In December 1915, Jacob Schiff sent an irritated letter to Walter Lippmann. Among the country’s most powerful financiers, Schiff was head of the elite banking house Kuhn, Loeb & Co. That perch afforded him the opportunity to be a dominant force in American philanthropy. Lippmann, only 26, was helping edit a young magazine called The New Republic.
Schiff wanted Lippmann to know that he wrote as an admirer. He had been a “constant reader” since the magazine’s first issue, a year earlier, and he regularly recommended it to friends. But there was something in its latest edition that had upset him, and he could not let it pass.
The offending commentary was titled “An Open Letter to the Rich.” Its author, John Lincoln, described himself as a teacher in a small Western city, married with two children. In the piece, Lincoln shared his circumstances. His salary was respectable but increasingly inadequate. Travel was largely impossible; theater and music were luxuries. Doctors, housing, and education all demanded constant calculation. His salary, Lincoln complained, was being reduced each year—not “in dollars and cents,” but “in butter, milk, and eggs.” And, above all, he and his wife wanted more children and they couldn’t afford them.
“And you,” he told the rich, “though you do not know it, are to blame.”
Lincoln’s letter was a complicated artifact of its time. His critique of inequality was entangled with the Progressive era’s preoccupation with heredity, reproduction, and what he called “better births.” But his central economic claim was simple: The United States possessed extraordinary wealth, while ordinary families found even their most intimate choices constrained by its unequal distribution.
Schiff believed that this magazine granting space to Lincoln’s argument was irresponsible. In correspondence he insisted remain private, he told Lippmann that the letter dripped with “jealousy and envy.” It condemned inequality without proposing a serious remedy. He worried that Lincoln’s polemic could damage a magazine whose “educational value” he otherwise admired.
Then Schiff offered an argument that could be made unchanged today. Suppose, he wrote, that the retired industrialist and richest man on the planet, John D. Rockefeller, possessed a billion dollars. Divide it among every American, and each person would receive roughly $10. Rockefeller would no longer be fantastically rich, but ordinary Americans would hardly be more secure—and something that was, to his mind, socially valuable would be lost.
Kept intact, Rockefeller’s fortune—and especially the fortune inherited by his son, John D. Rockefeller Jr.—could improve social conditions, build universities, support research, and create institutions whose benefits reached far beyond the Rockefeller family. Schiff believed the younger Rockefeller possessed “a high conception of the duty the possession of such great wealth imposes upon its possessor.”
This was not chiefly a defense of the rich man’s right to enjoy his wealth. It was a defense of concentrated wealth based on what an enlightened rich man could accomplish for everyone else. In other words, great inequality, in Schiff’s formulation, made possible great philanthropy.
Lippmann answered the following day.
He opened by rejecting Schiff’s charge that The New Republic had published an exercise in envy. Lincoln’s essay mattered, he explained, because it was “a very sincere, human document.” And ordinary people should be allowed to describe honestly what economic arrangements looked like from where they stood.
Nor did Lippmann believe that Rockefeller should simply divide his fortune into $10 payments. Such an idea, he told Schiff, was “obviously preposterous.” Personally, Lippmann said his preferred remedies would be progressive taxation, inheritance taxes, restrictions on the private appropriation of natural resources, and public investment in what he called “social betterment.” But then Lippmann did something interesting: He accepted Schiff’s main argument. He had “no doubt,” he wrote, that Rockefeller Jr. was spending his fortune “in a highly desirable way.”
But what did that prove?
“Think what it means to a community,” Lippmann challenged Schiff, “to trust such staggering power to the accidents of birth.”
What if Rockefeller’s heir had been someone else? Suppose he had inherited the fortune but none of the sense of responsibility Schiff admired. Both men knew rich men’s sons of precisely that sort.
The problem for Lippmann was not whether a rich person could use concentrated wealth for the public good. The problem was that the public good had become dependent upon what that person decided to do.
“I am one of those who believes that the possession of great masses of property is an enormous power,” Lippmann wrote, “a power which has reached a stage in our country that is almost ominous to the future of democracy.” If America hoped to become the country it promised to be, he continued, it could not safely leave in a few private hands, “controlled by nothing but the private conscience, a power which is greater than that of the government itself.”
