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The Rich Man’s Burden And How Andrew Carnegie Unloaded It
October 1970 | Volume 21, Issue 6
On one of the last nights of the year 1868, Andrew Carnegie, who had recently moved to New York from Pittsburgh and was living with his mother in the elegant St. Nicholas Hotel, sat down at his desk to total up his various investments and his annual returns from those investments. It was an impressive statement of accomplishment for a man who, as a child of thirteen, had accompanied his parents in steerage class from Scotland to America and had found his first employment as a bobbin boy in a textile mill at $1.20 a week. Now, twenty years later, he had assets of four hundred thousand dollars and an annual income of $56, no. How gratifying it all should have been! Yet, in a curious way, it was not entirely satisfying. Carnegie had for some time realized that most of the successful men he had encountered were men with one ambition —money, and with but one talent—the ability to get it. He could not help comparing these business associates with the heroes of his childhood, Uncle Tom Morrison, Uncle George Lauder, and his father, radical Chartists who would discourse at length upon literature, history, politics, and economics.
The end of the year for a Scottish Calvinist is a time for sober reflection, for pondering upon man’s sinful frailty and God’s awesome majesty. Carnegie had, to be sure, never accepted the Calvinist view of either man or God, but the ethos of Scotland was bred into him. With all the introspection of a Jonathan Edwards or a John Knox, he took a hard, unpitying look at himself. Then he wrote down another kind of balance sheet to accompany his statement of business holdings: Man must have an idol—The amassing of wealth is one of the worst species of idolitary [sic]. No idol more debasing than the worship of money. Whatever I engage in I must push inordinately therefor 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 more money in the shortest time, must degrade me beyond hope of permanent recovery. I will resign business at thirty five …
Carnegie, however, did not resign business at thirty-five. For the next thirty-two years he continued to “push inordinately,” and by 1900 he had built a steel empire so vast and so independently powerful that it endangered even the complex, interlocking financial world of J. P. Morgan. In February, 1901, Morgan, representing all of those interests in steel products and railroads that were threatened by Carnegie’s ever-expanding empire, offered to buy Carnegie Steel and quickly accepted Carnegie’s price of $480,000,000. Paying a visit to Carnegie’s home, Morgan shook the Scotsman’s hand and said, “Mr. Carnegie, I want to congratulate you on being the richest man in the world!”
And, during all of these years, Carnegie’s note, written in 1868 and addressed to himself, had lain in his desk, undisturbed, yet ever disturbing to his self-esteem. Now with this vast fortune in first mortgage, 5 per cent gold bonds of the newly created United States Steel Corporation in his possession, Carnegie turned his full attention away from getting to giving—to debasing the idol at whose altar he had so long and so successfully worshipped. Carnegie was under no illusions about the problems that would confront him. His friend John Morley, an English statesman, had written him a month after the sale to Morgan had been consummated, “I say to you what Johnson said to Burke, when B. showed him his fine house, ‘I don’t envy, I do admire.’ You’ll have some difficulty, tho’ in adapting the principles of accumulation to the business of distribution.” To which Carnegie wrote in answer, ”… I don’t see it needs the same principles as acquisition—but it needs some of these. Tenacity and steady sailing to the haven we clear for—supreme confidence in one’s own ideas, or conclusions rather, after thought —and above all, placing use above popularity.” These were qualities of character with which Carnegie had proved himself to be well endowed, but he also showed a quality of capriciousness that often made his philanthropic gestures—or lack of them—an enigma to those soliciting him for aid.
Yet Carnegie would always believe that his philanthropic practices, like his business practices, were based upon rational, systematic principles. These principles in some respects made his task of giving more difficult but, he felt, far more so’cially significant and beneficial than the simple random distribution of largess. He had explained his system in a remarkable two-part essay entitled “Wealth,” which appeared in the June and December, 1889, issues of the North American Review .
Carnegie’s essay created a considerable stir when it first appeared, and deservedly so. The editor of the North American Review , Alien Thorndike Rice, called it the “finest article I have ever published in the Review.” It was quickly picked up in Britain, where it appeared in Pall Mall Gazette under the title “Gospel of Wealth.” It caught the attention of the reading public of two nations because of its candor, its specific proposals for the distribution of wealth, and, of course, because of its author—a well-known American millionaire who was openly critical of his own class.
