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Andrew Carnegie and the Robber Barons

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  • 0:06 The Robber Barons
  • 1:44 The Rise of Andrew Carnegie
  • 2:53 The Gospel of Wealth
  • 4:18 Reform Darwinism
  • 5:32 Philanthropy
  • 7:03 Lesson Summary
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Lesson Transcript
Instructor: Alexandra Lutz

Alexandra has taught students at every age level from pre-school through adult. She has a BSEd in English Education.

The Second Industrial Revolution created enormous wealth for industrialists like Andrew Carnegie. These corporate leaders were sometimes called Robber Barons for their questionable business practices, but they were also well-known for their philanthropy.

The Robber Barons

Between the Civil War and the beginning of the 20th century, America experienced a Second Industrial Revolution, a period of tremendous growth in technology, industry and the economy. With favorable government policies, it was the era of big businesses that competed for monopolies and any other market advantage. The men who ran these mega-corporations were sometimes called Captains of Industry for their innovative systems of management, production and organization, but they were also less admirably called Robber Barons for their anti-competitive practices and exploitative relationship with their employees - perfect examples of why the late 1800s were dubbed by writer Mark Twain as the 'Gilded Age'.

It's tempting to judge their practices against modern laws and business ethics. But, don't forget that corporate tycoons in the late 19th century were blazing new trails in the business world without many examples to follow, and they were largely behaving in accordance with the laws of the day in an era of laissez-faire (or hands-off) government. Yes, they were super-rich, corporate fat cats who lived lavishly, sometimes at the expense of others, but they were also unbelievably generous, giving away millions of dollars to organizations and individuals.

Their names are well-known to Americans even today, especially because of the institutions they established: John D. Rockefeller, Jay Gould, J.P. Morgan, Andrew Mellon, Cornelius Vanderbilt and J.J. Astor. Perhaps none represent the Gilded Age as clearly as Andrew Carnegie.

The Rise of Andrew Carnegie

Andrew Carnegie immigrated to the United States from Scotland in 1848 when he was 13 years old and immediately went to work to help support his family. His career progressed from being a bobbin boy in a textile factory to becoming a messenger boy in a telegraph office, then an operator, and advancing through the office ranks of the Pennsylvania Railroad Company until he was superintendent of the railroad's western division. The upper management included the 20-year-old Carnegie in their insider trading tips, helping him make profitable investments and begin building capital. Today, this kind of activity could land you in jail, but things were different back then.

During the Civil War, he shifted his focus from railroads to ironworks, started his first company and soon held a vertical monopoly in the steel industry - that's a business tactic that eliminates middlemen from the production line. When adjusted for inflation, Andrew Carnegie was the second richest man ever in America and the fourth wealthiest man in the recorded history of the world.

The Gospel of Wealth

Although Carnegie owned corporations that were involved in bloody labor disputes over wages (and other controversies), he may be best known for his efforts to give away his money in ways that no one had ever heard of before. In 1889, he published an essay commonly called 'The Gospel of Wealth', in which he proclaimed that workers had the right to unionize and demand higher wages and that rich people had a moral duty to give away whatever money they didn't need to support their families. Here's an excerpt from that text:

'This, then, is held to be the duty of the man of Wealth: First, to set an example of modest, unostentatious living, shunning display or extravagance; to provide moderately for the legitimate wants of those dependent upon him; and after doing so to consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer, and strictly bound as a matter of duty to administer in the manner which, in his judgment, is best calculated to produce the most beneficial results for the community - the man of wealth thus becoming the mere agent and trustee for his poorer brethren, bringing to their service his superior wisdom, experience, and ability to administer - doing for them better than they would or could do for themselves.'

Reform Darwinism

What do you think about those ideas? On the one hand, they start out sounding so generous. And then you get to the end, and it sounds so condescending. This is the result of a philosophy sometimes called Reform Darwinism. Charles Darwin's theory of evolution had been explained to the world as 'survival of the fittest'.

The concept was quickly adapted from biology into sociology, and many intellectuals believed that people became wealthy because they were the most 'fit'. The logical extreme of this 'Social Darwinism' was to let poor, unfit people just die out. But, some members of the elite couldn't reconcile that heartlessness with cultural and/or religious values.

Such Reform Darwinists, like Andrew Carnegie, believed that all members of society should be given appropriate opportunities and resources to improve their lives. However, Carnegie and other Robber Barons clearly didn't think the poor were capable of handling and spending large sums of money. Therefore, the so-called 'fittest' members of society had a duty to decide for the poorest what they needed most.

Philanthropy

Whatever his beliefs, Andrew Carnegie proceeded to give away 90% of his fortune during his lifetime, about $350 million dollars - and that's not adjusted for inflation. And then since his death, the endowments he established have donated another $2 billion, and many of them keep on giving today. He established some of the first corporate pension funds for his former employees, founded the 'Hero's Fund', contributed to universities and helped support organizations for world peace.

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