The Greatest Gift of All

On this day in economic and financial history...

Standard Oil founder John D. Rockefeller furthered his philanthropic legacy beyond all reproach on Dec. 24, 1919, when he donated $100 million. It was, at the time, the single-largest such gift in the history of the world. Adjusted for inflation, the gift would be worth $1.3 billion -- no longer the largest in history, but considering that Rockefeller's single gift amounted to 0.1% of the entire national GDP at the time, it still holds up extremely well.

Half of the $100 million went to the General Education Board to bolster institutions of higher education. The other half went to Rockefeller's self-named foundation, of which $5 million was earmarked for improving Canadian medical schools. Rockefeller had by this point far exceeded the beneficence of fellow arch-capitalist Andrew Carnegie, who had died earlier that year, having given away $350 million throughout his life. Rockefeller's education gifts bear notable similarities to those of Microsoft (NASDAQ: MSFT  ) founder Bill Gates. Both Gates and Rockefeller used their resources to push for structural reforms or efficiency gains in the operation of those institutions receiving their money. Rockefeller, however, seems to have earned much less criticism for his reform tactics.

In recent years, Rockefeller's gift was bested for sheer economic heft by that of Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) founder Warren Buffett. The legendary investor-CEO's $37 billion multistage donation, announced in 2006, is not only staggering in size, but also nearly triples Rockefeller's generosity when measured against national GDP. Buffett's gift clocked in at nearly 0.3% of the entire American GDP at the time it was announced.

Rockefeller maintains the upper hand when it comes to aggregate philanthropy, though. By Dec. 24, 1919, he had already donated a total of half a billion dollars, which roughly doubles Buffett's gift as a percentage of American GDP.

In the beginning...
Apollo 8 circled the Moon and gave its pilots the first human glimpse of an earthrise on Dec. 24, 1968. The crew -- Bill Anders, Jim Lovell, and Frank Borman -- took the occasion to take a picture and begin a brief television broadcast. The photograph Earthrise is now considered one of the most important photos in history, and the broadcast -- in which the three pilots read from the beginning of the Biblical Book of Genesis -- became at that time the most-watched television broadcast in history.

Put this in your Rolodex
Economist Irving Fisher received a patent for his card-indexing system on Dec. 24, 1912. This system, a predecessor to the Rolodex, was Fisher's most successful business development, and it set him on the path to respectable wealth.

If Irving Fisher doesn't ring a bell, the phrase "permanently high plateau" should jog your memory. Fisher is most famous for extreme bullishness just after the Dow Jones Industrial Average (DJINDICES: ^DJI  ) peaked in 1929, and his repeated strident pronouncements that investors would not suffer great losses turned him into one of the most famously incorrect market pundits in history. Fisher's optimism during the Crash of 1929 destroyed his reputation and his finances, and he died without ever seeing the Dow reclaim its "plateau" of 1929.

Fisher's greater contribution to the stock market comes from an economic theory he put forward after the Crash of 1929 -- that of debt deflation. It has gained much wider prominence in recent years due to its fairly accurate prediction of the sequence of events following a debt bubble's implosion. Notable publications including The Economist, The New York Times, and Businessweek have said Ben Bernanke's actions as chairman of the Federal Reserve are influenced by Fisher.

Fisher sold his indexing system to Remington-Rand in 1925. That company, through a series of mergers, is now part of Unisys (NYSE: UIS  ) . The Rolodex, which is by now more or less obsolete, is still manufactured by Newell Rubbermaid (NYSE: NWL  ) -- which must be catering to that small subset of elderly Luddite businessmen who still use landline telephones and can't figure out how to turn on their computers.

Foolish final thoughts
Warren Buffett may be in the twilight of his career, but millions of investors hope his succession plan has been developed with the sort of foresight he has shown throughout his career. Can Berkshire regain the growth rate that once made it one of the market's absolute best stocks? What might happen to a post-Buffett Berkshire? There are many questions, but the Fool's premium research service has many answers. You think long-term, and so do we, which is why each subscription comes with a full year of updates. Click here to subscribe to our Berkshire Hathaway research reports now.


Read/Post Comments (1) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 24, 2012, at 6:23 PM, neamakri wrote:

    "Ben Bernanke's actions as chairman of the Federal Reserve are influenced by Fisher"

    Put me and Ben alone in a room for 4 hours. One of us will emerge with a new attitude.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2167696, ~/Articles/ArticleHandler.aspx, 10/2/2014 2:58:30 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement