Carnegie is considered by many to be the father of modern philanthropy. This title stems not only from Carnegie’s extensive giving but also from his writings which laid out a philosophy to giving. You would be hard pressed to find a place in the United States that is not touched by this legacy. To some, this may paint Carnegie as an egocentric, obsessed with ensuring his name was remembered but others see it as a testament to his generosity. Carnegie himself would probably respond plainly that what he did was not self-obsessive or strictly generous but rather was his sworn duty.

In June 1889, Carnegie’s “Wealth” was published in the The North American Review (Carnegie Corporation, 2015). The article was revolutionary for its time and was considered controversial among Carnegie’s contemporaries (Carnegie Corporation, 2015). The article not only outlined how Carnegie thought wealth should be spent but explained many underlying sociological, political, and psychological ideas that he felt supported his philanthropic approach.

Qualifying the Good Life

He starts with painting society as being divided between the rich and the poor, each separated by a chasm of wealth inequality. However, Carnegie argues that this is actually a positive and inevitable part of human society (Carnegie, 1998). He states that harmony can be created for both the rich and poor by using the rich’s high concentrations of wealth to advance societal goals (Carnegie, 1998). Carnegie described the alternative to inequality as “universal squalor” where everyone has the same standard of living, but it is universally lower than what could be achieved under capitalism (Carnegie, 1998). The concept of “universal squalor” stemmed from Carnegie’s views that entrepreneurial talent was rare, that small amounts of wealth evenly distributed cannot achieve societal change, and that most people would squander what money they had on unproductive ventures (Carnegie, 1998). Carnegie felt that the wealthy were in the best position to improve society based on both their personal ability to generate wealth and because they had large sums that they could direct towards singular projects, which would be much harder to achieve by many people with small sums of money (Carnegie, 1998).

However, Carnegie also placed high expectations (and some asterisks) on how the wealthy should direct their funds. Carnegie firmly believed that philanthropy was a moral duty for the wealthy (Carnegie, 1998). This sentiment was most famously epitomized by his quote: “The man who dies thus rich dies disgraced,” (Carnegie, 1998). Further, Carnegie argued that the wealthy should not leave large amounts of money to their families and that doing so rarely created a good life for them (Carnegie, 1998). This sentiment is reflected in Carnegie’s support for the existing estate tax, which he felt should be set at a high level to incentivize the wealthy to use their money wisely while they lived (Carnegie, 1998).

Carnegie stressed that the wealthy should give as much as they could while they were alive. Firstly, because he felt that the wealthy could only ensure that money was spent wisely if they spent it personally (Carnegie, 1998). Secondly, Carnegie thought that having excessive wealth at the end of your life was disgraceful and considered this hoarding. He also believed that the more wealth someone possessed, the more they owed to the state for its role in creating the environment or opportunity to create that wealth (Carnegie, 1998).

With regards to spending as much wealth as possible during life, Carnegie practiced what he preached. Though he started philanthropic efforts as early as 1870, he began the lion’s share of his work when he sold his steel business to J.P. Morgan in 1901 (Carnegie Corporation, 2015). The sale made Carnegie the richest man in the world with a total net worth of $480 million dollars (worth around $16.5 billion today). When Carnegie died, he had given $350 million ($12.2 billion today) away and had $30 million remaining which he gave to his trust (Carnegie Corporation, 2015).

Carnegie spent his money on a variety of ventures but did place a special emphasis on certain societal benefits. One was education which Carnegie felt was critical to not only his own upbringing but also to creating the entrepreneurial minds that would improve society (Carnegie Corporation, 2015). Carnegie spent a total of $9 million ($310 million today) on the schools and institutes that would form the University of Carnegie Mellon (Carnegie Corporation, 2015). Likewise, $55 million was spent on libraries throughout the world, building 1,679 libraries in the U.S. and 830 abroad (Carnegie Corporation, 2015).

