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Andrew Carnegie

Carnegie & Rockefeller – A Short Documentary


Andrew Carnegie’s life seemed touched by magic. He embodied the American dream: the immigrant who went from rags to riches, the self-made man who became a captain of industry, the king of steel. “Carnegie was more than most people,” says Owen Dudley Edwards, historian at the University of Edinburgh. “Not only more wealthy, not only more optimistic, Carnegie is still, right throughout his life, the little boy in the fairy story, for whom everything has to be all right.”

Fond of saying “The man who dies rich, dies disgraced,” Carnegie amassed a fortune, then gave it away. Millions of dollars went to support education, a pension plan for teachers, and the cause of world peace. Most famous as a benefactor of libraries, he funded nearly 3,000 around the world. He preached the obligation of the wealthy to return their money to the societies where they made it — then added, says Carnegie’s biographer, Joseph Frazier Wall, “a very revealing sentence. He wrote, ‘and besides, it provides a refuge from self-questioning.'”

The Richest Man in the World: Andrew Carnegie, produced by Austin Hoyt and narrated by David Ogden Stiers, follows Carnegie’s life from his impoverished origins in Dunfermline, Scotland, through his business career where he was on the cutting edge of the industrial revolution in telegraphy, railroads, and finally, steel. The Richest Man in the World traces the roots of Carnegie’s philanthrophy to his idealistic, egalitarian father, a skilled weaver displaced by the Industrial Revolution. But Carnegie’s mother, Margaret, was a more dominant force in his life. Determined to overcome the shame of poverty and “get to the top,” the frugal Margaret often advised young Andrew, “Look after the pennies, and the pounds will look after themselves.” He lived with her until she died, and only then married, at age 51.

Carnegie’s daughter, Margaret Carnegie Miller, publicly remembered her father as “a kindly, friendly, man. He always wanted to be remembered as one who loved his fellow men.” In private, her thoughts were harsher. “Tell his life like it was,” she urged his biographer. “I’m sick of the Santa Claus stuff.”

“Although Carnegie saw himself as a friend of the working man,” says Hoyt, “the lives of his workers were not fairy tales where everything turns out all right.” According to business historian Harold Livesay, “By the standards of his time, Carnegie does not stand out as a particularly ruthless businessman. But certainly by the standards of ethics and conduct to which we would like to hold businessmen today, he indeed operated extremely ruthlessly.”

His conflicts with labor are best remembered in the 1892 showdown between Carnegie Steel and the unions at Homestead, Pennsylvania, a workers’ town where the steel unions reigned supreme. Carnegie, on vacation in Scotland, had left his partner, Henry Clay Frick, to settle the dispute, wiring him that he approved “anything you do.” But later Carnegie held Frick solely responsible for the violence at the mill that left seven workers and three Pinkerton guards dead. In his autobiography, Carnegie would remember Homestead as one of only two incidents in his career that he regretted. The other was when he turned his back on Thomas A. Scott, the mentor who had guided him to his first fortune while working for the Pennsylvania Railroad. Both events clearly haunted him, but in neither was he able to accept responsibility for what happened.

The Richest Man is a story of a business genius who created a steel empire that made America the most prosperous economy in the world. Everything in his story looms large: The implications of his low-cost steel were enormous for the American economy. The backstabbing, chicanery, and generosity are on the grandest scale. Carnegie’s struggle with the unions would determine the role of labor in industrial America. Frick’s lawsuit against him was the biggest at that point in American history.

In 1900, when he sold Carnegie Steel to J.P. Morgan for $480 million, the financier told him, “Congratulations, Mr. Carnegie, you are the richest man in the world.” Carnegie proved himself to be a philanthropist of unusual fervor, as over the next decade he gave away $350 million with the same creativity and energy that led to its accumulation.

Andrew Carnegie (play /kɑrˈnɡi/ kar-nay-gee, but commonly /ˈkɑrnɨɡi/ kar-nə-gee or/kɑrˈnɛɡi/ kar-neg-ee;[1] November 25, 1835 – August 11, 1919)

He was a Scottish-Americanindustrialist who led the enormous expansion of the American steel industry in the late 19th century. He was also one of the most important philanthropists of his era.

Carnegie was born in Dunfermline, Scotland, and emigrated to the United States with his parents in 1848. His first job in the United States was as a factory worker in a bobbin factory. Later on he became a bill logger for the owner of the company. Soon after he became a messenger boy. Eventually he progressed up the ranks of a telegraph company. He built Pittsburgh’s Carnegie Steel Company, which was later merged with Elbert H. Gary‘s Federal Steel Company and several smaller companies to create U.S. Steel. With the fortune he made from business among others he built Carnegie Hall, later he turned to philanthropy and interests in education, founding the Carnegie Corporation of New YorkCarnegie Endowment for International PeaceCarnegie Institution of WashingtonCarnegie Mellon University and the Carnegie Museums of Pittsburgh.

