George Peabody's Sense of Duty Underscored Life of Philanthropy


By Mike Field

     The year was 1837. Martin Van Buren was the newly elected
president of the United States, Victoria was preparing to ascend
the throne of England, and in Maryland--not for the first time--
the state was facing a grave fiscal crisis.
     Two years before, the General Assembly had voted to
underwrite an ambitious slate of development projects it hoped
would bring future economic prosperity. It authorized an $8
million bond issue, including funds for the Chesapeake and Ohio
Canal and the Baltimore and Ohio Railroad. Unfortunately, the
bonds issued to finance the two costly undertakings were not
selling. 
     Maryland, like several other states in the young Republic,
had a past record of repudiating the interest payments on its own
bonds, effectively rendering them worthless. Investors treated
these latest financial instruments like poison.
     Recognizing the importance of these projects--the B&O
Railroad would fuel the region's economic growth for decades to
come--the state turned to three of its most respected and
accomplished citizens to act as commissioners for the sale of the
bonds. Among them was the 42-year-old George Peabody, a
Massachusetts-born son of a leather worker who had parlayed a
fourth-grade education and a devotion to hard work into the
country's largest mercantile firm with offices in Baltimore,
Philadelphia and New York. 
     Peabody received his appointment as commissioner shortly
before he sailed to London on business. It was his fifth such
trip in a decade, this at a time when trans-Atlantic travel was
still mainly the domain of sailors, immigrants and adventurers.
His first trip, in 1827, had left him 15 pounds thinner after 25
days of near-continuous seasickness. This time, he left with a
charge from the state to find a European investor willing to back
the bonds--and Maryland's future growth. A sizable commission
would be his if he could successfully sell the bonds in Europe.
     Peabody hated these crossings, but it was a measure of the
extent of his wealth and influence that he felt it necessary to
personally conduct business in London, then the world's financial
capital. Within the next two decades he would build one of the
largest financial empires of the mid-19th century.
     Yet George Peabody--the man who in all his 74 years would
never marry and never own his own home--is not remembered for the
money he made, but rather for the money he gave away. His
willingness to give freely, coupled with his uncanny ability to
give wisely, would earn the Baltimore merchant the love and honor
of two nations and the sobriquet "father of modern philanthropy."
     It is a measure of the success of Peabody's giving that all
the major gifts he made in his lifetime--including the creation
of the Peabody Institute in Baltimore--continue to operate in
some form more than 100 years after the death of their
benefactor. Several libraries; museums at Harvard, Yale and in
Salem, Mass.; a college in Tennessee; and the largest non-profit
housing association in Britain all bear his name. This unusual
accomplishment reflects not only the scale of his gifts--he gave
millions at a time when gifts of several thousands were
considered noteworthy--but also the unusual skill he displayed in
making his bequests. The sale of the Maryland bonds offers a clue
to the character of the man.
     At first, it seemed impossible that the bonds would sell.
The Panic of 1837 resulted in a depression in America that would
last for seven years. Maryland was one of nine states that had
stopped interest payments on previous indebtedness; three states
had repudiated their debts outright. Peabody, while making the
rounds in London, Paris and Amsterdam looking for financing, was
also conducting a vigorous campaign of letter-writing urging his
adopted state of Maryland and the others to renew payments.
Several of these letters to influential businessmen and
politicians were published in newspapers on both sides of the
Atlantic, a practice not uncommon in that day.
     Eventually, after being repeatedly turned down, Peabody
resolved to approach Baring Brothers of London, perhaps the
wealthiest and most respected firm in all Europe. It was a
typical Peabody move: as gutsy as it was audacious, yet offering
the prospect of significant financial reward. When Baring
Brothers agreed to buy the bonds (at a significant discount),
Peabody had effectively delivered the state from financial
catastrophe, and had entitled himself to a $60,000 commission for
his efforts.
     Peabody never collected the money, believing the needs of
the state were more important than his own financial reward in
the matter. He did, however, aggressively buy up at deep
discounts many of the existing bonds widely considered to be
worthless; when Maryland and other states eventually agreed to
make good on those debts George Peabody made a killing.
     Years later, when it was apparent how significant the sale
had been to the state and it became known that Peabody had
refused his commission, a grateful General Assembly passed a
special resolution lauding Peabody's "devotion and interest" and
called upon the governor to convey Maryland's special thanks to
its former citizen (who by now had settled permanently in
London). 
     "I did not expect any public acknowledgement for the act,"
wrote Peabody in response to Governor Philip Thomas' laudatory
letter accompanying the resolution, "having been prompted solely
by what I considered a duty to Maryland in which a large portion
of my business life had been successfully passed." As Peabody
penned his response he stopped and neatly underlined the word
duty, as if to make sure the point of his reply was not to be
lost. 
     It was a concept that was to animate his later life as--
propelled in part by his successful negotiation of the Maryland
bonds--Peabody gradually made the transition from Baltimore
merchant to London financier, a change that suited his visionary
nature perfectly. As early as 1827 Peabody had invested $10,000
in the Baltimore and Ohio Railroad. In his later years he would
make his mark by continuing to finance the westward expansion of
the American railroads, as well raising the money for the first
and second trans-Atlantic cables. To aid in his efforts, Peabody
brought in as a junior partner a bright young American who had
particularly impressed the elder businessman with his social
graces and financial acumen. That young man's name was Junius
Spencer Morgan. Together, the two would create a financial empire
eventually known as the House of Morgan.
     Unsuccessful in marriage proposals (he was twice turned
down), Peabody was nonetheless a gregarious man, fond of good
food and fine wine. He kept a box at the opera. Unlike the
somewhat dour business associate of his Baltimore days, Johns
Hopkins (whom Peabody reportedly described as the only man more
thoroughly anxious to make money than he was himself), Peabody
enjoyed grand entertainments and was not beyond throwing them for
his many associates and friends.
     In 1851, Peabody announced he would host a Fourth of July
party for both Americans and the cream of British society. It was
an audacious proposal: after all, the War for American
Independence was within living memory, the War of 1812 (in which
Peabody had fought) had ended just 37 years before. It would be
bad taste to attend an event celebrating their own country's
defeat, and in Victorian England, bad taste was not to be
condoned. Consulted in advance, most of the fashionable people of
London replied they would not attend. 
     But Peabody was undaunted. As with the Maryland bonds,
Peabody surmounted the problem by going to the top. He invited
the most socially prominent Englishman of the day: the
84-year-old Duke of Wellington, victor at the Battle of Waterloo.
(Then, as now, social custom precluded simply inviting the Queen
and the Prince Consort to a party.) A Fourth of July celebration,
said Peabody, represented the perfect opportunity to bury old
differences between the British and American people. Wellington
agreed and all of London society was forced to acquiesce. The
party proved to be the hit of the social season; from that day
until his death, George Peabody was considered the most socially
prominent American living in England, if not in all Europe. It
was from this basis of social prominence that Peabody launched
his career as international philanthropist.


Celebrating Peabody's Centennial!!!
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     The Peabody Institute will celebrate the 200th birthday of
its founder, George Peabody, on Thursday, Feb. 16.
     Following a free noon concert in the Friedberg Concert Hall,
a bagpiper will lead the entire school in procession from the
Concert Hall to the Peabody Statue on Mount Vernon Place, where a
new plaque will be unveiled. 
     A reception, hosted by the city of Baltimore, will follow in
the nearby Washington Monument. The public is invited to attend.
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