Sharing Wealth Essay By Andrew

NORTH AMERICAN REVIEW

.

No. CCCXCI

JUNE, 1889.

WEALTH

BY ANDREW CARNEGIE.

The problem of our age is the proper administration of wealth, so that theties of brotherhood may still bind together the rich and poor in harmoniousrelationship. The conditions of human life have not only been changed, butrevolutionized, within the past few hundred years. In former days there waslittle difference between the dwelling, dress, food, and environment of thechief and those of his retainers. The Indians are to-day where civilized manthen was. When visiting the Sioux, I was led to the wigwam of the chief. Itwas just like the others in external appearance, and even within the differencewas trifling between it and those of the poorest of his braves. The contrastbetween the palace of the millionaire and the cottage of the laborer with usto-day measures the change which has come with civilization.

This change, however, is not to be deplored, but welcomed as highlybeneficial. It is well, nay, essential for the progress of the race, that thehouses of some should be homes for all that is highest and best in literatureand the arts, and for all the refinements of civilization, rather than thatnone should be so. Much better this great irregularity than universalsqualor. Without wealth there can be no Mæcenas. The "good old times "were not good old times. Neither master nor servant was as well situated thenas to-day. A relapse to old conditions would be disastrous to both--not theleast so to him who serves--and would Sweep away civilization with it. Butwhether the change be for good or ill, it is upon us, beyond our power toalter, and there fore to be accepted and made the best of. It is a waste oftime to criticise the inevitable.

It is easy to see how the change has come. One illustration will servefor almost every phase of the cause. In the manufacture of products we havethe whole story. It applies to all combinations of human industry, asstimulated and enlarged by the inventions of this scientific age. Formerlyarticles Were manufactured at the domestic hearth or in small shops whichformed part of the household. The master and his apprentices worked side byside, the latter living with the master, and therefore subject to the sameconditions. When these apprentices rose to be masters, there was little or nochange in their mode of life, and they, in turn, educated in the same routinesucceeding apprentices. There was, substantially social equality, and evenpolitical equality, for those engaged in industrial pursuits had then little orno political voice in the State.

But the inevitable result of such a mode of manufacture was crude articlesat high prices. To-day the world obtains commodities of excellent quality atprices which even the generation preceding this would have deemed incredible.In the commercial world similar causes have produced similar results, and therace is benefited thereby. The poor enjoy what the rich could not beforeafford. What were the luxuries have become the necessaries of life. The laborerhas now more comforts than the landlord had a few generations ago. The farmerhas more luxuries than the landlord had, and is more richly clad and betterhoused. The landlord has books and pictures rarer, and appointments moreartistic, than the King could then obtain.

The price we pay for this salutary change is, no doubt, great. We assemblethousands 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 islittle better than a myth. All intercourse between them is at an end. RigidCastes are formed, and, as usual, mutual ignorance breeds mutual distrust.Each Caste is without sympathy for the other, and ready to credit anythingdisparaging in regard to it. Under the law of competition, the employer ofthousands is forced into the strictest economies, among which the rates paidto labor figure prominently, and often there is friction between the employerand 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 itpays for cheap comforts and luxuries, is also great;but the advantage of thislaw are also greater still, for it is to this law that we owe our wonderfulmaterial 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 changein the conditions of men to which we have referred : It is here; we cannotevade it; no substitutes for it have been found; and while the law may besometimes hard for the individual, it is best for the race, because it insuresthe survival of the fittest in every department. We accept and welcometherefore, as conditions to which we must accommodate ourselves, greatinequality of environment, the concentration of business, industrial andcommercial, in the hands of a few, and the law of competition between these, asbeing not only beneficial, but essential for the future progress of the race.Having accepted these, it follows that there must be great scope for theexercise of special ability in the merchant and in the manufacturer who has toconduct affairs upon a great scale. That this talent for organization andmanagement is rare among men is proved by the fact that it invariably securesfor its possessor enormous rewards, no matter where or under what laws orconditions. The experienced in affairs always rate the MAN whose services canbe obtained as a partner as not only the first consideration, but such as torender the question of his capital scarcely worth considering, for such mensoon create capital; while, without the special talent required, capital soontakes wings. Such men become interested in firms or corporations usingmillions ; and estimating only simple interest to be made upon the capitalinvested, it is inevitable that their income must exceed their expenditures,and that they must accumulate wealth. Nor is there any middle ground whichsuch men can occupy, because the great manufacturing or commercial concernwhich does not earn at least interest upon its capital soon becomes bankrupt.It, must either go forward or fall behind : to stand still is impossible. Itis a condition essential for its successful operation that it should be thusfar profitable, and even that, in addition to interest on capital, it shouldmake profit. It is a law, as certain as any of the others named, that menpossessed of this peculiar talent for affair, under the free play of economicforces, must, of necessity, soon be in receipt of more revenue than can bejudiciously expended upon themselves; and this law is as beneficial for therace as the others.

