Andrew Carnegie

American financier and philanthropist

• Born: November 25, 1835
• Birthplace: Dunfermline, Fife, Scotland
• Died: August 11, 1919
• Place of death: Lenox, Massachusetts

One of the wealthiest men in the world at the time of his retirement, Carnegie achieved great fame for his business success and for his many benefactions, which became the chief interest of his later years.

Early Life

Andrew Carnegie was born in Scotland, where his father, William Carnegie, was a prosperous handloom weaver at the time of his birth. However, his father could not compete with the new technology of steam looms and fell into poverty as Andrew grew older. Andrew’s mother, Margaret Morrison Carnegie, proved under these circumstances to be the bulwark of the family. Ambitious for her two sons, Andrew and younger brother Thomas, she organized a family move to the United States in 1848, when Andrew was thirteen.

The Carnegies settled in Allegheny, Pennsylvania, where they had relatives and attempted to rebuild the family’s fortunes. Although William Carnegie was never again a success, the family got by through hard work and timely assistance from the Pittsburgh area’s close-knit Scottish community. Working long, hard hours in factories, Andrew improved his skills, learning double-entry bookkeeping in night school, and in barely a year left factory work to become a telegraph messenger in 1849, an operator in 1851, and in 1853, secretary and personal telegrapher to Tom Scott, superintendent of the Pennsylvania Railroad’s western division.

Life’s Work

Carnegie remained with the Pennsylvania Railroad for a dozen years, acquiring managerial skills and a sharp insight into the economic principles of the capitalist economy, and forming close personal relationships with several entrepreneurs who were to prove instrumental in his own success. Scott, who delegated increasing responsibility to the resourceful Carnegie, became vice president in 1859; he then named Carnegie superintendent of the western division, perhaps the most challenging position of its kind with any railroad in the United States. The demands of the Civil War would vastly increase his responsibilities, but Carnegie proved equal to them. At Scott’s behest, he organized the movement of Union troops into beleaguered Washington in April, 1861, restored regular rail service between Washington and the north, and stayed in the capital for some months as Scott’s assistant in charge of railroads and telegraph services. (Scott had been appointed assistant secretary of war with special responsibility for railroads.) Carnegie then returned to Pittsburgh to resume his duties with the Pennsylvania Railroad.

Carnegie was already losing interest in a salaried position. On a tip from Scott, he had purchased six hundred dollars’ worth of stock in the Adams Express Company in 1856. The first dividend check he received was a revelation, and legend has it that Carnegie, thrilled to realize that he could earn money without physical toil, exclaimed, “Here’s the goose that lays the golden eggs.” More investments followed: in the Woodruff Sleeping Car Company, the Columbia Oil Company, and the Keystone Bridge Company, in which Carnegie held a one-fifth interest, enough to make him the dominant shareholder.

By 1863, Carnegie was earning more than forty thousand dollars annually from his investments, several times his salary, and left the Pennsylvania Railroad at the end of the Civil War to devote more of his time to the management of Keystone and to the Union Iron Mills, which was a principal supplier of Keystone. Carnegie left the operating decisions to experts in bridge construction, while concentrating on sales and finances. With Keystone, he secured contracts to sell materials to such projects as the Eads Bridge at St. Louis, the Ohio River bridges at Cincinnati and Point Pleasant, West Virginia, and the Brooklyn Bridge.

Carnegie’s involvement in finance required that he travel often to Europe, and his lifestyle changed. Always interested in the world of ideas, he never allowed his lack of formal education to keep him from broadening his knowledge. He read extensively and cultivated friendships in Europe and in were chosen, to which he moved with his mother in 1867. A bachelor throughout these years, Carnegie enjoyed the companionship of women and led an active social life. He also actively sought the company of intellectuals and eventually would count among his friends the British statesman William Gladstone and literary figures such as Matthew Arnold, Richard Watson Gilder, John Morley, Herbert Spencer, and Mark Twain. A man of much personal charm, the small-statured Carnegie—he stood but five feet, three inches tall—was equally at ease discussing ideas with the learned and business with financiers or potential customers.

Carnegie was still not content with his lot in life, for he believed that he had become too involved in financial speculation and wished instead to turn to manufacturing, which he considered a more constructive and respectable pursuit. His familiarity with the needs of railroads made him believe that there were large profits to be made in steel, for improved rails would be needed in immense quantities. In 1872, he organized a partnership, drawing on Pittsburgh business acquaintances of long duration to establish Carnegie, McCandless and Company to manufacture steel by the Bessemer process . After several reorganizations involving many different combinations of partners over the years, this firm would become known as Carnegie Steel Company, Limited, in 1892.

By 1874, the gigantic new Edgar Thomson Works was under construction, its development supervised by Alexander Holley, the foremost American expert on the Bessemer process, and its operations turned over to Bill Jones, who brought in top-notch department heads from other companies. Characteristically, Carnegie turned over the day-to-day operations to experts such as Jones, while he concentrated on sales and finances, employing the efficient cost-based management techniques learned in the railroad business.

