The Scottish-born American industrialist and philanthropist Andrew Carnegie (1835-1919) was one of the first "captains of industry." Leader of the American steel industry from 1873 to 1901, he disposed of his great fortune by endowing educational, cultural, scientific, and technological institutions.
Andrew Carnegie typified those characteristics of business enterprise and innovation that changed the United States from an agricultural and commercial nation to the greatest industrial nation in the world in a single generation—between 1865 and 1901. The era has sometimes been called the "Age of the Robber Barons" on the assumption that because no public regulation or direction existed large fortunes were built by unprincipled men who corrupted officialdom, despoiled the country's natural resources, and exploited its farmers and laborers. Surely, there were some men who manipulated the corporate securities of the companies they controlled in the stockmarket for their own gain, but the only victims were their fellow speculators.
The entrepreneurs of the period not only built and modernized industry, but because they were technologically minded, they increased the productivity of labor in agriculture, mining, manufacturing, and railroading. As a result, the real wages of workers and the real wealth of farmers went up sharply.
In all this, Carnegie was a pacesetter. He was a stiff competitor; plowing back company earnings into new plants, equipment, and methods, he could lower prices and expand markets for steel products. In years of recession and depression he kept running his plants, undercutting competitors, and assuring employment for his workers.
These 19th-century entrepreneurs were successful in a dog-eat-dog world for several reasons. Government followed a hands-off policy: it did not regulate; it also did not tax. Government had not yet made commitments to social justice, protection of the poor, or more equitable distribution of the national product. At the same time, the customs, attitudes, and sanctions of the period—and the law writers, courts, economists, Protestant clergy, and even the trade unionists affiliated with the American Federation of Labor— accepted the unequal distribution of wealth. In fact, success in the marketplace was equated with the virtues of hard work, thrift, sobriety, and even godliness.
It was in this kind of world that Carnegie, a man of boundless imagination and great organizational skills, built his companies and made steel efficiently and cheaply. He fought competitors and also efforts at market and price controls by the mergers and oligopolies that began to appear in the 1890s. Because he was successful, he had to be bought off: this was the origin of the U.S. Steel Corporation in 1901, the greatest merger of the era; and it was the end of Carnegie's career as a steel-master. But it was not his end as a citizen, for he closely followed national and international developments, particularly the search for world peace, and expressed himself forcefully in writings and before legislative committees on questions of the day; and he helped lay plans for the organizations he set up to use his very large endowments.
Youth and Early Manhood
Carnegie was born on Nov. 25, 1835, in Dunfermline, Scotland, the son of William Carnegie, a home linen weaver, and Margaret Morrison Carnegie, daughter of a tanner and shoemaker. It was a time of ferment in Scotland as machine looms displaced skilled cottage workers like Carnegie's father, and social and political inequalities radicalized such humble craftsmen. Because they lived in a caste-ridden society, agitations for reform were unsuccessful. When he came to contrast Britain with America in his Triumphant Democracy (1886), Carnegie said, "it is not to be wondered at that, nursed amid such surroundings, I developed into a violent young Republican whose motto was 'death to privilege."'
In 1848 the family moved to the United States, settling in Allegheny City, across the river from Pittsburgh. The father obtained employment in a cotton factory, which he soon quit to return to his home handloom, peddling damask linens from door to door; Andrew, in the same mill, became a bobbin boy at $1.20 a week. The fierce desire to rise and to help take care of the family (he was soon its chief support for the father died in 1855) pushed Andrew to educate himself and to learn a craft. He became an indefatigable reader, a theatergoer who knew his Shakespeare so well he could recite whole scenes, and a lover of music with a cultivated taste.
At the age of 14 Carnegie became a messenger boy in the Pittsburgh telegraph office, and 2 years later a telegraph operator. So quickly did he improve himself that at 18 Thomas A. Scott, superintendent of the western division of the Pennsylvania Railroad, made Carnegie his secretary at $35 a month, soon raised to $50—a large enough salary to buy a house for his mother.
Carnegie stayed with the Pennsylvania Railroad until 1865, by which time he was a young man of real means. During the Civil War, when Scott was named assistant secretary of war in charge of transportation, Carnegie went to Washington to act as Scott's right-hand man and to organize the military telegraph system. But Carnegie soon was back in Pittsburgh, succeeding Scott as head of the Pennsylvania's western division. He was one of the backers of the Woodruff Sleeping Car Company, the original holder of the Pullman patents, and also bought into a successful petroleum company. He became a silent partner in a number of local small iron mills and factories; the most important was the Keystone Bridge Company, formed in 1863, of which he owned a one-fifth share.
Between 1865 and 1870 Carnegie became a self-designated capitalist. He traveled in and out of England, peddling the bonds of small United States railroads and publicly chartered bridge companies. He probably sold as much as $30 million in bonds and may have made in commissions from them, and from the iron products he also sold, $1 million.
During this time Carnegie watched the revolutionary changes taking place in the English iron industry as a result of the adoption of the Bessemer converter. Steel, he saw, was bound to replace iron for the manufacture of rails, structural shapes, pipe, wire, and the like.