Private conscience: This is an idea that stood out.
More than a century later, the conceptual problem Lippmann named is hardly theoretical.
Last July, Nobel laureate Daron Acemoglu issued a public challenge to Elon Musk. If Musk really believed that technological abundance would make money largely irrelevant within a decade, Acemoglu asked, why not pledge his fortune to charity by 2036? Such a commitment, he argued, might also address some of the growing anxiety over the political and social power of billionaires and, now, trillionaires. Musk responded that he was “actually going to do something along these lines,” without elaborating.
Acemoglu’s challenge came, however, with an important qualification. If Musk were to give it all away, the recipient charities “should be approved as effective and non-ideological by an impartial body,” he noted. This distinction reveals just how difficult Lippmann’s problem is to escape. Even giving away a fortune does not by itself democratize the power the fortune contains. Someone must still decide which institutions receive it, which purposes count as effective, and which visions of the public good qualify as neutral.
We tend to identify the danger of great wealth most easily in its most obviously manipulative forms: billionaires financing political campaigns, purchasing media organizations (and then firing their staff), cultivating politicians to be their toadies, underwriting ideological movements to further their specific ends, or using their immense economic leverage to shape public policy. But Schiff and Lippmann were arguing about something less obvious: What happens when private fortunes acquire public authority precisely by doing things much of the public values?
Let’s consider the Gates Foundation. Bill Gates announced in 2025 that the foundation would spend more than $200 billion before closing in 2045; in January 2026, its board approved a $9 billion annual payout. Then in August, the foundation committed more than $540 million to the University of Washington’s Institute for Health Metrics and Evaluation to expand and update estimates of the Global Burden of Disease study, the world’s largest global research program measuring health outcomes over time.
There is much to admire in this ambition, and that is what makes the parallel useful. The Gates Foundation is not the Rockefeller fortune, and Gates is not Schiff. But the underlying logic of mega-philanthropy would have been instantly recognizable to Schiff: Resources kept concentrated can be mobilized on a scale that dispersed private resources cannot.
Yet Lippmann’s argument did not require proving Schiff economically wrong. Efficiency still would not answer the question of democratic legitimacy.
A second recent example makes this distinction clearer. In April, NPR announced $113 million in extraordinary private gifts, including $80 million from philanthropist Connie Ballmer, the largest from a living donor in NPR’s history, and another $33 million from an anonymous donor. The gifts came after Congress had eliminated about $1.1 billion in federal support for public media.
Those gifts may preserve vital independent journalism that millions of Americans value. But they also expose the dependency Lippmann worried about. A public good weakened by a political decision became more reliant on private fortunes. Ballmer’s money was designated for digital innovation, and the anonymous gift is marked for tools and services across the network. Those may be excellent priorities. Yet the structural point remains: The person who supplies scarce resources acquires some power over which possibilities those resources make real. Why not use that money to support dedicated coverage on the housing crisis or racial justice or storytelling on political and commercial censorship? We are accustomed to big donor gifts supporting specific types of news coverage; why not this one? Who decided and why?
Lippmann’s challenge was not simply whether the wealthy gave enough money, or did so wisely. He questioned whether wealth should confer such authority over public decisions at all.
I encountered the Schiff-Lippmann correspondence while researching the transformation of American charity during the Progressive era. My book, Fire in the Heart of the City, begins with another crisis of private power: the Triangle Shirtwaist Factory fire of 1911.
The preventable tragedy was one of the deadliest industrial disasters in American history, resulting in the horrific deaths of 146 workers, most of them young immigrant women, after being trapped inside a burning New York garment factory building. After the tragedy, an extraordinary wave of sympathy swept through New York. Money poured in for their families.
But this round of charitable giving did not settle the question of what justice required; quite the opposite. Almost immediately after a massive public funeral march, involving nearly half a million New Yorkers, a second struggle began.
Who would control the donation money?
Who could legitimately speak for the dead and their families?
The workers of the Lower East Side and the unions that represented them had answers. So did wealthy donors and the rapidly professionalizing charity organizations that claimed expertise in investigating households, classifying needs, separating the worthy recipient from the unworthy, and administering relief.
