Does a Culture of Thrift Cultivate Generosity?

Barbara Dafoe Whitehead, Big Questions Online, 10/2/2012

The national thrift culture not only encouraged personal savings. It provided the impetus for a culture of mass giving, or what the historian Olivier Zunz, echoing thrift advocates of the time, has termed “public thrift.”

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Subject: Thrift

More by: Barbara Dafoe Whitehead

My answer to the question is yes. A powerful and reciprocal relationship between thrift and generosity can exist, and has existed at key moments in our past.

Beginning with Benjamin Franklin, the great popularizer of thrift, we can trace the development of thrift as a complement and spur to generosity in American thought and practice.

The high point of this development came in the early decades of the twentieth century when a mass culture of thrift provided the rationale and resources for a culture of organized mass philanthropy. To be sure, the practice of thrift has not been consistent across the centuries. Americans have often been notoriously unthrifty. But the broad tendency over time has been to tie thrift and generosity together in a new and expansive view of giving.

Over much of the world, the practice of giving freely and sacrificially of one's time, talent and treasure has been rooted in the religious obligation to offer tithes to one's own faith community and to give charity to the poor and needy.

Franklin broke with this tradition. He recast the philosophy of giving from a religious obligation to care for the poor to a secular rationale for doing good while doing well. Central to his thinking was the connection between thrift as a means to individual betterment and generosity as a means to social betterment.

Franklin saw thrift as way to wealth for "middling" people who were not born to great riches but who could gain wealth through persistent hard work and frugal living. However, his notion of thrift was never narrowly conceived as wealth-building for its own sake or for the sake of one's heirs, much less for the establishment of a permanent class of wealth and privilege. Indeed, in Franklin's view, riches passed on to future generations only bred idleness and dissipation. Those who gained wealth, he believed, had the responsibility to give their time and talents to serve the public and the common good.

At the same time, Franklin was opposed to traditional charity. Instead, he argued, one's gifts should be directed toward projects of self-help and mutual aid. He believed that generosity, like thrift itself, should produce growth. Its beneficiaries should multiply. Funds should be replenished and made available to others. Putting this idea into practice, he bequeathed a substantial fund to provide loans for young married tradesmen who pledged to repay the loan at five percent of the principal each year.

Franklin also rejected the notion of generosity as painful self-sacrifice. He believed that giving brought rewards to the giver as well as the receiver. As Poor Richard said, "When you are good to others, you are best to yourself."

If Franklin laid the philosophical foundations for thrift-based generosity, the great nineteenth century philanthropists put the idea into practice. Industrial magnates like Andrew Carnegie, John D Rockefeller, Johns Hopkins, Leland Stanford, Charles Pratt and John C. Wanamaker used their immense fortunes to build universities, hospitals, public libraries, museums, and vocational training schools. Importantly, the institutions they founded were for the social benefit of the public and not for their own private pleasures. With the founding of these educational and cultural institutions, they expanded and enriched the civil society and the common good.

A 'Gospel of Wealth,' A Culture of Thrift

To a remarkable degree, these philanthropists echoed Franklin's philosophy of giving. Like Franklin, most came from humble beginnings and credited youthful habits of thrift for their rise into great wealth. Like Franklin, they saw their wealth as a trust to be used for the benefit of improving opportunities for aspiring Americans. In his famous 1889 essay, "The Gospel of Wealth, [2]" Andrew Carnegie restated Franklin's principles of philanthropic giving. In it, he argued that a person of wealth should live modestly; provide moderately for those who depend on him; and use the surplus as trust funds to produce "the most beneficial results for the community." He also underscored another hallmark of Franklin's thinking: namely, that the aim of giving should be to "place within reach the ladders on which the aspiring can rise . . . "

The close relationship between thrift and generosity reached its high water mark in the early twentieth century with emergence of an organized and institutionalized culture of thrift. National organizations like the YMCA, National Education Association, American Bankers Association, and the General Federation of Women's Clubs mobilized to celebrate Thrift Week, to encourage thrift education for schoolchildren, and to promote the habit of savings among urban workers and new immigrants who might otherwise turn to loan sharks and salary lenders for financial help. Building and loans, mutual savings banks, and later credit unions offered cooperative savings opportunities for wage-earning Americans as a ladder to economic betterment. Related Questions

The national thrift culture not only encouraged personal savings. It provided the impetus for a culture of mass giving, or what the historian Olivier Zunz, echoing thrift advocates of the time, has termed "public thrift."

Public thrift rested on the principle of self-interest rightly understood. As Americans faced public health threats or natural disasters, they realized that they could not protect their families from such catastrophes on their own. But they could pool their nickels and dimes to wage a collective fight to search for a cure. In short, their small savings could have big effects on the entire society. Their time and talents could be pooled to provide volunteer armies of fundraisers to fight tuberculosis or to support the Red Cross.

Thus, mass savings and mass giving had a reciprocally reinforcing effect on the public. Thrift leaders promoted popular giving, and philanthropic leaders praised the popular habit of saving. Economists devised family budgets that included a line item for household giving, thus establishing generosity as an economic norm for families of all income levels. In this fashion, thrift provided the resources for giving, and giving inspired greater thrift as the two were increasingly linked in popular health, and later, World War I fund-raising campaigns.

The reciprocal relationship between private and public thrift, saving and giving, persisted into the early years of the Great Depression and later helped to drive popular participation in the hugely successful World War II savings bond campaigns and the post-war March of Dimes effort.

Giving in an Age of Spending

By the 1960s, however, the coalition of national organizations promoting thrift ceased their activities. Schools gave up their savings programs. And American households increasingly turned to consumer debt rather than savings to finance their wants and needs. The savings rate, which stood in double digits as late as the early 1980s, fell to near zero in 2005 and has since rebounded to a still anemic 4.4 percent.

As a consequence, thrift has lost much of its cultural force. Few schoolchildren today have even heard the word, much less are able to say what it means. A teacher of my acquaintance reports that her students, rich, poor and in-between, customarily throw their loose change into the trash along with their lunch leftovers. Apparently, they are clueless as to the value of their nickels and dimes when their customary medium of exchange is the "swipe" card.

Yet the relationship between thrift and giving has not died out. It persists in the philanthropic work of men like Warren Buffet and the late Sir John Templeton [3] who exemplify the tradition of living modestly and giving generously of their wealth for the betterment of the larger community. And public thrift – in the form of mass giving campaigns - continues to be a part of American life and culture. Indeed, Americans are famously generous in their response to natural and health disasters, both here and across the world. We continue to join walk-a-thons and fundraisers to combat breast cancer, diabetes, Alzheimer's and other diseases. We continue to volunteer time to help others in need.

Still, it may be too optimistic to expect generosity to flourish as its cultural and economic wellsprings run dry. Indeed, public thrift may not be sustainable without the renewal of the value of private thrift.

In light of that possibility, I invite readers to offer their thoughts and comments on the following questions, (or on any other relevant point one might wish to raise).

Questions for Discussion:

In the past, resources for mass giving have come from Americans' household savings. Will today's low level of household savings contribute to lower levels of giving in the future?

Likewise, widespread prosperity in the past has helped to foster generosity. Will Americans become less generous and less oriented to public thrift in these difficult economic times?

A mass thrift culture fostered collective action in service of a common goal. What kinds of social and institutional incentives today would generate a similar spirit of cooperation for the common good?

Finally, what can we do to help young people learn about and practice thrift, given their use of new technologies that foster speed, instant gratification, and the magic of plastic over the magic of compound interest?

This article originally appeared here.


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