Andrew Carnegie

Andrew Carnegie (properly , but commonly, /ˈkɑrnɨɡi/ or /kɑrˈnɛɡi/ )[1] (November 25, 1835 – August 11, 1919) was a Scottish-American industrialist, businessman, entrepreneur and a major philanthropist.

Carnegie was born in Dunfermline, Scotland, and migrated to the United States as a child with his parents. His first job in the United States was as a factory worker in a bobbin factory. Later on he became a bill logger for the owner of the company. Soon after he became a messenger boy. Eventually he progressed up the ranks of a telegraph company. He built Pittsburgh's Carnegie Steel Company, which was later merged with Elbert H. Gary's Federal Steel Company and several smaller companies to create U.S. Steel. With the fortune he made from business among others he built Carnegie Hall, later he turned to philanthropy and interests in education, founding the Carnegie Corporation of New York, Carnegie Endowment for International Peace, Carnegie Institution of Washington, Carnegie Mellon University and the Carnegie Museums of Pittsburgh.

Carnegie donated most of his money to establish many libraries, schools, and universities in America, the United Kingdom and other countries, as well as a pension fund for former employees. He is often regarded as the second-richest man in history after John D. Rockefeller. Carnegie started as a telegrapher and by the 1860s had investments in railroads, railroad sleeping cars, bridges and oil derricks. He built further wealth as a bond salesman raising money for American enterprise in Europe.

He earned most of his fortune in the steel industry. In the 1870s, he founded the Carnegie Steel Company, a step which cemented his name as one of the "Captains of Industry". By the 1890s, the company was the largest and most profitable industrial enterprise in the world. Carnegie sold it in 1901 for $480 million to J.P. Morgan, who created U.S. Steel. Carnegie devoted the remainder of his life to large-scale philanthropy, with special emphasis on local libraries, world peace, education and scientific research. His life has often been referred to as a true "rags to riches" story.

Early life

Andrew Carnegie was born in Dunfermline, Scotland, in a typical weaver's cottage with only one main room consisting of half the ground floor which was shared with the neighbouring weaver's family.[2] The main room served as a living room, dining room and bedroom.[2] He was named after his paternal grandfather.[2] In 1836, the family moved to a larger house in Edgar Street (opposite Reid's Park), following the demand for more heavy damask which his father, William Carnegie, benefited from.[2] His uncle, George Lauder, whom he referred to as "Dod", introduced him to the writings of Robert Burns and such historical Scottish heroes as Robert the Bruce, William Wallace, and Rob Roy. Falling on very hard times as a handloom weaver and with the country in starvation, William Carnegie decided to move with his family to Allegheny, Pennsylvania in the United States in 1848 for the prospect of a better life.[3] Andrew's family had to borrow money in order to migrate. Allegheny was a very poor area. His first job at age 13 in 1848 was as a bobbin boy, changing spools of thread in a cotton mill twelve hours a day, six days a week. His wages were $2.00 per week.[4] Andrew's father, William Carnegie, started off working in a cotton mill but then would earn money weaving and peddling linens. His mother, Margaret Morrison Carnegie, earned money by binding shoes.

In 1850, Carnegie became a telegraph messenger boy in the Pittsburgh Office of the Ohio Telegraph Company, at $2.50 per week,[5] following the recommendation of his uncle. His new job gave him many benefits including free admission to the local theater. This made him appreciate Shakespeare's work. He was a very hard worker and would memorize all of the locations of Pittsburgh's businesses and the faces of important men. He made many connections this way. He also paid close attention to the telegraph's instruments (he could translate the clicks of the telegraph before they appeared on the printed tape) and within a year was promoted as an operator.

Carnegie's education and passion for reading was given a great boost by Colonel James Anderson, who opened his personal library of 400 volumes to working boys each Saturday night. Carnegie was a consistent borrower and a "self-made man" in both his economic development and his intellectual and cultural development. His capacity, willingness for hard work, his perseverance, and his alertness soon brought forth opportunities. At work, Carnegie quickly taught himself to distinguish the differing sounds the incoming telegraph signals produced and learned to transcribe signals by ear, without having to write them down.

