In The Gospel of Wealth by Andrew Carnegie we presented Carnegie’s proposition that Capitalism promotes the best interests of society. However, a side effect is the “inevitable” concentration of wealth that creates inequality. Below is what Carnegie believes is the “True Solution” to this concentration of wealth.
The Three Choices
Carnegie presents three options for the disposition of great wealth ending with The Gospel of Wealth’s True Solution:
- Left to their Families; or
- Bequeathed for Public Purposes; or,
- Administer Wealth During the Lives of its Possessors.
Option 1: Left to their Families:
He characterizes, leaving wealth to the family as showing the most inferior judgment. Like European monarchs that gave the greatest portion of wealth to the first son. It reflects the vanity of the parent who wants their name and title passed on to succeeding generations.
Through their follies, the benefactors become impoverished, illustrating the futility of this choice. They cannot maintain the status of a hereditary class because their inherited wealth passes quickly into the hand’s strangers.
Carnegie asks; “Why should men leave great fortunes to their children? If this is done from affection, is it not misguided affection?” Generally, it is not well for the children so burdened. Neither is it well for the state.
He suggests leave moderate sources of income for the wife and daughters where needed. But, leave little if any for the sons. Because the amount inherited does more injury than good.
The wise soon concludes that such inheritance is not in the best interests of their families or the state and is an improper use of wealth.
Option 2: Bequeathed for Public Purposes:
Carnegie is also critical of leaving wealth for public uses after death. He ironically describes it as a means; “provided a man is content to wait until he is dead before it becomes of much good in the world.”
Legacies left after death are unlikely to accomplish the good hoped. The benefactors real objective is often not attained because others prevent their wishes from coming to fruition. These gifts “are only monuments of his folly.”
The Samual Jones Tilden Example
Carnegie’s example of this folly is Samuel Tilden, a New York politician with a fortune, estimated at $7 million (over $190 million in 2016 according to Wikipedia). He bequeathed $4 million (over $108 million in 2016) for a free public library in the City of New York.
The will was still being contested by relatives when Carnegie wrote the Gospel of Wealth. It would be much better if Mr. Tilden devoted his last years to the proper administration of this sum. That would prevent legal contests or any other cause of delay interfering with his aims.
At the time, Carnegie wondered if Mr. Tilden’s millions would ever give the city a public library. “…where the treasures of the world contained in books will be open to all forever, without money and without price.”
As it turned out, the city did get a library, but the relatives successfully contested Tilden’s wishes and reduced the amount for the library in 1895.
Option 3: Administer Wealth During the Lives by its Possessors:
Carnegie believes the level of skill to acquire wealth is also needed to benefit the community. And, wealth in the hands of few is more potent in comparison to small sums distributed over many years or to the government.
“This policy would work powerfully to induce the rich man to attend to the administration of wealth during his life, which is the end that society should always have in view, as being that by far most fruitful for the people.”
The advantages are it requires only modification to existing conditions while preserving individualism and Capitalism. And, it can be put into practice by the degree and timing desired by the possessor.
Most importantly, the surplus wealth of the few become the property of the many in an effective manner for the common good.
The Cooper Institute
He uses the Cooper Institute (now the Cooper Union) as an example. Founded in New York City in 1859 by wealthy industrialist and businessman Peter Cooper. With less than a year of schooling, his dream was to give talented young people the privilege he lacked: a good education from an institution “open and free to all.”
Cooper gave the majority of his wealth to The Cooper Union, a tuition-free school with courses available to any applicant. Discrimination based on ethnicity, religion, or sex was expressly prohibited. And, higher education provided free of charge to those with limited funds.
Carnegie argues if distributed in small quantities much would be wasted in the indulgence of appetites, some of it in excess. And even the part put to the best use, adding to the comfort of home, would yield results for society when compared to the Cooper Institute.
The Gift that Keeps on Giving
Today, the Cooper Union offers undergraduate and master degree programs in architecture, fine arts, and engineering. In 2017, Cooper Union ranked number one in the Regional Colleges (North) category by U.S. News & World Report.
The Gospel of Wealth’s True Solution
Carnegie’s The Gospel of Wealth’s True Solution then is for the wealthy to utilize their skills and talents to distribute wealth for the benefit of the community. And, while they are alive helps assure it is used effectively for the intended purpose. This is the antidote for the temporary unequal distribution of wealth, a side effect of Capitalism.
Estate Taxes as an Incentive for the True Solution
Carnegie points out that at death, there is no choice but to leave wealth behind. And, argues those who do probably would not have left any at all if they could take it with them. There is “no grace in their gifts.”
