Andrew Carnegie

(PD) Photo: Library of Congress
Andrew Carnegie, in 1912.

Andrew Carnegie (1835-1919) was a Scottish-American industrialist, and founder of the steel industry in the United States. After selling his steel interests to U.S. Steel in 1901, Carnegie became for some years the richest man in the world. He gave away his fortune to a series of philanthropies in America, Scotland and the British Empire, promoting libraries, higher education, science, and world peace. Rejecting the "robber baron" epithet hurled by radicals, he opposed imperialism and was one of the most visible leaders of the Efficiency Movement in the Gilded Age and during the Progressive Era was a major proponent of philanthropy through the "Gospel of Wealth."

Early career

Carnegie was born in Dunfermline, Scotland, on Nov. 25, 1835. His name is properly pronounced Car-nay-gie rather than the more common Carn-a-gie. His father, William Carnegie (? - 1855), a Swedenborgian in religion, was a hand-loom weaver who moved from the small settlement of Patiemuir to Dunfermline as that industry became more centralized. There, the father became a relatively prosperous weaver, with four looms and a number of apprentices, but he did not abandon the radical idealism of his forebears. They had been active in the Meal Riots of the late 18th century when workers protested the high price on grain supported by the Corn Laws. His radical proclivities were strengthened by his marriage to Margaret Morrison, daughter of Tom Morrison, a leader of Scottish Chartism, a movement to gain political reform for the benefit of the working classes. The Morrison family were outspoken opponents of privilege in all forms: the monarchy, the House of Lords, the Church of Scotland, private education, and the protective tariff on agricultural products.

Andrew grew up in this unorthodox political environment that formed his earliest political and social ideals. In Dunfermline, the ancient capital of Scotland, he received his first love for history and romantic patriotism, which he never lost. During these years of rapid industrialization of the textile trade throughout Britain, the hand-loom weavers of Scotland suffered greatly, their income dropping steadily. By 1848, William Carnegie had to admit to his family that there was no demand for his woven linens at any price. Selling their last remaining loom and borrowing twenty pounds from a neighbor, William and Margaret Carnegie, with Andrew and his younger brother Thomas (1843–1886), sailed for New York in May 1848.

American years

The family settled in Allegheny, Pennsylvania, a suburb of Pittsburgh, and at the age of thirteen, young Andrew found his first job in a cotton factory as a bobbin-boy at $1.20 a week. William Carnegie failed to make a successful adjustment to this new environment so remote from his beloved Scotland and his looms, but his son flourished and soon became the chief earner. Andrew wrote enthusiastic letters back to his friends in Dunfermline that here in America he had found the practical realization of all the Scottish Chartist's dreams. He became convinced for life that American republicanism was the perfect solution to Europe's long-standing political failures.

At age 14 the boy left the cotton mill, which he disliked intensely, to become a messenger for a local telegraph company. He met important people and took advantage of any business opportunity that presented itself. From this moment on, his rise in the business life of Pittsburgh was meteoric. He quickly mastered the art of telegraphy. Thomas Scott, then superintendent of the Pittsburgh division of the Pennsylvania Railroad, in 1853 hired Carnegie as private secretary and personal telegrapher at $35 a month. When Scott became general superintendent of the railroad, "Andy" at age 24 and only only 5 feet 3 inches tall took over Scott's major position in Pittsburgh, and grew a beard to disguise his youth.

Civil War work

In 1861, at the beginning of the Civil War, he went with Scott, then Assistant Secretary of War, to Washington to organize the military telegraph department. They set up railroad and telegraph conections essential to the defense of Washington. Carnegie was appointed Superintendent of the Military Railways and the Union Government's telegraph lines in the East. Carnegie helped open the rail lines into Washington that the rebels had cut; he rode the locomotive that pulled the first brigade of Union troops to reach Washington. Shortly after this, following the defeat of Union forces at Bull Run, he personally supervised the transportation of the defeated forces. Carnegie was "the first casualty of the war" when he gained a scar on his cheek from working with telegraph wire. He would tell the story of that scar for years to come. Under his organization, the telegraph service rendered efficient service to the Union cause and significantly assisted in the eventual victory.

Defeat of the Confederacy required vast supplies of munitions, as well as railroads (and telegraph lines) to deliver the goods. 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 war industry, with its railroads and telegraphs also essential.

