Excerpt from "Wealth"
First published in the North American Review, June 1889
"In bestowing charity, the main consideration should be to help those who will help themselves."
Andrew Carnegie (1835–1919) was an outstanding symbol of the American dream: a poor immigrant who works hard and achieves astounding success and enormous riches. Carnegie had started on his path to success as a boy, working for low wages in a textile mill, and rose to dominate the steel industry.
At the same time that Carnegie was amassing his fortune, however, more typical immigrants were housed in squalid quarters, earning barely enough to live on. They worked for ten or twelve hours a day, six days a week; they received no vacations and were subject to dismissal at the whim of a supervisor.
In the 1880s the Socialist Party began appealing to such workers to back a profound change. The socialists (people who seek political and economic equality for all people) and other groups, such as the communists (people who believe in a government in which the people own property in common), advocated higher wages and other benefits for workers, which would come at the expense of wealthy owners like Andrew Carnegie. Consequently, Carnegie wrote an essay which he titled simply "Wealth."
Things to remember while reading the excerpt from "Wealth":
- The subject of Carnegie's essay was not an abstract idea for him. In the essay he defends having a huge treasure even while his workers were barely able to live on their wages, and he argues against those who proposed political changes to make the distribution of wealth more even. He argued that it was an inevitable law of history that civilization should advance in such a way as to create a small class of business owners with far greater wealth than ordinary workers. Efforts to change this, as proposed by socialists, communists, and anarchists (people who advocated an end to formal government structures), were doomed to failure—because they went against the natural trends of history, according to Carnegie.
- As part of his justification for accumulating a large fortune, Carnegie also advocated that wealthy individuals should give away their money during their lifetimes in order to benefit society. He was especially intent that such gifts seldom be given directly to individuals in need (as charity), which in his view would simply lead poor people to spend money in a wasteful manner. Rather he believed the money should go to institutions that would improve people's lives. Carnegie himself chose to give money to build public libraries, providing funding to establish libraries in almost every state, and overseas as well.
- In Andrew Carnegie's time, there was no federal tax on incomes (the first federal income tax was imposed after adoption of the Sixteenth Amendment in 1913). Nor was there a federal tax on estates (the property and possessions, including money, left by a person at death). These two facts made it relatively easy for the owners of large corporations of the era to acquire immense fortunes.
- In contrast to a climate favoring the wealthy, there was an almost complete absence of government benefits for workers. If workers were fired or laid off, they were on their own—there was no unemployment assistance to help them until they found another job. Often, workers lived in housing provided by their employer, so that losing a job also meant losing a place to live.
Excerpt from "Wealth"
The problem of our age is the proper administration of wealth, so that the ties of brotherhood may still bind together the rich and poor inharmonious relationship. The conditions of human life have not only been changed, but revolutionized, within the past few hundred years. In former days there was little difference between the dwelling, dress, food, and environment of the chief and those of hisretainers . The Indians are to-day where civilized man then was. When visiting theSioux, I was led to thewigwam of the chief. It was just like the others in external appearance, and even within the difference wastrifling between it and those of the poorest of his braves. The contrast between the palace of the millionaire and the cottage of the laborer with us to-day measures the change which has come with civilization.
- Agreeable; tranquil.
- American Indian tribe.
- American Indian hut.
This change, however, is not to bedeplored , but welcomed as highly beneficial. It is well, nay, essential for the progress of the race, that the houses of some should be homes for all that is highest and best in literature and the arts, and for all therefinements of civilization, rather than that none should be so. Much better this great irregularity than universalsqualor. Without wealth there can be no Maecenas [an ancient Roman patron of literature]. The "good old times" were not good old times. Neither master nor servant was as well situated then as to-day. Arelapse to old conditions would be disastrous to both—not the least so to him who serves—and would sweep away civilization with it. But whether the change be for good or ill, it is upon us, beyond our power to alter, and therefore to be accepted and made the best of. It is waste of time to criticize the inevitable.
- Filth; disrepair.
- Falling back.
It is easy to see how the change has come. One illustration will serve for almost every phase of the cause. In the manufacture of products we have the whole story. It applies to all combinations of human industry, as stimulated and enlarged by the inventions of this scientific age. Formerly articles were manufactured at the domestic hearth or in small shops which formed part of the household. The master and hisapprentices worked side by side, the latter living with the master, and therefore subject to the same conditions. When these apprentices rose to be masters, there was little or no change in their mode of life, and they, in turn, educated in the sameroutine succeeding apprentices. There was, substantially, social equality, and even political equality, for those engaged in industrial pursuits had then little or no political voice in the State.
But the inevitable result of such a mode of manufacture was crude articles at high prices. To-day the world obtains commodities of excellent quality at prices which even the generation preceding this would have deemed incredible. In the commercial world similar causes have produced similar results, and the race is benefited thereby. The poor enjoy what the rich could not before afford. What were the luxuries have become the necessaries of life. The laborer has now more comforts than the farmer had a few generations ago. The farmer has more luxuries than the landlord had, and is more richly clad and better housed. The landlord has books and pictures rarer, and appointments more artistic, than the King could then obtain.
The price we pay for thissalutary change is, no doubt, great. We assemble thousands of operatives in the factory, in the mine, and in thecounting-house, of whom the employer can know little or nothing, and to whom the employer is little better than a myth. Allintercourse between them is at an end. RigidCastes are formed, and, as usual, mutual ignorance breeds mutual distrust. Each Caste is without sympathy for the other, and ready to credit anythingdisparaging in regard to it. Under the law of competition, the employer of thousands is forced into the strictest economies, among which the rates paid to labor figure prominently, and often there is friction between the employer and the employed, betweencapital and labor, between rich and poor. Human society loseshomogeneity.
- Office used for bookkeeping.
- Social exchanges.
- Groups based on hierarchy.
- Money; resources.
- Being the same throughout.
The price which society pays for the law of competition, like the price it pays for cheap comforts and luxuries, is also great; but the advantages of this law are also greater still, for it is to this law that we owe our wonderful material development, which brings improved conditions in its train. But, whether the law bebenign or not, we must say of it, as we say of the change in the conditions of men to which we have referred: It is here; we cannot evade it; no substitutes for it have been found; and while the law may be sometimes hard for the individual, it is best for the race, because it insures the survival of the fittest in every department. We accept and welcome, therefore, as conditions to which we must accommodate ourselves, great inequality of environment, the concentration of business, industrial and commercial, in the hands of a few, and the law of competition between these, as being not only beneficial, but essential for the future progress of the race. Having accepted these, it follows that there must be great scope for the exercise of special ability in the merchant and in the manufacturer who has to conduct affairs upon a great scale. That this talent for organization and management is rare among men is proved by the fact that it invariably secures for its possessor enormous rewards, no matter where or under what laws or conditions. The experienced in affairs always rate the man whose services can be obtained as a partner as not only the first consideration, but such as to render the question of his capital scarcely worth considering, for such men soon create capital; while, without the special talent required, capital soon takes wings. Such men become interested in firms or corporations using millions; and estimating only simple interest to be made upon the capital invested, it is inevitable that their income must exceed their expenditures, and that they must accumulate wealth. Nor is there any middle ground which such men can occupy, because the great manufacturing or commercial concern which does not earn at least interest upon its capital soon becomes bankrupt. It must either go forward or fall behind: to stand still is impossible. It is a condition essential for its successful operation that it should be thus far profitable, and even that, in addition to interest on capital, it should make profit. It is a law, as certain as any of the others named, that men possessed of this peculiar talent for affairs, under the free play of economic forces, must, of necessity, soon be in receipt of more revenue than can bejudiciously expended upon themselves; and this law is as beneficial for the race as the others.
Objections to the foundations upon which society is based are not in order, because the condition of the race is better with these than it has been with any others which have been tried. Of the effect of any new substitutes proposed we cannot be sure. TheSocialist orAnarchist who seeks to overturn present conditions is to be regarded as attacking the foundation upon which civilization itselfrests, for civilization took its start from the day that the capable, industrious workman said to his incompetent and lazy fellow, "If thou dost not sow, thou shalt not reap," and thus ended primitiveCommunism by separating thedrones from the bees [workers]. One who studies this subject will soon be brought face to face with the conclusion that upon the sacredness of property civilization itself depends—the right of the laborer to his hundred dollars in the savings bank, and equally the legal right of the millionaire to his millions. To those who propose to substitute Communism for this intense Individualism the answer, therefore, is: The race has tried that. All progress from thatbarbarous day to the present time has resulted from its displacement. Not evil, but good, has come to the race from the accumulation of wealth by those who have the ability and energy that produce it. But even if we admit for a moment that it might be better for the race to discard its present foundation, Individual-ism,—that it is a nobler ideal that man should labor, not for himself alone, but in and for a brotherhood of his fellows, and share with them all in common, realizingSwedenborg 's idea of Heaven,where, as he says, the angels derive their happiness, not from laboring for self, but for each other,—even admit all this, and a sufficient answer is, This is notevolution, but revolution. It necessitates the changing of human nature itself—a work ofeons, even if it were good to change it, which we cannot know. It is not practicable in our day or in our age. Even if desirable theoretically, it belongs to another and long-succeeding sociologicalstratum. Our duty is with what is practicable now; with the next step possible in our day and generation. It is criminal to waste our energies in endeavoring to uproot, when all we can profitably or possibly accomplish is to bend the universal tree of humanity a little in the direction most favorable to the production of good fruit under existing circumstances. We might as well urge the destruction of the highest existing type of man because he failed to reach our ideal as to favor the destruction of Individualism, Private Property, the Law of Accumulation of Wealth, and the Law of Competition; for these are the highest results of human experience, the soil in which society so far has produced the best fruit. Unequally or unjustly, perhaps, as these laws sometimes operate, and imperfect as they appear to theIdealist, they are, nevertheless, like the highest type of man, the best and most valuable of all that humanity has yet accomplished.…
- A person who believes in socialism, the political and economic freedom of all people.
