Revisiting The Gospel of Wealth

The 1889 classic is as relevant as ever. Unfortunately.

The news this week got me thinking about extremely rich people and how they spend their money. And that naturally brought me to an essay published in June, 1889.

The author was Andrew Carnegie, the billionaire (inflation-adjusted) steel magnate. Originally published under the title Wealth, it was later re-published as The Gospel of Wealth.

Its famous opening line: “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.” Sounds at least a little pertinent today, don’t you think?

The Gospel of Wealth is the quintessential document of the “Gilded Age,” the long boom following the Civil War during which American industrialization exploded and a handful of capitalists made spectacular fortunes. “Gilded Age” comes from the title of a lesser-known Mark Twain novel mocking greed, materialism, and corruption: The age is “gilded” rather than “golden” because its glitter is merely a thin veneer of gold overlaying the squalid stuff beneath.

You probably don’t have to plumb my psyche to figure out why my brain connected the news this week with the Gilded Age and The Gospel of Wealth. But I’m not going to editorialize. Carnegie was damned interesting in his time and his relevance today is obvious — unfortunately — so I’ll merely quote and summarize and keep the commentary to a minimum. Then maybe slip in some, um, observations connecting The Gospel of Wealth to today.

First, let’s see how Carnegie starts the essay:

The conditions of human life have not only 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.

This was 1889 so you just know he is going to write something about native Americans that makes us cringe.

The Indians are today where civilized man then was.

There it is.

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 [inflation-adjusted: billionaire] and the cottage of the labourer with us today measures the change which has come with civilization.

At this point, it’s not clear where Carnegie is going with this. What he describes with the Sioux sounds rather appealing compared to a society in which a few loll about in “palaces” while the many live in hovels — well, “cottages” — and toil in dark satanic mills. Is Carnegie some kind of radical?

This change, however, is not to be deplored.

Whoops. Guess not.

It is well, nay, essential for the progress of the race, that the houses of some should be home for all that is highest and best in literature and the arts, and for all the refinements of civilization, rather than none should be so. Much better this great irregularity than universal squalor. Without wealth, there can be no Maecenas [a great patron of the arts in Ancient Rome]. The “good old times” were not good old times. Neither master nor servant was as well situated then as today. 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.

So it’s true that inequality has widened dramatically, but the system that did that has made everyone better off. Capitalism rocks.

And in any event, there’s no use moaning about 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 a waste of time to criticize the inevitable.

OK, let me slip in a smidge of editorial commentary: One of my standard rules of thumb is that any statement containing the words “inevitable” or “impossible” is probably wrong.

But never mind. After this somewhat dispiriting opening, Carnegie gets into the heart of his analysis.

It is easy to see how the change has come…. 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 landlord 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.

Reading that in 2022, it’s even harder not to acknowledge the point. After all, the process Carnegie identifies has only accelerated, and today, even an impecunious scribbler such as your correspondent is more richly clad and has better books and pictures and music — and everything else available via the Internet — than even Andrew Carnegie with his billions (inflation-adjusted) in 1889. That said, I have no servants and must fetch my own gin and tonic. Progress is not strictly linear, I suppose.

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 advantage 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.

Carnegie seems to be building up to a conclusion like Gordon Gekko’s “greed is good” speech in that 1980s classic, Wall Street:

The point is, ladies and gentleman, that greed — for lack of a better word — is good.

Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.

Greed, in all of its forms — greed for life, for money, for love, knowledge — has marked the upward surge of mankind.

But Andrew Carnegie was no Gordon Gekko. He knew intimately the difference between life at the bottom and the top.

The son of a poor Scottish immigrant, the young Carnegie went to work, not school, tending to a steam engine in a basement. At the age of 15, he got the lucky break that transformed his life when he was asked to work as a messenger in a telegraph office.

Here’s how he described the change decades later: “From the dark cellar running a steam engine at $2 a week, begrimed with coal dirt, without a trace of the elevating influences of life, I was lifted into paradise. Yes, heaven, as it seemed to me, with newspapers, pens, pencils and sunshine about me. There was scarcely a minute in which I could not learn something. I felt that my foot was upon the ladder and that I was bound to climb.” When Carnegie became a telegraph operator, his father cried with pride and relief. Then he died. That’s what qualified as a happy ending in the mid-19th century.

So how does Carnegie square his belief that this is the best possible world with his awareness of the reality of how miserable this world is for so many? Gordon Gekko would tell the boys tending steam engines they’ve never had it so good and on those rare occasions when they emerge from the cellars to stand, blinking, in the sunlight, they should thank the rich in their mansions.