Beyond education, Carnegie, a pacifist, emphasized the necessity of international peace. He was responsible for the construction of a library and courthouse for arbitration at the Hague that cost $1.5 million ($51 million today), (Carnegie Corporation, 2015). The building is now known as the Peace Palace, is still maintained by the Carnegie Foundation, and additionally houses the United Nations International Court of Justice (Peace Palace, n.d.). The Carnegie Council for Ethics in International Affairs used its $2 million dollar endowment ($68 million today) to organize religious leaders to promote cooperation and alternatives to war. It is now one of the largest institutes dedicated to international affairs and ethics (Carnegie Corporation, 2015).

Beyond these twin passions of peace and education, Carnegie provided for the arts and other recreational ventures. He paid for and provided 7,600 pipe organs to organizations all over the world (Momich, 2019). The illustrious music hall named (unsurprisingly) Carnegie Hall was also financed by Carnegie (Carnegie Hall, 2022). Despite the great impact of these projects, and the fact that they reflect a small fraction of Carnegie’s philanthropic ventures, it should be noted that Carnegie’s philanthropy was financed by wealth generated through harsh labor practices.

Financing Philanthropy in Dollars and Deaths

One of Carnegie’s first financial windfalls came when he bought stock in the Columbia Oil Company (Pees, 2004). The dividends he received were substantial but were generated by an industry that was almost entirely unregulated. The oil wells were dug by hand or with chiseling tools. Fires killed many workers and the vapors released caused environmental damage, lung problems and cancer in workers (Total Safety, 2015). Carnegie would use this money (following some ventures in railroad construction) to enter into the field he was famous for: iron and steel (Marvig, 2022). He would eventually absorb a variety of smaller steel and iron producers to create the Carnegie Steel Company.

Much like oil, the world of steel and iron production was unregulated and dangerous. In 1910, the Bureau of Labor Statistics released its first report on steel and iron accidents (Chaney, 1922). The most startling results were that for every million work exposure hours, there were 38.1 accidents and the severity of these accidents were much higher than other fields (Chaney, 1922). The Bureau compared the severity rate to machine factories who had a severity rate of 1.8 while iron and steel had a severity rate of 7.0 (Chaney, 1922). Certainly, some number of accidents are bound to occur but it is undeniable that Carnegie knew the risk to life and limb that his business incurred upon his workers.

Despite the risk in the factories, Carnegie’s most infamous disregard for his workers came during the Homestead Strike. Though Carnegie was in Scotland at the time of the strikes, he endorsed his chief executive Henry Clay Frick’s decision to cut worker wages which instigated the strike (History.com, 2009). Carnegie remained in contact with Frick as Frick organized a private security group referred to as “Pinkerton’s Guard” that broke up union activity and left a dozen people dead (History.com, 2009). Carnegie would return from Scotland, reduce wages, institute a 12 hour work day, and cut hundreds of jobs over the following years (History.com, 2009). How do we reconcile philanthropic efforts that arose in part out of harming society?

The Carnegie Report Card

Carnegie’s philosophy can be distilled into a system for evaluating philanthropy and applied to other philanthropists. Evaluating individual philanthropists based on Carnegie’s philosophy revolves around three main categories: The philanthropist’s views of society, views of themselves, and the practical outcomes. The “views of society” encapsulate Carnegie’s foundational beliefs including that wealth discrepancy is good, that harmony can and should be created between the poor and wealthy, and that wealth in the hands of a few will lead to societal progress. The “views of themselves” cover Carnegie’s beliefs about what he thought his personal impact on society could be, how he felt money should be spent, and how Carnegie viewed his own talents. Lastly, “practical outcomes” reference what philanthropists have done with their money. These categories were used to create a scoring rubric to compare philanthropists to Carnegie’s philosophical ideals.

