Andrew Carnegie

• 1. Introduction

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  Andrew Carnegie sat down in 1868, at the age of 33, and wrote himself a memo that read like a vow. He called the piling up of wealth one of the worst forms of idolatry. He planned to cap his income at $50,000 a year and retire from business at 35. The man who dies thus rich, he wrote, "dies disgraced."

  Carnegie did not retire at 35. He went on to control the most extensive integrated iron and steel operation that any individual in the United States had ever owned. Then, in the last 18 years of his life, he gave away around $350 million, almost 90 percent of his fortune.

  This documentary follows the Scottish weaver's son who made that fortune and the choices he made along the way. How does an immigrant child end up at the center of American steel? Who paid the real price for the empire he built? And did a man who spoke so harshly of wealth ever practice what he preached?

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• 2. Mill, Wire, and Rail

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  Andrew Carnegie was born on the 25th of November 1835 in Dunfermline, Scotland, to William and Margaret Carnegie. The family cottage had a single main room that served as living room, dining room and bedroom. Half of the ground floor was shared with a neighboring weaver's family. William Carnegie ran a successful weaving business with several looms, and in 1836 the family moved to a larger house on Edgar Street. His maternal uncle, George Lauder Sr., introduced the boy to the poems of Robert Burns and to Scottish heroes such as Robert the Bruce, William Wallace and Rob Roy.

  By 1848, when Carnegie was 12, his father's handloom trade was failing and the country was starving. His mother became the main earner, helping her brother and selling potted meats at her small shop. The family borrowed money from George Lauder Sr. and set out for Allegheny, Pennsylvania, where workers were in demand. Carnegie had left Dunfermline only once before, on a family trip to Edinburgh to see Queen Victoria. The Carnegies arrived in September 1848.

  Carnegie's first job was as a bobbin boy at the Scottish-owned Anchor Cotton Mills, changing spools of thread 12 hours a day, six days a week. The pay was $1.20 per week. A bobbin manufacturer named John Hay soon offered him $2.00 weekly. The new work was worse. Carnegie had to run a small steam engine and fire the boiler in a cellar, and he later wrote of lying awake at night, fretting that the steam was too low or too high and that the boiler might burst.

  In 1849 Carnegie became a telegraph messenger boy at the Pittsburgh office of the Ohio Telegraph Company, on his uncle's recommendation. He memorized the locations of the city's businesses and the faces of its important men. He also learned to tell incoming signals apart by sound, and he could translate them by ear without the paper slip. Within a year he was promoted to operator.

  Colonel James Anderson opened his personal library of 400 volumes to working boys every Saturday night. Carnegie borrowed steadily. He promised himself that if wealth ever came to him, other poor boys would get the same chance.

  In 1853, when Carnegie was about 18, Thomas A. Scott of the Pennsylvania Railroad hired him as a secretary and telegraph operator at $4.00 a week. Carnegie took the job because he saw more room to grow there than at the telegraph company. On the 1st of December 1859 he became superintendent of the railroad's Western Division, at a salary of $1500 a year. He hired his 16-year-old brother Tom as his personal secretary and telegraph operator. He also hired his cousin Maria Hogan, who became the first female telegraph operator in the country. The railroads were America's first big businesses, and Carnegie learned management and cost control there, especially from Scott.

  In 1855 Scott made it possible for Carnegie to invest $500 in the Adams Express Company, which carried the railroad's messengers. His mother raised the money with a $600 mortgage on the family's $700 home. The chance existed only because of Carnegie's closeness to Scott. Scott and the railroad's president, John Edgar Thomson, took part in insider dealing and in payoffs from firms that did business with the line. Carnegie later received shares in Theodore Tuttle Woodruff's sleeping car company for holding stock that Woodruff had given to the two men as a payoff. Before the Civil War he also arranged a merger between Woodruff's company and the one run by George Pullman, inventor of the first-class sleeping car.

