The Gospel of Wealth is the greatest written piece of work about philanthropy. Andrew Carnegie dedicated his life to philanthropy, and instilled many of the principles that today’s billionaires, like Bill Gates, adhere to.
Carnegie, who grew up in Scotland, didn’t have much as a boy. His family moved to the states when he was young in search of a better life. When he wasn’t working, a young Andrew Carnegie spent his time reading books. This wouldn’t have been possible if it weren’t for a generous man who opened up his personal library, a rare thing to do at the time, to the public in Western Pennsylvania. Carnegie has stated this act of kindness as one of the the main inspirations that led him to become one of the most generous men alive.
However, despite being one of the first publicly supporting figures of philanthropy, Carnegie had a predecessor. George Peabody, or the “father of modern philanthropy”, is known for establishing America’s international credit and partnering with Junius Spencer Morgan. This partnership goes on to become J.P. Morgan & Co. after several mergers and acquisitions. Through his actions and teachings, Peabody inspired the likes of Carnegie and Rockefeller. Unfortunately, Vanderbilt didn’t pick up the full message.
George Peabody Library in Baltimore, Maryland Source
Although a man of many talents, philanthropy certainly wasn’t in Cornelius “Commodore” Vanderbilt’s horizon. Through his vast railroad empire, he generated a very large sum of money and gained plenty of power. While he was alive, he was very keen on being financially responsible for his wealth. But he was never seen as a philanthropist. When Cornelius passed away, the money might as well been buried with him. For that was essentially the last time we saw it.
His eldest son, and heir to his railroad empire, did a fairly good job keeping things in order. In fact, he actually doubled the family’s railroad business. However, as the transportation industry started to change and the pressure to spread the wealth mounted from his family, William Henry Vanderbilt passed away earlier than expected. And at this moment, the Vanderbilt empire came crashing down.
“Any fool can make a fortune; it takes a man of brains to hold onto it,” Commodore is said to have told his son William Henry “Billy” Vanderbilt, according to Fortune’s Children: The Fall of the House of Vanderbilt, a family history written by cousin Arthur T. Vanderbilt II.
Despite not being on Forbes’ inaugural America’s Richest Families list, the Vanderbilt legacy lives on through Vanderbilt University in Nashville, Tennessee. Cornelius Vanderbilt, known as “the Commodore,” make a $1 million gift that founded Vanderbilt University in the spring of 1873. Source
All sense of financial responsibility was lost, and so was control of the once prosperous transportation empire Cornelius built. Mansions with precious jewels and lavish parties became synonymous with the Vanderbilt name. The most precious art could be found in the Vanderbilts many homes. And then suddenly, there was nothing left.
During the same time period as Cornelius Vanderbilt, Andrew Carnegie built a steel empire that generated him an enormous amount of wealth. It all started when he was working on the railroad and started to make some successful investments. He then realized the future was in steel. His business acumen, such as vertically integrating his business, was one of the key factors to his success. In 1901, he sold the Carnegie Steel Company to banker John Pierpont Morgan for $480 million, north of $309 billion in today’s dollars. Bezos who?
Both Carnegie and Vanderbilt had different philosophies on how that money should be spent. Carnegie decided to express his opinions by writing the greatest written piece about personal finance, The Gospel of Wealth.
The Gospel of Wealth has many interesting parts, but there are three that stick out the most:
The real value of money relies on its proper distribution
The rich should take an active part in charity
The rich must be held at a higher standard
Carnegie preached the importance of distributing your money while you are still alive and not giving it to your heirs when you pass. In his eyes, it’s a burden to leave your family with great wealth and no direction. Instead of leaving money with your family, spread the wealth amongst the less fortunate. Vanderbilt left majority of his money with his eldest son, and eventually the next generation blew threw it all. Carnegie famously distributed $350 million during his lifetime, but had $30 million left, which went into his Corporation’s endowment. Yet unlike many of his rich peers, Carnegie didn’t even leave his descendants with a stake in Carnegie Steel or his fortune.
Yet even when there was a family charity, Carnegie preached caution. Donors should play an active part in the proper use of their resources. Proper oversight is needed; else recipients will mishandle charity. Random acts of donation are often ineffective because they don’t benefit the full society. Instead, the wealthy must take an active part in sharing their wealth with society by donating not only money, but their time and resources. As time is the most valuable commodity we have.
