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Andrew Carnegie — the Billionaire Philanthropist Who Wrote The Blueprint for Bill Gates | by Ash Jurberg | Feb, 2021

The fourth richest person of all time wrote the Gospel of Wealth that Gates and Buffett follow

Source: WikiCommons

The current wealthiest person on this planet is Jeff Bezos. As I write this, he is worth approximately $190 billion. Next is Elon Musk, who today is worth $177 billion.

This would make them combined less than what Andrew Carnegie’s net worth (adjusted for inflation) was at his peak.

Carnegie’s wealth was estimated to be $372 billion in today’s figures, making him the fourth richest person of all time.

I read a lot about entrepreneurs, startups, and businesses. Approximately 23% of all articles (or so it seems) feature business lessons from Bezos and Musk. It gets boring after the first 100. Yet, we don’t see as much from Andrew Carnegie — the richest American in history and perhaps the most generous philanthropist of all time.

Let’s change that now.

“The man who dies rich dies disgraced.” Andrew Carnegie

Andrew Carnegie was a prolific writer, keen to share his knowledge. His autobiography can be downloaded for free here. It’s so underappreciated that it had only been downloaded 504 times in the last 30 days when I visited to get a copy.

It is lengthy, so like an A-Grade student trying to seek popularity by providing study notes for his classmates, here is a Cliff Notes version of his life.

After arriving in the US from Scotland at age 13, Carnegie worked in a cotton mill for the princely wage of $1.20 a week. He then worked as a messenger for a telegraph company, where he taught himself to use the equipment so he could be promoted rapidly.

Next was work at the Pennsylvania Railroad, where he set about learning as much as possible about the railroad industry and, more importantly, investment opportunities. He got his first chance when his boss offered him 10 shares in a company called Adams Express Company. Carnegie convinced his mother to mortgage their house to raise the $500 required.

That investment was the first of many very successful decisions that led to his enormous wealth. Another business connection told Carnegie of the chance to invest in trains with sleeping carriages, and he took out another bank loan for the capital needed. Carnegie continued to make shrewd investments, and by the age of 30, he had an annual income of $50,000 in a time when the average hourly wage was between 14 and 20 cents an hour—a far cry from his time in the cotton mill.

Readers of self-help and personal development will be familiar with the benefits of journaling. It involves writing down your thoughts, goals, or even just free writing and can help with mental health, productivity, and focus, amongst other benefits.

In 1868, age 33, Carnegie wrote a memo to himself asking questions about his career and life. In it, he made a promise to retire at age 35 and thereafter to focus on his benevolence and educating others.

“By these two years, I can so arrange all my business as to secure at least 50,000 per annum. Beyond this, never earn — make no effort to increase fortune, but spend the surplus each year for benevolent purposes. Cast aside business forever except for others.”

“Taking a part in public matters, especially those connected with education & improvement of the poorer classes.”

“Man must have an idol — the amassing of wealth is one of the worst species of idolatry. No idol more debasing than the worship of money.”

Despite his self-awareness, Carnegie didn’t keep his promise to retire, instead continuing to build a business empire. In 1872, after a visit to a steel business in England, Carnegie returned to America with a plan to expand his current ventures in the steel industry.

He started his company J. Edgar Thomson Steel Works, which would eventually evolve into the Carnegie Steel Company. Over the next two decades, Carnegie almost singlehandedly grew the American steel industry — and by 1890, it had overtaken Great Britain.

At this time, Carnegie published an article, the Gospel of Wealth in the North American Review — America’s first literary publication. He wanted to lead by example and share his ideas with all, hoping they would follow his lead and be more philanthropic.

Historian Benjamin Soskis describes this essay as the “urtext of modern philanthropy.” If, like me, you’ve never heard that word before, it means “an original or the earliest version of a text.”

It was a blueprint for wealthy people on how to disperse their riches as Carnegie wanted them to utilize their surplus funds in a thoughtful manner that would add the most benefit to society as a whole.

He was particularly critical of those who’d inherited wealth, saying that heirs of large fortunes wasted money on excessive material items and over-the-top lifestyles. In contrast, those that had worked hard for their money appreciated their fortunes.

