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The Billionaire Who Gave it All Away

When you’ve built an empire, this is what you build next.
The Billionaire Who Gave it All Away
The Billionaire Who Gave it All Away

Andrew Carnegie is known as one of the wealthiest people in American history. But his true legacy comes not from the fortune he amassed for himself through his business savvy, but rather from how he gave nearly all of it away to help other people.

Carnegie knew the value of the money he gave away intimately, having worked for every penny of it after growing up without anything as a child in a poor immigrant family and watching his father travel across countries and oceans to try and find work. But that same journey from rags to riches had showed him the power of money to enable people to transform their own lives, as his own success was due to the generosity of others at key points in his life. 

Maybe it is that gratitude from his early years that led a man with a fortune on par with Bill Gates’ to give away 90 percent of it by the time he died. He did so as part of his life-long belief that wealth came with responsibility—a belief he laid out in a 1889 essay, The Gospel of Wealth, which has been called the foundational text for all of modern philanthropy. In that essay, he rejected the customs of wealthy people in his time—of 
spending lavishly on extravagant lifestyles for themselves, and passing money down through inheritances or gifts to the state—and argued instead that the wealthy have an obligation to direct their resources over the course of their lives to reduce the gap between the wealthy and the poor.

Building a Legacy

As large as Carnegie's influence in the business world would grow, his willingness to follow his philanthropic beliefs would ultimately be the way in which he changed the world the most. Today, his self-made legacy lives on more than 100 years after he sold the company he built from nothing and continues to grow each day through the lives of the people who are still using the fruits of his labors today to advance themselves.

It is an improbable end for result for a boy who started his career making $1.20 a week working 12 hours a day in a cotton mill, but Carnegie himself wouldn't have been surprised. It's proof of what he believed his whole life—that hard work and perseverance are the keys to wealth. Two skills that he had to learn to develop at an early age.  

People who are unable to motivate themselves must be content with mediocrity, no matter how impressive their other talents.-Andrew Carnegie
Carnegie was born in Dunfermline, Scotland, in a one-room Weaver’s cottage shared with another family. As a boy, he attended the Free School in town, a school which was donated, appropriately, by a philanthropist—the first of several times in Carnegie’s life that he was the beneficiary of the generosity of wealthy people.

In those early years, his father's work as a weaver could support the family, but before long the situation had changed dramatically. Opportunities for work in Scotland had dried up, and the family soon became desperate for money. To make matters worse, as the family fell on hard times, the country was being ravaged by a potato famine. With his father unable to find income, the family was forced to survive on what his mother could make lending a hand at her brother’s cobbler shop and selling potted meat out of a small storefront.

I began to learn what poverty meant…It was burnt into my heart then that my father had to beg for work. And then and there came the resolve that I would cure that when I got to be a man.-Andrew Carnegie

 

Chasing Every Opportunity

Desperate to make ends meet, the family made a drastic decision. They took a chance to borrow some money and move to the United States where they hoped there were be more opportunity—a hope which turned out to be unfounded. In the U.S. the family resettled in Allegheney, Pennsylvania, but dealers weren't interested in buying his father’s hand-loom products any more than they were in Scotland, and at the age of 12 Carnegie had to start working to support the family, toiling alongside his father at Anchor Cotton Mills.

It was during these years that Carnegie would be given another opportunity, thanks to the wealth of others, that would shape his life. A local man in Allegheney named Colonel James Anderson made his personal library available to the working boys in the town, inviting them to come in and take one book at a time each Saturday, and Carnegie availed himself of it. The books he read from Colonel Anderson's collection made up most of Carnegie’s education in the United States—he never attended school after leaving Scotland—and Carnegie would attempt to repay that generosity his entire life. In his later years, "after fortune had smiled upon me," Carnegie erected a statue honoring Anderson and built 3,000 libraries across the United States to give young people the same opportunity he had.

The average person puts only 25 percent of his energy and ability into his work. The world takes off its hat to those who put in more than 50 percent of their capacity, and stands on its head for those few and far between souls who devote 100 percent.-Andrew Carnegie

Carnegie left the cotton mill at age 14, but he took the hardworking spirit he had learned there with him—and his hunger to learn. When he got a job as a messenger for a telegraph company, he memorized the streets and addresses of Pittsburgh and the famous people he delivered to. He taught himself to use the telegraph machinery too, earning a promotion to telegraph operator as he started to climb the ranks. His hard work did not go without notice and, when a former coworker at the telegraph company started the Pennsylvania Railroad Company, he hired Carnegie as a personal secretary.

It was an opportunity that would alter the course of Carnegie’s life.



Hard Work Pays Off

Working at the railroad, Carnegie learned the business skills that fueled his career, but it was also the place where he made his first investment, forming the foundation for all his wealth. He was given an opportunity from his boss to buy 10 shares of Adams Express Co., and, although Carnegie himself didn't have the money to make the investment, his mother mortgaged the family's home to get together $500 for Carnegie to buy the shares.

It paid off. Literally. As the money from the Adams Express Co. started to trickle in, a few years later Carnegie received another opportunity to invests in a sleeping car company—another opportunity given as a reward for his hard work—and that investment kicked things into another gear. Carnegie began earning triple his railroad salary within two years and, suddenly, the poor boy from Scotland, reliant on the generosity of others, started to build some power for himself.

Immense power is acquired by assuring yourself in your secret reveries that you were born to control affairs.-Andrew Carnegie

Over the next several years, Carnegie continued his streak of shrewd investing and that power only grew. After World War I when demand for iron spiked, he left the railroad and began building bridges for the railroad and his former partners there. And, in those business dealings, just as those partners had helped him in his early years, he always worked to return the favor, giving them stock in his businesses and even eventually named his first steel plant after one of them.

Committing to Simplicity

By the time Carnegie was 33, he was already incredibly wealthy. So much so that he thought he was done in business. In a note to himself written in 1868, Carnegie declared that he would live on an income of $50,000 a year and get out of business entirely. In his own words, “The amassing of wealth is one of the worst species of idolatry—no idol more debasing than the worship of money.”

His plan was to move to Oxford and become a student. Devote his life to learning, then move to London where he would own a newspaper. Everything above that $50,000 that he made each year would be given back for public good. Of course, history had other plans for him. He still hadn’t built Carnegie Steel, which skyrocketed his wealth to unimaginable levels with its innovative use of vertical integration and a new process for making steel. And, when he eventually sold Carnegie Steel at the age of 61, it would be the largest industrial sale of a business in U.S. history to that point.


Going All the Way

But no matter how much success Carnegie found in those years, his commitment to giving it away—that vision he had laid out when he was 33—remained the same. In the 18 years before he died alone, Carnegie gave away the 2019 equivalent of $65 billion. And as he did, Carnegie gave the country some its most revered places, from Carnegie Hall, to what's today called Carnegie-Mellon University, to his thousands of libraries. 

Many who would set out to imitate Andrew Carnegie's success would focus on building wealth through business and investment. But Carnegie himself would have given different advice—a truth known to many of the self-made: that power and influence are based on how much you offer to other people. And, no matter how hard you work for yourself, true greatness will never come until you learn to give it back.