The scoring is done by calculating how closely the philanthropist’s beliefs from the first two sections conform to Carnegie’s thinking. This score is then modified by the practical outcomes section to reflect whether the philanthropist’s actual actions conform to their own responses or not. This modification is done by looking at what percentage of the philanthropist’s wealth has been given to philanthropic causes. If the percentage aligns with Carnegie’s own percentage of giving then the philanthropist gets the full value of their scores. Otherwise, their scores in the other two sections are reduced by the percent of difference between Carnegie’s percentage and the philanthropists. The rest of this paper analyses Bill Gates’ views and philanthropic history as a case study for using Carnegie’s views as a rubric to consider modern wealth and philanthropy.

A Student of Carnegie?

It should be noted that Gates’ score only includes questions where he has provided a clear response. The questions where no clear response could be found are marked as “N/A” on the table and are not included in calculating the overall score. Gates’ views on society came out to a 63% agreement with Carnegie. In general, this category shows a potential evolution or at least softening of Carnegie’s views over time. Gates agrees that wealth discrepancy exists but is not as certain as Carnegie that it is a positive or necessary condition. Further, Gates still believes in the capitalist system and the laws of the free market but arguably is more critical of the system and its flaws. An area of major agreement is that both feel estate taxes should be high. Another fascinating similarity is that both Carnegie and Gates advocated for progressive tax rates and supported a capital gains tax (though Carnegie advocated for it to exist, while Gates argues it should be higher).

Gates’ alignment with Carnegie on views of the self was much higher at 93%. One of the views considered was whether they wanted to leave money to their children. Both Carnegie and Gates intended to leave some money to their families but felt that leaving a large sum of money to their children was not a kindness. Both stressed the need for their children to work for their success so that they would be capable adults.

Another belief under the views of self category is the role of the state in wealth generation. Both philanthropists believe that their success was a product, at least in part, of the state. Both seem to agree that without the existence of the state, their efforts would have been hampered or that the tools they needed would not have existed at all. This in turn leads to another similarity: both men’s philanthropy is, in part, motivated by a sense of obligation to the society they live in. Both believe their money should be spent to improve the conditions they grew up in so that others can lead better lives.

Perhaps obviously, but importantly, both these men share an optimistic view of their own efforts. They truly believe that the money they spend can impact society and change it for the better (and it appears it has). Carnegie summarized this view stating: “Do your duty and a little more and the future will take care of itself.” Despite some differences, when we look at Gates’ own philanthropic work, it seems clear that he was heavily influenced by Carnegie and his Gospel.

Applying the Gospel

The supermajority of Bill Gates’ philanthropy has been through the foundation he created with his now former wife Melinda, aptly named the Bill and Melinda Gates Foundation. This organization has distributed $60 billion dollars since its inception in 2000 (Bill & Melinda Gates Foundation, 2022b). It should be noted that the funds this foundation has used were not exclusively Bill Gates’ assets as both Melinda Gates and Warren Buffet also contributed significant amounts (Bill & Melinda Gates Foundation, 2022b). However, Bill Gates has been able to contribute further lump sum payments over the course of the Foundation’s existence. Though it is true that having a foundation to distribute wealth is a commonality between Gates and Carnegie, there are two far stronger similarities between their approaches to wealth distribution.

The first is Gates’ Giving Pledge which is a near direct endorsement of Carnegie’s philosophy that the wealthy are obliged to give away wealth during their lives. In a 2015 speech, Gates outlined the importance of philanthropy and echoed many of the points that Carnegie emphasized. Two major similarities were Gates’ firm belief in 1) utilizing the laws of competition and the strength of the free market to create more equitable conditions for all and 2) the role of technology in generating future prosperity (Gates, 2015). Despite Gates’ very close alignment to Carnegie in this speech, there are some remarks that may have given Carnegie pause. For example, Gates is more optimistic about the capacity of individuals (with small sums of money) to contribute effectively philanthropically (Gates, 2015).

