Throughline - The New Gilded Age

Episode Date: April 28, 2022

Philanthropic foundations are a fundamental part of our society: they support media, the arts, education, medical research, and more. NPR, and even this show, is supported by many personal and family foundations. But it wasn't always that way. In this episode, we go back to the beginning — the Gilded Age. We trace the birth and evolution of what many today call "big philanthropy," and ask what all this private wealth means for the public good.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

Support for this podcast and the following message come from the NPR Wine Club, which has generated over $1.75 million to support NPR programming. Whether buying a few bottles or joining the club, you can learn more at nprwineclub.org slash podcast. Must be 21 or older to purchase. I am quite literally from another age. The World Economic Forum annual meeting at Davos, Switzerland, 2019. An exclusive event where the world's richest and most powerful people get together to solve the world's problems.

I was there when David Attenborough, you know, was showing his new film. The Garden of Eden is no more. Beautiful, you know, absolutely beautiful, stunning footage of how we're wrecking the planet. And people were literally crying while they were seeing it. And I was thinking, but guys, you arrived here in your private jets. We can solve this, but we need leadership. Well, innovation is what changes the rules. It's the thing that I'm most interested in.

What do you see business's role in combating inequality? I think business has a huge role to play in battling the issues that we're going to be talking about today. And I want to thank the World Economic Forum for providing leadership. Those were the voices of former Vice President Al Gore, billionaire and philanthropist Bill Gates, and investor Robert Moritz speaking at the 2019 Davos meeting. These are some of the types of guys, and yes, the vast majority of attendants are men, that go to Davos. And they're there for a cause.

It's not like they're just talking. Maybe that's what's horrifying and disturbing about it. If only it would be a conspiracy. You could just roll that up and go there and expose the selfish people. But the disturbing truth is that when you go to Davos, you'll find a lot of lovely and friendly people who really believe they're trying to do their best to improve the world. This is Rutger Bregman.

I'm a historian and the author of the book, Humankind, A Hopeful History. Rutger felt out of place at Davos. He's a young history professor from Amsterdam, the kind of guy who rides his bike to work. And suddenly he's in a room with some of the world's most powerful people. I felt like it was another planet. I really disliked it. Do we agree on what the problem is and who is meant to fix it? Is it ironically a discussion valuable to be had at the World Economic Forum? I know there are some who'd say, not sure you guys are the ones who exactly understand what this problem is,

so we're going to prove them wrong. And I became more and more frustrated as the days went along, with the fact that no one was talking about the elephant in the room, which was really the T word, taxes. Taxes. How can you talk about feminism and climate change and better business models and corporate responsibility, blah, blah, blah, when you're evading your taxes on a massive scale? I couldn't understand that. Many wealthy people at Davos are deeply committed to philanthropy.

Sometimes they do this philanthropy through their own personal foundations. They also, on the whole, pay relatively little in taxes. So they're giving away money, but the public gets no say in where it goes. So I was talking to my wife on Thursday of the conference. I had basically fled to my hotel room. And she said, what are you doing? You're in Davos. You're like, this is where everything happens.

And she said, well, what are you going to do tomorrow? I said, tomorrow I have one last panel. And, you know, I'm just going to promote my previous book. I'll do the job and get back as soon as possible. And she said, come on, you're such a coward. Say what you really think. What are you doing? How can you talk about your dissenters? You arrived here. You're such a coward. Say what you really think. His wife's words stung. They stuck with him.

So Rutger decided, I'm just going to go for it. So I prepared this short speech. I wrote it out on my iPhone. And the next day I went to this panel. He knew the panel would be live stream. The moderator asked me some question about poverty, something about my previous book, and I basically ignored the question. I mean, it feels like I'm at a firefighters conference and no one's allowed to speak about water. I mean, 10 years ago, the World Economic Forum

asked the question, what must industry do to prevent a broad social backlash? The answer is very simple. Just stop talking about philanthropy and start talking about taxes. And that went viral. Historian. Dutch historian. Rutger. Bregman.