The thesis of the “Gospel” was simply and boldly stated: “The problem of our age is the proper administration of wealth.” To Carnegie there appeared only three alternatives by which a man of great wealth could dispose of his fortune: he could leave it to his family, he could bequeath it in his will for public purposes, or he could administer it during his lifetime for public benefit. Of the three, the least desirable both for society and for the individual was the first, and on this point Carnegie gave his oft-repeated homily on the evils of inherited wealth. The wife and daughters should be provided with moderate sources of income, he believed, but as for the sons, he felt that “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 the legacies.”
The second alternative, while socially more responsible, is frequently thwarted by disappointed heirs contesting the will, he wrote. Even when a philanthropic bequest is successfully carried out, “it may be said that this is only a means for the disposal of wealth, provided a man is content to wait until he is dead before he becomes of much good in the world.” Carnegie approved of heavy inheritance taxes, or “death duties,” to ensure society’s reaping some benefits from the accumulation of wealth if either of the first two alternatives was chosen.
“There remains, then,” he wrote, “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. … It is founded upon the present most intense Individualism and … 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 distributed in small sums to the people themselves.” In short, the rich man should spend his fortune during his lifetime in ways that will most effectively benefit and advance society. “This, then, is held to be the duty of the man of wealth: To set an example of modest, unostentatious living, 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 … the man of wealth thus becoming the mere trustee and agent 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.”
In the second part of his essay, Carnegie, at the request of the editor, presented “some of the best methods of performing this duty of administering surplus wealth for the good of the people.” First, the millionaire who adheres to the gospel must “take care that the purposes for which he spends it shall not have a degrading pampering tendency upon its recipients, but that his trust shall be so administered as to stimulate the best and most aspiring poor of the community to further efforts for their own improvement. It is not the irreclaimably destitute, shiftless, and worthless which it is truly beneficial or truly benevolent for the individual to attempt to reach and improve. For these there exists the refuge provided by the city or the State, where they can be sheltered, fed, clothed … and, most important of all—where they can be isolated from the well-doing and industrious poor. …”
The specific fields of philanthropy in which the wise trustee of surplus wealth would invest, according to Carnegie, were seven, listed in descending order of importance: (1) universities—the founding of universities, of course, being possible only “by men enormously rich”; (2) free libraries—for Carnegie himself, he said, this “occupies first place”; (3) the founding or extension of hospitals “and other institutions connected with the alleviation of human suffering” ; (4) parks; (5) halls suitable for meetings, concerts, etc; (6) “swimming baths”; and (7) churches—but only the building, not the maintenance of the church activities, which should be done by the entire congregation. “It is not expected,” Carnegie added, “that there should be general concurrence as to the best possible use of surplus wealth. … There is room and need for all kinds of wise benefactions for the common weal.”
It is fortunate that Carnegie did not expect “general concurrence” on his list of proper fields for philanthropy, for he certainly did not get it. Ministers and mission boards, in particular, were outraged to find churches seventh on the list—just after swimming baths. Artists, writers, and musicians also wanted their share of patronage, as did private schools, orphanages, and other charitable institutions.
But Carnegie’s fundamental assumptions were not allowed to go unchallenged either. A sharp critique of Carnegie’s gospel was offered by William Jewett Tucker, the liberal American theologian, professor of religion at Andover Theological Seminary, and later to be the distinguished president of Dartmouth College. Writing a review of “The Gospel of Wealth” in 1891 for the Andover Review, Tucker, as no other critic of the time did, examined the essence of Carnegie’s gospel—and found it fallacious. First, Tucker pointed out, it was based upon a false assumption of inevitability. He quoted Carnegie as saying, “We start with a condition of affairs [referring to the prevailing competitive system] under which the best interests of the race are promoted, but which inevitably gives wealth to the few.” This Tucker found unacceptable. “[T]he assumption … that wealth is the inevitable possession of the few, and is best administered by them for the many, begs the whole question of economic justice now before society, and relegates it to the field of charity, leaving the question of the original distribution of wealth unsettled, or settled only to the satisfaction of the few. …”
Tucker also found fault in Carnegie’s plan for the redistribution of wealth, generous and praiseworthy as it seemed to be. “Just as formerly it was contended that political power should be in the hands of the few, because it would be better administered, so now it is contended—I quote Mr. Carnegie’s words, slightly transferring them, but not changing their meaning—that ‘the millionaire is intrusted for the time being with a great part of the increased wealth of the community, because he can administer it for the community far better than it could or would have done for itself.’ This, of course, if accepted and carried out in any complete way, becomes patronage … and, in the long run, society cannot afford to be patronized.”