In 1870 Carnegie decided that instead of being a "capitalist" with diversified interests he was going to be a steelman exclusively. Using his own capital, he erected his first blast furnace (to make pig iron) that year and the second in 1872. In 1873 he organized a Bessemer-steel rail company, a limited partnership. Depression had set in and would continue until 1879, but Carnegie persisted, using his own funds and getting local bank help. The first steel furnace at Braddock, Pa., began to roll rails in 1874. Carnegie continued building despite the depression—cutting prices, driving out competitors, shaking off faltering partners, plowing back earnings. In 1878 the company was capitalized at $1.25 million, of which Carnegie's share was 59 percent; from these policies he never deviated. He took in new partners from his own "young men" (by 1900, he had 40); he never went public, capital being obtained from undivided profits (and in periods of stress, from local banks); and he kept on growing, horizontally and vertically, making heavy steel alone. From 1880 onward, Carnegie dominated the steel industry.
In the 1880s Carnegie's two most important acquisitions were his purchase of majority stock in the H. C. Frick Company with vast coal lands and over 1000 coking ovens in Connellsville, Pa., and the Homestead mills outside of Pittsburgh. Frick became his partner and, in 1889, chairman of the Carnegie Company. Carnegie had moved to New York City in 1867 to be close to the marketing centers for steel products; Frick stayed in Pittsburgh as the general manager. Frick and Carnegie made an extraordinary team. Carnegie, behind the scenes, planned the expansion moves, installation of cost and chemical controls, and modernization of plants. Frick was the working director who rationalized the mass-production programs necessary to keep prices down. It was Frick who saw that vertical integration was imperative and achieved the company's control (by purchase and lease) of iron ore mines in the Lake Superior area, linking Carnegie ore ships and railroads with the Pittsburgh complex of furnaces and mills.
Carnegie was wise enough to use his leisure for traveling, writing, and expanding his tastes. His first book, Round the World (1881), was a modest recital of widening horizons. His second, An American Four-in-Hand in Britain (1883), related a coaching trip through England and Scotland with his mother. The third, Triumphant Democracy (1886), surveyed the social and economic progress of the United States from 1830 to 1880, but woven in was a secondary theme: the contrast between American egalitarianism and the unequal, class societies of Britain and the other European countries. To Carnegie, easy access to education was the key to American democracy's political stability and industrial accomplishments. He said, "Of all its boasts, of all its triumphs, this is at once its proudest and its best."
In 1889 Carnegie published an important article, "Wealth" (republished in England as "The Gospel of Wealth"), in which he held that it was the duty of rich men to get rid of their fortunes, administering them personally for the welfare of the community. He did not gloss over the inequality of wealth, but he saw wealth as a stewardship to be employed productively, for modern industrialization and mass production had wide social benefits. As a result, he said: "The poor enjoy what the rich could not before afford. What were the luxuries have become the necessities of life."
Carnegie remained a bachelor until his mother died in 1886; a year later he married Louise Whitfield (their only child, Margaret, was born in 1897). The couple began to spend 6 months each year in Scotland, but Carnegie kept in close touch with developments and problems in the ramifying Carnegie Company, no minute detail of management escaping his attention.
Trials of the 1890s
The 1890s presented three serious challenges: two were surmounted, and one left a deep hurt and stained Carnegie's reputation. The bitter nationwide depression of 1893-1896 resulted in plant shutdowns, mass unemployment, and collapsing markets. But the Carnegie Company, by following Carnegie's famous injunction "Take orders and run full," pushed prices down, retained its workers, and made profits. Carnegie was hostile to pools, that is, collusive arrangements among steel companies to limit production and steady prices. He withdrew from them and undersold his competitors.
Carnegie's absence from the United States, together with his silence during the Homestead strike of 1892, was a tragic error. The Carnegie Company had acquired Homestead in 1883, invested $4 million in new plants and equipment, increased production 60 percent, and automated many of its operations, thus sharply stepping up productivity per man-hour but cutting down the number of skilled manual workers needed. These workers belonged to a craft union, the Amalgamated Association of Iron and Steel Workers, a member of the American Federation of Labor. From 1875 on the Carnegie Company had been negotiating wage and work agreements on a 3-year basis with this union. Thus, the Carnegie Company was not antiunion, and in two articles that Carnegie wrote in 1886 he declared that workers had a right to negotiate with management through their unions. He recognized the right to strike, as long as the action was peaceably conducted; management on its part was to shut down its plants and make no effort to use strikebreakers or protect them with private guards. Strikes, he said, should not degenerate into warfare but were to be regarded as trials of strength, with peaceful negotiation terminating the contest.
To show his good faith, Carnegie suggested a so-called sliding scale for wage determination in his own shops. There would be a guaranteed wage minimum, but rates would go up or down as market prices for steel products rose or fell. The union accepted such a contract for Homestead in 1889, but it was terminating on July, 1, 1892, and the union sought to renegotiate with the sliding scale. Frick had submitted a counterproposal calling for a lowering of the minimums from which wage rates were to be scaled, because modernization had resulted (in modern terminology) in more capital inputs and less labor inputs. Labor's contribution to the increased productivity had declined, as had the number of skilled manual workers. The two sides met head on; neither would yield, and on June 30, 1892, the Homestead mill shut down as a result of both a lockout and a strike.
