word again--turnto the best in literature and culture and soon lift themselves into the radianceof full humanity, with malice toward none.
This did not happen, as any demographic survey will show; mostof these elements refuse to be budged from their irrational ruts, long hallowed bymedicine men. It would require hundreds of thousands of psychiatrists and assistantsto reorient them.
Karl Marx was a little more precise than the democrats whenhe found an unheeding constituency for socialist revolution in the working class,specifically factory workers. These persons, brought together under harsh conditionsfrom field and farm, Marx saw as the battering ram of glorious socialist revolution,overthrowing the overreaching, exploiting capitalists. Yet the workers in no capitalistsociety behaved according to this vision, any more than people in general respondedto the democratic vision. The most militant workers, indeed, banded themselves togetherin over-reaching trade unions, separating themselves from the bulk of workers. Neo-Marxistssuch as Baran-Sweezy now admit they cannot get revolutionary assistance from theproduction workers, who are rapidly being reduced in number by automation. Even ifthey were not being so reduced, however, they would on the basis of past performanceshow no support for socialism. In no instance has any considerable segment of theworking class of any capitalist country supported socialist aspirations. There islittle idealism on the working-class level.
The metaphorically skin-clad majority has no more than a confusedconception of either democracy or socialism and has no interest in applying itselfto get an improved conception. Prayer, imprecation and incantation remain its chiefshort-cut instrumentalities for dealing with reality.
It is here that opportunity beckons to the dervishes, religiousand political. It is here that they find they are in business, in a position to mediate,at a price, between mass irrationality, which has its own claims, and rationality.
Transition to Capitalism
Capitalism in rising to the economic surface came into a worldof many surviving historical currents. Focusing our attention on Europe, it willbe noticed that most of the population was literally skin-clad and wholly illiterateas the Christian church thrust itself up in the fifth century, A.D., from the ruinsof classic civilization in the Mediterranean. Whatever of civilization came intonorthern Europe came via the Church. Yet the feudal system, associated in time withthe Church, was not born of the Church. It was simply a local secular system of bossand followers that came into being, first in Italy, with the decay of Roman imperialinstitutions. Feudalism, as the dominant economic-political system, is uncriticallyheld in retrospect responsible for whatever one cares to focus attention on in thisperiod, just as capitalism is held responsible by socialists for whatever happenstoday.
In the course of time the rise of cities and inter-regionaltrade gave birth to a growing merchant class, embryonic capitalists or bourgeoisie(city dwellers). These people differed from churchmen, lords and village vassals;they were businessmen and businesswomen. With the slow accumulation of wealth, thismerchant class increasingly held the whip hand, and it finally asserted it most stronglyin the successful French Revolution.
But although economic institutions were now increasingly lookedupon as capitalistic rather than feudal, wages being paid for labor rather than serviceand protection, all the old cultural ways persisted and still flourish.
Marx, in The Communist Manifesto, recognized the capitalistsas a new class, superior historically and functionally to peasants, vassals, lords,clergy and the like, but doomed to fall before the holy onslaught of the factoryproletariat. Marx, obviously, wishfully accelerated the pace of history, and wronglyanticipated a turn that never took place. Marx's lumpish proletariat, actually, washeading nowhere beyond right where it stood. As matters now appear, it is headingtoward liquidation, first split, then part pushed lower into a dismal subproletariatvia automation and part pushed upward into the lower middle classes or beyond, perhapsinto middle-classness. What made the capitalists superior to predecessors, althoughnot wholly acceptable to Marx, was their greater rationality. But, as Marx saw it(correctly I believe), it was a rationality largely misplaced, wholly in the narrowservice of self, to the dangerous neglect of society as a whole. Only the proletariat,oppressed under wage slavery, could in the Marxian view feel the necessity for equitablesocial arrangements all around. Such arrangements, as Marx thought (perhaps rightly),could be supplied only by socialism. The proletariat has obviously failed Marx andhis followers just as the masses have failed the democrats. They represent lost hopes.