- A person who advocates rebellion against the ruling power.
- Form of government in which all the people own property (land and capital) in common.
- Those that live on the labor of others.
- Emanuel Swedenborg (1688–1772); Swedish scientist.
- Process of change.
- An immeasurable long period of time.
- Level of society.
- A visionary.
There remains, then, only one mode of using great fortunes; but in this we have the trueantidote for the temporary unequal distribution of wealth, thereconciliation of the rich and the poor—a reign of harmony—another ideal, differing, indeed, from that of the Communist in requiring only the further evolution of existing conditions, not the total overthrow of our civilization. It is founded upon the present most intense individualism, and the race is prepared to put it in practice by degrees whenever it pleases. Under its sway we shall have an ideal state, in which the surplus wealth of the few will become, in the best sense, the property of the many, because administered for the common good, and this wealth, passing through the hands of the few, can be made a much more potent force for the elevation of our race than if it had been distributed in small sums to the people themselves. Even the poorest can be made to see this, and to agree that great sums gathered by some of their fellow-citizens and spent for public purposes, from which the masses reap the principal benefit, are more valuable to them than if scattered among them through the course of many years in trifling amounts.…
- Bringing together of.
Poor and restricted are our opportunities in this life; narrow our horizon; our best work most imperfect; but rich men should bethankful for one inestimableboon . They have it in their power during their lives to busy themselves in organizingbenefactions from which the masses of their fellows will derive lasting advantage, and thus dignify their own lives.…
- Good deeds; donations.
This, then, is held to be the duty of the man of Wealth: First, to set an example of modest,unostentatious living, shunning display or extravagance; to provide moderately for the legitimate wants of those dependent upon him; and after doing so to consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer, and strictly bound as a matter of duty to administer in the manner which, in his judgment, is best calculated to produce the most beneficial results for the community—the man of wealth thus becoming the mere agent and trustee 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.…
The best uses to which surplus wealth can be put have already been indicated. Those who would administer wisely must, indeed, be wise, for one of the serious obstacles to the improvement of our race isindiscriminate charity. It were better for mankind that the millions of the rich were thrown into the sea than so spent as to encourage the slothful, the drunken, the unworthy. Of every thousand dollars spent in so called charity to-day, it is probable that $950 is unwisely spent; so spent, indeed, as to produce the very evils which it proposes tomitigate or cure.…
- Without thought or plan.
In bestowing charity, the main consideration should be to help those who will help themselves; to provide part of the means by which those who desire to improve may do so; to give those who desire to rise the aids by which they may rise; to assist, but rarely or never to do all. Neither the individual nor the race is improved byalms-giving. Those worthy of assistance, except in rare cases, seldom require assistance. The really valuable men of the race never do, except in cases of accident or sudden change. Every one has, of course, cases of individuals brought to his own knowledge where temporary assistance can do genuine good, and these he will not overlook. But the amount which can be wisely given by the individual for individuals is necessarily limited by his lack of knowledge of the circumstances connected with each. He is the only true reformer who is as careful and as anxious not to aid the unworthy as he is to aid the worthy, and, perhaps, even more so, for in alms-giving more injury is probably done by rewarding vice than by relieving virtue.…
Thus is the problem of Rich and Poor to be solved. The laws of accumulation will be left free; the laws of distribution free. Individualism will continue, but the millionaire will be but a trustee for the poor; intrusted for a season with a great part of the increased wealth of the community, but administering it for the community far better than it could or would have done for itself. The best minds will thus have reached a stage in the development of the race in which it is clearly seen that there is no mode of disposing of surplus wealth creditable to thoughtful and earnest men into whose hands it flows save by using it year by year for the general good. This day already dawns. But a little while, and although, without incurring the pity of their fellows, men may die sharers in great business enterprises from which their capital cannot be or has not been withdrawn, and is left chiefly at death for public uses, yet the man who dies leaving behind him millions of available wealth, which was his to administer during life, will pass away "unwept, unhonored, and unsung," no matter to what uses he leaves thedross which he cannot take with him. Of such as these the public verdict will then be: "The man who dies thus rich dies disgraced."
- Something that is worthless.
Such, in my opinion, is the trueGospel concerning Wealth, obedience to which is destined some day to solve the problem of the Rich and the Poor, and to bring "Peace on earth, among men Good-Will."
- Absolute truth.
What happened next …
At age sixty-five, Andrew Carnegie had a fortune valued at about $360 million (the equivalent of about $8 billion in 2003). Taking his own advice, Carnegie started giving it away to the sort of institutions described in "Wealth."
As mentioned, he is best remembered for funding public libraries. Every state (except Rhode Island) has at least one public library funded by Andrew Carnegie. He also paid for almost five thousand organs for use in churches around the United States as well as in other countries.
Andrew Carnegie also established pension funds to benefit steelworkers and college professors. Another fund,
the Hero Fund, gave prizes for acts of heroism. In New York City, Carnegie Hall became a renowned auditorium for concerts. Pittsburgh's Carnegie Institute of Technology became a famous college. Carnegie also gave money to many other colleges, including the Tuskegee Institute in Alabama for African Americans.
Still, upon his death, Andrew Carnegie had not succeeded in giving away all his money, as he once advocated. His estate was valued at $23 million (equivalent to about $245 million in 2003) at his death in 1919.
In the meantime, laws were passed designed to address the huge gap in income between business owners and workers. A federal income tax was imposed in 1913, originally paid primarily only by very wealthy citizens, and in 1916 a federal tax on estates was passed. At the same time, government programs were established to provide money for people who lose their jobs. Carnegie probably would have opposed modern welfare payments, insisting that people who cannot find work need to be educated or trained in order to get jobs. It is an argument that has continued since Carnegie's time.
Did you know …
In 1900 Carnegie Steel was the largest corporation in the world. The next year, Andrew Carnegie sold his company to the financier J. P. Morgan (1837–1913) for $480 million (equivalent to about $5.1 billion in 2003). Morgan said later he would gladly have paid more. Morgan used Carnegie's company as the core of a new company: U.S. Steel.
For more information
Bobinski, George S. Carnegie Libraries: Their History and Impact on American Public Library Development. Chicago: American Library Association, 1969.
Carnegie, Andrew. Autobiography of Andrew Carnegie. Boston and New York: Houghton Mifflin, 1920.
Carnegie, Andrew. The Gospel of Wealth, and Other Timely Essays (includes "Wealth," published in the North American Review, June 1889). New York: Century, 1900.
Hacker, Louis Morton. 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.
Carnegie, Andrew. "Wealth." Furman University's Nineteenth Century Documents and Editorials.http://www.furman.edu/~benson/docs/carnegie.htm (accessed on April 11, 2003).
Excerpt from "The Gospel of Wealth"
Originally published in the North American Review, June 1889; available at American Studies at the University of Virginia (Web site)
"In bestowing charity, the main consideration should be to help those who will help themselves; to provide part of the means by which those who desire to improve may do so; to give those who desire to rise the aids by which they may rise; to assist, but rarely or never to do all."
More than any other time in American history, the Gilded Age (approximately 1877–99) was characterized by the phenomenal wealth and far-reaching power of a handful of men. Known as robber barons, these men ruled the business world by taking complete control of the industrialization (a transition to an economy based on business and industry rather than agriculture) of the country, also known as the Industrial Revolution. Generally speaking, they accumulated billions of dollars by exploiting (using to their advantage) the working-class poor. They underpaid and overworked the labor that made their factories and businesses run. Robber barons were not known for their honesty or integrity in the way they conducted business.
It would be incorrect to say that the robber barons set the standards for the industrialization of America. They did not. The Industrial Revolution happened because of the determination and perseverance of small-business owners who relied on proven business strategies to keep their companies alive. And that is where the robber barons differed greatly from other industrialists: They took risks by experimenting with strategies that no one had ever used before in business. Those strategies, supplemented by the barons' greed and desire for power, gave them wealth but a bad reputation as well.
Among the most notable robber barons were John D. Rockefeller (1839–1937), owner of the Standard Oil Company, which at its peak controlled 90 percent of America's oil industry; Cornelius Vanderbilt (1794–1877), a railroad tycoon (exceptionally wealthy industrialist) considered by many to be the first true robber baron; Jay Gould (1836–1892), a railroad financier (one who deals with large amounts of money in finance and investment businesses) who often competed with Vanderbilt; and J. P. Morgan (1837–1913), the most famous banker and financier of his day. Unlike his peers, Morgan had a reputation as a man of his word who valued honesty more than money.
Another famous robber baron was Andrew Carnegie (1835–1919), owner of Carnegie Steel. Unlike his fellow industrialists, Carnegie was an immigrant. Born in Scotland, he moved to the United States at the age of twelve. Although born into poverty, Carnegie's intelligence and resourcefulness turned misfortune to fortune. By the age of thirty-three, the Scotsman was worth $400,000 (approximately $5 million in twenty-first-century money).
Like the other robber barons, Carnegie overworked and underpaid his employees. In doing so, he kept his operating costs as low as possible, which allowed him to provide steel to buyers at a price lower than his competitors.
Carnegie was in the right business at the right time. The industrialization of America made steel the number-one selling product. Steel was used in the construction and maintenance of railroads as well as nearly every other industry of the day. He sold his company to U.S. Steel (owned by robber baron J. P. Morgan) in 1901 for $250 million ($4.5 billion in twenty-first-century money) and became the wealthiest man in the world.
Carnegie's wealth troubled him. He had known poverty and despair in his younger years, so he understood firsthand the struggles and suffering of the poor. Although he reigned as king of the steel industry for thirty years, he privately longed to change his focus from making money to doing good for those less fortunate than himself. In this respect, Carnegie set himself apart from his robber baron colleagues.
