History‎ > ‎Biographies‎ > ‎

Andrew Carnegie

Andrew Carnegie (but commonly November 25, 1835 – August 11, 1919) was a Scottish American industrialist who led the enormous expansion of the American steel industry in the late 19th century. He was also one of the highest profile philanthropists of his era and, by the time of his death, he had given away to charities and foundations about $350 million (in 2015, $4.76 billion) – almost 90 percent of his fortune. His 1889 article proclaiming "The Gospel of Wealth" called on the rich to use their wealth to improve society, and it stimulated a wave of philanthropy.

Carnegie was born in Dunfermline, Scotland, and emigrated to the United States with his very poor parents in 1848. Carnegie started work as a telegrapher and by the 1860s had investments in railroads, railroad sleeping cars, bridges and oil derricks. He accumulated further wealth as a bond salesman raising money for American enterprise in Europe. He built Pittsburgh's Carnegie Steel Company, which he sold to J.P. Morgan in 1901 for $480 million (in 2015, $13.6 billion), creating the U.S. Steel Corporation. Carnegie devoted the remainder of his life to large-scale philanthropy, with special emphasis on local libraries, world peace, education and scientific research. With the fortune he made from business, he built Carnegie Hall and he founded the Carnegie Corporation of New York, Carnegie Endowment for International Peace, Carnegie Institution for Science, Carnegie Trust for the Universities of Scotland, Carnegie Hero Fund, Carnegie Mellon University and the Carnegie Museums of Pittsburgh, among others. His life has often been referred to as a true "rags to riches" story.

Early life

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 asRobert the Bruce, William 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

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, and quickly learned to distinguish the differing sounds the incoming telegraph signals produced. He developed the ability to translate signals by ear, without using the paper slip, 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, his 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 precocious youth began a rapid advance 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". 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 his mother's placing a $500 mortgage on the family's $700 home, but the opportunity was available only 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 connections 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 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.

1885–1900: Steel empire

Carnegie did not want to marry during his mother's lifetime, instead choosing to take care of her in her illness towards the end of her life. 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 theBessemer process for steel making. Sir 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.

Death

Carnegie died on August 11, 1919, in Lenox, Massachusetts, of bronchial pneumonia. He had already given away $350,695,653 (approximately $4.8 billion, adjusted to 2010 figures) of his wealth. After his death, his last $30,000,000 was given to foundations, charities, and to pensioners. He was buried at the Sleepy Hollow Cemetery in North Tarrytown, New York. The grave site is located on the Arcadia Hebron plot of land at the corner of Summit Avenue and Dingle Road. Carnegie is buried only a few yards away from union organizer Samuel Gompers, another important figure of industry in the Gilded Age.

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

Comments