Wednesday, July 31, 2013

Andrew Carnegie: His Outlook On Wealth And The World

On wealth

Carnegie at Skibo Castle, 1914
Stained glass window dedicated to Andrew Carnegie in the National Cathedral
As early as 1868, at age 33, he drafted a memo to himself. He wrote: "...The amassing of wealth is one of the worse species of idolatry. No idol more debasing than the worship of money."[38]In order to avoid degrading himself, he wrote in the same memo he would retire at age 35 to pursue the practice of philanthropic giving for "...the man who dies thus rich dies disgraced." However, he did not begin his philanthropic work in all earnest until 1881, with the gift of a library to his hometown of Dunfermline, Scotland.[39]
Carnegie wrote "The Gospel of Wealth",[40] an article in which he stated his belief that the rich should use their wealth to help enrich society.
The following is taken from one of Carnegie's memos to himself:
Man does not live by bread alone. I have known millionaires starving for lack of the nutriment which alone can sustain all that is human in man, and I know workmen, and many so-called poor men, who revel in luxuries beyond the power of those millionaires to reach. It is the mind that makes the body rich. There is no class so pitiably wretched as that which possesses money and nothing else. Money can only be the useful drudge of things immeasurably higher than itself. Exalted beyond this, as it sometimes is, it remains Caliban still and still plays the beast. My aspirations take a higher flight. Mine be it to have contributed to the enlightenment and the joys of the mind, to the things of the spirit, to all that tends to bring into the lives of the toilers of Pittsburgh sweetness and light. I hold this the noblest possible use of wealth.[41]

The "Andrew Carnegie Dictum" was:
  • To spend the first third of one's life getting all the education one can.
  • To spend the next third making all the money one can.
  • To spend the last third giving it all away for worthwhile causes.


Early life

Birthplace of Andrew Carnegie in Dunfermline, Scotland
Andrew Carnegie was born in Dunfermline, Scotland, in a typical weaver's cottage with only one main room, consisting of half the ground floor which was shared with the neighboring weaver's family.[2] The main room served as a living room, dining room and bedroom.[2] He was named after his legal grandfather.[2] In 1836, the family moved to a larger house in Edgar Street (opposite Reid's Park), following the demand for more heavy damask from which his father, William Carnegie, benefited.[2] His uncle, George Lauder, whom he referred to as "Dod", introduced him to the writings of Robert Burns and historical Scottish heroes such as Robert the BruceWilliam Wallace, and Rob Roy. Falling on very hard times as a handloom weaver and with the country in starvation, William Carnegie decided to move with his family to Allegheny, Pennsylvania in the United States in 1848 for the prospect of a better life.[3] Andrew's family had to borrow money in order to migrate. Allegheny was a very poor area. His first job at age 13 in 1848 was as a bobbin boy, changing spools of thread in a cotton mill 12 hours a day, 6 days a week in a Pittsburgh cotton factory. His starting wage was $1.20 per week.[4] Andrew's father, William Carnegie, started off working in a cotton mill but then would earn money weaving and peddling linens. His mother, Margaret Morrison Carnegie, earned money by binding shoes.

