Andrew Carnegie



Born: November 25, 1835
Dunfermline, Scotland
Died: August 11, 1919
Lenox, Massachusetts
Industrialist and philanthropist

Andrew Carnegie. Reproduced courtesy of the Library of Congress.
Andrew Carnegie.
Reproduced courtesy of the Library of Congress.

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.

New Opportunities

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

Books

Tarbell, Ida M. The Life of Elbert H. Gray: A Story of Steel. New York: D. Appleton and Company, 1925.

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

1970.

Periodicals

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.

Web Sites

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).



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