George Peabody

George Peabody is often referred to as the “father of modern philanthropy.” He was almost certainly the first American who was known first and foremost for his charitable giving. Before he turned to philanthropy, Peabody was a merchant banker—indeed, he created one of the most important American banks of the 19th century. Headquartered in London, he helped channel desperately needed European and British capital into promising ventures in the United States. All told, it is believed that Peabody gave away about $8 million of his $16 million fortune within his lifetime. Peabody’s generosity was hailed as an example for his contemporaries, and later generations of philanthropists have continued to invoke it.

Peabody was born in 1795, the third of eight children in a working-poor family from Danvers (since renamed Peabody), Massachusetts. His family could only afford to give him four years of formal schooling; at age 11, he was sent to apprentice at a general store. In 1811, his father died, in debt, forcing the sale of the family home and many of its belongings. George and his brothers had to feed, house, and clothe their mother and sisters. “I have never forgotten,” he once reflected, “and never can forget the great privations of my early years.” 

Peabody moved south to Washington, D.C., where he opened a dry-goods store in Georgetown. He served in the Army during the War of 1812, where he met an older merchant named Elisha Riggs Sr. The two men hit it off, and Riggs offered to make Peabody, then 19 years old, a partner at his business, importing wholesale dry goods. The business flourished, and within three years, Peabody was worth $40,000, repaying his father’s debts and providing a more comfortable life for his family.

In 1816, Peabody left D.C. and moved to Baltimore, where he spent the next two decades. Trusted for his fairness, Peabody prospered as a wholesale-goods merchant, and by 1827 was travelling to London to negotiate the sale of American cotton in Lancashire. In 1835, he established George Peabody & Co., a merchant bank offering securities in American enterprises—railroads, canals—to British and European investors. Given his rising stature among international bankers, and given its unmatched centrality in the world of finance, Peabody moved to London in 1837. Except for three visits back to the States, he remained in England for the rest of his life.

But there was never any mistaking his first loyalties. His Fourth of July parties were a highlight of the London social calendar, but it went deeper than that. Peabody put his reputation on the line during the Panic of 1837, pledging creditors that the states he represented would not default on their loan obligations—even securing an emergency $8 million loan to save Maryland’s credit. When several states did default, Peabody moved heaven and earth to persuade their legislatures to resume payment, with interest. For his services, Peabody refused his $60,000 commission; the Maryland state treasury, he insisted, needed to pay bondholders first.

George Peabody never quite escaped the marks of his boyhood poverty. He routinely worked 10-hour days, every day of the week, and during one 12-year stretch he never took off three consecutive days. More visibly, he was frugal to the point of absurdity. His partner, Junius Morgan (father of J. Pierpont Morgan, who began his distinguished career in finance at the New York office of George Peabody), once found him standing in a drenching London rain. Morgan realized that Peabody had left the office 20 minutes earlier. Ron Chernow recounts their exchange: “’Mr. Peabody, I thought you were going home,’ the younger man said. ‘Well, I am, Morgan,’ Peabody replied, ‘but there’s only been a twopenny bus come along as yet and I am waiting for a penny one.’” At the time, Peabody had more than £1 million to his name.

In the early 1850s, Peabody’s interests began to turn to philanthropy. For his hometown of Danvers’ 1852 centennial celebration, he announced his plans to build the first Peabody Institute Library. The gift was followed by a number of similar benefactions throughout the United States. In 1857, he founded the Peabody Institute of Baltimore, which included a music conservatory, art gallery, lecture hall, and reference library. He built other Peabody Institute Libraries in Massachusetts, Vermont, and Washington, D.C. After a favorite nephew began teaching paleontology at Yale, Peabody funded a museum of archaeology and ethnology at Harvard and a museum of natural history at Yale.

In March 1862, Peabody wrote a letter to the Times of London, announcing his intention to create a trust, initially funded with £150,000, to “ameliorate the condition of the poor and needy of this great metropolis, and to promote their comfort and happiness.” The Peabody Donation Fund (since renamed the Peabody Trust) was chartered to build affordable housing for the workingmen of London. With gas lights, running water, subsidized rent, and smartly appointed dwellings, it was vastly superior to the housing stock otherwise available to the laboring poor. Peabody also ensured that the tenants were deserving, demanding punctual rent payments, instituting a nighttime curfew, and enforcing a morals code.

The gift was an instant sensation. Queen Victoria sent an adoring letter of thanks, enclosing a miniature portrait of herself and offering him a baronetcy or knighthood. (Peabody declined the titles.) Peabody, proclaimed Prime Minister William Gladstone, “taught men how to use money and how not to be its slave.” He was the first American to be made Freeman of the City of London, and his statue was erected at the Royal Exchange. “From a full and grateful heart,” said the one-time infantryman who had borne arms against the British, the gift “has repaid me for the care and anxiety of fifty years of commercial life.” Peabody was so pleased with the donation that, shortly before his death in 1869, he increased his total contribution to £500,000.

From 1866 to 1867, Peabody visited the United States and toured the American South. He was shocked by the wreckage he found. Eager to help, he announced the creation of the Peabody Education Fund, endowed with $2.1 million and charged with restoring primary and secondary education in West Virginia and the eleven states of the former Confederacy. Peabody offered relatively small seed grants to counties and districts, requiring local leaders to provide matching funds and charter the schools under state legislation. The Peabody Education Fund worked for 47 years, promoting and sustaining public schools and funding teacher training institutes throughout the South.

Peabody’s generosity endeared him to British and Americans alike, and with his death in November 1869, he was honored on both sides of the Atlantic. A grave was prepared for him at Westminster Abbey—the first American to receive such honors—and it was made clear that the royal family wished to bury him in England. It was not to be. Peabody’s dying words (“Danvers—Danvers! Don’t forget!”), combined with the explicit instructions of his will, deprived London of his remains. Peabody was returned to his native land by a joint squadron of British and American naval vessels, where the flags of former enemies were matched at half-mast, reflecting two nations united in mourning, and in admiration. 

Further reading

• Phebe Hanaford, The Life of George Peabody (B. B. Russell, 1870)
• Muriel Hidy, George Peabody: Merchant and Financier, 1829-1854 (Arno, 1978)
• Franklin Parker, George Peabody: A Biography (Vanderbilt Press, 1995)
• Robert Charles Winthrop, Eulogy, Pronounced at the Funeral of George Peabody (John Wilson & Son, 1870)