THE BLOG
08/08/2014 03:59 pm ET | Updated Oct 08, 2014

Stories of Abundance: The Robber Barons

Peter Dazeley via Getty Images

Today, we don't blink an eye when the world's wealthiest individuals donate enormous sums of money to charitable causes. In fact, we expect them to do so.

But large-scale philanthropy hasn't always been a part of history. If you look back 600 years ago, royals' sole goal was to keep their wealth within the family.

What changed? The emergence of robber barons like John D. Rockefeller, Andrew Carnegie, Cornelius Vanderbilt, Richard Sears and Henry Ford.

I wrote about this tremendous shift in Abundance -- the excerpt follows.

If family and friends want to receive these "Stories of Abundance" as well as the "Evidence for Abundance" email I sent on Tuesday, just have them go to AbundanceHub.com and sign up. I'd love to have them in the community!

***Beginning of Abundance Excerpt: The Robber Barons***

It's the morning of April 16, 2011, and the X PRIZE Foundation is holding its annual Visioneering meeting. This, in our parlance, is the process of brainstorming incentive competitions to solve the world's grand challenges. To help us do the big thinking, we invite top entrepreneurs, philanthropists, and CEOs for a weekend best described as a cross between a mini-TED and Hurricane Katrina.

This year the meeting is being hosted by the chairman of Fox Filmed Entertainment, Jim Gianopulos, at its Los Angeles studios. The only room large enough to hold everyone is the commissary. The walls are flat white, decorated with photographs of film icons from Cary Grant to Luke Skywalker, but it's a different kind of crowd, and few pay these images much mind. Nor does anyone have much to say about box office returns or points on the back-end, but there's a lot of talk about creating African entrepreneurs, reinventing the technology of health care, and increasing the energy density of batteries by an order of magnitude.

Over the years, I've been lucky enough to host many similar meetings and meet many similar people, and what seems to unify them is exactly what's on display today: a high level of optimism, a magnanimous sphere of caring, and a hearty appetite for the big and bold. Perhaps this is to be expected. These are the same captains of the digital age who, with the stroke of HTML code, have reinvented banking with PayPal, advertising with Google, and commerce with eBay. They've seen firsthand how exponential technologies and the tools of cooperation can transform industries and better lives. They now believe that the same high-leverage thinking and best business practices that led to their technological success can bring about philanthropic success. Taken together, they constitute a significant force for abundance and a new breed of philanthropist: a technophilanthropist; a young, idealistic, iPad jet-setter who cares about the world -- the whole world -- in a whole new way.

Large-scale philanthropy, based in the private, not the public sector, is a relatively recent historical development. Going back some six hundred years, wealth was concentrated within royals whose sole goal was to keep that money in the family. This sphere of caring expanded during the Renaissance, when European merchants tried to mitigate poverty in big trading cities like London. Two centuries ago, the financial community got involved. But it was the titans of industrialization known collectively as the robber barons who really rewrote the rule book.

The robber barons were transformative. In less than seventy years, they turned America from an agricultural nation into an industrial powerhouse. What John D. Rockefeller did for oil, Andrew Carnegie did for iron and steel, Cornelius Vanderbilt did for railroads, James B. Duke for tobacco, Richard Sears for mail-order retailing, and Henry Ford for automobiles. There were dozens more. And while robber baron rapaciousness has received much attention, contemporary historians are in agreement: it was also these gilded age magnates who invented modern philanthropy.

Certainly scholars have gone back and forth about most things robber baron, including the nature of their charity. Not long ago, BusinessWeek wrote: "John D. Rockefeller became a major donor -- but only after a public relations expert, Ivy Lee, told him that donations could help salvage a damaged Rockefeller image." Great-great grandson Justin Rockefeller, an entrepreneur and political activist, disagrees: "John David Sr., a devout Baptist, started tithing from his very first paycheck. He kept meticulous financial records. His first year in business was 1855. His income was ninety-five dollars, ten percent of which he gave to the church." Either way, that $9.50 donation was only the beginning. In 1910 Rockefeller took $50 million worth of Standard Oil stock to create the foundation bearing his name. By the time of his death in 1937, half of his fortune had been given away.

Carnegie, though, was an even bigger donor, and it's to Carnegie that most of today's technophilanthropists trace their roots. When Warren Buffett wanted to inspire philanthropy in Bill Gates, he started by giving him a copy of Carnegie's essay "The Gospel of Wealth," which attempts to answer a tricky question: "What is the proper mode of administering wealth after the laws upon which civilization is founded have thrown it into the hands of the few?"

Carnegie believed that one's wealth must be used to better the world, and the best way to do so was not by leaving the money for one's children or bequeathing it to the state for public works. His interest was in teaching others how to help themselves; thus, his major contribution was to construct 2,500 public libraries. While "The Gospel of Wealth" wasn't popular in Carnegie's time, much of his philosophy is now shared by many of the technophilanthropists, though, as we'll soon see, exactly who to help and how to do so is where today's generation and yesterday's benefactors diverge.