  In the spring of 1861 Carnegie joined the U.S. Military Telegraph Corps. Scott, now Assistant Secretary of War in charge of military transportation, made him superintendent of the military railways and the Union government's telegraph lines in the East. Carnegie helped reopen rail lines into Washington D.C. that rebels had cut, and he rode the locomotive pulling the first brigade of Union troops to arrive. After the Union defeat at Bull Run, he personally supervised the transport of the beaten forces. He later joked that he was "the first casualty of the war," pointing to a scar on his cheek from freeing a trapped telegraph wire.

  The war supplied the Union with vast quantities of munitions, and it showed how much victory depended on rails and wires.

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• 3. Steel Empire

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  In 1864 Carnegie was among the early investors in the Columbia Oil Company in Venango County, Pennsylvania, which paid out over $1 million in cash dividends in a single year. Wartime demand for gunboat armor, cannons, shells and a hundred other iron products had made Pittsburgh a center of production. Carnegie helped establish a steel rolling mill, and steel became the source of his fortune. He built up several ironworks, eventually forming the Keystone Bridge Works and the Union Ironworks.

  Carnegie had left the Pennsylvania Railroad, yet he kept his ties to Thomas A. Scott and J. Edgar Thomson. He used the connection to win contracts for his bridges and rails, and he gave both men stock in his businesses. The Pennsylvania became his best customer. When he built his first steel plant, he named it for Thomson. Carnegie also had charm and a wide knowledge of literature, and he used invitations to important social events to his advantage.

  The Eads Bridge across the Mississippi River at St. Louis, completed in 1874, used steel supplied by Keystone, in which Carnegie also held shares. The bridge was an important proof of what steel could do, and it opened a new market.

  Carnegie's fortune rested on two innovations. The first was the cheap mass production of steel, through adopting and adapting the Bessemer process, which burns the high carbon content out of pig iron quickly and in a controlled way. Prices fell, and Bessemer steel was soon standard for rails, although it was not suitable for buildings or bridges. The second was vertical integration, in which he took control of all his suppliers of raw materials.

  In 1883 Carnegie bought the rival Homestead Steel Works, which came with a large plant, coal and iron fields, a 425-mile railway and a line of lake steamships. By the late 1880s his steel business was the world's largest maker of pig iron, steel rails and coke. It could produce about 2,000 tons of pig iron per day. By 1889 American steel output had passed that of the United Kingdom, and Carnegie owned a large part of it.

  His holdings included the J. Edgar Thomson Steel Works in Braddock, the Lucy Furnaces, the Frick Coke Company and the Scotia ore mines. He had also bought, at low cost, the most valuable of the iron ore fields around Lake Superior. In 1892 he combined his assets and those of his associates into the Carnegie Steel Company.

  Millions of dollars a year came to Carnegie from American trade tariffs, which he lobbied Congress to keep in place. The steel and railroad barons also worked closely together to negotiate prices instead of letting the market compete. Carnegie tried to keep all this hidden. Legal documents released in 1900, during proceedings involving the former Carnegie Steel chairman Henry Clay Frick, revealed how favorable the tariffs had been.

  In 1901 Carnegie was 65 and thinking about retirement, so he reorganized his enterprises as conventional joint stock corporations. The banker John Pierpont Morgan, America's most important financial deal maker, had watched how efficiently Carnegie produced profits. Morgan imagined a single integrated steel industry that would cut costs, lower prices, produce more and raise wages. To build it, he had to buy out Carnegie and several other major producers. Charles M. Schwab negotiated the deal in secret.

  Carnegie signed the letter agreeing to sell on the 26th of February 1901. The contract was completed on the 2nd of March 1901, when the United States Steel Corporation was formally organized. Its capitalization of $1.4 billion equaled 4 percent of the nation's gross domestic product. It was also the first corporation in the world with a market capitalization above $1 billion.

  Carnegie's steel enterprises sold for $303,450,000. His share was $225.64 million, paid in 5 percent gold bonds with a term of 50 years. A special vault was built at the Hudson Trust Company in Hoboken, New Jersey, to hold nearly $230 million worth of the physical bonds. They were held in trust for Robert A. Franks, Carnegie's business secretary. The sale made Carnegie richer than John D. Rockefeller.

