The wealthiest man on earth at the time was Andrew Carnegie. The Scottish-American industrialist had lately begun to donate his capital to good causes and was also being slowly involved in the world peace movement. He was asked in 1902 to consider sponsoring offices and a library for the PCA. Fedor Martens, a Russian lawyer and diplomat was one of the many persons who managed to gently push Carnegie into agreeing to do so. In 1904 the Carnegie Foundation was established, its name-giver donating a sum of $ 1.5 million (now at least c. $ 30 million).
As for the construction of the building itself, Carnegie expressed his wish for an open and international competition resulting in a building that was to stand alone, preferably in a park. The building should contain spacious rooms, large enough to have meetings in and be provided with a great library equipped with all the modern technical devices.
After much debate the Zorgvliet area, a green suburb at the west of The Hague, was chosen as the site to build the Peace Palace. In the summer of 1905 an international competion for the design was organized, which was eventually won by Louis M. Cordonnier (1854-1938) of Lille, France.
Cordonnier's rather baroque design was sobered down, both in terms of aesthetics and in terms of finance, by the Dutch architect J.A.G. van der Steur. On July 30, 1907, coinciding with the Second Hague Peace Conference, the stone-laying ceremony took place. Six years later the Peace Palace and grounds (designed by the famous English landscape architect T.H. Mawson) were officially opened.