In 1889, Carnegie published an essay in a political magazine. In the essay, he explained his philosophy on wealth and how to distribute it after death. The essay attracted much attention because its author claimed that the wealthy have a responsibility to give back to society and work for its greater good. This attitude was not popular among America's upper class, who had been living for decades with the idea that hard work was all that was needed to succeed. The general attitude was that the poor were poor because God made them that way and that they deserved their status in society.
Carnegie developed his ideas while reading the work of a philosopher he greatly admired, Herbert Spencer (1820–1903). Spencer's philosophy was based on the evolutionary theory of Charles Darwin (1809–1882), which said the strong survive while the weak die. Spencer applied that biological theory to society and promoted the idea that competition was natural and that those most fit to live in society would rise to the top. It was Spencer who coined the phrase "survival of the fittest." Carnegie found in Spencer's philosophy the permission to succeed in business, even as he struggled internally with his high-society position and life of privilege.
Things to remember while reading the excerpt
from "The Gospel of Wealth":
- Carnegie was highly respected in American society. His opinions mattered. His was a true rags-to-riches story. Carnegie was considered a perfect example of a poor man who achieved the American Dream.
- Carnegie's life was one of paradox (contradictions). As the richest man in the world, he spoke out against privilege. He championed the working man, even as he crushed labor unions and cut his employees' wages.
- Before the Industrial Revolution, the gap between the upper classes and the lower classes was not so large. There had always been people who had money and people who did not, but industrialism allowed people in the right circumstances to make more money than was ever possible before. Without the working class, robber barons could not have elevated themselves to the highest positions in American society.
Excerpt from "The Gospel of Wealth"
What is the proper mode of administering wealth after the laws upon which civilization is founded have thrown it into the hands of the few? And it is of this great question that I believe I offer the true solution. It will be understood that fortunes are here spoken of, not moderate sums saved by many years of effort, the returns from which are required for the comfortable maintenance and education of families. This is not wealth but only competence, which it should be the aim of all to acquire.
A Different Kind of Gospel
The industrialization of America was looked upon by some as progress. Others considered it a phenomenon that caused more harm than good. There were those who believed that industrialization gave birth to overcrowded slums and a greatly increased poor population that lived in despair and hopelessness.
There was nothing anyone could do to stop industrialization. But churches and religious organizations were determined to do what they could to improve the situation for the working-class poor. The result was what religious leaders from different faiths called the Social Gospel. The concept was based on the idea that through reform laws and religion, a fair and just society was attainable.
The Social Gospel sought reform on every level: child labor, work conditions, housing, education, and more. In some ways, the idea was the opposite of the "survival of the fittest" beliefs of men like Andrew Carnegie and John D. Rockefeller. They believed the powerful and wealthy had the right to their lives of privilege, even while others suffered. But in other ways, the philosophies were similar. Both Carnegie and Rockefeller were famous for their philanthropy (charitable donations). Between the two of them, hundreds of millions of dollars were given to help those in need.
The major difference between the Social Gospel movement and the philanthropy of Carnegie and Rockefeller was that the activists sought to change the law and offer protective measures to the poor. The robber barons did not want the laws changed; the laws already in place worked in their favor and allowed them to run their businesses in such a way that they made millions off the cheap labor of the working class.
Social Gospel faded away as an active movement, but its efforts influenced the reforms of the Progressive Era (approximately 1900–17). The philosophy of the Social Gospel movement stands as the foundation for religious charities throughout the world.
There are but three modes in which surplus wealth can be disposed of. It can be left to the families of the decedents; or it can be bequeathed for public purposes; or, finally, it can be administered during their lives by its possessors. Under the first and second modes most of the wealth of the world that has reached the few has hitherto been applied. Let us in turn consider each of these modes.
The first is the most injudicious. In monarchical countries, the estates and the greatest portion of the wealth are left to the first son [so] that the vanity of the parent may be gratified by the thought that his name and title are to descend to succeeding generations unimpaired. Why should men leave great fortunes to their children? If this is done from affection, is it not misguided affection? Observation teaches that, generally speaking, it is not well for the children that they should be so burdened. Neither is it well for the state. Beyond providing for the wife and daughters moderate sources of income, and very moderate allowances indeed, if any, for the sons, men may well hesitate, for it is no longer questionable that great sums bequeathed oftener work more for the injury than for the good of the recipients. Wise men will soon conclude that, for the best interests of the members of their families and of the state, such bequests are an improper use of their means.
As to the second mode, that of leaving wealth at death for public uses, it may be said that this is only a means for the disposal of wealth, provided a man is content to wait until he is dead before it becomes of much good in the world. Knowledge of the results of legacies bequeathed is not calculated to inspire the brightest hopes of much posthumous good being accomplished. The cases are not few in which the real object sought by the testator is not attained, nor are they few in which his real wishes are thwarted. In many cases the bequests are so used as to become only monuments of his folly.
There remains, then, only one mode of using great fortunes; but in this we have the true antidote for the temporary unequal distribution of wealth, the reconciliation of the rich and the poor—a reign of harmony—another ideal, differing, indeed, from that of the Communist in requiring only the further evolution of existing conditions, not the total overthrow of our civilization. It is founded upon the present most intense individualism, and the race is prepared to put it in practice by degrees whenever it pleases. Under its sway we shall have an ideal state in which the surplus wealth of the few will become, in the best sense, the property of the many, because [it will be] administered for the common good; and this wealth, passing through the hands of the few, can be made a much more potent force for the elevation of our race than if it had been distributed in small sums to the people themselves. Even the poorest can be made to see this and to agree that great sums gathered by some of their fellow citizens and spent for public purposes, from which the masses reap the principal benefit, are more valuable to them than if scattered among them through the course of many years in trifling amounts.
This, then, is held to be the duty of the man of wealth: first, to set an example of modest, unostentatious living, shunning display or extravagance; to provide moderately for the legitimate wants of those dependent upon him; and after doing so to consider all surplus revenues which come to him simply as trust funds which he is called upon to administer, and strictly bound as a matter of duty to administer in the manner which, in his judgment, is best calculated to produce the most beneficial results for the community—the man of wealth thus becoming the mere agent and trustee 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. …
In bestowing charity, the main consideration should be to help those who will help themselves; to provide part of the means by which those who desire to improve may do so; to give those who desire to rise the aids by which they may rise; to assist, but rarely or never to do all. Neither the individual nor the race is improved by almsgiving. Those worthy of assistance, except in rare cases, seldom require assistance.
Such, in my opinion, is the true gospel concerning wealth, obedience to which is destined some day to solve the problem of the rich and the poor, and to bring "Peace on earth, among men goodwill."
What happened next …
For all their greed and corruption, many robber barons defied the label given them and established the model for the basis of American philanthropy. Carnegie himself refused to simply give money to the poor, but in his lifetime, his wealth established nearly three thousand public libraries throughout the world, numerous universities and educational foundations, several music halls (including the famous Carnegie Hall in New York City), and other self-improvement and scientific initiatives.
Carnegie founded the Carnegie Corporation of New York. Its mission was to "promote the advancement and spread of knowledge and understanding." This charitable organization remains active in the twenty-first century and regularly donates to institutions that provide educational grants, universities, colleges, and companies focused on education. The popular children's television show Sesame Street, for example, is funded in part by the Carnegie Corporation.
Other robber barons became philanthropists as well. J. P. Morgan left one of the most extensive art collections ever put together upon his death, and he donated sizeable sums of money to art museums and collections throughout his life. Rockefeller and Carnegie were in direct competition with each other's level of giving throughout their later years. Newspapers even kept score of who donated more money to charity. For instance, in 1904, the Times of London reported Carnegie's total at $21 million and Rockefeller's at $10 million; in 1910, the New York American said Carnegie was up to $179.3 million and Rockefeller over $134.2 million; and in 1913, the New York Herald noted that Carnegie's sum had increased to $332 million and Rockefeller's $175 million.
The age of the robber baron and his philanthropy ended with the presidency of Woodrow Wilson (1856–1924; served 1913–21), who passed legislation introducing the income tax (taxes paid on money earned) and estate tax (taxes paid on money left at the time of death). These taxes inhibited the quick growth of monetary fortune.
Did you know …
- Carnegie's sixty-four-room mansion was so big that it took two tons of coal to heat it on a typical winter day.
- Carnegie first worked as a bobbin boy setting up spools of thread in a cotton factory, where he earned $1.20 a week.
- By the time he died, Carnegie had given away $350 million. Per instructions left in his will, the remaining $30 million was given away to foundations and charities.
Consider the following …
- How does American society define "success"?
- Capitalism is based on the idea that every individual has an equal opportunity for success. Is this true in American society? Why or why not?
- Can a person be a ruthless businessman but still be a good person?
For More Information
Carnegie, Andrew, and David Nasaw. The Gospel of Wealth and Other Writings. New York: Penguin Classics, 2006.
Edge, Laura B. Andrew Carnegie: Industrial Philanthropist. Minneapolis: Lerner, 2004.
Rau, Dana Meachen. Andrew Carnegie: Captain of Industry. Minneapolis: Compass Point Books, 2006.
Carnegie, Andrew. "The Gospel of Wealth." North American Review. June 1889. Reprinted at American Studies at the University of Virginia. http://xroads.virginia.edu/~DRBR/wealth.html (accessed on July 25, 2006).
Chernow, Rob. "Blessed Barons." Time.com.http://www.time.com/time/time100/builder/other/barons.html (accessed on July 25, 2006).
PBS. "Monkey Trial: People and Events: Fundamentalism and the Social Gospel." American Experience.http://www.pbs.org/wgbh/amex/monkeytrial/peopleevents/e_gospel.html (accessed on July 25, 2006).