Carnegie was notorious for building libraries and taking an active part in America’s education system, especially in the south. In fact, Carnegie built over 3,000 libraries! He believed money was never enough, that time and resources must also be given to the cause. The Rockefeller’s are another good example of giving not only money, but time and resources. Through six-generations, The Rockefeller Foundation has taken a lead role in fighting for equal healthcare, economic opportunity, nourishment, and more.
One of the more controversial parts of The Gospel of Wealth, is the polarizing statement that the wealthy must be role models. When you are apart of the 1%, you are obligated to live life at a higher standard. That in fact you should act as a trusted advisor to those who are less fortunate than you with your knowledge, experience, and time. In doing so, they would be better off than they would or could do for themselves.
That was Carnegie’s belief and he expressed it quite clearly throughout his life. Never was he in the headlines for the wrong reasons or making a fool out of the family name. How many times do we see famous celebrities in the news today for scandals and petty drama? The name Carnegie oozes class and wealth.
The Gospel of Wealth is the story of a poor boy who grew up to be a very humble man. A man who invested wisely and took a risk by starting his own business. That risk paid off. From rags to riches, Andrew Carnegie is quite an inspiration.
So, where does that leave today’s billionaires? With Bill Gates, we see this generations Andrew Carnegie. Mr. Gates is worth $112.8 billion from his Microsoft empire. Towards the later half of his legendary Microsoft tenure, he started shifting more into philanthropy. This became clear after he stepped down from his role as CEO, and then a few years later leaving his role as chairman. He is now taking on the world’s toughest problems at The Bill and Melinda Gates Foundation.
Warren Buffett started The Giving Pledge with Bill Gates. He isn’t as active in philanthropy as Gates, but he has pledged to give away 99 percent of his wealth to philanthropic causes. Approximately 83 percent of that will go to the Bill & Melinda Gates Foundation, and much of the rest will be distributed to the foundations of his children. In theory, this is great. But keeping the Gospel of Wealth in mind, is this really philanthropy or a mere check he’s going to write?
Melinda and Bill Gates Source
On the other hand, we have Jeff Bezos and Mark Zuckerberg. We know them for their successful businesses, but they are also not a stranger to the front page of a breaking news story. They both have briefly mentioned giving some of their wealth away, but to what extent?
Bezos has started to give back through multiple organizations, but in a very passive way. Over the last few years, he’s been starting charities and foundations. Of course, it’s only a fraction of his billionaire fortune with little or no time and effort being put into it. When you are worth nearly $200 billion dollars, throwing a few million is like the average man telling a clerk to keep the change. He’s getting closer to the age where Bill Gates decided to turn a corner which gives me some hope. After all, how could you possibly spend all of that money?
As controversial as Zuck can and has been, I believe he will follow in the footsteps of the great Peabody, Carnegie, and Gates. Zuckerberg has pledged to give 99% of his Facebook shares away and he is working more and more on the Chan Zuckerberg Initiative. Both Zuck and his wife, Priscilla Chan, have signed the giving pledge. As his time at Facebook eventually comes to an end, I believe Zuck will start to become more philanthropic by giving away more of his time, energy, and resources. After all, he is only 36. As for now, he is focused on steering Facebook in the right direction, whatever that may be.
There is one more thing I’d like to mention. Race. White American men are not the only ones who are rich and/or philanthropic. The lack of education in both race and history is horrifying. Mansa Musa (My next article is about him) and Herodes Atticus were known philanthropists many hundreds of years prior. Oprah Winfrey, Carlos Slim Helu, Amancio Ortega, Diane Hendricks, and Aliko Dangote are all billionaires. But why don’t we mention them when we discuss the wealthy and elite? Regardless of race, ethnicity, or religion, every wealthy individual should be held to the same high standards listed in the Gospel of Wealth.
The moral of the story here is how you give your wealth away. Passive vs active. Are you satisfied with cutting a check and patting yourself on the back? Or are you willing to treat this like your own business and give away your time and resources?
Pledging to give your money away is charity, not philanthropy. It should be condoned for the 1% to sit back and cut checks. Instead, we need rich people to actively build schools, help develop poor communities, and fight for policy changes. Rather than sit in your multi-million dollar homes, on your multi-million dollar butts, please take an active part in giving and help us make much needed changes.
Thanks for reading! If you enjoyed this article, please share it with a friend!