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By Their Bootstraps: The Lives of Twelve Gilded Age Social Entrepreneurs.

INTRODUCTION

PREFACE

Social Entrepreneurship Awards

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BY THEIR BOOTSTRAPS: THE LIVES OF TWELVE GILDED AGE SOCIAL ENTREPRENEURS
(Manhattan Institute, 2002)

By Martin Morse Wooster

Introduction by Henry Olsen

Social entrepreneurs, individuals who employ private-sector talents to meet pressing public problems, are an increasingly important part of the American landscape. Millard Fuller of Habitat for Humanity and Rev. Eugene Rivers of Boston’s Ten Point Coalition are only two of the more recognizable names in this growing movement.

Today’s social entrepreneurs follow in the footsteps of notable social entrepreneurs in our past. Visionary leaders like Clara Barton and Robert Baden-Powell started many of America’s most famous non-profits, like the American Red Cross and the Boy Scouts. In By Their Bootstraps, Martin Morse Wooster chronicles the achievements and philosophies of these 19th and 20th century pillars of philanthropic life.

Wooster shows that these men and women championed a new spirit of philanthropy devoted to the idea that individual, private action could alleviate social problems without significant government oversight and funding. This collection of short biographic sketches is offered as a reminder of the principles of these original social entrepreneurs and their tremendous potential for transforming today’s society.

INTRODUCTION

This book is sponsored by the Manhattan Institute’s Social Entrepreneurship Initiative. Our Initiative presents annual awards to some of the most notable social entrepreneurs in America today, people who are creating new non-profit organizations to tackle some of our society’s most pressing problems. Given this focus on action in the present day, one might ask why we would sponsor a book depicting the lives of people who lived over a century ago. The answer is that we see today’s resurgence in social entrepreneurship as a renewal of the spirit that flourished in the late 19th and early 20th centuries, a spirit that saw the foundations of today’s independent, non-profit sector built by individuals who saw it as their responsibility to act to ameliorate society’s problems on their own without significant government oversight or involvement.

The sector these people helped create is taken for granted now, but was quite unique when they began. Organizations that existed solely to provide benefits for others without charge were rare in the early 19th century, and even rarer in earlier times. Consequently, these people blazed their own trails in creating their groups; they had to be every bit as entrepreneurial in the setting of goals and the creativity of achieving them as any founder of a business. What istinguished them and the sector they were creating was the object of this entrepreneurial fervor: not the accumulation of wealth or the production of goods, but the betterment of their fellow men.

Given how successful they were, one might think their examples would have guided their successors and encouraged these second- and third-generation non-profit activists to achieve new heights. Unfortunately, this did not happen. In the 20th Century, talented, socially aware people turned to government as the outlet for their energy, building an extensive social welfare network that provided most of the money and direction for societal improvement. Much of this activity was funneled through the organizations built by the 19th Century social entrepreneurs, co-opting them and subtly limiting the very independent spirit that characterized them in their nascence.

What changed? Why did the socially aware entrepreneurs of the 20th Century differ so much in outlook from their predecessors? The answer lies in the intellectual revolution wrought by the Progressive movement in the early 20th Century, a revolution that changed the way Americans looked at nearly every aspect of their community life.

Progressives looked at the circumstances around them—rapid industrialization and growth of large corporations, rapid urbanization and concentration of poor people in cities, an explosion of scientific knowledge and approaches—and created an ideology to explain and guide these trends. They argued that decision making, whether in government or in particular firms, had to be centralized. They argued that only experts trained in a particular field could effectively guide the actions of a society or firm. And they believed that the effect of these two principles would create a rationally ordered, efficiently operating society which benefited all people.

These ideas took root and sprouted the forest of government agencies and specialized fields of expertise that we now see in all aspects of American life. Companies created intricate command-and-control hierarchies, headed by businessmen who often possessed Masters of Business Administration. Philanthropists created large foundations with professional staff to give away the money they had earned. And government mimicked both sectors, building their own large agencies staffed with career civil servants trained by the specialty schools of social work, civic planning, and others that sprung up to create the new class of experts.