This was striking at the real inner defense line that protected Carnegie’s self-esteem and provided a justification for his life. In an essay, “The Advantages of Poverty,” Carnegie made one brief statement that was far more revealing of his own motivation for philanthropy than he probably ever intended or realized. In discussing the question of why the very rich should avoid extravagant living, he wrote, “they can, perhaps, also find refuge from self-questioning in the thought of the much greater portion of their means which is being spent upon others.” It is the phrase “perhaps, also find refuge from self-questioning” that is the tip-off. This is the kind of refuge Carnegie must have been seeking for twenty years, ever since as a young man in 1868 he had warned himself against the degradation of money worship. But the old doubts persisted. What was really happening to an America in which one man could accumulate a fortune that ran into nine figures? Carnegie had to justify his life to himself. Unlike some of his contemporaries—Fisk, Gould, Drew—he could not accept for himself the innocent animal amorality of the freebooter, nor on the other hand could he, having rejected the tenets of orthodox religion, now retreat with John D. Rockefeller into pious Baptism and say, “The Good Lord gave me my wealth.”
Carnegie must have felt that he had at last found justification for plutocracy by his gospel of wealth: a man may accumulate great wealth in a democracy, but he has a responsibility to return that wealth in a way that will not destroy society’s own responsibility to preserve individual initiative. To give through the usual charitable outlets is wrong, for such charity is primarily concerned with the hopeless “submerged tenth.” It keeps the weak weak and upsets the equality of opportunity. To give library buildings with the provision that the community must then furnish the books is right, for this makes available opportunities for all—it encourages the salvageable “swimming tenth” and at the same time respects the responsibility of the community. And who is better prepared for the responsible task of being steward for a nation’s accumulated wealth than the man who, starting with nothing, has through his own initiative gathered in this wealth? Carnegie must have felt with the writing of his “Gospel of Wealth” that he had at last made peace with his conscience, had at last found that “refuge from self-questioning.”
He, of course, had begun to practice long before he had had a gospel to preach. That is why he was convinced that he was a “scientific philanthropist.” His principles of philanthropy, he felt, were pragmatically based upon experience. His earliest philanthropic bequests, however, were based on no discernible system. Sentiment and his own idiosyncratic interests dictated his choice more than any rational philosophy. By the time his essay “Wealth” appeared in 1889, he had given a swimming bath and library to Dunfermline, the Scottish town in which he was born, a library to Braddock, Pennsylvania, and a pipe organ to the small Swedenborgian church in Allegheny, Pennsylvania, that his father and aunts had attended in the iSso’s. His only gift to higher education was a grant of six thousand dollars extended over a fiveyear period to the Western University of Pennsylvania (later to be the University of Pittsburgh). This is not a tremendously impressive list, and sentiment was clearly a major factor. But the list is interesting in its diversity. It is evident that these early gifts determined his ideas about “the best fields of philanthropy.”
After the appearance of his famous essay Carnegie began in earnest to follow his own dictates. As he had indicated in “Wealth,” libraries were to be his specialty in this early phase of his philanthropic career. After his first two library gifts to Dunfermline and Braddock, in which he furnished not only the library building but provided an endowment for the acquisition of books and the maintenance of the library, Carnegie would give only the building and insist upon the town’s taxing itself for the books and maintenance. He was to make only three exceptions to this rule after having established it: at Duquesne and Homestead, Pennsylvania, and the borough of Carnegie, a suburb of Pittsburgh. Fifty years later, a report on the Carnegie library system by Ralph Munn, which appeared in the Library Journal , showed the wisdom of that rule. The only four libraries in the United States to receive an endowment from Carnegie, Munn reported, “still have exactly the same endowment which he gave them in the 1890’s and the cities have firmly refused to give them any local financial support.”
It was much easier at first for Carnegie to give libraries in Scotland than in the United States, for there were no taxation restrictions on British municipalities. They could tax themselves for the support of libraries, while many cities of the United States could not. Pittsburgh, for example, could not accept Carnegie’s offer to provide a library building in 1881 because the city council ruled that the laws of Pennsylvania did not provide for municipal property-tax assessments to be used to maintain a free library. Shortly thereafter, however, the Pennsylvania legislature specifically provided for tax assessments for libraries, and Pittsburgh quickly requested a renewal of the offer. The renewal came multiplied several times over, for Carnegie now had in mind a great civic center, the Carnegie Institute, which would include not only an imposing library but a great museum, a music hall, and an art institute, located at the edge of Schenley Park.