PBS. "The Richest Man in the World: Andrew Carnegie." American Experience.http://www.pbs.org/wgbh/amex/carnegie/index.html (accessed on July 25, 2006).
- Money used for the basics in life.
- Monarchical countries:
- Nations ruled by kings or queens who inherited their positions.
- Excessive pride.
- After death.
- Person who leaves behind a will distributing his property and wealth.
- Foolish ideas.
- Controlling influence.
- Small, of little importance.
- Brothers; fellow human beings.
- Giving away to.
- Giving to the poor.
Born November 25, 1835
Died August 11, 1919
Industrialist and philanthropist
"Concentrate your energies, your thoughts and your capital. The wise man puts all his eggs in one basket and watches the basket."
A ndrew Carnegie stands as a symbol of the idea that immigrants could come to the United States and make a vast fortune. In Carnegie's case, he came to the United States from his native Scotland at age thirteen and worked his way from poverty to one of the great fortunes of the world based on manufacturing steel. In retirement, Carnegie gave away several hundred million dollars, a significant portion of his fortune during his lifetime. He financed public libraries throughout the United States as well as donated money to universities and bought organs for churches.
The industrial revolution
In one respect, Carnegie shared an experience with countless other Europeans who immigrated to the United States in the nineteenth and early twentieth centuries: His family's livelihood had been seriously affected by the industrial revolution, the historic change from a farm-based economy to an economic system based on the manufacturing of goods and distribution of services on an organized and massproduced basis. This meant that new machines powered by steam or running water (streams and rivers) took over the work of many workers using traditional methods. The new machines could do the work of several people in a day and introduced a profound change in European—and especially English—society from about 1760 until about 1940.
Carnegie's family lived in Dunfermline, an ancient capital of Scotland where Scottish national hero and king Robert the Bruce (1274–1329) was buried. There, Carnegie's father William used a hand-powered loom to weave cloth. William Carnegie worked from his small cottage that doubled as the family home, and employed three assistants. The business made the family a modest but fairly comfortable living. William Carnegie was also a local leader of the Chartists. (Chartism was a political movement in Britain between 1838 and 1848 whose members campaigned to obtain the right to vote for working people. At that time in Britain, only relatively wealthy landlords and business owners owned enough property to qualify to vote for members of Parliament. Workers like Carnegie had no way to influence political decisions. The Chartist movement campaigned to let all men vote regardless of wealth.) Andrew Carnegie's mother was Margaret Morrison, the daughter of a shoemaker who also campaigned for political and social reforms.
By 1835, when Andrew Carnegie was born, independent weavers had already been doomed by the industrial revolution. Looms for weaving and machines for spinning yarn from cotton or wool were among the first machines introduced in the long process of industrialization, starting in England in the late 1700s and continuing until the mid-1900s. A power loom, operated by one or two people, could produce more cloth in a day than twenty or more weavers using traditional hand looms. Weavers were forced either to work as employees in new textile factories, where the automated looms were situated, or to find another occupation.
When Andrew Carnegie was eight years old, a new textile mill using looms powered by a steam engine opened in Dunfermline. Any hope that William Carnegie could continue to thrive in his small textile business was wiped out with the arrival of the new factory. Five years later, with the family income steadily declining, Carnegie's mother urged that the family leave Scotland to join relatives living in the United States. The country was expanding rapidly and held out hope to thousands of families in Europe for a brighter economic future.
Carnegie was thirteen when his family immigrated to the United States in May 1848. They settled near relatives near Pittsburgh, Pennsylvania, a busy, growing city of more than forty thousand people. It seemed to offer many new economic opportunities. At first, Andrew's father tried to recreate the business he had in Scotland, weaving tablecloths on a wooden loom and selling them directly to customers. But the industrial revolution was advancing in the United States just as rapidly as in England, and Carnegie's father had to accept that he could not support his family in the traditional way. Instead, he found a job in the Blackstock Cotton Mill, which made cotton cloth using power-driven looms.
Andrew joined his father in the factory, working as a "bobbin boy," the person who put fresh spools, or bobbins, of yarn onto the rapidly moving looms. It was a job often carried out by child workers, whose nimble fingers seemed well suited to the job.
Father and son both worked twelve hours a day for six days a week. For his seventy-two hours of work, Andrew was paid $1.20 a week (the equivalent of about $25 in the early twenty-first century). Andrew's father thought factory work was depressing and soon quit. But Andrew stayed on. The family lived on his wages, plus whatever his mother could earn sewing shoes for a nearby shoemaker. When Andrew had the chance to move to another factory for $2 a week, he gladly took it. That first change of jobs for more money was just the first of many in Carnegie's long and successful career.
The owner of Carnegie's new factory noticed that his young employee was cheerful and hardworking. He began calling Carnegie away from the factory floor to write business letters, which helped supplement the boy's brief formal education. Carnegie got a major break when an uncle alerted him to an opening as a telegraph messenger. At the time, the newly developed telegraph was an important means of rapid communication for business. Messages came into central telegraph offices, where messenger boys dashed to deliver them to their intended recipients.
Carnegie got the job at the telegraph office, along with another raise to $2.50 a week. The major break was not just the money: before the office officially opened for the day, delivery boys had a chance to practice sending and receiving messages themselves. Carnegie took full advantage of this opportunity and soon became quite adept at this process. This led to a job as a telegraph operator, which earned him $25 a month.
At the time, sending telegraph messages was a highly skilled profession. Operators translated the sound of a series of long and short clicks sent over telegraph wires into letters, using a code developed by American inventor Samuel F. B. Morse (1791–1872). Although the receiving device printed the clicks on paper, Carnegie was able to translate the letters as they came in simply by the sound, which made him especially fast in translating the clicks into messages. So impressive was his work that curious businesspeople would drop into the office, just to see him work. Soon, some customers requested that Carnegie send important messages. One of these was Thomas A. Scott (1823–1881), an executive with the Pennsylvania Railroad.
Working on the railroad
In one of the biggest breaks of his career, the seventeen-year-old Carnegie went to work for Scott as a general assistant in 1853. In this position, Carnegie often traveled along the railroad line between Philadelphia to the east and Pittsburgh to the west to oversee construction and maintenance. On one of his trips, a man named Theodore Woodruff (1811–1892) approached Carnegie about a new invention, the sleeping car. It looked like an ordinary railroad car on the outside, but inside, the car could be converted into a kind of rolling hotel, with sleeping spaces for passengers. Carnegie immediately realized the business potential of the new car for people who traveled long distances and showed it to the head of the railroad, who in turn decided to acquire the sleeping cars for the company. As a reward for bringing the idea to the railroad's attention, Carnegie was allowed to buy shares in the new Woodruff Sleeping Car Company, which earned him more than $5,000 in its first year (the equivalent of over $100,000 in the twenty-first century).
In 1859, Carnegie became superintendent of the Pennsylvania Railroad's western division. He gained a reputation for working hard to keep the trains running on schedule, which required constant maintenance of the cast-iron rails, which were brittle and prone to breaking.
At 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, since the Union Army fighting for the northern states depended both on good communications and on the railroads to move its troops and supplies. In addition to working for the railroad, Carnegie also helped the U.S. Military Telegraph Corps.
Throughout his career, Carnegie invested the money he received from the Woodruff Sleeping Car Company in some of the many companies that were springing up as part of the industrial revolution. Carnegie was twenty-nine when the Civil War ended in 1865, and he already owned shares, or individual small portions of a company into which money is invested, worth a total of almost $40,000 (the equivalent of nearly $480,000 in the twenty-first century) in more than a dozen companies. Consequently, when Carnegie was offered a promotion to general superintendent of the Pennsylvania Railroad, he turned down the offer. He wanted to tend to his investments.
Life as an investor
At first, Carnegie's investments were primarily related to the railroad business, which he knew from experience. When he saw a chance to merge the Woodruff Sleeping Car Company with a rival, he helped make it happen, in the
process becoming the largest single investor in the new Pullman Palace Car Company. Noting that traditional wooden railroad bridges often broke or burned, Carnegie invested in the Keystone Bridge Company to build railroad bridges made of cast iron.
On a trip to England, Carnegie toured a mill making steel with a new process developed by engineer Henry Bessemer (1813–1898). Steel is a form of iron that has been heated to a very high temperature in coal furnaces in order to reduce the amount of carbon and other impurities, such as sulfur, mixed into iron ore when it is mined. The resulting metal is strong, like iron, but not as brittle. Before Bessemer's process, small amounts of iron were converted into steel by heating the metal to the high temperature required. The old process had been slow and expensive, which in turn limited the uses for steel. Bessemer developed a way of injecting oxygen into molten, or melted, iron, burning away the carbon and resulting in steel that could be poured into molds or rolled into thin
sheets. Steel produced using the new process proved to be ideal for building bridges as well as many other products, such as rails, military cannons, and support beams for skyscrapers.
Carnegie acquired the right to use Bessemer's process in a steel mill in the United States. Soon, he was using Bessemer's process to manufacture steel rails for the railroads. Since coal was the principal fuel used to make steel, Carnegie acquired another company that owned coal mines to guarantee a steady supply of coal for his mills. Carnegie also hired scientists to study the chemistry of making steel and did not hesitate to build new plants in order to improve the quality of his product and the efficiency of his operations.
On the one hand, Carnegie treated his workers well, as long as it did not cost too much. On the other hand, he strongly resisted the efforts of his employees to organize into unions. The essential idea of unions was that while a single worker had no influence over a factory owner—one worker could easily be dismissed and replaced by another—all of the factory's workers acting together could unite and disrupt a factory's smooth operation by refusing to work unless their demands were met. A conflict occurred in July 1892, when steelworkers at one of his steel factories, the Homestead Plant on the Monongahela River, 7 miles east of Pittsburgh, went on strike, or refused to continue working, in protest over wages they believed were too low. Homestead was an enormous steel factory, spread over about 150 acres and employing 4,500 men. Three years earlier, the men had negotiated a contract setting their wages, and the contract expired in July 1892. Most workers went on strike until a new agreement was reached.
