Duke Energy, Cigarettes, Pollution, Profits, and Philanthropy

James Buchanan DukeDuke Energy is the largest U. S. electric utility and also has holdings in Canada and Latin America. On 20 March, a New York Times article reported that North Carolina regulators had just charged the company with illegally pumping “as much as 61 million gallons of coal-ash wastewater into a . . . river from September to last week.” Federal investigators were already still examining an early February Duke pipe spill of up to 82,000 tons of toxic coal ash into another river. Both the pumping and the spill occurred upstream from nearby “municipal drinking-water intakes.”

Before its 21st-century emergence as Duke Energy the heart of the company was Duke Power, which became infamous in Barbara Koppel’s 1976 Oscar-winning documentary Harlan County, USA. The film depicts Duke Power intimidating striking coal workers who tried to join the United Mine Workers.

James Duke and Wendell Berry

The originator of Duke Power was James B. Duke (1856-1925), sometimes labeled “father of the modern cigarette” and chief philanthropist of the Duke Endowment, which in the 1920s gave so generously to a North Carolina college that it changed its name from Trinity College to Duke University.

Thus, before reading of Duke Energy’s polluting activities I had already associated James Duke with some of the “robber barons” like John D. Rockefeller and Andrew Carnegie. All three were symbols of the tycoon capitalism that preceded Franklin Roosevelt’s New Deal, but also were noted philanthropists.

In his well-known book about late-nineteenth century business and finance moguls, The Robber Barons, Matthew Josephson does not mention Duke, but he might have if more of Duke’s activities had occurred earlier. In a new 1962 Preface, Josephson wrote: “I have tried to give a candid description of their [the robber barons’] most ruthless actions, their conspiracies and their plunderings; for they accepted no ethics of business conduct; but I have also spoken of their constructive virtues, and sought to picture them as human beings.”  (Later on, he notes that “in his philanthropies, Rockefeller gave money in many ways strange and wonderful, often known only to himself.”)

In his original Preface, Josephson wrote:

They were aggressive men . . . sometimes they were lawless; in important crises, nearly all of them tended to act without those established moral principles which fixed more or less the conduct of the common people of the community. . . .

. . . But all this revolutionizing effort is branded with the motive of private gain on the part of the new captains of industry. To organize and exploit the resources of a nation upon a gigantic scale, to regiment its farmers and workers into harmonious corps of producers, and to do this only in the name of an uncontrolled appetite for private profit—here surely is the great inherent contradiction whence so much disaster, outrage and misery has flowed.

This paradox, the germ of many future plagues, illuminates the story of industrial concentration in the United States . . . .  between 1861 and 1901.

In perceiving Duke as following in the tradition of the earlier robber barons, I have been influenced by writer Wendell Berry’s criticism of him in his 2012 Jefferson Lecture. Berry recounts how in the winter of 1907 his farming Kentucky grandparents planned to use the money they would obtain from selling their tobacco crop at auction in Louisville to pay some of their debts, but due to Duke’s American Tobacco Company monopoly on prices, his grandfather returned from Louisville “without a dime” of profit. Berry adds, “Thus began my father’s lifelong advocacy [as an eventual lawyer and farmer], later my brother’s and my own, and now my daughter’s and my son’s, for small farmers and for land-conserving economies.”

By 1907, thanks largely to Duke’s advertising and marketing efforts—in 1889 alone, he spent $800,000 on marketing—U. S. cigarette smoking began to take off, quadrupling in the last 15 years of the nineteenth century. In 1902, he joined with a British company to form the British American Tobacco.  v “The Duke trust exerted an oppression that was purely economic, involving a mechanical indifference, the indifference of a grinder to what it grinds. It was not, that is to say, a political oppression. It did not intend to victimize its victims. It simply followed its single purpose of the highest possible profit, and ignored the ‘side effects.’”

Following the path exemplified by Duke Power, corporate industrialism, according to Berry,

has exposed the falsehood that . . . it ever has given precedence to the common good. . . . Among its characteristic signs are destroyed communities, neighborhoods, families, small businesses, and small farms. It has failed just as conspicuously and more dangerously to conserve the wealth and health of nature. No amount of fiddling with capitalism to regulate and humanize it, no pointless rhetoric on the virtues of capitalism or socialism . . . can for long disguise this failure. The evidences of it are everywhere: eroded, wasted, or degraded soils; damaged or destroyed ecosystems; extinction of species; whole landscapes defaced, gouged, flooded, or blown up; pollution of the whole atmosphere and of the water cycle; “dead zones” in the coastal waters; thoughtless squandering of fossil fuels and fossil waters, of mineable minerals and ores; natural health and beauty replaced by a heartless and sickening ugliness.

“But how about Duke’s philanthropy?” one of his defenders might ask. A Duke University web site states this:

Lifelong Methodists, the two brothers [James and his brother Benjamin] practiced the kind of financial stewardship encouraged by their church and instilled in them by their father. . . . The Dukes, individually and collectively, gave to a number of causes. . . . [James] Duke limited his philanthropy to the areas served by the power company. In addition to Duke University, he designated annual income to be distributed to non-profit hospitals and child care institutions for blacks and whites in the Carolinas, to rural Methodist churches and retired Methodist preachers in North Carolina, and to three other institutions of higher education. . . . One of the largest foundations in the United States, the Duke Endowment, with offices in Charlotte, North Carolina, has now distributed more than one billion dollars to its beneficiaries.

