Andrew Carnegie

Born November 25, 1835

Dunfermline, Scotland

Died August 11, 1919

Lenox, Massachusetts

Scottish-born American industrialist
and philanthropist

"I would as soon leave my son a curse as the almighty dollar."

Andrew Carnegie's name is synonymous with the steel industry. Starting from poverty, he built an enormous fortune by utilizing a new process for making steel and creating the largest steel-manufacturing company in the United States at precisely the time the world was turning from iron to steel to build railroads, skyscrapers, machine tools, and automobiles.

Carnegie was the son of a poor Scottish weaver. After immigrating to the United States with his family, he began a swift, steady rise to overwhelming business success, living out the ultimate rags-to-riches story. Carnegie held varied and diverse jobs in his career: he was a textile factory worker, a telegraph messenger boy, a telegraph operator, a railroad supervisor and then railroad owner, and finally an owner of steel factories, with each success building upon the previous one. He brought innovation to each and every business enterprise he touched and amassed one of the largest fortunes of the late nineteenth century.

From humble origins

When Andrew Carnegie was born in 1835, his family was just a few years away from being affected by the onset of the Industrial Revolution, a period marked by the widespread replacement of manual labor by machines that began in Great Britain in the eighteenth century, although it is doubtful that they realized it at the time. His father, William, was a weaver, producing cloth on his own loom and employing three assistants in a business operated out of the family home (a so-called cottage industry). The income allowed for a decent living.

When Andrew was just eight years old, a steam-powered textile mill opened in the Carnegie's hometown of Dunfermline, Scotland, and the family's cozy existence was wiped away. The mill could produce much more cloth many times faster than a hand weaver possibly could, and the mill could sell it more cheaply. The Carnegie's income began to decline, and they grew to accept the fact that their way of life could no longer be sustained. Their solution, the same decision reached by so many others at that time, was to move to the United States.

The Carnegies settled in Pittsburgh, Pennsylvania, where they had relatives. The year was 1848, and Pittsburgh was a bustling, growing city of more than forty-thousand people, offering plenty of opportunities. Andrew's father believed that he could make a living the way he used to, and for a short while he wove tablecloths on a wooden loom and tried to sell them. When he sadly accepted that he could not support his family this way, he took a job in a textile mill, tending a power-driven loom. Andrew, who was by now thirteen years old, joined him. They both worked twelve hours per day, six days per week. Andrew was paid $1.20 a week. His father found the factory and the work to be depressing and soon quit the job, but Andrew stayed on. His wages, along with what his mother could earn sewing shoes for a nearby cobbler, kept the family alive. When Andrew had the chance to move to another factory for $2.00 per week, he gladly took it. That turned out to be the first small step in a long career of uninterrupted success.

Young Andrew Carnegie was consistently competent, cheerful, and hardworking, and people were drawn to his open, pleasant ways. At the new job, the owner took notice of him, sometimes calling Carnegie away from the factory floor to write business letters for him. Then came a piece of luck. Carnegie's uncle knew a man who was looking for a telegraph messenger boy. Carnegie was hired, at a salary of $2.50 per week. Besides delivering telegraph messages to businesses in Pittsburgh, the messenger boys were able to practice sending and receiving messages themselves if they came to the office before it officially opened for the day. Carnegie took full advantage of this opportunity to become adept at telegraphy, and soon was promoted to telegraph operator, at $25.00 per month.

For a time Carnegie was one of only a handful of operators in the country who could translate into letters the sound of a series of long and short clicks sent over telegraph wires. (American inventor Samuel F. B. Morse [1791–1872; see entry] had invented a code that used combinations of long and short clicks—sometimes called dots and dashes—to stand for letters of the alphabet.) The receiving instrument on early telegraphs made marks, standing for the "dots and dashes," on paper tape, which trained operators then converted back into letters. Carnegie was one of the few who could do the conversion simply by hearing the clicks, without bothering to read the marks on paper. His skill was so impressive that curious businesspeople would drop in just to see him work. Soon, business leaders were requesting that Carnegie send their important messages. One of these was Thomas A. Scott, of the Pennsylvania Railroad. In 1853 seventeen-year-old Carnegie went to work for the railroad as Scott's general assistant.

Working on the railroad

The Pennsylvania Railroad ran across the state of Pennsylvania, from Philadelphia in the east to Pittsburgh in the west. Carnegie often traveled along the line to oversee construction and maintenance projects.

On one of these trips, a stranger named Theodore Woodruff approached Carnegie about a new invention, the sleeping car. He carried a small model with him, which he showed to Carnegie. It looked like an ordinary railroad car, but the sleeping car was designed so that at night it could be converted to allow sleeping space for travelers. Carnegie realized the value of the notion and discussed it with the head of the railroad, who quickly decided to acquire the sleeping cars for the line. For his role in bringing the sleeping car to the railroad, Carnegie was allowed to buy a share in the new Woodruff Sleeping Car Company, which earned him more than $5,000 in its first year.