Made a claim that took many attendees by surprise. His critique of wealth inequality, of the opposition amongst the world's elite to taxation. You know, you're sort of bringing up the question of philanthropy versus taxes. Has really taken over part of the opposition amongst the world's elite to taxation. You know, you're sort of bringing up the question of philanthropy versus taxes. Has really taken over part of the conversation. Public good coming either through the individual generosity of billionaires or through, you know, programs that are decided upon by our elected representatives, right?

So tell us, first of all, what do you have against philanthropy? Why don't you like philanthropy? What Rutger Bregman said at Davos in 2019 wasn't just about taxes and wealth. It's about something much deeper, questioning the very fundamentals of our economic system, a system in which a small group of people can build incredible amounts of wealth and then use that wealth to impact society through philanthropy. In 2020, even with a pandemic, private foundations gave away $88.5 billion, a 17% increase from 2019. Some, like Rutger, would argue that even if a wealthy philanthropist has good intentions, what they're doing is fundamentally undemocratic.

That excessive wealth should be taxed and then used by a democratically elected government. Others point to the good foundations have done. The Gates Foundation's $2 billion to combat the COVID pandemic, or the Ford Foundation's support for media and the arts. NPR, and even the show, is supported by many personal and family foundations. Philanthropic foundations are a fundamental part of our society, but it wasn't always that way. In this episode of ThruLine from NPR, we're going back to the beginning, the Gilded Age, to trace the birth and evolution of what many today call big philanthropy

and ask what all this private wealth means for the public good. Hello, this is Nancy Smith, and I'm in Kiel, Germany. You're listening to ThruLine from NPR. It's a great show. I love it. Keep up the good work. This message comes from WISE, the app for doing things in other currencies. Send, spend, or receive money internationally, and always get the real-time mid-market exchange rate with no hidden fees. Download the WISE app today or visit visit wise.com. T's and C's apply. If you're constantly asking, what's good to eat around here?

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and the NPR Network, wherever you get podcasts. was created in this country. Arturo Sandoval and a new artist each month in the key of Latin jazz, a podcast from WUCF FM, part of the NPR network. Part one, too much damn money. So what happened in the late 19th century is that for the first time, we in the United States had huge industrial enterprises of a size that really didn't exist before. Industrial enterprises, mainly those that were finishing raw materials.

Entrepreneurial geniuses like Andrew Carnegie and John D. Rockefeller Sr. were the entrepreneurs who figured out how to produce those finished products, which returned huge profits. This is Stan Katz. I'm a recently retired professor in what used to be called the Woodrow Wilson School at Princeton University. It's now the School of Public and International Affairs. But my sort of special research area has actually been philanthropy. And the era of modern philanthropy begins with names like John D. Rockefeller Sr.

But before he was a household name, Rockefeller was just an average kid from Ohio. He was a hardworking Cleveland kid. He came from a modest, one would say, lower middle class family. And, you know, he earned every dime he ever made. And he was made to work from a very young age. He was a deeply committed Baptist, and he felt a Christian religious obligation to be charitable. Literally the first dollar ever made, he saved 10 cents so that he could donate it to charity. As an adult, Rockefeller found his way into business. The oil business.

At exactly the right time. He organized a company which ultimately becomes Standard Oil. Standard Oil was basically an oil monopoly, and it made Rockefeller the richest man in America, controlling 90% of all the oil in the country at the height of his career. This type of big business seems normal now, maybe even American. But it wasn't always like this.

When you had a normal kind of capitalist enterprise anytime from the 17th century to the late 19th century, the profits generated were relatively modest. And people could use them for the normal things. They built bigger houses. They purchased fancier modes of transportation and clothing and paintings and whatever. And they were charitable. So what was different about the late 19th century?

There was simply too damn much money. John D. Rockefeller's senior advisors said to him That he had to find new ways of being He called it charitable, he meant philanthropic Because he said Your fortune is rolling up Rolling up like an avalanche You must keep up with it You must distribute it faster than it grows

If you do not It will crush you And your children And your children's children. Wow. So it was literally, that was the metaphor used. The word philanthropy is derived from Greek. So it's love of people.

