Meet Andrew Carnegie: The Two Andrews

Generous and naive while often grasping and ruthless, Andrew Carnegie personally
embodied the contradictions that divided America in the Gilded Age. At a time when America
struggled--often violently--to sort out the competing claims of democracy and individual gain,
Carnegie championed both. He saw himself as a hero of working people, yet he crushed their
unions. The richest man in the world, he spoke up against privilege. A generous philanthropist
(working to better human welfare), he slashed the wages of the workers who made him rich.

The roots of Carnegie's internal conflicts were planted in Dunfermline, Scotland, where he
was born in 1835, the son of a weaver and political radical who instilled in young Andrew the
values of political and economic equality. His family's poverty, however, taught Carnegie a
different lesson. When the Carnegies immigrated to America in 1848, Andrew was determined to
bring prosperity to his family. Carnegie was a "self-made man" in both his economic
development, and his intellectual and cultural development. His capacity, willingness for hard
work, his perseverance, and his alertness soon brought forth opportunities. Carnegie's climb from
the slums of Pittsburgh to the mansions of New York paralleled America's transformation from a
sleepy agricultural nation into the world's foremost industrial power. He earned most of his
fortune in the steel industry. In the 1870s, he founded the Carnegie Steel Company. By the 1890s,
the company was the largest and most profitable industrial enterprise in the world. By 1868
Carnegie, then 33, was worth $400,000 (nearly $5 million today). But his wealth troubled him, as
did the ghosts of his radical past. He wrote himself a telling letter, promising that he would stop
working in two years and pursue a life of good works: "To continue much longer overwhelmed by
business cares... must degrade me beyond hope of permanent recovery."

Yet Carnegie's business cares held him in sway. For three decades, he dominated the steel
industry, and although he allowed himself time for vacations in Scotland and for his troubled
courtship of Louise Whitfield, his thoughts rarely strayed from his mills. Carnegie did not forget
his radical roots. In a period of turbulent labor unrest, Carnegie publicly supported the unions. In
his own mills, though, his position was less clear. He usually avoided using strikebreakers (people
who would use force to end a strike and punish those that were involved), but drove a hard
bargain and typically got his way, most notably during the bloody lockout at his Homestead
works in 1892. With his partner Henry Clay Frick, Carnegie broke the steel unions. His empire
grew. By 1900, Carnegie Steel produced more steel than the entire British steel industry. When he
sold the company to J.P. Morgan in 1901, Carnegie personally earned $250 million
(approximately $4.5 billion today).

Carnegie then turned his enormous energies to philanthropy and the pursuit of world peace.
With the fortune he made from business, he later turned to interests in education, founding the
Endowment for International Peace, Carnegie Mellon University and the Carnegie Museums of
Pittsburgh. In the public memory, he may have been correct. Today he is most remembered for his
generous gifts of music halls, educational grants, and nearly 3000 public libraries. By the time of
his death in 1919, he had given away over $350 million (more than $3 billion in 1996 dollars).
Cornelius Vanderbilt

Cornelius Vanderbilt was born at Port Richmond, Staten Island, New York, the son of a
ferryboat captain and farmer. He received little formal schooling. By age 16, he was transporting
people and cargo around New York harbor. During the War of 1812, he secured a government
contract to deliver supplies to posts throughout the area. Vanderbilt eventually controlled most of
the ferry traffic in New York waters, but in 1818 he sold his fleet and went to work for a
steamship line run by Thomas Gibbons. The Gibbons line was highly successful by effectively
undercutting the earlier line established by Robert Fulton and Robert Livingston. Vanderbilt
stayed with Gibbons until 1829 when, having learned all he could and accumulated sufficient
savings, he left to establish his own line.

During the 1830s, Vanderbilt's line became the dominant steamship presence on the
Hudson River, due largely to low pricing and comfortable accommodations. Eventually, his
competitors banded together and bought him out. Vanderbilt turned to serving Long Island and
Boston. Never the retiring sort, he adopted the title “Commodore” and frequently dressed in a full
naval uniform.

Seizing upon the gold rush fever of 1849, Vanderbilt established a cheap, reliable way for
prospectors to reach the gold fields of California. In 1851, he arranged ship accommodations
from New Orleans to Central America, overland travel across the isthmus, and another ship for
the voyage up the Pacific to San Francisco. Vanderbilt’s venture was so successful that his
competitor bought him out and paid him $50,000 a month for not operating his business. In 1855,
Vanderbilt opted for the luxury liner business and for a few years operated a line between New
York and Havre, France.