Carnegie gave most of his money to establish many libraries, schools, and universities in the United States, the United Kingdom, Canada and other countries, as well as a pension fund for former employees. He is often regarded as the second-richest man in history after John D. Rockefeller. Carnegie started as a telegrapher and by the 1860s had investments in railroads, railroad sleeping cars, bridges and oil derricks. He built further wealth as a bond salesman raising money for American enterprise in Europe. Carnegie once gave $25,000 to Speaker of the House David B. Henderson to erect a library on the campus of Upper Iowa University in his name.

He earned most of his fortune in the steel industry. In the 1870s, he founded theCarnegie Steel Company, a step which cemented his name as one of the “Captains of Industry”. By the 1890s, the company was the largest and most profitable industrial enterprise in the world. Carnegie sold it in 1901 for $480 million to J.P. Morgan, who created U.S. Steel. Carnegie devoted the remainder of his life to large-scale philanthropy, with special emphasis on local libraries, world peace, education and scientific research. His life has often been referred to as a true rags to riches story.

Biography – Early life

Birthplace of Andrew Carnegie in Dunfermline, Scotland

Andrew Carnegie was born in Dunfermline, Scotland, in a typical weaver’s cottage with only one main room consisting of half the ground floor which was shared with the neighboring weaver’s family.  The main room served as a living room, dining room and bedroom.   He was named after his legal grandfather.   In 1836, the family moved to a larger house in Edgar Street (opposite Reid’s Park), following the demand for more heavy damask from which his father, William Carnegie, benefited.  His uncle, George Lauder, whom he referred to as “Dod”, introduced him to the writings of Robert Burns and historical Scottish heroes such as Robert the BruceWilliam Wallace, and Rob Roy. Falling on very hard times as a handloom weaver and with the country in starvation, William Carnegie decided to move with his family to Allegheny, Pennsylvania in the United States in 1848 for the prospect of a better life.   Andrew’s family had to borrow money in order to migrate. Allegheny was a very poor area. His first job at age 13 in 1848 was as a bobbin boy, changing spools of thread in a cotton mill 12 hours a day, 6 days a week in a Pittsburgh cotton factory. His starting wage was $1.20 per week.   Andrew’s father, William Carnegie, started off working in a cotton mill but then would earn money weaving and peddling linens. His mother, Margaret Morrison Carnegie, earned money by binding shoes.

Railroads

Carnegie age 16, with brother Thomas

In 1850, Carnegie became a telegraph messenger boy in the Pittsburgh Office of the Ohio Telegraph Company, at $2.50 per week, following the recommendation of his uncle. His new job gave him many benefits including free admission to the local theater. This made him appreciate Shakespeare’s work. He was a very hard worker and would memorize all of the locations of Pittsburgh’s businesses and the faces of important men. He made many connections this way. He also paid close attention to his work quickly learning to distinguish the differing sounds the incoming telegraph signals produced and learned to translate signals by ear, without having to write them down and within a year was promoted as an operator. Carnegie’s education and passion for reading was given a great boost by Colonel James Anderson, who opened his personal library of 400 volumes to working boys each Saturday night. Carnegie was a consistent borrower and a “self-made man” in both his economic development and his intellectual and cultural development. His capacity, willingness for hard work, his perseverance, and his alertness soon brought forth opportunities.

Starting in 1853, Thomas A. Scott of the Pennsylvania Railroad Company employed Carnegie as a secretary/telegraph operator at a salary of $4.00 per week. At age 18, the youth began a rapid advancement through the company, becoming the superintendent of the Pittsburgh Division. His employment by the Pennsylvania Railroad Company would be vital to his later success. The railroads were the first big businesses in America, and the Pennsylvania was one of the largest of them all. Carnegie learned much about management and cost control during these years, and from Scott in particular.

Scott also helped him with his first investments. Many of these were part of the corruption indulged in by Scott and the Pennsylvania’s president, J. Edgar Thomson, which consisted of inside trading in companies that the railroad did business with, or payoffs made by contracting parties “as part of a quid pro quo“, as biographer David Nasaw writes.  In 1855, Scott made it possible for Carnegie to invest $500 in the Adams Express, which contracted with the Pennsylvania to carry its messengers. The money was secured by the act of his mother placing a $500 mortgage on the family’s $700 home, but the opportunity was only available because of Carnegie’s close relationship with Scott.   A few years later, he received a few shares in T.T. Woodruff’s sleeping car company, as a reward for holding shares that Woodruff had given to Scott and Thomson, as a payoff. Reinvesting his returns in such inside investments in railroad-related industries: (iron, bridges, and rails), Carnegie slowly accumulated capital, the basis for his later success. Throughout his later career, he made use of his close connection to Thomson and Scott as he established businesses that supplied rails and bridges to the railroad, offering the two men a stake in his enterprises.

1860–1865: The Civil War

Before the Civil War, Carnegie arranged a merger between Woodruff’s company and that of George M. Pullman, the inventor of a sleeping car for first class travel which facilitated business travel at distances over 500 miles (800 km). The investment proved a great success and a source of profit for Woodruff and Carnegie. The young Carnegie continued to work for the Pennsylvania’s Tom Scott, and introduced several improvements in the service.