Intellectual influences

Carnegie claimed to be a champion of evolutionary thought particularly the work of Herbert Spencer, even declaring Spencer his teacher.[42] Though Carnegie claims to be a disciple of Spencer many of his actions went against the ideas espoused by Spencer.
Spencerian evolution was for individual rights and against government interference. Furthermore, Spencerian evolution held that those unfit to sustain themselves must be allowed to perish. Spencer believed that just as there were many varieties of beetles, respectively modified to existence in a particular place in nature, so too had human society “spontaneously fallen into division of labour”.[43] Individuals who survived to this, the latest and highest stage of evolutionary progress would be “those in whom the power of self-preservation is the greatest—are the select of their generation.”[44] Moreover, Spencer perceived governmental authority as borrowed from the people to perform the transitory aims of establishing social cohesion, insurance of rights, and security.[45][46] Spencerian ‘survival of the fittest’ firmly credits any provisions made to assist the weak, unskilled, poor and distressed to be an imprudent disservice to evolution.[47] Spencer insisted people should resist for the benefit of collective humanity as these severe fate singles out the weak, debauched, and disabled.[47]
Andrew Carnegie’s political and economic focus of during the late nineteenth and early twentieth century was the defense of laissez faire economics. Carnegie emphatically resisted government intrusion in commerce, as well as government-sponsored charities. Carnegie believed the concentration of capital was essential for societal progress and should be encouraged.[48] Carnegie was an ardent supporter of commercial “survival of the fittest” and sought to attain immunity from business challenges by dominating all phases of the steel manufacturing procedure.[49]Carnegie’s determination to lower costs included cutting labor expenses as well.[50] In a notably Spencerian manner, Carnegie argued that unions impeded the natural reduction of prices by pushing up costs, which blocked evolutionary progress.[51] Carnegie felt that unions represented the narrow interest of the few while his actions benefited the entire community.[49]
On the surface, Andrew Carnegie appears to be a strict laissez-faire capitalist and follower of Herbert Spencer, often referring to himself as a disciple of Spencer.[52] Conversely, Carnegie a titan of industry seems to embody all of the qualities of Spencerian survival of the fittest. The two men enjoyed a mutual respect for one another and maintained correspondence until Spencer’s death in 1903.[52] There are however, some major discrepancies between Spencer’s capitalist evolutionary conceptions and Andrew Carnegie’s capitalist practices.
Spencer wrote that in production the advantages of the superior individual is comparatively minor, and thus acceptable, yet the benefit that dominance provides those who control a large segment of production might be hazardous to competition. Spencer feared that an absence of “sympathetic self-restraint” of those with too much power could lead to the ruin of his competitors.[53] He did not think free market competition necessitated competitive warfare. Furthermore, Spencer argued that individuals with superior resources who deliberately used investment schemes to put competitor out of business were committing acts of “commercial murder”.[53] Carnegie built his wealth in the steel industry by maintaining an extensively integrated operating system. Carnegie also bought out some regional competitors, and merged with others, usually maintaining the majority shares in the companies. Over the course of twenty years, Carnegie’s steel properties grew to include the Edgar Thomson Steel Works, the Lucy Furnace Works, the Union Iron Mills, the Homestead Works, the Keystone Bridge Works, the Hartman Steel Works, the Frick Coke Company, and the Scotia ore mines among many other industry related assets.[54] Furthermore, Carnegie’s success was due to his convenient relationship with the railroad industries, which not only relied on steel for track, but were also making money from steel transport. The steel and railroad barons worked closely to negotiate prices instead of free market competition determinations.[55]
Besides Carnegie’s market manipulation, United States trade tariffs were also working in favor of the steel industry. Carnegie spent energy and resources lobbying congress for a continuation of favorable tariffs from which he earned millions of dollars a year.[56] Carnegie tried to keep this information concealed, but legal document released in 1900, during proceeding with the ex-chairman of Carnegie Steel Henry Clay Frick revealed how favorable the tariffs had been.[57] Herbert Spencer absolutely was against government interference in business in the form of regulatory limitation, taxes, and tariffs as well. Spencer saw tariffs as a form of taxation that levied against the majority in service to “the benefit of a small minority of manufacturers and artisans”.[58]
Despite Carnegie's personal dedication to Herbert Spencer as a friend, his adherence to Spencer’s political and economic ideas is more contentious. In particular, it appears Carnegie either misunderstood or intentionally misrepresented some of Spencer's principal arguments. Spencer remarked upon his first visit to Carnegie's steel mills in Pittsburgh, which Carnegie saw as the manifestation of Spencer's philosophy, "Six months' residence here would justify suicide."[59]
The conditions of human society create for this an imperious demand; the concentration of capital is a necessity for meeting the demands of our day, and as such should not be looked at askance, but be encouraged. There is nothing detrimental to human society in it, but much that is, or is bound soon to become, beneficial. It is an evolution from the heterogeneous to the homogeneous, and is clearly another step in the upward path of development.
—Carnegie, Andrew 1901 The Gospel of Wealth and Other Timely Essays[48]
On the subject of charity Andrew Carnegie's actions diverged in the most significant and complex manner from Herbert Spencer's philosophies. In his 1854 essay Manners and Fashion, Spencer referred to public education as “Old schemes”. He went on to declare that public schools and colleges, fill the heads of students with inept useless knowledge, which excludes useful knowledge. Spencer stated that he trusted no organization of any kind, “political, religious, literary, philanthropic”, and believed that as they expanded in influence so too did its regulations expand. In addition Spencer thought that as all institutions grow they become evermore corrupted by the influence of power and money. The institution eventually loses its “original spirit, and sinks into a lifeless mechanism”.[60] Spencer insisted that all forms of philanthropy uplift the poor and downtrodden were reckless and incompetent. Spencer thought any attempt to prevent “the really salutary sufferings” of the less fortunate “bequeath to posterity a continually increasing curse”.[61] Carnegie, a self-proclaimed devotee of Spencer, testified to Congress on February 5, 1915: "My business is to do as much good in the world as I can; I have retired from all other business."[62]
Carnegie held that societal progress relied on individuals who maintained moral obligations to themselves and to society.[63] Furthermore, he believed that charity supplied the means for those who wish to improve themselves to achieve their goals.[64] Carnegie urged other wealthy people to contribute to society in the form of parks, works of art, libraries and other endeavors that improve the community and contribute to the “lasting good.”[65] Carnegie also held a strong opinion against inherited wealth. Carnegie believed that the sons of prosperous businesspersons were rarely as talented as their fathers.[64] By leaving large sums of money to their children, wealthy business leaders were wasting resources that could be used to benefit society. Most notably, Carnegie believed that the future leaders of society would rise from the ranks the poor.[66] Carnegie strongly believed in this because he had risen from the bottom. He believed the poor possessed an advantage over the wealthy because they receive greater attention from their parents and are taught better work ethics.[66]

