The Many Legacies of Andrew Carnegie

December 19, 2006 at 6:50 PM EDT

PAUL SOLMAN, NewsHour Economics Correspondent: ‘Twas some nights before Christmas at the Carnegie Deli, pastrami and pickles aimed right at the belly. The salamis were hung by the counter with care, hoping the revelers soon would be there.

OK, it’s the holiday season, but why, you may wonder, the Carnegie Deli? Well, it was a stop on our Carnegie tour of New York. Landmarks named for the robber baron philanthropist which we visited with historian David Nasaw, author of a new book on Andrew Carnegie, about whom Nasaw remains ambivalent.

DAVID NASAW, Biographer: He did a lot of things I applaud; he did a lot of things I abhor. I’m here, and what I tried to do in my biography is to tell the story, the full story.

PAUL SOLMAN: The story of Andrew Carnegie, as he pronounced it, a man who in his lifetime gave away more money in proportion to the economy as a whole than Bill Gates and Warren Buffet combined, yet squeezed his workers to the breaking point and still makes us uncomfortable almost a century after his death.

But let’s start our tour at a more obvious Carnegie venue than a deli: a library.

DAVID NASAW: Whenever anyone from anywhere in the country I’ve been hears that I’ve written about a biography of Andrew Carnegie, the first story they want to tell me is about the story of the library in their hometown.

PAUL SOLMAN: Carnegie built more than 2,500 libraries, culminating with a multimillion-dollar grant, worth several billion today, to build 65 here in New York City.

DAVID NASAW: He wanted people to be able to lift themselves, to educate themselves, to train themselves. And there was no better way to do that than with libraries.

PAUL SOLMAN: No better way, he thought, for certain people, that is, those like Carnegie, eager, willing, and able to make something of themselves and lead society forward. As preached by his philosopher guru, Social Darwinist Herbert Spencer, who coined the term “survival of the fittest.”

DAVID NASAW: Carnegie believed in the survival of the fittest. He believed in Social Darwinism. He believed that you had to give an opportunity to the fittest, who were going to survive, to the fittest to rise themselves as high as they could.

PAUL SOLMAN: And pull us all along with them.

DAVID NASAW: And pull us all up with them, right.

PAUL SOLMAN: The library benefactor goes from pauper to prince in a hurry. His struggling family moves from Scotland to bustling industrial Pittsburgh in 1848, when Andra is 12.

DAVID NASAW: Pittsburgh is as smoky, as dirty, as filthy, as soot-filled as any European manufacturing city.

PAUL SOLMAN: Andra went right to work, as a bobbin boy in one of the city’s cotton mills. He quickly moved up, becoming a telegraph messenger and then operator for the Pennsylvania railroad, soon running one of its branches and investing in sweetheart deals.

DAVID NASAW: By the time he’s in his middle 20s, he’s beginning to make big money. By the time he’s 30, he is a millionaire. And most of that money comes from the kinds of insider trading that today might put him on the other side of bars in a jail.

A man of contradictions

PAUL SOLMAN: Carnegie and friends got the railroad to pay fat sums to track, pole and steel suppliers secretly owned by Carnegie and friends. But Carnegie's most infamous act was with partner Henry Frick, breaking the union at their steel plant in Homestead, Pennsylvania, in 1892.

After demanding both an increase in hours and lower wages, the workers took over the plant to prevent replacement workers from entering it. Armed Pinkerton guards were hired to remove them. A pitched battle followed. Seven workers died. The state militia was called in.

In the end, Carnegie got what he wanted: a 12-hour workday; lower wages; a broken union; and a modern increasingly mechanized steel company, led by Carnegie, with little competition and profit margins some called obscene. "Meet you in Hell," Frick wrote Carnegie at the end of their lives.

But, remember, Carnegie tried to give away most of the money he made. When he couldn't, he set up this last of many foundations, New York's Carnegie Corporation, which has for a century now supported education, peace, art, libraries, and even, in the interest of full disclosure, public television.

VARTAN GREGORIAN, President, Carnegie Corporation: His portrait is always watching me whether I'm doing all right or not.

PAUL SOLMAN: But had Vartan Gregorian been advising Carnegie back in the day, what would he have said to squeezing the workers for money that, after all, has been put to such good use?

VARTAN GREGORIAN: I would have said something different, to be frank with you. I would have said, "You're building libraries. You're building museums. Give weekends off to workers to enjoy the libraries and the museums. As you're building for the public man, allow the public man, the workers, to go benefit from these institutions."

PAUL SOLMAN: On the other hand, says Gregorian...