In spring 1861, Carnegie was appointed by Scott, who was now Assistant Secretary of War in charge of military transportation, as Superintendent of the Military Railways and the Union Government’s telegraph lines in the East. Carnegie helped open the rail lines into Washington D.C. that the rebels had cut; he rode the locomotive pulling the first brigade of Union troops to reach Washington D.C. Following the defeat of Union forces at Bull Run, he personally supervised the transportation of the defeated forces. Under his organization, the telegraph service rendered efficient service to the Union cause and significantly assisted in the eventual victory. Carnegie later joked that he was “the first casualty of the war” when he gained a scar on his cheek from freeing a trapped telegraph wire.

Defeat of the Confederacy required vast supplies of munitions, as well as railroads (and telegraph lines) to deliver the goods. The war demonstrated how integral the industries were to American success.

Keystone Bridge Company

In 1864, Carnegie invested $40,000 in Story 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. 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 wartime production. Carnegie worked with others in establishing a steel rolling mill and steel production and control of industry became the source of his fortune. Carnegie had some investments in the iron industry before the war.

After the war, Carnegie left the railroads to devote all his energies to the ironworks trade. Carnegie worked to develop several iron works, eventually forming The Keystone Bridge Works and the Union Ironworks, in Pittsburgh. Although he had left the Pennsylvania Railroad Company, he remained closely connected to its management, namely Thomas A. Scott and J. Edgar Thomson. He used his connection to the two men to acquire contracts for his Keystone Bridge Company and the rails produced by his ironworks. He also gave stock to Scott and Thomson in his businesses, and the Pennsylvania was his best customer. When he built his first steel plant, he made a point of naming it after Thomson. As well as having good business sense, Carnegie possessed charm and literary knowledge. He was invited to many important social functions—functions that Carnegie exploited to his own advantage.

Carnegie, c. 1878

Carnegie believed in using his fortune for others and doing more than making money. He wrote:

“I propose to take an income no greater than $50,000 per annum! Beyond this I need ever earn, make no effort to increase my fortune, but spend the surplus each year for benevolent purposes! Let us cast aside business forever, except for others. Let us settle in Oxford and I shall get a thorough education, making the acquaintance of literary men. I figure that this will take three years active work. I shall pay especial attention to speaking in public. We can settle in London and I can purchase a controlling interest in some newspaper or live review and give the general management of it attention, taking part in public matters, especially those connected with education and improvement of the poorer classes. Man must have no idol and the amassing of wealth is one of the worst species of idolatry! No idol is more debasing than the worship of money! Whatever I engage in I must push inordinately; therefore should I be careful to choose that life which will be the most elevating in its character. To continue much longer overwhelmed by business cares and with most of my thoughts wholly upon the way to make more money in the shortest time, must degrade me beyond hope of permanent recovery. I will resign business at thirty-five, but during these ensuing two years I wish to spend the afternoons in receiving instruction and in reading systematically”

Industrialist

1885–1900: Empire of Steel

Bessemer converter, schematic diagram

Carnegie’s mother had not wanted him to get married.   After she died in 1886, Carnegie married Louise Whitfield,  who was more than 20 years his junior.  In 1897, the couple had their only child, a daughter, whom they named after Carnegie’s mother, Margaret.

Carnegie made his fortune in the steel industry, controlling the most extensive integrated iron and steel operations ever owned by an individual in the United States. One of his two great innovations was in the cheap and efficient mass production of steel by adopting and adapting the Bessemer process for steel makingSir Henry Bessemer had invented the furnace which allowed the high carbon content of pig iron to be burnt away in a controlled and rapid way. The steel price dropped as a direct result, and Bessemer steel was rapidly adopted for railway lines and girders for buildings and bridges. The second was in his vertical integration of all suppliers of raw materials. In the late 1880s, Carnegie Steel was the largest manufacturer of pig iron, steel rails, and coke in the world, with a capacity to produce approximately 2,000 tons of pig metal per day. In 1888, Carnegie bought the rival Homestead Steel Works, which included an extensive plant served by tributary coal and iron fields, a 425-mile (685 km) long railway, and a line of lake steamships. Carnegie combined his assets and those of his associates in 1892 with the launching of the Carnegie Steel Company.

By 1889, the U.S. output of steel exceeded that of the UK, and Carnegie owned a large part of it. Carnegie’s empire grew to include the J. Edgar Thomson Steel Works, (named for John Edgar Thomson, Carnegie’s former boss and president of the Pennsylvania Railroad), Pittsburgh Bessemer Steel Works, the Lucy Furnaces, the Union Iron Mills, the Union Mill (Wilson, Walker & County), the Keystone Bridge Works, the Hartman Steel Works, the Frick Coke Company, and the Scotia ore mines. Carnegie, through Keystone, supplied the steel for and owned shares in the landmark Eads Bridge project across the Mississippi River at St. Louis, Missouri(completed 1874). This project was an important proof-of-concept for steel technology, which marked the opening of a new steel market.

http://en.wikipedia.org/wiki/Andrew_Carnegie

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