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The Rockefellers and the Angry CommonersA century ago, the super-rich had to contend with class warfare.

By Beverly Gage
Posted Friday, Oct. 19, 2007, at 12:45 PM ET
John D Rockefeller, Jr. Click image to expand.

Former Citigroup chairman Sanford Weill thinks that John D. Rockefeller had it good. "I once thought how lucky the Carnegies and Rockefellers were because they made their money before there was an income tax," Weill told the New York Times' Louis Uchitelle in July. "I felt that everything of any great consequence was really all made in the past."

Imagine Weill's surprise, then, to discover himself occupying an economic world that more and more resembles Rockefeller's. According to the most recent statistics, the richest .01 percent of Americans—the almost 15,000 families in Weill's peer group—now take home a full 5 percent of the nation's income. At least the poorest 20 percent, by contrast, some 60 million people, make do with about the same. The last time the concentration of income at the top was this extreme, according to economists Emmanuel Saez and Thomas Piketty, was in the 1910s and 1920s, when tycoons like Rockefeller, J.P. Morgan, and Andrew Carnegie were at or near the height of their power. And most of the recent increase in inequality has taken place in just the past few decades. Sometime between the tech boom and the subprime-lending crisis, according to a growing legion of social commentators and a slew of recent articles (including Uchitelle's), the United States entered a "new Gilded Age."

Technically, the 1910s and 1920s fall outside what historians describe as the Gilded Age, roughly the period between the end of Reconstruction in the 1870s and Theodore Roosevelt's 1901 ascendance to the presidency (thanks to an assassin's bullet). But the "new Gilded Age" is less a measure of the past than a comment on the present. What it suggests, in its baldest formulation, is that the mega-rich have been growing ever-mega-richer while the rest of us have whiled away our time worrying about health-care deductibles and 3 percent raises.

Viewed purely in terms of the statistics on inequality, the recycling of the Gilded Age moniker makes a certain amount of sense. The term also has a nice political edge for liberal critics: What's next, it implies, the repeal of those pesky child-labor laws? But numbers get us only so far in understanding how inequality actually played out for the first great generation of corporate tycoons such as Carnegie and Rockefeller.

A century ago, the "class question"—who would control industrial profits, who would set wages, whether capitalism was even compatible with democracy—was at the forefront of American politics, the impetus for mass uprisings, partisan warfare, and, for some, the hope of full-blown revolution. Even at the height of Social Darwinism (which, like inequality, seems to be making a comeback), industrial titans lived with an acute awareness that the poor were not altogether pleased with their lot, and that they might one day soon do something serious to change it. Today, by comparison, the inequality debate is positively polite, as if the gap between rich and poor were a minor matter to be considered by statisticians and policy-makers.

The apparent statistical similarity between the two periods often masks what's unique about today's inequality crisis. Take labor organizing, for instance. Today, unions represent approximately 8 percent of the private-sector work force—about the same percentage as a century ago. But labor's political fortunes could hardly be more different. At the turn of the last century, unions were on their way up, a rise that would lead to the passage of landmark federal labor legislation in the 1930s. By contrast, if current trends continue (as they probably will), private-sector unions will be all but extinct in the United States within the next few decades. In the chasm between these two political realities—between an era when class revolution seemed genuinely possible and an era when expanding the Earned Income Tax Credit seems like a pipe dream—lies the answer to that anguished query of today's progressive: How did we end up here?

A century ago, even the richest men in America could not escape concerns over impending class conflict. John D. Rockefeller Jr., son of the original John D., tried mightily—and failed. Largely a philanthropist rather than an industrialist, Rockefeller Jr. worked throughout his early life to tidy up his father's reputation, helping most notably to establish the Rockefeller Foundation in 1913.

The following year, however, his father's chickens came home to roost. In the spring of 1914, armed guards at the Colorado Fuel and Iron Co. fired on striking workers and then set fire to their tents, killing 11 children and two women cowering in a pit below. The Rockefeller family, the press soon revealed, owned a controlling interest in the company's stock, and Rockefeller Jr. sat on the board. The outcry was instantaneous. "Mr. Rockefeller is the monster of capitalism," Helen Keller (a socialist as well as a hero to the disabled) told reporters, according to Ron Chernow's Titan. "He gives charity and in the same breath he permits the helpless workmen, their wives and children to be shot down."

In the months that followed, protesters held regular vigils in front of Rockefeller's Standard Oil offices, his 54th Street mansion, and his country estate in Tarrytown, N.Y., demanding that he condemn the murders and respect their right to free speech. When he failed to heed their pleas, a few prepared to deliver a less subtle message. On July 4, 1914, three New York anarchists accidentally blew themselves up in a Lexington Avenue tenement while allegedly preparing a bomb to assassinate the "tyrant of Ludlow."

Rockefeller Jr.'s first instinct was to lash out against his critics. "There was no Ludlow massacre," he wrote in a private memo, according to Chernow. "While this loss of life is profoundly to be regretted, it is unjust in the extreme to lay it at the door of the defenders of law and property."

Rockefeller Jr. changed his stance, however, after consulting with Ivy Lee, a public relations strategist (these were pioneering times for the P.R. industry, too). Called the following year to testify about the affair before the Commission on Industrial Relations, he adopted a conciliatory tone, promising that he was moderating his social views. He also tentatively offered CFI workers the right to join a company-controlled union, a scheme known as the Rockefeller Plan. Even his father, who abhorred any concession to labor, took pains to ameliorate his image by the 1920s. Possibly on Lee's advice, he began to hand out dimes to poor children.