Carnegie had departed for Scotland in the spring, having instructed Frick that in the event of a strike there was to be a complete shutdown and no strikebreakers. Apparently when Frick refused to meet with union spokesmen a second time, he meant to smash the union. Carnegie's silence, despite his previous statements, meant approval. In any event, Frick decided to open the company properties by force, and he hired the notorious strikebreaking Pinkerton Agency. It is beside the point whether Frick's intention was simply to protect the Carnegie properties (as he contended) or to recapture the plants and use strikebreakers (as the workers believed).
On July 6 two barges carrying 300 Pinkertons moved up the Monongahela River and were fired on from the hills and the shore. The Pinkertons also fired, but they were unable to land and surrendered, asking for safe conduct back to Pittsburgh. Five strikers were killed, three Pinkertons fatally wounded, and scores on both sides injured. The strikers had won the battle of Homestead; the company property was still virtually in their possession. Five days later the governor of Pennsylvania sent in 8,000 militia to restore order and open the plant.
Carnegie, from abroad, said nothing, except, in a letter dated July 17: "We must keep quiet and do all we can to support Frick and those at Seat of War…. We shall win, of course, but have to shut down for months." On July 27 the Homestead works reopened under military protection; new workers were hired, and old ones were permitted to return on an individual basis. The militia was withdrawn in September, and 2 months later the union called off the strike; thenceforth the Carnegie Company (and U.S. Steel which succeeded it) remained nonunion until the middle 1930s.
Carnegie never got over the consequences of Frick's actions. Years later he wrote: "I was the controlling owner. That was sufficient to make my name a by-word for years." But, as controlling owner, he had neither intervened nor repudiated Frick.
In the 1890s Carnegie, for the first time, began to meet with stiff competition from giant corporations which had been put together, recapitalized, and made public by the investment houses of J. P. Morgan and Company in New York and the Moore Brothers in Chicago. Because they were overcapitalized, these companies were interested in stability in an industry with excess capacity and fluctuating market conditions. They wanted controlled prices, prorations of the market, and tying agreements rather than Carnegie's ruthless competition with all comers.
The new combines made heavy steel and light steel; and because the second group was tied into the first by "communities of interest," they threatened to cut down their purchases from Carnegie unless he was willing to play their game.
Carnegie had thought of selling out and retiring in 1889: his annual income was $2 million, and he wanted to cultivate his hobbies and develop the philanthropic program that was taking shape in his mind. But the threats that now came from the West as well as the East were too much for his fighting spirit and his sense of outrage, and he took the war into the enemy camp. He would not join their pools and cartels; moreover, he would invade their territories by making tubes, wire and nails, and hoop and cotton ties and by expanding his sales activities into the West. He ordered a new tube plant built on Lake Erie at Conneaut, which at the same time would be a great transportation center with harbors for boats to run to Chicago and a railroad to connect with Pittsburgh.
Thus orignated the U.S. Steel Corporation in 1901, through the work of J.P. Morgan. The point was to buy Carnegie off at his own price—as he was the only disturbing factor that held back "orderly markets and stable prices." The Carnegie Company properties were purchased for almost $500 million (out of the total capitalization of the merger of $1.4 billion); Carnegie's personal share was $225 million, which he insisted upon having in the corporation's first-mortgage gold bonds. At last Carnegie was free to pursue his outside interests.
Development of Taste
Carnegie had started cultivating his interests in books, music, the fine arts, learning, and technical education early in life. He began to set up trust funds "for the improvement of mankind." The first were for "free public libraries"; some 3,000 were scattered over the English-speaking world. In 1895 the magnificent Carnegie Institute of Pittsburgh was opened, housing an art gallery (at his request, one of the first to buy contemporary paintings), a natural history museum (which also financed archeological expeditions), and a music hall. Originally under the institute (but separated in 1912) was a group of technical schools which blossomed into the Carnegie Institute of Technology, today the basis of the Carnegie Mellon University. The Carnegie Institution of Washington was set up to encourage pure research in the natural and physical sciences. He built Carnegie Hall in New York City. The Foundation for the Advancement of Teaching was created to provide pensions for university professors. Carnegie established the Endowment for International Peace to seek the abolition of war.
In all, Carnegie's benefactions totaled $350 million, $288 million going to the United States and $62 million to Britain and the British Empire. The continuation of his broad interests was put under the general charge of the Carnegie Corporation, with an endowment of $125 million. Carnegie died on Aug. 11, 1919, at his summer home near Lenox, Mass.
The Autobiography of Andrew Carnegie (1920) is fascinating. Burton J. Hendrick, The Life of Andrew Carnegie (2 vols., 1932), is an objective and sound account of Carnegie as man and steelmaster. Joseph F. Wall, Andrew Carnegie (1970), is the most recent life and very full; it is also critical of Carnegie as a businessman. Louis M. Hacker, The World of Andrew Carnegie, 1865-1901 (1968), describes the times in which Carnegie flourished. The best discussion of the steel industry is Peter Temin, Iron and Steel in Nineteenth-Century America: An Economic Inquiry (1964). □
"Andrew Carnegie." Encyclopedia of World Biography. 2004. Encyclopedia.com. (August 25, 2016). http://www.encyclopedia.com/doc/1G2-3404701139.html
"Andrew Carnegie." Encyclopedia of World Biography. 2004. Retrieved August 25, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3404701139.html
Born: November 25, 1835
Died: August 11, 1919
Industrialist and philanthropist
In his lifetime, Andrew Carnegie built a vast fortune by making steel. His company helped lead the United States into a new industrial age, and became the foundation for U.S. Steel in 1901. But Carnegie's business skill, as great as it was, did not overshadow his generosity. Before his death, he gave away hundreds of millions of dollars. Most of this money went to build libraries and support education. Carnegie, largely self-educated, valued the power of learning. He saw firsthand that education and ambition could help the poor build a better life.