Objections to the foundations upon which society is based are not in order,because the condition of the race is better with these than it has been withany others which have been tried. Of the effect of any new substitutesproposed we cannot be sure. The Socialist or Anarchist who seeks to overturnpresent conditions is to be regarded as attacking the foundation upon whichcivilization itself rests, for civilization took its start from the day thatthe capable, industrious workman said to his incompetent and lazy fellow, "Ifthou dost net sow, thou shalt net reap," and thus ended primitive Communism byseparating the drones from the bees. One who studies this subject will soon bebrought face to face with the conclusion that upon the sacredness of propertycivilization itself depends--the right of the laborer to his hundred dollars inthe savings bank, and equally the legal right of the millionaire to hismillions. To these who propose to substitute Communism for this intenseIndividualism the answer, therefore, is: The race has tried that. All progressfrom that barbarous day to the present time has resulted from its displacement.Not evil, but good, has come to the race from the accumulation of wealth bythose who have the ability and energy that produce it. But even if we admitfor a moment that it might be better for the race to discard its presentfoundation, Individualism,--that it is a nobler ideal that man should labor,not for himself alone, but in and for a brotherhood of his fellows, and sharewith them all in common, realizing Swedenborg's idea of Heaven, where, as hesays, the angels derive their happiness, not from laboring for self, but foreach other,--even admit all this, and a sufficient answer is, This is notevolution, but revolution. It necessitates the changing of human nature itselfa work of oeons, even if it were good to change it, which we cannot know. Itis not practicable in our day or in our age. Even if desirable theoretically,it belongs to another and long-succeeding sociological stratum. Our duty iswith what is practicable now ; with the next step possible in our day andgeneration. It is criminal to waste our energies in endeavoring to uproot,when all we can profitably or possibly accomplish is to bend the universaltree of humanity a little in the direction most favorable to the production ofgood fruit under existing circumstances. We might as well urge the destructionof the highest existing type of man because he failed to reach our ideal asfavor the destruction of Individualism, Private Property, the Law ofAccumulation of Wealth, and the Law of Competition ; for these are the highestresults of human experience, the soil in which society so far has produced thebest fruit. Unequally or unjustly, perhaps, as these laws sometimes operate,and imperfect as they appear to the Idealist, they are, nevertheless, like thehighest type of man, the best and most valuable of all that humanity has yetaccomplished.

We start, then, with a condition of affairs under which the best interestsof the race are promoted, but which inevitably gives wealth to the few. Thusfar, accepting conditions as they exist, the situation can be surveyed andpronounced good. The question then arises, --and, if the foregoing be correct,it is the only question with which we have to deal, --What is the proper modeof administering wealth after the laws upon which civilization is founded havethrown it into the hands of the few ? And it is of this great question that Ibelieve I offer the true solution. It will be understood that fortunesarehere spoken of, not moderate sums saved by many years of effort,the returns on which are required for the comfortable maintenance and educationof families. This is not wealth, but only competence which itshould be the aim of all to acquire.