What does Berry have to say about such philanthropy? He tells us in his Jefferson Lecture that on his first visit to Duke University he

came face-to-face with James B. Duke in his dignity, his glory perhaps, as the founder of that university. He stands imperially in bronze in front of a Methodist chapel aspiring to be a cathedral. He holds between two fingers of his left hand a bronze cigar. On one side of his pedestal is the legend: INDUSTRIALIST. On the other side is another single word: PHILANTHROPIST. The man thus commemorated seemed to me terrifyingly ignorant, even terrifyingly innocent, of the connection between his industry and his philanthropy. But I did know the connection. I felt it instantly and physically. The connection was my grandparents and thousands of others more or less like them. If you can appropriate for little or nothing the work and hope of enough such farmers, then you may dispense the grand charity of “philanthropy.”

Notice that Berry does not condemn Duke for producing, marketing, and advertising cigarettes. Stanford Professor Robert Proctor writes in his Golden Holocaust: Origins of the Cigarette Catastrophe and the Case for Abolition “the cigarette kills when used as directed. An estimated 100 million people died from smoking in the twentieth century.” Berry, however, grew up among tobacco farmers and has great empathy for their plight. In the early 1990s, he wrote an agonizing piece, “The Problem of Tobacco.” In it he recognized that in the early twentieth century people did not yet realize the terrible health toll smoking produced. Thus, in any criticism of Duke for marketing a product that killed so many people, his ignorance regarding the health effects of cigarette smoking would have to be considered.

Berry did, however, note the addition of many chemicals to cigarettes and wondered to what extent the additives contribute to “tobacco-caused” diseases. And Duke’s American Tobacco Company did add chemicals to its cigarettes. About today’s cigarette industry, Proctor writes:

“Most people know that the industry’s behavior has been less than honorable, but how many know that cigarette smoke contains arsenic, cyanide, and radioactive isotopes? . . . How many know that only about two-thirds of what goes into a cigarette is actually tobacco, with much of the rest being a witches’ brew of added sugars, burn accelerants, freebasing agents, bronchial dilators, and moisteners like glycerine or diethylene glycol?”

Capitalism and the Pursuit of Profit

Berry’s criticism of James Duke and capitalism for putting profits before all else reminds us that conservative economist Milton Friedman once wrote, “The social responsibility of business is to increase its profits.” And Daniel Bell in his The Cultural Contradictions of Capitalism stated that “in its products and in its advertisements, the corporation promotes pleasure, instant joy, relaxing, and letting go,” and that this situation left “capitalism with no moral or transcendental ethic.”

If the main goal of capitalism is to earn profits—and I think it is—and it has “no moral or transcendental ethic,” then where does that leave us? To increase profits, will Duke Energy or other companies like British Petroleum (BP) pollute or fail to take adequate safety measures to avoid pollution? Will cigarette companies or doctors, as reported in one famous case in Texas, put profits before people’s health? Will companies like General Motors and Toyota fail to report safety issues that endanger drivers of their cars? Will agribusinesses and other companies, as Berry charges, continue to wreak havoc on the environment? Will marketing and advertising (often false or misleading), as economist/environmentalist E. F. Schumacher once wrote, continue to encourage a “frenzy of greed and . . . an orgy of envy”.

One may argue that not every businessperson or professional puts profits before all else. The Mayo Clinic, for example, has established a reputation for trying to live up to founder William J. Mayo’s admonition: “The best interest of the patient is the only interest to be considered.” Scott Bader, today a global chemical company headquartered in Great Britain, so impressed the socialist Schumacher about a half century ago that he agreed to serve on its Board of Directors and devoted most of a chapter to it in his classic Small is Beautiful: Economics as if People Mattered (1973). Today, still a profit-sharing and community oriented company, it stands as proof that companies need not be heartless to succeed. And certainly there are some businesspeople who conduct themselves honorably. Furthermore, one may justly applaud, whatever the source of the assets, the philanthropy of Rockefeller, Andrew Carnegie, Duke, or (more recently) Bill Gates and his wife, Melinda.

Despite such examples, however, our economic system encourages businesses to maximize profit and to value, truly value, other considerations only as they affect it—a reputation for honesty, for example, may help a company become more profitable.

In the face of such a reality, what can be done? I suggest three steps.

  • Follow the example of the progressives of the Progressive Era (1890-1914) and Franklin Roosevelt’s New Deal, who generally sought not to overthrow or replace capitalism, but to have government bodies and laws constrain and supplement it in order to insure that it served the public good.
  • Reform our educational system, including our business colleges, so that education stresses that other values supersede profit-making. (See here for more on this subject.)
  • Work, as I urged in a previous essay, toward the creation of a more progressive American culture.

It is ironic that conservatives, who desire less “big government,” often favor an unfettered type of capitalism that requires exactly that—if the common good is to be served. As Berry once wrote, “The cause of big government, after all, is big business. The power to do large-scale damage, which is gladly assumed by every large-scale industrial enterprise, calls naturally and logically for government regulation, which of course the corporations object to.”

If environmental regulators, whether from states like North Carolina or federal agencies like the Environmental Protection Agency (EPA), do not attempt to curb pollution by profit-obsessed companies, who will? If government regulators do not do more to prevent the type of financial chicanery that helped bring about the Great Recession of 2007-2009, who will? If government legislation does not address the widening U.S. wealth gap created by our capitalist system, who will?

walter moss

Walter Moss

In the useful book Practical Wisdom: The Right Way to Do the Right Thing (review here), its authors argue that an overabundance of rules and regulations can be counterproductive and that instead we need to encourage more individuals and institutions to develop practical wisdom. This includes developing institutional, including university and corporate, cultures that emphasize a hierarchy of values that places profit-making within its proper subordinate position.

Good advice. But to the extent our families, schools, universities, mass culture, and institutional cultures fail to stress that higher values should supersede money-making and profits, government bodies and regulations will remain our final safeguard.

Walter G. Moss

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Comments

  1. Joseph Maizlish says

    A general principle, to which there may be rare exceptions, is: “The good done in the donation cannot equal the ill done in the accumulation.”

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