Starting in 1853, Thomas A. Scott of the Pennsylvania Railroad Company employed Carnegie as a secretary/telegraph operator at a salary of $4.00 per week. At age eighteen, the youth began a rapid advancement through the company, becoming the superintendent of the Pittsburgh Division. His employment by the Pennsylvania Railroad Company would be vital to his later success. The railroads were the first big businesses in America, and the Pennsylvania was one of the largest of them all. Carnegie learned much about management and cost control during these years, and from Scott in particular.[6]

Scott also helped him with his first investments. Many of these were part of the corruption indulged in by Scott and the Pennsylvania's president, J. Edgar Thomson, which consisted of inside trading in companies that the railroad did business with, or payoffs made by contracting parties "as part of a quid pro quo," as biographer David Nasaw writes.[7] In 1855, Scott made it possible for Carnegie to invest $500 in the Adams Express, which contracted with the Pennsylvania to carry its messengers. The money was secured by the act of his mother placing a $500 mortgage on the family's $700 home, but the opportunity was only available because of Carnegie's close relationship with Scott.[8] A few years later, he received a few shares in T.T. Woodruff's sleeping car company, as a reward for holding shares that Woodruff had given to Scott and Thomson, as a payoff. Reinvesting his returns in such inside investments in railroad-related industries: (iron, bridges, and rails), Carnegie slowly accumulated capital, the basis for his later success. Throughout his later career, he made use of his close connection to Thomson and Scott as he established businesses that supplied rails and bridges to the railroad, offering the two men a stake in his enterprises.[9]

1860–1865: The Civil War

Before the Civil War, Carnegie arranged a merger between Woodruff's company and that of George M Pullman, the inventor of a sleeping car for first-class travel which facilitated business travel at distances over . The investment proved a great success and a source of profit for Woodruff and Carnegie. The young Carnegie continued to work for the Pennsylvania's Tom Scott, and introduced several improvements in the service.

In spring 1861, Carnegie was appointed by Scott, who was now Assistant Secretary of War in charge of military transportation, as Superintendent of the Military Railways and the Union Government's telegraph lines in the East. Carnegie helped open the rail lines into Washington D.C. that the rebels had cut; he rode the locomotive pulling the first brigade of Union troops to reach Washington D.C. Following the defeat of Union forces at Bull Run, he personally supervised the transportation of the defeated forces. Under his organization, the telegraph service rendered efficient service to the Union cause and significantly assisted in the eventual victory. Carnegie later joked that he was "the first casualty of the war" when he gained a scar on his cheek from freeing a trapped telegraph wire.

Defeat of the Confederacy required vast supplies of munitions, as well as railroads (and telegraph lines) to deliver the goods. The war demonstrated how integral the industries were to American success.

In 1864, Carnegie invested $40,000 in Story Farm on Oil Creek in Venango County, Pennsylvania. In one year, the farm yielded over $1,000,000 in cash dividends, and petroleum from oil wells on the property sold profitably. The demand for iron products, such as armor for gunboats, cannon, and shells, as well as a hundred other industrial products, made Pittsburgh a center of wartime production. Carnegie worked with others in establishing a steel rolling mill and steel production and control of industry became the source of his fortune. Carnegie had some investments in the iron industry before the war.

After the war, Carnegie left the railroads to devote all his energies to the ironworks trade. Carnegie worked to develop several iron works, eventually forming The Keystone Bridge Works and the Union Ironworks, in Pittsburgh. Although he had left the Pennsylvania Railroad Company, he remained closely connected to its management, namely Thomas A. Scott and J. Edgar Thomson. He used his connection to the two men to acquire contracts for his Keystone Bridge Company and the rails produced by his ironworks. He also gave stock to Scott and Thomson in his businesses, and the Pennsylvania was his best customer. When he built his first steel plant, he made a point of naming it after Thomson. As well as having good business sense, Carnegie possessed charm and literary knowledge. He was invited to many important social functions—functions that Carnegie exploited to his own advantage.[10]

Carnegie believed in using his fortune for others and doing more than making money. He wrote:

I propose to take an income no greater than $50,000 per annum! Beyond this I need ever earn, make no effort to increase my fortune, but spend the surplus each year for benevolent purposes! Let us cast aside business forever, except for others. Let us settle in Oxford and I shall get a thorough education, making the acquaintance of literary men. I figure that this will take three years active work. I shall pay especial attention to speaking in public. We can settle in London and I can purchase a controlling interest in some newspaper or live review and give the general management of it attention, taking part in public matters, especially those connected with education and improvement of the poorer classes. Man must have an idol and the amassing of wealth is one of the worst species of idolatry! No idol is more debasing than the worship of money! Whatever I engage in I must push inordinately; therefore should I be careful to choose that life which will be the most elevating in its character. To continue much longer overwhelmed by business cares and with most of my thoughts wholly upon the way to make more money in the shortest time, must degrade me beyond hope of permanent recovery. I will resign business at thirty-five, but during these ensuing two years I wish to spend the afternoons in receiving instruction and in reading systematically!

