Lesson Plan: Remember The Progressive Titans
Subject: Social Studies
Instructor: Kyle Johnson
Date: November 30th, 2012
Duration: One 50-minute class period (Using knowledge from 3 previous periods)
Grade/ Section: 8th Grade, Section C
Nevada Standards:
H2.[6-8].22 Describe the effects of industrialization and new technologies on the
development of the United States.
G7.[6-8].2 Describe how movements of people, goods, ideas, and resources
have affected events and conditions in the past and present.
E9.[6-8].1 Discuss choices made by individuals including the concepts of opportunity
cost and total benefit.
Common Core Standards:
NH. 6-8. 2 Determine the central ideas or information of a primary or secondary source;
provide an accurate summary of the source distinct from prior knowledge or opinions.
NH. 6-8. 8 Distinguish among fact, opinion, and reasoned judgment in a text.
Objective: Apply notes, annotations, lectures, videos, and audio clips into a
representational persona of an American Industrial Titan by participating in a Morning
Show Game.
DOK:
1234-
Use
Interpret
Construct
Apply
Materials:
Bios and accomplishments for Cornelius Vanderbilt, JP Morgan, Andrew Carnegie, and
John D. Rockefeller.
Printed faces for the above mentioned figures attached to sticks.
“Good Morrow America” Logo
Series “The Men Who Built America” by History Channel
Activities/ Procedures:
Previous Days:
1) Spit students up into teams of four and choose a leader for their team, this person
will later act out the teams person of interest.
2) Have students read and annotate the biographies of Cornelius Vanderbilt, JP
Morgan, Andrew Carnegie, and John D. Rockefeller.
3) Watch and take notes on Episodes 1 (Vanderbilt), 2 (Rockefeller), and 5 (JP
Morgan) of the series “The Men Who Built America.”
4) For homework have students do a written dialogue between their assigned figure
and any other teams figure on the importance of ruthlessness in business.
Activity Day:
1) Have students come in and answer the Daily Writing Question, “What would your
Titan tell this person?”
2) Use popsicle sticks to call on students and formulate an initial discussion on the
nature of these important men in American History.
3) Have students get into groups and compile all notes onto a single sheet of paper.
4) Staple or tape this piece of paper to the backside of the persons face, place a stick
in the middle so the students can hold the Titan’s face in front of their own during
the show.
5) Began “Good Morrow America!” by having the four students representing the
figures step outside and don their new personas (suit jackets can help with the
overall feel of the characters if avaible)
6) Teacher will don his/her own persona as the host of the morning show.
7) Using sound bites found at http://www.instantsfun.es/reallife proceed with the
introductions to the morning show.
8) Guide “special guests” through questions including life, career, and thoughts on
business.
9) Reserve a time for questions from the audience.
10) Have students ask questions to the impersonators.
11) Conclude morning show
12) Have students judge a character outside of their assigned person. Have them rate
that person on accurately portraying the figures persona, using all the correct
facts, and understanding the connections between the men.
13) If time allows have students share one aspect of their person that made them
successful.
Remediation/ Enrichment:
Students will be placed in groups that utilize their strengths and assist in their
weaknesses. Each student will be assigned a specific task making them essential to the
group’s overall success. Students will work in groups to complete all classwork,
decisions, and objectives adding to collaboration skills and teamwork.
Assessment/Conclusion:
Students will judge the contestants on their performances factoring in authenticity, factual
information, and creativity in performance. If time allows have students share one aspect
of their person that made them successful.
Students will also answer questions in the mindset of their person for homework.
Questions include: What was a defining moment in your life? Tell me about your
childhood. If you could change one moment in your life what would it be?
John Pierpont Morgan (April 17, 1837 – March 31, 1913) was an American financier, banker,
philanthropist and art collector who dominated corporate finance and industrial consolidation during his
time. In 1892 Morgan arranged the merger of Edison General Electric and Thomson-Houston Electric
Company to form General Electric. After financing the creation of the Federal Steel Company, he
merged in 1901 with the Carnegie Steel Company and several other steel and iron businesses,
including Consolidated Steel and Wire Company owned by William Edenborn, to form the United States
Steel Corporation.
Morgan died in Rome, Italy, in his sleep in 1913 at the age of 75, leaving his fortune and business to his
son, John Pierpont "Jack" Morgan, Jr., and bequeathing his mansion and large book collections to The
Morgan Library & Museum in New York.
At the height of Morgan's career during the early 1900s, he and his partners had financial investments
in many large corporations and were accused by critics of controlling the nation's high finance. He
directed the banking coalition that stopped the Panic of 1907. He was the leading financier of the
Progressive Era, and his dedication to efficiency and modernization helped transform American
business.
Childhood and education
J. P. Morgan was born and raised in Hartford, Connecticut, to Junius Spencer Morgan (1813–1890) and
Juliet Pierpont (1816–1884) of Boston, Massachusetts. Pierpont, as he preferred to be known, had a
varied education due in part to interference by his father, Junius. In the fall of 1848, Pierpont transferred
to the Hartford Public School and then to the Episcopal Academy in Cheshire, Connecticut, (now called
Cheshire Academy), boarding with the principal. In September 1851, Morgan passed the entrance
exam for the English High School of Boston, a school specializing in mathematics to prepare young
men for careers in commerce.
In the spring of 1852, illness that was to become more common as his life progressed struck; rheumatic
fever left him in so much pain that he could not walk. Junius sent Pierpont to the Azores (Portuguese
islands in the Atlantic) in order for him to recover. After convalescing for almost a year, Pierpont
returned to the English High School in Boston to resume his studies. After graduating, his father sent
him to Bellerive, a school near the Swiss village of Vevey. When Morgan had attained fluency in
French, his father sent him to the University of Göttingen in order to improve his German. Attaining a
passable level of German within six months and also a degree in art history, Morgan traveled back to
London via Wiesbaden, with his education complete.[1]
Career
Early years/life
J. P. Morgan in his earlier years.
Morgan went into banking in 1857 at his father's London branch, moving to New York City in 1858
where he worked at the banking house of Duncan, Sherman & Company, the American representatives
of George Peabody & Company. From 1860 to 1864, as J. Pierpont Morgan & Company, he acted as
agent in New York for his father's firm. By 1864–1872, he was a member of the firm of Dabney, Morgan,
and Company. In 1871, he partnered with the Drexels of Philadelphia to form the New York firm of
Drexel, Morgan & Company. Anthony J. Drexel became Pierpont's mentor at the request of Junius
Morgan.
J.P. Morgan & Company
Main article: J.P. Morgan & Co.
After the 1893 death of Anthony Drexel, the firm was rechristened "J. P. Morgan & Company" in 1895,
and retained close ties with Drexel & Company of Philadelphia, Morgan, Harjes & Company of Paris,
and J.S. Morgan & Company (after 1910 Morgan, Grenfell & Company), of London. By 1900, it was one
of the most powerful banking houses of the world, carrying through many deals especially
reorganizations and consolidations. Morgan had many partners over the years, such as George W.
Perkins, but remained firmly in charge.[2]
Modernizing management
Morgan's process of taking over troubled businesses to reorganize them was known as
"Morganization".[3] Morgan reorganized business structures and management in order to return them to
profitability. His reputation as a banker and financier also helped bring interest from investors to the
businesses he took over.[4]
Newspapers
In 1896, Adolph Simon Ochs, who owned the Chattanooga Times, secured financing from Morgan to
purchase the financially struggling New York Times. It became the standard for American journalism by
cutting prices, investing in news gathering, and insisting on the highest quality of writing and
reporting.[5]
Treasury gold
In 1895, at the depths of the Panic of 1893, the Federal Treasury was nearly out of gold. President
Grover Cleveland accepted Morgan's offer to join with the Rothschilds and supply the U.S. Treasury
with 3.5 million ounces of gold[6] to restore the treasury surplus in exchange for a 30-year bond issue.
The episode saved the Treasury[7] but hurt Cleveland with the agrarian wing of the Democratic Party
and became an issue in the election of 1896, when banks came under a withering attack from William
Jennings Bryan. Morgan and Wall Street bankers donated heavily to Republican William McKinley, who
was elected in 1896 and reelected in 1900.
Steel
After the death of his father in 1890, Morgan took control of J. S. Morgan & Co. which was renamed
Morgan, Grenfell & Company in 1910. Morgan began talks with Charles M. Schwab, president of
Carnegie Co., and businessman Andrew Carnegie in 1900. The goal was to buy out Carnegie's steel
business and merge it with several other steel, coal, mining and shipping firms to create the United
States Steel Corporation. His goal was almost completed in late 1900 while negotiating a deal with
Robert D. Tobin and Theodore Price III, but was then retracted immediately. In 1901 U.S. Steel was the
first billion-dollar company in the world, having an authorized capitalization of $1.4 billion, which was
much larger than any other industrial firm and comparable in size to the largest railroads.
U.S. Steel aimed to achieve greater economies of scale, reduce transportation and resource costs,
expand product lines, and improve distribution.[8] It was also planned to allow the United States to
compete globally with Britain and Germany. U.S. Steel's size was claimed by Charles M. Schwab and
others to allow the company to pursue distant international markets-globalization.[8] U.S. Steel was
regarded as a monopoly by critics, as the business was attempting to dominate not only steel but also
the construction of bridges, ships, railroad cars and rails, wire, nails, and a host of other products. With
U.S. Steel, Morgan had captured two-thirds of the steel market, and Schwab was confident that the
company would soon hold a 75 percent market share.[8] However, after 1901 the businesses' market
share dropped. Schwab resigned from U.S. Steel in 1903 to form Bethlehem Steel, which became the
second largest U.S. producer on the strength of such innovations as the wide flange "H" beam—
precursor to the I-beam—widely used in construction.
Morgan's role in the economy was denounced as overpowering in this hostile political cartoon
Labor policy was a contentious issue. U.S. Steel was non-union and experienced steel producers, led
by Schwab, wanted to keep it that way with aggressive tactics to identify and root out trouble makers.
The lawyers and bankers who had organized the merger, notably Morgan and the CEO Elbert "Judge"
Gary were more concerned with long-run profits, stability, good public relations, and avoiding trouble.
The bankers' views generally prevailed, and the result was a paternalistic labor policy. U.S. Steel was
finally unionized in the late 1930s.[9]
1907 Panic
The Panic of 1907 was a financial crisis that almost crippled the American economy. Major New York
banks were on the verge of bankruptcy and there was no mechanism to rescue them until Morgan
stepped in personally and took charge, resolving the crisis.[10][11] Treasury Secretary George B.
Cortelyou earmarked $35 million of federal money to quell the storm but had no easy way to use it.
Morgan now took personal charge, meeting with the nation's leading financiers in his New York
mansion; he forced them to devise a plan to meet the crisis. James Stillman, president of the National
City Bank, also played a central role. Morgan organized a team of bank and trust executives which
redirected money between banks, secured further international lines of credit, and bought plummeting
stocks of healthy corporations. A delicate political issue arose regarding the brokerage firm of Moore
and Schley, which was deeply involved in a speculative pool in the stock of the Tennessee Coal, Iron
and Railroad Company. Moore and Schley had pledged over $6 million of the Tennessee Coal and Iron
(TCI) stock for loans among the Wall Street banks. The banks had called the loans, and the firm could
not pay. If Moore and Schley should fail, a hundred more failures would follow and then all Wall Street
might go to pieces. Morgan decided they had to save Moore and Schley. TCI was one of the chief
competitors of U.S. Steel and it owned valuable iron and coal deposits. Morgan controlled U.S. Steel
and he decided it had to buy the TCI stock from Moore and Schley. Judge Gary, head of U.S. Steel,
agreed, but was concerned there would be antitrust implications that could cause grave trouble for U.S.
Steel, which was already dominant in the steel industry. Morgan sent Gary to see President Theodore
Roosevelt, who promised legal immunity for the deal. U.S. Steel thereupon paid $30 million for the TCI
stock and Moore and Schley was saved. The announcement had an immediate effect; by November 7,
1907, the panic was over. Vowing to never let it happen again, and realizing that in a future crisis there
was not likely to be another Morgan, banking and political leaders, led by Senator Nelson Aldrich
devised a plan that became the Federal Reserve System in 1913.[12] The crisis underscored the need
for a powerful mechanism, and Morgan supported the move to create the Federal Reserve System.
