Julius Rosenwald^©

"Shall we devote the few precious days of our existence to buying and selling. . . . My Friends, it is the unselfish effort, helpfulness to others that ennobles life, not because of what it does for others, but more what it does for ourselves."

Julius Rosenwald

Julius Rosenwald may qualify as the original "compassionate conservative." A successful Republican, Rosenwald opposed FDR's new deal politics and his approach to welfare. Nonetheless, Rosenwald alone was responsible for the construction of more than 5,000 black schools built throughout the South between 1916 and 1932. Although as a Jew, he could not serve on any local or the national YMCA Board of Directors, he was the driving force behind the building of 25 YMCAs. Rosenwald was born August 12, 1862 at the family home, about a block from Abraham Lincoln's Springfield, Illinois residence. His father Samuel had emigrated from Germany, beginning as a door-to-door peddler and working his way up to a horse drawn cart before he married Augusta Hammerslough in 1857. Augusta's brothers were very successful retailers and they put Samuel in charge of several of their stores.

Julius was an outgoing, affable young man who left high school after his sophomore year to work for his uncles in their New York store. There, he became boyhood friends with Henry Goldman, Goldman Sach's founder, and Henry Morgenthau, father of FDR's Treasury Secretary. At 23, after five years with his uncles and with their support, Julius started his own clothing store.

He soon realized there was an even bigger opportunity in manufacturing men's summer clothing and once more, with support from his uncles and his father, he started the new business in Chicago. It was a hit from the start. Five years later, in 1890, he married Augusta Nusbaum, and by 1895, he had sold the business to invest in and operate Sears & Roebuck.

Richard Warren Sears, a gifted promoter had started Sears & Roebuck in 1887. He recruited self-taught watchmaker Alvah Curtis Roebuck (also not Jewish) as a partner after Sears had proved he could sell watches by mail.

In 1895, to finance expansion, and to raise funds to buy out a by then disgruntled Roebuck, Sears agreed, to sell half the business for $75,000 to Aaron Nusbaum. Nusbaum approached his brother-in-law, Rosenwald, with the idea of taking half his position -- a 25 percent ownership position in Sears & Roebuck -- and serve as co-head of operations. Sears was a superb copy writer and promoter, but a poor businessman with little operational ability. Rosenwald's management skills were critical and the partnership was an immense success.

In 1901, Sears and Rosenwald bought out Nusbaum for $1.25 million after Sears and Nusbaum concluded they could not work together. When Sears sold his shares to Goldman Sachs in 1909 and retired, Rosenwald assumed sole control and led the company until his death in 1932.

Rosenwald deserves the credit for running Sears and managing its explosive growth into the huge nationwide mail order and retail store operation it became. By the mid 1970s, Sears, the WalMart of its day, was the largest retailer in the world. Rosenwald introduced the money-back guarantee, filled catalogue orders quickly, reduced returns and instituted quality control.

Long before Rosenwald had invested in Sears, when he was still a struggling clothing manufacturer, he and his wife, Augusta, had proved their commitment to philanthropy. After attending a meeting about the immense difficulties faced by Jews in Czarist Russia, they pledged $2,500 at a time when it was a very large sum of money and when they were still struggling to make their own small business a success. Though he opposed Zionism, Rosenwald later committed to donate ten percent of every million dollars raised to help one million World War I Jewish refugees trying to leave Russia.

But the act for which Rosenwald will be longest remembered was his creation of the Rosenwald Schools. In 1912, he had joined the Board of Booker T. Washington's Tuskegee Institute. At the time, average annual education spending was $21.14 per pupil. The South averaged only $4.92 for white students and less than half that, ($2.21) for blacks. Conditions were abysmal. Serving on the Tuskegee Board, Rosenwald became aware of the problem and felt compelled to act.

He began by having Tuskegee draw up plans for an inexpensive one-room school building that could be built anywhere in the South. Plans in hand, he approached parents in black communities throughout the South. He offered to match their volunteer contributions of time, materials and money, dollar for dollar, to build new schools for their children. They had to do their part. He was willing to provide 50 percent, but the rest was up to them.

He wanted to avoid the dependence of welfare, and create pride, self-respect and commitment. The parents did their part and Rosenwald pointed out that their sacrifice was greater than his. In proportion to their means, they had given much more than he had. His approach also roused two other groups of supporters. Other whites kicked in with donations. And uncomfortable with their own failure, local governments soon found a way to preserve their dignity by raising substantial tax funds. In the end, 5,357 "Rosenwald schools" were built at a cost of $28.4 million (in 1932 dollars.) Of that, Rosenwald provided $4.4 million. Cash and in-kind contributions from blacks totaled $4.8 million. Other whites had donated $1.1 million and the balance came from local taxes. At the time, only the 2,500 libraries build by Andrew Carnegie's philanthropy could compare. A few "Rosenwald schools" remain as part of the National Trust for Historic Preservation. For more information, visit rosenwaldplans.org Web site.

Black schools were only part of Rosenwald's legacy. Despite being a Jew who could not serve on a local or national board of the Young Men's Christian Association, he did much the same for YMCA's. Twenty five YMCA buildings were constructed because he offered to pay 25 percent of the cost if the local people who would benefit from the housing, fellowship, and exercise would come up with the other 75 percent.

He did more. He funded $2 million in university fellowships for southerners. Another $2 million went to the University of Chicago, and $3 million helped build Chicago's Museum of Science and Industry.

He opposed establishing a lasting foundation, stipulating that all of his money be spent for good works within 25 years of his death. And it was. By 1948, it was all gone. In total, he had given away $63 million - in today's terms, more than $750 million.