This was Carnegie’s first great philanthropic endeavor, and in these early days he could still allow himself the luxury of considering almost every detail, from the architectural design of the buildings to the question of nudity in the copies of classical statuary. “I strongly recommend nude to be draped since question has been raised,” he wired W. M. Frew, the president of the Carnegie Library Commission. “Remember my words in speech. We should begin gently to lead people upward. I do hope nothing in gallery or hall will ever give offense to the simplest man or woman. Draping is used everywhere in Britain except in London. If we are to work genuine good we must bend and keep in touch with masses. Am very clear indeed on this question.” For weeks he fussed with Frew about the names that would be carved in stone on the entablature. When he saw the proposed list in the Pittsburgh Dispatch , he exploded to Frew: “I cannot approve the list of names. … Some of the names have no business to be on the list. Imagine Dickens in and Burns out. Among painters Perugini out and Rubens in, the latter only a painter of fat, vulgar women, while a study of the pictures of Raphael will show anyone that he was really only a copyist of Perugini, whose pupil he was. Imagine Science and Franklin not there. This list for Music seems satisfactory. Palestrina rightly comes first. Have been entranced by his works, which we have heard in Rome. As I am to be in Pittsburgh very soon, I hope you will postpone action in regard to the names.”
Library giving, except for so large an undertaking as the Carnegie Institute of Pittsburgh, quickly became a business, as efficient and standardized as the filling of orders for steel billets at Homestead or Duquesne. A town council would apply for a Carnegie Library, and Carnegie’s secretary, James Bertram, would acknowledge the request and inform the municipal government of the specifications to be met before the grant could be made. The town would first have to provide a site, if possible centrally located in the town. Then the governing board of the community would have to pledge an annual appropriation for books and maintenance that would amount to 10 per cent of the Carnegie gift. The size of Carnegie’s gift was based upon the population of the town, usually two dollars per capita, which worked very well indeed for cities from twenty-five thousand to one hundred thousand in population. In the latter instance, for example, Carnegie would give two hundred thousand dollars for the building, and the city would pledge twenty thousand dollars a year for maintenance. But in many of the very small villages that also received gifts of libraries, the annual amount pledged in order to receive the gift might be as low as two hundred dollars a year. In fact, the only major criticism made by the Munn report of 1951 was that it would have been much better if smaH neighboring towns had “pooled their resources for a single library,” much as communities would later do in consolidating public-school systems. From the professional librarian’s point of view this is certainly a justifiable criticism, but who can say how many youths or lonely old people living in towns like Idaho Springs, Colorado, or Flora, Indiana, or Sanborn, Iowa, in those pre-radio-television days, found their only intellectual excitement or companionship in the Carnegie Free Public Library? In any event, Carnegie liked to think this was true. As he wrote to one applicant for a library building, “I believe that it outranks any other one thing that a community can do to benefit its people. It is the never failing spring in the desert.”
At first Carnegie made no attempt to provide building plans along with his grant of money for the building, leaving the architectural design to be determined by each locality. But there were so many bad buildings erected in these early years of library giving, and so many complaints from librarians who had to contend with functional problems, that Carnegie, and later the Carnegie Corporation of New York, sent out standard plans along with the monetary grant. What may have been gained in functional efficiency, however, was lost in architectural variety. Soon, in small towns all over America, there came to be an architectural style, popularly known as Carnegie Classical, that was as easily identifiable as that other standardized small-town architectural style known as Wesley Romanesque. A stranger in the community seldom had difficulty in spotting the Carnegie Library and the Methodist church, which in many towns confronted each other across the square.
The public generally believed that Carnegie insisted that his name be engraved above the front entrance of the libraries he gave. This was not true. But certainly he never objected to its being done, and, upon request, he would provide the library with a photograph of himself, which would hang in the place of honor just inside the main door. As he made clear to applicants, the one thing he did desire was “that there should be placed over the entrance to the Libraries I build a representation of the rays of a rising sun, and above ‘ LET THERE BE LIGHT ,’ and I hope you can have this on the building.” Not all communities complied with this request, however. Perhaps the Methodists across the way found it a bit presumptuous for a secular institution thus to arrogate to itself Jehovah’s own first command.