Not Carnegie. Yes, the system made some fantastically rich, he wrote. But what did the rich do with that wealth?

That is the critical question at the heart of his essay.

There are but three modes in which surplus wealth can be disposed of. It can be left to the families of the decedents; or it can be bequeathed for public purposes; or, finally, it can be administered during their lives by its possessors. Under the first and second modes most of the wealth of the world that has reached the few has hitherto been applied. Let us in turn consider each of these modes.

Leave a vast estate to your lucky children? Carnegies despises the idea. It is destructive and selfish, he writes.

Why should men leave great fortunes to their children? If this is done from affection, is it not misguided affection? Observation teaches that, generally speaking, it is not well for the children that they should be so burdened. Neither is it well for the state. Beyond providing for the wife and daughters moderate sources of income, and very moderate allowances indeed, if any, for the sons, men may well hesitate, for it is no longer questionable that great sums bequeathed oftener work more for the injury than for the good of the recipients. Wise men will soon conclude that, for the best interests of the members of their families and of the state, such bequests are an improper use of their means.

It is not suggested that men who have failed to educate their sons to earn a livelihood shall cast them adrift in poverty. If any man has seen fit to rear his sons with a view to their living idle lives, or, what is highly commendable, has instilled in them the sentiment that they are in a position to labor for public ends without reference to pecuniary considerations, then, of course, the duty of the parent is to see that such are provided for in moderation. There are instances of millionaires' sons unspoiled by wealth, who, being rich, still perform great services in the community. Such are the very salt of the earth, as valuable as, unfortunately, they are rare; still it is not the exception, but the rule, that men must regard, and, looking at the usual result of enormous sums conferred upon legatees, the thoughtful man must shortly say, "I would as soon leave to my son a curse as the almighty dollar," and admit to himself that it is not the welfare of the children, but family pride, which inspires these enormous legacies.

If you’re very rich and you live your riches to your children, Carnegie says, you are a truly wretched person.

Some day I may compile a list of people who are generally remembered fondly, or at least with no particularly opprobrium, but who were, in Andrew Carnegie’s terms, selfish and horrible.

Carnegie had a solution for such people.

Taxes. Big taxes.

The growing disposition to tax more and more heavily large estates left at death is a cheering indication of the growth of a salutary change in public opinion. The State of Pennsylvania now takes — subject to some exceptions — one-tenth of the property left by its citizens. The budget presented in the British Parliament the other day proposes to increase the death-duties; and,most significant of all, the new tax is to be a graduated one. Of all forms of taxation, this seems the wisest. Men who continue hoarding great sums all their lives, the proper use of which for public ends would work good to the community, should be made to feel that the community, in the form of the state, cannot thus be deprived of its proper share. By taxing estates heavily at death the state marks its condemnation of the selfish millionaire's unworthy life.

“The selfish millionaire’s unworthy life.” This guy sounds like Anand Giridharadas.

And Carnegie has more to say on the subject. The man loves estate taxes!

It is desirable that nations should go much further in this direction. Indeed, it is difficult to set bounds to the share of a rich man's estate which should go at his death to the public through the agency of the state, and by all means such taxes should be graduated, beginning at nothing upon moderate sums to dependents, and increasing rapidly as the amounts swell, until of the millionaire's hoard, as of Shylock's, at least [quoting The Merchant of Venice] “the other half comes to the privy coffer of the state."

But what of the rich who leave their wealth to charity in their wills?

Carnegie thought that was better than keeping the money in the family. But not much.

Bequests aren’t overseen by the person giving the money so they often do not achieve their intended ends, Carnegie writes. And why should anyone be grateful for something a man wouldn’t have done if mortality hadn’t forced him?

It may fairly be said that no man is to be extolled for doing what he cannot help doing, nor is he to be thanked by the community to which he only leaves wealth at death. Men who leave vast sums in this way may fairly be thought men who would not have left it at all, had they been able to take it with them. The memories of such cannot be held in grateful remembrance, for there is no grace in their gifts.

The conclusion is obvious, Carnegie writes. Give it away, rich people. Now.

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 projected to put it in practice by degree 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.

Carnegie then discusses the importance of giving away money effectively. Here, he sounds a little less like a Social Gospel preacher and more like a robber baron.

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 use 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.

