Excerpt from "Wealth"
First published in the North American Review, June 1889
"In bestowing charity, the main consideration should be to help those who will help themselves."
Andrew Carnegie (1835–1919) was an outstanding symbol of the American dream: a poor immigrant who works hard and achieves astounding success and enormous riches. Carnegie had started on his path to success as a boy, working for low wages in a textile mill, and rose to dominate the steel industry.
At the same time that Carnegie was amassing his fortune, however, more typical immigrants were housed in squalid quarters, earning barely enough to live on. They worked for ten or twelve hours a day, six days a week; they received no vacations and were subject to dismissal at the whim of a supervisor.
In the 1880s the Socialist Party began appealing to such workers to back a profound change. The socialists (people who seek political and economic equality for all people) and other groups, such as the communists (people who believe in a government in which the people own property in common), advocated higher wages and other benefits for workers, which would come at the expense of wealthy owners like Andrew Carnegie. Consequently, Carnegie wrote an essay which he titled simply "Wealth."
Things to remember while reading the excerpt from "Wealth":
- The subject of Carnegie's essay was not an abstract idea for him. In the essay he defends having a huge treasure even while his workers were barely able to live on their wages, and he argues against those who proposed political changes to make the distribution of wealth more even. He argued that it was an inevitable law of history that civilization should advance in such a way as to create a small class of business owners with far greater wealth than ordinary workers. Efforts to change this, as proposed by socialists, communists, and anarchists (people who advocated an end to formal government structures), were doomed to failure—because they went against the natural trends of history, according to Carnegie.
- As part of his justification for accumulating a large fortune, Carnegie also advocated that wealthy individuals should give away their money during their lifetimes in order to benefit society. He was especially intent that such gifts seldom be given directly to individuals in need (as charity), which in his view would simply lead poor people to spend money in a wasteful manner. Rather he believed the money should go to institutions that would improve people's lives. Carnegie himself chose to give money to build public libraries, providing funding to establish libraries in almost every state, and overseas as well.
- In Andrew Carnegie's time, there was no federal tax on incomes (the first federal income tax was imposed after adoption of the Sixteenth Amendment in 1913). Nor was there a federal tax on estates (the property and possessions, including money, left by a person at death). These two facts made it relatively easy for the owners of large corporations of the era to acquire immense fortunes.
- In contrast to a climate favoring the wealthy, there was an almost complete absence of government benefits for workers. If workers were fired or laid off, they were on their own—there was no unemployment assistance to help them until they found another job. Often, workers lived in housing provided by their employer, so that losing a job also meant losing a place to live.
Excerpt from "Wealth"
The problem of our age is the proper administration of wealth, so that the ties of brotherhood may still bind together the rich and poor in harmonious relationship. The conditions of human life have not only been changed, but revolutionized, within the past few hundred years. In former days there was little difference between the dwelling, dress, food, and environment of the chief and those of his retainers. The Indians are to-day where civilized man then was. When visiting the Sioux, I was led to the wigwam of the chief. It was just like the others in external appearance, and even within the difference was trifling between it and those of the poorest of his braves. The contrast between the palace of the millionaire and the cottage of the laborer with us to-day measures the change which has come with civilization.
This change, however, is not to be deplored, but welcomed as highly beneficial. It is well, nay, essential for the progress of the race, that the houses of some should be homes for all that is highest and best in literature and the arts, and for all the refinementsof civilization, rather than that none should be so. Much better this great irregularity than universal squalor. Without wealth there can be no Maecenas [an ancient Roman patron of literature]. The "good old times" were not good old times. Neither master nor servant was as well situated then as to-day. A relapse to old conditions would be disastrous to both—not the least so to him who serves—and would sweep away civilization with it. But whether the change be for good or ill, it is upon us, beyond our power to alter, and therefore to be accepted and made the best of. It is waste of time to criticize the inevitable.
It is easy to see how the change has come. One illustration will serve for almost every phase of the cause. In the manufacture of products we have the whole story. It applies to all combinations of human industry, as stimulated and enlarged by the inventions of this scientific age. Formerly articles were manufactured at the domestic hearth or in small shops which formed part of the household. The master and his apprentices worked side by side, the latter living with the master, and therefore subject to the same conditions. When these apprentices rose to be masters, there was little or no change in their mode of life, and they, in turn, educated in the same routine succeeding apprentices. There was, substantially, social equality, and even political equality, for those engaged in industrial pursuits had then little or no political voice in the State.
But the inevitable result of such a mode of manufacture was crude articles at high prices. To-day the world obtains commodities of excellent quality at prices which even the generation preceding this would have deemed incredible. In the commercial world similar causes have produced similar results, and the race is benefited thereby. The poor enjoy what the rich could not before afford. What were the luxuries have become the necessaries of life. The laborer has now more comforts than the farmer had a few generations ago. The farmer has more luxuries than the landlord had, and is more richly clad and better housed. The landlord has books and pictures rarer, and appointments more artistic, than the King could then obtain.
