Carnegie, Andrew (1835-1919)

Andrew Carnegie (1835-1919)

Steelmaker, philanthropist

Sources

Career. Born in Dunfermline, Scotland, in 1835, Andrew Carnegie immigrated with his family to the United States and settled in 1848 in Pittsburgh. (His father was a skilled weaver who had fallen on hard times and decided to start anew in America.) In Pittsburgh young Carnegie worked in various mills and factories then secured a position as a telegraph operator for the Pennsylvania Railroad. He soon entered the hierarchy of railroad management and began to prosper; by the end of the Civil War he held investments in a range of businesses and had moved into the manufacture of bridges. In 1872 Carnegie entered the steel business, rising to dominate the industry by the end of the nineteenth century. In 1901 he retired, selling the Carnegie Steel Company (which produced a quarter of the nation’s total steel output) to banker J. P. Morgan for nearly $500 million. At the time Morgan called him “the richest man in the worid.” He devoted the rest of his life to philanthropy, giving away a substantial portion of the wealth he had amassed.

A Plan for Success. Carnegie’s steel mills grew to dominate the industry because Carnegie continuously and aggressively overhauled his production methods. He quickly adopted new technologies, becoming the first major steel producer in the United States. For example, he committed substantial capital in the Bessemer production process and employed a chemist at his blast furnaces. He was notoriously stingy in paying out dividends to his partners and filtered profits back into his company in the form of more modern equipment. As he stated in a private memorandum to himself: “Whatever I engage in I must push inordinantly.”

Relationship with Workers. Carnegie also pushed his workers hard, operating his plants so as to maximize centrai control over production. Materials in the Carnegie mills moved smoothly along carefully designed paths, making production as efficient as possible: coal, for example, was carried on elevated trains. Carnegie also pioneered new accounting methods in his shops. Moreover, he was ruthless about wresting as much control as he could from skilled steelworkers who dominated traditional milling. He broke an attempt to unionize at his Homestead mill in 1892 with a lockout and a protracted, violent strike.

Company Structure. Carnegie’s steel company demonstrated several important trends in American business. In financial and managerial terms, Carnegie Steel represented a transition from privately held businesses to corporations with ownership separate from management. The company was set up as a series of partnerships, with Carnegie himself holding a majority interest. Like modern corporate owners, Carnegie delegated the day-to-day management of his mills to reliable individuals, such as Henry C. Frick. The scope of Carnegie’s operations, meanwhile, typified another I business trend: as the business grew, Carnegie expanded his operations vertically. He purchased or leased iron ore fields in the Lake Superior regions and set up strategie business alliances with major coal mines in Connellsville, Pennsylvania, in order to ensure steady supplies of raw material. In addition he acquired control of railroads and steamship lines to transport his produets. These moves were driven in part by his expansive business outlook, but they also stemmed from the way in which the mills themselves were set up: as processes became more automated and streamlined, the scale of production correspondingly increased. Carnegie carne to depend on keeping his mills operating at high capacities in order to make profits and fuel further expansion.

Legacy. In the final analysis Carnegie’s most enduring legacy was perhaps less tangible than the steel his mills produced or the fortune he earned and then distributed. It may have been his social philosophy, summed up in his essay “Wealth,” originally appearing in the North American Review in 1889, a classic statement of industriai noblesse oblige in which the author charged the rich with making themselves into stewards of the commonwealth: “the man of wealth,” he declared, must act as “trustee and agent for his poorer brethren, bringing to their service his superior wisdom, experience, and ability to administer, doing for them better than they would or could do for themselves.”

Sources

Andrew Carnegie, The Gospel of Wealth, and Other Timely Essays (New-York: Century, 1900);

Joseph Frazier Wall, Andrew Carnegie (New York: Oxford University Press, 1970).