These ideas dominated for many decades, and are still influential today. But the last two decades has seen a second transformation in the circumstances of life that has the potential to change American life every bit as much as the transformations that took place in the early 20th Century.

We have seen an explosion in decentralized decision making in private firms, as people have come to realize that individual spark and drive create wealth more effectively than a hierarchical, top-down system. This has fed an explosion in private sector entrepreneurialism, perhaps the largest explosion since the one experienced in the late 19th Century. People today believe they can solve problems on their own rather than join an organization that will take care of them and provide their direction, and they are changing American life with their beliefs.

Much like the change in attitudes in the Progressive era, these beliefs are spreading their influence into the worlds of government and philanthropy. Al Gore spoke of “reinventing government”, and politicians in both parties say they are moving toward devolving decision making in government, and giving average people more choices in how they receive and use their government benefits. Philanthropists are taking a more hands-on approach, seeking out new ways to give their money through “venture philanthropy” and other non-traditional methods. And some of the budding entrepreneurship in the air is finding its expression in socially useful ways; the MBA is finding that another dot-com or small business is not as rewarding as building a new school, or a new credit union that teaches immigrants how to save and invest for their futures.

The Social Entrepreneurship Initiative exists to spur this transformation on. Our awards highlight the work of successful social entrepreneurs with the hopes that more people will want to emulate them, and more philanthropists will seek them out and provide crucial “venture capital.” Our book places a focus on the philosophy that animates today’s movement, a philosophy that says social problems are best ameliorated when creative, talented individuals take on the challenge of solving them. We hope that people will come to see that private initiative can be harnessed to solve social problems, much as it was in the period of the entrepreneurs featured in this book. We anticipate changes in philanthropy, from attempts to create government programs to serve classes of recipients to an emphasis on funding innovative ideas and people who are judged and rewarded based upon measurable results. It is in this spirit that we publish this work, a testament to the ideas of an old generation and of the new generation yet to come.

—Henry Olsen
New York, New York

In works of active beneficence no country has surpassed, perhaps none has equaled, the United States. Not only are the sums collected for all sorts of philanthropic purposes larger relatively to the wealth of America than to any European country, but the amount of personal interest shown in good works and personal effort devoted to them seems to a European visitor to exceed what he knows at home.

—James Bryce, The American Commonwealth (1888) i

PREFACE

The social entrepreneurs examined in this book were all active between 1850 and 1910, known in the United States as The Gilded Age (after the Civil War) and in Great Britain as the Victorian and Edwardian Eras. Both countries had strikingly similar experiences during this period. Both saw an historical explosion in wealth fueled largely by the Industrial Revolution. Both also saw a dramatic increase in easily observable poverty, as millions of poor, rural people left the land to join teaming cities. And both nations saw a dramatic increase in the time rich people devoted to the needs of these poor, and in the money they gave and organizations they created to alleviate their condition.

To Americans individualism has meant, not the individual’s independence of other individuals, but his and their freedom from governmental restraint. Traditionally, the people have tended to minimize collective organization as represented by the state while exercising the largest possible liberty in forming their own voluntary organizations. This conception of a political authority too weak to interfere with men’s ordinary pursuits actually created the necessity for self-constituted associations to do things beyond the capacity of a single person, and by reverse effect the success of such endeavors proved a continuing argument against the growth of stronger government.