  Two events from the years before the sale, one in 1889 and one in 1892, had already marked his name.

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• 4. Two Disasters

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  On the 31st of May 1889 the South Fork Dam gave way above Johnstown, Pennsylvania, sending twenty million tons of water down the valley. The flood killed 2,209 people. Carnegie was one of more than 50 members of the South Fork Fishing and Hunting Club, which has been blamed for the disaster.

  Henry Clay Frick had formed the club at the suggestion of his friend Benjamin Ruff. Its sixty-odd members were the leading business tycoons of Western Pennsylvania. They included Frick's best friend Andrew Mellon and the attorneys Philander Knox and James Hay Reed.

  The Commonwealth of Pennsylvania had built the dam between 1838 and 1853 as a reservoir for a canal basin in Johnstown. Railroads then replaced canals, and the lake was abandoned, sold to the Pennsylvania Railroad and sold again to private interests. The club took ownership in 1881. The dam stood 72 feet high and 931 feet long. Between 1881 and 1889 it often sprang leaks, which were patched mostly with mud and straw. A previous owner had also sold off the three cast iron discharge pipes that once allowed a controlled release of water. The head of the Cambria Iron Works downstream in Johnstown had raised concerns about its safety.

  When word of the failure reached Pittsburgh by telegraph, Frick and other club members formed the Pittsburgh Relief Committee to help the victims. They also resolved never to speak publicly about the club or the flood. The strategy worked, and Knox and Reed fended off every lawsuit that would have blamed the members. Carnegie later built Johnstown a new library to replace the one destroyed in the flood. That library now houses the Flood Museum.

  The Homestead Strike of 1892 lasted 143 days and ranks among the most serious labor confrontations in American history. It centered on the Homestead plant of Carnegie Steel and pitted the company against the Amalgamated Association of Iron and Steel Workers. Carnegie left for a trip to Scotland before the unrest peaked, and he left the dispute in the hands of his partner Henry Clay Frick. Frick was well known in industrial circles for his staunch anti-union views.

  The collective bargaining agreement was due to expire at the end of June, and talks began in February. Because the steel industry was doing well, the union asked for a raise. The union represented about 800 of the plant's 3,800 workers. Frick answered with an average wage cut of 22 percent, which would hit nearly half of the union's members and remove some positions from the bargaining unit. When no agreement came, management locked the workers out. The workers considered it a lockout rather than a strike.

  Frick brought in thousands of strikebreakers and Pinkerton agents to protect them. On the 6th of July, 300 Pinkertons arrived from New York City and Chicago, and a fight broke out. Ten men died, seven strikers and three Pinkertons, and hundreds were injured. Pennsylvania Governor Robert Pattison ordered two brigades of state militia to the site.

  The anarchist Alexander Berkman then shot at Frick and wounded him. Berkman was not directly connected to the strike, but he said that with Frick eliminated, responsibility for the Homestead conditions "would rest with Carnegie." Afterward the company resumed operations with non-union immigrant employees in place of the Homestead workers, and Carnegie returned to the United States. His reputation was permanently damaged.

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• 5. The Gospel of Wealth

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  The poet Matthew Arnold, the philosopher Herbert Spencer and the humorist Mark Twain all counted Carnegie as a friend. He also corresponded with most American presidents of his day. After touring Britain by coach, he wrote a book called An American Four-in-hand in Britain, and he published three travel books in all. In the early 1880s he and Samuel Storey bought numerous British newspapers meant to argue for abolishing the monarchy and founding "the British Republic." His charm and wealth still won him many British friends, among them Prime Minister William Ewart Gladstone.

  Triumphant Democracy appeared in 1886 and was his most radical work to that point. Packed with statistics, it argued that the American republic was a better system than the British monarchy. Its cover showed an upended crown and a broken scepter. The book stirred controversy in Britain. It sold over 40,000 copies, mostly in the United States.

