Andrew Carnegie

Dimitris Stamatios | May 26, 2023

Summary

Andrew Carnegie (correctly pronounced

Although Carnegie paid his employees the low wages typical of the time, he later donated most of his money to fund various libraries, schools and universities in the United States, the United Kingdom and other countries, as well as to create pension funds for senior employees. Carnegie began as a radio telegrapher and by the 1860s invested in railroads, railroad sleeping cars, bridges and oil derricks. He also made his fortune as a bond salesman to finance Anglo-American enterprises in Europe.

It was in steel that he made most of his fortune. In the 1870s, he founded the Carnegie Steel Company, a move that cemented his name as one of the “Captains of Industry”. By the 1890s, it was the largest and most profitable of all the world’s industrial enterprises. Carnegie sold it to J.P. Morgan in 1901, who created U.S. Steel. He devoted the rest of his life to large-scale philanthropy, with special emphasis on local libraries, world peace, education and scientific research.

Carnegie’s education and his passion for reading were given a great boost by Colonel James Anderson, who opened his private library of 1,000 volumes to working-class children every Saturday morning. Carnegie was a constant user and a “self-made man” in his economic as well as intellectual and cultural development. His ability and willingness to work hard, his perseverance and diligence soon and hereafter brought him opportunities.

The son of a fighter as a child, Carnegie emigrated with his family from Scotland to the United States in 1847 and settled in Allegheny, Pennsylvania. That same year he had his first job, when he was thirteen years old, as a bobbin boy, changing spools of thread in a cotton weaving mill for twelve hours a day, six days a week. He was paid $1.20 a week, plus an additional 100 cents for keeping the boiler going. In 1851, Carnegie became a telegrapher in the Pittsburgh office of the Ohio Telegraph Company, earning $2.00 a week. In addition to providing him with a higher income, the job also awakened in him a lifelong passion for the plays of William Shakespeare. He often had to deliver messages to a theater, and most of the time he managed to arrive just as the curtains were raised and the show began. Carnegie could convince the theater manager to let him stay and see the performance for free.

Carnegie quickly taught himself to distinguish the different sounds of the signals he received and to transcribe them by ear, without having to write them down. Thomas A. Scott of the Pennsylvania Railroad Company hired him as a clerk and telegrapher beginning in 1853, at a salary of $4.00 a week. At the age of eighteen, Carnegie began to climb the ranks, becoming the superintendent of the Pittsburgh division. Scott also helped him with his early investments. In 1855 Carnegie invested $600 in a successful company called Adams Express. Later he invested in sleeping cars for the Pennsylvania Railroad Company and bought part of the company that manufactured the cars. This became a very profitable investment. By reinvesting his money in railroad-related industries: (iron, bridges and rails), Carnegie slowly accumulated capital, which would be the basis of his later success.

1860-1865: Civil War

Before the American Civil War broke out, Carnegie had formed a partnership with Mr. Woodruff, the inventor of a sleeping car for first-class travel. The sleeping cars facilitated business travel for distances of approximately 500 miles (805 km). The investment proved to be a success and a source of profit for Woodruff and Carnegie. The younger Carnegie became superintendent of the Pennsylvania Railroad’s Western Division, and introduced several service improvements.

In the spring of 1861 Carnegie was appointed by Scott, who was now the Deputy Secretary of War in charge of military transportation, as superintendent of the Union Government’s Military Railroads and telegraph lines in the East. Carnegie helped open the railroad lines into Washington that the rebels had cut; he drove the locomotive carrying the first brigade of Union troops all the way to Washington. After the defeat of the Union forces at Bull Run, he personally supervised the transfer of the defeated forces. Under his organization, the telegraph service rendered efficient service to the Union cause and aided considerably in the final victory. Carnegie would later boast of being “the first wounded man of the war” when he got a scar on his cheek while working the telegraph wire.

The defeat of the Confederates necessitated large supplies of ammunition, as well as railroads (and telegraph lines) to deliver the goods. The war showed how integral industries were to American success.

In 1864, Carnegie invested $40,000 in the Storey farm on Oil Creek in Venango County, Pennsylvania. Within a year, the farm produced about $1,000,000 in cash dividends, and the oil from the wells was sold profitably. The demand for iron products, such as gunboat shells, cannons, and frames, as well as a hundred other industrial products, made Pittsburgh a center of production during wartime. Carnegie worked with others to set up a steel rolling mill, increase steel production and gain control of the industry, which would be the source of his fortune. Carnegie made several investments in the iron industry before the war.

After the war, Carnegie left the railroads to devote all his energies to the iron foundry trade. Carnegie worked to improve several foundries, eventually becoming part of The Keystone Bridge Works and the Union Ironworks. As superintendent of the Keystone Bridge Company’s, Carnegie realized the weakness of traditional wooden structures. They were largely replaced by iron bridges made in his foundries.

In addition to having a good nose for business, Carnegie had charisma and a knowledge of literature. He was invited to many social events, events that Carnegie used to his own advantage.