Always alert to technological improvements that would lower the cost of production and lead to increased sales and profits, within a decade, Carnegie introduced to his plants the open-hearth steel production process. Carnegie’s business philosophy led him to expand and diversify. During the mid-1880’s, his organization acquired the massive Homestead Works and developed a major new market by selling steel structural members to the elevated railways and skyscrapers that were beginning to appear in major American cities.

In 1880, Carnegie met Louise Whitfield, the twenty-three-year-old daughter of a prominent New York merchant. Louise endured the tribulations of a relationship troubled by Carnegie’s frequent and extended business travel. Moreover, he initially refused to marry, out of deference to his mother’s wishes. The two were finally married in 1887, less than a year after the death of Carnegie’s mother. The couple had one daughter.

At the time of his marriage, Carnegie was a millionaire several times over. The 1890’s brought more prosperity, as well as some of Carnegie’s greatest disappointments. The prosperity came in substantial measure from Carnegie’s faith in the continued growth of the American economy and the business acumen of Henry Clay Frick . Chairman of the company since 1889, Frick conducted an aggressive campaign of expansion and cost-cutting that led to one of the bitterest episodes in American labor history, the Homestead Strike of 1892. During this period, Carnegie remained in virtual seclusion in Scotland, giving Frick authority to handle negotiations with the Amalgamated Association of Iron and Steel Workers. The labor-management strife led to intense press criticism of Carnegie in both England and the United States and, along with other issues, precipitated a split between Carnegie and Frick.

Carnegie, who held an interest of more than 50 percent in the firm, resumed a more active role in company affairs, forcing Frick out as chief operating executive at the end of 1894 and leading the business to its most profitable years. The key was Carnegie’s success in increasing the firm’s share of the market during the depression of the 1890’s, acquiring ownership of more of its basic raw materials, its own railroads and its fleet of ore-carrying ships, and its modernizing facilities. Carnegie Steel’s annual profits grew 800 percent between 1895 and 1900. In Charles Schwab, a brilliant executive totally loyal to Carnegie, the company at last had a worthy successor to Frick.

At the end of the 1890’s, new troubles arose from competitors. On one hand, Carnegie relished a fight; on the other hand, he was willing to sell out, provided the price was right. It was—nearly $500 million, of which Carnegie’s share was $300 million in 5 percent first-mortgage bonds in the successor company, United States Steel. The investment banker J. P. Morgan, who had handled the transaction, said that Carnegie was “the richest man in the world.” While a similar claim has been made for Carnegie’s contemporary, John D. Rockefeller, there is no doubt that Carnegie had built one of the most formidable business enterprises of the nineteenth century; Carnegie Steel produced more than the combined output of the entire steel industry of Great Britain.

Carnegie devoted his remaining years to philanthropy. It was, however, philanthropy with a difference. In Carnegie’s hands, philanthropy, a term that he disliked, itself became big business. In two articles published in 1886, Carnegie, a widely published author, had called for an understanding of the needs of the working man and for the acceptance of unions. The bitterness of the Homestead Strike had inevitably made Carnegie appear a hypocrite, and Carnegie was determined to demonstrate to the world that he was not insensitive to the needs of the less privileged. In an essay entitled “Wealth,” first published in 1889 and often reprinted as “The Gospel of Wealth,” he had set forth the essentials of his views on charitable giving. He held that the man of means should spend his fortune during his own lifetime in ways that would advance society. The millionaire, he argued, was but a trustee who should approach philanthropy scientifically and endow institutions such as universities, public libraries, and recreational areas for the masses.

On a relatively small scale, he had begun to dispense grants at the end of the 1880’s, increasing the number and size of his benefactions as the years passed. In retirement, Carnegie had the time to systematize his giving. While he did provide some money for medical facilities, his usual response to a request for support from a hospital or medical school was to say “That is Mr. Rockefeller’s specialty.” The great bulk of Carnegie’s support went to libraries and the support of education. He ultimately provided more than fifty million dollars to establish twenty-eight hundred public libraries, the vast majority in the United States and Great Britain. Carnegie ordinarily provided funds for the buildings only, for he expected the communities concerned to provide the revenues needed for books and maintenance. Fond of the limelight, Carnegie often appeared at the dedication of his libraries.

Carnegie also gave large amounts of money to Edinburgh University and three other universities in Scotland, and he established the Carnegie Institute of Technology in Pittsburgh (later the Carnegie-Mellon University) and the Carnegie Institution in Washington, D.C., which subsidized basic research in several disciplines. Another substantial sum went to the Carnegie Foundation for the Advancement of Teaching. Ostensibly a pension plan for college faculty, in practice the foundation did much to set standards that raised the quality of higher education in the United States. The largest sum of all, $125 million, was used in 1911 to endow the Carnegie Corporation of New York, which had the mission of advancing knowledge through the promotion of schools, libraries, research, and publication.