VARTAN GREGORIAN: There he is, this person who was the richest man at the time, buried with his wife in a modest plot. And around his wife and him are their servants, buried at the same lot. Unheard of, anybody, to have workers, his workers, domestic workers to be buried around him, so he was a man of contradiction, is what I'm trying to say.

PAUL SOLMAN: Carnegie didn't seem to see the contradictions, however. He was remarkably sure of himself, though hardly as physically imposing as he's often portrayed.

DAVID NASAW: The true Andrew Carnegie, not on this pedestal, would have been up about here. A 30-year-old man weighs 109 pounds, stocky build, had to have been under five feet.

PAUL SOLMAN: Meaning he gave away, in today's money, about $2 billion for every inch of him.

Bill Gates, Warren Buffett, George Soros, were they thinking of Andrew Carnegie when they gave away all their money?

DAVID NASAW: I think absolutely. Buffett, when he gave away his money, referenced Carnegie. He quoted from Carnegie. When he said, "The man who dies rich dies disgraced," in the 1880s, his fellow millionaires looked on him like he was a lunatic, you know, an idiot, a mad man.

But only recently, in the last five to 10 years, are millionaires understanding or at least telling us that the money is going to go back to society, because it is society, not the individual, that creates wealth, which is what Carnegie said.

Sacrificing people for society

PAUL SOLMAN: But for a person who believed society creates the wealth, Carnegie was awfully hard on its working members. At the Carnegie Deli -- New Yorkers accent the first syllable -- amidst ecumenical hopes for peace on Earth and goodwill toward men, some still remember.

CARNEGIE DELI EMPLOYEE: He was greedy. He was wrong.

CARNEGIE DELI EMPLOYEE: It's horrifying, but it's a long time ago.

PAUL SOLMAN: But David Nasaw says Carnegie believed he was just carrying out social evolution's grand scheme.

DAVID NASAW: Great military leaders have to sacrifice soldiers; great captains of industry have to sacrifice people. You can't only look after the poor, and the weak, and the disabled. You've got to do what's best for the community, and that often means sacrificing innocent people.

PAUL SOLMAN: But with huge profit margins in steel and little real competition, even at the time the workers asked, "You can afford to raise our wages, so why don't you?"

DAVID NASAW: And he said, I'll tell you why. If I raised your wages, where would they go? They would go to better cuts of meat, to drink, to clothing, to things of the flesh, to things of the body. That's not what the working people need. That's not what this community, Pittsburgh, needs.

What it needs are things of the spirit: libraries, concert halls, schools. And you wouldn't pay for that yourselves, so you need me to take it out of your paychecks and give it back to you.

PAUL SOLMAN: So he actually thought that if he gave his workers raises they would blow it at the Carnegie Deli?

DAVID NASAW: He thought they'd blow it at the Carnegie Deli or at their local bars or at whatever the equivalent was of the Gap.

A fading legacy?

PAUL SOLMAN: Now, time for a brief parenthesis here. A probing reporter at the Carnegie Deli can hardly skip its more famous neighborhood namesake and fail to ask the canonical question.

How do you get to Carnegie Hall?

NEW YORKER: You've got to go south.

PAUL SOLMAN: The icon seems to have faded a bit.

Do you know how to get to Carnegie Hall?

NEW YORKER: Carnegie Hall? No.

PAUL SOLMAN: But at least one New Yorker knew it as a landmark, both geographical and comedic.

How do you get to Carnegie Hall?

NEW YORKER: Practice, practice, practice.

PAUL SOLMAN: OK, last stop: The Carnegie Council for Ethics in International Affairs, which pushes peace, justice and religion. Its president--- Joel Rosenthal.

JOEL ROSENTHAL, President, Carnegie Council for Ethics in International Affairs: Every generation has to confront the issues of war and peace. Mr. Carnegie's goal, as David has explained, was to achieve world peace.

The path to philanthropy

PAUL SOLMAN: But we end where we began, with yet another contradiction.

DAVID NASAW: At the same time that he was the head of Carnegie Steel, which was making millions of dollars every year selling steel-plated armor for battleships, he was the nation's foremost advocate for naval disarmament. He wanted to eliminate all navies.

Why? Because he felt that any way he could make this money was good, because he was going to give it away in the end, and better that he make it and give it to peace than that Bethlehem Steel make it and do something entirely different with it.

PAUL SOLMAN: And so, after becoming the richest man alive, when J.P. Morgan bought him out to create America's first billion-dollar corporation, U.S. Steel, in 1901, Carnegie became the world's greatest philanthropist.

A hundred years later, U.S. Steel is a shadow of its former self, its great rival, Bethlehem, defunct, both hammered by Darwinian forces. Or maybe it's just that even the fittest, like Andrew Carnegie presumably; don't last forever, though his money, however it came to him, very well might.