Religion and world view

Witnessing sectarianism and strife in 19th century Scotland regarding religion and philosophy, Carnegie kept his distance from organized religion and theism.[67] Carnegie instead preferred to see things through naturalistic and scientific terms stating, "Not only had I got rid of the theology and the supernatural, but I had found the truth of evolution."[68]
Later in life, Carnegie's firm opposition to religion softened. For many years he was a member of Madison Avenue Presbyterian Church, pastored from 1905 to 1926 by Social Gospel exponent Henry Sloane Coffin, while his wife and daughter belonged to the Brick Presbyterian Church.[69] He also prepared (but did not deliver) an address to St. Andrews in which he professed a belief in "an Infinite and Eternal Energy from which all things proceed".[70]

World peace

Influenced by his "favorite living hero in public life", the British liberal, John Bright, Carnegie started his efforts in pursuit of world peace at a young age.[71] His motto, "All is well since all grows better", served not only as a good rationalization of his successful business career but also in his view of international relations.


While Carnegie did not comment on British imperialism, he very strongly opposed the idea of American colonies. He strongly opposed the annexation of the Philippines, almost to the point of supporting William Jennings Bryan against McKinley in 1900. In 1898, Carnegie tried to arrange for independence for the Philippines. As the end of the Spanish American War neared, the United States bought the Philippines from Spain for $20 million. To counter what he perceived as imperialism on the part of the United States, Carnegie personally offered $20 million to the Philippines so that the Filipino people could buy their independence from the United States.[17] However, nothing came of the offer. Carnegie worked with other conservatives who founded the American Anti-Imperialist League, which included former presidents of the United States Grover Cleveland and Benjamin Harrison and literary figures like Mark Twain.[18][19][20]

No comments:

Post a Comment