In 1859 Carnegie was named superintendent of the western division of the railroad. His salary was now $1,500 per year. He gained a reputation for working hard to keep the trains running on schedule. This meant pushing his work crews to keep the cast-iron rails, which were prone to breaking, in good repair. When the railroad company built its own telegraph line, Carnegie and his assistant became the first to employ women as telegraph operators, declaring that the women were more reliable than male operators.

With the outbreak of the American Civil War (1861–65), the focus of Carnegie's responsibilities changed abruptly. His knowledge of both the telegraph and railroads was highly valued. The Union Army (fighting for the Northern states) depended on good communications to move its troops and keep supplies flowing. When he wasn't out on the line, supervising track work or the rebuilding of lines, Carnegie was involved with the work of the U.S. Military Telegraph Corps. He worked himself to exhaustion; one hot day, while overseeing work on a bridge in Virginia, he suffered from sunstroke. He was so weak and tired that even he was forced to admit that he needed a vacation, so he took one—his first in almost fifteen years.

But Carnegie had not been too busy to make personal investments during the war years. He used his profits from the Woodruff Sleeping Car Company to invest in other companies, and with those profits he made more investments. When the Civil War ended, he was twenty-nine years old and owned shares in more than a dozen companies, worth a total of almost $40,000. When he was offered a promotion to general superintendent of the Pennsylvania Railroad, he turned it down in order to tend to his investments.

Determined to make a fortune

Carnegie was shrewd and forthright, a winning combination for a full-time investor. When he saw an opportunity to merge the Woodruff Sleeping Car Company with a rival, he made it happen, becoming the largest investor in the new Pullman Palace Car Company, which promptly cornered the worldwide market for sleeping cars. Noting the delays caused by broken or burned wooden railroad bridges, he organized a company to construct cast-iron bridges.

On a trip to England, Carnegie toured a steel mill. He realized that steel, being stronger than iron, would make better, safer, longer-lasting railroad tracks. Within three years, he had built a steel mill near Pittsburgh, Pennsylvania, and was supplying steel rails to railroads. He was among the first to use an efficient, new steelmaking process developed in England by Henry Bessemer (1813–1898; see entry). Soon he acquired more mills, and then he bought part of a company that owned coalfields in order to guarantee that the mills would always have a steady supply of raw materials.

Carnegie was obsessed with providing his customers with the best steel at the best price. He hired scientists to study the chemistry of steelmaking, and he did not hesitate to build new plants to improve the quality of his product and the efficiency of his operations.

At the same time, he was determined to be a kind employer, dedicated to the welfare of his employees. On the other hand, Carnegie strongly resisted the efforts of steel-workers to organize into unions. This inherent conflict came to a head in 1892, when steelworkers at Carnegie's Homestead plant in Pennsylvania went on strike. While Carnegie vacationed in Scotland, he put his newly appointed chief executive, Henry Clay Frick (1849–1919), in charge. Violence broke out, and several strikers—and hired company guards—were killed.

The Homestead strike caused Carnegie great distress. The public blamed him, as the mill owner, for the tragedy, and accused him of hiding in Scotland while letting Frick do his dirty work. In truth, Carnegie was furious at the way Frick handled the crisis. Two years later, Carnegie replaced Frick with Charles Schwab (1862–1939) as chief executive; Schwab had begun his career as a common laborer.

Successful as he was, Carnegie did not stop building his company. He bought the rights to mine iron ore in the Mesabi Range of Minnesota, where ore could be scooped from just beneath the surface at a cost of merely five cents a ton, versus three dollars a ton for underground ore. In 1898 Carnegie built steamboats to carry the ore from Lake Superior to Conneaut, Ohio, on Lake Erie, and built his own railroad to haul the ore to his mills in Pittsburgh.

Even though the market for rails was diminishing in the late 1890s, new uses for steel were springing up: for steel columns in building skyscrapers and the elevators inside them, girders to build elevated tracks for city tramways, and pipes to deliver water and gas to cities.

The Homestead Strike

The Homestead mill, outside of Pittsburgh, Pennsylvania, was part of the Carnegie Steel Company. In July 1892 the mill's contract with union workers was due for renewal. Carnegie was vacationing in a remote area of Scotland at the time, and Henry Clay Frick (1849–1919), the chief executive of Carnegie Steel, was in charge.

Determined to resist the workers' demands, Frick erected a high fence around the entire factory. There was barbed wire at the top and watchtowers that could hold armed men. Then he hired three hundred "guards" from the Pinkerton Detective Agency. On July 1, 1892, the Homestead workers went on strike, and the mill was shut down.