Carnegie dispensed still more money to causes designed to promote international peace, while he spent various amounts on such diverse items as church organs; the Hero Fund, which recognizes valorous deeds performed in everyday life; New York City’s Carnegie Hall; and pensions for the widows of United States presidents and for tenant farmers on his Scottish estate, Skibo Castle.

During his lifetime, Carnegie had succeeded in giving away slightly more than $350 million, utilizing the Carnegie Corporation as his principal means of organizing the distribution of his fortune. Its establishment indicated Carnegie’s recognition that it was impossible for a single individual as wealthy as he to supervise personally the administration and meaningful use of his own fortune, the tenet he had advocated in “The Gospel of Wealth.” After his death at his summer home in Lenox, Massachusetts, in 1919, his will revealed that there were but thirty million dollars left to distribute; he had already made provisions for his wife and daughter. Praise for his generosity in the press was widespread.

Significance

Andrew Carnegie was a man of contradictions. Despite having little formal education himself, he had a great respect for knowledge, writing books and essays on several topics, reading widely, and making it possible for countless others to read through the thousands of libraries he established. A ruthless businessperson, he made platitudinous statements about the dignity of labor but denied many workers that dignity through the practices of his company, a denial that culminated in the Homestead Strike. However, as a businessperson, he must be remembered as an outstanding success, for, in three separate fields, he showed mastery.

Carnegie’s first triumph was with the Pennsylvania Railroad, in whose employ he rose from secretary to one of its most responsible executives at a time when railroads were at the forefront of establishing patterns of modern business management. His next and greatest triumph was in building the giant Carnegie Steel Company. Finally, the practices that had served him so well in the business world enabled him to organize philanthropy on an almost unprecedented scale, as he spent his fortune generously and, on the whole, wisely. To many, he symbolized widely shared values in American culture: generosity combined with the success ethic.

Bibliography

Bridge, James Howard. The Inside History of the Carnegie Steel Company. New York: Aldine, 1903. Written by a man who assisted Carnegie in some of his writing endeavors. The author knew not only Carnegie but also most of his key associates. Tends to see the management controversies of the 1890’s from Frick’s perspective.

Carnegie, Andrew. The Autobiography of Andrew Carnegie. Boston: Houghton Mifflin, 1920. Published the year after Carnegie’s death, this book contains a wealth of interesting information but tends to be self-serving.

‗‗‗‗‗‗‗. Triumphant Democracy: Or, Fifty Years’ March of the Republic. New York: Charles Scribner’s Sons, 1886. Carnegie wrote several books, even more essays, and still more letters that appeared in newspapers under his name. This book and “The Gospel of Wealth” are perhaps his best-known works. Makes clear his ardent faith in capitalism, democracy, and opportunity.

Hendrick, Burton J. The Life of Andrew Carnegie. 2 vols. Garden City, N.Y.: Doubleday, 1932. Written in a vigorous style by a man who had a chance to talk with Carnegie’s widow and many of his business associates.

Hessen, Robert. Steel Titan: The Life of Charles M. Schwab. New York: Oxford University Press, 1975. The best study of any of the hard-driving executives who did so much to put Carnegie Steel at the top of American industry. The first half of this biography deals with Schwab’s early life and his years with Carnegie. The latter part discusses Schwab’s own considerable success after he left United States Steel.

Hogan, William T. Economic History of the Iron and Steel Industry in the United States. 5 vols. Lexington, Mass.: D.C. Heath, 1971. The first two volumes of this five-volume work provide invaluable information on the steel industry during the years in which Carnegie was its dominant personality.

Krass, Peter. Carnegie. New York: John Wiley & Sons, 2002. A well-reviewed, detailed and thorough examination of Carnegie’s life, career, and personality.

Krooth, Richard. A Century Passing: Carnegie, Steel, and the Fate of Homestead. Lanham, Md.: University Press of America, 2002. Krooth said this study of the 1892 Homestead Strike “describes how greed devastated a nineteenth century town and a great steel mill. The conflict foretold the death of vibrant national industry, perhaps basic U.S. industry itself.”

Livesay, Harold C. Andrew Carnegie and the Rise of Big Business. Edited by Oscar Handlin. Boston: Little, Brown, 1975. Brief but invaluable biography that places Carnegie’s business accomplishments in the context of developments in nineteenth century business management.

McHugh, Jeanne. Alexander Holley and the Makers of Steel. Baltimore: Johns Hopkins University Press, 1980. Biography of the man generally considered to be the foremost American expert in the Bessemer process. Attempts to place its subject in the context of the late nineteenth century technological revolution in steelmaking.

Swetnam, George. Andrew Carnegie. Boston: Twayne, 1980. While Carnegie will always be remembered as an industrialist and philanthropist, he became an author even earlier. This valuable, brief book examines his interest in writing and his best-known works.

Wall, Joseph Frazier. Andrew Carnegie. New York: Oxford University Press, 1970. More than a thousand pages in length, this is the definitive biography of Carnegie and is likely to remain so for many years.