Carnegie believed that he should use his fortune to benefit others and devote himself to more than just making money. He wrote;

1880-1900: scholar and activist

Carnegie continued his business-focused career; at the same time some of his literary intentions were fulfilled. He became friends with the English poet Matthew Arnold and the philosopher Herbert Spencer; in turn he maintained correspondence and relations with most of the presidents of the United States, statesmen and notable writers. Carnegie deeply admired Spencer. However Spencer, who believed in social Darwinism, thought philanthropy was foolish.

Carnegie erected spacious swimming pools and baths for the people of his hometown, Dunfermline (Scotland). The following year, Carnegie donated $40,000 for the creation of a public library in Dunfermline. In 1884, he made a $50,000 donation to Bellevue Hospital Medical College (now part of New York University Medical Center) to establish a histological laboratory, now called the Carnegie Laboratory.

In 1881, Carnegie took his family, including his 70-year-old mother, on a tour of the United Kingdom. They visited Scotland and enjoyed several warm welcomes along the way. Highlight of all was the triumphant return to his native town of Dumferline, where Carnegie’s mother laid the foundation stone for the Carnegie library for which he had donated the money. Carnegie’s criticisms of British society did not mean dislike; on the contrary, one of Carnegie’s ambitions was to act as a catalyst for rapprochement among English-speaking peoples. To that end, in the early 1880s, he acquired numerous newspapers in England, all of them advocating the abolition of the monarchy and the establishment of a “British Republic.” Carnegie’s charisma aided by his great wealth meant that he had many British friends, among them Prime Minister William Ewart Gladstone.

In 1886, Andrew Carnegie’s younger brother Thomas died at the age of forty-three. However, business success continued. While controlling the steel foundries, Carnegie had purchased at low cost the most valuable iron ore fields around Lake Superior. In the same year Carnegie became a controversial figure. After his tour of Britain, he wrote about his experiences in a book entitled An American Four-in-hand in Britain. Although still involved in the operation of his many businesses, Carnegie became a regular contributor to numerous journals, most notably Nineteenth Century, under the editorship of James Knowles, and the influential North American Review, edited by Lloyd Bryce.

In 1886 Carnegie wrote what was to be his most radical work to date, entitled Triumphant Democracy. Liberal in its use of statistics to bolster his arguments, the book was about the republican system in the United States being superior to the British monarchy. It presented a very favorable and idealized view of Anglo-American progress and criticized the English royal family. The cover showed an upside-down royal crown and a broken scepter. The book caused great controversy in the United Kingdom, and made many Americans appreciate the economic progress of their country and sold some 40,000 copies, most of them in the United States.

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 businessman should comprise two parts. The first part was the gathering and accumulation of wealth. The second part was for the subsequent distribution of that wealth to worthy causes. Philanthropy was the way to make life worth living.

In 1898, Carnegie attempted to arrange independence for the Philippine Islands. As the Spanish-American War drew to a close, the United States purchased the Philippines from Spain for $20 million. To counter what he perceived as an imperialist attempt by the United States, Carnegie personally offered the $20 million to the Philippines so that the Filipinos could buy their independence from the U.S. However, nothing happened after this gesture and the Spanish-American War continued.

Carnegie managed to amass a fortune in the steel industry, controlling the largest integrated steel and iron operation ever owned by a private individual in the United States. One of his two great innovations was cost reduction through mass production of steel railroad rails. The second was to implement vertical integration with all raw material suppliers. By the late 1880s, Carnegie Steel was the largest pig iron, steel rail and coke mill in the world, with a production capacity of approximately 2000 tons of pig iron metal per day. In 1888, Carnegie bought out the competing Homestead Steel Works, which had a huge plant along with coal and iron mine supplies, a long railroad of some 685 km and a fleet of steamships. Carnegie merged his and his associates’ holdings in 1892 to form the Carnegie Steel Company.

By 1889, the U.S. steel surplus exceeded that of England and Carnegie owned most of it. Carnegie’s empire grew further to include the following companies: J. Edgar Thomson Steel Works, (named for John Edgar Thomson, Carnegie’s first boss and the president of the Pennsylvania Railroad), Pittsburgh Bessemer Steel Works, Lucy Furnaces, Union Iron Mills, Union Mill (Wilson, Walker & County), Keystone Bridge Works, Hartman Steel Works, Frick Coke Company, and the Scotia mines. Carnegie, through Keystone, supplied the steel and held stock in the famous bridge called the Eads Bridge across the Mississippi River at St. Louis, Missouri (completed in 1874). The project was an important litmus test for the new steel technology, ushering in a new steel market.

1889: Johnstown flooding

Carnegie was one of more than 50 members of the South Fork Hunting and Fishing Club, which has been blamed for the Johnstown flood that killed 2209 people in 1889.

