The New Tycoons: Andrew Carnegie
By the time he died in 1919, Carnegie had
given away $350,695,653. At his death, the
last $30,000,000 was likewise given away to
foundations, charities and to pensioners.
Oil was not the only commodity in great demand during the
Gilded Age. The nation also needed steel. The railroads needed STEEL
for their rails and cars, the navy needed steel for its new naval fleet,
and cities needed steel to build skyscrapers. Every factory in America
needed steel for their physical plant and machinery. Andrew Carnegie
saw this demand and seized the moment.
Humble Roots
Like John Rockefeller, ANDREW CARNEGIE was not born into
wealth. When he was 13, his family came to the United States from
Scotland and settled in Allegheny, Pennsylvania, a small town near
Pittsburgh. His first job was in a cotton mill, where he earned $1.20
per week.
His talents were soon recognized and Carnegie found himself
promoted to the bookkeeping side of the business. An avid reader,
Carnegie spent his Saturdays in the homes of wealthy citizens who
were gracious enough to allow him access to their private libraries.
After becoming a telegrapher for a short while, he met the head of a
railroad company who asked his services as a personal secretary.
Millionaire Andrew Carnegie spoke against irresponsibility of the wealthy and
sharply criticized ostentatious living.
During the Civil War, this man, THOMAS SCOTT, was sent to
Washington to operate transportation for the Union Army. Carnegie
spent his war days helping the soldiers get where they needed to be
and by helping the wounded get to hospitals. By this time, he had
amassed a small sum of money, which he quickly invested. Soon iron
and steel caught his attention, and he was on his way to creating the
largest steel company in the world.
Vertical Integration: Moving on Up
The Besse
When WILLIAM KELLY and HENRY BESSEMER perfected a process
to convert iron to steel cheaply and efficiently, the industry was soon
to blossom.
Carnegie became a tycoon because of shrewd business tactics.
Rockefeller often bought other oil companies to eliminate competition.
This is a process known as HORIZONTAL INTEGRATION. Carnegie also
created a VERTICAL COMBINATION, an idea first implemented by
GUSTAVUS SWIFT. He bought railroad companies and iron mines. If he
owned the rails and the mines, he could reduce his costs and produce
cheaper steel.
Carnegie was a good judge of talent. His assistant, HENRY CLAY
FRICK, helped manage the CARNEGIE STEEL COMPANY on its way to
success. Carnegie also wanted productive workers. He wanted them to
feel that they had a vested interest in company prosperity so he
initiated a profit-sharing plan.
All these tactics made the Carnegie Steel Company a multimillion dollar corporation. In 1901, he sold his interests to J.P. Morgan,
who paid him 500 million dollars to create U.S. Steel.
Giving Back
Retirement did not take him out of the public sphere. Before his
death he donated more than $350 million dollars to public foundations.
Remembering the difficulty of finding suitable books as a youth, he
helped build three thousand libraries. He built schools such as
CARNEGIE-MELLON UNIVERSITY and gave his money for artistic pursuits
such as CARNEGIE HALL in New York.
Andrew Carnegie was also dedicated to peace initiatives
throughout the world because of his passionate hatred for war. Like
Rockefeller, critics labeled him a robber baron who could have used his
vast fortunes to increase the wages of his employees. Carnegie
believed that such spending was wasteful and temporary, but
foundations would last forever. Regardless, he helped build an empire
that led the United States to world power status.
The New Tycoons: Andrew Carnegie. U.S. History: Pre-Columbian to
the New Millenium, 15 Oct, 2013.
http://www.ushistory.org/us/36c.asp
Growth and transformation: The United
States in the Gilded Age
From Outline of U.S. History.
Provided by U.S. Department of State.