Right before the workers struck, Carnegie had left on a vacation in his native Scotland and put his newly appointed chief executive, Henry Clay Frick (1849–1919), in charge. Shortly after the strike began, violence broke out between the workers and guards from the Pinkerton Detective Agency, hired by Frick. Several strikers and guards were killed when workers rushed past a fence 4 feet high and 4 miles long that surrounded the factory and attacked guards. Angry workers even tried to use an antique cannon from the town hall to fire on river barges bringing Pinkerton guards up the Monongahela River and into the plant, but the cannon exploded, injuring several strikers.
Frick finally called in troops from the Pennsylvania National Guard to restore order and protect the mill. On July 23, however, Frick was attacked in his office, surviving two gunshot wounds and three stab wounds.
The Homestead strike caused Carnegie great distress. As the mill owner, the public blamed him for the violence 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.
Despite the Homestead setback, Carnegie kept building his company. He acquired rights to mine iron ore in the Mesabi Range of Minnesota, where ore could be scooped from just beneath the surface of the mountains at a fraction of the cost of underground mining. He built his own steamboats to carry the ore from Lake Superior to Conneaut, Ohio, on Lake Erie, and then used his own railroad to haul the ore to mills in Pittsburgh.
New uses for steel were literally springing up: steel was used for the columns that supported tall buildings, especially in New York City, for the elevators inside them, and for the elevated tracks on which passenger trains ran. Carnegie's steel company gained a major share of the rapidly expanding steel industry.
By 1900, Carnegie Steel was the largest steel company in the world, producing more steel than all of Great Britain combined. In 1901, banker J. P. Morgan (1837–1913) was trying to assemble a trust, a company that would own a significant portion of the country's steel manufacturers in order to control the price. Rather than face a bruising competition with Morgan, Carnegie began exploring the idea of selling his company. Working through Schwab, the company president, Morgan inquired about Carnegie's asking price. The following day, Carnegie wrote a figure on a slip of paper: $480 million (worth about $10.6 billion in the twenty-first century). Morgan accepted the price on the spot and used Carnegie Steel as the centerpiece of United States Steel.
For several years before he sold his company, Carnegie began paying more attention to his personal life and philanthropy, benefitting others through charitable gifts. He spent nearly a year traveling around the world. He and his mother also took a sentimental trip back to Dunfermline, Scotland. There, Carnegie donated funds to build a new public library, the first of many libraries Carnegie eventually helped fund. In a special ceremony, his mother, Margaret Carnegie, laid the foundation stone of the new building.
Only after his mother died in 1886 did Carnegie marry. At age fifty-one, he married Louise Whitfield (1857–1946), with whom he had been in love for years. Ten years later, their only child, Margaret, was born.
At age sixty-five, Carnegie started giving away his immense fortune. The project for which he is best remembered was donating funds to build public libraries. In total, 2,811 libraries were built throughout the United States from his donations. The project reflected Carnegie's belief that the best way to help people was to help them help themselves through education. Carnegie donated nearly 5,000 organs to churches in the United States, as well. He also supplied the funds used to build Pittsburgh's Carnegie Technical Schools (which, in 1912, became Carnegie Institute of Technology; and, in 1967, Carnegie-Mellon University, after a merger with the Mellon Institute). Throughout his life, Carnegie remembered friends from Dunfermline, and he later contributed funds to them.
Andrew Carnegie was also a strong advocate of world peace. He was among the first to call for a "league of nations," an organization of nations, as proposed by President Woodrow Wilson (1856–1924; served 1913–21), that would exert moral leadership and help nations avoid future wars. He also built in the Netherlands what he called the Peace Palace, which today houses the principal judicial body of the United Nations, among other institutions. When World War I (1914–18) broke out, Carnegie's wife, Louise, later said that the industrialist's heart was broken. He died five years later, on August 11, 1919, at his vacation home in the Berkshire Mountains of western Massachusetts, one of the most successful immigrants to ever come to the United States.
—James L. Outman
For More Information
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.
Chernow, Ron. "Blessed Barons." Time (December 7, 1998): p. 74.
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 March 10, 2004).
Lorenzen, Michael. "Deconstructing the Philanthropic Library: The Sociological Reasons Behind Andrew Carnegie's Millions to Libraries." Michael Lorenzen.http://www.michaellorenzen.com/carnegie.htm (accessed on March 10, 2004).
"The Richest Man in the World: Andrew Carnegie." PBS American Experience.http://www.pbs.org/wgbh/amex/carnegie (accessed on March 10, 2004).
Born November 25, 1835 (Dunfermline, Scotland)
Died August 11, 1919 (Lenox, Massachusetts)
"There is no class so pitiably wretched as that which possesses money and nothing else."
During his lifetime Andrew Carnegie's name immediately brought forth thoughts of the immense wealth he made through the steel empire he created almost single-handedly. The Scottish-born businessman possessed tremendous foresight and sharp managerial skills, and the innovations he brought to American industry revolutionized it and helped make the country a global economic power in the years following his death. Carnegie's legacy, however, involved more than making money. Carnegie came from a humble background and gave generously in his lifetime. After nearly thirty years in the steel industry, Carnegie sold his company to Wall Street financial backer J. P. Morgan (1837–1913; see entry) in 1901, and the deal made him the richest man in the world. He used it to fund his philanthropic efforts (aid given to promote human welfare), which centered on public libraries and schools in the United States and England. At the time of his death in 1919, Carnegie had given away nearly 90 percent of his fortune.
The story of Carnegie's rise from his poor beginnings became a symbolic success story of the American dream for generations of new immigrants. He was born on November 25, 1835, in Dunfermline, Scotland. Dunfermline was a noted textile center, and Carnegie's father was a handloom weaver by trade. In the late 1840s, however, steam-powered looms became standard in the mills, and many in Dunfermline found themselves out of a job. Carnegie's father, William, was among the unemployed. Weavers in Scotland attempted to organize and demand some economic reforms that would protect their livelihoods, but they were unsuccessful. The hardship of these years made a tremendous impression on young Carnegie, and though his own industry was guided by the same principles as those of the mills—favoring productivity over job protection—he would later attempt to improve the lives of the working class through other means.
Margaret Carnegie, his mother, believed that a better life could be made in America, and she convinced her husband to relocate the family there. The family, which also included Andrew's younger brother, Thomas, left in 1848 and settled in Allegheny, Pennsylvania, near Pittsburgh. They lived in poor quarters, and William Carnegie had a difficult time finding a job that could support the household. Although he was just thirteen, Andrew soon went to work to help out, finding a job as a bobbin boy in a textile mill. His duty was to collect the used spindles of yarn from the looms. He progressed from that to a better job as a messenger in a telegraph office, and from there to being a telegraph operator. The year he turned eighteen he was chosen by the superintendent of the Pennsylvania Railroad company's western division, Thomas Scott, to become his personal telegraph operator and office assistant.
Carnegie spent the next twelve years with the Penn Railroad, which was one of the major transportation lines in its day. Two years into the job, in 1855, his father died, and Carnegie became the sole supporter of his mother and brother. Because he had entered the working world at such a young age, he had little formal education, but he spent his free time reading about a variety of subjects. He was a frequent visitor to the local free library, where anyone could come in to read. He also took night school courses in bookkeeping and advanced to other positions within the railroad company. In 1859, when Scott became a vice president, he made Carnegie the supervisor of the Penn Railroad's western lines. The division prospered under Carnegie's shrewd management, and he even invented a military telegraph system for Union Army communications during the American Civil War (1861–65; a war between the Union [the North], who were opposed to slavery, and the Confederacy [the South], who were in favor of slavery).
The Age of Steel
During his years as a railroad executive, Carnegie also began making investments in other businesses. After meeting George Pullman (1831–1897), inventor of the sleeping car for trains, he bought a stake in the Woodruff Sleeping Car Company for $217. Within two years that investment was yielding an annual return of nearly $5,000. Carnegie also began buying partnerships in iron mills and factories, and in 1865 he decided to retire from the Penn Railroad and start his own firm. His Keystone Bridge Company constructed bridges from iron, which was quickly replacing wood as the standard material, and, like nearly everything that Carnegie established, the business prospered. During this time he also sold bonds in both the United States and England for railroad and bridge company enterprises and reportedly earned $1 million in commissions in a five-year period.
By 1870 Carnegie was convinced that steel would soon become the building material of choice for the growing United States. Steel was produced by combining iron with carbon, but in its early days the process was difficult. On a visit to England, Carnegie saw huge Bessemer furnaces, in which impurities were removed from molten iron by compressed air. The process had been patented by Henry Bessemer (1813–1898) in 1855. It was an inexpensive way to make steel, which lasted longer than iron and was lighter in weight. Prior to the Bessemer method, steel was made from iron, and about three tons of coke, a fuel made from coal, were needed to fire the furnaces for each ton of steel produced.
The extensive Bessemer factories in Sheffield, England, were producing steel using the new method, and Carnegie quickly realized the advantages of it. By 1872 he had two Bessemer-type furnaces in operation at mills he owned in Pennsylvania, and soon he founded his first business devoted fully to the manufacture of steel, Carnegie, McCandless, and Company, which later became simply Carnegie Steel. The company opened its first completely operational plant in 1875 in Braddock, Pennsylvania. It was named the J. Edgar Thomson Works, after the president of the Pennsylvania Railroad. The two companies were linked in another way as well, for the first major order at Carnegie's new plant came from the railroad for two thousand steel rails. Railroads were the main form of transportation at the time, with hundreds of miles of new tracks being laid down every year as Americans moved westward.
