Andrew Carnegie

Andrew Carnegie was born in Dunfermline, Scotland, the son of a weaver. The family immigrated to the United States in 1848 because of 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 $500 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.

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