Rosenwald's Reward

In December, 1921, the mail order house of Sears, Roebuck & Co., that proud, old firm "founded on a fair profit, a fine organization and the faith of the customer," was in a bad, bad way. The post-War depression and readjustment had nibbled away at inventories and surplus so that earlier that year dividends on common stock had to be suspended. It seemed to President Julius Rosenwald and his associates that, to balance on the year, they would have to write off inventories hugely, pass dividends and even levy on holders of common stock some fraction of their stocks. Now these gentlemen knew that much of the common stock was owned by employes of the company who, more than usual investors, would be hurt. To such levy there was of course the resource of all business people in such a quandary, to borrow on all free real estate, on reputation, and to pay through the nose usurious interest rates, commissions, brokerages, bonuses.

Quietly through his pince-nez Mr. Rosenwald looked at his associates. They saw a gentle, dignified man, oval of face, high of brow, thoughtful of eye, pleasant of lips--lips which by a phrase had often given millions in thoughtful charity. They were to hear those lips make as fair a proposition as ever was laid before business men.

Mr. Rosenwald said he would give to Sears, Roebuck & Co. 50,000 shares of its common stock, of which the par value was $5,000,000, the market value $3,000,000. The only condition was that the company would sell those shares only to him at par, where, when, and if he wanted them. Further, he would buy the company's real estate holdings, appraised neutrally and highly at $16,000,000, paying at once in cash and Liberty bonds $4,000,000 and paying off the remaining $12,000,000 over a term of years by a trust deed, without personal liability. Thus the company would reduce its capital liabilities by 5 millions, would get 4 millions in cash and a credit of 12 millions. Mr. Rosenwald would own the real estate; the company would have a tenure of at least 20 years, paying in rent 7% on only the 4 millions.

Its officials, including Mr. Rosenwald, grabbed the proposition. The day after the deal was announced the stock jumped 8 points.

A fortnight after he had so graciously propped up his company, Mr. Rosenwald won a prize in a newspaper contest, a prize of $5 for submitting the day's best motto: "I would rather be a beggar and spend my money like a king, than be a king and spend my money like a beggar," a phrase from Robert Ingersoll, robustious iconoclast.

Last week Mr. Rosenwald exercised his option; bought the 50,000 shares of stock back at par. They cost him 5 millions where, in open market, they would have cost 12 millions. Thus he makes a paper profit of some 7 millions, a profit which he might not have made had he not "given away" his stock in 1921.

A beggar not at all, Mr. Rosenwald yet gives regally, in million dollar gestures, usually with a stipulation that the recipient secure some complement no matter how small. Some gifts: to 13 Negro Y. M. C. A.'s and 2 Y. W. C. A.'s in 13 cities having a Negro population of about a million, $2,750,000; to the University of Chicago and other institutions, $700,000; to the establishment of a University of Chicago Medical School, $500,000; to the Wilmer (Eye) Institute Fund of Johns Hopkins University, $50,000; to the creating of "neat and tidy" rural public schools for Negroes, $1,500,000; to European War Relief $1,000,000. One-third of his time does this Illinois-born Jew give to charitable, religious and educational enterprises. Little does he give to himself other than a pleasant, comfortable life. A member of ten clubs, he would rather spend hours with his family in his home on Ellis Ave., Chicago.