Andrew Carnegie

1835-1919

Andrew Carnegie was born in Dunfermline, Scotland, the son of a weaver. The
family immigrated to the United States in 1848 due to changing labor conditions in
their native land, where recently introduced steam looms were replacing many
workers, Carnegie’s father among them. The family settled in Allegheny,
Pennsylvania, where Andrew received no formal education and found work as a
bobbin boy in a cotton mill. He later worked as a messenger in a telegraph office and
rapidly advanced to telegrapher.

In 1853, Carnegie became the private secretary and telegrapher to Thomas A. Scott,
president of the Pennsylvania Railroad. Taking the first step toward an investment
program, Carnegie bought stock in a sleeping car company and in a short time was
making more from his speculative venture than from his regular job. He later made a
similarly small investment in oil during its formative years and again profited
handsomely. Carnegie was appointed a superintendent for the Pennsylvania Railroad
in 1859. After the Civil War broke out in 1861, Carnegie served in the War
Department reorganizing telegraph service for the Union army. He had earlier paid a
substitute $850 to discharge his responsibilities as a draftee.

In 1864, Carnegie devoted his full energies to the iron business; his firm received
lucrative contracts from the railroads to replace aging wooden bridges with iron ones.

On a trip to Europe, Carnegie met and was inspired by Henry Bessemer, developer of
breakthrough technology for making steel from pig iron. In 1873, Carnegie sold out
his other interests and turned his full attention to steel; he began acquiring the
components of what would become the Carnegie Steel Company.

Carnegie’s recipe for success included hard work, attention to detail and an ability to
hire and rely upon qualified help; Charles Schwab was an early assistant and would
later become president of U.S. Steel and Bethlehem Steel. Carnegie was also a
shrewd observer of human nature. When he opened his first steel plant in 1875, he
named the facility for the president of the Pennsylvania Railroad, J. Edgar Thompson;
shortly thereafter, Carnegie received an enormous order from that organization for the
production of steel rails.

Carnegie’s growing wealth enabled him to profit from the depression of the 1890s.
When others faced bankruptcy, he managed to gobble up steel production facilities.
By 1900, he controlled about one-quarter of the nation’s steel output.

The low point of Carnegie’s career occurred in 1892 during the infamous Homestead
Steel Strike. Carnegie was traveling in Europe during the dispute, but his interests
were represented by Henry Clay Frick, with whom Carnegie had differed on labor
matters in the past. Nevertheless, the total humiliation suffered by the strikers at
Homestead colored the outlook of many working people toward Carnegie for many
years to come.

Carnegie gained much good will in 1898 when he offered $20 million to the
government of the Philippines. He was an opponent of the American acquisition of
the islands and hoped the Filipinos could purchase their independence. His effort
came to nothing, however.

In 1901, J.P. Morgan offered to buy all of Carnegie’s steel holdings for the price of
$250 million. Carnegie acceptance made him the world’s richest man. Morgan went
on to form U.S. Steel, a corporation with a capitalization in excess of $1.4 billion.

In 1889, Carnegie wrote an article for the North American Review, entitled “The
Gospel of Wealth.” He advanced the idea that the rich are merely trustees of wealth
and that they have a duty to use their resources to benefit society. He took his
admonishment to others to heart and spent the last two decades of his life giving away
the great bulk of his fortune. Major philanthropic ventures included the following:

Carnegie Hall (1892)

Carnegie Institution (1902) for research into American colleges and universities

Carnegie Hero Fund Commission (1904)

Carnegie Endowment for the Advancement of Teaching (1905)

Carnegie Endowment for International Peace (1910)

Carnegie Corporation of New York (1911)

Funding for the establishment of more than 2,800 libraries

Major support for Tuskegee Institute

Funding for the Peace Palace at The Hague, The Netherlands, later the home of the
United Nations International Court of Justice.

Carnegie’s business enterprises present a classic illustration of vertical integration. He

sought to become immune from competition by dominating all aspects of the
production process. He was not content to own only the steel mills, but worked to
control iron ore barges, coal and iron fields and the railroads (one area where he was
not especially successful). Whenever possible, Carnegie would sell his product
directly to the user, bypassing the middleman and his fees.