The Ohio Works of the Carnegie Steel Company in Youngstown, Ohio, 1910. Click to
see the full panoramic photograph. (Haines Photo Co. More about the photograph)
Between two great wars – the Civil War and the First World War – the
United States of America came of age. In a period of less than 50 years
it was transformed from a rural republic to an urban nation. The
frontier vanished. Great factories and steel mills, transcontinental
railroad lines, flourishing cities, and vast agricultural holdings marked
the land. With this economic growth and affluence came
corresponding problems. Nationwide, a few businesses came to
dominate whole industries, either independently or in combination
with others. Working conditions were often poor. Cities grew so
quickly they could not properly house or govern their growing
populations.
Technology and change
“The Civil War,” says one writer, “cut a wide gash through the history
of the country; it dramatized in a stroke the changes that had begun to
take place during the preceding 20 or 30 years.…” War needs had
enormously stimulated manufacturing, speeding an economic process
based on the exploitation of iron, steam, and electric power, as well as
the forward march of science and invention. In the years before 1860,
36,000 patents were granted; in the next 30 years, 440,000 patents
were issued, and in the first quarter of the 20th century, the number
reached nearly a million.
As early as 1844, Samuel F. B. Morse had perfected electrical
telegraphy; soon afterward distant parts of the continent were linked
by a network of poles and wires. In 1876 Alexander Graham Bell
exhibited a telephone instrument; within half a century, 16 million
telephones would quicken the social and economic life of the nation.
The growth of business was speeded by the invention of the typewriter
in 1867, the adding machine in 1888, and the cash register in 1897. The
linotype composing machine, invented in 1886, and rotary press and
paper-folding machinery made it possible to print 240,000 eight-page
newspapers in an hour. Thomas Edison’s incandescent lamp eventually
lit millions of homes. The talking machine, or phonograph, was
perfected by Edison, who, in conjunction with George Eastman, also
helped develop the motion picture. These and many other applications
of science and ingenuity resulted in a new level of productivity in
almost every field.
Concurrently, the nation’s basic industry – iron and steel – forged
ahead, protected by a high tariff. The iron industry moved westward as
geologists discovered new ore deposits, notably the great Mesabi range
at the head of Lake Superior, which became one of the largest
producers in the world. Easy and cheap to mine, remarkably free of
chemical impurities, Mesabi ore could be processed into steel of
superior quality at about one‑ tenth the previously prevailing cost.
Carnegie and the age of steel
Andrew Carnegie was largely responsible for the great advances in
steel production. Carnegie, who came to America from Scotland as a
child of 12, progressed from bobbin boy in a cotton factory to a job in a
telegraph office, then to one on the Pennsylvania Railroad. Before he
was 30 years old he had made shrewd and farsighted investments,
which by 1865 were concentrated in iron. Within a few years, he had
organized or had stock in companies making iron bridges, rails, and
locomotives. Ten years later, he built the nation’s largest steel mill on
the Monongahela River in Pennsylvania. He acquired control not only
of new mills, but also of coke and coal properties, iron ore from Lake
Superior, a fleet of steamers on the Great Lakes, a port town on Lake
Erie, and a connecting railroad. His business, allied with a dozen
others, commanded favorable terms from railroads and shipping lines.
Nothing comparable in industrial growth had ever been seen in
America before.
Though Carnegie long dominated the industry, he never achieved
a complete monopoly over the natural resources, transportation, and
industrial plants involved in the making of steel. In the 1890s, new
companies challenged his preeminence. He would be persuaded to
merge his holdings into a new corporation that would embrace most of
the important iron and steel properties in the nation.
Corporations and cities
The United States Steel Corporation, which resulted from this
merger in 1901, illustrated a process under way for 30 years: the
combination of independent industrial enterprises into federated or
centralized companies. Started during the Civil War, the trend
gathered momentum after the 1870s, as businessmen began to fear that
overproduction would lead to declining prices and falling profits. They
realized that if they could control both production and markets, they
could bring competing firms into a single organization. The
“corporation” and the “trust” were developed to achieve these ends.