—Arthur M. Schlesinger Sr. (1944)
ii

How much did such philanthropic activities increase? The answer cannot be answered precisely. In an essay to be published in the forthcoming edition of Historical Statistics of the United States, Harvard historian Peter Dobkin Hall and University of Maryland (Baltimore County) emeritus professor Colin B. Burke note that the Internal Revenue Service did not create the modern code of 501 (c) organizations until 1954, and did not require charities to submit detailed financial reports until after the passage of the Tax Reform Act of 1969. Earlier private efforts at collecting data on charities (such as by the American Association of Fund-Raising Counsel) were only created in the 1950s, and data prior to 1950 is spotty and erratic. For example, the Census Bureau required churches to submit reams of information, including salaries paid to pastors, the debt of a denomination, and how much church property was worth. But while the Census required churches to list how much money was sent to foreign missions, there were no comparable requirements for domestic faith-based charity. Moreover, the Census Bureau never had a consistent definition of what was and was not a church, ensuring that no long-term comparisons can be made with the Census’s data on denominations.iii

Yale historian Frank Prochaska notes similar problems with British charitable statistics collected during this period. “The financial accounts of voluntary societies are incomplete for the past and remain unstandardized today,” he writes. Among the problems: “the records of charitable trusts . . . are chaotic and inaccessible;” changing definitions of what is and is not a charity under British law make comparisons between periods impossible, and the amount given by individuals to beggars cannot be calculated.iv

Nonetheless, three attempts have been recently made to calculate the size of the independent sector in the US. These include:

  • Peter Dobkin Hall, using Connecticut state statistics, has calculated growth among nonprofits in New Haven. He determines that the number of nonprofits in New Haven rose from 2.6 per 1,000 New Haven residents in 1870 to 3.8 per 1,000 in 1890 and 4.5 per 1,000 by 1910.v
  • Political scientists Gerald Gamm of the University of Rochester and Robert Putnam of Harvard have done a census of the number of associations appearing in 26 cities between 1840 and 1940. They found that the average number of associations appearing in a city directory rose from 2.1 per 1,000 in 1840 to 5.4 associations per 1,000 by 1910. Since most American cities grew dramatically during this era, this meant a substantial growth in the number of associations. Gamm and Putnam found that associations grew fastest in the Midwest and West, and were more likely to be established in small cities rather than large ones.vi
  • Harvard historian Theda Skocpol is conducting a study of national associations in America that enrolled at least one percent of all potentially eligible members. She finds that 59 such organizations have existed in America, from the Free Masons (created 1733) to the Christian Coalition (created 1989). Thirty-two of the 59 associations were created between 1865 and 1914.vii

Just like other small businesses, charities had a high failure rate, as antiquated organizations failed to adapt to changing needs. Peter Dobkin Hall studied nonprofit organizations created in New Haven, Connecticut. He found that 85 of the 170 nonprofits that existed in New Haven in 1879 had vanished by 1899, a failure rate of 65 percent. In the twentieth century, 256 of the 458 nonprofits that were active in New Haven in 1900 had died by 1929, a failure rate of 56 percent.

But most of these social entrepreneurs did not give up; they ended up creating something new. The number of nonprofits in New Haven steadily grew in this period, rising from 130 in 1870 to 458 in 1900 to 676 in 1929. And nearly all of these enterprises were relatively new; 91 percent of the nonprofits that existed in New Haven in 1899 were created after 1870, while 70 percent of the nonprofits that existed in New Haven in 1929 were created after 1900.viii

Now it is true that the Skocpol and the Gamm/Putnam studies count associations and not charities, and some of the associations were social clubs that did not practice philanthropy. But given the patchy evidence from this era, what can be said is this: there was a substantial increase in the independent sector in America during this period, and much of this increase was due to social entrepreneurs trying to help others. As Gamm and Putnam write, “Scholars generally assert that the late nineteenth and early twentieth century constituted an age of great associational activity,”ix and many of these associations were charitable.

Systematic analyses of Victorian civil society comparable to those of Hall, Gamm and Putnam, and Skocpol have not been conducted in Britain. But Frank Prochaska finds several indicators showing a dramatic increase in philanthropic activity during this period. One survey of middle-class Britons conducted during the 1890s showed they spent more on charity than on any item save for food. Another study conducted during this period found that half of the workers surveyed made weekly donations to charity, while a quarter also made additional weekly gifts to a church or chapel.

