The greatest 20th century donor you've never heard of

Julius Rosenwald (1862-1932) was one of the 20th century’s greatest philanthropists, but he’s little known today. He should not remain obscure. His efforts to build thousands of schools for blacks in the South enabled a great many black children to receive a better education than they would otherwise have had. And his impassioned arguments against perpetual foundations raise questions that every donor must confront.

Only one biography of Rosenwald has appeared, and that was in 1939; so he’s long overdue for a reappraisal. Fortunately, Rosenwald’s grandson, Peter M. Ascoli, who teaches at the Spertus Institute of Jewish Studies, has produced a well-written, engaging biography, judiciously crafted from diligent research in several archives. It is a fitting tribute to his grandfather’s life and works.

Rosenwald grew up in Chicago and by the early 1890s had achieved modest success in a company that made men’s suits. His great opportunity came in 1892 when his brother-in-law, Aaron Nussbaum, had a meeting with Richard Sears, the co-founder of Sears, Roebuck. Nussbaum thought the meeting would involve selling pneumatic tubes to Sears. He swiftly found that Sears had other plans. A brilliant salesman but a disorganised manager, Sears was short of cash and offered to sell Nussbaum half of his company for $75,000. Nussbaum then asked his brother-in-law if he’d be willing to buy a quarter of Sears, Roebuck for $37,500. Rosenwald swiftly agreed - and the investment eventually made him a multi-millionaire.

Rosenwald spent three years selling his clothing company and joined Sears, Roebuck as a vice president in 1896. He found that, thanks to Richard Sears’ masterful skills as a copywriter, the company was flooded with orders. But once the orders were received, they were thrown in baskets, where they would sit for weeks or months. Rosenwald joined a company where, as one historian puts it, “orders poured in, faster than the factories could make the goods, faster than they could be cleared through warehouses and shipping rooms. Departments fell behind - 30 days, 60 days, sometimes three or four months.”

Rosenwald, working with plant manager Otto Doering, conquered the chaos. He established one of America’s first assembly lines, where orders could be processed swiftly and efficiently. Rosenwald and Doering’s achievements were copied by other businesses wanting to improve their efficiency. Management expert Peter Drucker once declared that Rosenwald “is the father not only of Sears, Roebuck but also the distribution revolution which has changed the world economy in the twentieth century.”

The turn to philanthropy

In 1908 Richard Sears lost a power struggle and Rosenwald became president of Sears, Roebuck, a position he held until his retirement in 1924. With his new-found wealth, Rosenwald began to turn to philanthropy. He started contributing to Jewish causes, first in Chicago, then nationally. But his major accomplishment in philanthropy came in the summer of 1910, when his friend, Paul J. Sachs (co-founder of the investment banking firm Goldman Sachs) gave him two books: Booker T. Washington’s Up From Slavery and John Graham Brooks’ An American Citizen: The Life of William H. Baldwin, Jr.

Rosenwald was moved by the story of Baldwin, a general manager of the Southern Railroad who decided to devote his life to raising funds for black colleges. Rosenwald vowed to do what he could to help blacks.

Rosenwald’s first major gift came in 1910 when he announced he would donate $25,000 to the construction of any YMCA for blacks where other donors had raised $75,000. Rosenwald’s challenge grant led to the construction of a dozen YMCAs - and to the attention of Booker T. Washington.

We know Washington today from his writings encouraging blacks to be self-reliant. But Ascoli notes that Washington was also a “brilliant fund-raiser” whose ideas persuaded donors to make gifts they weren’t otherwise prepared to make. Rosenwald, for example, was prepared to donate to the Tuskegee Institute, the college Washington founded. Washington asked Rosenwald to do more. In particular, Washington wanted Rosenwald to help build small rural schools in areas in the South where blacks received little or no education.

In a September 1912 letter, Washington urged Rosenwald to assist in the building of six rural schools in Alabama. He proposed that the schools would cost $600 apiece and that Rosenwald pay half of this, plus an additional $50 per school to hire someone to “get people stirred up and keep them stirred up until the schoolhouses had been built”.

“It is the best thing for the people themselves to build [school] houses in their own community,” Washington concluded. “I have found by investigation that many people who cannot give money would give half a day or a day’s work and others would give material in the way of brick, nails, lime, etc.”

Rosenwald agreed to pay for half the cost of the six schools. Washington regularly sent the donor detailed reports on how his funds were used. By May 1913, the schools were finished. Washington duly sent Rosenwald a detailed report, including several photographs and testimonials from local whites who supported the school construction project. “You do not know what joy and encouragement the building of these schoolhouses has brought to the people of both races in the communities where they are being erected,” Washington declared.