Both father and son performed other, more substantive good works as well, of course, establishing not only the Rockefeller Foundation, but also the Rockefeller Institute, Riverside Church, and the University of Chicago, among other institutions. Many of today's CEOs-turned-philanthropists look to such accomplishments as models of philanthropic behavior. As they do so, however, it's important to understand that this earlier generation turned to philanthropy at least in part as a matter of self-defense. Indeed, measured against the political pressures facing the tycoons of the early 20th century, the charitable activities of the Slate 60 seem decidedly selfless: They are giving away their fortunes even though nobody is threatening their lives.

On the other hand, as this recent New York Times magazine and other articles show, the new rich are also spending their money on $40 million Manhattan apartments and $120,000 birthday parties for their kids. The Times package, like much of the reporting on the rich of the new Gilded Age, smacks vaguely of voyeurism. ("Econ porn," you might call it.) More importantly, the attention being lavished on the ways of the contemporary rich misses a larger point about our current politics of inequality.

The real question of today's Gilded Age, highlighted by the comparison to its predecessor, is not why the rich became rich, or whether they behave well with their billions. It's why the rest of us seem to feel we can do so little about it.

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Beverly Gage teaches American history at Yale University. Her book on the 1920 bombing of Wall Street, The Day Wall Street Exploded, will be published in 2008.
Photograph of John D. Rockefeller Jr. by Underwood & Underwood, ca. 1915/Library of Congress.
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Remarks from the Fray:

One reason the exploited don't believe there is any alternative to the class system is that the ruling classes have successfully equated socialism and communism with Stalinism in the public imagination. Any attempt to imagine alternatives to class society is immediately met with horrified references to Stalin's crimes----which is ironic given that many of the people Stalin killed off in the Gulag were Trotskyists and others who actually BELIEVED in socialism rather than just using it as a slogan to justify autocracy and corruption.

Be that as it may, Stalin is still the bourgeoisie's best friend a half century after his death. Not only was he always ready to betray the class struggle and team up with the bourgeoisie for his own advantage, as in the Hitler-Stalin pact or the later alliance with Roosevelt and Churchill, but he continues to function as the greatest enemy of the socialist cause even in death. If mankind is ever to find its way out of the historical dead end of capitalism, it will first have to recognize that Stalinism was not equivalent to, but rather was a deviation from, the natural path of socialist development.

--Herbert Meyers

(To reply, click here.)

Face it, we aren't living in tents in the snow outside the dangerous factory. It isn't the degree of income disparity as much as the floor that is experienced by the working men that matters. White collar workers, blue collar workers, they are getting by - unlike back then. The gaslight era made the cost of lighting and heating a home several times more than it is today, at the cost of much more pollution in residential neighborhoods.

The ultra-rich back then were perceived quite differently, and actually, the fact that they made their money more slowly (it seems) made workers less hopeful of aspirations to wealth, short stories aside.

Times have changed at least in the US. What happens in China, on the other hand...

--BenK

(To reply, click here.)

Back in the late 1800's and early 1900's, there was a social phenomenon that fueled the money making machines of those 15000 families that you describe and it was the hordes of poor European immigrants that came to the USA by the millions. Hungry and cold, they would work for nickels and dimes during ten or more hours a day. Little brothers and sisters joined the family effort just the same. Everybody's labor was bought as cheap as those 15000 families could have it, and they made sure to keep it like that for as long as they could. Of course, as soon as the workers could get their noses out of the mud of extreme poverty they began making more demands for benefits in exchange for their sweat and years of working in terrible conditions. Shamefully, child labor laws had to be written, passed, and institutionalized to protect little kids from the unhealthy environment of industry. Worker unions had to be formed so that the workers had a way to protect themselves from the leonine way of their employers.

Nowadays, the same phenomenon continues, except that now the immigrants come from the south, but they are still hungry and cold. Unlike the Europeans, they have brown skin and eyes, but they also work for nickels and dimes and that makes them very desirable to have. The problem with many of these immigrants is that they actually work a lot and are able to move up the economic ladder within their own generation. Just like those immigrants of European origin.

--abraxas

(To reply, click here.)

I don't see how anyone who apparently has read Ron Chernow's excellent biography can present such a distorted picture of Rockefeller. The idea that he gave away huge amounts of his own money in order to fend off some sort of popular uprising is laughable. Rockefeller had no fear of the common man, Congress, or anyone else. His philanthropies came out of his lifelong membership in the Baptist Church, and his belief that it was the right thing for a Christian to do. An old-fashioned point of view, perhaps, but after all, this was over 100 years ago. He even retired at an early age from the oil business so he could devote more time to his charities.

And the article mentions his founding of the University of Chicago, the Rockefeller Foundation, etc., almost parenthetically, as if these were mere trifles. You might also have mentioned that he was the principal benefactor of Spelman College and other historically black colleges. Meanwhile Sanford Weill gave away $37 million last year -- a pittance by comparison.

There are plenty of things you can accuse Rockefeller of (his ferociously monopolistic business practices, for example), but having hypocritical motives for his philanthropy isn't one of them.

--slobone

(To reply, click here.)

(10/21)

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