  In June 1889 the North American Review published Carnegie's essay "Wealth." Gladstone read it and asked for it to appear in Britain, where The Pall Mall Gazette ran it as "The Gospel of Wealth." Carnegie argued that an industrialist's life has two parts. The first is gathering wealth. The second is giving it away to benevolent causes, which he said made life worthwhile.

  Carnegie welcomed the growing habit of taxing large estates at death. He pointed out that Pennsylvania already took about one-tenth of many estates and that a British budget proposed graduated death duties. Heavy taxes on estates, he wrote, mark the state's condemnation of "the selfish millionaire's unworthy life."

  He was equally firm against passing fortunes to children. Sons of prosperous businessmen, he thought, were rarely as talented as their fathers, so large bequests wasted resources that society could use. He expected future leaders to rise from the poor, who he believed gained more parental attention and better work habits.

  A rule later labeled the Andrew Carnegie Dictum split a life into thirds. The first third was for getting all the education one can. The second was for making all the money one can. The last was for giving it all away to worthwhile causes.

  Herbert Spencer was the thinker Carnegie named as his teacher. After reading Darwin and Spencer, Carnegie wrote, light came to him as in a flood, and he adopted the motto "All is well since all grows better." Yet the two men differed sharply in practice. Spencer opposed government interference in business, including tariffs, and he distrusted philanthropic institutions. Carnegie lobbied for tariffs and founded institution after institution.

  Spencer also warned that dominant producers could ruin their competitors, and he called deliberate ruin by superior resources "commercial murder." Carnegie built an integrated empire, bought out some regional competitors and merged with others. In Spencerian terms, he argued that unions raised costs and blocked the natural fall in prices. When Spencer first visited the Pittsburgh mills, which Carnegie saw as his philosophy made real, he remarked, "Six months' residence here would justify suicide." The two men still corresponded until Spencer died in 1903.

  Carnegie testified to Congress on the 5th of February 1915: "My business is to do as much good in the world as I can; I have retired from all other business."

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• 6. Giving It Away

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  The first Carnegie Library opened in 1883 in Dunfermline, the town of his birth. Carnegie had already paid for swimming baths there in 1879, and in 1880 he gave £8,000 toward a library. He met the philanthropist Enoch Pratt, whose Enoch Pratt Free Library in Baltimore, Maryland, impressed him deeply. "Pratt was my guide and inspiration," Carnegie said.

  His method was simple. He paid to build and equip a library, but only if the local authority provided the land and a budget for running it. To win local interest, he gave $500,000 to Pittsburgh for a public library in 1885. The next year he gave $250,000 to Allegheny City for a music hall and library, and another $250,000 to Edinburgh for a free library. By 1908 he had handed the management of the project to his staff, led by James Bertram.

  In total Carnegie funded some 3,000 libraries. They stood in 47 U.S. states and also in Canada, Britain, Ireland, Belgium, Serbia, France, Australia, New Zealand, South Africa, the West Indies and Fiji. Library professionals wanted designs that made administration efficient, while wealthy donors preferred buildings that boosted civic pride. Between 1886 and 1917, Carnegie reshaped both library giving and library design.

  Not everyone welcomed the gift. The historian Richard White reports that many steelworkers "despised" Carnegie's library in Homestead, Pennsylvania. By his account, Carnegie imposed work rules that took away nearly all their leisure and then lectured them on spending time they did not have. Mill officers dominated the library board.

  In 1900 Carnegie gave $2 million to start the Carnegie Institute of Technology in Pittsburgh. It is now Carnegie Mellon University, after merging with the Mellon Institute of Industrial Research. In 1902 he gave the same amount to create the Carnegie Institution in Washington, D.C., to encourage research and discovery. He also served on the boards of Cornell University and the Stevens Institute of Technology, and in 1899 he gave £50,000 to help found the University of Birmingham.

