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Last Thursday I mentioned that I wanted to share a little bit about a “particularly competent and undeservedly unknown man” from the late 1800s / early 1900s. John D. Rockefeller, who, as we will discuss, eventually entrusted his philanthropic activities to him, said that this man combined “business skill and philanthropic aptitude to a higher degree than any other man I have ever known.”
Quiet the compliment from one of the most successful businessmen in history.
This man was Frederick Taylor Gates - and the University of Chicago, Rockefeller University, the Rockefeller Foundation, and America’s model of medical school education and medicine research can all be tied back to his steadfast efforts and uncommon common sense.
Gates was born in New York in 1853 and grew up neither poor nor rich. The son of a Baptist minister, he followed in his father's footsteps, completing seminary at Rochester University in 1880. From the ages of 27 to 34, he served as a pastor in Minneapolis, Minnesota, to a small congregation of “those made to feel unwelcome” at the larger churches of the city.
He was a hard-working and earnest man - known for his work ethic as much as for his devoted adherence to Baptist teachings. Innately, he was also an uncommonly curious individual, spending his free time reading about education, economics, finance, political science, and medicine through self-directed study. Thus, his small Baptist congregation was fortunate to have a well-educated, good-natured head of the church.
People noticed and would seek his advice from time to time. George Pillsbury - the patriarch of a wealthy local family - came to him with a rather large problem. Pillsbury was dying, and it had always been his intention to set up a Baptist institution of higher learning. He had just written into his will a gift of $200,000 (late-1800’s dollars) for such purposes, but he feared that the endowment would be misused and wasted. Could Gates think of a way to structure the gift to ensure success?
Gates spends some time researching successful educational institutions and surprises Pilsbury with what he comes back with - namely, don’t pledge $200,000 all upfront. More specifically, Gates leverages his understanding of economics and human nature based on his own studies and common sense, suggesting that:
Gates then offers to go raise the needed $50,000 himself!
Pillsbury is pleasantly caught off guard and backs Gate’s plan. Gates raises the money, Pillsbury Baptist College is founded and the entire community is standing together behind the project.
As a side benefit for Gates, his fundraising capabilities are being noticed far and wide.
A group of Baptists in Chicago reaches out to Gates with a problem of their own - the lack of a premier Midwestern (Baptist) university that rivals the Ivy League schools in the North East. For years, they have tried to attract the attention of a well-known Baptist and businessman - John D. Rockefeller. So annoyed by their uninspiring overtures, Rockefeller has even instructed his organization to ignore the group’s attempts to contact him altogether.
Gates agrees that such a school in the Midwest is a worthwhile endeavor, and after a failed in-person trip to New York where Rockefeller refuses to meet with Gates, Gates writes a letter in a last-ditch attempt at persuading Rockefeller.
For some reason, Rockefeller reads the letter. And he is blown away by the proposal.
Similar to Gate’s approach with Pilsbury, he suggests a measured pace and thoughtful approach to funding the suggested university. The Baptist group in Chicago had been too interested in making large progress quickly. Gates, however, suggests that…
The letter results in a face-to-face meeting with Rockefeller, the eventual donation of a large sum to the Baptist group ($600,000 from Rockefeller to match a $400,000 raised from local interests), and the founding of what eventually becomes the University of Chicago!
Not too bad for a 35-year-old minister in the Midwest - but Rockefeller knew that he had in Gates someone with the potential to do even more.
Gates relocates with his family to New York in order to run all of Rockefeller’s philanthropic efforts. Rockefeller was constantly “hunted, stalked, and hounded almost like a wild animal” by well-intentioned spokespersons for causes across the United States.
Using his proven, thoughtful approach, Gates took over and managed these interactions - focusing on large-scale philanthropic efforts where donations had a chance to make significant improvements. And he was good at it.
So good, in fact, that Rockefeller started to look to Gates to manage not only his philanthropic efforts but select family office investments as well.
Gates feels out of his element, but he tackles the challenge the same way he first attacked the problem of fundraising and properly allocating donations. Namely, he used his common sense that had been built up over the years due to his self-guided studies.
This appears to be part of what Rockefeller saw as unique in Gates - the ability to apply common sense to complicated problems until they are understood and approached properly.