“No other country on earth can lay claim to a greater philanthropic tradition than Great Britain,” Prochaska writes. “Until the twentieth century philanthropy was widely believed to be the most wholesome and reliable remedy for the nation’s ills, a view that is not without adherents today.”x

One sign of British generosity can be found in a leader published in the Times of London in 1885. The leader writer reported that in 1884 donors gave 1,013 London charities 4.4 million pounds. This amount was “more than twice the revenues of the Swiss confederation. They slightly exceed that of Sweden, and greatly that of Denmark.”xi

The most reliable estimates of the amount of aid going to the poor in the U.S. during this period are provided by poverty-fighter F. B. Sanborn. In 1869, Sanborn estimated that government and private aid to the poor amounted to $125 million, “or more than twice as much as the whole civil service of the country costs, and more than the whole expenses of the National Government were, ten years ago.”xii

But the generous Victorians, Edwardians and Gilded Age plutocrats did not give away money indiscriminately. They thought out rules for how to give, to make sure that their funds encouraged virtue and discouraged vice.

Sanborn argued that private aid was better than government doles for two reasons. First, government aid was inherently wasteful; according to Sanborn, at least ten percent of the amount the state spent (or about $4 million) “is annually wasted, and worse than wasted, for lack of wise management.” But more importantly, government aid was ‘inherently defective” because it promoted dependency. “The poor are lavishly, and yet defectively supplied with what they need, and their temporary condition of pauperism is allowed to become a permanent one.”xiii

Two schools of thought arose during this era on how to fight poverty, with the difference arising because of religious faith. One school called itself “scientific philanthropy,” and argued that the best way to help the poor was for charities to work together, to make sure that those who needed help received it—and those who were lazy and just didn’t want to work were firmly dealt with. They also wanted to make sure that donors knew that charities were run honestly, and that most of the help donors provided actually went to the poor.

Although some of the “scientific philanthropists” were ministers, these reformers were primarily interested in fighting poverty in secular ways, through rules that, while grounded in morality, were not explicitly Christian. These reformers were also concerned that paupers would go to one charity, live off the aid provided, then go to another charity or to a government workhouse. In this way, indolent poor people who were able to work but chose not to could spend years on the dole.

Sir Charles Trevelyan, one of the leading reformers of the day, observed in an 1870 pamphlet that “it is time that we should cease to do all of our charity by proxy, and to think that we have discharged our duty when we have subscribed a five-pound note to a public institution. Who are to enquire into the individual cases of the swarm of neglected children who are the seed plot of future pauperism and crime?”xiv

The “enquirers” turned out to be members of the Charity Organisation Society (COS), founded in 1869. In order for a recipient to get COS aid, a volunteer went to the recipient’s home, interviewed the worker and his family, and also talked to neighbors to get a sense of the recipient’s character. Applicants who simply stated they were destitute but would not allow an interview were rejected. Applicants who were drunks were also turned down. But the COS was happy to aid applicants who couldn’t work because of illness, or who needed small loans for equipment.xv

The COS’s methods were carefully studied by Americans; in fact, Josephine Shaw Lowell, one of the more sophisticated American poverty fighters, created the Charity Organization Society of New York in 1873 as a way of introducing British methods of poverty-fighting to the U.S. By 1885, there were 50 branches of the COS operating in most large American cities.

A second school of poverty fighting was represented by evangelical Christians. They thought that the primary causes of poverty were moral and spiritual, and that when a poor person accepted Christ, he would be led away from vice and towards virtue. In Britain, prominent evangelicals included two of the greatest philanthropic entrepreneurs, T. J. Barnardo and William Booth (both profiled in this study); in America, they formed the inner-city missions, most notably the Central Union Mission in Washington, D.C., and the Pacific Garden Mission in Chicago, which eventually became chapters of the International Union of Gospel Missions.