  In 1911 the astronomer George Ellery Hale was struggling to build a 100-inch telescope at Mount Wilson. Carnegie added ten million dollars to the Carnegie Institution and urged that the work be pushed vigorously, because he was eager to hear its results. The Hooker Telescope saw first light on the 2nd of November 1917, with Carnegie still alive.

  His gift of $10 million in 1901 created the Carnegie Trust for the Universities of Scotland. The deed was signed on the 7th of June 1901, and a royal charter followed on the 21st of August 1902. The sum was unprecedented. At the time, total government aid to all four Scottish universities was about £50,000 a year. The St. Andrews students elected him Lord Rector in December 1901, and he served until 1907. In Dunfermline he also bought the private estate that became Pittencrieff Park, opened it to the public and set up the Carnegie Dunfermline Trust. A statue of him was built there between 1913 and 1914.

  Carnegie was a major patron of music. He helped back Jeannette Thurber's National Conservatory of Music of America in 1885. Carnegie Hall in New York City opened in 1891 and stayed in his family until 1925. He also paid for 7,000 pipe organs in churches and temples, with no preference for any denomination.

  In 1913 he gave a further $10 million to endow the Carnegie United Kingdom Trust and handed it responsibility for his other British giving, apart from universities. Its trustees chose to finance rural library schemes rather than new buildings. They also favored musical education over church organs.

  Pension funds came next. In 1901 he set up large funds for his former employees at Homestead, and in 1905 one for American college professors, which evolved into TIAA-CREF. Church-related schools had to cut their religious ties to qualify for the money. He was also a large benefactor of the Tuskegee Institute under Booker T. Washington, and he helped Washington create the National Negro Business League. In 1904 he founded the Carnegie Hero Fund to recognize deeds of heroism.

  By 1911 it was obvious that Carnegie could not give away his entire fortune himself, so he created the Carnegie Corporation of New York. Its purpose was "to promote the advancement and diffusion of knowledge and understanding." He also provided $25,000 a year to the spelling reform movement, whose Simplified Spelling Board produced a Handbook of Simplified Spelling written entirely in reformed spelling.

  In a desk drawer, Carnegie kept the letters of thanks he received from people he had helped. He labeled the drawer "Gratitude and Sweet Words."

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• 7. Peace and Empire

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  After the Spanish-American War, the United States seemed ready to annex Cuba, Guam, Puerto Rico and the Philippines. The United States paid Spain $20 million for the Philippines. Carnegie then personally offered $20 million so that the Filipino people could buy their independence, but nothing came of it. In 1898 he joined the American Anti-Imperialist League, whose members included the former presidents Grover Cleveland and Benjamin Harrison and Mark Twain. He later became its vice-president.

  Carnegie opposed the annexation so strongly that in 1900 he nearly backed William Jennings Bryan against William McKinley. He did not object to the annexation of the Hawaiian islands or Puerto Rico. He urged McKinley to withdraw American troops from the Philippines.

  His loyalties pulled him in two directions. During the 1880s and 1890s his steel works filled large orders of armor plate for an enlarged and modernized United States Navy, even as he opposed American expansion overseas. Yet he became a major donor to the Peace Palace at The Hague, the brainchild of the Russian tsar Nicholas II. He contributed $1.5 million in 1903, and he gave $150,000 for a Pan-American Palace in Washington.

  At the Peace Palace dedication in 1913, Carnegie predicted that the end of war was as certain to come, and soon, as day follows night. His largest and most influential peace organization was the Carnegie Endowment for International Peace, formed in 1910 with a $10 million endowment. It encouraged the scientific study of the causes of war and the adoption of judicial methods to remove them.

  William T. Stead once asked Carnegie to create a peace and arbitration society. Carnegie declined. He wrote that a cause dependent on a millionaire's money would begin as an object of pity and end as an object of derision. He also told Stead, "We are heading straight to the Re-United States," meaning a merger of the United States and the British Empire.