Critics
While conservatives in the Progressive Era hailed Morgan for his civic responsibility, his strengthening
of the national economy, and his devotion to the arts and religion, the left wing viewed him as one of the
central figures in the system it rejected.[13] Morgan redefined conservatism in terms of financial prowess
coupled with strong commitments to religion and high culture.[14]
Enemies of banking attacked Morgan for the terms of his loan of gold to the federal government in the
1895 crisis and for the financial resolution of the Panic of 1907. They also attempted to attribute to him
the financial ills of the New York, New Haven and Hartford Railroad. In December 1912, Morgan
testified before the Pujo Committee, a subcommittee of the House Banking and Currency committee.
The committee ultimately concluded that small number of financial leaders was exercising considerable
control over many industries. The partners of J.P. Morgan & Co. and directors of First National and
National City Bank controlled aggregate resources of $22.245 billion, which Louis Brandeis, later a U.S.
Supreme Court Justice, compared to the value of all the property in the twenty-two states west of the
Mississippi River.[15]
Unsuccessful ventures
Morgan did not always invest well, as failures with energy, subways and shipping demonstrated.
Energy
In 1900, Morgan financed inventor Nikola Tesla and his Wardenclyffe Tower with $150,000 for
experiments in transmitting energy. However, in 1903, when the tower structure was near completion, it
was still not yet functional due to last-minute design changes that introduced an unintentional defect.
Once Tesla revealed to Morgan his vision of wireless electricity, Morgan saw no reason to continue
investments in Tesla's vision since Morgan was motivated by profits and had a monopoly on copper of
electrical lines. [16] Consequently, by July 1904, Morgan (and the other investors) finally decided they
would not provide any additional financing. Morgan also advised other investors to avoid the project.[17]
Subways
Morgan suffered a rare business defeat in 1902 when he attempted to enter the London Underground
field. Transit magnate Charles Tyson Yerkes thwarted Morgan's effort to obtain parliamentary authority
to build an underground road that would have competed with "Tube" lines controlled by Yerkes. Morgan
called Yerkes' coup "the greatest rascality and conspiracy I ever heard of".[18]
[
Shipping
In 1902, J.P. Morgan & Co. financed the formation of International Mercantile Marine Company, an
Atlantic shipping combine which absorbed several major American and British lines. IMM was a holding
company that controlled subsidiary corporations that had their own operating subsidiaries. Morgan
hoped to dominate transatlantic shipping through interlocking directorates and contractual
arrangements with the railroads, but that proved impossible because of the unscheduled nature of sea
transport, American antitrust legislation, and an agreement with the British government. One of IMM's
subsidiaries was the White Star Line, which owned the RMS Titanic. The ship's famous sinking in 1912,
the year before Morgan's death, was a financial disaster for IMM, which was forced to apply for
bankruptcy protection in 1915. Analysis of financial records shows that IMM was overleveraged and
suffered from inadequate cash flow that caused it to default on bond interest payments. Saved by World
War I, IMM eventually reemerged as the United States Lines, which itself went bankrupt in 1986.[19]
Morgan lost heavily on the deal.[20] Morgan had a suite with a private promenade deck on the Titanic
and is reported to have booked passage on the maiden voyage, but instead decided to stay in France
to continue receiving therapeutic sulfur baths.[21]
[edit]
Morgan corporations
In 1890–1913, 42 major corporations were organized or their securities were underwritten, in whole or
part, by J.P. Morgan and Company.[22]
Industrials
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American Bridge Company
American Telephone & Telegraph
Federal Steel Company
General Electric
International Harvester
International Mercantile Marine
J. I. Case Threshing Machine
United Dry Goods
Railroads
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Atchison, Topeka and Santa Fe Railway
Atlantic Coast Line
Central of Georgia Railroad
Chesapeake & Ohio Railroad
Chicago & Western Indiana Railroad
Chicago, Burlington & Quincy
Chicago Great Western Railway
Chicago, Indianapolis & Louisville Railroad
Elgin, Joliet & Eastern Railway
Erie Railroad
Florida East Coast Railway
Hocking Valley Railway
Lehigh Valley Railroad
Louisville and Nashville Railroad
New York Central System
New York, New Haven & Hartford Railroad
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New York, Ontario and Western Railway
Northern Pacific Railway
Pennsylvania Railroad
Pere Marquette Railroad
Reading Railroad
St. Louis & San Francisco Railroad
Southern Railway
Terminal Railroad Association of St. Louis
Later years
J. P. Morgan, photographed by Edward Steichen in 1903
Self-conscious about his rosacea, Morgan hated being photographed.
After the death of his father in 1890, Morgan gained control of J. S. Morgan & Co (renamed Morgan,
Grenfell & Company in 1910). Morgan began conversations with Charles M. Schwab, president of
Carnegie Co., and businessman Andrew Carnegie in 1900 with the intention of buying Carnegie's
business and several other steel and iron businesses to consolidate them to create the United States
Steel Corporation.[8] Carnegie agreed to sell the business to Morgan for $487 million.[8] The deal was
closed without lawyers and without a written contract. News of the industrial consolidation arrived to
newspapers in mid-January 1901. U.S. Steel was founded later that year and was the first billion-dollar
company in the world with an authorized capitalization of $1.4 billion.[23]
Morgan was the founder of the Metropolitan Club of New York and its president from 1891 to 1900.
When his friend, Frank King, whom he had proposed, was black-balled by the Union Club because he
had done manual labor in his youth, Morgan resigned from the Union Club, and then organized the
Metropolitan Club. He donated the land on 5th Avenue and 60th Street at a cost of $125,000, and
commanded Stanford White, "Build me a club fit for gentlemen. Forget the expense." Of course he
invited King as a charter member.
Personal life
Morgan was a lifelong member of the Episcopal Church, and by 1890 was one of its most influential
leaders.[24]
In 1861, he married Amelia Sturges, a.k.a. Mimi (1835–1862). Three years after her death, he married
Frances Louisa Tracy, known as Fanny (1842–1924) on May 31, 1865. They had four children:
▪ Louisa Pierpont Morgan (1866–1946) who married Herbert L. Satterlee (1863–1947)[25]
▪ John Pierpont Morgan (1867–1943) who married Jane Norton Grew
▪ Juliet Pierpont Morgan (1870–1952) who married William Pierson Hamilton (1869–1950)
▪ Anne Tracy Morgan (1873–1952).
He often had a tremendous physical effect on people; one man said that a visit from Morgan left him
feeling "as if a gale had blown through the house."[26] Morgan was physically large with massive
shoulders, piercing eyes and a purple nose, because of a chronic skin disease, rosacea.[27] His
deformed nose was due to a disease called rhinophyma, which can result from rosacea. As the
deformity worsens, pits, nodules, fissures, lobulations, and pedunculation contort the nose. This
condition inspired the crude taunt "Johnny Morgan's nasal organ has a purple hue."[28] Surgeons could
have shaved away the rhinophymous growth of sebaceous tissue during Morgan's lifetime, but as a
child Morgan suffered from infantile seizures, and Morgan's son-in-law Herbert L. Satterlee has
speculated that he did not seek surgery for his nose because he feared the seizures would return. His
social and professional self-confidence were too well established to be undermined by this affliction. It
appeared as if he dared people to meet him squarely and not shrink from the sight, asserting the force
of his character over the ugliness of his face.[30] He was known to dislike publicity and hated being
photographed; as a result of his self-consciousness of his rosacea, all of his professional portraits were
retouched.
Morgan smoked dozens of cigars per day and favored large Havana cigars dubbed Hercules' Clubs by
observers.[31]
His house on Madison Avenue was the first electrically lit private residence in New York. His interest in
the new technology was a result of his financing Thomas Edison's Edison Electric Illuminating Company
in 1878.[32] It was at 219 Madison avenue that a reception of 1000 people was held for the marriage of
Juliet Morgan and William Pierson Hamilton on April 12, 1894, where they were gifted a favorite clock of
Morgan. Morgan also owned East Island in Glen Cove, New York, where he had a large summer house.
An avid yachtsman, Morgan owned several sizeable yachts. The well-known quote, "If you have to ask
the price, you can't afford it" is commonly attributed to Morgan in response to a question about the cost
of maintaining a yacht, although the accuracy of the story is unconfirmed.[33]
Morgan was scheduled to travel on the maiden voyage of the RMS Titanic, but canceled at the last
minute, choosing to remain at a resort in Aix, France.[34]White Star Line, Titanic's operator, was part of
Morgan's International Mercantile Marine Company, and Morgan was to have his own private suite and
promenade deck on the ship. In response to the tragedy, Morgan purportedly said, "Monetary losses
amount to nothing in life. It is the loss of life that counts. It is that frightful death.”[35]
Morgan died while traveling abroad on March 31, 1913, just shy of his 76th birthday. He died in his
sleep at the Grand Hotel in Rome, Italy. Flags on Wall Street flew at half-staff; the stock market closed
for two hours when his body passed through.[36]
At the time of his death, he only held 19% of his own net worth, an estate worth $68.3 million
($1.39 billion in today's dollars based on CPI, or $25.2 billion based on 'relative share of GDP'), of which
about $30 million represented his share in the New York and Philadelphia banks. The value of his art
collection was estimated at $50 million.[37]
His remains were interred in the Cedar Hill Cemetery in his birthplace of Hartford, Connecticut. His son,
J. P. Morgan, Jr., inherited the banking business.[38]
The Cragston Dependencies, associated with his estate Cragston at Highlands, New York, was listed
on the National Register of Historic Places in 1982.[39]
Collector of art, books, and gemstones
Morgan was a notable collector of books, pictures, paintings, clocks and other art objects, many loaned
or given to the Metropolitan Museum of Art (of which he was president and was a major force in its
establishment), and many housed in his London house and in his private library on 36th Street, near
Madison Avenue in New York City. His son, J. P. Morgan, Jr., made the Pierpont Morgan Library a
public institution in 1924 as a memorial to his father and kept Belle da Costa Greene, his father's private
librarian, as its first director.[40] Morgan was painted by many artists including the Peruvian Carlos
Baca-Flor and the Swiss-born American Adolfo Müller-Ury, who also painted a double portrait of
Morgan with his favorite grandchild Mabel Satterlee that for some years stood on an easel in the
Satterlee mansion but has now disappeared.
Morgan was a benefactor of the American Museum of Natural History, the Metropolitan Museum of Art,
Groton School, Harvard University (especially its medical school), Trinity College, the Lying-in Hospital
of the City of New York, and the New York trade schools.
Gem collector
By the turn of the century Morgan had become one of America's most important collectors of gems and
had assembled the most important gem collection in the U.S. as well as of American gemstones (over
1000 pieces). Tiffany & Co. assembled his first collection under their Chief Gemologist George
Frederick Kunz. The collection was exhibited at the World's Fair in Paris in 1889. The exhibit won two
golden awards and drew the attention of important scholars, lapidaries and the general public.[41]
George Frederick Kunz then continued to build a second, even finer, collection which was exhibited in
Paris in 1900. Collections have been donated to the American Museum of Natural History in New York
where they were known as the Morgan-Tiffany and the Morgan-Bement collections.[42] In 1911 Kunz
named a newly found gem after his best customer: morganite.
U.S. gemstones from the Morgan collection
Photography
Morgan was also a patron to photographer Edward S. Curtis, offering Curtis $75,000 in 1906, to create
a series on the Native Americans.[43] Curtis eventually published a 20-volume work titled The North
American Indian.[44] Curtis went on to produce a motion picture, In the Land of the Head Hunters
(1914), which was restored in 1974 and re-released as In the Land of the War Canoes. Curtis was also
famous for a 1911 magic lantern slide show The Indian Picture Opera which used his photos and
original musical compositions by composer Henry F. Gilbert.[45]
Legacy
His son, J. P. Morgan, Jr., took over the business at his father's death, but was never as influential. As
required by the 1933 Glass–Steagall Act, the "House of Morgan" became three entities: J.P. Morgan &
Co., which later became Morgan Guaranty Trust; Morgan Stanley, an investment house; and Morgan
Grenfell in London, an overseas securities house.
The gemstone Morganite was named in his honor.[46]
Popular culture
"I Like a Little Competition"—J. P. Morgan by Art Young. Cartoon relating to the answer Morgan gave when asked whether
he disliked competition at the Pujo Committee.[47]
▪ A contemporary literary biography of Morgan is used as an allegory for the financial environment in
America after WWI in the second volume, Nineteen Nineteen, of John Dos Passos' U.S.A. trilogy.
▪ Morgan appears as a character in Caleb Carr's novel The Alienist,[48] and in Steven S. Drachman's
novel, The Ghosts of Watt O'Hugh.[49]
▪ Morgan appears in E. L. Doctorow's novel Ragtime, and in the Broadway musical of the same name.
