The Saving Grace of Wealth and Power

In 1868, thirty-three-year-old railroad magnate, industrialist and philanthropist Andrew Carnegie wrote himself a to-do list for the coming years. To fully appreciate it, though, as well as the existential crisis it must have presaged for him and the lessons that crisis held for our own individual and national approaches to wealth, it’s important to know a few things about his early life.

Andrew Carnegie was born in Dunfermline, Scotland, in 1835, the son of a smalltime weaver. When his family emigrated to the United States in 1848, they had to borrow the $20 it took to secure passage. In Pennsylvania, beginning at age 13, he earned a living first at a cotton mill and then as a telegraph operator. His professional acuity led to a consistent rise through the ranks at the Pennsylvania Railroad Company, due in large part to the mentorship of the corporation’s fourth President, Thomas A. Scott. Scott taught him many of the practices and attitudes that Carnegie would later use to such advantage in business.

In 1855, with Scott’s help, twenty-year-old Andrew Carnegie made his first investment: $500 in Adams Express, which we know today as American Express. His mother mortgaged her house to raise the money. On receiving his first guaranteed monthly dividend check, in the amount of $10, Carnegie wrote, “I shall remember that check as long as I live . . . It gave me the first penny of revenue from capital — something that I had not worked for with the sweat of my brow. ‘Eureka!’ I cried. ‘Here’s the goose that lays the golden eggs!’

Cautious investment during the Civil War made it possible for him in 1864 to put $40,000 into oil prospecting. The company did strike oil within the year, making him manyfold richer. Armed with that sudden wealth, he moved from railroad investment into pig iron, and from there into the factories that anchored the Steel Belt in Pennsylvania. In 1868, at thirty-three years old, he was fabulously wealthy — and that was only the beginning.

Even (or perhaps especially) at that time, Carnegie was planning for the future with a fiery, if meticulous, ambition. The following personal memorandum is one of his best-known works.

Carnegie’s Memo to Self

St. Nicholas Hotel, New York, December, 1868

Thirty three and an income of $50,000 per annum! By this time two years I can arrange all my business as to secure at least $50,000 per annum. Beyond this never earn – make no effort to increase fortune, but append the surplus each year for benevolent purposes. Cast aside business forever, except for others.

Settle in Oxford and get thorough education, making the acquaintance of literary men – this will take three years’ active work – pay especial attention to speaking in public. Settle then in London and purchase a controlling interest in some newspaper or live review and give the general management of it attention, taking a part in public matters, especially those connected with education and improvement of the poorer classes.

Man must have an idol – the amassing of wealth is one of the worst species of idolatry – no idol more debasing than the worship of money. Whatever I engage in I must push inordinately; therefore should I be careful to choose that life which will be the most elevating in its character. To continue much longer overwhelmed by business cares and with most of my thoughts wholly upon the way to make money in the shortest time, must degrade me beyond hope of permanent recovery. I will resign business at thirty-five, but during the ensuing two years I wish to spend the afternoons in receiving instruction and in reading systematically.

(Andrew Carnegie, aged 33) (Source: Transcribed from the letter itself, on file at the Carnegie House in Dunfermline, Scotland). (Bolding mine.)

Carnegie died fifty-one years later, at his home in Lenox, Massachusetts, at the ripe old age of eighty-three, having amassed more than $500 million dollars.

How is it possible to square thirty-three-year-old Andrew Carnegie, who wrote privately — and therefore, one assumes, not to grandstand — that “the amassing of wealth is one of the worst species of idolatry” and consequently promised to himself that he would resign business at thirty-five, with the steel magnate he became in his later years — who, even as of 2007, according to the New York Times, remained the sixth-richest American in history?

Carnegie must have wrestled extensively with this question over the years, but by 1898, when he published “The Gospel of Wealth,” he’d evidently come up with his own answer: great wealth may be saved if its holder makes use of it for others. Even today, as a friend of mine remarked, this piece remains “the most famous monograph on philanthropy there is”:

Thus is the problem of rich and poor to be solved. The laws of accumulation will be left free, the laws of distribution free. Individualism will continue, but the millionaire will be but a trustee for the poor, intrusted for a season with a great part of the increased wealth of the community, but administering it for the community far better than it could or would have done for itself. The best minds will thus have reached a stage in the development of the race in which it is clearly seen that there is no mode of disposing of surplus wealth creditable to thoughtful and earnest men into whose hands it flows, save by using it year by year for the general good. This day already dawns. Men may die without incurring the pity of their fellows, still sharers in great business enterprises from which their capital cannot be or has not been withdrawn, and which is left chiefly at death for public uses; yet the day is not far distant when the man who dies leaving behind him millions of available wealth, which was free for him to administer during life, will pass away “unwept, unhonored, and unsung,” no matter to what uses he leaves the dross which he cannot take with him. Of such as these the public verdict will then be: “The man who dies thus rich dies disgraced.”

