How the richest man in America practised what he preached on sharing the wealth.
At first blush, Andrew Carnegie was a prototypical 19th Century American industrialist. Having built the U.S. steel industry almost single-handedly, Carnegie was one of the key figures behind the American industrial revolution. Railway tracks, skyscraper girders, passenger ships – they were all made possible by the innovations in steel processing that made Carnegie, at one point, the richest man in America.
But look a little closer and you will see Carnegie stands apart from his industrialist peers like Rockefeller and Getty. While just about every industrialist of the day had a charitable or philanthropic cause he put his name to, Carnegie saw sharing his wealth not merely as good public relations, but rather as a moral imperative that shaped how he lived the latter part of his life.
When Carnegie got up on his soapbox, it wasn’t to deride big government or those who are looking for a hand-out. His target was his uber-wealthy peer group who hoarded money rather than using it to better the community.
And that made him anything but the prototypical American industrialist.
Andrew Carnegie was born in Dunfermline, Scotland in 1835. At the age of 13, he immigrated to the United States with his parents. As a young man, he worked installing and repairing telegraph lines. This was his main duty when he served in the Union Army during the American Civil War.
Travelling the country working with telegraph lines gave him a glimpse into what 20th Century America would soon be like. It would grow rapidly and so he got in the ground floor investing in several different industries. As a young man, Carnegie had investments in railroads, oil derricks and was the primary investors in the Pullman luxury sleeping car.
Carnegie left the Railroad industry to manage the Keystone Bridge Company. This would give him a masterclass in the importance of manufacturing good quality steel. SO in the early 1870’s Carnegie founded the J. Edgar Thompson Steelworks which would eventually become the Carnegie Steel Company.
Carnegie led key innovation in steel production including the Bessemer steelmaking process which had been used in Britain but not in the U.S. at that point. Bessemer steel was easier and cheaper to produce, causing it to surge in demand. Carnegie Steel was the industry leader up to the point he sold it to a group put together by J.P. Morgan for $480 Millon. The new company became known as The U.S. Steel Corporation.
Driven By A New Cause
Carnegie had been involved in philanthropic efforts through most of his adult life. But now retired with $225 million in bank bonds in his vault, he found a new calling. The key tenants of this calling were outlined in his 1889 essay in the North American Review entitled The Gospel of Wealth.
The essay is a type or sermon to his fellow industrialists cautioning them against hoarding or squandering their great wealth. He lobbied for a more stringent estate tax similar to what they had in Britain. But in his language, it became clear this was more about a moral obligation on the part of the wealthy.
“By taxing estates heavily at death the State marks its condemnation of the selfish millionaire’s unworthy life.”
For Carnegie, a wealthy industrialist who hoards his money only to pass it on to unworthy heirs who did nothing to earn it was more than just unwise, it bordered on sinful.
Walking The Walk
Carnegie strongly believed that excess wealth should not be used in charities that trap the less fortunate in a continued cycle of poverty. Instead, it should be used to create institutions that can lead to their betterment.
To this end, Carnegie donated hundreds of millions of dollars to build libraries, educational institutions, and cultural centres. The most famous of which is the Carnegie Hall Performance Center in New York which continues to stand as a signature piece of architecture in that city’s skyline.
Other standing examples of Carnegie’s Gospel of Wealth put into practice include Carnegie Mellon University in Pittsburgh, and countless public libraries built in communities small and large all across the United States.
Other key cultural and community enrichments include The Carnegie Endowment for International Peace, Carnegie Institution for Science, Carnegie Trust for the Universities of Scotland, Carnegie Hero Fund, and the Carnegie Museums of Pittsburgh.