▪ A satirical version of Morgan appears in Matt Fraction and Steven Sanders' graphic novel The Five
Fists of Science
▪ In Arthur Miller's play Death of a Salesman, Morgan is mentioned as an example of how one does not
have to be likeable to be successful in business, which runs counter to protagonist Willy Loman's
ideas.
▪ Morgan is believed to have been the model for Walter Parks Thatcher (played by George Coulouris),
guardian of the young Citizen Kane (film directed by Orson Welles) with whom he has a tense
relationship—Kane blaming Thatcher for destroying his childhood.[50][51][52]
▪ In his satirical history of the United States, It All Started with Columbus, Richard Armour commented
that, "Morgan, who was a direct sort of person, made his money in money... He became
immensely wealthy because of his financial interests, most of which were around eight or ten
percent... This Morgan is usually spoken of as 'J.P.' to distinguish him from Henry Morgan, the
pirate."
According to Phil Orbanes, former Vice President of Parker Brothers, Rich Uncle Pennybags of the
American version of the board game Monopoly is modeled after J. P. Morgan.[53]
Cornelius Vanderbilt
Ancestry
Cornelius Vanderbilt's great-great-grandfather, Jan Aertson or Aertszoon, was a Dutch farmer from the
village of De Bilt in Utrecht, Netherlands, who emigrated to New York as an indentured servant in 1650.
The Dutch van der ("of the") was eventually added to Aertson's village name to create "van der Bilt" ("of
De Bilt"), which was eventually condensed to Vanderbilt.
Early years
Born in Staten Island, New York, Vanderbilt began working on his father's ferry in New York Harbor as a
boy, quitting school at the age of 11. At the age of 16 Vanderbilt decided to start his own ferry service.
According to one version of events, he borrowed $100 from his mother to purchase a periauger (a
shallow draft, two masted sailing vessel). However, according to the version of the first published
account of his life, published in the magazine Scientific American in 1853, the periauger belonged to his
father and he received half the profit. He began his business by ferrying freight and passengers
between Staten Island and Manhattan.
On December 19, 1813, Vanderbilt married his first cousin, Sophia Johnson (1795–1868), daughter of
his aunt Elizabeth Hand Johnson. They moved into a boarding house on Broad Street in Manhattan. He
and his wife eventually had 13 children, one of whom died in childhood.[3]:9-27 In addition to running his
ferry, Vanderbilt bought his brother-in-law John De Forest's schooner Charlotte, and traded in food and
merchandise, in partnership with his father and others. But on November 24, 1817, a ferry entrepreneur
named Thomas Gibbons asked Vanderbilt to captain his steamboat between New Jersey and New
York. Though Vanderbilt kept his own businesses running, he became Gibbons's business
manager.[3]:31–35
When Vanderbilt entered his new position, Gibbons was fighting against a monopoly on steamboats in
New York waters, granted by the New York State Legislature to the politically influential patrician,
Robert Livingston, and steamboat designer Robert Fulton. Though both Livingston and Fulton had died
by the time Vanderbilt went to work for Gibbons, the monopoly continued in the hands of Livingston's
heirs, who had granted a license to Aaron Ogden to run a ferry between New York and New Jersey.
Gibbons launched his steamboat venture because of a personal dispute with Ogden, whom he hoped to
bankrupt. To accomplish this, he undercut prices, and also brought a landmark legal case – Gibbons v.
Ogden – to the United States Supreme Court to overturn the monopoly.[3]:37–48
Working for Gibbons, Vanderbilt learned to operate a large and complicated business. He moved to
New Brunswick, New Jersey, a stop on Gibbons's line between New York and Philadelphia, where his
wife Sophia operated a very profitable inn, using the proceeds to feed, clothe, and educate the children.
Vanderbilt also proved a quick study in legal matters, representing Gibbons in meetings with lawyers.
He also went to Washington, D.C., to hire Daniel Webster to argue the case before the Supreme Court.
Vanderbilt appealed his own case against the monopoly to the Supreme Court, which was next on the
docket after Gibbons v. Ogden. The Court never heard Vanderbilt's case, because on March 2, 1824, it
ruled in Gibbons's favor, saying that states had no power to interfere with interstate commerce. The
case is still considered a landmark ruling, and is considered the basis for much of the prosperity the
United States later enjoyed.[3]:47–67
Steamboat entrepreneur
C. Vanderbilt, Hudson River steamer owned by Cornelius Vanderbilt (oil on canvas by James and John Bard).
After Thomas Gibbons died in 1826, Vanderbilt worked for Gibbons' son William until 1829. Though he
had always run his own businesses on the side, he now worked entirely for himself. Step by step, he
started lines between New York and the surrounding region. First he took over Gibbons' ferry to New
Jersey, then switched to western Long Island Sound. In 1831, he took over his brother Jacob's line to
Peekskill, New York, on the lower Hudson River. That year he faced opposition by a steamboat
operated by Daniel Drew, who forced Vanderbilt to buy him out. Impressed, Vanderbilt became a secret
partner with Drew for the next thirty years, so that the two men would have an incentive to avoid
competing with each other.[3]:72, 84–87
On November 8, 1833, Vanderbilt was nearly killed in the Hightstown rail accident on the Camden and
Amboy Railroad in New Jersey. Also on the train was former president John Quincy Adams.[3]:90–91
In 1834, Vanderbilt competed on the Hudson River against a steamboat monopoly between New York
and Albany. Using the name "The People's Line," he used the populist language associated with
Democratic president Andrew Jackson to get popular support for his business. At the end of the year,
the monopoly paid him a large amount to stop competing, and he switched his operations to Long
Island Sound.[3]:99–104
During the 1830s, textile mills were built in large numbers in New England as the United States
experienced an industrial revolution. Some of the first railroads in the United States were built from
Boston to Long Island Sound, to connect with steamboats that ran to New York. By the end of the
decade, Vanderbilt dominated the steamboat business on the Sound, and began to take over the
management of the connecting railroads. In the 1840s, he launched a campaign to take over the most
attractive of these lines, the New York, Providence and Boston Railroad, popularly known as the
Stonington. By cutting fares on competing lines, Vanderbilt drove down the Stonington stock price, and
took over the presidency of the company in 1847, the first of the many railroads he would head.[3]:119–146
During these years, Vanderbilt also operated many other businesses. He bought large amounts of real
estate in Manhattan and Staten Island, and took over the Staten Island Ferry in 1838. It was in the
1830s when he was first referred to as "commodore," then the highest rank in the United States Navy. A
common nickname for important steamboat entrepreneurs, it stuck to Vanderbilt alone by the end of the
1840s.[3]:124–127
Oceangoing steamship lines
Vanderbilt in later life
When the California gold rush began in 1849, Vanderbilt switched from regional steamboat lines to
ocean-going steamships. Many of the migrants to California, and almost all of the gold returning to the
East Coast, went by steamship to Panama, where mule trains and canoes provided transportation
across the isthmus. (The Panama Railroad was soon built to provide a faster crossing.) Vanderbilt
proposed a canal across Nicaragua, which was closer to the United States and was spanned most of
the way across by Lake Nicaragua and the San Juan River. In the end, he could not attract enough
investment to build the canal, but he did start a steamship line to Nicaragua, and founded the
Accessory Transit Company to carry passengers across Nicaragua by steamboat on the lake and river,
with a 12-mile carriage road between the Pacific port of San Juan del Sur and Virgin Bay on Lake
Nicaragua.[3]:174–205
In 1852, a dispute with Joseph L. White, a partner in the Accessory Transit Company, led to a battle in
which Vanderbilt forced the company to buy his ships for an inflated price. In early 1853, he took his
family on a grand tour of Europe in his steamship yacht, the North Star. While he was away, White
conspired with Charles Morgan, Vanderbilt's erstwhile ally, to betray him, and deny him money he was
owed by the Accessory Transit Company. When Vanderbilt returned from Europe, he retaliated with a
rival line to California, cutting prices until he forced Morgan and White to pay him off. He then turned to
transatlantic steamship lines, running in opposition to the heavily subsidized Collins Line, headed by
Edward K. Collins. Vanderbilt eventually drove the Collins Line into extinction.[4] During the 1850s, he
also bought control of a major shipyard and the Allaire Iron Works, a leading manufacturer of marine
steam engines, in Manhattan.[3]:217–264
In November 1855, Vanderbilt began to buy control of Accessory Transit once again. That same year,
the military adventurer, William Walker, took control of Nicaragua. Edmund Randolph, a close friend of
Walker, coerced the Accessory Transit's San Francisco agent, Cornelius K. Garrison, into opposing
Vanderbilt. Randolph convinced Walker to annul the charter of the Accessory Transit Company, and
give the transit rights and company steamboats to him; Randolph then sold them to Garrison. Garrison
brought Charles Morgan in New York into the plan. Vanderbilt took control of the company just before
these developments were announced. When he tried to convince the U.S. and British governments to
help restore the company to its rights and property, they refused. So he negotiated with Costa Rica,
which (along with the other Central American republics) had declared war on Walker. Vanderbilt sent a
man to Costa Rica who led a raid that captured the steamboats on the San Juan River, cutting Walker
off from his reinforcements from the United States. Walker was forced to give up, and was conducted
out of the country by a U.S. Navy officer. But the new Nicaraguan government refused to allow
Vanderbilt to restart the transit business, so he started a line by way of Panama, eventually constructing
a monopoly on the California steamship business.[3]:268–327
American Civil War
When the Civil War began in 1861, Vanderbilt attempted to donate his largest steamship, the
Vanderbilt, to the Union Navy. Secretary of the Navy Gideon Welles refused it, thinking its operation
and maintenance too expensive for what he expected to be a short war. Vanderbilt had little choice but
to lease it to the War Department, at prices set by ship brokers. When the Confederate ironclad Virginia
(popularly known in the North as the Merrimack) wrought havoc with the Union blockading squadron at
Hampton Roads, Virginia, Secretary of War Edwin Stanton and President Abraham Lincoln called on
Vanderbilt for help. This time he succeeded in donating the Vanderbilt to the Union navy, equipping it
with a ram and staffing it with handpicked officers. It helped bottle up the Virginia, after which Vanderbilt
converted it into a cruiser to hunt for the Confederate commerce raider Alabama, captained by Raphael
Semmes. Vanderbilt also outfitted a major expedition to New Orleans. But he suffered a personal loss
when his youngest and favorite son and heir apparent, George Washington Vanderbilt, a graduate of
the United States Military Academy, fell ill and died without ever seeing combat.[3]:341–364
Railroad empire
Cornelius Vanderbilt versus Jim Fisk in a famous rivalry with the Erie Railroad
New York and Harlem Railroad
Though Vanderbilt had relinquished his presidency of the Stonington Railroad during the California gold
rush, he took an interest in several railroads during the 1850s, serving on the boards of directors of the
Erie Railway, the Central Railroad of New Jersey, the Hartford and New Haven, and the New York and
Harlem (popularly known as the Harlem). In 1863, Vanderbilt took control of the Harlem in a famous
stockmarket corner, and was elected its president. He later explained that he wanted to show that he
could take this railroad, which was generally considered worthless, and make it valuable. It had a key
advantage: it was the only steam railroad to enter the center of Manhattan, running down 4th Avenue
(later Park Avenue) to a station on 26th Street, where it connected with a horse-drawn streetcar line.
From Manhattan it ran up to Chatham Four Corners, New York, where it had a connection to the
railroads running east and west.[3]:365–386
Vanderbilt brought his son William Henry Vanderbilt in as vice-president of the Harlem. William had had
a nervous breakdown early in life, and his father had sent him to a farm on Staten Island. But he proved
himself a good businessman, and eventually became the head of the Staten Island Railway. Though
the Commodore had once scorned him, he was impressed by William's success, and eventually made
him operational manager of all his railroad lines. In 1864, the Commodore sold his last ships,
concentrating on railroads.[3]:387–390
New York Central and Hudson River Railroad
Looking out the north end of the Murray Hill Tunnel towards the station in 1880; note the labels for the New York, Harlem
and New York, and New Haven Railroads; the New York Central and Hudson River was off to the left. The two larger
portals on the right allowed some horse-drawn trains to continue further downtown.