Of Rockefeller’s decision to use Gates in this way, Gates says that…
Taking the three investments called out in Chapter 38 of Gate’s autobiography, Chapters In My Life, we have a few quick case studies. In all three investments, Rockefeller had trusted, sight unseen, the suggestions of friends and acquaintances. While traveling for his philanthropic efforts, Gates makes detours to inspect and report back on these assets.
In the first two investments - iron furnaces in Alabama and Wisconsin - Gates quickly realizes that Rockefeller had been cheated. In both instances, the money invested by Rockefeller had dissipated due to losses incurred but that these losses had been hidden from the wealthy financier. Interestingly, also in both situations, Gates uncovers that the true intentions behind raising money for the furnaces were so that the project coordinators, who owned land in the surrounding area, could sell out to speculators who believed the to-be-built furnaces would bring about an increase in land valuations.
In the third - gold mines in Colorado - Gates starts out much less certain in himself given his belief that mining is too technical of a business for him to wrap his arms around. However, he says that…
Unfortunately for Rockefeller, his money here was also lost. There was no gold in the mines owned by the enterprise in which he had invested. Every reputable mining man in Denver, and a few bankers as well, knew this - all one had to do was ask them. A promoter looking to line his own pocket had tricked Rockefeller’s friends into giving him money, and they in turn had walked Rockefeller into the same trap.
In all three cases, Gates extricates Rockefeller from these situations as best he can - but he is not satisfied with only uncovering past mistakes. He can himself direct non-philanthropic investment for the family as well. And so he does, starting in 1893 when a US-wide economic depression was brought about by crashing export commodity prices, over-investment in mining and railroads, and subsequent runs on the banks.
While everyone else was running for the hills, Gates directed $40 million of investment into a mining enterprise in northeastern Minnesota called the Masabi Range. The story is a long one, but in short, between 1893 and 1901, Gates amasses a fleet of transportation vessels, mines, railroads and docks and then sells the entire organization to U.S. Steel and J.P. Morgan for $90 million.
In today’s dollars, that is over a billion dollars of profit for Rockefeller’s family office - in a period of only 8 years!
Outside of his work with Rockefeller, Gates continued his habit of self-directed reading in topics that interested him. As would be the case for many of us, I’m sure, on a family vacation in the mountains of New York, he brought along a 1,000-page medical school textbook. And he was bothered by what he learned…
Gates brought this idea back to Rockefeller, and after some time and additional research, the first biomedical research institute in the United States was founded - Rockefeller University. Focusing primarily on medical sciences while providing doctoral and postdoctoral education, the University has been associated with 26 Nobel Prizes in chemistry, physiology, and medicine.
Beyond Rockefeller University, Gates also played a part in bringing the learnings from the 1910 Flexner Report - a book-length deep dive into America’s medical schools, its deficiencies, and suggested methods for improvement - to life across the United States.
Gates directly hired Abraham Flexner, who had conducted the study and compiled the report, to deploy resources across the United States to pursue the goals he had laid out in his report. Gates supported Flexner, such that…
So, not only did Gates play a hand in the first medical research-focused university in the Americas, but he also supported a broad professionalization and building-up of medical school education standards and best practices across the nation.
And maybe we have time for one more selected accomplishment - the establishment of the first permanent philanthropic foundation.
In 1905, after nearly two decades of working for Rockefeller, Gates was bothered by what the future might hold when Rockefeller inevitably would pass the reins over to his heirs. But…
Of course, we know where this leads - the founding of the Rockefeller Foundation. Since it was informally set up in 1906, the foundation has donated $17 billion to causes globally across medicine, agriculture, the arts, and social sciences.
Before he retired in 1923, Gates oversaw $500 million in distributions for the Rockefeller family’s philanthropic efforts - this is ~$10 billion in 2020 equivalent dollars!
There are many more stories that we could go into where Gates made a difference - such as the killing off of a good portion of hookworm globally and the founding of black high schools in the South to support equal education opportunities (his uncle was a noted abolitionist and judge in New York - Cyrus Gates), but I think the picture is clear.
Gates was an uncommonly gifted individual, for sure - but he was also a curious learner and hard worker who knew how to take what he learned and apply it in the real world. Because he happened to do so, the world is a better place - even if his name is not commonly known.
Take care and have a great week,
But What For? Writing about anything, as long as it’s interesting
Writing about anything, But What For? Because anything can be interesting.