1880–1900: Scholar and activist

Carnegie continued his business career; some of his literary intentions were fulfilled. He befriended English poet Matthew Arnold and English philosopher Herbert Spencer as well as being in correspondence and acquaintance with most of the U.S. Presidents,[11] statesmen, and notable writers.[12]

Carnegie erected commodious swimming-baths for the people of his hometown in Dunfermline in 1879. In the following year, Carnegie gave $40,000 for the establishment of a free library in Dunfermline. In 1884, he gave $50,000 to Bellevue Hospital Medical College (now part of New York University Medical Center) to found a histological laboratory, now called the Carnegie Laboratory.

In 1881, Carnegie took his family, including his 70 year-old mother, on a trip to the United Kingdom. They toured Scotland by coach, and enjoyed several receptions en-route. The highlight for them all was a triumphal return to Dunfermline, where Carnegie's mother laid the foundation stone of a Carnegie Library for which he donated the money. Carnegie's criticism of British society did not mean dislike; on the contrary, one of Carnegie's ambitions was to act as a catalyst for a close association between the English-speaking peoples. To this end, in the early 1880s, he purchased numerous newspapers in England, all of which were to advocate the abolition of the monarchy and the establishment of "the British Republic". Carnegie's charm aided by his great wealth meant that he had many British friends, including Prime Minister William Ewart Gladstone.

In 1886, Andrew Carnegie's younger brother Thomas died at age 43. Success in the business continued, however. While owning steel works, Carnegie had purchased at low cost the most valuable of the iron ore fields around Lake Superior. The same year Carnegie became a figure of controversy. Following his tour of the UK, he wrote about his experiences in a book entitled An American Four-in-hand in Britain. Although still actively involved in running his many businesses, Carnegie had become a regular contributor to numerous magazines, most notably the Nineteenth Century, under the editorship of James Knowles, and the influential North American Review, led by editor Lloyd Bryce.

In 1886, Carnegie wrote his most radical work to date, entitled Triumphant Democracy. Liberal in its use of statistics to make its arguments, the book argued his view that the American republican system of government was superior to the British monarchical system. It gave a highly favorable and idealized view of American progress and criticized the British royal family. The cover depicted an upended royal crown and a broken scepter. The book created considerable controversy in the UK. The book made many Americans appreciate their country's economic progress and sold over 40,000 copies, mostly in the U.S.

In 1889, Carnegie published "Wealth" in the June issue of the North American Review. After reading it, Gladstone requested its publication in England, where it appeared as "The Gospel of Wealth" in the Pall Mall Gazette. The article was the subject of much discussion. Carnegie argued that the life of a wealthy industrialist should comprise two parts. The first part was the gathering and the accumulation of wealth. The second part was for the subsequent distribution of this wealth to benevolent causes. The philanthropy was key to making the life worthwhile.

Carnegie was also known to be a great journalist. This came about from his experience in constantly writing to newspapers and to their editors. His knowledge in reading newspapers stems from a habit from his childhood.[13] He also would go on to publish three books on travel. One of them entitled "Round the world" he began writing while traveling England and Scotland.[14]

In 1898, Carnegie tried to arrange for independence for the Philippines. As the end of the Spanish American War neared, the United States bought the Philippines from Spain for $20 million USD. To counter what he perceived as imperialism on the part of the United States, Carnegie personally offered $20 million USD to the Philippines so that the Filipino people could buy their independence from the United States.[15] However, nothing came of this gesture and the Philippine-American War ensued.

Carnegie opposed the annexation of Cuba by the United States and in this, was successful with many other conservatives who founded an anti-imperialist league that included former presidents of the United States, Grover Cleveland and Benjamin Harrison, and literary figures like Mark Twain.[16][17][18]