  Theodore Roosevelt became president in 1901, and he and Carnegie were soon in frequent contact. Carnegie praised him for pushing Germany and Britain into arbitration over Venezuela in 1903. He also praised him for mediating the end of the war between Russia and Japan. Roosevelt relied on Carnegie to finance his 1909 expedition to Africa. In return he asked Carnegie to help ease tension between the cousins who ruled Britain and Germany. The plan collapsed when King Edward VII suddenly died.

  The historian David Nasaw argues that Roosevelt systematically deceived and manipulated Carnegie and held him in contempt. In a private 1905 letter to Whitelaw Reid, Roosevelt wrote that he felt "contemptuous abhorrence" for a man who made a god of money-making and also condemned war. He added that denouncing war was as foolish as denouncing business.

  In 1914 Carnegie founded the Church Peace Union, a group of leaders from religion, academia and politics. It planned its first international conference for the 1st of August 1914 on the shores of Lake Constance in southern Germany. As delegates traveled there by train, Germany was invading Belgium. The union survived and is now the Carnegie Council for Ethics in International Affairs.

  The outbreak of the First World War was a shock to Carnegie's optimistic view of peace. His efforts at anti-imperialism and world peace had failed in his lifetime. Even so, his ideas about international relations helped lay the foundation for the League of Nations after his death.

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• 8. Home and Legacy

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  Carnegie refused to marry while his mother was alive, and he cared for her through her final illness. She died in 1886. The 51-year-old Carnegie then married Louise Whitfield, who was 21 years younger. In 1897 the couple had their only child, Margaret, named after his mother. His younger brother Thomas had died the same year as his mother, at age 43.

  Carnegie bought Skibo Castle in Scotland in 1898 for some $85,000. The family spent most summers there and the rest of the year at their New York mansion at 2 East 91st Street, completed in late 1902. Louise lived in the mansion until her death in 1946. Since 1976 it has housed the Cooper-Hewitt, Smithsonian Design Museum, and the neighborhood is now called Carnegie Hill. It became a National Historic Landmark in 1966.

  Carnegie's family belonged to the Presbyterian Church, but he grew skeptical of Calvinism and of religion as a whole. His father left the church after a sermon on infant damnation. Carnegie said he wanted the world to know him as a "positivist." Later his firm opposition softened. He joined the Madison Avenue Presbyterian Church, led from 1905 to 1926 by Henry Sloane Coffin. He also prepared an address, which he never delivered, professing belief in "an Infinite and Eternal Energy from which all things proceed." Around 1912-1913 he exchanged letters with 'Abdu'l-Bahá, eldest son of the founder of the Baháʼí Faith.

  Carnegie died on the 11th of August 1919 of bronchial pneumonia at his Shadow Brook estate in Lenox, Massachusetts. His last $30 million went to foundations, charities and pensioners. He was buried at Sleepy Hollow Cemetery in Sleepy Hollow, New York, under an intentionally simple gravestone in the form of a Celtic cross. A few yards away lies the union organizer Samuel Gompers.

  The University of Glasgow gave him an honorary Doctor of Laws in June 1901, and the city granted him its freedom later that year. Honors followed from Scotland, Belfast, France and the Netherlands. Queen Wilhelmina named him Knight Grand Cross of the Order of Orange-Nassau on the 25th of August 1913.

  The dinosaur Diplodocus carnegiei was named for him after he sponsored the Utah expedition that found its remains. Carnegie was so proud of "Dippy" that he had casts of the bones made and plaster replicas of the skeleton donated to museums in Europe and South America. The original stands in the Hall of Dinosaurs at the Carnegie Museum of Natural History in Pittsburgh. The saguaro cactus, Carnegiea gigantea, also bears his name, as do the towns of Carnegie, Pennsylvania, and Carnegie, Oklahoma, and the Carnegie Medal for children's literature in the UK.

  In 2007 Lauder College in the Halbeath area of Dunfermline was renamed Carnegie College. The college had been named for his uncle George Lauder Sr., who first handed the Dunfermline boy the poems of Robert Burns.

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