In the 1870s and 1880s,the evangelicals and more secular poverty fighters fought over quite a lot. As Marvin Olasky shows in The Tragedy of American Compassion, part of the argument was ideological. Some of the noted thinkers of the period, particularly Yale sociologist William Graham Sumner and Johns Hopkins economist Simon Newcomb, were social Darwinists who argued that the poor were failures who could never climb the social ladder to escape their life of misery. The Christians countered that the poor could be saved through hard work, discipline, and education.xvi

But the scientific philanthropists and the evangelicals agreed more often than they disagreed. They would agree that government aid promoted pauperism rather than self-reliance, and that the only way the poor could free themselves from the poverty trap was by treating the poor as individuals with unique problems, not as members of a faceless class.

As an example of how poverty fighters thought during this period, consider the recession of the mid-1880s, which caused large numbers of Americans to be put out of work. As historian Samuel Rezneck notes, the response of most charitable leaders of the period was to call for a reduction of indiscriminate government aid (known at the time as “outdoor relief,” because recipients had to stand outside an agency to receive their handouts). A typical response was offered by the Philadelphia Society for Organizing Charity, which in 1885 stated that “Experience shows that the public money voted for such relief is often wasted and sometimes stolen. Even when dispensed by honest officials it aggravates the evil it is presumed to relieve. Outdoor relief is always a strong temptation to imposture. Its effect on the taxpayers is misleading, for they suppose their duty to the poor is discharged when they have paid their tax bills.”xvii

Thus when Andrew Carnegie decided to write his great essay “The Gospel of Wealth” in 1889, he used many of the ideas of the period as a foundation for telling the philanthropist what he needed to do. Like both the scientific philanthropists and the evangelicals, Carnegie believed that the rich had an obligation to help the poor—an obligation so strong that he considered it the duty of the millionaire to spend the wealth he created during his lifetime on projects that would aid the poor. This led him to conclude that “the man who dies rich dies disgraced.”xviii

But Carnegie also forcefully warned about “indiscriminate charity. It were better for mankind that the millions of the rich were thrown into the sea than so spent to encourage the slothful, the drunken, the unworthy. Of every thousand dollars spent in so-called charity today, it is probable that nine hundred and fifty dollars is unwisely spent—so spent, indeed, as to produce the very evils which it hopes to mitigate or cure.”xix

Carnegie illustrated his point by telling the story of “a well-known writer of philosophic books” who gave a beggar a quarter. “He knew nothing of the habits of this beggar, knew not the use that would be made of this money, although he had every reason to suspect that it would be spent improperly. . . . The quarter-dollar given that night will probably work more injury than all the money will be able to do good which its thoughtless donor will ever be able to give in true charity.”xx

“In bestowing charity,” Carnegie concluded, “the main consideration should be to help those who will help themselves; to provide part of the means by which those who desire to improve themselves may do so, to give those who desire to rise the aids by which they may rise; to assist, but rarely or never to do all.”xxi

Carnegie urged his fellow millionaires to pursue projects that would “place within its reach the ladders by which the aspiring can rise,” including libraries, parks, art museums, and other ventures “certain to give pleasure and improve the public taste.”xxii Two of the donors Carnegie admired—Peter Cooper and Enoch Pratt—are profiled in this study. Thus the consensus of poverty fighters and philanthropists in about 1890 would be this: everyone should give; no one should give indiscriminately; government aid hurts more than it helps. It would be the next generation—who were born between 1860 and 1870, and who began to write and work at the turn of the century, who would argue that charity could not cure poverty and that only professional social workers administering government doles should aid the poor. But the thoughts and ideas of this generation are the subject of another study. xxiii

These social entrepreneurs are not uniform in their methods or interests, nor were most of them notable for any theoretical writings on the nature of charitable giving. But they did, by and large, adhere to the consensus that individual, private action could alleviate social problems without significant government oversight or funding. These brief biographic sketches are offered as working reminders that this philosophy—oft-derided in the 20th Century, but now making a comeback—is not unrealistic; that entrepreneurial activity did make a difference in hundreds of thousands of people’s lives; and that such activity is feasible today in a society every bit as entrepreneurial and socially-inclined as that which spawned these men and women.