There are but three modes in which surplus wealth can be disposed of. Itcall be left to the families of the decedents; or it can be bequeathed forpublic purposes; or, finally, it can be administered during their lives by itspossessors. Under the first and second modes most of the wealth of the worldthat has reached the few has hitherto been applied. Let us in turn considereach of these modes. The first is the most injudicious. In monarchicalcountries, the estates and the greatest portion of the wealth are left to thefirst son, that the vanity of the parent may be gratified by the thought thathis name and title are to descend to succeeding generations unimpaired. Thecondition of this class in Europe to-day teaches the futility of such hopes orambitions.The successors have become impoverished through their follies or fromthe fall in the value of land. Even in Great Britain the strict law of entailhas been found inadequate to maintain the status of an hereditary class. Itssoil is rapidly passing into the hands of the stranger. Under republicaninstitutions the division of property among the children is much fairer, butthe question which forces itself upon thoughtful men in all lands is: Whyshould men leave great fortunes to their children? If this is done fromaffection, is it not misguided affection? Observation teaches that, generallyspeaking, 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 daughtersmoderate sources of income, and very moderate allowances indeed, if any, forthe sons, men may well hesitate, for it is no longer questionable that greatsuns bequeathed oftener work more for the injury than for the good of therecipients. Wise men will soon conclude that, for the best interests of themembers of their families and of the state, such bequests are an improper useof their means.

It is not suggested that men who have failed to educate their sons to earna livelihood shall cast them adrift in poverty. If any man has seen fit torear his sons with a view to their living idle lives, or, what is highlycommendable, has instilled in them the sentiment that they are in a position tolabor for public ends without reference to pecuniary considerations, then, ofcourse,the duty of the parent is to see that such are provided for ?flmoderation. There are instances of millionaires' sons unspoiled bywealth, who, being rich, still perform great services in the community. Suchare 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, lookingat the usual result of enormous sums conferred upon legatees, the thoughtfulman must shortly say, "I would as soon leave to my son a curse as the almightydollar," and admit to himself that it is not the welfare of the children, butfamily pride, which inspires these enormous legacies.

As to the second mode, that of leaving wealth at death for public uses, itmay be said that this is only a means for the disposal of wealth, provided aman is content to wait until he is dead before it becomes of much good in theworld. Knowledge of the results of legacies bequeathed is not calculated toinspire the brightest hopes of much posthumous good being accomplished. Thecases are not few in which the real object sought by the testator is notattained, nor are they few in which his real wishes are thwarted. In many casesthe bequests are so used as to become only monuments of his folly. It is wellto remember that it requires the exercise of not less ability than that whichacquired the wealth to use it so as to be really beneficial to the community.Besides this, it may fairly be said that no man is to be extolled for doingwhat he cannot help doing, nor is he to be thanked by the community to which heonly leaves wealth at death. Men who leave vast sums in this way may fairly bethought men who would not have left it at all, had they been able to take itwith them. The memories of such cannot be held in grateful remembrance, forthere is no grace in their gifts. It is not to be wondered at that suchbequests seem so generally to lack the blessing. -

The growing disposition to tax more and more heavily large estates left atdeath is a cheering indication of the growth of a salutary change in publicopinion. The State of Pennsylvania now takes--subject to someexceptions--one-tenth of the property left by its citizens. The budgetpresented in the British Parliament the other day proposes to increase thedeath-duties ; and,most significant of all, the new tax is to be a graduatedone. Of all forms of taxation, this seems the wisest. Men who continuehoarding great sums all their lives, the proper use of which for - public endswould work good to the community, should be made to feel that the community, inthe form of the state, cannot thus be deprived of its proper share. By taxingestates heavily at death the state marks its condemnation of the selfishmillionaire's unworthy life.

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 whichshould go at his death to the public through the agency of the state, and byall means such taxes should be graduated, beginning at nothing upon moderatesums to dependents, and increasing rapidly as the amounts swell, until of themillionaire's hoard, as of Shylock's, at least

"_____ The other half

Comes tothe privy coffer of the state."

This policy would work powerfully to induce the rich man to attend to theadministration of wealth during his life, which is the end that society shouldalways have in view, as being that by far most fruitful for the people. Norneed it be feared that this policy would sap the root of enterprise and rendermen less anxious to accumulate, for to the class whose ambition it is to leavegreat fortunes and be talked about after their death, it will at- tract evenmore attention, and, indeed, be a somewhat nobler ambition to have enormoussums paid over to the state from their fortunes.