The Giving Pledge was formed as another venture between Bill Gates, Melinda Gates, and Warren Buffet in 2010 (Giving Pledge, 2022). The Pledge is a voluntary agreement open to billionaires to publicly promise to give most of their wealth to philanthropic causes either during their lifetimes or in their will (Giving Pledge, 2022). Though Carnegie may have reservations about the option to give donate through a will (which he felt was always less effective than spending during life), it seems likely he would happily endorse this initiative. It is likely that not only would Carnegie think that this is the perfect kind of initiative to motivate the wealthy, but would also be thrilled to see that the Pledge has garnered 236 signatories (and seems to gain more each year) (Giving Pledge, 2022).

Shared Passions

Another similarity between the two men is their area of focus for their philanthropic giving. Broadly speaking, both cared deeply about education and preventing loss of human life. Carnegie focused on creating public libraries and promoting international peace. For Gates, the focus has been on promoting access to education and preventing the spread of diseases. Gates also has a unique connection to Carnegie in regard to education, in that one of his first philanthropic ventures was providing desktop computers to the same libraries that Carnegie built (Bill & Melinda Gates Foundation, 2022b). Further, Gates has broadened Carnegie’s vision and his foundation now looks globally at reinforcing and/or creating access to public libraries around the world (Bill & Melinda Gates Foundation, 2022a).

As stated above, Gates has utilized a foundation to disperse his wealth. It publishes ample information on how that money is spent. In North America, Gates’ educational endeavors have focused on improving access to K-12 and post-secondary education. For example, the Gates Scholarship Program offers full ride scholarships to 300 students who are “outstanding, minority, high school seniors from low-income households” (About TGS, 2016; Gates Scholarship, 2020). Gates uses individualized approaches for programs in different parts of the world. His educational efforts in China include creating what he calls “China’s first philanthropy institute” which he hopes will create a strong local culture of philanthropy (Gates, 2015).

In line with their shared interest in reducing loss of human life, Gates’ has invested significant amounts of money in providing vaccines to low income countries. For malaria, the Gates Foundation claims that in the last two decades, 1.7 billion cases of malaria have been prevented and 10.6 million lives have been saved (Malaria, 2022). In relation to HIV, the fund has dedicated $6 billion to fund aspects of AIDs and HIV research that are underdeveloped. Lastly, the fund has provided funds for a variety of programs in relation to pneumonia which remains a major killer of children under 5 in low income countries (Bill & Melinda Gates Foundation, 2022c). In particular, they have worked to improve maternal immunization and fight the most common causes of childhood pneumonia (Bill & Melinda Gates Foundation, 2022c). There’s no doubt that Carnegie would be very impressed with Gates’ efforts but Carnegie was very clear about his opinions on holding large amounts of wealth, stating that “the man who dies rich dies disgraced.” This raises the difficult question of what Carnegie would think of the fact that Gates wealth following retirement has not decreased but rather has grown exponentially?

Quantifying Charity

This question makes the final aspect of the rubric difficult to calculate because the comparison is between Carnegie who retired and attempted to spend all his wealth (he couldn’t do it fast enough before he died) and Gates who has retired but continues to make huge sums of money off of his stocks in Microsoft as well as his own investment portfolio. For example, Bloomberg suspects that Gates somewhere has received around $56 billion from stocks and dividends which is 3.5 times the total net worth Carnegie had when selling Carnegie Steel (Cannon et al., 2017). Likewise, despite Gates having increased his net worth from the $63 billion he had in 2000 when he retired from Microsoft to its current $118 billion, his fund has already provided almost five times the amount Carnegie provided over the course of his life (Gates’ fortune, 2008). So when trying to compare Carnegie giving 73% of his retired wealth to Gates you have to muddle the percentage as in one sense Gates has contributed a far smaller ratio of his wealth than Carnegie but the relative amount he has given dwarfs what Carnegie was able to contribute.