As any casual glance around the United States will show, thecountry is full of mentalities more appropriate to the old Teutonic forests, theRoman arenas and the medieval countryside than to a society of capitalist institutions.One can discard socialism completely. For verification of this view one hardly needsstray as far away as Nashoba County, Mississippi; Selma, Alabama; Cicero, Illinois;or even Bronx County, New York. One need only read speeches in The CongressionalRecord, where the free-ranging infantile Freudian id reveals itself in full baroqueregalia.
The Finpolitan World Preserve
Any hut, any palace, the Kremlin itself is open to the finpolitans,who range the world in breadth and depth. These cannot, manifestly, be ordinary people.They put grand dukes comparatively into the shade.
"What we really have," said one of the Rockefellersto Morris, "is our name. That is our big asset. It opens doors and, as our moneyis dispersed, it is of far greater value than anything else as long as it remainsa good name. Seeing that it does must be our first consideration. There is an oldsaying: 'Shirt sleeves to shirt sleeves in three generations.' Well, we have to avoida third-generation anticlimax. We have to put our time and our money to work buildingsomething new." 59
Aptly put. The Rockefellers, as any intelligent person mighthave suspected, do not feel they have been called upon to preside over the dissolutionof the world's largest fortune. They are, like all the finpols, at work preservingand building something new. They have long-term projects. They intend to stay evenas their public relations men, imaginatively anticipating socialist intentions, suggestthey are disappearing.
As Laurance put it on another occasion, they are concerned "tosee to it that the well doesn't run dry." Two of the fourth generation who havebeen earmarked to occupy themselves for this reason with family business affairsare Nelson's son, Rodman, and David Rockefeller, Jr. 60 "There areso many Rockefeller organizations extant that it is hard for outsiders to keep themstraight." 61
That their multi-faceted position is at times as confusing tothem as it may be to outsiders is shown when Morris says elsewhere that "TheRockefellers always have their guard up against anyone who suggests that their nameand wealth give them some special privilege." 62 Here, on differentpages, one can have it either way: Their name alone has great weight in the world(page 36), their name confers upon them no special privilege (page 28). What is thecase is that in ordinary behavior they are like anyone else, "democratic,"standing in a long line to get a wedding license, eating in a college cafeteria tosave pocket money or living as a common laborer in the oilfields on the first job.But when large objectives loom, the name alone opens difficult doors. 63They appear to be Cinderellas, of lowly station one minute, up in the clouds thenext.
The name, however sinister it may sound to leftists, is a primaryasset of all the finpols --Du Ponts, Mellons, Fords, Pews, Hartfords, Rosenwaldset al.
Just what the cash value of the name is in each case would bedifficult to determine with any preciseness. What, one may ask, would it be worthto a syndicate if converted into the designation of The Rockefeller National Bankand Trust Company, the Rockefeller Insurance Company or Rockefeller Enterprises,Inc.? Merely for the use of the name in some such enterprise the promoters wouldunquestionably be willing to assign a sizeable block of stock, the exact dimensionssubject to negotiation. With the understanding that the Rockefellers would be associatedwith the management, bringing into the background their vast connections and holdings,the block of stock would be considerable apart from any contribution of capital bythe Rockefellers. They need put up no money at all.
Beyond this, the name is of shadowy intangible value in a project-orientedworld.
As to opening doors, indeed, the Rockefeller name is magic.(The names of all the American big-wealthy open doors all over the world.) Wheneverthe Rockefellers--or any of the other higher finpols --travel abroad, theyare instantly enmeshed in the nets of upper-level governmental protocol. As key figuresin American society, they instantly galvanize governmental attention.
Thus, says Kahn in the New Yorker, when David Rockefellerat forty-eight contemplated taking a trip to Russia, he paused to reflect; for he"had heard hints that if he should get to the USSR he would probably be invitedto confer with Premier Khrushchev, and there was no telling how explosively the Communistleader might react to a confrontation, on his home ground, with a notorious internationalbanker." 64
Rockefeller decided to go, and in Leningrad "was told Khrushchevwould like to see him the following afternoon at the Kremlin, in Moscow." Therehe went with his daughter Neva and for two and a half hours participated in whathe later described as "the most intensive conversation I've ever had with anyone."65 What the upshot of it all was has not been indicated, but within twoyears the United States had widened its trade relations with the Soviet bloc. Wasthere any connection?