To encourage the wealthy to attend to this, he proposes a graduated Estate Tax. Starting at nothing on moderate sums to dependents and increasing rapidly on the “millionaire’s hoard.”
“Of all forms of taxation, this seems the wisest.” Those who hoard all their lives need to learn not to deprive the community of its proper share.
“By taxing estates heavily at death, the state marks its condemnation of the selfish millionaire’s unworthy life.”
The Blessings and Duties of the Wealthy
The wealthy should be grateful for the opportunity they have to adopt Christ’s spirit and apply it to today’s conditions for the good of others. They can live the essence of his life and bring dignity to their own by expressing his spirit for others.
And with this blessing comes the duty to administer surplus wealth as a trust for the poor. And, produce the most benefit for the community using their wisdom, experience, and ability. They should also:
- Set an example of modest living, shunning display or extravagance;
- Provide moderately for the legitimate wants of dependents. And, after doing so:
- Consider all surplus revenues only as trust funds to administer in a manner to produce the most beneficial results for the community.
“…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.”
He cautions on the problems associated with the use of 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.”
Carnegie estimates 95% of charity money goes to “so-called charity.” Because it produces the very evils which it proposes to mitigate or cure.
His example is giving money to a beggar but knowing nothing of the beggar nor the intended use of the money. And, if spent improperly it will probably work more injury than good.
The donor “…only gratified his own feelings, saved himself from annoyance, and this was probably one of the most selfish and very worst actions of his life, for in all respects he is most worthy.”
The main consideration in giving charity then is:
- to help those who will help themselves.
- provide part of how those who desire to improve may do so;
- give to those who want to use the aid by so they may rise; and,
- to assist, but rarely or never do all.
“Neither the individual nor the race is improved by almsgiving. Those worthy of assistance, except in rare cases, seldom require assistance.”
The Problem of Rich and Poor
Carnegie claims the wealthy should know that the best means of benefiting the community is to place ladders within reach of the aspiring so they can rise. The problem of the Rich and Poor goes away when:
- the laws of accumulation remain free;
- the laws of distribution remain free;
- individualism continues;
- and, the millionaire accepts the duty during life as a trustee for the poor;
- and, administers their concentrated wealth for the benefit of the community.
Those who leave behind millions, “will pass away unwept, unhonored, and unsung, no matter to what uses he leaves that which he cannot take with him.”
“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.”
Essential Messages in The Gospel of Wealth:
History does not repeat itself, but it rhymes. The Gilded Age saw the formation of large business conglomerates that dominated their industries. They improved the quality, price and availability of products and services to many. But they created inequality through the concentration of wealth.
Today “Modern Monopolies” like Google, Amazon, and Alibaba create undeniable benefits for consumers but also concentrate wealth.
Carnegie’s rags to riches story gave him a unique perspective on the continuum from the poor to the wealthy. This experience undoubtedly influenced The Gospel of Wealth, where he tries to address the age-old gap between the rich and poor.
Capitalism is not the perfect medicine for society, but it is better than alternatives, like Socialism or Communism, tried and failed. However, one of the “side effects” of Capitalism is the concentration of great wealth in the hands of the few. This is as real today as it was in 1889.
He cautions not abandon an efficient but less than perfect economic system in pursuit of an unproven ideal method. Capitalism has produced a higher standard of living for so many. And, as Winston Churchill cautioned; “perfection is the enemy of progress.”
Carnegie’s The Gospel of Wealth’s True Solution addresses the concentration of excessive wealth. The excess wealth is a temporary trust fund — the wealthy with a duty to produce the most benefits from it for the community.
Carnegie funded 2,500 public libraries around the globe. And, endowed science research, education, world peace, and others. By 1911 he gave away 90% of his $480 million fortune equivalent to $310 billion in current dollars.
And, he’s inspired many today to consider some version of The Gospel of Wealth’s True Solution. “The Giving Pledge” created by Bill and Melinda Gates and Warren Buffett is a commitment by 204 of the world’s wealthiest individuals and families dedicating the majority of their wealth to giving back.
Lessons for Us
In Carnegie’s life during the Gilded Age, like today, people held firm and often adversarial views on the wealth gap and mass migrations to America.
This rags to riches immigrant saw the issues from both sides, and learned valuable lessons that he shared in “The Gospel of Wealth.” He then practiced in life what he preached in that writing.
Winston Churchill probably summed it up best when he said; “We make a living by what we get, but we make a life by what we give.” And, that is perhaps Andrew Carnegie’s legacy and most important lesson for us.
Was Andrew Carnegie a Robber Baron or a philanthropist, an oppressor of the poor or their champion?