It seems likely that Carnegie would be perfectly fine with Gates’ “hoarded” wealth. For one, Carnegie never makes the argument that you need to cut off all your monetary pursuits when you retire, Carnegie did this simply to have more time to focus on philanthropy. Secondly, Carnegie retired at 66 and spent his last 17 years doing the majority of his philanthropic work while Gates is 66 today. Thus, it is likely that Carnegie would actually see Gates as someone who not only has many years to continue his philanthropic pursuits and recognize that Gates began to pursue philanthropy earlier than Carnegie himself. This would also be corroborated by Gates’ recent announcement that he would provide an additional $20 billion to the fund this year to combat current issues (Wile, 2022). Thirdly, Carnegie would have some assurances that Gates intends to continue giving back in the form of the Giving Pledge. Lastly, it simply seems inconceivable that someone who praised those who could turn a profit would dislike someone creating wealth while also masterfully providing charitable resources that far exceeded his own contributions. It is a far easier thing to imagine Carnegie meeting Gates, smiling at his protégé, and saying “You have done your duty, the future will take care of itself.”

Appendix 1: Rubric

Views on Society	Score: 20/32 or 63%
Does the philanthropist think that there should and could be harmony between the poor and the rich?	1
Does the philanthropist think large distinctions in wealth exist?	2
Are large wealth distinctions beneficial?	N/A
Would a large distinction in wealth between the rich and the poor be justified if society as a whole is improved?	N/A
Does the philanthropist think a large distinction is wealth would create a caste system between employers and workers that would harbor distrust and weaken homogeneity?	2
Does the philanthropist wish we went back to the “good old days?”	N/A
Does the philanthropist think the law of competition is the best way for society to advance?	1
Are there viable alternatives to a free market?	1
Does the philanthropist think great business minds are rare?	1
Does the philanthropist think there are people who will unjustly or unequally use the laws of free markets to create wealth for themselves?	2
Does the philanthropist think this is justified because the people doing this are rare and their wealth will ultimately benefit society?	0
Is a few people spending large sums of money a better way to push society forward than many people having small sums of money?	1

Does the philanthropist think people who are given small sums of money will spend it on appetite and excess primarily while only a fraction of the money will be used to push society forward?	N/A
Does the philanthropist think that majority consensus is usually right?	1
Does the philanthropist think that what defines modesty and what defines the needs of their dependents is based on public opinion?	N/A
Does the philanthropist believe there is a limit on what can practically be done in our lifetimes?	N/A
How much does the philanthropist feel they need to be considered wealthy (calculated by having a standard of living above living comfortably)?	1
Does the philanthropist think, generally, giving away large sums of money does more good or more harm?	1
Does the philanthropist think charity can ever be selfish?	2
Does the philanthropist think charity can have the opposite intended effect?	1
Does the philanthropist think charity is effective for resolving issues?	1
Does the philanthropist think taxes on estates are good?	2
Does the philanthropist think having these taxes encourages business people to contribute their wealth to society?	0

 

View of Self	Score: 15/16 or 94%
Does the philanthropist think that their actions can at most impact only the next generation after you?	N/A
If the philanthropist made a profit, what would be the limit of what they would buy for themselves?	N/A
How confident is the philanthropist in their ability to turn a profit?	N/A
Would the philanthropist leave money to their children and if so how much (best answer to how much is providing enough for their needs)?	2
If the philanthropist do not leave them money or only a small amount, why (best answer is to teach their children to contribute and build their own wealth)?	2
How much wealth should the philanthropist have when they die (the score is highest if they believe they should have almost no wealth)?	2
Does the philanthropist think you owe the state at least in part for their success in life?	2
Does the philanthropist think the state is entitled to a “fair share” of their wealth?	2
Does the philanthropist think their life is short and that their most ambitious goals will not be achieved while they are alive?	N/A
Does the philanthropist think if they use the wealth they have they can push society forward in their lifetime?	2
Does the philanthropist think with their wealth, they should live modestly?	N/A
Does the philanthropist think any wealth they have that is not needed for themselves or dependents should be spent on things to benefit society as a whole?	2
Does the philanthropist think they have knowledge that makes them better able to spend money effectively that ordinary people do not possess?	N/A
Does the philanthropist think spending their own money while they are alive to improve society is the only credible way of disposing of wealth?	1