Andrew Carnegie and the Gospel of Wealth (Part Two)

(Editor’s note:  This is the second and final segment in a two part series, introducing readers to the Industrial Revolution and one of its iconic heroes.  To view the first segment, click here.)

What, if anything, is the duty of the rich man to society, according to one of the most iconic and storied rich men of early industrial America?

While the industrial robber barons of the Gilded Age were said only to flash their great wealth to the masses, Andrew Carnegie, for one, articulated a call for these wealthy business titans of industry to return their wealth to society.  This illustrates Lesson 3 (of 4) of US History.  The king of steel strongly believed that the rich man had not the option, but rather a corresponding duty, to voluntarily return his wealth to society from whence it came.

Carnegie's Gospel of Wealth writings set forth a model of how the wealthy man should conduct his life.  First, the capitalist’s primary goal was to make money.  But he should then live only modestly, so as to bring no undue attention to himself.  Then, since the rich man had figured out how to achieve great wealth in the first place, he alone should choose how to spend that wealth.  Whether on charity, society, science, or any other worthy cause, in his sole discretion, he should accomplish all this before he dies.

According to Carnegie, it would be a curse for a rich man to die with money in the bank, and which the government could then get its hands on by mechanisms such as the inheritance tax.  In the end, if all went according to plan, the rich man who made it would, in turn, give it all away freely, the government involved neither while making the money, nor spending it in the end.

And Carnegie acted.  As part of his considerable financial legacy, Carnegie, the king of steel, donated substantial sums for a pension relief fund to the families of killed and injured workers, based on merit, and not given indiscriminately.  Additionally, he made bequests to build 67 libraries forming the backbone of the venerable New York City public library system and some 1,689 public libraries in the US during his lifetime.  The program was expanded to include church organs.  Lastly, he made a gift to establish the International Court at the Hague, in support of a world court of arbitration, where international disputes could be resolved without resort to war.

As the so-called “Apostle of Peace,” Carnegie has been quoted as saying: “We have abolished the duel.  Let it be our race that truly takes the first step to abolish international dueling.”  And Carnegie (remember, the year was 1910, before the World Wars) had also stated:

The whole matter is so simple  …  Germany, Great Britain and the US coming together (somewhat covertly) to form a joint police force to maintain peace is all that is needed.

But the impact of the Industrial Revolution on American society was not all positive.  Neither were the results all pretty, nor without a heavy price.  Consider that the process generated a sink full of dirty dishes.  The growth of corporations and trusts raised immense amounts of targeted capital but, importantly, decreased social responsibility.  Materialism was pronounced over all other values.  Natural resources were exploited, despoiling the land, to increase profits.  Wealth and industry, over production, people and politics, became overly concentrated.  This, in turn, led to corrupt political machines led by party bosses, the overcrowding of cities, the straining of resources and services.  It also necessitated the combination of diverse cultural groups which were unfamiliar with American city life or each other.

Moreover, American industrial workers faced deteriorating labor conditions.  Women, children and the unskilled immigrant factory worker were exploited, suffering work conditions which could perhaps best be described as unsafe, inhumane and produced substandard products.  Hours were excessive, on a daily and weekly basis.  Wages failed to keep pace with the cost of living.  Still, the abundant supply of cheap, new, unskilled immigrant workers greatly exceeded the supply of new factory jobs in the nation’s big industrial cities.

Workers also faced strong opposition not only from their employers but also the courts.  Government policy and judicial decisions fiercely protected not the industrial worker but the entrepreneurial spirit of American businessmen to lead by way of innovation.  Sweatshop working conditions and stagnant wages stimulated a movement toward the formation of labor unions.  However, attempts at unionization led to violent confrontations between big business and government in tandem against the interests of labor.

One thing was clear: America was making more products than it could consume.  This factor, added to the free-for-all, further stimulated unstable economic cycles of boom and bust that produced unrest on farms.  Due to increasing productivity, farmers faced declining prices for their crops, as well as a diminution of their land, with laws and government interest in protecting neither.  Land foreclosures skyrocketed.

Instability spawned a first of its kind political movement, a populist wing of the Democratic Party traced to the protection of the nation’s agrarian and common man labor interests.  Dramatized by William Jennings Bryan, “The Great Commoner,” “on the wings of a single great speech about a cross of gold,” it rose briefly to political prominence but ultimately failed and was swept away by 1896.

In cities, living conditions degenerated into tenement slums filled with crime and poverty, racism and nativism.  Advances in transportation, specifically the railroad, exacerbated segregated living arrangements for an increasingly diverse cultural society.  And the entire process, given the magnitude and swiftness of the forces of change, fueled a painless escape to drugs.