And at the center of their struggle was Jacob Schiff.
New York’s mayor, along with State Governor John Alden Dix, asked Schiff to preside over a public meeting about the city’s response to the catastrophe. The old Metropolitan Opera House, just outside Bryant Park, was rented by Anne Morgan, J.P. Morgan’s daughter, and everyone showed up. The department store owners, bankers, philanthropists, and wealthy Fifth Avenue titans sat in its grand tiers and protected boxes, while the garment workers filled every other square inch of the theater. To open the meeting, Schiff urged New Yorkers not to use the moment to assign blame but to instead support established charitable institutions—including the New York Charity Organization Society, of which he served as vice president.
The conflict mattered because whoever won the authority to provide assistance gained more than money, they gained influence over the definition of the problem itself. That influence, in turn, set the terms for the debate to come.
Were garment workers vulnerable because employers possessed too much power and workers too little? Because wages were inadequate? Because government regulation was weak? Or were poverty and insecurity better understood through the lens of the charities, as stemming from unrestricted immigration policies and at the household level—through dependency, individual behavior, assimilation, or family management? Different diagnoses pointed toward different remedies. And for many upper-class New Yorkers, private relief offered an appealing alternative to the supposedly radical remedies of the city’s unions: It could ease the consequences of an unequal system without necessarily changing the distribution of power that produced them.
The established charities ultimately received more than $100,000, aided substantially by The New York Times, which promoted these philanthropic efforts rather than worker organizations as the proper channel for public relief. Yet the charities ultimately retained nearly a quarter of the money rather than distributing it to families, after concluding that many recipients could not be trusted to use additional cash wisely. The money remained under institutional control. So did the judgment about what counted as need.
This is why philanthropy occupies such an unusual place in American democracy. Giving does not merely transfer resources. It also redistributes authority, by shaping who has the capacity to define a problem, elevate a solution, and sustain it over time.
Schiff understood the benevolent possibilities of that authority better than most. He was not an indifferent plutocrat defending privilege against the poor. He was one of the great givers in the history of the country, deeply involved in institutions devoted to education, social welfare, and immigrant communities. He knew concentrated wealth could accomplish extraordinary things because he had watched it do so—and had done so himself. In fact, had our popular history of American philanthropy been written around influence rather than fame, Jacob Schiff might now occupy a place much closer to Carnegie and Rockefeller—the men who became the archetypes of modern American philanthropy.
Schiff’s own benevolence, however, was not the whole story of the system he was defending. In the years that followed the fire, immense private fortunes would help give institutional life not only to universities, medical research, and social welfare but also to racist ideas about heredity, racial hierarchy, immigrant quotas, and eugenics that would prove extraordinarily destructive. The very charity Schiff represented, the Charity Organization Society, became a lead champion of eugenics and lobbied for some of the most destructive social policies of the twentieth century.
Whether Schiff, who died in 1920, ever fully reckoned with this danger is difficult to know. But it exposed the vulnerability in his argument: The perceived wisdom of today’s enlightened philanthropist offered no guarantee that tomorrow’s judgments would prove enlightened. The danger, in other words, was not only the selfish rich man. It was the sincere philanthropist who was wrong.
Schiff’s final letter to Lippmann underscored the optimism he held for his fellow billionaires. Schiff conceded that he agreed with “much” of what the younger editor had written. He even recognized “the injustice of existing conditions.” What troubled him was that publishing attacks like Lincoln’s might alienate “possessors of wealth” who themselves understood those injustices and “would go far” in helping to remedy them.
The difference was simple. Schiff believed social progress required the cooperation of enlightened wealth. Lippmann worried about the potential corrosive effects of this sort of co-dependent social relationship. It’s important to understand that the risk for Lippmann wasn’t just that billionaires “would go far,” as Schiff hoped; it was that there were influential seats for them at the tables of the country’s biggest social discussions simply because of their wealth.
We know now that once reform depends upon wealthy benefactors, their preferences become part of the strategic environment even when they issue no explicit demands. Recipients can resist, bargain, redirect, or walk away, but they do so on a field shaped by unequal control over resources. Organizations learn which ideas are likely to attract support. Some acquire staffs, buildings, journals, research programs, all while spending decades in development; others remain aspirations.