Statue at the modern Grand Central Terminal
Once in charge of the Harlem, Vanderbilt encountered conflicts with connecting lines. In each case, the
strife ended in a battle that Vanderbilt won. He bought control of the Hudson River Railroad in 1864, the
New York Central Railroad in 1867, and the Lake Shore and Michigan Southern Railway in 1869. He
later bought the Canada Southern as well. In 1870, he consolidated two of his key lines into the New
York Central and Hudson River Railroad, one of the first giant corporations in American history.[3]:391–442,
474–520
Grand Central Depot
Main article: Grand Central Terminal
In 1869, he directed the Harlem to begin construction of the Grand Central Depot on 42nd Street in
Manhattan. It was finished in 1871, and served as his lines' terminus in New York. He sank the tracks
on 4th Avenue in a cut that later became a tunnel, and 4th Avenue became Park Avenue. The depot
was replaced by Grand Central Terminal in 1913.[3]:391-442
Rivalry with Jay Gould
In 1868, Vanderbilt fell into a dispute with Daniel Drew, who had become treasurer of the Erie Railway.
To get revenge, he tried to corner Erie stock, which led to the so-called Erie War. This brought him into
direct conflict with Jay Gould and James Fisk, Jr., who had just joined Drew on the Erie board. They
defeated the corner by issuing "watered stock" in defiance of state law, which restricted the number of
shares a company could issue. But Gould bribed the legislature to legalize the new stock. Vanderbilt
used the leverage of a lawsuit to get his losses back, but he and Gould became public enemies.
Gould never got the better of Vanderbilt in any other important business matter, but he often
embarrassed Vanderbilt, who uncharacteristically lashed out at Gould in public. By contrast, Vanderbilt
befriended his other foes after their fights ended, including Drew and Cornelius Garrison.
Death and legacy
Following his wife's death in 1868, Vanderbilt went to Canada where, on August 21, 1869, he married a
cousin from Mobile, Alabama, named Frank Armstrong Crawford.[5] Crawford was 43 years younger
than her husband. Crawford's cousin's husband, Holland McTyeire, convinced Vanderbilt to endow what
would become Vanderbilt University, named in his honor. Vanderbilt gave $1 million, the largest
charitable gift in American history to that date. He also bought a church for $50,000 for his second
wife's congregation, the Church of the Strangers. He also donated to churches around New York,
including a gift to the Moravian Church on Staten Island of 8½ acres (34,000 m2) for a cemetery in
which he was later buried.
Cornelius Vanderbilt died on January 4, 1877, at his residence, No. 10 Washington Place, after having
been confined to his rooms for about eight months. The immediate cause of his death was exhaustion,
brought on by long suffering from a complication of chronic disorders.[6] At the time of his death, aged
82, his fortune was estimated at $100 million. In his will, he left 95% of his $100 million estate to his son
William and to William's four sons ($5,000,000 (approx. $99,000,000 in 2008 USD) to Cornelius
Vanderbilt II, and $2 million apiece (approx. $39,600,000 in 2008 USD) to William Kissam Vanderbilt,
Frederick Vanderbilt, and George Washington Vanderbilt II). The Commodore stated that he believed
William Henry was the only heir capable of maintaining the business empire.
He willed amounts ranging from $250,000 (approximate $4,950,000 in 2008 USD) to $500,000
($9,920,000 in 2008 USD) to each of his eight daughters. His wife received US$500,000, their New
York City home, and 2,000 shares of common stock in New York Central Railroad. To his younger
surviving son, Cornelius Jeremiah Vanderbilt, whom he regarded as a wastrel, he left the income from a
$200,000 trust fund. The Commodore had lived in relative modesty considering his nearly unlimited
means, splurging only on race horses, leaving his descendants to build the Vanderbilt houses that
characterize America's Gilded Age. (It is worth noting that though trivial in comparison to the $90
million+ inherited by William Henry Vanderbilt and his sons, the bequests to his other children made
them very wealthy by the standards of 1877 and were not subject to inheritance tax.)
According to "The Wealthy 100" by Michael Klepper and Robert Gunther, Vanderbilt would be worth
$143 billion in 2007 dollars, if his total wealth as a share of the nation's GDP in 1877 (the year of his
death) were taken and applied in that same proportion in 2007. This would make him the secondwealthiest person in American history, after John D. Rockefeller.[7][8] Another calculation, from 1998,
puts him in third place, after Andrew Carnegie.[9]
Vanderbilt's life story has inspired works of fiction, including the ambitious character of Nat Taggart in
Ayn Rand's Atlas Shrugged (1957).[10] His family (see below) has done much the same.
John D. Rockefeller
John Davison Rockefeller (July 8, 1839 – May 23, 1937) was an American industrialist and
philanthropist. He was the founder of the Standard Oil Company, which dominated the oil industry and
was the first great U.S. business trust. Rockefeller revolutionized the petroleum industry and defined the
structure of modern philanthropy. In 1870, he founded the Standard Oil Company and aggressively ran
it until he officially retired in 1897.[1] Standard Oil began as an Ohio partnership formed by John D.
Rockefeller, his brother William Rockefeller, Henry Flagler, Jabez Bostwick, chemist Samuel Andrews,
and a silent partner, Stephen V. Harkness. As kerosene and gasoline grew in importance, Rockefeller's
wealth soared, and he became the world's richest man and the first American worth more than a billion
dollars.[2] Adjusting for inflation, he is often regarded as the richest person in history.[3][4][5][6]
Rockefeller spent the last 40 years of his life in retirement. His fortune was mainly used to create the
modern systematic approach of targeted philanthropy. He was able to do this through the creation of
foundations that had a major effect on medicine, education, and scientific research.[7]
His foundations pioneered the development of medical research, and were instrumental in the
eradication of hookworm and yellow fever. He is also the founder of both the University of Chicago and
Rockefeller University. He was a devoted Northern Baptist and supported many church-based
institutions throughout his life. Rockefeller adhered to total abstinence from alcohol and tobacco
throughout his life.[8]
He had four daughters and one son; John D. Rockefeller, Jr. "Junior" was largely entrusted with the
supervision of the foundations.
Early life and business career
Rockefeller was the second of six children born in Richford, New York, to William Avery Rockefeller
(November 13, 1810 – May 11, 1906) and Eliza (Davison; September 12, 1813 – March 28, 1889).
Genealogists trace some of his ancestors to French Huguenots who fled to Germany in the 17th
century.[9][10] His father, first a lumberman, then a traveling salesman, billed himself as a “botanic
physician” and sold elixirs. The locals referred to the mysterious but fun-loving man as "Big Bill," and
"Devil Bill".[11] He was a sworn foe of conventional morality, who had opted for a vagabond existence
and who returned to his family infrequently. Throughout his life, William Avery Rockefeller gained a
reputation for shady schemes rather than productive work.[12] Eliza, a homemaker and devout Baptist,
struggled to maintain a semblance of stability at home, as William was frequently gone for extended
periods. She also put up with his philandering and his double life, which included bigamy.[13] Thrifty by
nature and necessity, she taught her son that "willful waste makes woeful want."[14] Young Rockefeller
did his share of the regular household chores and earned extra money raising turkeys, selling potatoes
and candy and eventually lending small sums of money to neighbors. He followed his father’s advice to
"trade dishes for platters" and always get the better part of any deal. Big Bill once bragged, "I cheat my
boys every chance I get. I want to make ‘em sharp."[15]
When he was a boy, his family moved to Moravia, New York, and, in 1851, to Owego, where he
attended Owego Academy. In 1853, his family moved to Strongsville, a suburb of Cleveland.
Rockefeller attended Cleveland's Central High School and then took a ten-week business course at
Folsom's Commercial College where he studied bookkeeping.[16]
In spite of his father’s absences and frequent family moves, young Rockefeller was a well-behaved,
serious and studious boy. His contemporaries described him as reserved, earnest, religious,
methodical, and discreet. He was an excellent debater and expressed himself precisely. He also had a
deep love of music and dreamed of it as a possible career.[17] Early on, he displayed an excellent mind
for numbers and detailed accounting.
Rockefeller at age 18, ca. 1857
In September 1855, when Rockefeller was sixteen, he got his first job as an assistant bookkeeper,
working for a small produce commission firm called Hewitt & Tuttle. He worked long hours and
delighted, as he later recalled, in “all the methods and systems of the office”.[18] He was particularly
adept at calculating transportation costs, which served him well later in his career. The full salary for his
first three months' work was $50 (50 cents a day).[19] From the beginning, he donated about 6% of his
earnings to charity, which increased to 10% by the age of twenty, when he tithed to his Baptist
church.[20]
As a youth, Rockefeller reportedly said that his two great ambitions were to make $100,000 and to live
100 years.[21]
In 1859, Rockefeller went into the produce commission business with a partner, Maurice B. Clark, and
they raised $4,000 in capital. Rockefeller went steadily ahead in business from there, making money
each year of his career.[22] After wholesale foodstuffs, the partners built an oil refinery in 1863 in "The
Flats", then Cleveland's burgeoning industrial area. The refinery was directly owned by Andrews, Clark
& Company, which was composed of Clark & Rockefeller, chemist Samuel Andrews, and M. B. Clark's
two brothers. The commercial oil business was in its infancy. Whale oil had become too expensive for
the masses, and a cheaper, general-purpose lighting fuel was needed.[23]
While his brother Frank fought in the Civil War, Rockefeller tended his business and hired substitute
soldiers. He gave money to the Union cause, as did many rich Northerners who avoided combat.[24] In
February 1865, in what was later described by oil industry historian Daniel Yergin as a "critical" action,
Rockefeller bought out the Clark brothers for $72,500 at auction and established the firm of Rockefeller
& Andrews. Rockefeller said, "It was the day that determined my career."[25] He was well-positioned to
take advantage of post-war prosperity and the great expansion westward, fostered by the growth of
railroads and an oil-fueled economy. He borrowed heavily, reinvested profits, adapted rapidly to
changing markets, and fielded observers to track the quickly expanding industry.[26]
[edit]
Marriage and family
In 1864, Rockefeller married Laura Celestia "Cettie" Spelman. They had four daughters and one son
together. He said later, "Her judgment was always better than mine. Without her keen advice, I would
be a poor man."[22]
[edit]
Beliefs
Rockefeller became a lifelong member of the then-new Republican Party, and a strong supporter of
Abraham Lincoln and the party’s abolitionist wing.[citation needed] He was a faithful congregant of the Erie
Street Baptist Mission Church, where he taught Sunday school, and served as a trustee, clerk, and
occasional janitor.[27] Religion was a guiding force throughout his life, and Rockefeller believed it to be
the source of his success. As he said, "God gave me money", and he did not apologize for it. He felt at
ease and righteous following John Wesley’s dictum, "gain all you can, save all you can, and give all you
can."[28]
[edit]
Oil
In 1866, his brother William Rockefeller built another refinery in Cleveland and brought John into the
partnership. In 1867, Henry M. Flagler became a partner, and the firm of Rockefeller, Andrews & Flagler
was established. By 1868, with Rockefeller continuing practices of borrowing and reinvesting profits,
controlling cost and using refineries' waste, the company owned two Cleveland refineries and a
marketing subsidiary in New York; it was the largest oil refinery in the world.[29][30] Rockefeller,
Andrews & Flagler was the predecessor of the Standard Oil Company.
[edit]
Standard Oil
Main article: Standard Oil
John D. Rockefeller ca. 1875
By the end of the American Civil War, Cleveland was one of the five main refining centers in the U.S.
(besides Pittsburgh, Philadelphia, New York, and the region in northwestern Pennsylvania where most
of the oil originated). In June 1870, Rockefeller formed Standard Oil of Ohio, which rapidly became the
most profitable refiner in Ohio. Standard Oil grew to become one of the largest shippers of oil and
kerosene in the country. The railroads were fighting fiercely for traffic and, in an attempt to create a
cartel to control freight rates, formed the South Improvement Company, in collusion with Standard and
other oil men outside the main oil centers.[31] The cartel received preferential treatment as a highvolume shipper, which included not just steep rebates of up to 50% for their product, but also rebates
for the shipment of competing products.[31] Part of this scheme was the announcement of sharply
increased freight charges. This touched off a firestorm of protest from independent oil well owners,
including boycotts and vandalism, which eventually led to the discovery of Standard Oil's part in the
deal. A major New York refiner, Charles Pratt and Company, headed by Charles Pratt and Henry H.