Investments in 1860s

Carnegie remained with the Pennsylvania Railroad for twelve years (1853-1865), but long before this, his interests had expanded far beyond the railway office from which he drew his modest salary. In 1864, Carnegie invested $40,000 in Storey 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. Carnegie was subsequently associated with others in establishing a steel rolling mill. Carnegie had some investments in the iron industry before the war and, after the war, he left the railroads to devote all his energies to the ironworks trade. He formed the Keystone Bridge Works and the Union Ironworks, in Pittsburgh. The Keystone Bridge Company made iron train bridges; as company superintendent, Carnegie had noticed the weakness of the traditional wooden structures. These were replaced in large numbers with iron bridges made in his works. Carnegie bought into the Woodruff Sleeping Car Co. and introduced the first successful sleeping car on American railroads. In 1865 he became a partner in a small iron forging company in Pittsburgh, the Kloman Co., and gave up his job with the Pennsylvania Railroad.

As well as having good business sense, Carnegie possessed charm and literary knowledge. However, because of his humble and foreign birth he was never fully accepted by Pittsburgh society. By 1868 when he moved permanently to New York City, his multiple investments were all nearly all profitable; he owned assets of $400,000 and an annual income of over $56,000, at a time when a factory foreman earned $1000. He seriously considered retiring at the age of thirty-five.

Building the steel industry

In the 36 years that followed his taking over the Kloman Co., Carnegie's career could serve as a summary of the industrial development of the nation in this period. In 1873, on one of his frequent trips to Great Britain, he met Henry Bessemer, inventor of the "Bessemer process," and became convinced that the industrial future lay in steel. His key decision investing $250,000 in the Edgar Thomson Steel Company, formed in 1874 with a capital of $1 million. The Bessemer plant at the company's site at Braddock's Field, near Pittsburgh was designed to manufacture high quality steel rails. Carnegie's huge success with this venture was due first to his commitment to technological change and second to his previous experience with the railroads. He wanted to have the most modern equipment available and was willing, whenever necessary, to scrap expensive machinery after only a short time if better technology could be had. The administrative structure he put together at the Edgar Thomson works was similar to the one he had worked in at the Pennsylvania Railroad. He appointed the country's most talented steel engineer, Captain William Jones (1839-1889), as general superintendent to oversee the daily work of the managers in charge of the blast furnaces. Jones had invented of several basic tools, such as the "Jones Mixer." Carnegie frequently pressured Jones to decrease employee wages, only to have Jones fearlessly reiterate the efficacy of enlightened labor policy.

Carnegie purchased iron ore lands in the Lake Superior region, acquired ships and ore-handling facilities, and joined forces in 1884 with Henry Clay Frick (1849–1919), who controlled the great Connesville coal beds. He formed Carnegie Bros. & Co. in 1881 with a capital of $5 million; its chairman was Tom Carnegie; after 1889 Frick held the post. Andrew Carnegie himself had no title, though he controlled 55% of the capital in the partnership, which made a profit of $2 million in its first year.

The Carnegie Steel Company by 1900 had become an immense organization with a profit of $40 million that year. It included all the processes of steel production--from the great blast furnaces and finishing mills of Pittsburgh to the railroads and lake steamers that move the ores and the finished products. Carnegie sold out his steel and related interests for $447 million in 1901 (Carnegie himself took $226 million; the rest went to his associates) to a syndicate formed by J. P. Morgan to create the United States Steel Company, by far the largest industrial corporation of the day.

Senior staff

After 1868 he made New York City his base and seldom visited Pittsburgh, leaving daily operations in the hands of partners and senior subordinates. Carnegie always maintained that the secret of his business success lay not in his own genius as a maker of steel, but in his ability to select the proper man for the job to be done. He was one of the first industrialists to hire scientists for research, and he suggested for his own epitaph, "Here lies a man who was able to surround himself with men far cleverer than himself." Carnegie hired the best steelmakers--own brother, Thomas M. Carnegie (1843–1886) (who died young), Henry Clay Frick, Charles M. Schwab, and the person he considered the greatest steel man of them all, Capt. "Bill" Jones.