Andrew Carnegie in many ways typified the American dream. He began with nothing
and used his drive and intelligence to become the world’s richest man. At the height
of his power, he sold out his holdings and dedicated his remaining years expending
his fortune to aid his fellow man.
 ANDREW CARNEGIE

Andrew Carnegie, the son of a handloom weaver, was born in Dunfermline,

Scotland, on 25th November, 1835. The family had a long radical tradition and his
father, William Carnegie, was an active Chartist. His material grandfather, Thomas
Morrison, had worked with William Cobbett during his campaign for social reform.

The economic depression of 1848 convinced the Carnegie family to emigrate to the
United States where they joined a Scottish colony at Allegheny near Pittsburgh.
Andrew began work at 12 in a local cotton factory but continued his education by
attending night school.

At 14 Carnegie became a messenger boy in the local Pittsburgh Telegraph Office.

His abilities were noticed by Thomas A. Scott, the superintendent of the western
division of the Pennsylvania Railroad. He made Carnegie his secretary. During the
Civil War Scott was appointed assistant secretary of war and Carnegie went to
Washington to work as his right-hand man. Carnegie's work included organizing the
military telegraph system.

After the war Carnegie succeeded Scott as superintendent of the western division of
the Pennsylvania Railroad. Carnegie shrewdly invested in several promising
ventures including the Woodruff Sleeping Car Company and several small iron mills
and factories. The most important of these was Keystone Bridge, a company which
he owned a one-fifth share.

Carnegie made regular visits to Britain where he observed the rapid developments in
the iron industry. He was especially impressed by the converter invented by Henry
Bessemer. Carnegie realised that steel would now replace iron for the manufacture
of heavy goods.

In 1870 Carnegie erected his first blast furnace where he used the ideas being
developed by Bessemer in England. Others followed and by 1874 he opened his
steel furnace at Braddock. He took several partners, including Henry Frick, but he
always insisted in retaining the majority holding in his various ventures.

Carnegie took a keen interest in social and political issues and wrote a series of
books including Round the World (1881), An American Four-in-Hand in Britain
(1883) and Triumphant Democracy (1886), where he compared the egalitarianism of
America with the class-based inequalities of Britain and other European countries.
He praised America's educational system arguing that: "Of all its boasts, of all its
triumphs, this is at once its proudest and its best."

In June, 1889, the North American Review published an article by Carnegie on what
he called the "Gospel of Wealth". In the article Carnegie argued that it was the duty
of rich men and women to use their wealth to benefit the welfare of the community.
He wrote that a "man who dies rich dies disgraced".

In 1889 Carnegie decided to allow Henry Frick to become chairman of the Carnegie
Companywhile he moved to New York to deal with the growing importance of
research and development. Carnegie also spent six months of the year in Scotland
with his family.

When Frick took control the firm consisted of various mills and furnaces in the
Pittsburgh area. Frick was concerned that there was no centralized management
structure and so in 1892 all productive units were integrated to form the Carnegie
Steel Company. Valued at $25 million it was now the largest steel company in the
world.

In an effort to increase profits, Henry Frick decided to lower the piecework wage rate
of his employees. In 1892 the Amalgamated Iron and Steel Workers Union called out
its members at the Carnegie's Homestead plant. Frick now took the controversial
decision to employ 300 strikebreakers from outside the area. The men were brought
in on armed barges down the Monongahela River. The strikers were waiting for them
and a day long battle took place. Ten men were killed and 60 wounded before the
governor obtained order by placing Homestead under martial law.

Carnegie, who was in Scotland during the strike, was furious with Frick as he had
instructed him not to use strikebreakers. In public Carnegie did not criticize Frick and
as a result had to take responsibility for what had happened. He later wrote: "I was
the controlling owner. That was sufficient to make my name a by-word for years".