—Martin Morse Wooster
Silver Spring, Maryland

ENDNOTES

i. James Bryce, The American Commonwealth (London: Macmillan, 1888), volume 3, p. 498.

ii. Arthur M. Schlesinger Sr., “Biography of a Nation of Joiners,” American Historical Review, October 1944.

iii. Draft supplied by Peter Dobkin Hall. More information about the problems of analyzing Census data on religion can be found in Roger Finke and Rodney Stark’s The Churching of America, 1776–1990 (New Brunswick, New Jersey: Rutgers University Press, 1992) p. 9–12.

iv. Frank Prochaska, “Philanthropy,” in F.M.L. Thompson, ed., The Cambridge Social History of Britain, 1750–1950: Volume 3, Social Agencies and Institutions (Cambridge: Cambridge University Press, 1990), p. 358.

v. Hall in Skocpol and Fiorina, op. cit., p. 215. Hall calculates that the number of nonprofits then fell to a low of 3.6 per 1,000 in 1940, then rose to an all-time high of 4.8 per 1,000 by 1990.

vi. Gerald Gamm and Robert D. Putnam, “The Growth of Voluntary Associations in America, 1840–1940” Journal of Interdisciplinary History, January 1999.

vii. Theda Skocpol, “How Americans Became Civic,” in Skocpol and Fiorina, op. cit. The list of eligible associations is on p. 72–73.

viii. Peter Dobkin Hall, “Vital Signs: Organizational Population Trends and Civic Engagement in New Haven, Connecticut, 1850–1998,” in Theda Skocpol and Morris P. Fiorina, eds, Civic Engagement in American Democracy (Washington: Russell Sage/Brookings, 1999), p. 227. Hall includes congregations in his census of New Haven nonprofits.

ix. Gamm and Putnam, op. cit.

x. Prochaska, op. cit., p. 357.

xi. The Times, January 9, 1885.

xii. F.B. Sanborn, “The Supervision of Public Charities,” Journal of Social Science, June 1869.

xiii. Ibid.

xiv. Cited in Helen Bosanquet, Social Work in London: 1969–1912 : A History of the Charity Organization Society (London: John Murray, 1914), p. 53.

xv. London School of Economics economic historian Robert Humphreys in Poor Relief and Charity, 1869–1945: The London Charity Organization Society (London: Palgrave, 2001) provides some sample COS cases on p. 52–54. Robert Whelan, in Helping the Poor: Friendly Societies, Dole Charities, and Dole Queues (London: Civitas, 2001), analyses COS history and reprints many of the surviving case files. Most of the unpublished COS files were destroyed during German bombing raids during World War II, and others were destroyed when the COS became the Family Welfare Association in 1962.

xvi. For more about this debate, see Marvin Olasky, The Tragedy of American Compassion (Washington, D.C.: Regnery, 1992), p. 61–71.

xvii. Eighth Annual Report of the Philadelphia Society for Organizing Relief, cited in Samuel Rezneck, “Patterns of Thought and Action in an American Depression, 1882–1886,” American Historical Review, June 1956.

xviii. Andrew Carnegie, The Gospel of Wealth and Other Timely Essays. ed. Edward C, Kirkland (Cambridge, Massachusetts: Harvard University Press, 1962), p. 29.

xix. Ibid., p. 26.

xx. Ibid., p. 26.

xxi. Ibid., p. 27.

xxii. Ibid., p. 28.

xxiii. In Return to Charity? (Washington, D.C.: Capital Research Center, 2000) I examine the more statist view of poverty fighters who flourished between 1910 and 1930.

 

 
 

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