It might be a nice difficulty, but a difficulty none the less: if you are incredibly rich, what will you do with all your money when you die? When in 1901 he sold his huge iron and steel interests to financier John Pierpont Morgan, personally receiving over $225 million, Andrew Carnegie became the richest individual of his age. The son of a poor Scottish linen weaver, he was the classic American immigrant success story who, in addition to possessing great judgment and drive, also admitted he had been in the right place at the right time. Carnegie’s family had settled in Pittsburgh, then a cradle of America’s industrial revolution, and as a young man he held jobs in the country’s emerging telegraph and railroad industries. Later, as a captain of industry, he was sharply criticised for keeping wages low and hours long (the famous Homestead strike in 1892 at one of his plants resulted in the deaths of ten men), yet he also kept with him a European sense of the ‘public good’, spending the last part of his life working out how to give his money away for the greatest benefit. The three most powerful points I took from the book were;
As a general rule, Carnegie noted, most fortunes are not passed on because of thoughts of the welfare of children, but because of family pride
Carnegie observed that wealth, passing through the hands of the few, can be made a much more potent force for the elevation of our race than if it had been distributed in small sums to the people themselves.
Carnegie's believed in what Jesus said that its "easier for a camel to enter the eye of a needle than for a rich man to enter the Kingdom of Heaven and recognised that a person who dies rich, “dies disgraced”.
The Gospel of Wealth, as it became known after publication in Britain, was an essay originally published in the North American Review. It became famous across the Atlantic when former prime minister William Gladstone helped organize its publication in the Pall Mall Gazette. Even today its influence is out of all proportion to its length, running as it does to no more than few thousand words.
Freedom, inequality and wealth.
Carnegie begins his essay by noting the huge differences in wealth in the modern world. He does not, as you might expect of an ‘enlightened capitalist’, decry the disparity – in fact, he applauds it, noting that today’s poor person is much better off that the poor of the past. They can afford what would have once been thought of as luxuries even to royalty. Furthermore, he writes, this great inequality is the natural way of the world, a demonstration of the self-evident principles of ‘survival of the fittest’ and advancement of the best able. Luck certainly plays a part, he admits, in the fortunes of men, but in a free society the people of ability and ambition naturally prosper while others lag. All wealth comes from healthy individualism and the freedom to create and do. In a free country, we are free to make a million, and free to starve. All this, according to Carnegie, was a given. But the big question facing a capitalist order was this: if the order leads to great wealth being concentrated into the hands of a few, what should be done with all the excess? Even though some people have been ‘born lucky’ in terms of attributes, it is also true that whatever they create through enterprise cannot be achieved without the public’s patronage. Therefore, he reasoned, great wealth ultimately belonged to the society that had helped created it.
What to do with it.
Noting the obvious, that ‘you can’t take it with you’ when you die, Carnegie goes through the ways that a rich person can get rid of their fortune. They can:
Leave it to their family;
Bequeath it to the public on their death;
Dispense and distribute it during their lifetime.
What was the point, he asked, in leaving all your money to your family? History shows that large fortunes are to their heirs more of a burden than a boon. Though some heirs turn out to be exemplary stewards of the family resources, without an incentive to work hard most children of the wealthy tend to lead mediocre lives, and some were downright destroyed by their money. Naturally, he comments, a magnate would want to leave their ‘wife and daughters’ well provided for, but they should think hard about leaving much to their sons. As a general rule, he noted, most fortunes are not passed on because of thoughts of the welfare of children, but because of family pride. But what use was pride when you were dead? Much better, he felt, to distribute your fortune during your lifetime, using the same imagination and diligence that you had displayed in creating it. This meant avoiding the typical philanthropist’s path of ‘giving it away to charity’, but working actively yourself to ensure maximum social benefit for your bucks.
Where to spend it.
According to Carnegie it was a waste of money to give directly to those who had nothing, since they would fritter it away on ‘indulgence’ and ‘excess’. He sternly noted that “Neither than individual nor the race is improved by alms-giving.” Resources should only go to those who could help themselves, and to worthwhile public projects that government did not have the funds to build. In another, related essay, he listed some areas that were all deserving of entrepreneurial largesse. They included universities, libraries, parks, museums and art galleries, hospitals, concert halls, swimming pools and churches. He observed that wealth, “…passing through the hands of the few, can be made a much more potent force for the elevation of our race than if it had been distributed in small sums to the people themselves.” That is, people on their own could not be trusted to make the best use of given money, but give them a noble institution or needed facility and they would use it to good ends. Carnegie himself became famous for his endowment of public libraries (close to 5,000 around the world), and funding of institutions devoted to peace (he pulled out all stops to try to prevent World War One). New York City already had been endowed with the Astor and Lenox libraries, which were combined to create (with further funds from Samuel J Tilden) to create the famous New York City Public Library. Carnegie takes his hat off to other philanthropists in this mould, mentioning Tilden, Cooper, Pratt, Stanford (endower of Stanford University), and the Vanderbilt family, which built the university named after them while they were still in their financial prime.
What I took for it.
Wealthy people are always eager to find ways around the Biblical line, “It is easier for a camel to enter the eye of a needle than for a rich man to enter the Kingdom of Heaven.” Carnegie, however, did not dispute the warning, wryly noting that it ‘betokens serious difficulty for the rich’. His own Gospel, he believed, expressed the full intent of Jesus’s words, in its recognition that a person who dies rich, “dies disgraced”. Some have viewed Carnegie’s attitude – that a great fortune given away wisely would do much more good to society than millions of ‘trifling amounts’ given away to many – as paternalistic. Yet he honestly believed that individuals counted for little in relation to the progress of humanity overall. This included himself. But history does not usually forget great givers, and many of the monuments built to serve the apparent pride of their capitalist donors are still around, continuing to elevate and inspire. Software king Bill Gates and investor Warren Buffett, the two richest individuals of our age, have both been strongly influenced by The Gospel of Wealth. Their fortunes, joined in the one Bill and Melinda Gates foundation, represent by far the biggest endowment in history, now dispensing billions of dollars a year to worthwhile causes, mostly relating to health and education.
Chuck Feeney, the duty-free billionaire behind Atlantic Philanthropies, was also inspired by the essay. In relation to big giving, Carnegie set the modern standard, and beyond the millions of lives enlightened by his libraries and other institutions, this is his even greater legacy.