Andrew Carnegie (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 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. 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.
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 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.
Andrew Carnegie was born in a typical weaver's cottage with only one main room. Falling on very hard times as a handloom weaver and with the country in starvation, Andrew's father 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.
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.
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.
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 as Superintendent of the Military Railways and the Union Government's telegraph lines in the East.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.
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. 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 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!..." .
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 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. Later on 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.
In 1901, Carnegie was 66 years of age and considering retirement. He reformed his enterprises into conventional joint stock corporations as preparation to this end. John Pierpont Morgan was a banker and perhaps America's most important financial deal maker. He had observed how efficiently Carnegie produced profit. He envisioned an integrated steel industry that would cut costs, lower prices to consumers, produce in greater quantities and raise wages to workers. To this end, he needed to buy out Carnegie and several other major producers and integrate them into one company, thereby eliminating duplication and waste. He concluded negotiations on March 2, 1901, and formed the United States Steel Corporation. It was the first corporation in the world with a market capitalization over $1 billion.
Carnegie continued his business career; some of his literary intentions were fulfilled. He befriended English poet Matthew Arnold and English philosopher Herbert Spencer as well as being in correspondence and acquaintance with most of the U.S. Presidents, statesmen, and notable writers. Carnegie's criticism of British society did not mean dislike; on the contrary, one of Carnegie's ambitions was to act as a catalyst for a close association between the English-speaking people. To this end, in the early 1880s, he purchased numerous newspapers in England, all of which were to advocate the abolition of the monarchy and the establishment of "the British Republic". Carnegie's charm aided by his great wealth meant that he had many British friends, including Prime Minister William Ewart Gladstone.