Thursday, September 6, 2007

The Little Scotsman

The Nashville Public Library that was home to much of my misspent youth was one of the original Carnegie Libraries, built in 1904, with the book stacks in an iron skeleton and translucent glass floors that were characteristic of many libraries before electric lighting took over the world. Leather soled shoes on glass generates a lot of static electricity on dry winter days, and many was the time when the first touch to the railing on the metal stairs brought this library patron a sudden exit from the world of daydreams.

A friend taught me the trick of holding a metal coin tightly and touching it to the railing to discharge the static. I’m not sure whether this was to reduce the shock (which it did, if only by eliminating the surprise and reducing involuntary muscle contraction because of the tight grip), or to maximize the spark. Sometimes we’d get sparks that traveled a goodly inch or two, occasionally with branching, like real lightning.

Nashville got a new library building in 1965, but for years afterwards, there were still books on the stacks that bore the imprint of the Carnegie Library of Nashville.

There was a feature on Carnegie a few nights ago on the PBS News Hour. While Economics Correspondent Paul Solman did a pretty good job, given the venue and time constraints, he missed some pretty important points.

First, Carnegie actually considered himself a friend of the working man, much like Henry Ford did a while later (before Ford, like Carnegie, resorted to the hired muscle of the Pinkerton Agency). In fact, in 1886, Carnegie wrote an article defending unions. But when the workers at the Homestead steel mill began thinking of the plant as more theirs than his (culminating in a worker seizure of the plant in 1892), Carnegie took action.

But he took action by proxy. Carnegie was actually on a trans-Atlantic voyage at the time that his partner, Henry Frick (who had joined his own coke making operation with Carnegie Steel in 1881), hired the Pinkertons who laid siege to the plant. The Pinkertons lost the battle, but the incident gave the Governor of Pennsylvania the excuse to send in the state militia, who evicted the workers and strikebreakers were then used to re-open the mill.

Carnegie was in telegraphic communication with Frick during the entire episode, and his reputation as a “friend of the working man” pretty much ended in that incident. But Carnegie continued to consider himself a friend of the downtrodden to his dying day, and always blamed the Homestead “incident” on Frick. He may have used that as part of his rationalization for attempting to later screw Frick in a buyout deal in 1900.

In 1901, Carnegie sold Carnegie steel to J. P. Morgan, or, more accurately to the bank, the J. P. Morgan and Co., to form the core of U. S. Steel. U. S. Steel was capitalized at a billion dollars; Carnegie was paid $480 million, and became the richest man in the world.

Carnegie was a Spenserian Social Darwinist, but, unlike many Social Darwinists, he didn’t believe in inherited wealth as a blood right. Instead, as he had written in “The Gospel of Wealth,” he believed in the “stewardship” of society by the wealthy, and that included large doses of philanthropy. Upon obtaining half a billion in 1901 dollars (on the order of an inflation adjusted 10 billion in today’s dollars, but a vastly greater sum in terms of, for example the fraction of U.S. GNP), Carnegie proceeded to give most of it away, to foundations of varying purposes, including the building of libraries.

But here is what you seldom hear in stories about Carnegie: Yes, he built libraries and put books in them, but he did not pay the salaries to librarians; he did not pay for the maintenance and upkeep of the buildings. Those tasks were left to the cities that got the libraries. Carnegie leveraged his philanthropy with a large amount of public money; eventually far more than he had actually given.

This was social engineering on a large scale, and it used private money to sway the priorities of the public purse. I was, as I have said many times, a major beneficiary of Carnegie’s social engineering. I daresay that I was just the sort of bright, self motivated individual that he had in mind as a beneficiary. Indeed, Carnegie started his real business ascent at a telegraph operator (see “I have a Code,”and made his first stake by investing in deals that he learned of as the telegrapher, i.e., what we now call insider trading.

Andrew Carnegie is in no way any sort of libertarian, Randite, or even Spenserian
role model. A great deal of his success had to do with being fortunately the right person in the right place at the right time. He lived in a time when government was at the beck and call of wealth, and his wealth derived in part from the land grants given to railroads (which bought his steel), the use to state troops to break strikes, and a complete disregard for polluting the property (and bodies) of other people. In the end, his greatest philanthropic achievement was to divert tax money to a purpose of his conception.

Yes, I’m an heir to Carnegie’s philanthropy, and rightly glad of it. Still, we bite the hands that feed us, and when you set out to enable education, especially self-education, don’t be surprised if some of the ideas that result are not entirely what you had in mind.

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