By 1901 Carnegie Steel was responsible for 2.1% of the US GDP when Carnegie finally retired. He sold his business to rival JP Morgan for $480 million (approx $372 billion in today’s figures).

Upon closing the deal, Morgan remarked:

“congratulations, Mr. Carnegie, you are now the richest man in the world.”

Finally, Carnegie could keep his promise to his 33-year-old self. He would give away all his wealth.

Before delving into his philanthropic efforts, I wanted to highlight two key lessons (of many) that helped Carnegie become the richest man in the world.

“I believe the best preventive of quarrels to be recognition of, and sincere interest in, the men, satisfying them that you really care for them and that you rejoice in their success.”

Carnegie was born poor and started working at a young age. He realized early that he needed connections. He didn’t have wealth of his own but had the opportunity to work under people with wealth and decided to leverage that.

He did this through the management of the Pennsylvania Railway, which helped him with his first investment. Through them (or as LinkedIn would call them 2nd-degree connections), he met people that led him to his other investments. He wisely twigged onto the fact that it’s not what you know but who you know and spent much of his early years building connections.

“I did not understand steam machinery, but I tried to understand that much more complicated piece of mechanism — man.”

Carnegie is famous for putting together the resources to create a great product by using other people’s talents. He had the ability to identify what he did and didn’t need to know about a business.

Carnegie was known for having personal connections with his employees and rewarding those who performed well. By taking an interest in their lives, he was rewarded with loyalty. Carnegie memorized addresses, names, and interests, which allowed him to “enter any room and engage anyone in conversation. College presidents, theologians, philosophers, university professors, industrialists, or politicians.”

“I believe the best preventive of quarrels to be recognition of, and sincere interest in, the men, satisfying them that you really care for them and that you rejoice in their success.”

It is no coincidence that the two lessons I highlighted are based on people skills.

“Whereas most men enjoyed making money, he in contrast delighted in seeing his fortune diminish. There never lived a man who had as much fun in giving away his wealth as Carnegie.” George Swetnam and Helene Smith, authors of The Carnegie Nobody Knows.

Carnegie was determined to give away his entire fortune before he died and set up several trustees to distribute his wealth throughout the United Kingdom and America.

Carnegie pinned his philanthropic interests on the two main goals of education and world peace. An avid writer and reader, his passion became establishing free public libraries to allow everyone a means of self-education. At the time, public libraries were rare, and Carnegie wanted to change this. He and the Carnegie Corporation subsequently spent over $56 million to build 2,509 libraries throughout the English-speaking world leading to his moniker of the “Patron Saint of Libraries.”

By the time he died, Carnegie had given away $350 million, and as of 2015, the Carnegie Corporation’s endowment was $3.3 billion.

The full list of his endowments and charities can be found here.

There is one couple that has taken the Gospel of Wealth on board.

In February 2008, Jared Cohon presented Bill Gates with a special gift. He told him, “upon entering your full-time career as a philanthropist, we thought it would be fitting to connect you, the greatest philanthropist of the 21st Century, with the greatest philanthropist of the 20th Century.”

Gates was then given the wooden chair that Carnegie used to sit on when he ran Carnegie Steel. It would seem that Carnegie (or his chair) inspired Gates. The Bill and Melinda Gates Foundation follows much of what Carnegie implored — focusing on improving education worldwide and trying to improve people’s health in poorer countries.

Other entrepreneurs have followed suit.

In 2006 Warren Buffet pledged to use 99% of his Berkshire Hathaway shares for philanthropic purposes while also asking rich Americans to use 50% of their wealth for similar purposes. Mark Zuckerberg and his wife Priscilla Chan announced in 2015 they will give away 99% of their shares in Facebook. Elon Musk was a little less ‘giving’ pledging 50% of his vast riches.

There are many lessons on how to build a business or a startup. Articles on how to treat employees, develop a culture, or diversify. These are great guides for aspiring or emerging entrepreneurs.

Andrew Carnegie provides not only a case study on how to amass a fortune from nothing but, more importantly, what to do once you have more wealth than you will ever need.

“To try to make the world in some way better than you found it is to have a noble motive in life.” Andrew Carnegie

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