As Kahn pointed out in the New Yorker, the Rockefellerscannot traipse into any country anywhere without ascertaining the political climatein advance. At the wrong time their appearance could cause riots. Thus in Ghana,to which the Rockefeller Brothers Fund had contributed a million-dollar program ofdeveloping small local industries, in 1963 they came under heavy ungrateful attackby the Ghanaian Times which said truculently: "Whilst the Governor ofNew York concentrates on changing the political climate in Washington to open upthe trade in nuclear arms, the president of Chase Manhattan is mostly concerned withcommodities like copper and bananas." The paper went on to charge that Davidwas engaged in blocking the Organization of American States and the Alliance forProgress, trying to overthrow (apparently without success) the governments of Boliviaand Peru, providing Portugal and the Union of South Africa with arms, dominatingthe U.S. Congress with stooges and a kept press, and using the Central IntelligenceAgency and the State Department as tools to supervise and protect his bank's ramifiedforeign investments. 66
While all this sounded a bit far-fetched to the conventionallyskeptical, the reserved Christian Science Monitor had earlier described Rockefelleras "a businessman who is listened to all over the world." 67Apparently they were at least aware of this fact in Ghana.
As Kahn went on to point out, David Rockefeller travels a gooddeal all over the world, inspecting properties, meeting with the highest governmentofficials--left, right or centrist.
In return, at home, David frequently entertains, in the cityand at Pocantico Hills, potentates who visit the United States.
"David's always got an Emperor or Shah or some other damnperson over here, and is always giving them lunches," grumbled the doughty SidneyJ. Weinberg of Goldman, Sachs and Company. "If I went to all the lunches hegives for people like that, I'd never get any work done." 68
Not only is he engaged in an interminable running series ofconferences with the highest foreign movers and shakers at home and abroad but hisschedule takes in without any party discrimination the highest American officials.All of this going and coming, hosting and guesting, may indeed be conducive to amore smoothly running world (and this one devoutly hopes) but it is not a line ofactivity familiar to ordinary mortals. This, in point of fact, is the way it is onthe finpol circuit. This is beyond mere Big Business. This is Super-Business,where the line of demarcation between inner government and upper business is so blurredas to be indistinguishable. It isn't deals but concessions, protectorates and spheresof influence that are negotiated here.
Training for such a high-level life in the case of the Rockefellersbegan early. Whereas the aim of the routinely upcoming wealthy was merely to getinto The Social Register or to marry impecunious nobility, the Rockefellerswere early pointed toward much higher game: close-harmony association with the power-eliteleadership of nations. Declassé nobility, whatever aura it carried fromthe past, never interested any of the Rockefellers; they always went directly forthe man who was in charge now. He, they seemed to know through some sort ofosmosis, was the fellow to know and understand, whatever his forebears or background.They aren't discriminatory; they would just as soon negotiate with an emperor aswith an ex-peasant.
Thus Nelson, just out of college and just married, went on atrip around the world with his bride. He carried letters of introduction to "highofficials and distinguished persons," and in India had interviews with the Viceroy,later Lord Halifax, and Mahatma Gandhi. 69 These were, to say the least,rather exalted companions for a collegian. But this was no ordinary collegian. Itwas a future high U.S. finpol.
With the possible exception of Winthrop, all the Rockefellerswhen they go abroad are knee-deep during their entire visit in power-wielders, power-elitistsand their mentors, majordomos and public relations men. The same is true of otherfinpols, and of their representatives, the upper managers of the big corporationsand banks. In the Orient John D. III is kow-towed to from teahouse to pagoda andpalace.
This hobnobbing with the international bigwigs contrasts ratherpointedly with Nelson's political campaigning at home, during which thousands ofTV viewers have seen sweaty admirers pounding his back at Coney Island and otherplebeian haunts and shouting, "Good old Rocky." There is apparently a differenceof opinion between foreign leaders (including Khrushchev and the Emperor of Japan)and the American public about the precise status of the Rockefellers. Can it be thatthe foreign political sharks, as they muster out the palace guard and diplomats togreet them, are mistaken? My own view of them accords more with that of the foreigners.The finpols are ultra-bigwigs, super-megaton bigshots, Brobdingnagian commissarsof affairs. In relation to them the average one-vote citizen is a muted cipher, anoisless nullity, an impalpable phantom, a shadow in a vacuum, a subpeasant.