"[Rich men] have it in their power during their lives to busy themselves in organizing [charities] from which the masses of their fellows will derive lasting advantage, and thus dignify their own lives."
An Immigrant's Tale
Carnegie was born on November 25, 1835, in Dunfermline, Scotland. He was the oldest child of William and Margaret Carnegie. As a boy, young Carnegie spent five years in school learning the basics of reading and writing. At home, his mother taught him the value of hard work, and she made sacrifices to ensure her family always had enough to eat. In his autobiography, Carnegie wrote, "We were not reduced to anything like poverty compared to our neighbors." Still after Mr. Carnegie lost his job as a weaver, his wife decided Carnegie and his younger brother Tom would have a better life in the United States. In 1848, the Carnegies arrived in Allegheny, Pennsylvania, just outside of Pittsburgh.
Carnegie took a job in the same cotton factory where his father worked, earning $1.20 per week. In 1849, he started delivering messages for a telegraph company and worked his way up to operating the telegraph. Carnegie also found time to continue his studies, borrowing books from a local businessman. He read Shakespeare and explored American history, developing a deep faith in democracy.
In 1853, Carnegie began working for the Pennsylvania Railroad. Within several years, he went from telegraph operator to personal assistant to Thomas Scott, an executive at the company. During the next twelve years, Carnegie studied the railroad business and eventually moved up to take Scott's job. He also made a wise investment, buying part of a company that made the first railroad sleeping cars. His share of the Woodruff Sleeping Car Company, bought for $217.50 in 1859, soon produced almost $5,000 per year in income. He also invested in several small iron mills and oil companies. By 1863, he was making $42,000 per year—a small fortune at the time.
Andrew Carnegie's interest in democracy and social reform had strong roots in his family. His mother's father, Thomas Morrison, was a leading political radical in Scotland, and Carnegie's father had belonged to the Chartist movement, which called for greater democracy in Great Britain.
As the Civil War (1861-65) was ending, Carnegie started his own company, the Keystone Bridge Company. His experience with both iron and railroads convinced him that iron bridges were better than wooden ones for railways. He had met his partners in the venture while working for the Pennsylvania Railroad. Throughout his career, Carnegie used his personal contacts and his charm to win allies and make deals. Through Keystone, Carnegie became more involved in the manufacturing of iron. He also started his own telegraph company in 1867. Its later merger with Atlantic Telegraph Company gave Carnegie a healthy profit.
During these years, Carnegie sometimes traveled to Europe to sell bonds, which were used to raise money to build railroads. For his efforts, Carnegie earned as much as $1 million. Carnegie had shown an ability to make money in almost every business he entered, and he was always eager to expand into new areas. Soon he was ready to start another new business: manufacturing steel.
Metalsmiths had made steel for several thousands of years. Adding carbon to iron produced this metal, which was stronger than iron and kept a sharp edge. But the method for making large amounts of steel at reasonable prices was not perfected until the 1850s and 1860s in Europe. Carnegie learned about modern steelmaking methods and began producing small amounts of steel in the late 1860s. In 1872, he and several partners launched a new steelmaking business, Carnegie, McCandless & Company. The name was later changed to Carnegie Steel. The company's first plant was built just outside of Pittsburgh. Its first order, from the Pennsylvania Railroad, was for two thousand steel rails.
The Steel King
Slowly, Carnegie and his workers began producing more and more steel at a lower price. Carnegie adapted new technologies as soon as they emerged, and his plant provided jobs to thousands of immigrants arriving from Europe. By 1878, Carnegie Steel was the largest steelmaker in the United States. Carnegie refused to sell stock in his company, giving him total control and the ability to pour his profits back into the business.
As Carnegie Steel grew it bought iron fields along Lake Superior, smaller steelworks, and a large share of the H. C. Frick Company, which produced coke. Henry Clay Frick (1849-1919), one of the leading businessmen of the era, played an active role in Carnegie's company. Frick handled daily operations while Carnegie looked for ways to lower costs and keep expanding.
Carnegie's success often came at the expense of his employees, as they worked long hours for low wages. Drawing on his own experience, Camegie believed hard work could overcome anything, including poverty. Being poor—or at least starting that way—was almost an advantage, Carnegie thought. In an article he wrote in 1891, Carnegie said, "the greatest and best of our race have necessarily been nurtured in the bracing school of poverty—the only school capable of producing the supremely great, the genius."
