The Principle of The Trusteeship

The Principle of The Trusteeship

The principle of the trusteeship

The principle of the trusteeship of wealth was significant on two counts for the evolution of the doctrine of social responsibility. First, it was the earliest indication that the leading businessmen recognized the need to justify their wealth and power to society. As Ghent said, "The principle of the 'trusteeship of great wealth' has won a number of adherents. . . A duty to society has been apprehended, and these are its first fruits. It is a duty, true enough, which is but dimly seen and imperfectly fulfilled."9 Second, the justification was put in individual terms. Philanthropic activities of wealthy individuals were the means of fulfilling the businessman's duty to society rather than expressions of ethical concern for how the affairs of business enterprises were conducted. The focus was on what the captains of industry did with their millions after they had made them. (They considered their actions in accumulating wealth to be another matter, private and beyond social criticism and control.

Corporations began to become directly involved in the welfare of their employees at the turn of the century. The railroads established a policy of financial support for the YMCA, and corporate contributions to charity began to occur in other industries. Management began to take an interest in safety and sanitary conditions in factories, and programs of payments were set up for accidents, retirement, and death. Management recognized the company 's stake in the well-being of the workers, but often the objective of welfare activities was more ambitious. The Colorado Fuel and Iron Company, for example, announced that it was "the purpose of this company to solve the social problem.1120 Be it noted, however, that the "social problem" tended to be defined from the standpoint of the employer, with little regard for the needs and attitudes of others. Morrel Heald has termed these experiments in social and individual welfare "enlightened absolutism," calling attention to the fact that the company was still all-powerful but that it was beginning to recognize its obligations to those most directly affected by its operations.2'

The corporation's obligation to society as a whole, in addition to the industrial workers, came into consideration in the pre-World War I years. The rapid growth and great size of some industrial firms created special problems and led management to seek a broad base of public support. The Bell System became a pioneer in corporate public relations because by combining a nationwide network of telephone facilities it had become a public utility. Its management, under the leadership of Theodore N. Vail, foresaw the inevitability of government regulation and welcomed rather than fought it. The Bell System concentrated on efficient and economical service, and attempted in every way possible to demonstrate management's conviction that, "We feel our obligation to the general public as strongly as to our investing public, or to our own personal interests.1122 The United States Steel Company and the Standard Oil Company also became public relations-conscious during this period. Elbert H. Gary, chairman of U.S. Steel, sensed the quasi-public nature of his company . Rockefeller and his associates became sensitive to the public criticism of Standard's hard-driving tactics and recognized that to a large segment of the public, economic performance alone was not the measure of its obligation to society.

Further reading - The Amount of The Advertising Appropriation