There remains, then, only one mode of using great fortunes; but in this wehave the true antidote for the temporary unequal distribution of wealth, thereconciliation of the rich and the poor--a reign of harmony--another ideal,differing, indeed, from that of the Communist in requiring only the furtherevolution of existing conditions, not the total overthrow of our civilization.It is founded upon the present most intense individualism, and the race isprojected to put it in practice by degree whenever it pleases. Under its swaywe shall have an ideal state, in which the surplus wealth of the few willbecome, in the best sense the property of the many, because administered forthe common good, and this wealth, passing through the hands of the few, can bemade a much more potent force for the elevation of our race than if it hadbeen distributed in small sums to the people themselves. Even the poorest canbe made to see this, and to agree that great sums gathered by some of theirfellow-citizens and spent for public purposes, from which the masses reap theprincipal benefit, are more valuable to them than if scattered among themthrough the course of many years in trifling amounts.

If we consider what results flow from the Cooper Institute, for instance,to the best portion of the race in New York not possessed of means, and comparethese with those which would have arisen for the good of the masses from anequal sum distributed by Mr. Cooper in his lifetime in the form of wages, whichis the highest form of distribution, being for work done and not for charity,we can form some estimate of the possibilities for the improvement of the racewhich lie embedded in the present law of the accumulation of wealth. Much ofthis sum if distributed in small quantities among the people, would have beenwasted in the indulgence of appetite, some of it in excess, and it may bedoubted whether even the part put to the best use,that of adding to thecomforts of the home, would have yielded results for the race, as a race, atall comparable to those which are flowing and are to flow from the CooperInstitute from generation to generation. Let the advocate of violent orradical change ponder well this thought.

We might even go so far as to take another instance, that of Mr. Tilden'sbequest of five millions of dollars for a free library in the city of New York,but in referring to this one cannot help saying involuntarily, how much betterif Mr. Tilden had devoted the last years of his own life to the properadministration of this immense sum; in which case neither legal contest nor anyother cause of delay could have interfered with his aims. But let us assumethat Mr. Tilden's millions finally become the means of giving to this city anoble public library, where the treasures of the world contained in books willbe open to all forever, without money and without price. Considering the goodof that part of the race which congregates in and around Manhattan Island,would its permanent benefit have been better promoted had these millions beenallowed to circulate in small sums through the hands of the masses? Even themost strenuous advocate of Communism must entertain a doubt upon this subject.Most of those who think will probably entertain no doubt whatever.

Poor and restricted are our opportunities in this life; narrow our horizon;our best work most imperfect; but rich men should be thankful for oneinestimable boon. They have it in their power during their lives to busythemselves in organizing benefactions from which the masses of their fellowswill derive lasting advantage, and thus dignify their own lives. The highestlife is probably to be reached, not by such imitation of the life of Christ asCount Tolstoi gives us, but, while animated by Christ's spirit, by recognizingthe changed conditions of this age, and adopting modes of expressing thisspirit suitable to the changed conditions under which we live ; still laboringfor the good of our fellows,which was the essence of his life and teaching, butlaboring in a different manner.

This, then, is held to be the duty of the man of Wealth: First, to set anexample of modest, unostentatious living, shunning display or extravagance; toprovide moderately for the legitimate wants of those dependent upon him; andafter doing so to consider all surplus revenues which come to him simply astrust funds, which he is called upon to administer, and strictly bound as amatter of duty to administer in the manner which, in his judgment, is bestcalculated to produce the most beneficial results for the community--the man ofwealth thus becoming the mere agent and trustee for his poorer brethren,bringing to their service his superior wisdom, experience and ability toadminister, doing for them better than they would or could do forthemselves.

