“Who dies rich dies in disgrace.” – Andrew Carnegie
“Saving up your money for a rainy day
Giving all your clothes to charity
Last night the wife said
Oh boy, when you're dead
You don't take nothing with you but your soul” – John Lennon
A few months ago, I happened upon a reference to an essay written in 1889 by the 19th and early 20th Century steel magnate Andrew Carnegie. In The Gospel of Wealth, Carnegie wrote of the responsibilities the newly wealthy and publicly stated his pledge to give away his fortune before he died. Having worked for the last 20 years at organizations that depend on philanthropy to fulfil their mission, I was curious to learn more. I knew little about Carnegie except that he was one of the ‘robber barons’ and that there were, a hundred years after his death, an extraordinary number of foundations and institutions that still bore his name. I went looking for the essay and instead found myself purchasing his biography. Fortunately, I didn’t look at the page count before clicking the ‘buy it now’ button because when it arrived, I was more than a little daunted by the 800-page paperback that I unwrapped. But the money was spent, and being thrifty as a (insert stereotype here), I wasn’t about to spend good money on a book and not at least try it.
I couldn’t put it down.
Born in Scotland in 1835, Carnegie’s father was a cloth weaver who was driven to near destitution by the industrial revolution. Carnegie’s mother, rather than let the family starve, figured out how to scrape together enough money for an ocean passage to the US where the family settled in Pittsburgh, Pa. At the age of 13 Carnegie got his first job working as a ‘bobbin boy’ in a cotton mill at $1.20 per week. He soon found a better job as a messenger for a telegraph company and then taught himself Morse code so that he could become a telegraph operator. Sometime later, a friend offered him the chance to buy a few shares of stock in a railroad company. The rest, as they say, is history. Andrew Carnegie went on to build an iron and steel empire and accumulated one of the largest fortunes the world has ever known.
Carnegie was not what we would call a benevolent boss. He busted unions without remorse, imposed a 12-hour, 6-day-a-week work week at his plants, reduced wages whenever he could and fixed prices with competitors in ways that would be illegal today (though it wasn’t at the time). He supported tariffs that kept prices for his products high. Many of his tactics appear ruthless. And yet (humanly) he was man of contradictions. An open atheist at a time when that was nearly unheard of, he had a strong internal code of morality. He squeezed every dollar of profit he could from his businesses yet genuinely believed that he was accumulating his surplus wealth for a purpose. He drove his workers so hard they barely had time to glance at a newspaper, but funded free libraries so that the working class might better their circumstances through learning. He amassed billions (in today’s dollars) then gave most of it away during his life and upon his death.
Carnegie enjoyed his wealth not for its own sake but for what it allowed him to do. He raised his family out of poverty. He spent freely on his family and friends. He took his wife, daughter, and friends on trips around the world and all over Europe. He built a castle in Scotland, where he and his wife spent the summers hosting hundreds of guests. He sent gifts of barrels of whisky to friends like Samuel Clemens and every US president from James Garfield to Woodrow Wilson.
Carnegie established thousands of public libraries, and by requiring the continuing support of those libraries by the towns who accepted his gift, created the idea of libraries as a public institution like fire and police protection. (The beautiful Beaux Arts style Carnegie Library in D.C. stands preserved right in front of the Convention Center, though today the building houses an Apple Store.) He funded public spaces and parks both in the US and in the UK. He endowed many universities, including the one in Pittsburgh that bears his name. The Carnegie Institution for Science still operates from a building on P Street NW in Washington, D.C.
In his final days, as it became clear that he was still earning money (interest on investments) faster than he could give it away, he established the Carnegie Corporation to continue his philanthropy after his death and left most of his remaining wealth to it after establishing a trust to provide for his wife and daughter. He also left bequests for every one of his servants and gave each of his tenants on the land he owned in Scotland a two-year rent abatement. For his dearest friends, whose devotion to public life or the life of the mind had left them in dire circumstances, he left annuities to provide for them until their deaths.
Carnegie, through extraordinary fortune, being in the right place at the right time, and yes, being endowed with uncanny knack for business, became fabulously wealthy. That’s not the interesting part. The interesting part is that from an early age began to ask himself what he should be doing with his wealth. He enjoyed plenty of it. He traveled extensively, drank the finest whisky, and summered in Scotland, boating and fishing at the castle he built. But even though he enjoyed a life that most would consider wildly extravagant, the amount he spent on himself was a drop compared to what he gave away. In doing so he created a legacy in science, education, and technology that still benefits humanity today.
It is not news that the disparity between those who have much and those who have little continues to grow, especially in prosperous countries like the United States. But many, even those who are not in the ‘one-percent,’ have a surplus beyond what we need to take care of ourselves and our families. It may surprise you to know that if your family income is above $150,000 a year, you are in the top ten percent of earners in the US. If your income is above $75,000, you are doing way better than average.
As I wind down the ‘accumulation phase’ of my life, I am trying to figure out how to make those resources last until they are no longer needed. Like most people nearing retirement today, I have no traditional pension. Instead, I have what I saved in my IRA and plus a small amount of Social Security when I am old enough to collect it. So figuring out the right amount I can dole out to myself to live on is pretty important.
Anyone who has done any retirement planning, has probably heard of the Monte Carlo simulation (can we agree, the name doesn’t inspire confidence?) which uses computer modeling to determine the likelihood of your outliving your resources. (e.g. “You have an 85% chance of not running out of money before you die.”) The lower your annual expenses or the higher your starting balance when you retire, the greater your chances of success.
My emotional need for a near 100 percent certainty that I (or more importantly my wife who is likely to outlive me) will not die destitute (or a burden to our children) means that I budget conservatively and will live frugally in retirement (i.e. no castles in Scotland and only moderately priced whisky). It also means that if the model predicts a near 100 percent chance of success in the worst-case scenario, an average scenario should result in a surplus. If I am so blessed, I hope to use the excess wisely and for good, but how?
The Gospel of Carnegie suggests a threefold path.
Enjoy it. Share your good fortune with family and friends and embrace a wide definition of who is a friend. You don’t have to live like a monk. Enjoy good whisky or at least good coffee.
Help raise up your neighbors not as fortunate by building and investing in institutions that support learning, skill building, and social equity and justice, or by giving someone hospitality and help when they need it.
If you can, leave a legacy of good that will continue beyond your life that supports the highest aspirations of our species: scientific inquiry, peace, and a world better than the one you were born into.
Most of us will not be able to endow a foundation that carries our name forward in perpetuity, but many will have resources beyond the needs of our sunset years. It is worth giving some thought to the disposition of your surplus, if you are fortunate enough to have one. After all, as has been observed: “Oh boy, when you’re dead, you don’t take nothing with you but your soul.”
Andrew Carnegie at his castle in Scotland