At the suggestion of his friend Benjamin Ruff, Carnegie’s partner, Henry Clay Frick, had formed the exclusive South Fork Hunting and Fishing Club high above Johnstown, Pennsylvania. The club’s sixty-odd members were the leading business tycoons of western Pennsylvania and included among them Frick’s best friend Andrew Mellon, his lawyers Philander Knox and James Hay Reed, as well as Frick’s business partner Carnegie. High above the city, near the small town of South Fork, the South Fork Dam was originally built between 1838 and 1853 by the Commonwealth of Pennsylvania as part of a canal system to be used as a reservoir for a canal basin at Johnstown. With the coming of age of railroads replacing canal barge transportation, the lake was abandoned by the Commonwealth, sold to the Pennsylvania Railroad and sold again to private interests and eventually came into the ownership of the South Fork Hunting and Fishing Club in 1881. Before the flood, speculators bought the abandoned reservoir, made less than well-designed repairs to the old dam, raised the lake level, built cabins and a clubhouse, and created the South Fork Fishing and Hunting Club. Less than 20 miles downstream from the dam was the town of Johnstown.

The dam was 22 m high and 284 m long. Between 1881, when the club opened, and 1889, the dam leaked and was repaired, mainly with mud and straw. In addition, a previous owner removed and sold for scrap the three cast-iron discharge pipes that formerly provided a controlled release of water. There was some speculation about the integrity of the dam, and the director of Cambria Iron Works downstream in Johnstown had expressed concern. Such repair work, a reduction in height, and an unusually high snowmelt and heavy spring rains combined to cause the dam to give way on May 31, 1889, resulting in twenty million tons of water sweeping down the valley as the Johnstown Flood.

Although Cambria Iron and Steel’s facilities were severely damaged by the flood, they were back to full production within a year. After the flood, Carnegie built a new library in Johnstown to replace the one built by Cambria’s chief legal counsel, Cyrus Elder, which was destroyed by the flood. The library donated by Carnegie is now owned by the Johnstown Area Heritage Association and houses the Flood Museum.

1892: Homestead Strike

The Homestead strike was a bloody labor confrontation that lasted 143 days in 1892, one of the most serious in U.S. history. The conflict centered at Carnegie Steel’s main plant in Homestead, and arose out of a labor dispute between the Amalgamated Iron and Steel Workers Association (AA) and Carnegie Steel Company.

Carnegie left for a trip to Scotland before the unrest reached its peak. In doing so, he left the mediation of the dispute in the hands of his associate and business partner Henry Clay Frick. Frick was well known in industrial circles for holding strong anti-union sentiment. With the collective bargaining agreement between the union and the company expiring at the end of June, Frick and local AA union leaders entered into negotiations in February. With the steel industry doing well and prices higher, the AA asked for a wage increase; the AA represented about 800 of the plant’s 3,800 workers. Frick immediately responded with a 22% average wage decrease that would affect nearly half of the union’s membership and eliminate several bargaining unit positions. Although in public Carnegie condemned the use of scabs and told associates that no steel mill was worthy of shedding a single drop of blood, he supported Frick’s idea of destroying The Union and also spoke in favor of “reorganizing the whole thing.”

The union and the company did not reach an agreement and management blocked the union. The workers considered the work stoppage to be a “lockout” by management and not a “strike” by the workers. As such, the workers would have been within their right to protest, and the subsequent government action would have been a set of criminal procedures designed to crush what was seen as a fundamental demonstration of the growing labor rights movement, strongly opposed by management. Frick brought in thousands of strikebreakers to work in the steel mills and Pinkerton agents to harass and attack the strikers.

On July 6, the arrival of a force of 300 Pinkerton agents from New York City and Chicago resulted in a brawl in which ten men were killed (seven strikers and three Pinkerton thugs), and hundreds were wounded. Pennsylvania Governor Robert Pattison ordered two state militia brigades to the scene of the attack. Then, allegedly in response to the fight between the striking workers and the Pinkertons, anarchist Alexander Berkman shot Frick in an assassination attempt, wounding him. While not directly connected to the attack, Berkman was involved in the assassination attempt. According to Berkman, “…with Frick’s removal, responsibility for Homestead conditions would fall to Carnegie.” Subsequently, the company successfully resumed operations with non-union immigrant employees in place of the Homestead plant workers, and Carnegie returned to the U.S. However, Carnegie’s reputation was permanently damaged by the events at Homestead.

Carnegie devoted his entire life to philanthropy. He donated millions of dollars to the rebuilding of Johnstown. He donated for most of his life millions of dollars to his favorite cause: building libraries. He wanted to be remembered for the good he had done. Carnegie began building public monuments all over the United States and erected Carnegie Hall, which was completed two years after the Johnstown flood of 1889.

He is one of the characters in the documentary series Giants of Industry and is also mentioned in the book How to Win Friends and Influence People by Dale Carnegie.

Diplodocus carnegii was named in his honor after he funded the Utah expedition. So was the desert plant Carnegiea gigantea.

Bibliography

Sources

1. Andrew Carnegie
2. Andrew Carnegie
3. dictionary.com
4. 1 2 3 4 Andrew Carnegie // Encyclopædia Britannica (англ.)
5. 1 2 3 4 Andrew Carnegie // Brockhaus Enzyklopädie (нем.) / Hrsg.: Bibliographisches Institut & F. A. Brockhaus, Wissen Media Verlag
6. John C. Wells: Longman Pronunciation Dictionary. Harlow, England: Pearson Education Ltd., 2000.