Corporations, making available a deep reservoir of capital (money and
other assets) and giving business enterprises permanent life and
continuity of control, attracted investors both by their anticipated
profits and by their limited liability in case of business failure. The
trusts were in effect combinations of corporations whereby the
stockholders of each placed stocks in the hands of trustees. (The
“trust” as a method of corporate consolidation soon gave way to the
holding company, but the term stuck.) Trusts made possible largescale combinations, centralized control and administration, and the
pooling of patents. Their larger capital resources provided power to
expand, to compete with foreign business organizations, and to drive
hard bargains with labor, which was beginning to organize effectively.
They could also exact favorable terms from railroads and exercise
influence in politics.
ExplorePAhistory.com
Name: Andrew Carnegie [Steel]
Region: Pittsburgh Region
County: Allegheny
Marker Location: Carnegie Library, 4400 Forbes Ave., Pittsburgh
Dedication Date: April 18, 1996
Behind the Marker
Andrew Carnegie, circa 1896.
Andrew Carnegie was a singular figure in American history. The "rags to
riches" ideal celebrated in the Horatio Alger stories was mostly a myth:
rags most often led to rags, or at best a modest prosperity, while rich
people most often had rich parents. But Carnegie actually lived it. Born a
poor immigrant boy, he became the "richest man in the world."
Andrew Carnegie was born on November 25, 1835, in Dunfermline,
Scotland, the eldest son of a handloom weaver. The family left Scotland in
1848, in economic straits, and followed a chain of Scottish immigrants to
Pittsburgh.
Later in life, when he returned as a latter-day laird to Skibo Castle,
Carnegie would revel in his Scottish heritage and upbringing. Yet even in
Pittsburgh as a young man, a network of Scottish immigrants steered him
to jobs in a textile factory and telegraph office.
The Edgar Thomson Steel Works, by William Rau, Braddock, PA, 1891.
At age eighteen, Carnegie became special assistant for Tom Scott, who
had recently become western superintendent for the Pennsylvania
Railroad. From Scott he mastered the details of running trains through
Pennsylvania's mountains and the principles of modern management.
A classic "inside investor," Carnegie made easy profits in such railroadrelated ventures as bridge building, railroad sleeping cars, telegraphs, and
iron and steel mills. In the 1870s, Carnegie named his flagship steel mill
after the Pennsylvania's president,
J. Edgar Thomson. Carnegie's first
sizable fortune came in selling bonds for these many varied business
ventures to European investors.
Carnegie's second, much larger fortune flowed from his adage to "put all
your eggs in one basket, then watch it carefully." This basket, of course,
was steel.
Carnegie bought his first iron furnaces and rolling mills, including
Freedom Iron as an offshoot of his railroad ventures in the 1860s. After the
Edgar Thomson mill, opened in 1875, he focused on creating an
empire
in steel. To undersell competitors in good times and bad, Carnegie cut
costs obsessively and made massive investments in technology.
Facsimile Bill of Sale, Andrew Carnegie's sale of the Carnegie Company and all...
An association with
Henry Clay Frick in the 1880s gave Carnegie's mills
control over the
coke that fueled his mills. As his fame grew with his
fortune, Carnegie launched a "literary" career with celebrated essays on
the gospel of wealth and on the labor question, the latter of which attracted
a storm of criticism following the violent
Homestead strike of 1892.
When financier J. P. Morgan put together U. S. Steel in 1901 to eliminate
Carnegie's relentless competitiveness, Carnegie's mills, railroads, coke
lands, and iron ore holdings formed the centerpiece of the nation's first
billion-dollar corporation. Morgan paid $480 million for Carnegie Steel, of
which Carnegie's personal share was $225,639,000.
Mr. and Mrs. Andrew Carnegie say farewell to Pittsburgh, 1914.
Giving away this huge sum of money - the equivalent in 2004 of about
$120 billion, approximately twice Bill Gate's fortune - proved more difficult
than Carnegie had imagined. In his celebrated
"Gospel of Wealth"
Carnegie stated, "The man who dies rich, dies disgraced."
