CARNEGIE, ANDREW

Andrew Carnegie (1835–1919) was a Scottish-born steel magnate in the United States known for his extraordinary philanthropy as well as his great wealth. He was born in Dunfermline, Scotland, the son of a handloom weaver. When a power loom was introduced in Dunfermline, the family became impoverished and decided to emigrate to the United States. Arriving in 1848, they settled in Allegheny, Pennsylvania. At age 13, Carnegie went to work as a bobbin boy in a cotton mill. He educated himself by reading voraciously and attending night school where he learned double-entry bookkeeping.

The young Carnegie worked in the cotton mill for barely a year before he landed a job as a telegraph messenger in 1849. He advanced quickly. By 1851 he was a telegraph operator. Only two years later he became secretary and personal telegrapher to Tom Scott, the superintendent of the Pennsylvania Railroad's Pittsburgh division.

Carnegie spent twelve years working for the railroad. When Scott was promoted to vice-president of the company in 1859, he chose his young secretary to succeed him as superintendent. During the American Civil War (1861–1865) Carnegie assisted in the management of railroad and telegraph services for the Union.

As railroad superintendent Carnegie invested in the Woodruff Sleeping Car Company and introduced the first successful sleeping car on American railroads. While still working for Scott, he began to invest in stocks. Carnegie made shrewd investments in industrial concerns. These included the Keystone Bridge Company, the Superior Rail Mill and Blast Furnaces, the Union Iron Mills, and the Pittsburgh Locomotive Works. In 1865 Carnegie left the Pennsylvania Railroad to manage the Keystone Bridge Company (where he had become the dominant shareholder), and a principal Keystone supplier, the Union Iron Mills.

In the early 1870s Carnegie decided to concentrate his efforts on steel. He founded the J. Edgar Thomson Steel Works, named after the president of the Pennsylvania Railroad, which eventually became the Carnegie Steel Company. The company built the first steel plants in the United States that used the Bessemer steelmaking process, a revolutionary industrial development in which steel was made from pig iron by using a blast of air forced through molten metal to burn out carbon and other impurities.

Carnegie also pioneered other major technological innovations that enabled his company to quickly become a model of productive efficiency. He kept costs down with detailed cost-and-production accounting procedures. By the 1890s, Carnegie's mills had introduced the basic open-hearth furnace process to American steel-making.

At the same time Carnegie and his unusually capable group of managers purchased vast acres of coal fields and iron-ore deposits that furnished the raw materials needed for steel-making. They also purchased ships and railroads needed to transport these supplies to the mills. By the end of the nineteenth century, the Carnegie Steel Company controlled all the elements it used in the steel production process and dominated the American steel industry.

Carnegie was less adept at labor-management relations than he was at building an industry. The Homestead Strike of 1892 resulted from his company's efforts to lower the minimum wage and eliminate the union as the exclusive bargaining agent in Carnegie's Homestead Works. The confrontation between labor and management turned violent when local management at the Homestead plant called in Pinkerton guards in an attempt to break the union.

By the turn of the century company profits reached $40 million; Carnegie's own share was $25 million. In 1901, at the age of 65, Carnegie sold his empire to the newly formed United States Steel Corporation, headed by financier J.P. Morgan. Carnegie's personal share of the proceeds from the sale came to about $230 million. After he sold the company Carnegie devoted his life to philanthropic activities and writing. He authored 8 books and 70 magazine articles.

Although he was an enthusiastic proponent of the capitalist ethic, Carnegie was concerned about some of the social ills that came about as byproducts of a market economy. A two part article entitled "Wealth" appeared in the 1889 North American Review. (It was later published in book form in 1900 as The Gospel of Wealth.) In this piece Carnegie addressed the problem of the "proper administration of wealth" and outlined his vision of a socially responsible capitalist. He argued that it was the duty of the rich to administer their surplus wealth for the common benefit. "The man who dies thus rich dies disgraced," he wrote.

Carnegie backed up his words with deeds. He eventually funded 2,509 public libraries throughout the English-speaking world, built the famous Carnegie Hall in New York, and founded the Carnegie Institute of Technology, which later became Carnegie-Mellon University. In 1905 he established the Carnegie Foundation for the Advancement of Teaching and in 1910 the Carnegie Endowment for International Peace. In 1911 he founded the Carnegie Corporation of New York, which continued his philanthropic legacy after his death. Throughout his lifetime Carnegie distributed some $350 million towards the public good.

CARNEGIE, ANDREW

FURTHER READING