Andrew Carnegie

(History of the World: The 19th Century)

Article abstract: One of the wealthiest men in the world at the time of his retirement from business in 1901, 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 November 25, 1835, in Dunfermline, Scotland. His father, William Carnegie, a prosperous handloom weaver at the time of Andrew’s birth, was unable to 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 move to the United States in 1848.

They 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 life-style 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 New York City, 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. In 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 which 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...

(The entire section is 2728 words.)