Carnegie was not at home inside the factory. He did best 500 miles away, selecting and backing the experts, going over the accounts sent by telegraph every day to look for cost savings, and visiting bankers and financiers to sell bonds and railroads to sell rails and bridgework. He was the greatest salesman of his day because he understood how his firm could best serve his customer's needs. For example, he worked with the brilliant civil engineer James Eads (1820-87), whose "Eads Bridge" across the Mississippi River at St. Louis, Missouri, symbolized the interrelationship of steel, railroads, and high finance during the Gilded Age. To build his great bridge, Eads relied on Carnegie to supply high-quality steel, meet urgent deadlines, give bridge-building counsel, and provide the financial acumen that became essential for raising large sums of money for Eads finally to complete his bridge in 1874.

Carnegie was a visionary who studied philosophy and believed that the inevitability of evolution and progress depended on the right genius at the right time. His faith in America as a land of business opportunity never wavered; much of the fast growth of his steel enterprise was due to his policy of expanding in periods of depression. He distrusted the ever-growing tendency of American business toward trust-building and overcapitalization, and the Carnegie Steel Co. remained a simple partnership arrangement greatly undercapitalized in terms of the actual value of its holdings and its annual profits.

Labor and Homestead

Carnegie prided himself on his enlightened labor policy, although his reputation for benevolence was publicly damaged by the tragic Homestead Strike of 1892. It began when company manager Henry Clay Frick sought to impose a wage cut (which Carnegie had approved). When the Amalgamated Association of Iron, Steel, and Tin Workers refused his terms and called a strike on June 29, Frick brought in about 300 Pinkerton detectives to protect workers who remained on the job. On July 6 an all-day armed clash occurred between strikers and detectives, in which strikers trapped a barge load of Pinkertons crossing the river and killed seven. The governor sent in 8500 militia to protect the plants and workers inside from further attacks by strikers. Under militia protection, nonunion laborers manned the steel mills from July 12 to November 20, when the strike collapsed. Frick's success permanently weakened unionism in the entire steel industry, which was not unionized successfully until the 1930s. Union members blamed Carnegie for the episode.

Carnegie originally was favorable toward the union in the 1870s and 1880s because it did not threaten profitability and helped guarantee steady production. It became the largest labor union in the country. In 1886 he published a series of articles in the Forum magazine that revealed liberal position on labor policies and benevolence toward his workers. Scholars have since argued that Carnegie's anti-union position during the Homestead affair either represents a reversal of his earlier position or the insincerity of his professed convictions. However, a consideration of Homestead within the context of industry-wide developments in the relationship between labor unions and steel production indicates that a new emphasis on unskilled labor (a result of new technology and changes in market demand) undermined the strength of the union. The Homestead lockout did not therefore represent a shift in Carnegie's position toward labor unions; rather it was the result of a downturn in the steel market and changes in methods of production.

Krause (1992) argues the "Battle for Homestead" represented a struggle between two competing, contradictory, and irreconcilable versions of American Republicanism. One was Carnegie's belief in the inalianable right to private property and the right to accumulate capital and manage enterprise. Individual entrepreneurship was the republican way to wealth for the individual and for society as a whole. In opposition was the version personified by labour reformer Thomas 'Beeswax' Taylor, which saw in the ideology of republicanism the guarantee of the workers' right to dignity and security as a group. The strikers' republicanism viewed labor as the inalienable property of the individual worker, rejected the "law" of supply and demand and sought the group action by uinions to assert the rights. They were not socialists and did not want government ownership, but they did want to control the work patterns on the factory floor regardless of the owner and his foremen. The unions were still thinking in terms of iron, when their expertise was decisive. In the age of steel the white collar engineer made the critical decisions, not blue collar workers. The union defeat in 1892 did not simply mark the end of the steelworkers' union's power, it more importantly destroyed the hopes of realizing the aims of radical republicanism. After 1900 Samuel Gompers and the AFL unions worked inside the owners' model of republicanism and sought higher wages, while the rejected republicanism vision was incorporated into the Socialism of Eugene Debs, who argued the workers should have full control by nationalizing industry and having a labor party run the government.

Philanthropy

'The man who dies thus rich, dies disgraced,' declared Carnegie, a doctrine that received its fullest expression in his book The Gospel of Wealth (1900). In his view, plutocracy such as his could exist alongside democracy, but men who acquired great wealth must return it to the community to preserve individual initiative. Thus the wealthy were but a trustee and an agent for their poorer brethren, albeit of the better and aspiring sort. His "scientific philanthropy" was to be carefully targeted according to a list of seven priorities. These were headed by his over-riding concerns—universities and free libraries—with churches in seventh place (an indication of his hostility to organized religion). The main instrument was the Carnegie Corporation formed in 1911; it was a scientifically designed organization with regular, firmly-stated, policies; it served as a model that replaced the paternalistic basis of American philanthropy based on the personal tastes, local connections, and whims of the philanthopist.