Carnegie frequently attended the dedication ceremonies of a major new library, particularly if it was in Britain, for there it usually meant that he would be granted the Freedom of the City, a medieval rite that he thoroughly enjoyed. He began collecting “Freedoms” in the early iSgo’s. The parchment scroll signifying this honor was encased in a small casket, and each town in Britain seemed to be trying to outdo its neighbor in the elaborateness of the casket design. Carnegie, who had never before been infected with the collector’s mania- neither stamps nor paintings nor rare old books ever having had an appeal for him—entered into this hobby with all the zest of the most fanatic philatelist. It was a proud day when he broke the previous record, held by Gladstone, of fourteen Freedoms. He really hit top form when he received six Freedoms in six days. They came so fast, in fact, that even the London Times, usually so reliable, became confused and on one occasion reported that Carnegie was to receive the Freedom of Bromley-by-Bow the following week. The citizens of that small London suburb were alarmed when they read their papers on that day, for it was the first they had known about it- no casket, no parchment, nothing was prepared. The Times hastily carried the next day one of its few retractions. It appeared that it was Bromley, Kent, that was prepared to honor Carnegie that week.
“How dog-sick you must be of all these meetings, addresses, and Hallelujah business,” Morley wrote Carnegie, who was then on one of his whirlwind collecting tours. “I shouldn’t wonder at your longing for Skibo [Carnegie’s castle in Scotland] and what Mr. Smith calls ‘the quiet stream of self-forgetfulness’—blessed waters for all of us.” But this was the kind of “quiet stream” that Carnegie never cared to fish in, and Morley’s sympathy was quite wasted on him. Carnegie, for all his loudly proclaimed radical republicanism, dearly loved the pomp and circumstance of the medieval ritual—riding in an open carriage through the old twisting streets lined with crowds and flags; being met at the town hall by the Lord Mayor, resplendent in his robes and silver medallion of office, who made the formal presentation of the Freedom of the City to Carnegie. Finally came the opportunity to address the assembled crowd and to spread his gospel of wealth.
How sweet it all was! “Never so busy, never so happy,” Carnegie would frequently write to his Cousin Dod or friend Morley, neither of whom could understand why he was either.
Carnegie would always insist that these shows were all for the purpose of dramatizing and publicizing the gospel of wealth, in the hope that other millionaires might be converted. As he wrote to one friend in explanation of his “Hallelujah business”: “Well do I remember my apprehensions when you advocated keeping all you did quiet. No show . No advocacy. Only go on & do the work in a quiet way, when I knew that advertizing was essential for success, i.e. to spreading abroad what could be done. … Of course its disagreeable work & puts me forward as a vain trumpeter but one who isn’t willing to play this part for the good to be done, isn’t much of a man.”
Carnegie enjoyed his trumpeting too obviously to convince anyone that he found it disagreeable work. The ceremonies and speeches continued, and ultimately he was to collect the Freedom of fifty-seven cities, the all-time record for Great Britain. For a time after World War II it appeared that Winston Churchill might surpass it, but he never quite equalled this total.
The flamboyant public displays of course enhanced Carnegie’s already notorious reputation for being a publicity seeker. It was generally believed both in Britain and in America that he never gave a cent that was not returned to him tenfold in public adulation. Poultney Bigelow, who worked with Carnegie for the establishment of the New York Public Library system, wrote one of the harshest indictments of the philanthropist: Never before in the history of plutocratic America had any one man purchased by mere money so much social advertising and flattery. No wonder that he felt himself infallible, when Lords temporal and spiritual courted him and hung upon his words. They wanted his money, and flattery alone could wring it from him. Ask him for aid in a small deserving case or to assist a struggling scientific explorer—that would be wasted time. He had no ears for any charity unless labelled with his name. … He would have given millions to Greece had she labelled the Parthenon Carnegopolis.
Such criticism, while understandable, was quite unfair, and although Carnegie generally ignored such comments, on occasion he felt it necessary to speak out. When he offered to match the six-hundred-thousand-dollar endowment of the Franklin Institute in Boston, he was greatly disturbed to receive an inquiry from Charles Eliot, president of Harvard, one of the trustees of the institute, asking if this meant that Carnegie expected the name to be changed to the Franklin-Carnegie Institute. Carnegie felt obliged to deny this at some length: The idea of tampering with Franklin’s name never entered my mind any more than when I duplicated Peter Cooper’s gift of six hundred thousand. … I find it difficult to avoid having gifts for new things called after the donors. Carnegie Hall New York was called by me The Music Hall a la Boston. Foreign artists refused to appear in “A Music Hall” —London idea. The Board changed it in my absence in Europe without consulting me. … “The way of the Philanthropist is hard” but I don’t do anything for popularity and just please my sel’—do what I think is useful. I never reply to attacks. Altho I confess I was surprised that you should have for a moment imagined there was a man living who could dream of coupling his name with Franklin or with any founder .
