Andrew Carnegie and the Steel Industry

Andrew Carnegie was born in Scotland in 1835. At that time, King William IV reigned over England, soon to be succeeded by Queen Victoria in 1837. Andrew Jackson was the president in America. Other industrial titans and entrepreneurs were born around the same time: Cornelius Vanderbilt was born in 1794, JP Morgan in 1837, John D Rockefeller in 1839, and Thomas Edison in 1847.

Also around this time, Samuel Morse invents the telegraph and Morse Code. In Scotland, the population was booming and the country was industrializing, built mainly around cotton and coal.

Early Life and Immigration

Carnegie was born to a family of weavers, but facing economic struggles at home and a lack of food, they emigrated to Allegheny, Pennsylvania, when Carnegie was 13 years old. At that age, he took a job at a cotton mill working 72 hours a week. After working in two different cotton mills, he took a job as a telegraph messenger boy, and worked to memorize locations and important people. He learned how to translate the telegraph sounds without the use of the paper, and was promoted to operator. Then he became a telegraph operator at the Pennsylvania Railroad Company, a career moved that proved highly beneficial. The railroads were a growing business and Carnegie proved himself a valuable employee. At 24 years of age, he became the superintendent of the Western Division of the Pennsylvania Railroad.

He continued to be successful in business, partially due to financial support from employers and business partners. He arranged a merger between a sleeping railcar company he was involved with and the Pullman sleeping car company. During the American Civil War, Carnegie assisted and organized the transportation of Union forces and munitions. He also profited from savvy investments in industries that were integral to wartime production.

Carnegie turned his attention to iron after the war. He formed two companies as part of these endeavors: the Keystone Bridge Company and Union Ironworks. But he wasn’t just a shrewd businessman; he was a learned man and philanthropist. He also was aware of the allure of money, writing that “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.”

Rise in the Railroad Industry

Carnegie’s investments and skill in iron led to his great success in steel. There were two significant pillars to his success: technical innovation and business innovation. Carnegie adopted a new process invented by Sir Henry Bessemer that allowed steel to be made from iron more efficiently and quickly. This lowered the cost for steel, expanding the market. While this Bessemer steel didn’t work for bridges or buildings, it worked well for railways.

His business innovation was vertical integration. This means that he controlled or bought companies that produced the raw materials for his steel products. He continued to invest and acquire companies, and through this developed a different kind of steel that did work for bridges, which was used in the Eads Bridge across the Mississippi River at St. Louis, Missouri. This again proved the usefulness of steel, further expanding the market.

As the calendar turned over into the 20th century, Carnegie began considering retirement. He restructured his companies, and his empire attracted the attention of JP Morgan, a banker. He thought that if he could consolidate various steel corporations, he could lower prices, raise wages, and cut costs. He bought out the Carnegie Steel Company, handing Carnegie himself a handsome $225 million ($6.6 billion in 2017 dollars).

Philanthropy and Legacy

But Carnegie didn’t stop there. He remained active in his companies, but turned more attention to philanthropy and travel. He funded some 3,000 libraries, mainly in the US, but all across the world. He also donated vast sums to universities, including what would become the Carnegie Mellon University, and set up the Carnegie Trust for the Universities of Scotland. He worked with Booker T. Washington on the Tuskegee Institute and the National Negro Business League, gave to create pension funds for former employees, built Carnegie Hall in New York City, and funded the construction of thousands of church organs. Additionally, he pursued many world peace projects and efforts, including financing the building of a Peace Palace at The Hague, all before the outbreak of The Great War.

But Carnegie, like everyone else, whether rich or poor, had his flaws. One of his facilities experienced labor conflicts while he was away in Scotland. During fights between strikers and Pinkerton agents, 10 people were killed and many more injured. Carnegie’s personal responsibility is unclear, however, he did leave his plant in the hands of a lieutenant after tensions had begun and could have estimated that the situation would escalate.

Throughout his life, Carnegie devoured books and was always learning, even though he had little to no formal education. He was incredibly disciplined and developed a fantastic work ethic. While most of us won’t achieve his degree of success, we can still emulate his industriousness.

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