Steel for the nation
Carnegie had been correct: steel was cheaper than iron to produce, and the price of rails fell sharply from $160 per ton in 1875 to $17 per ton in 1900. Open-hearth steel production, another innovation he introduced, also lowered the manufacturing costs, and his firm prospered. The open-hearth method allowed for greatly increased temperatures which normal furnaces and fuels had been unable to reach, to remove impurities from pig iron. By 1878 Carnegie Steel was worth $1.3 million and was the leading steel manufacturer in the United States. In 1881 Carnegie bought a stake in a thriving Pennsylvania coke company owned by Henry Clay Frick (1849–1919). Coke was in plentiful supply thanks to Pennsylvania's coal mines, and soon the Carnegie plants were producing two thousand tons of steel daily.
The partnership between the two industrial leaders was a successful one for many years. Frick oversaw day-to-day operations, while Carnegie was responsible for expansion and cost-cutting measures at the plants. He made a wise purchase of a rival in 1883 when he bought the Homestead Works, whose mills churned out the steel structural elements for elevated railways in New York City and Boston, Massachusetts. Homestead also provided the steel beams used in the new skyscrapers rising in American cities, including the first skyscraper, the Home Insurance Company Building in Chicago, Illinois. Carnegie's company made large profits over the next two decades, providing steel for thousands of miles of rail and a great number of buildings. The company was also instrumental in the creation of landmarks, with both the Washington Monument in the District of Columbia and New York City's Brooklyn Bridge built using steel from Carnegie's plants.
Even during a serious economic downturn, the Depression of 1893–96, Carnegie's company remained successful because of his sound management. He was earning a salary of nearly $25 million annually by 1890 and was regarded as one of the country's most impressive business minds. One major setback came in 1892, however, when workers at the Homestead facility went on strike. Initially Carnegie was not opposed to labor unions, unlike many of his fellow industrialists—in fact, in one of the many articles he authored, he argued in an 1886 issue of Forum Magazine that workers should have the right to form a union. But Carnegie's view changed and he opposed the unionization of the workers in his plants, believing that unions interfered with good company management. Frick, on the other hand, had always been strongly opposed to organized labor.
Strike at Carnegie's company
When the Homestead workers went on strike in mid-1892, Carnegie was in Scotland on his annual summer vacation. Frick, left in charge, was determined to break the hold of the union, the Amalgamated Association of Iron and Steel Workers, at the company's mills. He enlisted guards of the Pinkerton Detective Agency, who had gained a reputation as dedicated strike-busters, and the Homestead picket line erupted into violence. In the end five workers and three Pinkerton agents died, and many more were left injured. The incident captured national attention, and the Pennsylvania governor sent in the state militia to maintain order. It was a bitter end, and Frick became one of the main enemies of the labor movement, even being targeted for an assassination attempt. The Homestead workers remained locked out, however, and no other union attempted to organize at a Carnegie plant until the 1930s.
Carnegie and Frick parted ways in 1899, and the following year a dispute over the market value of the coke that Frick's plants sold to Carnegie's had to be settled by lawyers after a lawsuit was filed. Carnegie had already begun his extensive philanthropic efforts by this time, and as the new century drew near, he hoped to retire and devote himself more fully to his charitable projects.
By the late nineteenth century, Wall Street financial backer J. P. Morgan was interested in setting up a steel cartel, a combination of independent business organizations formed to regulate production, pricing, and the marketing of goods. Though Carnegie was initially opposed to cartels, considering them against free-market principles, he was ready to retire, and so in 1901 he sold his interest in his company to Morgan for a sum of $480 million. It was the most significant takeover in American business until then, and the amount was also the most profitable personal commercial transaction at that time. Carnegie alone personally made $225 million from it, which made him the richest man in the world. Morgan combined the former Carnegie properties with his own Federal Steel to form the United States Steel Corporation, the first billion-dollar corporation in the world. Over the next few decades, it served as a leading producer of steel and was a powerful player in the economic and industrial might of twentieth-century America. The company even built the city of Gary, Indiana, and, because of its immense size and power, was referred to simply as "the Corporation" by a generation of investment bankers and traders on Wall Street.
Established pension fund
There was another, sometimes overlooked, achievement of Carnegie's company in 1901: the creation of the first funded pension system for workers. After establishing a fund to pay workers when they were injured on the job or to provide a financial allowance to their families if they were killed at work, Carnegie also set aside another portion of money. According to a 1999 article in Pensions & Investments magazine, Carnegie wrote a letter saying the second portion was to be used "to provide small pensions or aids to such employees as, after long and creditable service, through exceptional circumstances, need such help in their old age and who make good use of it."
The retirement plan Carnegie devised was based on one used by his former employer, the Pennsylvania Railroad, but the railroad funded its plan through worker contributions, which then went into a general pool that was invested in stocks and bonds. Carnegie's, by contrast, was funded from the great profits of Carnegie Steel before he sold it to Morgan. He also set up a similar fund to provide for college professors who had become too old to teach any longer. He donated $10 million to
Andrew Carnegie and spelling reform
Andrew Carnegie was known for his commitment to education, but one of the steel businessman's more unusual philanthropic efforts came out of his hope for world peace. In the early years of the twentieth century, he donated generously to a spelling reform movement promoted by the National Simplified Spelling Board. After its formation in 1903, the board urged the adoption of a simplified spelling system that was the work of Melvil Dewey (1851–1931), creator of the Dewey Decimal System that was used by libraries to catalog books. Dewey's suggestions included the elimination of unpronounced vowels, like "ue" at the end of dialogue, and the abolishment of unnecessary double consonants, like the second "l" in spelling.
Carnegie believed that a simplified spelling system in the English language had many potential benefits. It would make the language easier to learn for new immigrants, reduce teachers' classroom instruction hours, and save time and money in the publishing world. Carnegie also hoped that a simplified universal language might be adopted by diplomats and other representatives of nations. A common tongue, he believed, would reduce differences among peoples and promote world peace, and he felt that English was ideally suited for such a task. Its spelling rules were frustrating and confusing, however, and the new system would be the first step in making the language easier to use.
The plan of the National Simplified Spelling Board was to recruit famous writers who would commit to using the new spelling of a dozen words in their works. These first twelve words were program, catalog, decalog, prolog, demogog, pedogog, tho, altho, thoro, thoro fare, thru, and thruout. The list of revised words would grow as the movement caught on. Author Mark Twain was an early supporter of the system, and the Board's work was also endorsed by President Theodore Roosevelt (1858–1919; served 1901–9). The Worcester Telegram of Massachusetts was the first newspaper to adopt the style.
Carnegie gave a total of nearly $300,000 to the spelling reform movement, but it failed to catch on with the public. Major newspapers poked fun at his "Bored of Speling," and he finally abandoned the cause in 1915 with the onset of World War I (1914–18; a war in which Great Britain, France, the United States and their allies defeated Germany, Austria-Hungary, and their allies) and more pressing concerns. In his own correspondence, however, Carnegie continued to use it, even in his last will and testament. Some of the simplified spellings advocated by the board did eventually become standard. For example program replaced the more old-fashioned programme, and labor became the preferred American version of the British word labour.
establish the Carnegie Teachers' Pension Fund, which eventually evolved into the Teachers Insurance and Annuity Association-College Retirement Equities Fund, also known as TIAA-CREF.
Carnegie did not marry until 1887, when he was fifty-one years old. His spare time was spent at Skibo Castle in Scotland, which he bought in 1897 as a vacation retreat for his wife, Louise, and their daughter, Margaret, born that same year. He spent the next twenty years of his life as one of history's most generous philanthropists. The arts, education, and public libraries were his passions, and he built Carnegie Hall, the famed concert hall in New York City. He donated $5.2 million to the New York public library system so that it could build its branch libraries, and a foundation he created provided funds for any city or town in the United States that wished to establish a free library. His generosity was responsible for the building and stocking of some 2,800 public libraries in the United States and Great Britain. He established the Carnegie Institute of Technology, later known as Carnegie-Mellon University, in Pittsburgh, and the Carnegie Foundation for the Advancement of Teaching. The Carnegie Corporation of New York, established by Carnegie in 1911, was still making financial grants to worthy people and causes in the early twenty-first century.
Carnegie died on August 11, 1919, at his Lenox, Massachusetts, estate known as Shadowbrook. He was survived by his wife Louise and daughter Margaret. By the time of his death, he had given away some $350 million of his fortune, estimated to be about 90 percent of his total wealth.
For More Information
Krass, Peter. Carnegie. Hoboken, NJ: John Wiley & Sons, 2002.
Chernow, Ron. "Blessed Barons." Time (December 7, 1998): p. 74.
"The Making of the Modern Company." Business Week (August 28, 2000): p. 98.
"Steel Baron Andrew Carnegie Pioneered Pension Funding." Pensions & Investments (December 27, 1999): p. 34.
Wren, Daniel A. and Ronald G. Greenwood. "Business Leaders: A Historical Sketch of Andrew Carnegie." Journal of Leadership Studies (Fall 1998): p. 106.
"Rags to Riches Timeline." PBS. http://www.pbs.org/wgbh/amex/carnegie/timeline/timeline2.html (accessed on July 7, 2005).
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). □
Born November 25, 1835
Died August 11, 1919
Scottish-born American industrialist
"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.
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
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.
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.
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).
The wealthiest man of his time, industrialist Andrew Carnegie is best known today for the monumental philanthropic projects he established after his retirement. Having made millions in the steel industry during the late 1800s, Carnegie dedicated his fortune to the educational and philanthropic causes he considered to be the proper beneficiary of capitalist profit.