There were many instances of Carnegie’s philanthropy that, at his express order, received no publicity whatsoever. He had many people on his private pension lists, from obscure boyhood friends in Dunfermline to such celebrities as Rudyard Kipling and Booker T. Washington. The publicity he did seek and get for his gospel of wealth after 1890, however, resulted in an almost unbelievable torrent of letters from individuals requesting aid for themselves or for some project in which they were interested. His faithful secretary, James Bertram, who handled all of this correspondence, estimated that Carnegie received on the average of four to five hundred letters a day, and after the announcement of some large benefaction, this number might increase to seven hundred a day. The great majority of these letters Carnegie, of course, never saw. They came from all over the world, from writers who could not get their books published, from inventors with patents to revolutionize industry, from persons who claimed kinship with Carnegie, or simply from desperate people having no other recourse but the blind hope that a simple scrawled message to that magical name would be the open-sesame to help.
No one, however, was too important or too proud, it would appear, to write a begging letter to Carnegie. Those letters from friends and distinguished persons he would have to see and to answer. On one day alone, he had letters from John Morley, Herbert Spencer, and William Gladstone. Morley, who never begged, had simply written a personal letter, but Spencer was begging for help for some sociological study a friend was engaged in, and Gladstone wanted Carnegie to give money to the Bodleian Library. Carnegie was impressed. “Just think,” he wrote in reply to Gladstone, “one mail brought me three letters.
One from you—Gladstone
One from Herbert Spencer
One from John Morley
I am quite set up as no other one can say this. A.C.” But not set up enough to become softheaded. Carnegie politely but firmly turned down both Spencer and Gladstone.
Mark Twain, who was a frequent correspondent and who always addressed Carnegie as Saint Andrew, wrote the most delightful begging letters of all those that Carnegie received. Sometimes it would be a joke:
You seem to be in prosperity. Could you lend an admirer a dollar & a half to buy a hymn book with? God will bless you. I feel it. I know it. N.B. If there should be another application this one not to count. P.S. Don’t send the hymn-book, send the money. I want to make the selection myself. Sometimes it would be a serious request for Carnegie to enter some business venture with him or to rescue him from one in which he was already caught. Either way, he took Carnegie’s refusals with good grace.
On an early spring morning in 1901, when Carnegie sailed for Europe, having sold out to Morgan and leaving behind him safely locked in a vault in Hoboken the world’s largest negotiable fortune, he had some understanding of the size of the task that lay before him. Just prior to his departure he had sent to the managers of the Carnegie Company, now a subdivision of United States Steel, five million dollars of those bonds to be held in trust for the following purposes: Income for $1 million to be spent in maintaining Libraries at Braddock, Homestead & Duquesne works. Income from other 84 million to be applied: 1st, to provide for employees of Carnegie Company injured in service and for dependents of those killed 2nd, to provide small pensions to employees after long service, help in old age. Not to be regarded as a substitute for what the Company is already doing. … I make this first use of surplus wealth upon retiring from business, as an acknowledgement of the deep debt I owe to the workmen who have contributed so greatly to my success.
He also left letters granting $5,200,000 to New York City for sixty-five branch libraries throughout the five boroughs, under the same conditions as applied to all of his library gifts; and to St. Louis, one million dollars for branch libraries. Thus, by three letters written in a single day, Carnegie had given away $11,200,000. All of his previous gifts up to that date had totalled $16,363,252. But the interest on his bonds and other investments alone amounted to over fifteen million dollars a year. Carnegie knew he would have to do much better than this if he were to make any substantial cut into his vast amount of capital.
But for the next ten years Carnegie gamely ran on in a race that he had set for himself, with handicaps that were self-imposed. Library giving, which he regarded as his specialty, took care of $60,364,808 of his fortune by providing 2,509 free public libraries throughout the United States, the British Isles, Canada, New Zealand, Australia, and South Africa. But spectacularly popular as this field of philanthropy proved to be, it amounted to only one seventh of his total fortune.