In 1881 he gave money for constructing a library in his birthplace in
Scotland, and then for a dozen or so libraries in the United States,
beginning in Braddock. (Carnegie typically paid only for the library building
and required the town to buy books and pay for upkeep, except in the four
cases of Braddock,
Homestead,
Duquesne and his namesakesuburb of Pittsburgh where he paid for the whole show.)
Carnegie's philanthropy did not win universal approval. Many workers
accused Carnegie of using charity to mask the corporate greed that had
robbed them of the
money produced by their toil.
When handling the paperwork became a burden, Carnegie set up a half
dozen foundations that funded 2,811 public libraries, 7,689 church organs,
numerous educational ventures, and countless pensions for public figures,
peacetime heroes, and college faculty. Still, interest on his fortune
accumulated almost as fast as he could give it away.
In 1911, with a massive gift of $125 million, he created the Carnegie
Corporation of New York for "the advancement and diffusion of
knowledge." The noble cause of promoting international peace, not an
easy task during World War I, occupied his remaining years. He died on
August 11, 1919, having successfully given away $380 million, his entire
fortune.
http://www.sjusd.org/leland/teachers/sgillis/immigration/pdf/1st_wave_summar
y.pdf
1st wave migration patterns
: Who were they and where did
they come from: Western and Northern Europe
IRISH
At the beginning of the 19th century the dominant industry of
Ireland was agriculture. Large areas of this land was under the
control of landowners living in England. Much of this land was
rented to small farmers who, because of a lack of capital, farmed
with antiquated [old] implements and used backward methods.
The average wage for farm laborers in Ireland was eight pence a
day. This was only a fifth of what could be obtained in the United
States and those without land began to seriously consider
emigrating to the New World.
In 1816 around 6,000 Irish people sailed for America. Within two
years this figure had doubled. Early arrivals were recruited to build
canals. In 1818 over 3,000 Irish labourers were employed on the
Erie Canal. By 1826 around 5,000 were working on four separate
canal projects. One journalist commented: "There are several kinds
of power working at the fabric of the republic - water-power,
steam-power and Irish-power. The last works hardest of all."
In October 1845 a serious blight began among the Irish potatoes,
ruining about three- quarters of the country's crop. This was a
disaster as over four million people in Ireland depended on the
potato as their chief food. The blight returned in 1846 and over the
next year an estimated 350,000 people died of starvation and an
outbreak of typhus that ravaged a weaken population. Despite good
potato crops over the next four years, people continued to die and
in 1851 the Census Commissioners estimated that nearly a million
people had died during the Irish Famine. The
British administration and absentee landlords were blamed for this
catastrophe by the Irish people. The Irish Famine stimulated a
desire to emigrate. The figures for this period show a
dramatic increase in Irish people arriving in the United States:
92,484 in 1846, 196,224 in 1847, 173,744 in 1848, 204,771 in
1849, and 206,041 in 1850. By the end of 1854 nearly two million
people - about a quarter of the population - had emigrated to the
United States in ten years.
A census carried out in 1850 revealed that there were 961,719
people in the United States that had been born in Ireland. At this
time they mainly lived in New York, Pennsylvania, Massachusetts,
Illinois, Ohio and New Jersey. The Irish Emigrant Society tried to
persuade immigrants to move to the interior but the vast majority
were poverty-stricken and had no money for transport or to buy
land. …
Thousands of Irish laborers worked on building the railroads in the
United States. Some were able to save enough money to buy land
and establish themselves as farmers along the routes they had
helped to develop. This was especially true of Illinois and by 1860
there were 87,000 Irish people living in this state.
Other Irish immigrants became coalminers in Pennsylvania.
Working conditions in the mines were appalling with no safety
requirements, no official inspections and no proper ventilation.
When workers were victimized for trade union activity, they
formed a secret society called the Molly Maguires. Named after an
anti-landlord organization in Ireland, the group attempted to
intimidate mine-owners and their supporters. The group was not
broken-up until 1875 when James McParland, a Pinkerton
detective and Irish immigrant, infiltrated the organization and his
evidence resulted in the execution of twenty of its members.
…