Carnegie's early life fostered both his ambition and his radical attitude toward wealth. He was born in Dunfermline, Scotland, in 1835, the oldest child of Margaret and Will Carnegie, a handloom weaver. His parents instilled in Andrew a strict work ethic and a belief that wealth carries with it social responsibilities. When steam-powered machines made handlooms obsolete around 1847, weavers in Scotland agitated for economic reforms, but there was little hope of success. At the urging of his socially-ambitious wife, Will Carnegie moved his family to the United States in 1848. They settled in Allegheny, Pennsylvania, near Pittsburgh, where Will Carnegie struggled to support his family. Young Andrew immediately began factory work, earning $1.20 per week as a bobbin boy in a textile mill. Soon he obtained a better job as a messenger in a telegraph office. Andrew memorized addresses and names to speed up his errands and was quickly promoted to telegraph operator. In 1853 he became assistant to Thomas Scott, superintendent of the company's western division.
By 1855 when Will Carnegie died, Andrew was the sole financial support for his mother and younger brother, Tom. He was only 20 years old. Although there was no opportunity for formal education, Andrew studied as much as he could at the free public library and learned double-entry bookkeeping at night school. He became an avid reader, a sophisticated lover of music, and a theatergoer with a passion for Shakespeare (he knew the Bard's work so well he could recite entire scenes from memory). By 1859, the young Carnegie was financially secure enough to move with his mother to the upscale suburb of Homewood. In 1864, Carnegie was drafted into the Union Army, but he paid a replacement soldier $850 to serve for him, a widely accepted practice at the time.
Carnegie was greatly influenced by his strong-willed mother, who was proud of her son's success and paraded in front of her former townspeople when she and Carnegie visited Dunfermline in 1881. Because of Margaret's disapproval, Carnegie put off marriage to Louise Whitfield, whom he had met in 1870, until after his mother's death. In 1886 Carnegie came down with typhoid, and suffered a serious relapse when he learned of his brother's death. A month later, when Margaret died, Carnegie was still so ill that his mother's coffin was lowered from her bedroom window in order to keep her death a secret from her son. Carnegie married Louise Whitfield in 1887, and in 1897 their daughter Margaret was born. That same year Carnegie bought Skibo Castle in Scotland, where he spent about half of each year until he retired in 1901. In 1916, Carnegie bought Shadowbrook, an estate in Lenox, Massachusetts, where he died in 1919.
Much of Carnegie's success came from his extraordinary ability to recognize and exploit the opportunities being created by industrialization. During his 12 years with the Pennsylvania Railroad, he developed the managerial skills and personal relationships that would help him in his later business ventures. He learned how the railroad industry worked and introduced such innovations as keeping the telegraph office open 24 hours a day and burning railroad cars after accidents to clear the tracks quickly. During the Civil War, he organized the military telegraph system for the North and gained additional insights into the industry. Seeing the commercial potential of sleeping cars on trains, Carnegie invested $217.50, which he obtained through a bank loan, in the Woodruff Sleeping Car Company. Within two years, he was receiving an annual return of about $5000, more than three times what he was earning at the railroad. Carnegie also became a silent partner in several small iron mills and factories. By 1863 his annual income was $42,000.
In 1865, Carnegie retired from the railroad and founded the Keystone Bridge Company, which used iron rather than wood in the construction of bridges. Tom Scott loaned Carnegie half the $80,000 needed for this investment. Two years later, Carnegie founded the Keystone Telegraph Company, which received permission from the Pennsylvania Railroad to string telegraph wires across their poles. This proved so valuable that Keystone merged with the Atlantic Telegraph Company and tripled its investors' return. Between 1865 and 1870, Carnegie traveled between the United States and England selling U.S. railroad and bridge company bonds. He may have sold as much as $30 million in bonds and made as much as $1 million in commissions.
Chronology: Andrew Carnegie
1848: Emigrates with family to United States; settles near Pittsburgh.
1856: Invests in railroad sleeping cars.
1861: Invests in oil and other companies.
1865: Retires from railroad; founds Keystone Bridge Company.
1872: Visits Bessemer steel plants in England.
1875: Opens his first steel plant, Edgar Thomson Works, in Braddock, PA.
1881: Assumes control of Frick Coke Company.
1883: Buys Homestead Works steel mill.
1889: Publishes "Gospel of Wealth."
1899: Forms Carnegie Steel from his several steel companies.
1901: Sells out to Morgan, becoming richest man in the world.
1919: Dies at estate in Lenox, MA.
By 1870 Carnegie realized that steel would inevitably replace iron in the expanding market for building products. He withdrew from his other investment activity to concentrate on steel manufacturing. With his own capital, he built his first blast furnace that year and another in 1872. He persuaded some of his Pittsburgh business acquaintances to join him in steel manufacturing and with them formed Carnegie, McCandless, and Company (later known as Carnegie Steel). The company employed the innovative Bessemer method, which Carnegie had witnessed on a visit to Bessemer's steel plants in England in 1872. This process, which forces compressed air through molten iron to burn out excess carbon and other impurities, significantly cut the cost of converting iron into steel. In 1875 Carnegie opened his first steel plant in Braddock, Pennsylvania, naming it after the president of the Pennsylvania Railroad, Edgar Thomson. The plant's first order, for 2,000 steel rails, was placed by the Pennsylvania Railroad. Carnegie also introduced open-hearth steel production to his plants, which lowered the costs and increased sales and profits. Carnegie consistently invested his profits back into the company to make improvements, cut operating costs, and drive out competition. By 1878 the company was capitalized at $1.3 million and it continued to grow, making Carnegie the dominant steel manufacturer in the country.
In the 1880s Carnegie acquired a majority interest in the H. C. Frick Company, which produced coke—a component in the manufacture of steel. Carnegie and Frick made a formidable business team, with Carnegie overseeing expansion, installation of cost controls, and modernization of plants while Frick controlled day-today management. In 1883, Carnegie bought the Homestead Works to produce steel structural members for elevated railways and skyscrapers-products in increasing demand in growing urban centers. Despite a harsh national depression from 1893-1896, the Carnegie Company, following Carnegie's command to "Take orders and run full," held prices down, kept skilled workers on the payroll, and earned profits. By 1890, Carnegie's take-home pay was $25 million per year. A decade later, Carnegie Steel's annual profits were $40 million.
Carnegie had always fought cartels, but by the 1890s he was beginning to encounter increasing competition from newly-formed corporations headed by J. P. Morgan and the Moore Brothers. These corporations wanted to impose stability on the steel industry by controlling prices and by limiting competition through pools and cartels. At first, Carnegie refused to bargain with these corporations, but by 1901 he wished to retire from business and devote himself to family life and philanthropy. J. P. Morgan bought Carnegie's controlling interest in Carnegie Steel for $500 million and restructured the business to create U.S. Steel Corporation. Carnegie's personal share in the buyout was $225 million, making him the wealthiest man in the world.
Social and Economic Impact
Carnegie played a significant role in building and modernizing American industry. He utilized not only the vast natural resources of the continent that provided the raw materials of manufacturing, but also a huge labor pool—new immigrants—eager for employment. Carnegie was quick to appreciate new technology, and although he did not invent his own innovations, he brought to his plants technological improvements that dramatically increased productivity and profits. With no public regulation of business during this era, Carnegie took advantage of the freedom to set hours, wages, and business practices as he saw fit. By emphasizing efficiency of production, he kept costs low and expanded markets for steel products. Steel became a pillar of the American economy, driving manufacturing and providing the materials needed for continued western expansion and rapid urban growth.
Carnegie's business practices also affected the position of struggling workers. In an era that lacked laws that protected workers' rights, Carnegie was not anti-union. In 1886, he published an article in Forum Magazine defending workers' right to form a labor union, and the following year he intervened to force his partner, Henry Clay Frick, to settle a strike that Frick had wished to break. But by increasing efficiency in his plants, Carnegie made labor conflicts inevitable because efficient production required fewer workers. In 1892, when the union contract at the Homestead mill expired, the workers organized a strike. Carnegie was on vacation in Scotland and at first directed Frick to honor the strike. When Frick made it clear that he intended to smash the union, Carnegie remained silent. On July 6, 1892, 300 Pinkerton Agents entered the area to break the strike, and a bloody battle ensued. Five strikers and three Pinkertons were killed, and scores were injured on both sides. For the next two months, the plant operated under military protection from the state militia, until the union finally called the strike off. This event soured labor toward Carnegie; his company was to remain nonunion until the mid-1930s.
Carnegie's success at business revolutionized the steel industry and helped the United States become an industrial leader. However, his impact on American society through philanthropy would outlast the industrial age. Carnegie followed the vision he set out in The Gospel of Wealth and dedicated his retirement to the proper distribution of his fortunes for the public good. He strongly supported education and the arts. In 1891 he founded a concert hall in New York City. He generously provided funds to cities interested in building public libraries. Most notably, in 1901 he gave the New York public library $5.2 million to open its first public branches. In total he donated over $50 million to build 2,800 public libraries in the United States and Great Britain. His belief in the free access to books is evident in an excerpt from his address at the dedication of the Carnegie Library of Pittsburgh in 1895: "It is the mind that makes the body rich. There is no class so pitiably wretched as that which possesses money and nothing else. Money can only be the useful drudge of things immeasurably higher than itself . . . My aspirations . . . have contributed to the enlightenment and the joys of the mind, to the things of the spirit, to all that tends to bring into the lives of the toilers of Pittsburgh sweetness and light. I hold this the noblest possible use of wealth. The taste for reading is one of the most precious possessions of life, and . . . I should much rather be instrumental in bringing to the working man or woman this taste than mere dollars. It is better than a fortune."