Whereas at home the contact of these worthies with the pubpolsis somewhat veiled, out of consideration for the illusions of the American booboisie,abroad the contact is more open. But for every contact with the power-brokers abroadthere plainly are ten to a hundred with the domestic variety, all readily accessibleby telephone. The finpols along with the pubpols, rising men of wealth,churchpols, corp-pols and top corporation lawyers, lawpols) are collectivelyengaged in running the world politico-economic system according to their own peculiarlights. Out of these ranks are drawn most appointed high government officials whensuch officials are not drawn from the ranks of electorally defeated pubpols.
Public policy is determined by this echelon in the sense thata given stated policy is either implemented or ignored. If it is ignored, like Prohibition,it is dead. Thus, in the 1950's anti-Communism was the policy publicly supportedas a means of promoting a lucrative military-industrial complex, and many rank-and-filecitizens gleefully joined in verbally strafing Communism and hunting out real andsupposed Communists and deviant ideologists. In the 1960's, despite the escalationof the Vietnam war by President Johnson, anti-Communism was allowed to wane, as adiplomatic rapprochement gradually took place with the Soviet Union and trade relationswere broadened with the Soviet bloc. The Vietnam war was waged not against Communismbut against an amorphous "aggression." True, many stalwarts tried to pumplife back into the anti-Communist crusade of the 1950's but they were more and moreignored by the upper financial-political echelons. These did not repudiate theirformer anti-Communist position, which might once again be useful; they simply abandonedit and chatted at length with Mr. Gromyko, possibly discussing The Chinese Menace.Soon, no doubt, it will be unpatriotic to eat chop suey and egg foo yung as it becameunpatriotic to eat knockwurst, sauerkraut and hamburger (liberty steak) in 1917-18.And so it goes in a fabulous democracy.
So extensive are the affairs of the finpols that allthe members of each finpolitan financial syndicate (finsyn?) requirelarge personal staffs embracing far more than body servants. In the case of the exemplaryRockefellers, for example, "In addition to a special staff that each Rockefellerhas to handle his personal affairs, the Rockefellers in mass have a general staffto handle their communal business. There are more than three hundred employees inthis establishment, which includes a legal department, an investment department,a philanthropic department, a brigade of accountants, and a family archivist."70 Many of these are people of arcane knowledge in near and remote fields,including a specialist on theological education in underdeveloped regions.
It is the general style of this finpolitan world thatnewcomers to big wealth will in time, whatever their current reservations, come toembrace through their children and grandchildren. Although the more recent Texasoil millionaires do not belong to this world, they are already getting ready forit as shown by their sprouting foundations. Once one has made the money, as old judgeMellon recognized, it is necessary to hold on to it. And the finpolitan styleis a way of becoming a permanent fixture, of weaving oneself into the warp and woofof the status quo. The finpolitans, it is evident, are far less concernedwith today than with tomorrow.
What any sociology of the finpolitan world would be devotedto, it seems to me, would be the outlining of point by point comparisons betweenthe Rockefeller style and that of their contemporaries. There would be shown whereinthe established big-rich copy the Rockefeller style and wherein they deviate fromit. Variations of emphasis take place throughout. But, despite variations, basicsimilarities are visible, notably the presence of investments in huge slabs.
In one matter all the finpolitan groups resemble eachother: None behaves as though it believed it had been called upon to preside overthe dissolution of the family dukedom. All, like the man who came to dinner, actthoroughly at home and as though they intend to stay, even as mass-media propagandatrumpets that the great fortunes are being dissipated. Rather than being dissipated,they appear to be more permanently and acceptably entrenched from day to day. Itis only a popular fantasy that the big fortunes are disappearing; but, perhaps likea bad dream, they disappear only in order to appear again.