Rogers, led the opposition to this plan, and railroads soon backed off. Pennsylvania revoked the cartel’s
charter and equal rates were restored for the time being.[32]
Undeterred, though vilified for the first time by the press, Rockefeller continued with his self-reinforcing
cycle of buying competing refiners, improving the efficiency of his operations, pressing for discounts on
oil shipments, undercutting his competition, making secret deals, raising investment pools, and buying
rivals out. In less than four months in 1872, in what was later known as "The Cleveland Conquest" or
"The Cleveland Massacre", Standard Oil had absorbed 22 of its 26 Cleveland competitors.[33]
Eventually, even his former antagonists, Pratt and Rogers, saw the futility of continuing to compete
against Standard Oil: in 1874, they made a secret agreement with their old nemesis to be acquired.
Pratt and Rogers became Rockefeller's partners. Rogers, in particular, became one of Rockefeller's key
men in the formation of the Standard Oil Trust. Pratt's son, Charles Millard Pratt became Secretary of
Standard Oil. For many of his competitors, Rockefeller had merely to show them his books so they
could see what they were up against, then make them a decent offer. If they refused his offer, he told
them he would run them into bankruptcy, then cheaply buy up their assets at auction. He saw himself as
the industry’s savior, "an angel of mercy", absorbing the weak and making the industry as a whole
stronger, more efficient, and more competitive.[34] Standard was growing horizontally and vertically. It
added its own pipelines, tank cars, and home delivery network. It kept oil prices low to stave off
competitors, made its products affordable to the average household, and to increase market
penetration, sometimes sold below cost if necessary. It developed over 300 oil-based products from tar
to paint to Vaseline petroleum jelly to chewing gum. By the end of the 1870s, Standard was refining
over 90% of the oil in the U.S.[35] Rockefeller had already become a millionaire.[36]
Standard Oil Trust Certificate 1896
In 1877, Standard clashed with the Pennsylvania Railroad, its chief hauler. Rockefeller had envisioned
the use of pipelines as an alternative transport system for oil and began a campaign to build and
acquire them.[37] The railroad, seeing Standard’s incursion into the transportation and pipeline fields,
struck back and formed a subsidiary to buy and build oil refineries and pipelines.[38] Standard countered
and held back its shipments, and with the help of other railroads, started a price war that dramatically
reduced freight payments and caused labor unrest as well. Rockefeller eventually prevailed and the
railroad sold all its oil interests to Standard. But in the aftermath of that battle, in 1879 the
Commonwealth of Pennsylvania indicted Rockefeller on charges of monopolizing the oil trade, starting
an avalanche of similar court proceedings in other states and making a national issue of Standard Oil’s
business practices.[39]
[edit]
Monopoly
Standard Oil gradually gained almost complete control of oil refining and marketing in the United States
through horizontal integration. In the kerosene industry, Standard Oil replaced the old distribution
system with its own vertical system. It supplied kerosene by tank cars that brought the fuel to local
markets and tank wagons then delivered to retail customers, thus bypassing the existing network of
wholesale jobbers.[40] Despite improving the quality and availability of kerosene products while greatly
reducing their cost to the public (the price of kerosene dropped by nearly 80% over the life of the
company), Standard Oil's business practices created intense controversy. Standard’s most potent
weapons against competitors were underselling, differential pricing, and secret transportation
rebates.[41] The firm was attacked by journalists and politicians throughout its existence, in part for
these monopolistic methods, giving momentum to the anti-trust movement. By 1880, according to the
New York World, Standard Oil was "the most cruel, impudent, pitiless, and grasping monopoly that ever
fastened upon a country."[42] To the critics Rockefeller replied, "In a business so large as ours … some
things are likely to be done which we cannot approve. We correct them as soon as they come to our
knowledge.”[42]
At that time, many legislatures had made it difficult to incorporate in one state and operate in another.
As a result, Rockefeller and his associates owned dozens of separate corporations operating in just one
state, making their management of the whole enterprise rather unwieldy. In 1882, Rockefeller's lawyers
created an innovative form of corporation to centralize their holdings, giving birth to the Standard Oil
Trust.[43] The "trust" was a corporation of corporations, and the entity's size and wealth drew much
attention. Nine trustees, including Rockefeller, ran the 41 companies in the trust.[43] The public and the
press were immediately suspicious of this new legal entity, but other businesses seized upon the idea
and emulated it, further inflaming public sentiment. Standard Oil had gained an aura of invincibility,
always prevailing against competitors, critics, and political enemies. It had become the richest, biggest,
most feared business in the world, seemingly immune to the boom and bust of the business cycle,
consistently racking up profits year after year.[44]
Its vast American empire included 20,000 domestic wells, 4,000 miles of pipeline, 5,000 tank cars, and
over 100,000 employees.[44] Its share of world oil refining topped out above 90% but slowly dropped to
about 80% for the rest of the century.[45] In spite of the formation of the trust and its perceived immunity
from all competition, by the 1880s Standard Oil had passed its peak of power over the world oil market.
Rockefeller finally gave up his dream of controlling all the world’s oil refining, he admitted later, “We
realized that public sentiment would be against us if we actually refined all the oil.”[45] Over time foreign
competition and new finds abroad eroded his dominance. In the early 1880s, Rockefeller created one of
his most important innovations. Rather than try to influence the price of crude oil directly, Standard Oil
had been exercising indirect control by altering oil storage charges to suit market conditions. Rockefeller
then decided to order the issuance of certificates against oil stored in its pipelines. These certificates
became traded by speculators, thus creating the first oil-futures market which effectively set spot market
prices from then on. The National Petroleum Exchange opened in Manhattan in late 1882 to facilitate
the oil futures trading.[46]
Even though 85% of world crude production was still coming from Pennsylvania wells in the 1880s,
overseas drilling in Russia and Asia began to reach the world market.[47] Robert Nobel had established
his own refining enterprise in the abundant and cheaper Russian oil fields, including the region’s first
pipeline and the world’s first oil tanker. The Paris Rothschilds jumped into the fray providing
financing.[48] Additional fields were discovered in Burma and Java. Even more critical, the invention of
the light bulb gradually began to erode the dominance of kerosene for illumination. But Standard Oil
adapted, developing its own European presence, expanding into natural gas production in the U.S. then
into gasoline for automobiles, which until then had been considered a waste product.[49]
Standard Oil moved its headquarters to New York City at 26 Broadway, and Rockefeller became a
central figure in the city’s business community. He bought a personal residence in 1884 on 54th street
near the mansions of other magnates such as William Vanderbilt. Despite personal threats and constant
pleas for charity, Rockefeller took the new elevated train to his downtown office daily.[50] In 1887,
Congress created the Interstate Commerce Commission which was tasked with enforcing equal rates
for all railroad freight, but by then Standard was depending more on pipeline transport.[51] More
threatening to Standard’s power was the Sherman Antitrust Act of 1890, originally used to control
unions, but later central to the breakup of the Standard Oil trust.[52] Ohio was especially vigorous in
applying its state anti-trust laws, and finally forced a separation of Standard Oil of Ohio from the rest of
the company in 1892, the first step in the dissolution of the trust.[52]
In the 1890s, Rockefeller expanded into iron ore and ore transportation, forcing a collision with steel
magnate Andrew Carnegie, and their competition became a major subject of the newspapers and the
cartoonists.[53] Rockefeller also went on a massive buying spree acquiring leases for crude oil
production in Ohio, Indiana, and West Virginia, as the original Pennsylvania oil fields began to play
out.[54] Amidst the frenetic expansion, Rockefeller began to think of retirement. The daily management
of the trust was turned over to John Dustin Archbold and Rockefeller bought a new estate, Pocantico
Hills, north of New York City, turning more time to leisure activities including the new sports of bicycling
and golf.[55]
Upon his ascent to the presidency, Theodore Roosevelt initiated dozens of suits under the Sherman
Antitrust Act and coaxed reforms out of Congress. In 1901, U.S. Steel, now controlled by J. Pierpont
Morgan, having bought Andrew Carnegie’s steel assets, offered to buy Standard’s iron interests as well.
A deal brokered by Henry Clay Frick exchanged Standard’s iron interests for U.S. Steel stock and gave
Rockefeller and his son membership on the company’s board of directors. In full retirement at age 63,
Rockefeller earned over $58 million in investments in 1902.[56]
One of the most effective attacks on Rockefeller and his firm was the 1904 publication of The History of
the Standard Oil Company, by Ida Tarbell, a leading muckraker. She documented the company’s
espionage, price wars, heavy-handed marketing tactics, and courtroom evasions.[57] Although her work
prompted a huge backlash against the company, Tarbell claims to have been surprised at its
magnitude. “I never had an animus against their size and wealth, never objected to their corporate form.
I was willing that they should combine and grow as big and wealthy as they could, but only by legitimate
means. But they had never played fair, and that ruined their greatness for me.” (Tarbell's father had
been driven out of the oil business during the South Improvement Company affair.)
Rockefeller responded by calling her “Miss Tarbarrel” in private but held back in public saying only, “not
a word about that misguided woman.”[57] Instead Rockefeller began a publicity campaign to put his
company and himself in a better light. Though he had long maintained a policy of active silence with the
press, he decided to make himself more accessible and responded with conciliatory comments such as,
“capital and labor are both wild forces which require intelligent legislation to hold them in restriction.”[58]
He wrote and published his memoirs beginning in 1908.
Rockefeller as an industrial emperor, 1901 cartoon from Puck magazine
Critics found his writing to be sanitized and disingenuous and thought that statements such as “the
underlying, essential element of success in business is to follow the established laws of high-class
dealing” seemed to be at odds with his true business methods.[58]
Rockefeller and his son continued to consolidate their oil interests as best as they could until New
Jersey, in 1909, changed its incorporation laws to effectively allow a re-creation of the trust in the form
of a single holding company. Rockefeller retained his nominal title as president until 1911 and he kept
his stock. At last in 1911, the Supreme Court of the United States found Standard Oil Company of New
Jersey in violation of the Sherman Antitrust Act. By then the trust still had a 70% market share of the
refined oil market but only 14% of the U.S. crude oil supply.[59] The court ruled that the trust originated
in illegal monopoly practices and ordered it to be broken up into 34 new companies. These included,
among many others, Continental Oil, which became Conoco, now part of ConocoPhillips; Standard of
Indiana, which became Amoco, now part of BP; Standard of California, which became Chevron;
Standard of New Jersey, which became Esso (and later, Exxon), now part of ExxonMobil; Standard of
New York, which became Mobil, now part of ExxonMobil; and Standard of Ohio, which became Sohio,
now part of BP. Pennzoil and Chevron have remained separate companies.[60]
Rockefeller, who had rarely sold shares, held over 25% of Standard’s stock at the time of the
breakup.[61] He, as well as all stockholders, received proportionate shares in each of the 34 companies.
In the aftermath, Rockefeller’s control over the oil industry was somewhat reduced but over the next ten
years, the breakup also proved immensely profitable for him. The companies’ combined net worth rose
fivefold and Rockefeller’s personal wealth jumped to $900,000,000.
Philanthropy
From his very first paycheck, Rockefeller tithed ten percent of his earnings to his church.[62] His church
was later affiliated with the Northern Baptist Convention, which formed from American Baptists in the
North with ties to their historic missions to establish schools and colleges for freedmen in the South
after the American Civil War. As Rockefeller's wealth grew, so did his giving, primarily to educational
and public health causes, but also for basic science and the arts. He was advised primarily by Frederick
Taylor Gates[63] after 1891,[64] and, after 1897, also by his son.
Rockefeller believed in the Efficiency Movement, arguing that: "To help an inefficient, ill-located,
unnecessary school is a waste...it is highly probable that enough money has been squandered on
unwise educational projects to have built up a national system of higher education adequate to our
needs, if the money had been properly directed to that end."[65]
He and his advisers invented the conditional grant, which required the recipient to "root the institution in
the affections of as many people as possible who, as contributors, become personally concerned, and
thereafter may be counted on to give to the institution their watchful interest and cooperation."[66]
In 1884, Rockefeller provided major funding for a college in Atlanta for African-American women, which
became Spelman College (named for Rockefeller's in-laws who were ardent abolitionists before the
Civil War).[67] The oldest existing building on Spelman's campus, Rockefeller Hall, is named after
him.[68] Rockefeller also gave considerable donations to Denison University[69] and other Baptist
colleges.
Rockefeller gave $80 million to the University of Chicago[70] under William Rainey Harper, turning a
small Baptist college into a world-class institution by 1900.
His General Education Board, founded in 1903,[71] was established to promote education at all levels
everywhere in the country.[72] In keeping with the historic missions of the Baptists, it was especially
active in supporting black schools in the South.[72] Rockefeller also provided financial support to such
established eastern institutions as Yale, Harvard, Columbia, Brown, Bryn Mawr, Wellesley and Vassar.