We are met here with the difficulty of determining what are moderate sumsto leave to members of the family; what is modest, unostentatious living; whatis the test of extravagance. There must be different standards for differentconditions. The answer is that it is as impossible to name exact amounts oractions as it is to define good manners, good taste, or the rules of propriety; but, nevertheless, these are verities, well known although undefinable.Public sentiment is quick to know and to feel what offends these. So in thecase of wealth. The rule in regard to good taste in the dress of men or womenapplies here. Whatever makes one conspicuous offends the canon. If any familybe chiefly known for display, for extravagance in home, table, equipage, forenormous sums ostentatiously spent in any form upon itself, if these be itschief distinctions, we have no difficulty in estimating its nature or culture.So likewise in regard to the use or abuse of its surplus wealth, or togenerous, freehanded cooperation in good public uses, or to unabated efforts toaccumulate and hoard to the last, whether they administer or bequeath. Theverdict rests with the best and most enlightened public sentiment. Thecommunity will surely judge and its judgments will not often be wrong.

The best uses to which surplus wealth can be put have already beenindicated. These who,would administer wisely must, indeed, be wise, for one ofthe serious obstacles to the improvement of our race is indiscriminate charity.It were better for mankind that the millions of the rich were thrown in to thesea than so spent as to encourage the slothful, the drunken, the unworthy. Ofevery thousand dollars spent in so called charity to-day, it is probable that$950 is unwisely spent; so spent, indeed as to produce the very evils which itproposes to mitigate or cure. A well-known writer of philosophic books admittedthe other day that he had given a quarter of a dollar to a man who approachedhim as he was coming to visit the house of his friend. He knew nothing of thehabits of this beggar; knew not the use that would be made of this money,although he had every reason to suspect that it would be spent improperly.This man professed to be a disciple of Herbert Spencer; yet the quarter-dollargiven that night will probably work more injury than all the money which itsthoughtless donor will ever be able to give in true charity will do good. Heonly gratified his own feelings, saved him- self from annoyance,-- and this wasprobably one of the most selfish and very worst actions of his life, for in allrespects he is most worthy.

In bestowing charity, the main consideration should be to help those whowill help themselves; to provide part of the means by which those who desire toimprove may do so; to give those who desire to use the aids by which they mayrise; to assist, but rarely or never to do all. Neither the individual nor therace is improved by alms-giving. Those worthy of assistance, except in rarecases, 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, casesof individuals brought to his own knowledge where temporary assistance can dogenuine good, and these he will not overlook. But the amount which can bewisely given by the individual for individuals is necessarily limited by hislack of knowledge of the circumstances connected with each. He is the onlytrue reformer who is as careful and as anxious not to aid the unworthy as he isto aid the worthy, and, perhaps, even more so, for in alms-giving more injuryis probably done by rewarding vice than by relieving virtue.

The rich man is thus almost restricted to following the examples of PeterCooper, Enoch Pratt of Baltimore, Mr. Pratt of Brooklyn, Senator Stanford, andothers, who know that the best means of benefiting the community is to placewithin its reach the ladders upon which the aspiring can rise--parks, and meansof recreation, by which men are helped in body and mind; works of art, certainto give pleasure and improve the public taste, and public institutions ofvarious kinds, which will improve the general condition of the people ;--inthis manner returning their surplus wealth to the mass of their fellows in theforms best calculated to do them lasting good. -

Thus is the problem of Rich and Poor to be solved. The laws ofaccumulation will be left free ; the laws of distribution free. Individualismwill 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 thecommunity, but administering it for the community far better than it could orwould have done for itself. The best minds will thus have reached a stage inthe development of the race iii which it is clearly seen that there is no modeof disposing of surplus wealth creditable to thoughtful and earnest men intowhose hands it flows save by using it year by year for the general good. Thisday already dawns. But a little while, and although, without incurring thepity of their fellows, men may die sharers in great business enterprises fromwhich their capital cannot be or has not been withdrawn, and is left chiefly atdeath for public uses, yet the man who dies leaving behind many millions ofavailable wealth, which was his to administer during life, will pass away "unwept, unhonored, and unsung," no matter to what uses he leaves the drosswhich he cannot take with him. Of such as these the public verdict will thenbe : "The man who dies thus rich dies disgraced."

Such, in my opinion, is the true Gospel concerning Wealth, obedience towhich is destined some day to solve the problem of the Rich and the Poor, andto bring ' Peace on earth, among men Good-Will."

Prepared in HTML by : Robert Bannister (rbannis1@cc.swarthmore.edu) on 6/27/95. Not responsible for errors.

