February 2025
Author: Jared Winkers
The Greatest Success of the “American Dream”
In 1847, Scotland was in starvation – the same year as 12-year-old Andrew (“Andra”) Carnegie’s father lost his job as a weaver, casting doubts on how they would survive in the families one-room cottage.
The next year, the Carnegies borrowed money to travel to the United States hoping for the promise of a better life. Carnegie’s first job in the US was working 72-hour weeks in a bobbin factory for less than $.02/hour ($0.58 in 2023).
It was not until 26-years later that Carnegie would build his first steel mill, leading to the creation of the Carnegie Steel Company: the first corporation in history to reach $1B. Carnegie’s steel empire resulted in a peak net worth of $309 Billion in 2023 dollars – making Carnegie the wealthiest immigrant to ever reach America, and the 2nd richest American to ever live.
What We Can Learn from Carnegie’s Legacy
How did Carnegie choose to use one of the greatest fortunes in history? In his “Gospel of Wealth”, Andrew Carnegie addresses “The problem of our age”:
“The proper administration of wealth, so that the ties of brotherhood may still bind together the rich and poor in harmonious relationship.”
Carnegie spent a great deal of time considering how he could divide his fortune, determining there are “three modes surplus wealth may be disposed of”:
- Transferring Wealth to Family
- Using Dollars for The Public Good
- Spending Personally Accumulated Wealth
OPTION 1: Transferring Wealth to Family:
While Carnegie was a tremendous supporter of public projects, he believed that parents who responsibly raised their children to pursue passions and philanthropic goals still have a “duty... to see that such (children) are provided for in moderation”. Despite believing parents should support children, Carnegie knew the risks of providing the next generation with an excessive inheritance:
“There are instances of millionaires’ sons unspoiled by wealth, who, being rich, still perform great services in the community. Such are the very salt of the earth, as valuable as, unfortunately, they are rare; still it is not the exception, but the rule, that men must regard, and, looking at the usual result of enormous sums conferred upon legatees, the thoughtful man must shortly say, “I would as soon leave to my son a curse as the almighty dollar.”
OPTION 2: Using Dollars for The Public Good:
When Carnegie passed, his assets went through public probate and were published in the 8/29/1919 New York Times –detailing how his final $20M was left charitable foundations. Specifically, Carnegie was a strong supporter of charitable giving while alive:
“It may fairly be said that no man is to be extolled for doing what he cannot help doing, nor is he to be thanked by the community to which he only leaves wealth at death.”
Out of the over $370M (~$12B in 2023) Carnegie donated, ~90% was done during his lifetime. One of the largest reasons Carnegie supported live donations was to ensure that the goals of the donor were truly met – “The cases are not few in which the real object sought by (the author of the will) is not attained, nor are they few in which his real wishes are thwarted”. In the 1900’s, the PA state estate tax was 10% - which Carnegie mentions as just one more incentive to pursue philanthropy during life, in favor of assets being left to the government.
OPTION 3: Carnegie’s View on Spending Personally Accumulated Wealth:
The final disposal option addressed by Carnegie almost appears selfish in comparison to the other options of family and philanthropy – however he clarifies that this spending is in service of others:
“Rich men should be thankful for one inestimable boon. They have it in their power during their lives to organize benefactions from which the masses of their fellows will derive lasting advantage.
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.”
Carnegie goes on to discuss how those who can do so, should use their assets in pursuit of more efficient ways to help others – both locally and globally. He says that the “Main considerations… of charity should be to help those who will help themselves”, evidenced by his extensive philanthropy in areas of education, science, and public access to libraries which provide opportunities to large groups of people from all walks of life.
Applications Today
Just as in Carnegie’s time, and long before, nobody wants to raise “spoiled” children who grow up used to being provided for. In his “Gospel of Wealth” Carnegie attempts to share his lifetime of experience on what he sees as the best use of wealth for those who have worked hard enough to attain it and want to ensure it is not squandered by future generations. His ideas on public philanthropy, combined with taking personal responsibility for making sure donations are used responsibly resonate with donors today who can use new websites and tools to compare charities on how efficiently they are able to use donations to help in their specific impact areas.
Many Americans are not yet sure what their legacy will look like, however the one thing most everyone can agree on is that they want as little as possible lost to taxes. The McGill Junge team is built around multi-generational planning and we have helped hundreds of clients to consider exactly what legacy they want to leave – while minimizing the legacy they leave to Uncle Sam.
Sources: Gospel of Wealth by Carnegie, NYT Edition, US CPI Calculator, Andrew Carnegie book by David Nasaw
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