The study had been undertaken by the Carnegie Foundation for the Advancement of Teaching; it
revolutionized the study of medicine in the United States.
Despite his personal preference for homeopathy, Rockefeller, on Gates's advice, became one of the
first great benefactors of medical science. In 1901, he founded the Rockefeller Institute for Medical
Research[71] in New York City. It changed its name to Rockefeller University in 1965, after expanding
its mission to include graduate education.[73] It claims a connection to 23 Nobel laureates.[74] He
founded the Rockefeller Sanitary Commission in 1909,[71] an organization that eventually eradicated
the hookworm disease,[75] which had long plagued rural areas of the American South. His General
Education Board made a dramatic impact by funding the recommendations of the Flexner Report of
1910.
He created the Rockefeller Foundation in 1913[76] to continue and expand the scope of the work of the
Sanitary Commission,[71] which was closed in 1915.[77] He gave nearly $250 million to the
foundation,[67] which focused on public health, medical training, and the arts. It endowed Johns Hopkins
School of Hygiene and Public Health,[71] the first of its kind.[78] It also built the Peking Union Medical
College in China into a notable institution.[69] The foundation helped in World War I war relief,[79] and it
employed William Lyon Mackenzie King of Canada to study industrial relations.[80] In the 1920s, the
Rockefeller Foundation funded a hookworm eradication campaign through the International Health
Board. This campaign used a combination of politics and science, along with collaboration between
healthcare workers and government officials to accomplish its goals. [81]
John D. Rockefeller's painting by John Singer Sargent in 1917
Rockefeller's fourth main philanthropy, the Laura Spelman Rockefeller Memorial Foundation, was
created in 1918.[82] Through this, he supported work in the social studies; this was later absorbed into
the Rockefeller Foundation. In total Rockefeller donated about $550 million.
Rockefeller became well known in his later life for the practice of giving dimes to adults and nickels to
children wherever he went. He even gave dimes as a playful gesture to wealthy men, such as tire mogul
Harvey Firestone.[83]
[edit]
Death
Rockefeller died of arteriosclerosis on May 23, 1937, two months shy of his 98th birthday,[84] at The
Casements, his home in Ormond Beach, Florida. He was buried in Lake View Cemetery in Cleveland.
[edit]
Legacy
Rockefeller had a long and controversial career in the oil industry followed by a long career in
philanthropy. His image is an amalgam of all of these experiences and the many ways he was viewed
by his contemporaries. These contemporaries include his former competitors, many of whom were
driven to ruin, but many others of whom sold out at a profit (or a profitable stake in Standard Oil, as
Rockefeller often offered his shares as payment for a business), and quite a few of whom became very
wealthy as managers as well as owners in Standard Oil. They also include politicians and writers, some
of whom served Rockefeller's interests, and some of whom built their careers by fighting Rockefeller
and the "robber barons".
Biographer Allan Nevins, answering Rockefeller's enemies, concluded:
“
The rise of the Standard Oil men to great wealth was not from poverty. It was not meteor-like,
but accomplished over a quarter of a century by courageous venturing in a field so risky that
most large capitalists avoided it, by arduous labors, and by more sagacious and farsighted
planning than had been applied to any other American industry. The oil fortunes of 1894
were not larger than steel fortunes, banking fortunes, and railroad fortunes made in similar
periods. But it is the assertion that the Standard magnates gained their wealth by
appropriating "the property of others" that most challenges our attention. We have abundant
evidence that Rockefeller's consistent policy was to offer fair terms to competitors and to buy
them out, for cash, stock, or both, at fair appraisals; we have the statement of one impartial
historian that Rockefeller was decidedly "more humane toward competitors" than Carnegie;
we have the conclusion of another that his wealth was "the least tainted of all the great fortunes
of his day."[85]
Biographer Ron Chernow wrote of Rockefeller:
“
What makes him problematic—and why he continues to inspire ambivalent reactions—is that
his good side was every bit as good as his bad side was bad. Seldom has history produced
such a contradictory figure.
Notwithstanding these varied aspects of his public life, Rockefeller may ultimately be remembered
simply for the raw size of his wealth. In 1902, an audit showed Rockefeller was worth about $200
million—compared to the total national GDP of $24 billion then.[87] His wealth continued to grow
significantly (in line with U.S. economic growth) after as the demand for gasoline soared, eventually
reaching about $900 million on the eve of the First World War, including significant interests in banking,
shipping, mining, railroads, and other industries. According to the New York Times obituary, "it was
estimated after Mr. Rockefeller retired from business that he had accumulated close to $1,500,000,000
out of the earnings of the Standard Oil trust and out of his other investments. This was probably the
greatest amount of wealth that any private citizen had ever been able to accumulate by his own efforts."
By the time of his death in 1937, Rockefeller's remaining fortune, largely tied up in permanent family
trusts, was estimated at $1.4 billion, while the total national GDP was $92 billion.[89] According to some
methods of wealth calculation, Rockefeller's net worth over the last decades of his life would easily
place him as the wealthiest known person in recent history. As a percentage of the United States' GDP,
no other American fortune — including those of Bill Gates or Sam Walton — would even come close.
The Rockefeller wealth, distributed as it was through a system of foundations and trusts, continued to
fund family philanthropic, commercial, and, eventually, political aspirations throughout the 20th century.
Grandson David Rockefeller was a leading New York banker, serving for over 20 years as CEO of
Chase Manhattan (now part of JPMorgan Chase). Another grandson, Nelson A. Rockefeller, was
Republican governor of New York and the 41st Vice President of the United States. A third grandson,
Winthrop Rockefeller, served as Republican Governor of Arkansas. Great-grandson, John D. "Jay"
Rockefeller IV is currently a Democratic Senator from West Virginia and a former governor of West
Virginia, and another, Winthrop Paul Rockefeller, served ten years as Lieutenant Governor of Arkansas.
Poem about his life
Rockefeller, at the age of 86, penned the following words to sum up his life:
“
I was early taught to work as well as
play,
My life has been one long, happy
holiday;
Full of work and full of play-
I
dropped the worry on the way-
And
”
God was good to me everyday.
ANDREW CARNEIGE
Early life
Birthplace of Andrew Carnegie in Dunfermline, Scotland
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.[3] The
main room served as a living room, dining room and bedroom.[3] He was named after his legal
grandfather.[3] 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.[3] His
uncle, George Lauder, whom he referred to as "Dod", introduced him to the writings of Robert Burns
and historical Scottish heroes such as Robert 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.[4]
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.[5] 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
Carnegie age 16, with brother Thomas
In 1850, Carnegie became a telegraph messenger boy in the Pittsburgh Office of the Ohio Telegraph
Company, at $2.50 per week,[6] 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.[
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", as biographer David Nasaw writes.[8] 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.[8][9] 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.
1860–1865: The Civil War
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, 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.[10]
Carnegie, c. 1878
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! Let us cast
aside business forever, except for others. Let us settle in Oxford and I shall get a thorough education,
making the acquaintance of literary men. I figure that this will take three years active work. I shall pay
especial attention to speaking in public. We can settle in London and I can purchase a controlling
interest in some newspaper or live review and give the general management of it attention, taking part
in public matters, especially those connected with education and improvement of the poorer classes.
Man must have no idol and the amassing of wealth is one of the worst species of idolatry! No idol is
more debasing than the worship of money! Whatever I engage in I must push inordinately; therefore
should I be careful to choose that life which will be the most elevating in its character. To continue much
longer overwhelmed by business cares and with most of my thoughts wholly upon the way to make
more money in the shortest time, must degrade me beyond hope of permanent recovery. I will resign
business at thirty-five, but during these ensuing two years I wish to spend the afternoons in receiving
instruction and in reading systematically!
Industrialist
1885–1900: Empire of Steel
Bessemer converter, schematic diagram
Carnegie's mother had not wanted him to get married.[11] After she died in 1886, Carnegie married
Louise Whitfield,[11] who was more than 20 years his junior.[12] In 1897,[13] the couple had their only
child, a daughter, whom they named after Carnegie's mother, Margaret.[14]
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 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, 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.
1901: U.S. Steel
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.
The buyout, secretly negotiated by Charles M. Schwab (no relation to Charles R. Schwab), was the
largest such industrial takeover in United States history to date. The holdings were incorporated in the
United States Steel Corporation, a trust organized by Morgan, and Carnegie retired from business. His
steel enterprises were bought out at a figure equivalent to 12 times their annual earnings—$480 million
(presently, $13,409,280,000) which at the time was the largest ever personal commercial transaction.
Carnegie's share of this amounted to $225,639,000 (presently, $6,303,451,104), which was paid to
Carnegie in the form of 5%, 50-year gold bonds. The letter agreeing to sell his share was signed on
February 26, 1901. On March 2, the circular formally filing the organization and capitalization (at
$1,400,000,000—4% of U.S. national wealth at the time) of the United States Steel Corporation actually
completed the contract. The bonds were to be delivered within two weeks to the Hudson Trust
Company of Hoboken, New Jersey, in trust to Robert A. Franks, Carnegie's business secretary. There,
a special vault was built to house the physical bulk of nearly $230,000,000 worth of bonds. It was said
that "...Carnegie never wanted to see or touch these bonds that represented the fruition of his business
career. It was as if he feared that if he looked upon them they might vanish like the gossamer gold of
the leprechaun. Let them lie safe in a vault in New Jersey, safe from the New York tax assessors, until
he was ready to dispose of them..."
1880–1900: Scholar and activist
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,[15] statesmen, and notable
writers.[16]
Carnegie erected commodious swimming-baths for the people of his hometown in Dunfermline in 1879.
In the following year, Carnegie gave $40,000 for the establishment of a free library in Dunfermline. In
1884, he gave $50,000 to Bellevue Hospital Medical College (now part of New York University Medical
Center) to found a histological laboratory, now called the Carnegie Laboratory.
In 1881, Carnegie took his family, including his 70 year-old mother, on a trip to the United Kingdom.
They toured Scotland by coach, and enjoyed several receptions en-route. The highlight for them all was
a triumphal return to Dunfermline, where Carnegie's mother laid the foundation stone of a Carnegie
Library for which he donated the money. 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 peoples. 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.
In 1886, Carnegie's younger brother Thomas died at age 43. Success in the business continued,
however. While owning steel works, Carnegie had purchased at low cost the most valuable of the iron
ore fields around Lake Superior. The same year Carnegie became a figure of controversy. Following his
tour of the UK, he wrote about his experiences in a book entitled An American Four-in-hand in Britain.
Although still actively involved in running his many businesses, Carnegie had become a regular
contributor to numerous magazines, most notably the Nineteenth Century, under the editorship of
James Knowles, and the influential North American Review, led by editor Lloyd Bryce.
In 1886, Carnegie wrote his most radical work to date, entitled Triumphant Democracy. Liberal in its use
of statistics to make its arguments, the book argued his view that the American republican system of
government was superior to the British monarchical system. It gave a highly favorable and idealized
view of American progress and criticized the British royal family. The cover depicted an upended royal
crown and a broken scepter. The book created considerable controversy in the UK. The book made
many Americans appreciate their country's economic progress and sold over 40,000 copies, mostly in
the U.S.
In 1889, Carnegie published "Wealth" in the June issue of the North American Review. After reading it,
Gladstone requested its publication in England, where it appeared as "The Gospel of Wealth" in the Pall
Mall Gazette. The article was the subject of much discussion. Carnegie argued that the life of a wealthy
industrialist should comprise two parts. The first part was the gathering and the accumulation of wealth.
The second part was for the subsequent distribution of this wealth to benevolent causes. The
philanthropy was key to making the life worthwhile.
Carnegie was also known to be a great journalist. This came about from his experience in constantly
writing to newspapers and to their editors. His knowledge in reading newspapers stems from a habit
from his childhood.[17] He also would go on to publish three books on travel. One of them entitled
"Round the world" he began writing while traveling England and Scotland.[18]
In 1898, Carnegie tried to arrange for independence for the Philippines. As the end of the Spanish
American War neared, the United States bought the Philippines from Spain for $20 million. To counter
what he perceived as imperialism on the part of the United States, Carnegie personally offered $20
million to the Philippines so that the Filipino people could buy their independence from the United
States.[19] However, nothing came of the offer. Carnegie also opposed the annexation of Cuba by the
United States and in this, was successful with many other conservatives who founded an anti-imperialist
league that included former presidents of the United States, Grover Cleveland and Benjamin Harrison,
and literary figures like Mark Twain.[20][21][22]
Retirement
1901–1919: Philanthropist
Carnegie, right, with James Bryce, 1st Viscount Bryce.