This is Joanne Barkin. I spent most of my career as a freelance writer. Who writes extensively about philanthropy. The early philanthropists weren't interested in just handing out money to alleviate suffering. They wanted to investigate what was causing certain kinds of problems, whether it was social ills like poverty and illiteracy, or also disease. And the model they took came straight out of the birth of modern medicine, especially germ theory. Always have chlorinated soda for nurses to wash their hands, especially after dressing or handling a suspicious case. It may destroy germs at the expense of the Florentz Nightingale isolate the pathogen and then you formulate some sort of cure for it and then you disseminate the

cure. So for instance, tuberculosis. You try to find out what was causing tuberculosis and then you try to cure tuberculosis, an antidote of some kind of medicine. And then the thing to do is you had to disseminate it. You had to get everyone who had TB cured. So the idea behind philanthropy was to take this medical approach and apply it to social illness. And probably the two biggest social problems that were worked on for the latter half of the 19th century were illiteracy and poverty. And the new mechanism for curing these problems? Foundations. Chronologically, the very first one is the Russell Sage Foundation, which still exists today.

Russell Sage is a less known name than Carnegie and Rockefeller. But he was a New York railroad exec who, when he died, left his fortune to his wife, Margaret. She started the Russell Sage Foundation in 1907 for the improvement of social and living conditions in the United States. What was different about what she set up from what had ever come before is that she got a charter just the way a corporation would have to get a charter for what it was going to do. But at the same time, it was tax-exempt because it was doing charitable work. And the charter purpose was just so much more general

than anything that had ever come before. It was a totally new structure, and it caught on. A few years after Russell Sage, Andrew Carnegie founded his foundation. And a few years after that, Rockefeller became the third such foundation in America. I think that Carnegie and Rockefeller wanted to do good, whether or not it was to make up for any harm they had caused or whether it was just like belated feeling of obligation that they had to put, they were both religious, that they had to put their religious beliefs into practice. That's how the idea got started. How vast indeed is the philanthropic field? It may be urged that the daily vocation of life is one thing, and the work of philanthropy quite another. I have no sympathy with this notion.

The man who plans to do all his giving on Sunday is a poor prop for the institutions of the country. John D. Rockefeller. So far, I don't get what's not to like. You know, I mean, we know now the term Robert Barron, which is used to describe Carnegie and Rockefeller and these guys. But like, I mean, it's all American Baptist, you know, like hardworking kid from Cleveland makes it, controls the market.

Why do people hate them so much? Let's assume that you are a mom and pop petroleum producer. Yeah. That means you got like one well that's pumping oil. You got one well and you want to produce a couple of hundred gallons of kerosene a month. You're making a good living. Yeah. But once Standard Oil comes along, you're out of business.

Sounds like, have you seen the film There Will Be Blood? I'm an oil man. It's exactly what it is. Ladies and gentlemen, I have numerous concerns spread across this state. I have many wells flowing at many thousand barrels per day. I like to think of myself as an oil man. As an oil man, I hope that you'll forgive this good old-fashioned place. That's exactly what it is.

And so these guys were, they were nice Christian guys, and they were completely ruthless. And an awful lot of people went bust because they could no longer earn a living doing what they used to do. So here are these robber barons putting mom-and-pop shops out of business, and then turning around and saying they had the answer to cure poverty. So how did people receive their philanthropy? The answer is badly. The reaction had everything to do with who these individuals were. It's not like they came out of the woodwork and formed these private foundations.

They were in the news every single day of every year. There were satires. It's during this time that political cartoons became popular in the U.S. Newspapers would print depictions of robber barons exploiting the working class. One cartoon shows wealthy businessmen sitting on a raft that's being kept afloat on the backs of factory workers. Another shows Standard Oil as an octopus whose tentacles are wrapped tightly around the Capitol building and politicians. And the fear was primarily they would, in effect, buy state legislatures or ultimately they would buy Congress. They would have so much money that they could corrupt legislators

and in effect purchase the legislation they want. And the public deeply resented that. That's one thing. The other thing they did, and this becomes enormously important by the late 19th century, is they were the objects of pure hatred from the emerging classes of laborers, because they thought the biggest enemy in the world was the labor union. They were called robber barons for a reason, and they didn't just make their money from being smart businessmen. They made it through exploiting their workers, which created conditions for workers to strike. You know the term strike breaker?