Vanderbilt entered the railroad business in 1857 and eventually gained control of the New
York and Harlem Railroad—again besting his rival, Daniel Drew. Vanderbilt managed to expand
his empire through purchase and consolidation. He gained control of the New York Central in
1869. By 1873, he successfully linked New York to Chicago by rail. During the Panic of 1873
and the resulting depression, Vanderbilt began construction of Grand Central Terminal in New
York City, offering employment to thousands who otherwise would have been unemployed.
However, because of their desperations, many of these employees worked for very low pay and in
dangerous working conditions.

Ruthless in business, Cornelius Vanderbilt was said by some to have made few friends in
his lifetime but many enemies. His public perception was that of a vulgar, mean-spirited man who
made life miserable for everyone around him, including his family. He often said that women
bought his stock because his picture was on the stock certificate. In his will, he disowned all his
sons except for William, who was as ruthless in business as his father and the one Cornelius
believed capable of maintaining the business empire. At the time of his death, aged 82, Cornelius
Vanderbilt's fortune was estimated at more than US$100 million. He willed US$95 million to son
William but "only" US$500,000 to each of his eight daughters. His wife received US$500,000 in
cash, their modest New York City home, and 2,000 shares of common stock in New York Central
Railroad. Vanderbilt gave little of his vast fortune to charitable works, leaving the $1 million he
had promised for Vanderbilt University (the largest charitable gift in American history to that
date) and $50,000 to the Church of the Strangers in New York City.

Vanderbilt would be worth $143 billion in 2007 dollars, making him the third-wealthiest
person in American history after Rockefeller and Carnegie.

John D. Rockefeller and Oil

Youth
John D. Rockefeller was born July 8, 1839, in Richford, New York. His father, William Avery Rockefeller,
was a "pitch man" -- a "Doctor" who claimed he could cure cancers and charged up to $25 a treatment. His
mother, Eliza Davison Rockefeller, was very religious and very disciplined. She taught John to work, to
save, and to give to charities.

The Standard Oil Company: 1870-1882

On January 10, 1870 the Standard Oil Company of Ohio was created by John D. Rockefeller. It held about
10% of the oil business at the time of its formation. In Rockefeller’s eyes, the state of the oil business was
chaotic. Because entry costs were so low in both oil drilling and oil refining, the market was glutted with
crude oil with an accompanying high level of waste. He borrowed heavily and plowed all his profits back
into the business in order to expand it further, and took decisive steps to strengthen and increase the
efficiency of all aspects of the firm. In his view, the theory of free competition did not work well when
there was a mix of very large, efficient firms and many medium and small firms. His view was that the
weak firms, in their attempts to survive, drove prices down below production costs, hurting even the
well-managed firms such as his own. Although his economics may be suspect in modern eyes, his solution
-- a market with a few (maybe one!) large, -- in effect an oligopolistic market (one with very few, but large,
suppliers) -- was what other industrial sectors eventually evolved into. What makes oil stand out is that it
happened by design -- as the result of a plan formulated by a single person -- John D. Rockefeller. During
1871 Rockefeller formulated his plan for consolidating all oil refining firms into one great organization
with the aim of eliminating excess capacity and price-cutting.

The Standard Oil Trust: 1882-1892

On January 2, 1882 the Standard Oil Trust was formed. By 1890 Standard Oil had set up an elaborate
nationwide distribution system that reached nearly every American town. By 1904 80% of American towns
were served by Standard Oil carts that delivered the various products directly to businesses and homes.
Standard Oil’s campaign to dominate even the smallest of the retail markets is probably the single most
important reason that company became so disliked by the American public. The Standard was aggressive in
its marketing practices and tried to force all grocery and hardware stores that sold kerosene and lubricants
to sell only Standard products. This policy -- though successful in the short run -- made the Standard widely
unpopular and simply increased its vulnerability to political attack. Also, many of his employees worked
for long hours for very low pay and in dangerous working conditions.

Retirement and Philanthropy

In 1901 Rockefeller sold his iron ore-related business to J.P. Morgan for $80,000,000 with an estimated
profit of at least $50,000,000 -- a huge fortune in its own right, but it was just one of his investments.
Morgan added the Rockefeller properties to the U.S. Steel Corporation. By 1896 Rockefeller stopped going
to his office daily and in 1897 he retired, at the age of 58. From the mid-1890s until his death in 1937,
Rockefeller’s activities were philanthropic. Rockefeller’s fortune peaked in 1912 at almost $900,000,000,
but by that time he had already given away hundreds of millions of dollars. His son, John D. Rockefeller
Jr., in 1897 joined Gates in the full time management of the fortune.

The University of Chicago -- which Rockefeller was largely responsible for creating -- alone received
$75,000,000 by 1932. He set up, at the urging of his son, the Rockefeller Institute for Medical Research
(now Rockefeller University) and his gifts to it totaled $50,000,000 by the 1930s. He set the standard for
philanthropy. Just the eradication of hookworm in the South alone would merit his place as one of the great
humanitarians of the 20th Century. But his reputation was so sullied that he never received the credit that he
was due for this great act on behalf of humankind.