As his fortunes grew, Carnegie often wrote articles expressing his views. He was proud of his learning, which had been mostly self-acquired, and he enjoyed spending time with educated people. His most famous article, "Wealth," appeared in 1889. In it, Carnegie argued that the wealthy had a duty to give away their money while they were alive. This message, later called the "Gospel of Wealth," was controversial. Some people said he ignored the larger social problems that created poverty. Ministers complained because Carnegie put churches low on his list of organizations that deserved charity. The "Gospel" also took an arrogant attitude toward the poor, asserting that the wealthy had "superior wisdom, experience, and ability to administer." Still, as his later actions showed, Carnegie was sincere in his belief that the rich had a duty to help the poor.
Out of Steel, Into Charity
By 1899, Carnegie Steel was still America's leading steel company. Its product had been used to build railroads and skyscrapers, and Carnegie had helped make the United States the world leader in steel production. By this time, he was considering getting out of business to concentrate on philanthropy—his charitable interests. The next year, however, he seemed committed to staying in business and challenging the new steel company formed by banker J. P. Morgan (1837-1913). In the end, though, Carnegie decided that at sixty-five years old, he was ready to retire. He sold his company to Morgan for $480 million. Of that, $250 million went to Carnegie. According to Carnegie biographer Joseph Frazier Wall, when the deal was done Morgan told Carnegie, "I want to congratulate you on being the richest man in the world!"
With his new wealth, Carnegie increased his philanthropic activities. Earlier, he had given money to start several public libraries in the United States and Great Britain, and in 1900 he founded the Carnegie Institute of Technology (now the Carnegie-Mellon Institute) in Pittsburgh. After 1901, his donations increased dramatically. His largest single gift—$125 million—founded the Carnegie Corporation, a nonprofit organization dedicated to improving education. Another sizable donation went to the Carnegie Endowment for International Peace. Carnegie also continued to fund new public libraries.
By the time Carnegie died in 1919, he had given away $350 million, proving he lived by the "Gospel of Wealth" that he preached. Carnegie's generosity and his role in creating the modern steel industry made him one of the most important Americans of the nineteenth and early twentieth centuries.
For More Information
Tarbell, Ida M. The Life of Elbert H. Gray: A Story of Steel. New York: D. Appleton and Company, 1925.
Wall, Joseph Frazier. Andrew Carnegie. New York: Oxford University Press,
Baker, Stephen. "A Real Steelman for USX." Business Week (May 15,1995).
Biesada, Alexandra. "Double Reverse." Financial World (January 22, 1991): p. 36.
Chernow, Ron. "The Deal of the Century." American Heritage (July-August 1998): p. 12.
Davis, Christopher. "Split Arms U.S. Steel for Industry Battle." Pittsburgh Business Times (October 26, 2001): p. 14.
-"USX Steel, Oil Units Might Not Remain Single for Long." Pittsburgh Business Times (April 27, 2001): p. 1.
Merwin, John. "Not in the Next 30 Days." Forbes (July 13, 1987): p. 72.
Norman, James R. "U.S. Steel (& Oil)." Forbes (September 16,1991): p. 166.
Schroeder, Michael, and Lisa Driscoll. "How Charles Corry Became a Dragon Slayer at USX." Business Week (February 18, 1991).
"The Strike Everyone Lost." Fortune (February 16, 1987): p. 10.
Thompson, Donald B. "Better 'X' Than 'Steel.'" Industry Week (July 21, 1986): p. 23.
Marathon Oil Corporation. [On-line] http://www.marathon.com (accessed on August 16, 2002).
United States Steel Corporation. [On-line] http://www.ussteel.com (accessed on August 16, 2002).
"Carnegie, Andrew." Leading American Businesses. 2003. Encyclopedia.com. (August 25, 2016). http://www.encyclopedia.com/doc/1G2-3498000105.html
"Carnegie, Andrew." Leading American Businesses. 2003. Retrieved August 25, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3498000105.html
The Scottish-born American industrialist and philanthropist Andrew Carnegie was the leader of the American steel industry from 1873 to 1901. He donated large sums of his fortune to educational, cultural, and scientific institutions.
Youth and early manhood
Andrew Carnegie was born on November 25, 1835, in Dunfermline, Scotland, the son of William Carnegie, a weaver, and Margaret Morrison Carnegie. The invention of weaving machines replaced the work Carnegie's father did, and eventually the family was forced into poverty. In 1848 the family left Scotland and settled in Allegheny City, Pennsylvania. Carnegie's father found a job in a cotton factory, but he soon quit to return to his home handloom, making linens and trying to sell them door to door. Carnegie also worked in the cotton factory, but after his father died in 1855, his strong desire to help take care of the family pushed him to educate himself. He became an avid reader, a theatergoer, and a lover of music.
Carnegie became a messenger boy for the Pittsburgh telegraph office. He later became a telegraph operator. Thomas A. Scott, superintendent of the western division of the Pennsylvania Railroad, made the eighteen-year-old Carnegie his secretary. Carnegie was soon earning enough salary to buy a house for his mother. During the Civil War (1861–65), when Scott was named assistant secretary of war in charge of transportation, Carnegie helped organize the military telegraph system. But he soon returned to Pittsburgh to take Scott's old job with the railroad.