The ultimate result and impact, it has been said, was a society in chaos, seeking reform.  This was the state of affairs as the American industrial machine rolled into the 20^th century.

-Michael D’Angelo

The Industrial Revolution and the Robber Barons (Part One)

(Editor’s note:  This is the first segment in a two part series, introducing readers to the Industrial Revolution and the underpinnings of modern times.)

What were the key ingredients to "make" America's Industrial Revolution?  What, if any, was the government’s role?  Why were the times seen as a Gilded Age, when style points both in politics and culture triumphed over substance?

In truth, the US was “ready” for the Industrial Revolution long before it actually arrived, but divisiveness on the slavery question held back progress.  Compromise after compromise had put off resolution of the most basic of civil rights issues, until it could be put off no longer.  When the Civil War ended, and the states were reconstructed, the US could return to the matter of industrial progress and prowess at the turn of the 20^th century.

Some say the birth of the Industrial Revolution was a precipitous event, transitioning America from a promised land into a crusader state, to capture and protect the wealth of foreign markets for its own citizens.  In this way America was said to mimic every great empire which had come --- and gone --- before.

The Industrial Revolution was the great free for all, US government “guided” by principles of Social Darwinism.  Basically, it was a game of survival of the fittest, most adaptable, Darwin’s theory of evolution as applied to society.  Those individuals who had figured out how to amass great personal wealth were viewed as being in the best position to make leadership decisions for the good of the masses.

Government’s role was either to support these individuals and their industries or avoid meddlesome interference (laissez-faire acceptance of supply and demand theory).  Industrial ventures operated through large, capital massing business organizations, called “trusts.”  But the relationship of these trusts to their government was to test severely the lawmaker’s role as the impartial umpire in the people’s pursuit of happiness.

The so-called titans of capitalism were bolstered by the collective success of the nation occasioned by explosive economic growth brought on by the Industrial Revolution.  The early capitalists featured names like Rockefeller in the business of oil, Morgan in banking, Carnegie in steel, and Vanderbilt in railroads.  They were firm believers in a free, unregulated market promoted by competition, with a new consumer class, a thriving force in the industrial economy.  With the incentive to reap great profits, these titans consolidated operations into large mega-corporations, streamlined the various systems of production, eliminated redundancies and maximized efficiencies.  While consolidation permitted them to control their industries, a primary goal was still to give the customer the best product at the lowest price.

It is perhaps helpful to think of the process of “making” an Industrial Revolution as similar to baking a wedding cake.  There were several key ingredients.  Among them were natural resources, such as oil, copper, land and water; a capital supply serving as “fertilizer.”  Government support was in the form of protective tariffs for the new, fledgling American industries, the birth of the modern corporation, low interest loans and adherence to the monetary gold standard.  Entrepreneurs took risks, mastered the art of vertical integration, business re-organization, and buying low and selling high.  Technological developments, such as electricity, steel, glass and the internal combustion engine, permitted innovations in rail transit, and the invention of the telephone and canned food.  A work force/consumer class was fueled mostly by an abundant flow of previously uneducated and unskilled laborers comprised mainly of a seismic inflow of new immigrants.  They had migrated to the cities in search of opportunities, filling the abundance of new industrial jobs.

For sure, there were many positives to consider.  In the span of a mere generation, the US became the #1 industrial power in the world, during which time a modern industrial economy emerged.  Skyscrapers were constructed, soon began to overtake the urban landscape, and our modern, industrial, steel and glass cities were born.  Immigrants comprised a new economic unit, a powerhouse called the “middle” class, a new term for the era.  With rising income, industrial workers doubled as what became known as consumers.  Their collective purchasing power permitted them to achieve a raised standard of material existence previously unknown.  It also kept the economy humming.

While the titans of industry were champions of competition, ironically, their goal was to eliminate competition.  Specifically, they sought to accomplish this by creating and then maintaining a hierarchy with themselves at the top.  Many had arrived there through superior intellect or other legitimate means.  But some used questionable or even illegal business practices.  Bribes, kickbacks and other monopolistic trade practices were all utilized to destroy competitors.

The times were regarded in negative terms as the Gilded Age, with great wealth flashed to the masses but accessible only to a precious few.  Those precious few were sometimes referred to not so nicely as robber barons.  Style points both in politics and culture triumphed over substance.  Consider the image of sunglasses attached to a bright, smiling face.

((Editor’s note:  The second and concluding segment in this two part series introduces readers to Andrew Carnegie, the Gospel of Wealth and the third lesson of US History.)

-Michael D'Angelo