Yes. Well, the industrialists of that period invented strike breaking. In September of 1913, the same year Rockefeller started his foundation, about 10,000 coal miners went on strike to protest low pay and awful working conditions in Rockefeller-owned coal mines in Ludlow, Colorado. In response to the strike, the miners were evicted from their homes and company-owned towns. So they built tent encampments and continued to strike. The Rockefellers hired a quote-unquote private detective agency made up of what one writer later described as, quote, Texas desperados and thugs.

They raided the camps, sometimes firing weapons. Tensions ran so high that Colorado's governor called in the National Guard to ease the violence. But that only made things worse. On Monday, April 20, 1914, seven months into the strike, the National Guard arranged themselves on a bluff overlooking the miners' makeshift homes, pointed a machine gun at them, and opened fire. The strikers were living in dugouts covered by canvas awnings,

and the awnings over these dugouts caught fire. The National Guard poured kerosene over the tents and set them ablaze. And many of the strikers were actually killed as a result of that fire, so it became a bloody, horrible disaster. Not just strikers. Entire families were living in these camps. And after 14 hours of gunfire, 25 people were dead, including three National Guardsmen, two women, and 11 children. The New York Times reported, quote,

The Ludlow Camp is a mass of charred debris, and buried beneath it is a story of horror unparalleled in the history of industrial warfare. In the holes which had been dug for their protection against the rifle's fire, the women and children died like trapped rats when the flames swept over them. The event came to be called the Ludlow Massacre, and it couldn't have happened at a worse time for Rockefeller. As the Ludlow strike went on month after month, resulting in its bloody finale, a commission on industry relations was formed to investigate working conditions in industries across the U.S. and relations between employers and employees. And in the middle of the commission, they watched the Ludlow massacre unfold in real time.

Coming up, a labor lawyer from Kansas City leads a commission to rein in the power of big business. And the new practice of philanthropy gets put under the microscope. This is Rob from Yonkers, New York. My voice comes to you through a Model 2500 desk telephone manufactured by Western Electric for the Bell System on November 17, 1971. To communicate is the beginning of understanding. You're listening to ThruLine on NPR. Support for this podcast and the following message come from Autograph Collection Hotels, with over 300 independent hotels around the world,

each exactly like nothing else. Autograph Collection is part of the Marriott Bonvoy portfolio of hotel brands. Find the unforgettable at AutographCollection.com. Part 2. Reigning It In A commission is hereby created to be called the Commission on Industrial Relations. The commission shall seek to discover the underlying causes of dissatisfaction in the industrial situation and report its conclusions thereon. The Commission on Industrial Relations, otherwise known as the Walsh to be the chair of this commission. He was a tough cookie.

Chairman Walsh. What do you think has been accomplished by the philanthropic activities of the country in reducing the suffering and want among the people? Mr. Guggenheim. There has a great deal been done. If it were not for what has been done and what is being done, we would have revolution in this country. And that was the main thing it did, was to put prominent people on record as to what the robber barons were doing, what their companies were doing, but also what the philanthropic foundations were doing. And the Rockefeller Foundation was the major target in terms of foundations. The entrance of the foundations

into the field of industrial relations through the creation of a special division by the Rockefeller Foundation constitutes a menace to the national welfare to which the attention not only of Congress, but of the entire country should be directed. The purpose of Mr. Rockefeller to influence the public press is clearly shown by the employment of an experienced publicity expert as a member of his personal staff. There is developing a degree of control over the teachings of professors in our colleges and universities, which constitutes a most serious menace. It would be desirable to recommend their abolition.