Carnegie spent his last years as a philanthropist. From 1901 forward, public attention was turned from
the shrewd business acumen which had enabled Carnegie to accumulate such a fortune, to the publicspirited way in which he devoted himself to utilizing it on philanthropic projects. He had written about his
views on social subjects and the responsibilities of great wealth in Triumphant Democracy (1886) and
Gospel of Wealth (1889). Carnegie bought Skibo Castle in Scotland, and made his home partly there
and partly in New York. He then devoted his life to providing the capital for purposes of public interest
and social and educational advancement.
He was a powerful supporter of the movement for spelling reform as a means of promoting the spread
of the English language.
Among his many philanthropic efforts, the establishment of public libraries throughout the United States,
the United Kingdom, and other English-speaking countries was especially prominent. Carnegie libraries,
as they were commonly called, were built in many places. The first was opened in 1883 in Dunfermline.
His method was to build and equip, but only on condition that the local authority matched that by
providing the land and a budget for operation and maintenance. To secure local interest, in 1885, he
gave $500,000 to Pittsburgh for a public library, and in 1886, he gave $250,000 to Allegheny City for a
music hall and library; and $250,000 to Edinburgh for a free library. In total Carnegie funded some
3,000 libraries, located in 47 US states, and also in Canada, the United Kingdom, what is now the
Republic of Ireland, Australia, New Zealand, the West Indies, and Fiji. He also donated £50,000 to help
set up the University of Birmingham in 1899.[23]
As VanSlyck (1991) showed, the last years of the 19th century saw acceptance of the idea that free
libraries should be available to the American public. But the design of the idealized free library was the
subject of prolonged and heated debate. On one hand, the library profession called for designs that
supported efficiency in administration and operation; on the other, wealthy philanthropists favored
buildings that reinforced the paternalistic metaphor and enhanced civic pride. Between 1886 and 1917,
Carnegie reformed both library philanthropy and library design, encouraging a closer correspondence
between the two.
The Broome County Public Library in New York opened in October 1904. Originally called the
Binghamton Public Library, it was created with a gift of $75,000 from Carnegie. The building was
designed to serve as both a public library and a community center.
He gave $2 million in 1901 to start the Carnegie Institute of Technology (CIT) at Pittsburgh and the
same amount in 1902 to found the Carnegie Institution at Washington, D.C. He later contributed more
to these and other schools. CIT is now part of Carnegie Mellon University. Carnegie served on the
Board of Cornell University.
In 1911, Carnegie became a sympathetic benefactor to George Ellery Hale, who was trying to build the
100 inch (2.5 m) Hooker Telescope at Mount Wilson, and donated an additional ten million dollars to the
Carnegie Institution with the following suggestion to expedite the construction of the telescope: "I hope
the work at Mount Wilson will be vigorously pushed, because I am so anxious to hear the expected
results from it. I should like to be satisfied before I depart, that we are going to repay to the old land
some part of the debt we owe them by revealing more clearly than ever to them the new heavens." The
telescope saw first light on November 2, 1917, with Carnegie still alive.[24]
In Scotland, he gave $10 million in 1901 to establish the Carnegie Trust for the Universities of Scotland.
It was created by a deed which he signed on June 7, 1901, and it was incorporated by Royal Charter on
August 21, 1902. The Trust was funded by a gift of $10 million (a then unprecedented sum: at the time,
total government assistance to all four Scottish universities was about £50,000 a year) and its aim was
to improve and extend the opportunities for scientific research in the Scottish universities and to enable
the deserving and qualified youth of Scotland to attend a university.[25] He was subsequently elected
Lord Rector of University of St. Andrews. He also donated large sums of money to Dunfermline, the
place of his birth. In addition to a library, Carnegie also bought the private estate which became
Pittencrieff Park and opened it to all members of the public, establishing the Carnegie Dunfermline
Trust[26] to benefit the people of Dunfermline. A statue of him stands there today. He gave a further $10
million in 1913 to endow the Carnegie United Kingdom Trust, a grant-making foundation.[27][28]
Carnegie also established large pension funds in 1901 for his former employees at Homestead and, in
1905, for American college professors. The latter fund evolved into TIAA-CREF. One critical
requirement was that church-related schools had to sever their religious connections to get his money.
His interest in music led him to fund construction of 7,000 church organs. He built and owned Carnegie
Hall in New York City.
Carnegie was a large benefactor of the Tuskegee Institute under Booker T. Washington for AfricanAmerican education. He helped Washington create the National Negro Business League.
He founded the Carnegie Hero Fund for the United States and Canada in 1904 (a few years later also
established in the United Kingdom, Switzerland, Norway, Sweden, France, Italy, the Netherlands,
Belgium, Denmark, and Germany) for the recognition of deeds of heroism. Carnegie contributed
$1,500,000 in 1903 for the erection of the Peace Palace at The Hague; and he donated $150,000 for a
Pan-American Palace in Washington as a home for the International Bureau of American Republics.
Carnegie was honored for his philanthropy and support of the arts by initiation as an honorary member
of Phi Mu Alpha Sinfonia Fraternity on October 14, 1917, at the New England Conservatory of Music in
Boston, Massachusetts. The fraternity's mission reflects Carnegie's values by developing young men to
share their talents to create harmony in the world.
By the standards of 19th century tycoons, Carnegie was not a particularly ruthless man but a
humanitarian with enough acquisitiveness to go in the ruthless pursuit of money;[29] on the other hand,
the contrast between his life and the lives of many of his own workers and of the poor, in general, was
stark. "Maybe with the giving away of his money," commented biographer Joseph Wall, "he would justify
what he had done to get that money."[30]
To some, Carnegie represents the idea of the American dream. He was an immigrant from Scotland
who came to America and became successful. He is not only known for his successes but his
enormous amounts of philanthropist works, not only to charities but also to promote democracy and
independence to colonized countries.[31]
Death
Carnegie's grave site at the Sleepy Hollow Cemetery in North Tarrytown, New York.
The footstone of Andrew Carnegie
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.[32] At his
death, his last $30,000,000 was given to foundations, charities, and to pensioners.[33] 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.[34]
Controversies
1889: Johnstown Flood
Main article: Johnstown Flood
Carnegie was one of more than 50 members of the South Fork Fishing and Hunting Club, which has
been blamed for the Johnstown Flood that killed 2,209 people in 1889.[35]
At the suggestion of his friend Benjamin Ruff, Carnegie's partner Henry Clay Frick had formed the
exclusive South Fork Fishing and Hunting Club high above Johnstown, Pennsylvania. The sixty-odd
club members were the leading business tycoons of Western Pennsylvania and included among their
number Frick's best friend, Andrew Mellon, his attorneys Philander Knox and James Hay Reed, as well
as Frick's business partner, Carnegie. High above the city, near the small town of South Fork, the South
Fork Dam was originally built between 1838 and 1853 by the Commonwealth of Pennsylvania as part of
a canal system to be used as a reservoir for a canal basin in Johnstown. With the coming-of-age of
railroads superseding canal barge transport, the lake was abandoned by the Commonwealth, sold to
the Pennsylvania Railroad, and sold again to private interests and eventually came to be owned by the
South Fork Fishing and Hunting Club in 1881. Prior to the flood, speculators had purchased the
abandoned reservoir, made less than well-engineered repairs to the old dam, raised the lake level, built
cottages and a clubhouse, and created the South Fork Fishing and Hunting Club. Less than 20 miles
downstream from the dam sat the city of Johnstown.
The dam was 72 feet (22 m) high and 931 feet (284 m) long. Between 1881 when the club was opened,
and 1889, the dam frequently sprang leaks and was patched, mostly with mud and straw. Additionally, a
previous owner removed and sold for scrap the 3 cast iron discharge pipes that previously allowed a
controlled release of water. There had been some speculation as to the dam's integrity, and concerns
had been raised by the head of the Cambria Iron Works downstream in Johnstown. Such repair work, a
reduction in height, and unusually high snowmelt and heavy spring rains combined to cause the dam to
give way on May 31, 1889 resulting in twenty million tons of water to sweep down the valley causing the
Johnstown Flood.[36] When word of the dam's failure was telegraphed to Pittsburgh, Frick and other
members of the South Fork Fishing and Hunting Club gathered to form the Pittsburgh Relief Committee
for assistance to the flood victims as well as determining never to speak publicly about the club or the
flood. This strategy was a success, and Knox and Reed were able to fend off all lawsuits that would
have placed blame upon the club's members.
Although Cambria Iron and Steel's facilities were heavily damaged by the flood, they returned to full
production within a year.. After the flood, Carnegie built Johnstown a new library to replace the one built
by Cambria's chief legal counsel Cyrus Elder, which was destroyed in the flood. The Carnegie-donated
library is now owned by the Johnstown Area Heritage Association, and houses the Flood Museum.
1892: Homestead Strike
The Homestead Strike
The Homestead Strike was a bloody labor confrontation lasting 143 days in 1892, one of the most
serious in U.S. history. The conflict was centered on Carnegie Steel's main plant in Homestead,
Pennsylvania, and grew out of a dispute between the National Amalgamated Association of Iron and
Steel Workers of the United States and the Carnegie Steel Company.
Carnegie left on a trip to Scotland before the unrest peaked. In doing so, Carnegie left mediation of the
dispute in the hands of his associate and partner Henry Clay Frick. Frick was well known in industrial
circles for maintaining staunch anti-union sensibilities.
After a recent increase in profits by 60%, the company refused to raise worker's pay by more than 30%.
When some of the workers demanded the full 60%, management locked the union out. Workers
considered the stoppage a "lockout" by management and not a "strike" by workers. As such, the
workers would have been well within their rights to protest, and subsequent government action would
have been a set of criminal procedures designed to crush what was seen as a pivotal demonstration of
the growing labor rights movement, strongly opposed by management. Frick brought in thousands of
strikebreakers to work the steel mills and Pinkerton agents to safeguard them.
On July 6, the arrival of a force of 300 Pinkerton agents from New York City and Chicago resulted in a
fight in which 10 men—seven strikers and three Pinkertons—were killed and hundreds were injured.
Pennsylvania Governor Robert Pattison ordered two brigades of state militia to the strike site. Then,
allegedly in response to the fight between the striking workers and the Pinkertons, anarchist Alexander
Berkman shot at Frick in an attempted assassination, wounding Frick. While not directly connected to
the strike, Berkman was tied in for the assassination attempt. According to Berkman, "...with the
elimination of Frick, responsibility for Homestead conditions would rest with Carnegie."[37][38]
Afterwards, the company successfully resumed operations with non-union immigrant employees in
place of the Homestead plant workers, and Carnegie returned to the United States. However,
Carnegie's reputation was permanently damaged by the Homestead events.
Philosophy
Andrew Carnegie Dictum
In his final days, Carnegie suffered from bronchial pneumonia. Before his death on August 11, 1919,
Carnegie had donated $350,695,654 for various causes. The "Andrew Carnegie Dictum" illustrates
Carnegie's generous nature:
▪ To spend the first third of one's life getting all the education one can.
▪ To spend the next third making all the money one can.
▪ To spend the last third giving it all away for worthwhile causes.
Carnegie was involved in philanthropic causes, but he kept himself away from religious circles. He
wanted to be identified by the world as a "positivist". He was highly influenced in public life by John
Bright.
On wealth
Carnegie at Skibo Castle, 1914
As early as 1868, at age 33, he drafted a memo to himself. He wrote: "...The amassing of wealth is one
of the worse species of idolatry. No idol more debasing than the worship of money."[39] In order to avoid
degrading himself, he wrote in the same memo he would retire at age 35 to pursue the practice of
philanthropic giving for "...the man who dies thus rich dies disgraced." However, he did not begin his
philanthropic work in all earnest until 1881, with the gift of a library to his hometown of Dunfermline,
Scotland.[40]
Carnegie wrote "The Gospel of Wealth",[41] an article in which he stated his belief that the rich should
use their wealth to help enrich society.
The following is taken from one of Carnegie's memos to himself:
Man does not live by bread alone. I have known millionaires starving for lack of the nutriment which
alone can sustain all that is human in man, and I know workmen, and many so-called poor men, who
revel in luxuries beyond the power of those millionaires to reach. It is the mind that makes the body rich.