Summary: Is there a moral responsibility to wealth? And what is the best way to pass on money?

"The man who dies...rich dies disgraced." Such is the verdict of Andrew Carnegie (1835-1919), industrialist and philanthropist, in his essay The Gospel of Wealth, in which he claimed to "solve the problem of the Rich and the Poor." He asserted that the only creditable option for those with surplus wealth is to use it during their lifetimes for the common good, and that to do otherwise is a disgrace. He and an increasing number of wealthy individuals have donated and administered large fortunes for charitable purposes. But do these individuals have a responsibility to donate to charity? Should the burden of charitable giving fall more heavily on their shoulders by virtue of having more to give?

The richest 85 people in the world are as wealthy as the bottom half of the world's population. This gap between rich and poor is still growing. With increasing globalisation, the potential for extreme wealth is increasing rather than diminishing, as is the gap between rich and poor.

The morality of wealth

Western views on the morality of wealth and philanthropy are heavily influenced by Christian thought. In brief, it could be claimed that the Christian view, at least from a Biblical perspective, promotes modest accumulation of wealth in order to provide for necessities, but hoarding excess wealth is seen as a burden and even a sin.

Carnegie had made an enormous fortune predominantly in the steel industry, becoming one of the wealthiest US businessmen of the 19th century. Instead of despairing of the increasing inequality between the rich and poor, his essay promotes the widening gap as something to be for the most part welcomed because of the improvements it brings to society as a whole.

Carnegie discusses three methods by which surplus wealth can be disposed of:

  1. He is most dismissive of the first, which involves leaving wealth to the individual's family members. Aside from providing for children in moderation, it is not the welfare of children, but family pride, which Carnegie believes inspires these enormous legacies.
  2. Carnegie's second mode is for an individual to leave wealth for public uses on his death. Although such bequests are not without some benefit to society, Carnegie points out that, in order to be of real benefit, the donation requires the exercise of no less ability than that which acquired the wealth.
  3. The third (and Carnegie's favoured) option is an "ideal state" in which the rich distribute their surplus wealth for the public good during their lifetimes. He does not recommend distributing sums in small quantities, as this leads to inefficiencies and waste, but instead suggests supporting a larger project such as a research institute or library, which has the potential to have a greater effect. Crucially, he notes that the greatest good would be found in using the wealthy individual's experience and abilities to devote years to administering these great sums in the donor's lifetime. A rich person's moral duty, in Carnegie's view, is thus to live modestly, provide moderately for his dependants, and administer all surplus wealth in the manner which produces the most beneficial results for the community.

What is the responsibility of wealth?

With great wealth does come responsibility, but that responsibility cannot be objectively defined. Individuals' attitudes towards the creation, accumulation and disposal of wealth will depend on their cultural, social and family influences, their religious affiliation (if any), and the social welfare available where they live and generate their wealth (which will have an impact on the taxes they pay). Each person will (and should) develop their own philosophy based on these influences, together with their own views and the guidance available to them.

There are, however, certain important truths. Although not greatly discussed in the Gospels or Carnegie's article considered above, the way in which extreme wealth is generated cannot be ignored. Firstly, there is a responsibility to generate wealth without exploiting the people who help generate it. This is achieved by paying workers a living wage and/or providing them with schooling, housing and medical care. The Peabody and Cadbury families were early proponents of such social industrialism. This is a controversial responsibility which many wealthy people fail to respect: Carnegie himself is accused of exploiting his workers. Secondly, there is a responsibility to generate wealth without unsustainably damaging the environment. This is a modern responsibility: the 19th century steel barons did not show particular concern towards the environment (and indeed few people did in the 19th century).

Further, certain significant themes emerge:

  • Accumulating excessive wealth as an end in itself, without any higher goal such as philanthropy, is morally disappointing.
  • Once wealth has been acquired, it is more efficient and fulfilling to give it away while the wealth generator is alive so his or her skills and determination can be applied to achieving the greatest impact.
  • Leaving excessive wealth to children so that they have no need - nor perhaps even desire - to work is unkind. Leaving wealth to children in a way that results in disputes and litigation is especially unkind.

This article was first published in Legal Week

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