So that's the kind of language that they were using, and it was deeply felt. My wife's grandfather was a very famous Unitarian minister at the time, this man named John Haynes Holmes. He was a tremendous guy, and so he was one of the people the Welsh committee summoned to ask what he thought. He says, my standpoint is the whole thought of democracy. From this standpoint, it seems to me that this foundation, the very character, must be repugnant to the whole idea of democratic society. Zing. So he's told us they're good Christians, but look out. Now remember, the Ludlow massacre happened in 1914, which was smack in the middle of the hearings.

Rockefeller was already being scrutinized for labor practices and philanthropic activity. But now he had to testify against the claims that he was responsible for the deaths. And John D. Rockefeller Jr. had denied under oath that he knew anything about it? Mr. Walsh, in spite of the objections that had been raised by some of his commission associates to his methods, went at Mr. Rockefeller in hammer and tongs fashion. You close your eyes to the crime at Ludlow and the evidence at the inquest?

You sit back in your offices in New York and say, I uphold the executives? Walsh grilled Rockefeller as he held up a picture of a little boy killed during the massacre. Walsh. Here is this boy's picture. Do you wish to see it? Rockefeller. No, you have described it.

Walsh. I will ask you the direct question. Were these men, mine guards, physicians, storekeepers, and others that went into Troop A, paid by you for what they did that day? Were they kept on the payroll, Rockefeller? I do not know. Do you know that afterward, Troop A wantonly fired on this camp where there were women and children that they looted the dead,

stole their property, and set fire with torches and oil to the tents in which they were dwelling? That is one of the reports that have been circulated. Have you made any effort of your own as a director of the Colorado Fuel and Iron Company to bring to justice those men in your own employ who are in Troop A who may have poured oil on the tents of those people and lit them with matches? No. The Walsh Commission spent three days with Rockefeller and held 154 days of hearings total over the course of two years. Along with Guggenheim, Carnegie, and Rockefeller,

critics like labor activist Mother Jones, future Supreme Court Justice Louis Brandeis, journalist Ida Tarbell, and Stan's grandfather-in-law took the stand. The outcome? If you stopped the first PhD you saw walking down the street in Manhattan and said to him, what was the Walsh Commission? He couldn't even begin to guess, right? I mean, had you heard of the Walsh Commission before? Exactly.

Does it in any way have an impact on shaping the way foundations operate? I think it has very little, really. And the reason is the foundations, there weren't very many. They were just coming online. They felt and they were complying with the law. And they felt as though they were doing good. And they rejected, I think, the notion that they were attempting or actually undermining the democracy. And I'm pretty sure, to the extent that they discussed it, what they said to themselves was, well, our best move here is to keep doing good.

And in the long run, that's going to be our best defense. And it was their best defense. The hearings didn't lead to any regulation and the general consensus afterwards was that these foundations were a net positive to society. In its first few years, the Rockefeller Foundation took on malaria, hookworm, and yellow fever, three diseases that were killing people all over the world. They funded the advancement of modern medicine in China, funded hunger relief efforts in Europe after World War I, and endowed the first school of public health at Johns Hopkins University.

None of this would have happened when it did if not for the work of these foundations and their commitment to education and health worldwide. But people were uncomfortable with that fact. And this uneasy relationship between public problem-solving and the private wealth that funded it continued well into the 20th century. People are always suspicious of people with a lot of money, right? That's not new. And so they'll find a reason to examine what they're doing, either through foundations or otherwise.

Nevertheless, no major legislation. In the decades after World War II, private foundations really started to take off. But there also started to be some skepticism that foundations were engaging both in self-dealing, using their money to enrich themselves, and in tax evasion. Remember, foundations were tax-exempt since they were considered charitable giving. So putting all your money in a foundation saved you a lot of money. President Harry Truman caught on to this in 1950 when he said that the tax exemption given to private foundations was being used, quote, as a cloak for speculative business ventures.

