- Historic Sites
The First Great Cheerful Giver
George Peabody made fourteen million dollars and gave nine million away —with no tax deductions to urge him on
June 1966 | Volume 17, Issue 4
The emphasis on housing and education of Peabody’s two major single philanthropies may well have reflected the fact that their author, in his youth, was poorly housed and modestly educated. He was born in a two-story, four-room, yellow frame house on the outskirts of South Danvers, the third son and fourth child (in a family of five boys and five girls) of Thomas and Judith Dodge Peabody. Although the family name was well known in New England, little is recorded of his father beyond the fact that he had fought in the Revolution. The boy who was to give $2,000,000 to southern education, $150,000 to Yale, $150,000 to Harvard, $60,000 to Washington College (now Washington and Lee), $25,000 to Phillips Academy (Andover), and $25,000 to Kenyon College, attended district “school between the ages of seven and eleven, where he did badly in arithmetic and well in penmanship. He was then apprenticed by his father to the neighboring general store of a Captain Sylvester Proctor, where four years of handling groceries and dry goods and bartering them for farm produce netted him thirty dollars and a suit of clothes. His next three business connections were still far from Rothschildian. At fifteen he worked for a year on the Vermont farm of Jeremiah Dodge, his maternal grandfather, performing such chores as clearing hillsides of sumac trees; the following year, 1811, he joined his brother David, twice his age, in a newly opened dry-goods store in Newburyport, Massachusetts. Shortly thereafter their father died, leaving their mother and several small children to support; the store was destroyed that same year in a great Newburyport fire; and George, at seventeen, moved on to Georgetown, in the District of Columbia, to clerk in another family dry-goods store, that of an uncle, John Peabody. Uncle John had already gone bankrupt once in the business; creditors were after him, and he installed his nephew, partly as a cover, as titular head of the business. In this reverse nepotism, George flourished. Within two years he was running the store, but his uncle’s situation made him apprehensive. In 1814, when Elisha Riggs, a successful competitor in the District, suggested a merger, George accepted. He had saved a little over a thousand dollars, which he invested in Riggs & Peabody, but if the capital was largely Elisha’s, the business genius was largely George’s. The firm began to export southern cotton to England and import finished goods to the United States. In 1815 it moved to Baltimore to acquire shipping facilities, and in 1822 it established branches in Philadelphia and New York. It was by this time a supplier of credit to facilitate the movement of cargoes by others. Peabody made his first trip to London in 1827. Two years later Riggs retired, leaving his partner in sole charge and well on his way toward a typical nineteenth-century American business metamorphosis—that of dry-goods merchant into banker.
This metamorphosis—subsequently exemplified in the careers of Henry Clews, Levi P. Morton, Junius Spencer Morgan, and the founding partners of J. & W. Seligman and Company and K’fchn, Loeb and Company—was dramatically highlighted in 1835. The state of Maryland, in severe financial trouble, appointed Peabody as one of three commissioners to negotiate loans. The merchant went to London and sold $8,000,000 worth of state bonds there, thus maintaining Maryland’s credit and upping his own. He refused a $60,000 commission and received a vote of thanks from the state legislature.
In 1837, the now-prosperous Peabody took the step that was to qualify him, geographically, for an impressive collection of British honors. He moved to London, where under the sign of George Peabody & Company he began to specialize in foreign exchange and American securities. The Panic of 1837 found him a heavy buyer of depreciated bonds of the American states at what turned out to be bargain rates. During the next few years, his firm became the leader in trading American securities in Europe and the house on which American letters of credit were most generally drawn. Meanwhile, Peabody himself became a kind of unofficial American ambassador. In 1851, when a World’s Fair was scheduled at the Crystal Palace in London, Congress made no appropriation for the American exhibitors. Peabody personally advanced the $15,000 needed to fit up galleries and arcades for the display of Colt’s revolver, McCormick’s reaper, Hoe’s printing press, Hobbs’ unpickable lock, Bond’s spring governor, and Hiram Powers’ famous statue of The Greek Slave . A mortified Congress later paid him back.