A future in steel
Between 1865 and 1870 Carnegie made money through investments in several small iron mills and factories. He also traveled throughout England, selling the bonds of small United States railroads and bridge companies. Carnegie began to see that steel was eventually going to replace iron for the manufacture of rails, structural shapes, pipe, and wire. In 1873 he organized a steel rail company. The first steel furnace at Braddock, Pennsylvania, began to roll rails in 1874. Carnegie continued building by cutting prices, driving out competitors, shaking off weak partners, and putting earnings back into the company. He never went public (sold shares of his company in order to raise money). Instead he obtained capital (money) from profits—and, when necessary, from local banks—and he kept on growing, making heavy steel alone. By 1878 the company was valued at $1.25 million.
In the 1880s Carnegie's purchases included a majority stake in the H. C. Frick Company, which had vast coal lands and over one thousand ovens in Connellsville, Pennsylvania, and the Homestead mills outside of Pittsburgh, Pennsylvania. Frick became his partner and eventually chairman of the Carnegie Company. Carnegie had moved to New York City in 1867 to be close to the marketing centers for steel products; Frick stayed in Pittsburgh as the general manager. They made a good team. Behind the scenes, Carnegie planned new projects, cost controls, and the improvement of plants; Frick was the working director who watched over the mass-production programs that helped keep prices down.
Carnegie spent his leisure time traveling. He also wrote several books, including Triumphant Democracy (1886), which pointed out the advantages of American life over the unequal societies of Britain and other European countries. To Carnegie access to education was the key to America's political stability and industrial accomplishments. In 1889 he published an article, "Wealth," stating his belief that rich men had a duty to use their money to improve the welfare of the community. Carnegie remained a bachelor until his mother died in 1886. A year later he married Louise Whitfield. They had one child together. The couple began to spend six months each year in Scotland, though Carnegie kept an eye on business developments and problems.
Trials of the 1890s
Carnegie's absence from the United States was a factor in the Homestead mill strike of 1892. After acquiring Homestead, Carnegie had invested in new plants and equipment, increased production, and automated many of the mill's operations, cutting down the number of workers that were needed. These workers belonged to a union, the Amalgamated Association of Iron and Steel Workers, with which the Carnegie Company had established wage and work agreements on a three-year basis. Carnegie believed that workers had a right to bargain with management through their unions. He also recognized the right to strike, as long as the action was conducted peacefully. He viewed strikes as trials of strength, with peaceful discussion resolving the conflict.
In contract talks during 1892, Frick wanted to lower the minimum wage because of the need for fewer workers. The union would not accept this and organized a strike. Carnegie was in Scotland, but he had instructed Frick that if a strike occurred the plant was to be shut down. Frick decided to smash the union by hiring people from the Pinkerton Agency as replacement workers and by trying to open the company properties by force. Two barges carrying three hundred Pinkertons moved up the Monongahela River and were shot at from the shore. The Pinkertons fired back, but they eventually surrendered. Five strikers and three Pinkertons were killed, and there were many injuries. The strikers had won; the company property remained closed. Five days later the governor of Pennsylvania sent in soldiers to restore order and open the plant. The soldiers were eventually withdrawn, and two months later the union called off the strike. Carnegie was criticized for his lack of action.
In the 1890s Carnegie also began to meet with tougher competition from newer, bigger companies who were interested in controlled prices and sharing the market. Companies that he had sold to for years threatened to cut down their purchases unless he agreed to cooperate. These threats made him decide to fight back. He refused to enter into any agreements with other companies. Moreover, he decided to invade their territories by making similar products and by expanding his sales activities into the West. Eventually, though, he decided to sell his company to the newly formed U.S. Steel Corporation in 1901 for almost $500 million. Carnegie's personal share was $225 million.
In retirement, Carnegie began to set up trust funds "for the improvement of mankind." He built some three thousand public libraries all over the English-speaking world. In 1895 the Carnegie Institute of Pittsburgh was opened, housing an art gallery, a natural history museum, and a music hall. He also built a group of technical schools that make up the present-day Carnegie Mellon University. The Carnegie Institution of Washington was set up to encourage research in the natural and physical sciences. Carnegie Hall was built in New York City. The Foundation for the Advancement of Teaching was created to provide pensions for university professors. Carnegie also established the Endowment for International Peace to seek an end to war.
In all, Carnegie's donations totaled $350 million. The continuation of his broad interests was put under the general charge of the Carnegie Corporation, with a donation of $125 million. Carnegie died on August 11, 1919, at his summer home near Lenox, Massachusetts.
For More Information
Carnegie, Andrew. The Autobiography of Andrew Carnegie. Boston: Houghton Mifflin Company, 1920.
Hacker, Louis M. The World of Andrew Carnegie, 1865–1901. Philadelphia: Lippincott, 1968.
Livesay, Harold C. Andrew Carnegie and the Rise of Big Business. Boston: Little, Brown, 1975.
Wall, Joseph F. Andrew Carnegie. New York: Oxford University Press, 1970.
"Carnegie, Andrew." UXL Encyclopedia of World Biography. 2003. Encyclopedia.com. (August 25, 2016). http://www.encyclopedia.com/doc/1G2-3437500168.html
"Carnegie, Andrew." UXL Encyclopedia of World Biography. 2003. Retrieved August 25, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3437500168.html
Andrew Carnegie (1835–1919) was a Scottish-born steel magnate in the United States known for his extraordinary philanthropy as well as his great wealth. He was born in Dunfermline, Scotland, the son of a handloom weaver. When a power loom was introduced in Dunfermline, the family became impoverished and decided to emigrate to the United States. Arriving in 1848, they settled in Allegheny, Pennsylvania. At age 13, Carnegie went to work as a bobbin boy in a cotton mill. He educated himself by reading voraciously and attending night school where he learned double-entry bookkeeping.