And that was common enough that both the Treasury and individuals who are well-informed were troubled by it. And that's basically what Congress was trying to address in 1969. 1969, the year Congress embarked on the most significant investigation into private foundations since the Walsh Commission. It was particularly directed at the Ford Foundation. The Ford Foundation was officially founded in 1936 by Henry Ford's son with an initial gift of $25,000. After both Ford and his son died in the 1940s,

their fortunes turned the foundation into the largest in the world. Once it did get going, it sort of identified itself as an aggressively liberal, progressive kind of foundation. And that raised another issue. In the 1930s, Congress had limited the political activities of foundations. But the Ford Foundation intervened aggressively in public education reform in New York City schools, supporting the Black-led movement for community control and funding new demonstration school districts. If it didn't go over the line that had been set in the 1930s against political

activities, it came very close to that line and it was unembarrassed. And the man running the Ford Foundation at the time? Was actually a friend of mine named McGeorge Bundy. McGeorge Bundy. He was one of these Ivy League characters who came from a very good Boston-area family, went to Yale, and later then became an academic, a political scientist. One of the smartest people I ever met in my whole life. He had been a major Kennedy administration actor in the planning of the Vietnam War.

Not his most glorious moment, as far as I'm concerned. But he was, at that point, one of the best-known academics in the United States. And one of the most widely disliked people because he was, I don't know a better way to say this, he was a smartass. So what happens when this guy you call a smartass ends up in front of those conservative Congress people wanting answers? What happens at those hearings? Fireworks. The dramatic high point of last week's hearings unquestionably came with the testimony of McGeorge Bundy, a formidable, unapologetic witness.

From the transcript. Now, the Ford Foundation has $3.2 billion in assets, as I understand it. Is that correct, sir? I think it is, in my mind, as $3.1 billion. It is a very substantial sum. May I ask you, in the interest of pluralism, do you think there is a ceiling that should be put on the size of foundations? Yes, I think there is certainly a point at which you could say

this is too much money in one place. Do you have any idea where such a point would be? I am not sure I am the most disinterested witness on the point. He treated them like he treated Harvard undergraduates, not too bright, not too fast, and not worthy of his respect entirely. So it was really an edgy performance. I was going to say that you apparently have a lot of outside trouble, because I noticed in 1966, you had an attorney's fee bill of $214,000. I hope you don't have that much trouble every year. Mr. Gibbons, let me say that my own feelings about lawyers is like my feelings about doctors.

When you need them, you need them very much. And it is important to get men who have the skill, integrity, and understanding to deal usefully with your problems. The Foundation does not feel that it has been overcharged by its council. And some people say, I don't actually believe this, but some people say that the legislation that came out was partly a retaliation despite Bundy's performative defense, the 1969 hearings delivered the first real regulations for philanthropic foundations. The 1969 legislation makes some real significant changes. One of them deals with the self-dealing problem, and it makes it clearly illegal to engage in self-dealing after that legislation is passed. Most people would say that was the most important thing that it did. But it also, for instance, establishes a distinction

between a private foundation, which is now what philanthropic foundations are, and a public foundation. A public foundation or public charity typically has many donors and more public involvement. A private philanthropic foundation, on the other hand, usually has just one or maybe a few donors. And one of the things the 1969 Act did, by the way, was for the first time to require an annual report. The legislation also revised the 990 form, which meant foundations now had to provide much more information to the public. So that's a huge change. So really, I would say it's only after 1969

that sort of the modern era of the private philanthropic foundation comes into effect. To me, the most amazing thing is that, you know, it's a hundred years old now, the Philanthropic Foundation is, and there's been no legislation to limit it in any significant way. Coming up, big philanthropy in the 21st century. This is Jonathan from Falls Church, Virginia. Thanks to Ms. Wright, my history teacher, for introducing me to this podcast. I love it. You're listening to ThruLine from NPR. Part 3. The New Gilded Age. Hello virtual reality Interactive appetite Searching for a website A window to the world

Got to get online Take a spin Now you're in with the techno set You're going surfing on the internet Internet companies are the hottest and most profitable investments in a generation. Imagine, if you will,

sitting down to your morning coffee, turning on your home computer to read the day's newspaper. Well, it's not as sitting down to your morning coffee, turning on your home computer to read the day's newspaper. Well, it's not as far-fetched as it may seem. It spans the globe like a superhighway. It is called internet. The information superhighway. There was money to be made. Investors are really trying to hitch their wagon to all things internet. Suddenly, the words Silicon Valley were on everyone's lips. The 1890s recurred in the 1990s. Tech is like the new oil. Tech is absolutely the new oil.