The question remained: What other fields could he enter in view of the restrictions he had laid upon himself? He would not enter the medical field, for he felt that this had been pre-empted by John D. Rockefeller. Giving to churches, and particularly to missionary enterprises, was antithetical to his most fundamental beliefs. The substantial exception he made to this rule was in providing church organs—a form of philanthropy into which he rather inadvertently stumbled when he presented the organ in 1873 to the small Swedenborgian church in Allegheny. Once this gift became publicized, other requests began to come in, and soon Carnegie found himself involved in a major operation. Knowing the prejudice of Scottish Calvinists against instrumental music in church, particularly the pipe organ—”a kist fu’ o’ whistles”- Carnegie took a certain delight in seeing a Scottish Presbyterian church swallow its pride and ask for an organ, in the hopes that this would induce Carnegie to make other and more holy contributions to the congregation. After a time this game, however, became no longer a sport but a big business. By 1919 Carnegie had given 7,629 church organs throughout the world at a cost of $6,248,312—a chest full of whistles large enough to have impressed John Knox himself.
Still the interest on his bonds continued to accumulate, and the years of grace left to him in which to dispose of his fortune were fast slipping by. Ruling out medicine, religion, and charitable social work, he had left to him only one major field in which to dispense his largess—education. Here the need was great, the opportunities many, the demands unlimited. But Carnegie was exceedingly cautious. University presidents throughout the United States and Great Britain were more than eager to help relieve Carnegie of his money, but he remained as deaf as Ulysses’ sailors to the siren calls from Harvard, Yale, Oxford, and Cambridge.
When he finally entered the field of higher education, it was by the back door, and only then by violating his own cardinal principle of not making charitable gifts to a whole class of impoverished individuals. It was Henry S. Pritchett, the president of the Massachusetts Institute of Technology, who was to open this door to Carnegie by raising the question of teachers’ pensions. Like most men of very limited formal education, and particularly men of European background, Carnegie held college professors in awe. To discover that college professors might teach for several decades and not achieve a salary above four hundred dollars a year, with no provisions for retirement, was for Carnegie a shocking revelation. Office clerks at Carnegie Steel earned as much or more.
The low salaries that prevailed throughout the academic profession were of particular concern to Pritchett, who, as head of a scientific technological school, had a great deal more difficulty in recruiting able men than did the administrative officers of the traditional liberal-arts colleges. Now that many of the basic industries were following Carnegie’s early example of employing chemists, physicists, and professionally trained mechanical engineers, educational institutions, even those as distinguished as M.I.T., did not find it easy to compete for personnel with companies that paid salaries three to five times higher. Another college personnel problem resulted from the fact that there were no pension plans for professors. Out of purely humanitarian concern, a college was often obliged to keep on its active teaching staff an elderly faculty member who should have been retired, thus denying a place to a young and valuable instructor. This situation further discouraged young men from going into the teaching profession.
Carnegie listened intently to Pritchett’s arguments, and by the spring of the year 1905 he was ready to announce his latest philanthropic foundation, the Carnegie Teachers Pension Fund, with an endowment of ten million dollars. Under the terms of this grant as proposed by Carnegie, a board of trustees, composed of twenty-two of the leading college and university presidents in the United States and Canada, was to establish pensions for faculty in private but nonsectarian colleges and universities “under such conditions as you [the trustees] may adopt from time to time.”
Had Carnegie simply set up a pension fund for all college teachers in private institutions, the trustees would have had little to do but see that there was a proper administration of the funds. It was Carnegie’s strong bias against sectarianism, plus the phrase “under such conditions as you may adopt,” that encouraged this able group of college administrators to set standards for higher education. The fund, at first incorporated under the laws of New York State, within a year received a national charter by act of Congress under a more appropriate name: The Carnegie Foundation for the Advancement of Teaching.
The first act of the trustees was to send out a questionnaire to 627 institutions of higher education throughout the United States and Canada, asking each college the size of its endowment, what educational standards it had established for admission and for graduation, what its relation to the state or province was, and what, if any, sectarian ties or obligations it had. Replies were received from 421 institutions, and the trustees then proceeded to establish standards for admission to the pension fund. They first decided that no school with an endowment of less than two hundred thousand dollars would be considered. No school that received a substantial portion of its operating funds from the state was eligible. No school that required a majority of its trustees to belong to a particular denomination or that had a sectarian requirement for its president, faculty, or student body, or that had a required course in a particular religious creed or sect would be eligible. Finally, no school that did not require of its students what the Carnegie board of trustees regarded as a minimum of preparation prior to admission to the college could qualify. Of the 421 original applicants, the trustees accepted only fifty-two for admission into the pension plan.
