Where have you gone, Andrew Carnegie? - rich are not as generous as they used to be

Washington Monthly, May, 1996 by Peter Henle, Mark Drajem

At first glance, Andrew Carnegie and Barbara Piasecka Johnson have much in common. Both were immigrants to the United States. Both rose from humble beginnings to great wealth. And body wanted to give something back to America. Carnegie, steel mogul of the early 20th century, gave grants to local communities to build libraries, and he founded a university and foundation that still bear his name. Now Johnson, widow of Johnson & Johnson heir Seward Johnson Jr., is making plans to give away some of her wealth. "I came to America and my dream came true," Johnson told The New York Times. "Now it's good to share with other people."

The cause Johnson has selected, though, is a bit different from Carnegie's. Johnson is turning her $25 million mansion and grounds in Princeton, New Jersey, into a country club. If you think that she's trying to create a recreational habitat for poor neighborhood kids, think again: The club will be for the lucky few who can pony up a $36,000 initial fee and $5,000 for annual dues.

Johnson's idea of charity may be, well, unusual (and, to be fair, not exactly typical of other members of the Johnson family), but it does suggest something amiss in how the rich view their philanthropic duty. in fact, many don't feel any such duty at all. As Michael Lewis observed in The New York Times Magazine, today's rich have developed a "righteous indignation toward the claims of the unrich: you can't give money to anyone you don't respect, and you can't respect anyone who doesn't make money." But, at a time when a relative handful of Americans are doing remarkably well, it's time for a few modern-day

Andrew Carnegies to step up to bat. Carnegie was an unlikely hero. As a child in 1848, he emigrated from Scotland to the United States. His first job here was as a bobbin boy in a textile mill; from there, he held a succession of jobs in a telegraph office, railroading, and, eventually, iron ore and steel. As a robber baron par excellence, he molded Carnegie Steel into the biggest American steel producer partly through intimidation and other unsavory tactics, but also through impressive business acumen he was, for example, among the first to utilize a cost accounting system).

As his empire grew, Carnegie asked himself what should be done with the enormous wealth he and others were accumulating. In an 1889 article he proposed an answer: "There are but three modes in which surplus wealth can be disposed of. It can be left to the families of the decedents; or it can be bequeadied for public purposes; or, finally, it can be administered by its possessors during their lives."

Carnegie quickly dismissed the first two options. Large inheritances, he thought, helped neither the heirs nor the state. "The man who dies rich dies disgraced," he once wrote. Bequeathal meant waiting until after death to "be much good in the world." His preferred solution was actually to levy heavy taxes on the rich; but in lieu of that he proposed that wealth "be administered by its possessors"--not randomly, but with great purpose. Heeding his own advice, Carnegie helped build the institutional infrastructure of America. He donated $350 million in his lifetime. If that doesn't sound like much, it's $5.4 billion in 1995 dollars.

Carnegie's specialty was libraries. In the late 19th century, only 900 libraries existed in America. With his leadership and money, 2,500 more were constructed. The deal was that he would construct the library building; then the city, town, or county would provide a central site and commit to buying the books, staffing the library, and maintaining the building. Carnegie also financed academic research (including that of Marie Curie), as well as the many buildings and institutes that still bear his name, including the Carnegie Institute, the Carnegie Endowment for International Peace, and, of course, New York's Carnegie Hah.

Today, large-scale, strategic philanthropy intended to improve equality of opportunity in America is rare. Sure, a few big foundations, including Carnegie's, continue to make good on their founders' aims. And overall philanthropic giving by Americans topped $100 billion in 1994, according to Giving USA, an annual report on charitable donations. But that number pales in comparison with the enormous growth in wealth by superrich. From 1982 to 1995, the number of billionaires increased from 13 to 94, according to Forbes. The net worth of those billionaires is an astonishing $220 billion--more than the annual federal deficit. But few of diem are putting their wealth to work for America.

Consider some of America's more prominent billionaires. Ross Perot, worth $2.4 billion, is considering pouring $30 million dollars into yet another self-aggrandizing presidential campaign. The $16 billion man, Bill Gates, has given away $35 million dollars--chump change, really--over the last nine years. His rival for the title of America's richest man, investor Warren Buffet, has said he will not give any money to philanthropic causes during his lifetime. Sumner Redstone, who made his $4 billion from cable television (including MTV) doesn't donate any serious money. Instead, he teaches courses for free at Harvard and Boston University Law Schools.