The price we pay for this salutary change is, no doubt, great. We assemble thousands of operatives in the factory, in the mine, and in the counting-house, of whom the employer can know little or nothing, and to whom the employer is little better than a myth. All intercourse between them is at an end. Rigid Castes are formed, and, as usual, mutual ignorance breeds mutual distrust. Each Caste is without sympathy for the other, and ready to credit anything disparaging in regard to it. Under the law of competition, the employer of thousands is forced into the strictest economies, among which the rates paid to labor figure prominently, and often there is friction between the employer and the employed, between capital and labor, between rich and poor. Human society loses homogeneity.
The price which society pays for the law of competition, like the price it pays for cheap comforts and luxuries, is also great; but the advantages of this law are also greater still, for it is to this law that we owe our wonderful material development, which brings improved conditions in its train. But, whether the law be benign or not, we must say of it, as we say of the change in the conditions of men to which we have referred: It is here; we cannot evade it; no substitutes for it have been found; and while the law may be sometimes hard for the individual, it is best for the race, because it insures the survival of the fittest in every department. We accept and welcome, therefore, as conditions to which we must accommodate ourselves, great inequality of environment, the concentration of business, industrial and commercial, in the hands of a few, and the law of competition between these, as being not only beneficial, but essential for the future progress of the race. Having accepted these, it follows that there must be great scope for the exercise of special ability in the merchant and in the manufacturer who has to conduct affairs upon a great scale. That this talent for organization and management is rare among men is proved by the fact that it invariably secures for its possessor enormous rewards, no matter where or under what laws or conditions. The experienced in affairs always rate the man whose services can be obtained as a partner as not only the first consideration, but such as to render the question of his capital scarcely worth considering, for such men soon create capital; while, without the special talent required, capital soon takes wings. Such men become interested in firms or corporations using millions; and estimating only simple interest to be made upon the capital invested, it is inevitable that their income must exceed their expenditures, and that they must accumulate wealth. Nor is there any middle ground which such men can occupy, because the great manufacturing or commercial concern which does not earn at least interest upon its capital soon becomes bankrupt. It must either go forward or fall behind: to stand still is impossible. It is a condition essential for its successful operation that it should be thus far profitable, and even that, in addition to interest on capital, it should make profit. It is a law, as certain as any of the others named, that men possessed of this peculiar talent for affairs, under the free play of economic forces, must, of necessity, soon be in receipt of more revenue than can be judiciously expended upon themselves; and this law is as beneficial for the race as the others.
Objections to the foundations upon which society is based are not in order, because the condition of the race is better with these than it has been with any others which have been tried. Of the effect of any new substitutes proposed we cannot be sure. The Socialist or Anarchist who seeks to overturn present conditions is to be regarded as attacking the foundation upon which civilization itselfrests, for civilization took its start from the day that the capable, industrious workman said to his incompetent and lazy fellow, "If thou dost not sow, thou shalt not reap," and thus ended primitive Communism by separating the drones from the bees [workers]. One who studies this subject will soon be brought face to face with the conclusion that upon the sacredness of property civilization itself depends—the right of the laborer to his hundred dollars in the savings bank, and equally the legal right of the millionaire to his millions. To those who propose to substitute Communism for this intense Individualism the answer, therefore, is: The race has tried that. All progress from that barbarous day to the present time has resulted from its displacement. Not evil, but good, has come to the race from the accumulation of wealth by those who have the ability and energy that produce it. But even if we admit for a moment that it might be better for the race to discard its present foundation, Individual-ism,—that it is a nobler ideal that man should labor, not for himself alone, but in and for a brotherhood of his fellows, and share with them all in common, realizing Swedenborg's idea of Heaven,
There remains, then, only one mode of using great fortunes; but in this we have the true antidote for the temporary unequal distribution of wealth, the reconciliation of the rich and the poor—a reign of harmony—another ideal, differing, indeed, from that of the Communist in requiring only the further evolution of existing conditions, not the total overthrow of our civilization. It is founded upon the present most intense individualism, and the race is prepared to put it in practice by degrees whenever it pleases. Under its sway we shall have an ideal state, in which the surplus wealth of the few will become, in the best sense, the property of the many, because administered for the common good, and this 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. Even the poorest can be made to see this, and to agree that great sums gathered by some of their fellow-citizens and spent for public purposes, from which the masses reap the principal benefit, are more valuable to them than if scattered among them through the course of many years in trifling amounts.…