There were some surprising rejections. Northwestern and Brown universities were kept out on sectarian grounds. The University of Virginia, a private university founded by Thomas Jefferson, was eliminated because its admissions standards were too low. Of the fifty-two institutions selected, twenty-two were located in New England and New York State. Only one southern school, Tulane University, was admitted. Vanderbilt and Randolph-Macon, both of whose educational standards were acceptable, were rejected on sectarian grounds.
In those schools that had not been selected, the anguished cries and threats of faculty members shook college administrations with a violence that Carnegie and Pritchett could hardly have imagined. There were emergency sessions of boards of trustees throughout the country, and charters that had once been considered inviolate were in many places quickly changed to remove sectarian requirements. Bates College went to the state legislature of Maine and successfully pushed through a new act of incorporation that changed its former relations with the Free Baptist Church. The University of Virginia raised its standards of admission, which had an immediate impact upon secondary schools throughout Virginia and in other parts of the South. Inadvertently, Carnegie, with his pension plan, had done more in a year to advance the standards of higher education within the United States than probably any carefully conceived program to accomplish that goal could ever have done.
By 1909 it was quite apparent to anyone interested in higher education that the Carnegie Foundation had become the national unofficial accrediting agency for colleges and universities. Good teachers were accepting positions on the basis of whether or not the school was a participant in the pension fund, prospective donors used participation as a major criterion in determining the direction and size of their gifts, and the program even had an indirect effect upon admissions.
It is not surprising that schools like Northwestern and Brown should be concerned over exclusion. No president was more importunate in his demands that his faculty be included within the pension plan than was President Abram Harris of Northwestern. He even persuaded the President of the United States to come to his aid. “Northwestern is no more sectarian than Princeton,” Theodore Roosevelt, with some heat, wrote Carnegie. But Northwestern would not change the provision in its charter that required a majority of its trustees to be Methodists, and not even T.R.’s big stick could force Carnegie and Pritchett to yield to sectarianism.
They did give in to the demands of the state institutions, however. In 1908 Carnegie agreed to permit state institutions, at the request of the state legislatures and governors, to participate in the pension program, and he added an additional five million dollars to the fund to accommodate these requests. This extension proved to be the undoing of the whole program. By 1915 it was apparent to the trustees that the free pension system could not be continued indefinitely. Two years later an independent legal reserve life-insurance company was created, chartered under the laws of New York State, and called the Teachers Insurance and Annuity Association of America. From 1918 on T.I.A.A. entered into contractual relationships with individual institutions of higher education and established life insurance and annuity programs for faculty and college administrators on a contributory basis. The free pension plan had proved to be infeasible within twelve years after its inauguration, but it was a noble and elevating experiment. Had a regular insurance system such as T.I.A.A. been adopted from the beginning in 1905, we should not have had the sorely needed evaluation of higher education that the Carnegie Fund trustees forced on the colleges and universities. The Times of London was quite correct in calling the foundation one of Carnegie’s most significant accomplishments “in the supremely difficult art of spending large sums of money in undertakings to be of permanent advantage to the public.”
By 1910 Carnegie was more than willing to agree with the Times as to how “supremely difficult” the art of spending was. He had given away $180,000,000 of his fortune, but he had almost the same amount still left in his possession. The capitalistic system at 5 per cent worked faster than he could. He told his good friend Elihu Root that it appeared that he would have to die in disgrace as a man of great wealth after all. Root had a simple solution. Why didn’t he set up a trust, transfer the bulk of his fortune to others for them to worry about, and then die happy in a state of grace?
And so it was done. Carnegie created the Carnegie Corporation of New York in November, 1911, and transferred to it the bulk of his remaining fortune, $125,000,000, “to promote the advancement and diffusion of knowledge among the people of the United States.” As United States Steel had been the supercorporation in industry, so the Carnegie Corporation of New York became the first supertrust in philanthropy.
“Now it is all settled,” Carnegie wrote his Scottish solicitor, John Ross, in February, 1913. For years the newspapers of New York had run a box score on the philanthropic gifts of Carnegie vs. Rockefeller. Now the New York Herald printed the final score: “Carnegie, $332 million; Rockefeller, $175 million.” It was no longer a contest. The public had lost interest, and so had Andrew Carnegie.