The young Carnegie worked in the cotton mill for barely a year before he landed a job as a telegraph messenger in 1849. He advanced quickly. By 1851 he was a telegraph operator. Only two years later he became secretary and personal telegrapher to Tom Scott, the superintendent of the Pennsylvania Railroad's Pittsburgh division.
Carnegie spent twelve years working for the railroad. When Scott was promoted to vice-president of the company in 1859, he chose his young secretary to succeed him as superintendent. During the American Civil War (1861–1865) Carnegie assisted in the management of railroad and telegraph services for the Union.
As railroad superintendent Carnegie invested in the Woodruff Sleeping Car Company and introduced the first successful sleeping car on American railroads. While still working for Scott, he began to invest in stocks. Carnegie made shrewd investments in industrial concerns. These included the Keystone Bridge Company, the Superior Rail Mill and Blast Furnaces, the Union Iron Mills, and the Pittsburgh Locomotive Works. In 1865 Carnegie left the Pennsylvania Railroad to manage the Keystone Bridge Company (where he had become the dominant shareholder), and a principal Keystone supplier, the Union Iron Mills.
In the early 1870s Carnegie decided to concentrate his efforts on steel. He founded the J. Edgar Thomson Steel Works, named after the president of the Pennsylvania Railroad, which eventually became the Carnegie Steel Company. The company built the first steel plants in the United States that used the Bessemer steelmaking process, a revolutionary industrial development in which steel was made from pig iron by using a blast of air forced through molten metal to burn out carbon and other impurities.
Carnegie also pioneered other major technological innovations that enabled his company to quickly become a model of productive efficiency. He kept costs down with detailed cost-and-production accounting procedures. By the 1890s, Carnegie's mills had introduced the basic open-hearth furnace process to American steel-making.
At the same time Carnegie and his unusually capable group of managers purchased vast acres of coal fields and iron-ore deposits that furnished the raw materials needed for steel-making. They also purchased ships and railroads needed to transport these supplies to the mills. By the end of the nineteenth century, the Carnegie Steel Company controlled all the elements it used in the steel production process and dominated the American steel industry.
Carnegie was less adept at labor-management relations than he was at building an industry. The Homestead Strike of 1892 resulted from his company's efforts to lower the minimum wage and eliminate the union as the exclusive bargaining agent in Carnegie's Homestead Works. The confrontation between labor and management turned violent when local management at the Homestead plant called in Pinkerton guards in an attempt to break the union.
By the turn of the century company profits reached $40 million; Carnegie's own share was $25 million. In 1901, at the age of 65, Carnegie sold his empire to the newly formed United States Steel Corporation, headed by financier J.P. Morgan. Carnegie's personal share of the proceeds from the sale came to about $230 million. After he sold the company Carnegie devoted his life to philanthropic activities and writing. He authored 8 books and 70 magazine articles.
Although he was an enthusiastic proponent of the capitalist ethic, Carnegie was concerned about some of the social ills that came about as byproducts of a market economy. A two part article entitled "Wealth" appeared in the 1889 North American Review. (It was later published in book form in 1900 as The Gospel of Wealth.) In this piece Carnegie addressed the problem of the "proper administration of wealth" and outlined his vision of a socially responsible capitalist. He argued that it was the duty of the rich to administer their surplus wealth for the common benefit. "The man who dies thus rich dies disgraced," he wrote.
Carnegie backed up his words with deeds. He eventually funded 2,509 public libraries throughout the English-speaking world, built the famous Carnegie Hall in New York, and founded the Carnegie Institute of Technology, which later became Carnegie-Mellon University. In 1905 he established the Carnegie Foundation for the Advancement of Teaching and in 1910 the Carnegie Endowment for International Peace. In 1911 he founded the Carnegie Corporation of New York, which continued his philanthropic legacy after his death. Throughout his lifetime Carnegie distributed some $350 million towards the public good.
See also: Bessemer Process, Homestead Strike, J.P. Morgan, Pinkerton National Detective Agency, Robber Barons, United States Steel Company
Bridge, James Howard. The Inside History of the Carnegie Steel Company: A Romance of Millions. Pittsburgh: University of Pittsburgh Press, 1992.
Chernow, Ron. "Blessed Barons." Time, December 7, 1998.
Livesay, Harold. Andrew Carnegie and the Rise of Big Business. New York: Harper Collins, 1975.
Wall, Joseph Frazier. Andrew Carnegie. New York: Oxford University Press, 1970.
Wall, Joseph Frazier, ed. The Andrew Carnegie Reader. Pittsburgh: University of Pittsburgh Press, 1992.
the man who dies thus rich dies disgraced.
"Carnegie, Andrew." Gale Encyclopedia of U.S. Economic History. 1999. Encyclopedia.com. (August 25, 2016). http://www.encyclopedia.com/doc/1G2-3406400138.html
"Carnegie, Andrew." Gale Encyclopedia of U.S. Economic History. 1999. Retrieved August 25, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3406400138.html
Carnegie, Andrew (1835-1919)
Andrew Carnegie (1835-1919)
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.”