But it's the new oil, steel, you name it, is huge. There are fortunes that are created by specific entrepreneurs. The last four years have seen very substantial growth in this business. This is Bill Gates giving a speech in 1995. The increase is fantastic because we're at a selling rate worldwide of over 40 million PCs a year. Fortunes that had just never been seen before. Well, you know, Bill Gates was your average Harvard dropout. He was a nerd and he spent all of his time learning how to program computers, which were a new toy. He quickly recognized that the computer was more than just a toy.

It was a business opportunity. In 1975, he co-founded Microsoft. And in 1985, Microsoft released an operating system that made computers user-friendly, even for people who knew nothing about them. It was called Windows. How much do you think this advanced operating environment is worth? Wait just one minute before you answer.

This really is a great product. We've put our hearts and souls into it. Wait until you see Windows write and Windows paint and then listen to what else you get at no extra charge. We didn't hesitate at any time to put more people onto it and really make it what we want it to be. All for just, how much did you guess? $500? $1,000? Even more?

No, it's just $99. That's right. Now, the retail package of Microsoft Windows. Thank you, ladies and gentlemen. It's here. Windows was a massive success. It quickly became the dominating operating system for computers. And soon, Gates was the youngest billionaire in America. By 1994, Microsoft was doing well enough for him to afford

to splash out more than $30 million on Leonardo da Vinci's Leicester Codex. In 1995, he was named the richest person in the world. When it became clear how personally successful he had become, there got to be criticism that he wasn't being philanthropic. Now, see, that didn't happen to John D. Rockefeller Sr. because there was no such thing at the time. But there had been Rockefeller and Carnegie and Rosenwald and all of these other people. That wasn't the only criticism. Gates was forced to testify in front of Congress when there were accusations that Microsoft was basically acting like a monopoly. In the case of the United States

versus Microsoft, the U.S. Justice Department contended that the software giant had breached antitrust laws by competing unfairly against Netscape Communications in the internet browser market, effectively creating a monopoly. So Bill Gates was rich and powerful, but not necessarily beloved. And beginning in the early 1990s, he started to give away some of the money he'd made. He donated millions to causes he cared about. By the year 2000, Gates had become more focused on philanthropy. That year, along with his then-wife

Melinda, he established the Bill and Melinda Gates Foundation. And a few years later... He announced that he was actually going to step away from Microsoft, and he and Melinda were going to devote themselves full-time to philanthropy. His vocal and financial support of the LiveAid campaign to make poverty history exemplified the software supremo shift its kind, with an endowment of nearly $50 billion. That's bigger than the GDP of many different countries. The Bill and Melinda Gates Foundation wants to make American kids among the best educated on Earth. And while they're doing that, the Gates also intend to save millions of lives worldwide. And they've been successful in many ways.

There are very few experts who would disagree that the foundation's investment in public health has saved lives. Well, if you have money, what are you going to do with it? You can spend it on yourself. You can have thousands of people holding fans and cooling you off. You can build pyramids and things. And if you don't think it's a favor to your kids to have them start with gigantic wealth, then you've got to pick a cause. Bill Gates' public transformation from billionaire businessman

to the world's most well-known philanthropist is also the story of big philanthropy's transition from being criticized to celebrated. What Bill and Melinda French Gates have done with their fortune is incredible. They've opted against spending it on things and instead on causes they believe in. They've committed themselves to the work and have achieved real results. In some ways, they took the original Rockefeller style of philanthropy and brought it into the 21st century.