In spite of his espousal of Herbert Spencer's philosophy and portions of the social Darwinism of the period, Carnegie remained deeply committed to many of the Chartist ideals of his boyhood. He rejected Spencer's attacks on philanthropy. In 1868 when, at the age of 33, his personal income had already reached $50,000 annually, he had written himself a note vowing to quit business shortly and never earn more than he was then earning, for "the amassing of wealth is one of the worst species of idolatry." He did not keep this resolution, but as his fortune grew so did his concern for reconciling great wealth with social and political democracy. Out of this concern came his own solution in his famous "Gospel of Wealth," first published in the North American Review in 1889. Here Carnegie stated his doctrine concerning the responsibility of the man of wealth to society. He must use the fortune he has earned to provide greater opportunity for all and to increase man's knowledge of himself and of his universe.

In the 18 years after he retired from steel he succeeded in giving back to society over $300,000,000, largely through the creation of one of the most remarkable group of philanthropic foundations in the world. These foundations included, in Great Britain: the Carnegie Trust for the Universities of Scotland, the Carnegie Dunfermline Trust, the Carnegie Hero Fund Trust, the Carnegie United Kingdom Trust; and in the United States: the Carnegie Institute of Pittsburgh, the Hero Fund Commission, the Carnegie Institute of Washington, the Carnegie Foundation for the Advancement of Teaching, the Carnegie Endowment for International Peace, and the largest of all, the Carnegie Corporation of New York with a basic endowment of $135,000,000.

The Carnegie Teachers' Pension Fund (now TIAA) created a pension system for college professors with an endowment of $10 million. To be eligible a college had to separate itself from control by a religious denomination, and many did so.

Libraries

Carnegie's interest in libraries dated back to his early days as a messenger-boy in Pittsburgh, when each Saturday he borrowed a new book from a free library. He later declared that it was his own personal experience which led him to value a library beyond all other forms of beneficence. His first gift was a library to his native town of Dunfermline in 1882. In 1898 he built The Carnegie Library in Homestead, Pennsylvania. Besides a library, the building included a bowling alley, an indoor swimming pool, basketball courts and other athletic facilities, a music hall, and space for a large number of meeting rooms for local clubs and organizations. Carnegie systematically funded 2,507 libraries throughout the English-speaking world, including 1,689 libraries in the United States, 600 libraries in Great Britain, 66 in Ireland, and 125 in Canada. James Bertram, Carnegie's chief aide from 1894 to 1914 administered the library program, issued guidelines and instituted an architectural review process.

As VanSlyck (1989) shows, the last years of the 19th century saw acceptance of the idea that libraries should be available to the American public free of charge. However the design of the idealized free library was at the center of a prolonged and heated debate. On one hand, wealthy philanthropists favored buildings that reinforced the paternalistic metaphor and enhanced civic pride. They wanted a grandiose showcase that created a grand vista through a double-height, alcoved bookhall with domestically-scaled reading rooms, perhaps dominated by the donor's portrait over the fireplace. Typical examples were the New York Public Library and the Chicago Public Library. Librarians considered that grand design inefficient, and too expensive to maintain. Between 1886 and 1917, Carnegie reformed both library philanthropy and library design, encouraging a closer correspondence between the two. The Carnegie buildings typically followed a standardized style called "Carnegie Classic": a rectangular, T-shaped or L-shaped structure of stone or brick, with rusticated stone foundations and low-pitched, hipped roofs, with space allocated by function and efficiency.

His libraries served not only as free circulating collections of books, magazines and newspapers, but also provided classrooms for growing school districts, Red Cross stations, and public meeting spaces, not to mention permanent jobs for the graduates of newly formed library schools. Academic libraries were built for 108 colleges. Usually there was no charge to read or borrow; in New Zealand, however, local taxes were too low to support libraries and most charged subscription fees to their users. The arrangements were always the same: Carnegie would provide the funds for the building but only after the municipal government had provided a site for the building and had passed an ordinance for the purchase of books and future maintenance of the library through taxation. This policy was in accord with Carnegie's philosophy that the dispensation of wealth for the benefit of society must never be in the form of free charity but rather must be as a buttress to the community's responsibility for its own welfare.

