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Fortune: Founder of Carnegie Steel Company
Legacy: The Carnegie Corporation
Foundation Assets: $1,824,314,932
2003 Giving: $74,542,133
Major Funding Areas: libraries, education, international peace and development |
Tough early beginnings, and lessons learned about the power of knowledge from a local merchant with a library, not only made Andrew Carnegie one of the world’s richest men, but also one of its most giving.
Born to working class parents Margaret and Will Carnegie on November 25, 1835, in Dunfermline, Scotland, when Carnegie died in Lenox, Massachusetts, on August 11, 1919, his steel empire had produced the raw materials that built the infrastructure of the United States. More importantly, he had given away more $350 million and had founded the development of over 3000 libraries world wide.
The son of a skilled weaver, Carnegie grew up in a working-class family and was expected to take up the weaving trade. The coming of the industrialist age and automated weaving looms changed those expectations however, and when the Carnegie family immigrated to the United States in 1848 they were penniless.
Carnegie’s father was greatly discouraged by his inability to support his family, and his mother made it clear that she was greatly disappointed in her husband and saddened by their poverty. Well aware of the difficult of the situation, and pushed by his mother’s determination to see him succeed, Carnegie took a job working as a bobbin boy in a loom factory for $1.20 a week. His next job as a steam engine and boiler attendant paid $2 a week, but it was his penmanship that impressed his bosses, and he was soon promoted to clerk.
Building on that success, Carnegie took a position as a telegraph boy delivering messages. His rare ability to understand dash-and-dot messages by ear led to his recruitment in 1853 by Thomas Scott, President of the Pennsylvania Railroad. Carnegie proceeded to learn everything he could about the railroad industry while working as Scott’s personal secretary and earning $35 a month.
Carnegie’s father however, was not so fortunate. Unable to find work as a weaver, he tried to produce his own materials for sale, but found few buyers. He died in 1855 when Andrew was only 20.
The younger Carnegie continued to gain more stature at the Pennsylvania Railroad, breaking a strike before it developed by passing on the names of the strike organizers to his boss, who fired the organizers immediately. Carnegie also made his first investment at the time, putting $217.50 into the Woodruff Sleeping Car Company. Two years he began receiving a return of about $5000 per year on his investment.
When Scott was appointed Assistant Secretary of War during the Civil War, Carnegie went to work in Washington as Scott’s right hand man, helping to organize the military telegraph system. Following the war, Carnegie succeeded Scott as superintendent at the Pennsylvania Railroad. Using his investment money and his increased salary, Carnegie was able to move his mother to an upscale neighborhood, which greatly pleased her.
Carnegie continued to invest in small iron mills and other related companies, which now included the Adams Express Company, the Piper and Schiffler Company, the Central
Transportation Company and an oil company in Titusville, Pennsylvania. By 1863, half of his $42,000 income was derived from investments.
Carnegie retired from the railroad in 1865 and proceeded to concentrate on building his fortune. He reorganized the Piper and Schiffler Company into the Keystone Bridge Company to build bridges from iron rather than wood. He also founded the Keystone Telegraph Company, which was allowed to string telegraph wire on the railroad poles across the entire state. Keystone attracted immediate interest from the Pacific and Atlantic Telegraph Company, allowing its investors to triple their return.
Carnegie’s investment income was almost $50,000 per year by 1868, and although he’d promised himself he’d retire from business and devote himself to philanthropy and education at the age of 35, a trip to England resulted in a change of plans. After visiting Henry Bessemer’s steel plants, whose steel-making process Carnegie he had been using since 1861 at The Freedom Iron Company, he saw great potential to expand the steel business in North America.
Along with several partners including Henry Frick, Carnegie opened the first steel plant in 1875. The Edgar Thomson Works in Braddock, Pennsylvania, received its first order for 2000 steel rails from Carnegie’s former employer, the Pennsylvania Railroad. Carnegie further expanded is empire by purchasing rival steel mill Homestead Works in 1883.