There is no class so pitiably wretched as that which possesses money and nothing else. Money can
only be the useful drudge of things immeasurably higher than itself. Exalted beyond this, as it
sometimes is, it remains Caliban still and still plays the beast. My aspirations take a higher flight. Mine
be it to have contributed to the enlightenment and the joys of the mind, to the things of the spirit, to all
that tends to bring into the lives of the toilers of Pittsburgh sweetness and light. I hold this the noblest
possible use of wealth.[42]
In 1908, he commissioned (at no pay) Napoleon Hill, then a journalist, to interview more than 500
wealthy achievers to find out the common threads of their success. Hill eventually became a Carnegie
collaborator. Their work was published in 1928 after Carnegie's death in Hill's book The Law of Success
(ISBN 0-87980-447-5) and in 1937, Think and Grow Rich (ISBN 1-59330-200-2). The latter has not
been out of print since it was first published and has sold more than 30 million copies worldwide. In
1960, Hill published an abridged version of the book containing the Andrew Carnegie formula for wealth
creation. For years it was the only version generally available. In 2004, Ross Cornwell published Think
and Grow Rich!: The Original Version, Restored and Revised (Second Printing 2007), which restored
the book to its original content, with slight revisions, and added comprehensive end notes, an index,
and an appendix.
Intellectual influences
Carnegie claimed to be a champion of evolutionary thought particularly the work of Herbert Spencer,
even declaring Spencer his teacher.[43] Though Carnegie claims to be a disciple of Spencer many of his
actions went against the ideas espouse by Spencer.
Spencerian evolution was for individual rights and against government interference. Furthermore,
Spencerian evolution held that those unfit to sustain themselves must be allowed to perish. Spencer
believed that just as there were many varieties of beetles, respectively modified to existence in a
particular place in nature, so too had human society “spontaneously fallen into division of labour”.[44]
Individuals who survived to this, the latest and highest stage of evolutionary progress would be “those in
whom the power of self-preservation is the greatest—are the select of their generation.”[45] Moreover,
Spencer perceived governmental authority as borrowed from the people to perform the transitory aims
of establishing social cohesion, insurance of rights, and security.[46][47] Spencerian ‘survival of the
fittest’ firmly credits any provisions made to assist the weak, unskilled, poor and distressed to be an
imprudent disservice to evolution.[48] Spencer insisted people should resist for the benefit of collective
humanity as these severe fate singles out the weak, debauched, and disabled.[48]
Andrew Carnegie’s political and economic focus of during the late nineteenth and early twentieth
century was the defense of laissez faire economics. Carnegie emphatically resisted government
intrusion in commerce, as well as government-sponsored charities. Carnegie believed the concentration
of capital was essential for societal progress and should be encouraged.[49] Carnegie was an ardent
supporter of commercial “survival of the fittest” and sought to immunity from business challenges by
dominating all phases of the steel manufacturing procedure.[50] Carnegie’s determination to lower costs
included cutting labor expenses as well.[51] In a notably Spencerian manner, Carnegie argued that
unions impeded the natural reduction of prices by pushing up costs, which blocked evolutionary
progress.[52] Carnegie felt that unions represented the narrow interest of the few while his actions
benefited the entire community.[50]
On the surface, Andrew Carnegie appears to be a strict laissez-faire capitalist and follower of Herbert
Spencer, often referring to himself as a disciple of Spencer.[53] Conversely, Carnegie a titan of industry
seems to embody all of the qualities of Spencerian survival of the fittest. The two men enjoyed a mutual
respect for one another and maintained correspondence until Spencer’s death in 1903.[53] There are
however, some major discrepancies between Spencer’s capitalist evolutionary conceptions and Andrew
Carnegie’s capitalist practices.
Spencer wrote that in production the advantages of the superior individual is comparatively minor, and
thus acceptable, yet the benefit that dominance provides those who control a large segment of
production might be hazardous to competition. Spencer feared that an absence of “sympathetic selfrestraint” of those with too much power could lead to the ruin of his competitors.[54] He did not think free
market competition necessitated competitive warfare. Furthermore, Spencer argued that individuals with
superior resources who deliberately used investment schemes to put competitor out of business were
committing acts of “commercial murder”.[54] Carnegie built his wealth in the steel industry by
maintaining an extensively integrated operating system. Carnegie also bought out some regional
competitors, and merged with others, usually maintaining the majority shares in the companies. Over
the course of twenty years, Carnegie’s steel properties grew to include the Edgar Thomson Steel
Works, the Lucy Furnace Works, the Union Iron Mills, the Homestead Works, the Keystone Bridge
Works, the Hartman Steel Works, the Frick Coke Company, and the Scotia ore mines among many
other industry related assets.[55] Furthermore, Carnegie’s success was due to his convenient
relationship with the railroad industries, which not only relied on steel for track, but were also making
money from steel transport. The steel and railroad barons worked closely to negotiate prices instead of
free market competition determinations.[56]
Besides Carnegie’s market manipulation, United States trade tariffs were also working in favor of the
steel industry. Carnegie spent energy and resources lobbying congress for a continuation of favorable
tariffs from which he earned millions of dollars a year.[57] Carnegie tried to keep this information
concealed, but legal document released in 1900, during proceeding with the ex-chairman of Carnegie
Steel Henry Clay Frick revealed how favorable the tariffs had been.[58] Herbert Spencer absolutely was
against government interference in business in the form of regulatory limitation, taxes, and tariffs as
well. Spencer saw tariffs as a form of taxation that levied against the majority in service to “the benefit of
a small minority of manufacturers and artisans”.[59] Carnegie without doubt was personal dedication to
Herbert Spencer as a friend, but Carnegie was not faithful adherent to Spencer’s political or economic
ideas. Furthermore, Carnegie appears to have misunderstood or intentionally misrepresented some of
Herbert Spencer's principal arguments.
"The conditions of human society create for this an imperious demand; the concentration of capital is a
necessity for meeting the demands of our day, and as such should not be looked at askance, but be
encouraged. There is nothing detrimental to human society in it, but much that is, or is bound soon to
become, beneficial. It is an evolution from the heterogeneous to the homogeneous, and is clearly
another step in the upward path of development.” Carnegie, Andrew 1901 The Gospel of Wealth and
Other Timely Essays[49]
On the subject of charity Andrew Carnegie's actions diverged in the most significant and complex
manner from Herbert Spencer's philosophies. In his 1854 essay Manners and Fashion, Spencer
referred to public education as “Old schemes”. He went on to declare that public schools and colleges,
fill the heads of students with inept useless knowledge, which excludes useful knowledge. Spencer
stated that he trusted no organization of any kind, “political, religious, literary, philanthropic”, and
believed that as they expanded in influence so too did its regulations expand. In addition Spencer
though that as all intuitions grew they become evermore corrupted by the influence of power and
money, eventually losing its “original spirit, and sinks into a lifeless mechanism”.[60] Spencer insisted
that all forms of philanthropy that agent or uplifted the poorer and downtrodden was reckless and
incompetent. Spencer thought any attempt to prevent “the really salutary sufferings” of the less
fortunate “bequeath to posterity a continually increasing curse”.[61] Carnegie, a self-proclaimed to
devotee of Spencer is also noted as saying "My business is to do as much good in the world as I can; I
have retired from all of their business." Andrew Carnegie congressional testimony February 5, 1915
Carnegie held that societal progress relied on individuals meeting their moral obligations to themselves
and to society.[62] Thus, he believed real charity supplied the means for those who wish to help
themselves, achieve their goals.[63] Moreover, Carnegie urged other wealthy people to contributed to
society in the form of parks, works of art, libraries and other endeavors that improved the community,
and contributed to the “lasting good”[64] Carnegie also held a strong opinion against inherited wealth.
Carnegie believed that the sons of prosperous businesspersons were rarely as talented as their
fathers.[63] By leaving large sums of money to their children, wealthy business leaders were wasting
resources that could be used to benefit society. Most notably, Carnegie believed that the future leaders
of society would rise from the ranks the poor.[65] Carnegie strongly believed in this because he had
risen from the bottom. He believed the poor possessed an advantage over the wealthy due to their
receiving more attention from their parents, and were taught better work ethics.[65]
Religion and world view
Witnessing sectarianism and strife in 19th century Scotland regarding religion and philosophy, Carnegie
kept his distance from organized religion and theism.[66] Carnegie instead preferred to see things
through naturalistic and scientific terms stating, "Not only had I got rid of the theology and the
supernatural, but I had found the truth of evolution."[67]
Later in life, Carnegie's firm opposition to religion softened. For many years he was a member of
Madison Avenue Presbyterian Church, pastored from 1905 to 1926 by Social Gospel exponent Henry
Sloane Coffin, while his wife and daughter belonged to the Brick Presbyterian Church.[68] He also
prepared (but did not deliver) an address to St. Andrews in which he professed a belief in "an Infinite
and Eternal Energy from which all things proceed".[69] Napoleon Hill wrote that Carnegie asserted the
importance of belief in "Infinite Intelligence", a name Hill used to identify "God" or the "Supreme
Being".[70][71]
World peace
Influenced by his "favorite living hero in public life", the British liberal, John Bright, Carnegie started his
efforts in pursuit of world peace at a young age.[72] His motto, "All is well since all grows better", served
not only as a good rationalization of his successful business career but also in his view of international
relations.
Despite his love and efforts towards international peace, Carnegie faced many dilemmas on his quest
for world peace. These dilemmas are often regarded as conflicts between his view on international
relations and his other loyalties. Throughout the 1880s and 1890s, for example, Carnegie allowed his
steel works to fill large orders of armor plate for the building of an enlarged and modernized United
States Navy; while he opposed American oversea expansion.[73] He also wrote controversial criticisms
of the British class structure which seemed to conflict with his promotion of Anglo-American
friendship.[74]
On the matter of American annexation, Carnegie had always thought it is an unwise gesture for the
United States. He did not oppose the annexation of the Hawaiian islands, Cuba and Puerto Rico, but
Carnegie stood still on his opposition towards the annexation of the Philippines. Because unlike the
Hawaiians, Cubans and Puerto Ricans, the Filipinos were willing to fight for their independence,
Carnegie believed that the conquest of the islands is a denial of the fundamental democratic principle,
and he also urged William McKinley to withdraw American troops and allow the Filipinos to live with
their independence.[75] This act well impressed the other American anti-imperialists, who soon elected
him vice-president of the Anti-Imperialist League.
After he sold his steel company in 1901, Carnegie was able to get fully involved into the acts for the
peace cause, both financially and personally. He gave away most of his fortunes to various peacekeeping agencies in order to keep them growing. When his friend, the British publicist William T. Stead,
asked him to create a new organization for the goal of a peace and arbitration society, his reply was as
such:
I do not see that it is wise to devote our efforts to creating another organization. Of course I may be
wrong in believing that, but I am certainly not wrong that if it were dependent on any millionaire's money
it would begin as an object of pity and end as one of derision. I wonder that you do not see this. There
is nothing that robs a righteous cause of its strength more than a millionaire's money. Its life is tainted
thereby.[76]
Carnegie believed that it is the effort and will of the people, that maintains the peace in international
relations. Money is just a push for the act. If world peace depended solely on financial support, it would
not seem a goal, but more like an act of pity.
The creation of the Carnegie Endowment for International Peace in 1910 was regarded as a milestone
on the road to the ultimate goal of abolition of war. Beyond a gift of $10 million for peace promotion,
Carnegie also encouraged the "scientific" investigation of the various causes of war, and the adoption of
judicial methods that should eventually eliminate them. He believed that the Endowment exists to
promote information on the nations' rights and responsibilities under existing international law and to
encourage other conferences to codify this law.[77]
In 1914, on the eve of the First World War, Carnegie founded the Church Peace Union (CPU), a group
of leaders in religion, academia, and politics. Through the CPU, Carnegie hoped to mobilize the world's
churches, religious organizations, and other spiritual and moral resources to join in promoting moral
leadership to put an end to war forever. For its inaugural international event, the CPU sponsored a
conference to be held on August 1, 1914, on the shores of Lake Constance in southern Germany. As
the delegates made their way to the conference by train, Germany was invading Belgium.
Despite its inauspicious beginning, the CPU thrived. Today its focus is on ethics and it is known as the
Carnegie Council for Ethics in International Affairs, an independent, nonpartisan, nonprofit organization,
whose mission is to be the voice for ethics in international affairs.
The outbreak of the First World War was clearly a shock to Carnegie and his optimistic view on world
peace. Although his promotion of anti-imperialism and world peace had all failed, and the Carnegie
Endowmenthad not fulfilled his expectations, his beliefs and ideas on international relations had helped
build the foundation of the League of Nations after his death, which took world peace to another level.