JP Morgan
 The son of a successful financier, Junius Spencer Morgan (1813–90), John Pierpont (JP) was
educated in Boston. He began his career in 1857 as an accountant with the New York banking firm of
Duncan, Sherman and Company. In 1861 Morgan became the agent for his father's banking company in
New York City and quickly became one of the most powerful bankers and investors in America. Also,
Morgan and Company soon became the predominant source of U.S. government financing. This firm was
reorganized as J.P. Morgan and Company in 1895, and, largely through Morgan's ability, it became one of
the most powerful banking houses in the world.
Morgan had intimate and highly useful connections with the London financial world, and during the
1870s he was thereby able to provide the rapidly growing industrial corporations of the United States with
much-needed capital from British bankers. He began reorganizing railroads in 1885, when he arranged an
agreement between two of the largest railroads in the country, the New York Central Railroad and the
Pennsylvania Railroad. In the course of these corporate restructurings, Morgan became a member of the
board of directors of these and other railroads, thereby amassing great influence on them. Between 1885
and 1888 he extended his influence to lines based in Pennsylvania and Ohio, and after the financial panic of
1893 he was called upon to rehabilitate a large number of the leading rail lines in the country. He helped to
achieve railroad rate stability and discouraged overly chaotic competition in the East. By gaining control of
much of the stock of the railroads that he reorganized, he became one of the world's most powerful railroad
magnates, controlling about 5,000 miles (8,000 km) of American railroads by 1902.
During the depression that followed the panic of 1893, Morgan formed a syndicate that resupplied
the U.S. government's depleted gold reserve with $62,000,000 in gold in order to relieve a Treasury crisis.
Three years later he began financing a series of giant industrial consolidations that were to reshape the
corporate structure of the American manufacturing sector. His first venture, in 1891, was to arrange the
merger of Edison General Electric and Thomson-Houston Electric Company to form General Electric,
which became the dominant electrical-equipment manufacturing firm in the United States. Having financed
the creation of the Federal Steel Company in 1898, Morgan in 1901 joined in merging it with the giant
Carnegie Steel Company and other steel companies to form United States Steel Corporation, which was the
world's first billion-dollar corporation. However, much like his counter-parts many of his workers were put
in dangerous working conditions that could often lead to dismemberment or even death. Also, many of his
employees worked for long hours for very low pay.
Morgan successfully led the American financial community's attempt to avert a general financial
collapse following the stock market panic of 1907. He headed a group of bankers who took in large
government deposits and decided how the money was to be used for purposes of financial relief, thereby
preserving the solvency of many major banks and corporations. Having ceased to undertake large industrial
reorganizations, Morgan thereafter concentrated on amassing control of various banks and insurance
companies. Through a system of interlocking memberships on the boards of companies he had reorganized
or influenced, Morgan and his banking house achieved a top-heavy concentration of control over some of
the nation's leading corporations and financial institutions. This earned Morgan the occasional distrust of
the federal government and the enmity of reformers and muckrakers throughout the country, but he
remained the dominant figure in American capitalism until his death in 1913.
Morgan was one of the greatest art and book collectors of his day, and he donated many works of art
to the Metropolitan Museum of Art in New York City. His book collection and the building that housed
them in New York City became a public reference library in 1924. Morgan was a benefactor of the
American Museum of Natural History, the Metropolitan Museum of Art, Groton School, Harvard
University (especially its medical school), Trinity College, the Lying-in Hospital of the City of New York,
and the New York trade schools.

Name:
DEFINE: Robber Baron:

DEFINE: Captain of Industry:

Using the provided readings, complete the chart for each industrialist.

For each of the industrialists record the following:

1. How he acquired his wealth
2. How he treated his workers
3. How he donated his wealth
4. Do you think he was a Robber Baron or a Captain of Industry? Explain briefly

Andrew Carnegie
1. Steel company, vertical integration.

2. He was fair and supported unions.

3. Libraries, art galleries, culture centers and learning institutions.

4. Captain of industry. He donated a lot of his wealth.

John D. Rockefeller
1. Made his money from oil.

2. His employees were treated poorly.

3. He donated hundreds of millions of dollars and set up research and education

institutes.

4. Captain of industry. His reputation was tainted and the employees were treated
poorly but a lot of money was donated.

Cornelius Vanderbilt
1. Railroads are where he made his money.

2. He treated employees poorly and with low wage.

3. He donated a small amount of his wealth to his own institution and some to a
church.

4. Robber baron. Greedy with his money and what seems like a misogynist.

J.P. Morgan
1. Banking and finance.

2. Workers were not in good conditions.

3. He donated a lot of money and even helped the government treasury during the
great depression.

4. Robber baron. Although he donated a lot, the conditions his workers were in were
extremely unfit.