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).
"Carnegie, Andrew (1835-1919)." American Eras. 1997. Encyclopedia.com. (August 25, 2016). http://www.encyclopedia.com/doc/1G2-2536601574.html
"Carnegie, Andrew (1835-1919)." American Eras. 1997. Retrieved August 25, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-2536601574.html
Andrew Carnegie (kärnĕg´ē, kär´nəgē), 1835–1919, American industrialist and philanthropist, b. Dunfermline, Scotland. His father, a weaver, found it increasingly difficult to get work in Scottish factories and in 1848 brought his family to Allegheny (now Pittsburgh), Pa. Andrew first worked in a cotton mill as a bobbin boy, then advanced himself as a telegrapher, and became (1859) a superintendent for the Pennsylvania RR. He resigned (1865) his railroad position to give personal attention to the investments he had made (1864) in iron manufactures.
By 1873, Carnegie had recognized America's need for steel and, concentrating on steel production, he began his acquisition of firms, which were later consolidated into the Carnegie Steel Company. His success was due in part to efficient business methods, to his able lieutenants, and to close alliances with railroads. Another factor was his partnership with Henry C. Frick. Carnegie, concentrating on production rather than stock-market manipulations, further expanded his plants and consolidated his hold in the depression of 1893–97. By 1900, the Carnegie Steel Company was producing one quarter of all the steel in the United States and controlled iron mines, coke ovens, ore ships, and railroads. It was in these circumstances that the U.S. Steel Corp. was formed to buy Carnegie out. He had long been willing to sell—at his own price—and in 1901 he transferred possession for $250 million in bonds and retired from business.
Carnegie's essay "The Gospel of Wealth" (1889) set forth his idea that rich men are "trustees" of their wealth and should administer it for the good of the public. His benefactions (totaling about $350 million) included Carnegie Hall (1892) in New York City, the Carnegie Institution of Washington (1902), the Carnegie Hero Fund Commission (1904), the Carnegie Foundation for the Advancement of Teaching (1905), the Carnegie Endowment for International Peace (1910), and over 2,800 libraries. After 1887, Carnegie lived a large part of each year in Scotland on his great estate on Dornoch Firth.
See his autobiography (1920, repr. 1963); biographies by B. J. Hendrick (2 vol., 1932, repr. 1989), A. F. Harlow (1953), J. F. Wall (1970), and D. Nasaw (2006); study on Carnegie libraries by A. A. Van Slyck (1996).
"Carnegie, Andrew." The Columbia Encyclopedia, 6th ed.. 2016. Encyclopedia.com. (August 25, 2016). http://www.encyclopedia.com/doc/1E1-CarnegieA.html
"Carnegie, Andrew." The Columbia Encyclopedia, 6th ed.. 2016. Retrieved August 25, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1E1-CarnegieA.html
Although opposed to militarism, Carnegie justified his providing armor plate for the naval expansion program of the 1890s as defensive, not offensive, in purpose. He supported the Spanish‐American War for Cuban independence, but became a leader in opposing the acquisition of the Philippines, even offering to pay Spain a higher sum than that proposed by the United States in order to give the islands their independence.
Carnegie sold his steel empire in 1901 for $400 million. He funded a variety of philanthropic enterprises, but after 1904 largely concentrated upon securing world peace through the establishment of foundations to promote this goal: the Carnegie Hero Fund; the Carnegie Endowment for International Peace; and the Church Peace Union. He also funded the building of three “Temples of Peace”: the International Court of Justice at the Hague; the Pan American Union Building in Washington, D.C.; and the Central American Court of Justice in Costa Rica. In the naive belief that peace could be purchased, he authorized the trustees of his foundations to eradicate other social ills after world peace had been secured. Not even World War I could crush his hopes. Carnegie died believing that Woodrow Wilson's League of Nations and his money would soon render war as morally unacceptable as cannibalism.
[See also Peace and Antiwar Movements.]
Simon Goodenough , The Greatest Good Fortune: Andrew Carnegie's Gift for Today, 1985.
Joseph Frazier Wall , Andrew Carnegie, 2nd ed. 1989.
Joseph F. Wall
John Whiteclay Chambers II. "Carnegie, Andrew." The Oxford Companion to American Military History. 2000. Encyclopedia.com. (August 25, 2016). http://www.encyclopedia.com/doc/1O126-CarnegieAndrew.html
John Whiteclay Chambers II. "Carnegie, Andrew." The Oxford Companion to American Military History. 2000. Retrieved August 25, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1O126-CarnegieAndrew.html
J. A. Cannon
JOHN CANNON. "Carnegie, Andrew." The Oxford Companion to British History. 2002. Encyclopedia.com. (August 25, 2016). http://www.encyclopedia.com/doc/1O110-CarnegieAndrew.html
JOHN CANNON. "Carnegie, Andrew." The Oxford Companion to British History. 2002. Retrieved August 25, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1O110-CarnegieAndrew.html
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"Carnegie, Andrew." World Encyclopedia. 2005. Retrieved August 25, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1O142-CarnegieAndrew.html