Carnegie also supported higher education and efforts for world peace. In 1898, he advocated for independence for the Philippines, which the United States had purchased from Spain for $20 million after capturing the islands during the Spanish-American War. Carnegie offered to donate that price for the islands to purchase their freedom, but this bid was unsuccessful. Carnegie also established the Carnegie Endowment for International Peace in 1910, and provided funds for the construction of the Central American Court of Justice in Costa Rica, destroyed later that year in an earthquake. Carnegie donated money to universities in his native Scotland, and in 1900 founded the Carnegie Institute of Technology (which later became Carnegie-Mellon University) in Pittsburgh. In 1902 he founded a scientific research institution called the Carnegie Institution in Washington, D.C. and in 1905 he established the Carnegie Foundation for the Advancement of Teaching. Six years later Carnegie allocated $125 million to the Carnegie Corporation of New York for educational advancement through schools, libraries, research, and publication. By the time of his death in 1919 Carnegie had succeeded in distributing over $350 million-in all, 90 percent of his fortune.
Sources of Information
The American Experience, 1998. Available from http://www.pbs.org/wgbh/pages/amex/carnegie/index.html
Byers, Paula K. and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography, Detroit: Gale Research, 1998.
Carnegie, Andrew. The Autobiography of Andrew Carnegie. Boston: Northeastern University Press, 1986 (1920).
Carnegie, Andrew. "Address at Dedication of The Carnegie Library of Pittsburgh." 1998. Available from http://www.clpgh.org/exhibit/neighborhoods/oakland/oak_n77.html
Carnegie Denied: Communities Rejecting Carnegie Library Construction Grants, 1898-1925. Westport, CT: Greenwood Press, 1993.
Hoyt, Austin. The Richest Man in the World: Andrew Carnegie. Screenplay, documentary film for The American Experience produced for WGBH-TV, Boston, 1997.
Kitman, Marvin. "The Marvin Kitman Sunday Show: Rich Lessons from Carnegie." Newsday, January 26, 1997.
Krause, Paul. The Battle for Homestead, 1880-1892: Politics, Culture, and Steel. Pittsburgh: University of Pittsburgh Press, 1992.
Royle, Trevor. The Companion to Scottish Literature. Detroit: Gale Research, 1983.
Tompkins, Vincent, ed. American Decades 1900-1909. Detroit: Gale Research, 1996.
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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.
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.
Gary, Indiana, Chamber of Commerce. [On-line] http://www.garychamber.com/history.asp (accessed on August 16, 2002).
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 (1835-1919)
CARNEGIE, ANDREW (1835-1919)
An industrialist and philanthropist, Andrew Carnegie was born in Dumferline, Scotland, to William and Margaret Morrison Carnegie. Economic reverses led the family to emigrate in 1848 to Allegheny, Pennsylvania, where for $1.20 per week Andrew took a job as a bobbin boy in a textile factory. Hungry for knowledge, he also became the heaviest user of Colonel J. Anderson's personal library, which was open to all Allegheny working boys. A year later, Carnegie hired on as a telegraph messenger boy, where he so distinguished himself that Thomas Scott, superintendent of the western division of the Pennsylvania Railroad, hired him as his personal telegrapher for $35 a month.
Under Scott, Carnegie learned business methods quickly, and when Scott became the general superintendent of the railroad in 1859, Carnegie took over the position of superintendent of the western division. The new salary enabled Carnegie to expand his investments, all of which turned substantial profits. In 1865, he resigned from the railroad to devote full attention to his growing business interests. When investments generated a comfortable income, he wrote himself a note in 1868: "Thirty-three and an income of $50,000 [sic] per annum.… Beyond this never earn—make no effort to increase fortune, but spend surplus each year for benovolent [sic] purposes." For the next twenty years, he generally ignored this commitment while he built a huge fortune in the steel industry.
In 1887, Carnegie married Louise Whitfield, and they had one daughter (born in 1897). By the end of the 1880s, however, the sentiment expressed in his 1868 note began to gnaw on Carnegie's conscience. In 1889, he published two essays in the North American Review outlining a "gospel of wealth" philosophy. Wealthy people, he said, had a responsibility to live moderately and give their excess wealth to needy people who would help themselves. In an essay entitled "The Best Fields for Philanthropy," he specifically identified seven institutions worthy of attention: universities, public libraries, medical centers, public parks and arboretums, concert halls, public swimming pools and baths, and churches. (Carnegie had foreshadowed some of these priorities earlier in the decade with gifts of a library and swimming bath to Dumferline, a library to Braddock, Pennsylvania, and an organ to an Allegheny church.) Much of this rhetoric, however, was tarnished by the Homestead Strike of 1892, in which seven steelworkers lost their lives in a fight with Pinker-ton detectives who had been hired to help Carnegie break the union.
After selling his steel interests to J. P. Morgan for nearly $500 million in 1901, Carnegie turned his full attention to implementing his gospel of wealth. By the time of his death eighteen years later, he had donated more than $333 million to underwrite such causes and organizations as the Simplified Spelling Board, 7,689 church organs, the Carnegie Hero Fund, the Church Peace Union, the Carnegie Institute of Pittsburgh (which included an art gallery, library, concert hall, and the Carnegie Institute of Technology), the Carnegie Institute of Washington, D.C., the Carnegie Foundation for the Advancement of Teaching, and the Carnegie Endowment for International Peace. He also provided the money to construct the Pan American Union building in Washington, D.C. (to promote peace in the Western Hemisphere), a Court of Justice in Costa Rica (to arbitrate disputes between Central American countries), and The Hague Peace Palace in the Netherlands (to house the World Court). In 1911, Carnegie endowed the Carnegie Corporation with $125 million, and over time, he relinquished control of his philanthropy to the directors of the corporation.
Among all his philanthropic interests, Carnegie particularly liked libraries. He often boasted that around the world the sun always shone on at least one Carnegie library. Between 1890 and 1919, he donated $56 million to construct 2,811 libraries in the English-speaking world (including $41 million to construct 1,679 American public libraries in 1,412 communities and $4.3 million to erect 108 academic libraries in the United States). In 1917, Carnegie also donated the money to erect 36 libraries in camps located throughout the United States that trained soldiers for participation in World War I. The sheer size of Carnegie's philanthropy generated a competition between communities to establish libraries; it also helped create a climate of giving that encouraged other library philanthropists.
A typical Carnegie grant first required communities to provide a suitable site for the library. Once that had been established, Carnegie would agree to donate a sum (usually $2.00 per capita of the local population) to be used in the erection of a building—as long as the community promised to fund the library annually at a rate of 10 percent of the original gift.
Not all communities welcomed Carnegie grants, however. In Wheeling, West Virginia, for example, local labor leaders who remembered the Homestead Strike of 1892 rejected efforts by city fathers to accept a grant. "There will be one place on this great green planet where Andrew Carnegie can't get a monument with his money," steel-worker Mike Mahoney told labor delegates at a meeting called to defeat the library levy in 1904. (Seven years later, Wheeling opened a public library with labor support, but without Carnegie money.) In scores of other communities, Carnegie grants were rejected for gender and race reasons. In some, the male elite rejected efforts by local ladies' clubs to add yet another institutional responsibility to the local tax burden. In others (especially in the South), the local white elite worried that to accept a "free" library would force them to offer racially integrated services.
Communities that successfully solicited Carnegie grants were often inexperienced in library design and architecture. To address this problem, James Bertram, Carnegie's private secretary, commissioned a set of six model library blueprints. In part, this had the effect of homogenizing public library architecture in small-to mediumsized communities. A typical classically designed Carnegie building required a library user to climb ten or more steps to enter through (usually) double doors. At that point she (the large majority of patrons were women and children) could turn left and descend to a lower level, where she generally found a restroom, heating plant, and meeting room available for community groups such as the local women's club and the Rotary Club. If the patron chose not to descend to the lower level, she could step forward to the circulation desk. Located in the middle of an open space (and often under a dome), the U-shaped circulation desk stood waist high and functioned as the command post of the librarian. From behind the desk, the librarian (almost always a woman) could, without moving, look right and monitor activities in the children's wing. The librarian could also look left into the adult reading room, where periodicals and newspapers were available. Behind the librarian were stacks filled with books that the American Library Association (ALA) had recommended in bibliographical guides (e.g., Booklist magazine, the ALA Catalog). These guides were funded in part by the interest that accrued on a $100,000 endowment made by Carnegie in 1902.
After Carnegie's death on August 11, 1919, in Lenox, Massachusetts, the Carnegie Corporation continued to favor most of his philanthropic interests, especially librarianship and higher education. The legacy of Carnegie's philanthropy was significant. Organizations that he founded and institutions that he helped to build during his lifetime evolved into essential agencies for creating, acquiring, organizing, and disseminating multiple forms of communication and information.
See also:Libraries, History of.
Carnegie, Andrew. (1889). The Gospel of Wealth. New York: Jenkins & McGowan.
Carnegie, Andrew. (1920). The Autobiography of Andrew Carnegie. New York: Houghton Mifflin.
Hendrick, Burton J. (1932). The Life of Andrew Carnegie. Garden City, NJ: Doubleday, Doran & Company.
Lagemann, Ellen Condliffe. (1989). The Politics of Knowledge: The Carnegie Corporation, Philanthropy, and Public Polity. Middletown, CT: Wesleyan University Press.
Livesay, Harold. (1975). Andrew Carnegie and the Rise of Big Business. Boston: Little, Brown.
Martin, Robert Sidney, ed. (1993). Carnegie Denied: Communities Rejecting Carnegie Library Construction Grants, 1898-1925. Westport, CT: Greenwood.
Van Slyck, Abigail. (1995). Free to All: Carnegie Libraries & American Culture, 1890-1920. Chicago: University of Chicago Press.
Wall, Joseph Frazier. (1970). Andrew Carnegie. New York: Oxford University Press.
Wayne A. Wiegand
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.