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CARNEGIE, ANDREW 1835-1919

INDUSTRIALIST AND PHILANTHROPIST

Carnegie Steel

Andrew Carnegie, having acquired his wealth during the nineteenth century, spent much of the early 1900s giving away large portions of his fortune to worthy causes. His wealth was primarily built from his domination of the American steel industry by his company, Carnegie Steel. By the turn of the century Carnegie had vertically integrated his holdings from ore to finished products and built his company into one of the world leaders in steel. When J. P. Morgan set up a financing coalition to purchase his business in 1901, Carnegie sold his 58 percent share of Carnegie Steel to the new U.S. Steel Corporation, making him one of the world's richest men.

Industrious Immigrant

Carnegie's prowess in getting wealth and giving it away enriched his adopted nation even more than it did himself. The circumstances of his boyhood fostered both passions. A native of Scotland, Carnegie came to America with his family, looking to fulfill both material ambition and social idealism. Settling in Pittsburgh, young Andrew got his start as a telegrapher, and his work came to the attention of Thomas Scott, the superintendent of the Pennsylvania Railroad's Western Division. He appointed Carnegie his secretary and personal telegrapher. During his twelve years with the Pennsylvania Railroad, Carnegie assimilated the managerial skill, grasped the economic principles, and cemented the personal relationships that enabled him to become a successful manager, capitalist, and entrepreneur. During the depression of the 1870s, with properties cheap and the Bessemer process coming into its own, Carnegie concentrated all his resources and energies in the making of steel. He hired the best people in steel technology and plant management, shrewdly held on to absolute control of his enterprise (the better to plow profits back into capital improvement), and out-maneuvered all his rivals in the field.

Social Concern

Carnegie's family had impressed upon him since he was a child the importance of social justice. With the enormous wealth he had acquired he "felt a moral duty to plow back their money into philanthropy with the same judgment, zeal, and leadership he had devoted to getting rich." He was able to live up to his family's desires. With the $250 million in 5 percent, fifty-year gold bonds he received from the sale of his steel company, Carnegie began to follow the precepts of the famous article he wrote in 1899, "The Gospel of Wealth." His article expressed his opinion that donations should be made during the life of the donor. Carnegie had established standards and routine procedures to handle all requests efficiently and promptly by late 1900 through the creation of the Carnegie Institute of Technology in Pittsburgh.

Making a Difference

Carnegie regarded library giving as his specialty, and he approached it systematically. In the first fifteen years of the century he helped establish 2,811 free public libraries, of which 1,946 were located in the United States. Although Carnegie received some criticism for his devotion to libraries, he was not distracted from building libraries since he felt that no other gifts were as popular or had as direct an impact upon as large a number of people as did his public libraries. Prior to 1880 free libraries were all but nonexistent; however, Carnegie was able to change that by making them almost as much a part of America as schoolhouses or churches. Church organs were another interest of Carnegie's; by his death in 1919 he had given away 4,092 church organs throughout the United States. Education was the biggest beneficiary of Carnegie's fortune. It has been estimated that 80 percent of his fortune went for educational purposes: libraries, colleges and universities, institutions to promote scientific research and the diffusion of knowledge, and individual grants and pensions to college teachers. Carnegie decided to focus his attention on the small colleges and universities. He felt larger institutions had large enough endowments so he concentrated his efforts where he felt he could make the greatest difference.

The Score

Carnegie thoroughly enjoyed the game of philanthropy during the early years when he competed with John D. Rockefeller. The press reported their donation totals each year like box scores. In 1910 the New York American reported total lifetime giving by Carnegie at $179,300,000 and Rockefeller at $134,271,000. By 1906 Carnegie was tired of the game and by 1910 he was sick of it. He wrote: "The final dispensation of one's wealth preparing for the final exit is I found a heavy task—all sad.… You have no idea the strain I have been under." Most discouraging to him was the fact that no matter how fast he gave during the years from 1901 to 1910, he could not give fast enough. The interest on his bonds kept gaining on his dispersal of the principal. By 1910 he had given away $180 million but he still had almost the same amount left. Carnegie's close friend, Secretary of State Elihu Root, noting his depression, suggested he set up a trust and transfer the bulk of his fortune to others for them to worry about, so he could die happy in a state of grace.

A New Corporation

Carnegie created the Carnegie Corporation of New York in November 1911, and in a series of grants he transferred to it the bulk of his remaining fortune, $125 million. In compliance with his gospel, Carnegie had given 90 percent of his fortune away during his lifetime, but he left other men to worry about its management. At the time of the announcement of the Carnegie Corporation the New York Herald ran the final box score on the contest between Carnegie and Rockefeller: "Carnegie, $332 million; Rockefeller, $175 million." It was no longer a contest. The public had lost interest, and so had Andrew Carnegie.