It was around this time that Carnegie began to publish some serious written works on social and political issues, including Round the World (1881), An American Four-in-Hand in Britain (1883) and Triumphant Democracy (1886). The latter publication celebrated the American belief in democracy and capitalism and compared America’s social system with that of many unequal European class-based systems. It also praised the American educational system. Additionally, Carnegie supported unions with an article in Forum Magazine defending workers' rights.
Tragedy also struck the Carnegie family in 1886. Carnegie himself became very sick with Typhoid and both his mother and brother died. Heart struck by the death of his family, Carnegie married his long time girlfriend Louise Whitfield.
This sequence of events surely had a profound affect on Carnegie’s feelings about life and work and led him to write his most famous manuscript, The Gospel of Wealth, in 1889. Published in the 1889 North American review the article argued that the rich should use their wealth to benefit their communities as a whole. In the article Carnegie said, a "man who dies rich dies disgraced."
Andrew Carnegie had one child, daughter Margaret Carnegie, in 1897, after which the Carnegie family purchased Skibo Castle, in Scotland. Carnegie decided he needed to spend more time on research and development and subsequently moved to New York. He also spent six months of the year in Scotland with his family.
In 1889 Carnegie made Henry Frick chairman of the Carnegie Company, a mistake he would later regret. While in Scotland in 1892, Frick decided to reduce piecework rates for the steel workers, which led to the infamous Homestead Strike by the Amalgamated Iron and Steel Workers Union at Carnegie's Homestead plant. Frick hired 300 strike breakers, but when they got to the plant, the strikers were waiting for them.
In a day long battle, 10 men were killed and 60 wounded before the governor placed Homestead under martial law. Carnegie took responsibility for the deaths, but was greatly discouraged by Frick’s actions and saddened by the fact that his name would never again be associated with supporting the working man.
Despite the tragedy, the Carnegie Steel Company continued to expand over the next 10 years. By 1899 annual production of steel was 2,663,412 tons with profits of $40 million. Conflicts between Carnegie and Henry Frick were also finally resolved in 1899, when Carnegie bought out Frick for $15 million.
Two years later Frick and J.P. Morgan purchased the Carnegie Steel Company for $500,000,000 and renamed it the U.S. Steel Corporation. The new company was valued at $1.4 billion, and left Carnegie with a personal fortune of $225,000,000.
After the sale of his company, Carnegie began to concentrate more seriously on philanthropy.
He had already established The Carnegie Institute of Pittsburgh (1895). And 11 years prior to the sale of his company, he had offered the city of Pittsburgh $1 million to build The Carnegie Library of Pittsburgh. Carnegie’s love of reading developed from his childhood experience in the library of a local businessman and he had always wanted to make the reading experience available to everyone as a means of self education. But he had more to do.
In 1902 he founded The Carnegie Institution of Washington to provide research for American colleges and universities. In 1905 he established the Carnegie Teachers' Pension Fund with an endowment of $10,000,000 and also The Carnegie Institute of Technology. In 1910, he established The Carnegie Endowment for International Peace.
In 1911 The Carnegie Corporation was established with approximately $125,000,000, its goal being to aid colleges, universities, technical schools, and scientific research. In 1913 The Carnegie United Kingdom Trust was established, followed in 1914 by The Carnegie Council on Ethics and International Affairs.
Carnegie returned home to Scotland for one last time at the outbreak of the War in 1914. In 1916 he bought Shadowbrook, an estate in Lenox, Massachusetts, where he would live for the remainder of his life. When he died in 1919, his gravestone read simply: Andrew Carnegie, Born in Dunfermline, Scotland, 25 November 1835. Died in Lenox, Massachusetts, 11 August 1919
His proudest words remain forever carved in stone above The Carnegie Library of Pittsburgh: Free to the People.
For more information about The Carnegie Corporation please visit:
http://www.carnegie.org/
For more information about Andrew Carnegie please visit:
http://www.pbs.org/wgbh/amex/carnegie/
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