The Carnegie Steel Company continued to expand and between 1889 and 1899
annual production of steel rose from 332,111 to 2,663,412 tons, and profits
increased from $2 million to $40 million. There was growing conflict between
Carnegie and Henry Frick during this period. This came to a head in 1899 and
Carnegie bought out Frick for $15 million.

In 1901 Frick joined with J. Pierpont Morgan to purchase the Carnegie Company for
$500,000,000 and established the U.S. Steel Corporation that was valued at $1.4
billion. Carnegie himself now had a personal fortune of $225,000,000.

Carnegie set up a trust fund "for the improvement of mankind." This included the
building of 3,000 public libraries (380 in Britain), the Carnegie Institute of Pittsburgh,
the Carnegie Institute of Technology and the Carnegie Institution of Washington for
research into the natural and physical sciences. Carnegie also established the
Endowment for International Peace in an effort to prevent future wars.

By the time Andrew Carnegie died in August, 1919, he had given away
$350,000,000. A further $125 million was placed with the Carnegie Corporation to
carry on his good works.
 ANDREW CARNEGIE

(1835-1919), industrialist and philanthropist. Andrew Carnegie's awesome prowess in getting

wealth and giving it away enriched his adopted nation even more than himself. The
circumstances of his boyhood fostered both passions. His mother exemplified the proverbial
thrift and enterprise of his native Scotland. The plight of his father, a weaver whose skill was
made worthless by new machinery, brought home the pain and humiliation of poverty. But
money was not the sole concern of Carnegie's family; his father and uncles were zealous in
the cause of political democracy and social justice. When Andrew was twelve, the family set
out for America, the land of promise for both material ambition and social idealism.

Kin and countrymen in the new land smoothed the Carnegies' way and led them to Pittsburgh,
well fitted by natural resources and river transport to soar with American industry in its
rocketing takeoff. Young Andrew rose with it. As a bright, alert, cheerful telegrapher he won
the favor of Thomas A. Scott, a high official of the Pennsylvania Railroad. At twenty-four,
Scott's prot?? became superintendent of the western division of the railroad. With Scott's help
in the form of a loan, advice, and influence, Carnegie was already making money in stocks,
and by his thirties he was a wealthy investor, promoter, and entrepreneur in a variety of
enterprises. During the depression of the seventies, with properties cheap and the Bessemer
process coming into its own, Carnegie concentrated all his resources and energies in the
making of steel. He hired the best people in steel technology and plant management,
shrewdly held on to absolute control of his enterprise the better to plow back profits into
capital improvements, and outgeneraled all his rivals in the field. By applying the
coordinating and cost accounting techniques he had learned from the Pennsylvania Railroad,
holding down wages and salaries, keeping up with the latest technology, and "hard-driving"
both his men and his furnaces, he held costs to a minimum and prices below his competitors',
thereby capturing an ever-growing share of the market and maximizing return on plant
investment. By his sixties, having vertically integrated his holdings from ore to finished
products, he dominated the American steel industry, which he had done much to make first in
the world. When he sold out to the Morgan-created United States Steel Corporation in 1901
for $250 million in U.S. Steel bonds, he found himself one of the world's richest men.

But despite his wealth-getting, his wage-cutting, and his responsibility for a bloody labor
dispute at his Homestead plant in 1892, Carnegie had not forgotten his heritage of concern for
social justice. In his 1889 article "Wealth," he gloried in the cheap steel his leadership had
given the American consumer but also proclaimed the moral duty of all possessors of great
wealth to plow back their money into philanthropy with the same judgment, zeal, and
leadership they had devoted to getting rich. And he lived up to that precept, paying for
thousands of library buildings, setting up trusts and foundations, endowing universities,
building Carnegie Hall in New York and the Peace Palace at The Hague, and much more. He
once wrote that the man who dies rich dies disgraced. He had some sins to answer for, and it
took him a while, but in 1919 at eighty-three Andrew Carnegie died in a state of grace by his
own agnostic definition.

Harold C. Livesay, Andrew Carnegie and the Rise of Big Business (1975); Joseph F. Wall,
Andrew Carnegie (1970).