George Peabody

Building a Fortune

Peabody was born in Danvers, Massachusetts, the third of eight children in a family with no wealth or social stature. Out of economic necessity, he left school at the age of 11 to work as an apprentice at a general store. He began his career as a dry goods merchant, building a prosperous business that required him to travel to London to negotiate deals.

In 1837 Peabody settled in London to run George Peabody & Company, a firm that sold American securities to British and European investors, eventually becoming the principal conduit for much-needed foreign capital into the U.S. Retiring from the mercantile business in 1843, he went on to build the bulk of his wealth through international banking.

Peabody never forgot the deprivations of his childhood. Even as he prospered, he continued to work assiduously and to live frugally, remaining ever aware of his lack of formal education as he circulated among elite society.

Giving Millions to Humanity

Turning to philanthropy in the 1850s, Peabody sought to endow public institutions such as libraries and museums that would serve the betterment of society and enable underprivileged people to improve themselves. In 1857 he established the Peabody Institute of Baltimore, the first major cultural center in an American city, with facilities including a lecture hall, reference library, music conservatory and art gallery. In London, Peabody addressed urban poverty more directly, establishing the Peabody Donation Fund in 1862 to provide decent subsidized housing for working poor families.

While he continued to reside in London, Peabody identified strongly as an American and directed most of his charitable giving to the U.S. Uncharacteristically for the time, he was careful to stipulate that none of his endowments should be used to promote religious or political ideologies.

Establishing the First Modern American Foundation

Visiting the U.S. in 1866, Peabody witnessed the devastation that the Civil War had wrought upon the South. Shortly thereafter he established the Peabody Education Fund (PEF), citing his intention to “encourage the intellectual, moral, and industrial education of the destitute children of the Southern States.” Although PEF was intended to improve southern education without regard to race, in its focus on rebuilding existing schools – which served only white students – it made no direct provision for the educational needs of newly freed Black children.

The fund drew harsh criticism from William Lloyd Garrison, a prominent abolitionist who accused Peabody of sympathizing with and even attempting to revive the Confederacy. But with the support of President Andrew Johnson, who recognized the fund’s potential to heal national divisions, it eventually gained legitimacy in the North. Further, PEF inspired a broad influx of philanthropic investment into Southern education, ultimately contributing to the development of Black schools.

Although the Peabody Education Fund shuttered in 1914, it remains significant as the first modern American foundation, a model that has shaped the structure, governance and strategic vision of charitable institutions for more than a century. Attesting to Peabody’s philanthropic impact, biographer Franklin Parker writes in Tennessee Historical Quarterly: “What he gave was significant in its time. What he unleashed was tremendous in its influence.”

Contributor: Erin Brown