BackStory

The American History Podcast

A Program Of Virginia Foundation for the Humanities

Listen
Connect
Newsletter

The Billion Dollar Question: American Philanthropy From Andrew Carnegie to Jeff Bezos, Part 1

In July of 1892, Homestead, Pennsylvania was the site of a violent labor strike between the Carnegie Steel Company and many of its employees, represented by the Amalgamated Association of Iron and Steel Workers. With the contract between the union and Carnegie Steel set to expire on July 1, Andrew Carnegie, away in Scotland at the time, gave his operations manager carte blanche to break the union before the deadline. The Pinkerton National Detective Agency was hired as strikebreakers and all 3,800 employees were fired. The ensuing violence splashed The Homestead Strike across national headlines and represented a fundamental tension between Carnegie Steel Company workers, and Carnegie himself.

Work days had lengthened and hourly pay had decreased for Carnegie Steel’s employees. Meanwhile, profits for the Carnegie Steel Company rose steadily. The profitability of Carnegie’s steel mills reflected their position as models for the entire industry and the fruit of his relentless efforts to drive down costs and undersell the competition. These goals came at the cost of unions and worker’s control over their labor conditions.

Throughout the 1890s, American workers formed unions to increase pay and ensure safer conditions. McClure’s Magazine described the Homestead mill in 1894: “On every side tumultuous action seemed to make every inch of ground dangerous. Savage little engines went rattling about among the piles of great beams. Dimly on my left were huge engines, moving with thunderous pounding.”

Workers faced 12-hour days, seven days a week, while making just over the poverty line of $500 per year. One man described the experience: “I lost forty pounds the first three months I came into this business. It sweats the life out of a man. I often drink two buckets of water during twelve hours; the sweat drips through my sleeves, and runs down my legs and fills my shoes.” Yet, American companies violently broke worker strikes.

The image of the cruel capitalist – of the Scrooge (Ebenezer or McDuck) – hoarding wealth with callous regard for the workers who created it, is familiar to Americans. But Andrew Carnegie didn’t quite fit this mold.

Andrew Carnegie, 1835-1919, half length, seated behind desk, looking down at book, facing right; shelves filled with books in background

In 1889, Carnegie published “The Gospel of Wealth,” an exhortative reflection of his views on the duties the wealthy assume toward the communities from which they draw their wealth. By the time he sold his company in 1901, Carnegie was in the third decade of giving away his wealth, mostly in the form of museums, community centers, and public libraries.

The impetus behind Carnegie’s philanthropy was a set of ideas laid out in “The Gospel of Wealth.” In the book he states that “the problem of our age is the proper administration of wealth.” Carnegie argues that capitalism necessarily creates huge inequalities, and so its beneficiaries have a moral duty to give their wealth away. He understands that the creator of wealth is not the capitalist, but the larger community and its workers.

Along with this imperative, Carnegie also laid out the proper form for this wealth distribution to take. He despised “indiscriminate charity,” wary of supporting “the slothful, the drunken, the unworthy.” Similarly, Carnegie felt justified in exploiting his workers to create a larger fortune for the community:

“Some of you may work for my steel mills… You’re thinking to yourselves, why didn’t he pay us more? He’d have less to give away and might have had to build a less grand library, but why didn’t he give us our fair share? I’ll tell you why. Because, if I had raised your wages, you would have spent it on a better cut of meat, maybe something to drink that you shouldn’t be drinking… But that’s not what you need. What you need are libraries, museums, concert halls… It is for the best, for the community and for your children, that it works out this away.”

Twenty years ago Vartan Gregorian became head of the Carnegie Corporation in New York, the philanthropic foundation created by Carnegie in 1911. In this position, Gregorian preached Carnegie’s ideas about philanthropy to an audience of the newly wealthy, including Bill Gates and Warren Buffett. He brought “The Gospel of Wealth” to its apex of influence, convincing many of these figures of their responsibility to give away their money as Carnegie did. As will be seen in Part Two, the manifestation of this influence does not always draw a clean parallel with Carnegie. Their comparison reveals some important observations about philanthropy itself, and changing ideas about the needs of civilization and humanity.


Learn more about America’s wealthiest by listening to BackStory’s “Who Wants to be a Millionaire?”

Do NOT follow this link or you will be banned from the site!