For Carnegie, it follows that the rich should pay for parks and recreation, “by which men are helped in body and mind,” and works of art, “to give pleasure and improve the public taste,” and “public institutions of various kinds, which will improve the general condition of their people.”

In this way, the rich return surplus wealth “to the mass of their fellows in the forms best calculated to do them lasting good.”

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.

Carnegie writes that the day is coming when…

…the man who dies leaving behind many 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.”

Carnegie’s essay caused a sensation when it was published, understandably. It’s still powerful reading today.

That power doesn’t come from the specifics, of course. In Carnegie’s day, the state had a minimal remit, and most of the works he envisions were far outside what the states of the day did. This is why, implicitly, he sees only two options for the disposal of wealth — private philanthropy or a Communist revolution. And since only private philanthropy permitted the continuance of the industrial capitalism that produced the wealth, it is the only viable option. Hence his “inevitable” comment. Judging by the fact that Carnegie didn’t even mention — if only to argue against — the option of simply taxing the rich and letting the state decided which parks and art and institutions should be funded to do the most good, it seems this didn’t even occur to him. That’s not surprising. The role of states everywhere in 1889 was, in 2022 terms, very narrowly defined. Seeing that third option would have required Carnegie to imagine change that didn’t take form until the early 20th century.

But at a minimum, we can say the man was not a 19th-century Ayn Rand. Not remotely. Just look again at what he wrote about estate taxes. This point has to be made because Ayn Rand’s acolytes, and other advocates of extreme laissez-faire, routinely point to Andrew Carnegie as the exemplar of how any poor waif can make a fortune and thus obtain the sacred right to do with it whatever the hell he pleases. They really should read The Gospel of Wealth.

And when they do, they should notice what’s not in the essay: There’s no talk of “self-made men.” Carnegie says the billionaire class, as we would call them, has an unusual talent for organization and finance, but that’s the extent of his praise for his own kind. He doesn’t claim that the ultra-rich are uniquely hard-working or visionary or worthy or moral. And he does not remotely suggest that the rich somehow create wealth all by their brilliant lonesomes.

On the contrary, Carnegie clearly sees wealth as something generated collectively. Tycoons contribute. But so do boys shovelling coal into steam engines. And everyone in between. Thus, the money churned out by industrial capitalism is “the wealth of the community.” It is why the rich man who passes his fortune on to his children denies the community of “its proper share.” And why the rich man should see himself as “a trustee for the poor.”

This was bracing stuff in 1889. It’s bracing stuff in 2022. In a sense, it may be even more radical today.

Consider that in the 2012 presidential election campaign, Barack Obama expressed just a pinch of Carnegie’s sentiment in far more cautious language.

There are a lot of wealthy, successful Americans who agree with me – because they want to give something back. They know they didn't – look, if you've been successful, you didn't get there on your own. You didn't get there on your own. I'm always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something – there are a whole bunch of hardworking people out there.

If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you've got a business, you didn't build that. Somebody else made that happen. The Internet didn't get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.

The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together.

That last sentence could have come straight from the pen of Andrew Carnegie.

But the Republican campaign endlessly repeated Obama’s one maladroit sentence — “if you’ve got a business, you didn’t build that” — to portray him as a mad socialist who doesn’t respect individual initiative. Simultaneously, the GOP popularized the phrase “makers and takers.” The rich are rich, Republicans said, because they earned their wealth. By themselves. And that wealth should be theirs to do with as they wish. Cutting taxes on the rich isn’t just good economics. It’s social justice.

In the decade since, political discourse has shifted further in the makers-and-takers direction. “Self-made” is a phrase routinely used about everyone from Bill Gates to, yes, Elon Musk — just Google the phrase “self-made billionaire” — while a significant portion of the population seems to believe that even the rich who spend their days swimming in gold coins like Scrooge McDuck are above reproach. And estate taxes are Bolshevism.

In this environment, Andrew Carnegie — the OG robber baron — sounds like Bernie Freaking Sanders.

To conclude on a happier note, Carnegie lived up to his words.

In 2022 dollars, he spent some $840 million for the improvement of teaching, $580 million for smaller colleges (including historically black colleges, explicitly to repair the damage done by slavery), and $290 million for a foundation to promote peace.

But his principal focus was on bringing books to the masses. The man who was denied an education, and spent his life as a billionaire (inflation-adjusted) voraciously learning, spent some $1.7 billion to build more than 1,500 public libraries.

However others judge his life, Carnegie did not, on his terms, die disgraced.