Yet, it's natural to ask the same question now that people asked about the Rockefeller Foundation a century ago. Is this much power in the hands of so few people dangerous for our society? If we want to live in a democracy, what does it mean that we also concentrate so much funding power in the hands of so few people? The Gates Foundation spends nearly as much each year as the World Health Organization. But what does that mean? And what it means is that decisions as to investment policy in public health by the Gates Foundation

in effect drive what the World Health Organization does because there's all this money going into it. In other words, because the Gates Foundation controls so much of the international funding for public health initiatives, they, by default, drive the agenda. So if the Gates Foundation is interested in funding an issue, then it's more likely that more people will work on that issue. And unlike other private personal foundations like the Rockefeller Foundation or the Carnegie Corporation, the Gates Foundation wasn't set up with a big set of trustees that functions like a board of directors. That huge foundation, the largest foundation in the world,

had a board of trustees of three people. Bill, Melinda, and Bill Sr., his father. And then finally they added Warren Buffett to the group. Warren Buffett is a billionaire who runs one of the biggest investment firms in the world. He's given the Gates Foundation billions. Last year, Bill and Melinda Gates divorced and Buffett stepped down. As a result, the foundation has brought in a few more trustees. But still, this means a small group of handpicked people are making decisions about funding that will impact millions of lives. The Gates Foundation provides funding to NPR. They declined to comment for this episode.

On their website, they describe their work as filling gaps and solving problems that neither the private nor public sectors can address on their own. And of course, this conversation isn't just about the Gates Foundation. The reality is that their work came out of a new wave of wealth generated at the start of the Internet age. There are now dozens of foundations with endowments of over a billion dollars. So it's easy to ask, will the foundations of the new Gilded Age receive the same scrutiny their predecessors did?

There's legislation pending in Congress that would update some regulations. But both Joanne Barkin and Stan Katz are skeptical. I'm going to predict that there's going to be no legislation and there's going to be very little regulation. There has been a lot of discussion of things that might be done. And I think that, on the whole, people who run congressional committees believe that philanthropic institutions are the goose that lays golden eggs.

And they've got to be very careful about doing something which creates disincentives to private philanthropic investment. The question of intent is just something that is absolutely irrelevant. I don't know what's in their hearts. I don't really know what's in their minds. You can't really talk about intent. You can talk about two things. You can talk about the quality of the projects they do, how they use their money, what are the results. And you can talk about the role of private foundations in a democracy.

Does this enhance or undermine a democracy? Those are the two things that you can really critique. I would describe philanthropy as a necessary evil. I would prefer to live in a socialist society in which the resources of the society were available to the public authorities and in which the basic needs of everybody were a right. But we live in a society in which we only acknowledge negative rights. We don't have a right to health care or to housing or to income or to clothing or to food. Well, it's hard to change that. In fact, we can't change that in the short term.

So what we do instead is we have workarounds. I view philanthropy as a necessary workaround. You can't vote out the foundations that are all the money and the political influence and the popular influence behind these programs. They really do exert influence on public policy, but with no public input. The challenge of people who care about it then is to make sure that philanthropy chooses to devote as much of itself as possible to the alleviation of basic human needs. So that's the challenge. That's it for this week's show. I'm Ramteen Arablui.

I'm Randa Abdel-Fattah, and you've been listening to ThruLine from NPR. This episode was produced by me. And me. And... Lawrence Wu. Lane Kaplan-Levinson. Julie Kane. Victor Ibez.

Monsi Karana. Yolanda Sangwini. Casey Miner. Kumari Devarajan. Fact-checking for this episode was done by Kevin Vogel. Thank you to Lawrence Wu, Victory Velez, Lane Kaplan-Levinson, Michael Gottwald, Eve Abrams, Avi Wolfman-Arent, Tom McGovern, Bill and Turner Ross, and Robbie and Alejandro Flores for their voiceover work. And additional thanks to Jerry Holmes, Tamar Charney, and Anya Grunman. This episode was mixed by Josh Newell.

Music for this episode was composed by Ramtin and his band, Drop Electric, which includes... Anya Mizani. Naveed Marvi. Cho Fujiwara. And finally, if you have an idea like something you heard on this show,

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