On the night of July 5, 1892, the Pinkerton guards, or "Pinks," as they were called, began arriving, riding on barges pulled by tugboats up the Monongahela River. A striker spotted the barges and raised an alarm, bringing enraged strikers rushing to the plant. Strikers ripped a hole in the fence surrounding the steel mill and streamed into the plant. With the barges docked at the company wharf, shooting broke out. Strikers even used the cannon at the town hall to fire on the barges, but the ancient weapon blew up, killing a striker.

Eventually the strikers negotiated a surrender, but union leaders could not control the enraged strikers, and three "Pinks" were killed as they retreated through the mob.

Eventually, Pennsylvania National Guard troops restored order and protected the mill. On July 23, a striker broke into Frick's office and shot him twice and stabbed him three times. Frick survived the attack, and by November 1892 the plant was operating again.

In 1900 Carnegie Steel was the largest steel company in the world. Its production was greater than the entire production of steel in Britain. Carnegie had become the most successful man in the steel industry.

The following year, the financier J. P. Morgan (1837–1913; see entry) attempted to assemble a trust, a combination of corporations, in order to gain exclusive control of the steel industry. To do so, he needed Carnegie Steel. Morgan approached Schwab, the company president, and requested that he find out how much Carnegie would sell his company for. The following day, Carnegie wrote a figure on a slip of paper: $480 million. Morgan accepted the price. Shortly thereafter, Morgan organized United States Steel, with Carnegie's mills as the centerpiece. Carnegie retired from the steel business.

The philanthropist

As Carnegie entered middle age he began to pay attention to two new pursuits: his personal life and philanthropy (benefiting others through charitable gifts). He treated himself to more travel, including a nearly year-long trip around the world. He and his mother also took a triumphant and sentimental trip back to Dunfermline, Scotland, where Carnegie took one of his first steps as a philanthropist by donating a new public library to the town of his birth. In a special ceremony, Mrs. Carnegie laid the foundation stone of the new building.

It was not until the death of his mother in 1886 that Carnegie considered marriage. In 1887, at age fifty-one, he married Louise Whitfield (1857–1946), with whom he had been in love for years. It would be ten years before their only child, Margaret, was born.

At age sixty-five, with a personal fortune of roughly $360 million (worth about $8 billion in the year 2000), Carnegie set about giving it away, partly in the belief that inheriting money spoiled children. As a philanthropist, he is most remembered for the public libraries he established; the total number would eventually come to 2,811. Most of them were in the United States; every state except Rhode Island had at least one Carnegie library. It also pleased him to give organs to churches; a total of nearly five thousand of the instruments were donated in the United States, and thousands more scattered in churches throughout the world. He gave financial support to many individuals, from friends in Dunfermline to celebrities and politicians.

On a more public stage, Carnegie established pension (retirement) funds in several areas, including a fund for Carnegie Steel employees and a fund for college professors. The Hero Fund awarded prizes for acts of heroism. New York City got Carnegie Hall, which became a world-renowned concert hall. Pittsburgh was given the Carnegie Institute of Technology, and many colleges received large gifts, including the Tuskegee Institute, a school serving African Americans. Princeton University got a three-and-a-half-mile-long, man-made lake on its campus so students could participate in the sport of rowing.

Upon Andrew Carnegie's death on August 11, 1919, he was worth $23 million; he had succeeded in giving away 90 percent of his fortune.

For More Information

Books

Livesay, Harold C. Andrew Carnegie and the Rise of Big Business. New York: Longman, 2000.

Meltzer, Milton. The Many Lives of Andrew Carnegie. New York: Franklin Watts, 1997.

Wall, Joseph Frazier. Andrew Carnegie. Pittsburgh, PA: University of Pittsburgh Press, 1989.

Periodicals

Chernow, Ron. "Blessed Barons." Time, December 7, 1998, p. 74.

McCallum, John S. "Andrew Carnegie and John Pierpont Morgan: Two Businessmen to Remember." Business Quarterly, March 1987, p. 6.

Web Sites

Carnegie, Andrew. "The Gospel of Wealth." American Studies at the University of Virginia.http://xroads.virginia.edu/~DRBR/wealth.html (accessed on February 13, 2003).

Carnegie, Andrew. "The Opportunity of the United States." Anti-Imperialism in the United States 1898–1935.http://www.boondocksnet.com/ai/ailtexts/carn02.html (accessed on February 13, 2003).

Lorenzen, Michael. "The Sociological Reasons Behind Andrew Carnegie's Millions to Libraries." Michigan State University.http://www.lib.msu.edu/lorenze1/carnegie.htm (accessed on February 13, 2003).

"The Richest Man in the World: Andrew Carnegie." PBS American Experience.http://www.pbs.org/wgbh/amex/carnegie/ (accessed on February 13, 2003).