Ernst Abbe: A Physicist’s View of Corporate Profit

Ernst Abbe (1840-1905)

Ernst Abbe (pronounced to rhyme with “away”) (1840 – 1905) was born in Eisenach, near Weimar, in the center of Germany. His father worked in a spinning factory. As a boy, Ernst used to bring his father his lunch: soup, which he poured into a trough from which his father drank as he sat at his spinning machine. His father, who had been a strong man in his youth, aged quickly as a result of working 14-hour days.

Supported by his father’s employer, Abbe was able to attend secondary school. By the time he left school, his scientific talent and his strong will had already become obvious. Thus, in spite of the family’s strained financial situation, his father decided to support Abbe’s studies at the Universities of Jena and Gottingen. During his time as a student, Abbe gave private lessons to enhance his income, and his father’s employer continued to support him. Abbe was awarded his PhD in physics, in Gottingen in 1861. This was followed by two short assignments at the Gottingen observatory and at the Physikalischer Verein in Frankfurt (an association of citizens interested in physics and chemistry that was founded by Johann Wolfgang Goethe in 1824 and still exists today). He then became professor of physics and mathematics at the University of Jena, and in 1871 he married Else Snell, daughter of the mathematician and physicist Karl Snell, one of Abbe’s teachers. He became director of the Jena astronomical and meteorological observatories in 1878.

At the University of Jena he succeeded in formulating a mathematical theory correlating the resolution of lenses to the wavelength of light. Abbe’s formula made it possible to calculate the exact curvature of lenses to achieve maximum resolution. In 1863 he was asked by Carl Zeiss to improve the microscopes produced at his optical works in Jena. Until that time lenses had been ground by trial and error. Due in large part to Abbe’s formula, Zeiss was able to vastly improve the quality and streamline the manufacture of lenses, and Zeiss’s microscopes and other optical instruments were soon in demand throughout the world. In 1875 Abbe became part-owner, and after the death of Carl Zeiss in 1889, he became the director and owner of the Carl Zeiss Works – and one of the richest men in Germany.

With his background as the son of a poor laborer and as a physicist, Abbe viewed his enormous wealth in a unique way. He asked himself: Where did it come from? With the objectivity of a scientist, he traced it back to three factors:

  1. His formula, which had greatly improved the quality and production of lenses. He realized, however, that he had only been able to discover the formula because of the research of many of his predecessors and colleagues at the university.
  2. The infrastructure provided by the town of Jena with its roads, legal structure, schools, and other services, without which the Carl Zeiss Works could not function.
  3. The work of all those engaged in the production process. Each person who worked in the Carl Zeiss Works contributed to its products, and the wealth they generated. Abbe remembered his father, and he knew what it meant to work in a factory. He was keenly aware of the fact that he was only one of the many people who contributed to the wealth that was now legally his own private possession.

This analysis led Abbe to establish a foundation (the Carl Zeiss Stiftung) into which all the profits of the company would flow. He himself received a salary commensurate with his work. The funds in the foundation were divided into three parts:

  1. A large part of the profits went to the University of Jena. This was to ensure that scientific knowledge could continue to contribute to the productivity and wellbeing of the community. As a result, the University prospered and became one of the leading universities in the world.
  2. Another portion went to the township of Jena so that it could continue to provide the infrastructure from which the Carl Zeiss Works and the rest of the community benefitted.
  3. Another portion went to the employees of the Carl Zeiss Works as their rightful share of the profits they had generated. (Ernst Abbe also introduced an 8-hour workday, vacations, health insurance, pensions, and representation of workers in the governance of the company.)

Ernst Abbe did not simply assume that the profits were his private possession. If he had done so, he might, like so many others in his situation, have become a philanthropist. Instead, as a true scientist, he asked himself how this wealth had actually been created. After determining the source of the wealth, he established a foundation that ensured that the sources of the wealth could be replenished. 125 years ago he already saw the need to create sustainable wealth management.

By John Barnes

The Carl Zeiss Works in Jena, 1910

The Carl Zeiss Works in Jena, 1910, as it looked shortly after the death of Ernst Abbe.