In 1901, Carnegie offered to donate $100,000 to the city of Richmond, Virginia, for a public library. The city council had to furnish a site for the building and guarantee that $10,000 in municipal funds would be budgeted for the library each year. Despite the support from the majority of Richmond's civic leaders, the city council rejected Carnegie's offer. A combination of aversion to new taxes, fear of modernization, and fear that Carnegie might require the city to admit black patrons to his library account for the local government's refusal. In 1903 union leaders in Wheeling, West Virginia, blocked the acceptance of a Carnegie library there. The Detroit Library subsisted on library fines and inadequate city funds; Carnegie offered $750,000 in 1901 but was turned down because it was "tainted money"; after nine more years of underfunding Detroit took the money.

Back to Scotland

He was engaged to Louise Whitfield of New York for many years, but married her in 1886 at age 51 only after his mother died in 1886. Carnegie spent at least six months of each year with his wife in Scotland. Soon after the birth of his only child, Margaret, he purchased a 30,000 acre estate in northern Scotland on the Firth of Dornoch and built the castle of Skibo. Here each summer, Carnegie, a white-bearded and kind-faced patriarch played the Scottish laird at his estate, as guests were led into dinner by a piper. He entertained those people, particularly in the world of literature, science, and education, who interested him most. He was friend of Herbert Spencer and Matthew Arnold and was closely associated with such Liberal statesmen as William E. Gladstone. Carnegie helped to finance the Gladstonian Liberal Party after the split over home rule in 1886. His closest friend was John Morley, writer, historian, and leader of the British Liberal party. Carnegie had acquired American citizenship as a minor when his father became a naturalized citizen in the early 1850s. He retained dual citizenship, however, and in the 1880s he seriously (but secretly) considered standing for election to the British Parliament. To that end in 1884 he owned or controlled seven daily newspapers and weeklies in Britain.

In his last years, Carnegie became convinced that war was man's greatest evil, and he devoted much of his time and fortune toward the securing of international peace. He built the Pan American Union building in Washington, D.C., to promote hemispheric peace and the Hague Peace Palace in the Netherlands to support international arbitration. The outbreak of World War I came as a tragic conclusion to all of his hopes, and although he supported the Allied cause, he never recovered from the shock of the war he had worked so hard to prevent, and he retired almost completely from the public scene. He died in Lenox, Massachusetts, on Aug. 11, 1919, with an estate of $30 million (of which $20 million was given away as well).

He wrote 70 articles on current events for leading magazines in Britain and the U.S., and eight books. He wrote his own work, without ghostwriters. The Autobiography of Andrew Carnegie was published posthumously in 1920. "Wealth" in the North American Review (June 1889) was the most famous essay. In it he expressed the view that wealth wisely administered for the common good became truly the property of the many. His articles on capital, labor, the industrial problem, and other topics offer an easily available antidote for the stereotype of the "Robber Baron."

Legacy

His major trusts and foundations continue in operation in the 21st century, including the Carnegie Trust for the Universities of Scotland, the Carnegie Dunfermline Trust, the Carnegie Institute, the Carnegie Endowment for International Peace, the Carnegie Hero Fund Commission, the Carnegie Institution of Washington, the Carnegie Corporation and Carnegie-Mellon University. The Carnegie Corporation of New York, with a capital fund of $3.0 billion, remains a force in philanthropy at the rate of $100 million a year and still supports libraries.

Further reading

See the detailed Bibliography at the tab above.

• Krass, Peter. Carnegie. (2002). 612 pp., a standard scholarly biography, along with Nasaw and Wall. online edition
• Livesay, Harold C. Andrew Carnegie and the rise of big business (2nd ed 1999), 200pp short book looking at his businesses using Alfred D. Chandler's models of Business History
• Nasaw, David. Andrew Carnegie (2006), major biography along with Krass and Wall. excerpt and text search
• Tweedale, Geoffrey. "Carnegie, Andrew (1835–1919)", Oxford Dictionary of National Biography, 2004 online
• Wall, Joseph. Andrew Carnegie (Oxford University Press, 1970), 1137 pp. a standard biography along with Nasaw and Krass. excerpt and text search

Primary sources

• Carnegie, Andrew. The Andrew Carnegie Reader edited by Joseph Frazier Wall (1992)
• Carnegie, Andrew. Triumphant Democracy (1886) online edition
• Carnegie, Andrew. The Gospel of Wealth and Other Essays (1901) online edition