1929 “He should be the most thanked man in the world,” said the New York Times on his seventy-fifth birthday. No buccaneer like many self-made moguls, this enormously wealthy man sought more than money. He was George Eastman, founder of Eastman Kodak, the pioneer of roll film and the simple box camera. His company slogan: “You press the button, we do the rest.” By creating an affordable product that helped preserve memorable moments, George Eastman richened people’s lives.
What the New York Times was referring to was not just his consumer product, but the way he ran his business. George Eastman’s treatment of employees set the standard for enlightened capitalism. He recognized that his greatest challenge was recruiting, training, and retaining the highly skilled workforce needed to make Kodak a success. He reduced employee working hours and introduced strict safety standards on the factory floor that cut worker accidents 80 percent in just three years. Other medical innovations included a Fresh Aid Fund, a medical department, and a disability benefit plan. He also instituted an employee profit-sharing plan, a savings system, a retirement program, and a life insurance program. This had never been done before in the United States= or anywhere else, for that matter.
He was an equal-opportunity employer. Many of his employees were women. When MIT recommended one of its professors for a senior position at Kodak, Eastman hired her on the spot. When asked to contribute to the all-black Tuskegee Institute, he made “by far the largest single contribution ever made to Negro education.” He then made an equivalent contribution to another black school, the Hampton Institute. Believing every man deserved a second chance, he instructed his staff to take extra measures to hire handicapped workers and ex-convicts. Compared with most businessmen, then and now, who believe the purpose of a business is to serve the stockholders, Eastman took a broad view and included other constituencies such as workers and the community. “Mr. Eastman,” said one associate, “was the only man I ever knew who started out a conservative and wound up a liberal.”
He was a liberal, but not a bleeding heart. Money must be earned. He was dead set against “gift stock”: he dug into his pocket and made cheap stock available to employees, but on the condition that they contribute 2 percent of their earning. When he took his company public and became a rich man, he set aside 18 percent of his personal profit and distributed it to his workers, with the following not: “This is a personal matter with Mr. Eastman and her requests that you will not consider it as a gift but as extra pay for good work.” Such fairness stood in sharp contrast to other corporations such as Ford, which in 1913 had a staggering 370- percent annual employee turnover, or Andrew Carnegie’s United States Steel Corporation, where the modus operandi was “I have always had one rule: When a workman sticks up his head, hit it.”
Looking for a young man to strengthen his business, Eastman went to Harvard Business School and asked to recruit its top MBA student. The man was Marion Folsom. Folsom joined Eastman Kodak and rose to the position of treasurer. Together, Eastman and Folsom structured Kodak’s groundbreaking pension and retirement plan. (Folsom, because of his work with Eastman, served on every advisory committee developing the Social Security Act, and eventually became Secretary of Health, Education, and Welfare.)
Eastman could be as hard-nosed as any of his fellow industrialist: “In
business it is war all the time,” he once wrote. When a friend complimented him
for being so organized and disciplined, he responded, “Yes, one has to be hard,
hard in this world. But never forget, one must always keep one part of one’s
heart a little soft.” This included his sales to the War Department in World
War I- a time when wartime profiteering, as in most wars, was rampant. Not for
Eastman: he voluntarily refunded $33,390 to the U.S. government, representing
the profits made by Eastman Kodak on was contracts. $152,620 of this was
returned in 1919, $182,770 in 1922. Recognizing Eastman’s extraordinary gesture
(unequaled in all of America), the president of the United State wrote him this
letter:
THE WHITE HOUSE
WASHINGTON
February
7, 1922
My dear Mr. Eastman:
Secretary
Weeks reported to the cabinet today the unusual experience of your return to
the government, on behalf of the Eastman Kodak Company of $182,770.00 which had
been paid the company on war contract in excess of the contemplated profit
provided in this contract. I had heard of this pleasant incident informally at the
time I had the pleasure of personally greeting you and some of your friends and
had also the satisfaction of seeing the incident noted in the columns of the
press. I have no doubt that becoming expression has already been conveyed to
you, but I cannot resist adding my own appreciation of this very prompt and
considerate notion on the part of your company in making a wholly voluntary
adjustment after the close of a great war service.
With
very best wishes, I am,
Very truly yours,
Mr. George Eastman,
c/o Eastman Kodak Co.,
Rochester, N.Y.
Eastman’s social innovations “attracted the attention of visitors from every state in the United State, from England, Australis, South America, Mexico, China, and Japan.” Finally he gave away 75 percent of his fortune to philanthropy while he was alive. This, too, was unusual. Most magnates, such as Ford, Guggenheim, and Rockefeller, kept accumulating their money and left it to foundation to manage after their deaths. Not Eastman. “Men who leave their money to be distributed by others are pie-faced mutts,” he said. “I want to see the action during my lifetime.” With that, he resigned from day-to-day management of Kodak to supervise his gifts to educational institutions and the city of Rochester, New York. A number of these gifts were given anonymously, under the name of “Mr. Smith.”
He was a totally unselfish man: at the age of seventy-seven, starting to suffer from a spinal ailment that threatened to cripple him, he shot himself so as not to be a burden to others. His suicide note read, “My work is done. Why wait?”
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From the book "American History" by Seymour Morris Jr.; Page 198
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