The Story of Andrew Carnegie
By: Biak Tial and Christina Liu
Andrew Carnegie was one of the industrialists during the Gilded Age, which took place from the 1870s to the 20th century.
He owned a large portion of the steel and iron iron industry from the 1880s to the 1900s, and by a large portion, we mean MOST of the steel and iron industry. At one point, he was the richest man in the world.
Later in life, he became a philanthropist and donated money for public libraries, pensions for professors and other philanthropic purposes. He was like the Robin Hood of the time... taking money from the wealthy (himself) and giving it to the poor.
Surprisingly, Carnegie had a lot in common with Cinderella. His story is the quintessential rags to riches story. His dad was a hand loom weaver and so there were many times when his family had to borrow money and migrate to different areas.
He worked many jobs as a teen --notably as a telegraph messenger in Pittsburgh. Eventually he found a job at the Pennsylvania Railroad Company as a telegraph operator & in this environment, where he learned about management and cost control.
Thomas A. Scott of the Pennsylvania Railroad Company helped him make his first investment, though many of them were through corrupt means with President Edgar J. Thompson. He slowly accumulated capital and this was the basis of his success.
He entered business using all the information he learned and accumulated. And this is really when his long list of achievements start rolling...
Andrew Carnegie arranged a merger with George Pullman's luxury first class trains, which proved to be a very profitable investment. He also invested in Story Farm on Oil Creek, which yielded valuable petroleum oil wells.
During the Civil War, he opened rail lines and supervised transportation of the defeated forces of Bull Run. Under his organization, the telegraph service rendered efficient service to the Union cause and significantly assisted in the eventual victory.
He formed the Keystone Bridge Works and the Union Ironworks, in Pittsburgh and made his first steel plant and became the largest manufacturer of steel. He did this through two innovations:
- The Bessemer Process: which resulted in the mass production of steel for a cheap price
- Background: 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. This made steel more readily available. The steel price dropped as a direct result, and Bessemer steel was rapidly adopted for railway lines and girders for buildings and bridges.
- The concept of Vertical Integration: he controlled mills that transported iron ore and coal mines, ships that transported iron ore to the factories and even the ovens that baked the iron.
- Goal was to make manufacturing more efficient by eliminating middlemen costs, making supplies more reliable, and controlling the quality of the product at each stage
- Vertically integrated companies are united by a common owner. Each company produces a product, and together all the products satisfy a common need. Essentially, this process combines all phases of manufacturing into one organization.
By 1889, the U.S. produced more steel than the UK, and Carnegie owned a large part of it.
When nearing his retirement, Carnegie sold his U.S. steel to J. P. Morgan for $1 billion in present day money, making him the richest man in the world at that time.
U.S. steel was largely used, and that is still the case to this day. Thanks to him, steel became readily available. His steel went into the making structures such as the Brooklyn Bridge and the Washington monument, and even skyscrapers, which changed the skyline of cities like New York City.
Andrew Carnegie's Significance and Legacy
Although he became successful, Carnegie did whatever he needed to stay successful. He is classified as a robber baron because he did whatever was necessary to succeed which included exploiting workers and others. He would do things like lay off workers or close mills to cut prices.
Despite this, there was a nice side to him as well! He dedicated the remaining years of his life to donating lots of money for public libraries, pensions for professors, and other philanthropic purposes.
Andrew Carnegie contributed greatly not only to the steel industry, but also to the industrialization of America as a whole. He promoted the use of vertical integration and the Bessemer process, which became concepts that were applied by many more companies in the future. The steel he owned was used to make many structures, both famous and average, which added to the rapid urbanization of America. His story of changing from rags to riches shows just how hard work can bring people far, which is truly inspirational!
To help remember Andrew Carnegie, here is a summary of the story!
- Luxury trains, Story Farm, Civil War
- Accumulated great wealth through steel, iron and railroad industry
- Robber baron
- Implemented the Bessemer Process & Vertical Integration to make steel readily available
- Allowed for spread of railroads - efficient transportation
- Steel used to create bridges and skyscrapers
- Became a rich man, despite his poor past