Political scientist Megan Ming Francis has called one version of this dynamic “movement capture.” In her study of the NAACP, she argues that financial dependence on the Garland Fund gave philanthropists leverage that helped redirect the organization’s central agenda away from its campaign against lynching and racial violence and toward education. This does not mean every donor captures every grantee. Dependence creates pressure, not inevitability. Recipients can push back, but unequal resources shape the field on which such negotiations occur.
That is why, I contend, the democratic problem is hardest to see when philanthropy succeeds. A hospital is not less useful because a billionaire built it. Research does not become worthless because a foundation financed it. Public radio is not less valuable because private donors help keep it alive. But gratitude and democracy ask different questions. Gratitude asks what someone chose to do with their wealth. Democracy asks why so much of our common life depended upon their choice.
This tension only becomes sharper as public institutions weaken, as they are today.
Recent New York Times and Washington Post investigations into the charity think tank of Silicon Valley tech billionaire Joe Lonsdale offer a revealing example. The organization, called the Cicero Institute, has reportedly used privately financed research, lobbying, polling, conferences, and model legislation to become an influential force in homelessness policy. Lonsdale has repeatedly cited an incident in which his wife was accosted while walking with their child in San Francisco as formative to his thinking about homelessness. Twenty-one states have reportedly considered Cicero-backed measures, and 16 have passed them, many centered on criminalizing camping and an approach emphasizing addiction, mental illness, and individual accountability rather than the Housing First model’s emphasis on long-term housing assistance. Federal officials have also looked to the charity for policy guidance. One early Cicero recruit described the opportunity bluntly: Many state legislatures lack substantial policy staffs, allowing private charities to function as “outsourced staff.”
This is another way private wealth acquires public authority. Money does not merely buy advocacy; it can build entire institutions from scratch, with the capacity to define a problem, produce the expertise surrounding it, make one set of solutions appear authoritative, and lock in the trajectory of public policy in the direction preferred by plutocrats.
This same imbalance becomes especially consequential when what is weakening is not merely policymaking capacity but public enforcement itself. The Trump administration’s 2027 budget proposal would significantly reduce OSHA’s federal enforcement capacity, a legacy outcome of the Triangle fire, even as the agency pursues a series of deregulatory rulemakings. And as this capacity shrinks, private philanthropy is increasingly being called upon to fill the resulting gaps. This is not simply a change in who writes the check, it is a fundamental transfer of power. Public protections are obligations backed by law and public authority; philanthropy is discretionary. A donor or foundation ultimately retains the authority to decide which problem merits attention, who receives assistance, and which solutions become possible. Triangle exposed this distinction more than a century ago.
And so we are now barreling toward an increasingly unavoidable question of not whether wealthy people should contribute to public life, but whether public life can function without their permission.
Lippmann’s warning does not require us to romanticize independent government oversight or the labor protections inspired by Triangle. Democratic majorities can be cruel. Public institutions can be unjust or incompetent or both. Experts can mistake prejudice for science. Reformers can reproduce the hierarchies they believe themselves to be overcoming. The Progressive era itself supplies abundant evidence of all four scenarios.
But those failures do not resolve his challenge. A political system committed to self-government cannot treat private conscience, no matter how enlightened, as a substitute for public legitimacy.
Schiff had complained that Lincoln offered indignation without a remedy. A fuller look at the history of the Triangle fire suggests one. The alternative to enlightened private conscience is not simply a better class of philanthropists. It is to build institutions through which ordinary people possess greater authority over the conditions of their own lives: unions and worker organizations capable of bargaining with employers, democratic governments capable of providing public goods, and community institutions with the resources to define their own priorities.
Philanthropy can contribute to that work. But to do so it must surrender some of the authority that wealth ordinarily buys to fund organizing rather than prescribe outcomes, to strengthen public capacity rather than replace it, and to support people in exercising power rather than merely deciding how best to help them. In this way, the answer to the private conscience is not a better conscience; it is more democratic power.
The danger is not simply that the powerful may use their power badly. It is that we become so grateful when they use it well that we stop asking why so much of our common life depends upon their private conscience at all.