Poor and restricted are our opportunities in this life; narrow our horizon; our best work most imperfect; but rich men should be thankful for one inestimable boon. They have it in their power during their lives to busy themselves in organizing benefactions from which the masses of their fellows will derive lasting advantage, and thus dignify their own lives.…
This, then, is held to be the duty of the man of Wealth: First, to set an example of modest, unostentatiousliving, shunning display or extravagance; to provide moderately for the legitimate wants of those dependent upon him; and after doing so to consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer, and strictly bound as a matter of duty to administer in the manner which, in his judgment, is best calculated to produce the most beneficial results for the community—the man of wealth thus becoming the mere agent and trustee for his poorer brethren, bringing to their service his superior wisdom, experience, and ability to administer, doing for them better than they would or could do for themselves.…
The best uses to which surplus wealth can be put have already been indicated. Those who would administer wisely must, indeed, be wise, for one of the serious obstacles to the improvement of our race is indiscriminate charity. It were better for mankind that the millions of the rich were thrown into the sea than so spent as to encourage the slothful, the drunken, the unworthy. Of every thousand dollars spent in so called charity to-day, it is probable that $950 is unwisely spent; so spent, indeed, as to produce the very evils which it proposes to mitigateor cure.…
In bestowing charity, the main consideration should be to help those who will help themselves; to provide part of the means by which those who desire to improve may do so; to give those who desire to rise the aids by which they may rise; to assist, but rarely or never to do all. Neither the individual nor the race is improved by alms-giving. Those worthy of assistance, except in rare cases, seldom require assistance. The really valuable men of the race never do, except in cases of accident or sudden change. Every one has, of course, cases of individuals brought to his own knowledge where temporary assistance can do genuine good, and these he will not overlook. But the amount which can be wisely given by the individual for individuals is necessarily limited by his lack of knowledge of the circumstances connected with each. He is the only true reformer who is as careful and as anxious not to aid the unworthy as he is to aid the worthy, and, perhaps, even more so, for in alms-giving more injury is probably done by rewarding vice than by relieving virtue.…
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. But a little while, and although, without incurring the pity of their fellows, men may die sharers in great business enterprises from which their capital cannot be or has not been withdrawn, and is left chiefly at death for public uses, yet the man who dies leaving behind him millions of available wealth, which was his 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."
Such, in my opinion, is the true Gospel concerning Wealth, obedience to which is destined some day to solve the problem of the Rich and the Poor, and to bring "Peace on earth, among men Good-Will."
What happened next …
At age sixty-five, Andrew Carnegie had a fortune valued at about $360 million (the equivalent of about $8 billion in 2003). Taking his own advice, Carnegie started giving it away to the sort of institutions described in "Wealth."
As mentioned, he is best remembered for funding public libraries. Every state (except Rhode Island) has at least one public library funded by Andrew Carnegie. He also paid for almost five thousand organs for use in churches around the United States as well as in other countries.
Andrew Carnegie also established pension funds to benefit steelworkers and college professors. Another fund,
the Hero Fund, gave prizes for acts of heroism. In New York City, Carnegie Hall became a renowned auditorium for concerts. Pittsburgh's Carnegie Institute of Technology became a famous college. Carnegie also gave money to many other colleges, including the Tuskegee Institute in Alabama for African Americans.
Still, upon his death, Andrew Carnegie had not succeeded in giving away all his money, as he once advocated. His estate was valued at $23 million (equivalent to about $245 million in 2003) at his death in 1919.
In the meantime, laws were passed designed to address the huge gap in income between business owners and workers. A federal income tax was imposed in 1913, originally paid primarily only by very wealthy citizens, and in 1916 a federal tax on estates was passed. At the same time, government programs were established to provide money for people who lose their jobs. Carnegie probably would have opposed modern welfare payments, insisting that people who cannot find work need to be educated or trained in order to get jobs. It is an argument that has continued since Carnegie's time.
Did you know …
In 1900 Carnegie Steel was the largest corporation in the world. The next year, Andrew Carnegie sold his company to the financier J. P. Morgan (1837–1913) for $480 million (equivalent to about $5.1 billion in 2003). Morgan said later he would gladly have paid more. Morgan used Carnegie's company as the core of a new company: U.S. Steel.
For more information
Bobinski, George S. Carnegie Libraries: Their History and Impact on American Public Library Development. Chicago: American Library Association, 1969.
Carnegie, Andrew. Autobiography of Andrew Carnegie. Boston and New York: Houghton Mifflin, 1920.
Carnegie, Andrew. The Gospel of Wealth, and Other Timely Essays (includes "Wealth," published in the North American Review, June 1889). New York: Century, 1900.
Hacker, Louis Morton. The World of Andrew Carnegie: 1865–1901. Philadelphia: Lippincott, 1968.
Livesay, Harold C. Andrew Carnegie and the Rise of Big Business. Boston: Little, Brown, 1975.
Carnegie, Andrew. "Wealth." Furman University's Nineteenth Century Documents and Editorials. http://www.furman.edu/~benson/docs/carnegie.htm (accessed on April 11, 2003).