In his 1919 obituary, the New York Times referred to the bolded language as “His Famous Utterance.”

Carnegie seems to have been a free-marketer, but of a particular sort: his free market philosophy depends upon the morality – in particular, the community responsibility – of the system’s victors. There’s another piece to be written here on why, say, the Occupy movement so distrusts the 1%, the short version of which is that they take and, except through a suspiciously indirect and unfalsifiable process, neither give nor concern themselves with giving. I’ve heard it said variously that merely creating value is justification enough for a banker’s job, or that increasing taxes on the 1% is the same as making them pay their fair share, but the evidence suggests that Andrew Carnegie would — and did — disagree strenuously. As communitarian commitment goes, he argues unequivocally that taxation is a distant second-best to the rich independently making active use of their wealth to better the community. (On the other hand, it’s hard to see how to make that happen if the rich don’t believe in noblesse oblige all on their own.)

That principle — that “there is but one right mode of using enormous fortunes, namely, that the possessors from time to time during their own lives should so administer these as to promote the permanent good to the communities from which they were gathered” [Taken from his later expansion on the Gospel of Wealth, available at the same site. --JSFM]– readily translates for use in other spheres. You can see it animating Carnegie’s views on international relations in this piece, which he wrote that same year:

The United States, thus far in their history, have no page reciting self-sacrifice made for others; all their gains have been for themselves. This void is now to be grandly filled. The page which recites the resolve of the Republic to rid her neighbor, Cuba, from the foreign possessor will grow brighter with the passing centuries, which may dim many pages now deemed illustrious. Should the coming American be able to point to Cuba and the Philippines rescued from foreign domination and enjoying independence won for them by his country and given to them without money and without price, he will find no citizen of any other land able to claim for his country services so disinterested and so noble.

That is, we are a great country if, and only if, we actively use our tremendous wealth and power for the good of others. Otherwise, should the American century ever end, we will fade into history “unwept, unhonored, and unsung.”

Despite his surety, Carnegie was also alive to the critics of his work. From an expansion of his initial essay:

Perhaps the “Pall Mall Gazette” in its issue of September 5 puts most pithily the objections that have been raised to what the English have been pleased to call “The Gospel of  Wealth.” I quote: “Great fortunes, says Mr. Carnegie, are great blessings to a community, because such and such things may be done with them.  Well, but they are also a great curse, for such and such things are done with them. Mr. Carnegie’s preaching, in other words, is altogether vitiated by Mr. Benzon’s practice.[1] The gospel of wealth is killed by the acts.” To this the reply seems obvious: the gospel of Christianity is also killed by the acts. The same objection that is urged against the gospel of wealth lies against the commandment, “Thou shalt not steal.” It is no argument against a gospel that it is not lived up to; indeed, it is an argument in its favor, for a gospel must be higher than the prevailing standard. It is no argument against a law that it is broken: in that disobedience lies the reason for making and maintaining the law; the law which is never to be broken is never required.

A strong riposte, and a fine example of a rhetorical device I’ve taken to calling the Appeal to Common Authority (more on which later).

What drove young Andrew to despair, and old Andrew to the admiring gaze of history, was the line between naked ambition and responsible citizenship. Carnegie devoted much time, thought and effort to discerning the placement of that line, and in acting as he believed a good citizen of substantial means not only should, but must. Without a similar code of conduct, today’s most privileged actors, nation and individual alike, expose themselves to accusations of greed and sloth by those who, without quite being able to articulate it, believe as Carnegie did.

Great wealth can, and does, vanish swiftly if heirs prove incapable of bearing its weight. The [19th century] iron merchant Ernest Benzon drew guests as notable as Felix Mendelssohn, George Eliot and Robert Browning to his lavish salon. In 1889, Benzon’s grandson, also called Ernest, described what then happened to the family fortune in his book, How I Lost £250,000 in Two Years. The chapter headings chronicle the dissolving of a fortune worth between £20m and £110m in today’s money: Coming of Age, Racing Experiences, Gambling Experiences, The Ring, Money Lenders, Monte Carlo and Pigeon Shooting, London Tradesmen. Before losing his last shilling on the roulette wheels of the riviera, Benzon once gambled away £10,000 at chemin-de-fer during a 10-minute wait for a train.