Carnegie

by Peter Krass
John Wiley & Sons © 2002
624 pages

Focus Take-Aways
Leadership & Mgt.
• Andrew Carnegie was a man of conflicts and contrasts.
Strategy
• He was a disciplined, tight-fisted, relentless, focused entrepreneur and moneymaker.
Sales & Marketing

Corporate Finance
• Yet, he believed that the accumulation of wealth was morally suspect.

Human Resources • He taught that if you watch your pence, the pounds will take care of themselves.
Technology & Production
• He opposed the aristocracy of birth and championed the American meritocracy.
Small Business
• He defended, in the abstract, the right of workers to organize. Yet, in practice, he
Economics & Politics
crushed unions and squeezed labor for all he could get.
Industries & Regions
• This mix of high ideals and low practice marks his personality.
Career Development
• Carnegie’s management style was individualistic and distinctly pre-corporate.
Personal Finance

Concepts & Trends • He tempered the radical ideals of his Scots family with the practicalities of running
large enterprises.

• In his later years, he dedicated himself to philanthropy.

Rating (10 is best)

Overall Applicability Innovation Style

8 5 8 8

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 Relevance
What You Will Learn
In this Abstract, you will learn an extraordinary amount about the life of Andrew Carnegie.

Recommendation
In more than 600 pages, author Peter Krass delivers an almost overwhelming volume
of facts about Andrew Carnegie, who certainly merits detailed study. Much in his life
and work remains relevant today. The book is marred by frequent editorial asides and
judgments. However, a man emerges out of the mountain of facts who was unusually
sensitive to the impact of new technologies and extraordinarily able to position himself
to take advantage of them. Carnegie was a man of contrasts, ruthless, hypocritical,
forceful and diffident, idealistic and amoral, driven to amass a fortune and philanthropic.
getAbstract.com appreciates the effort behind this full scale biography of Carnegie, the first
one offered for almost 30 years, and recommends getting to know this American icon.

Abstract
His Times
Between Andrew Carnegie’s birth in 1835 and his death in 1919 came the Industrial
Revolution, capitalism, Marxism, the Franco-Prussian War, the Spanish-American
War, the First World War, the invention of telecommunications, the construction of
“This unwilling-
ness to allow eco- railroads, the Bessemer process in steel making, the invention of the automobile, the
nomic and social invention of the airplane, the victory of (broadly defined) democracy over aristocracy,
forces to deter- several key presidencies and the rise of the United States as the world’s dominant
mine his business
course — a classic
power. Carnegie had a hand in most of these developments. Hailing from radical
trait of the gam- stock in Scotland, he agitated for democracy, wrote in support of workers’ rights and
bling entrepreneur unionization, preached against aristocracy, worked as an entrepreneur in the telegraph
— defined Carn- and railroad businesses before forging his empire in steel and was, in short, at five feet
egie’s early busi-
ness career.” and three inches, a man of his times.
Born in the town of Dunfermline, Scotland, in 1835, Carnegie began life in relatively
comfortable circumstances compared to other children of working class families. His
nickname was Andra. His father, Will Carnegie, was a damask weaver, practicing one of
the most demanding and highly compensated skills in the textile industry. For Andrew’s
first 12 years, the family knew a small measure of security and material prosperity —
economic cycles threatened and battered, but every cycle turned eventually. However,
the introduction of the Jacquard loom (a machine for pattern weaving) around 1847
doomed the market for hand-woven fabrics. Thousands of weavers lost their livelihoods.
Carnegie’s family struggled with poverty. The difficult circumstances aggravated the
radical political activist strain in the family’s heritage. Agitation in the Meal Riots of
1770 had sent his great grandfather to prison. Andrew’s uncle, Tom Morrison, organized
a general strike in 1842, and his father was president of a local weavers’ society.
“He wanted to be Andrew’s father and uncle were both leaders in the Chartist movement.
the sympathetic,
progressive capi-
talist.”
1848-1853
The impoverished family traveled 50 days in steerage to America. After they arrived,
they took a series of crowded, uncomfortable packet boats to Pittsburgh, an industrial
frontier town, smoky, crowded and rough. Will Carnegie learned that his weaving skills
Carnegie © Copyright 2004 getAbstract 2 of 5
 were useless here. He lost the status of leader of the family. His wife, Margaret, helped
support the family by sewing shoes. Young Andrew eventually found work in a bobbin
“Carnegie eventu- factory. He started at $1.20 per week. He found another job that paid two dollars a week
ally became part of — tending the boiler at a factory. His diligence and aptitude so impressed the supervisor
a group that called that he asked Andrew to help keep the company’s books. Meanwhile, Andrew and a
itself the Original
Six; its members group of friends formed a clique they called the “Original Six.” They encouraged each
were like blood other to continue with education and self-improvement. In 1849, when the boys were
brothers to each attending night school in Pittsburgh, Andrew Carnegie learned that he could make $2.50
other and devel-
oped lifelong loyal-
a week as a telegraph messenger. He spent nights memorizing the locations of Pittsburgh
ties.” businesses and the names of leading businesspeople so he would not make a mistake
delivering messages. He also learned telegraph code. He was eventually promoted to
telegraph operator, at $20 per month.
Although the manager of the telegraph office offered to increase Andrew’s salary to $400
per year if he decided to stay on, he urged the young man to take a position with the
Pennsylvania Railroad working for Thomas A. Scott in 1853. An astute entrepreneur and
demanding boss, Scott taught Carnegie how to manage a complex enterprise. Eventually,
Carnegie became so confident that he handled emergencies himself, issuing orders,
signing Scott’s name and advising Scott only afterward.
“His evolving busi-
ness philosophy
[was] built on three
1855-1859
cornerstones: cut Andrew Carnegie’s father, Will, died, in 1855, apparently beaten down by his inability
costs, cut prices, to find work in America and by the failure of his entrepreneurial foray into cloth-
and scoop the making. Andrew was left as the sole support of his family. In 1856, he broke his first
market.”
union. A worker whom he had once assisted passed him a tip to repay the favor. He
told Carnegie that a pledge was circulating through the railroad shop and that men who
agreed to strike were signing it. Andrew advised Scott, who fired every man who signed
the pledge. The strike fizzled.
Scott invested in a sleeping car manufacturer that planned to supply sleeper cars to the
Pennsylvania Railroad. He brought Carnegie into the investment. Carnegie went into debt to
buy the stock, but within two years the dividends paid more than triple his railroad salary.
“Carnegie was cer- At 24, in 1859, Carnegie was promoted to superintendent of the railroad’s Pittsburgh
tain his destiny lay
among the lions of Division, a job that paid $1,500 per year. The family moved to Homewood, a suburb east of
Wall Street.” Pittsburgh, where they lived near Judge William Wilkins, once President Andrew Jackson’s
representative in Russia and President John Tyler’s secretary for war. Carnegie became a
regular guest in the Wilkins home. He mingled with influential people the rest of his life.

1861-1867
With the outbreak of the Civil War, Carnegie’s mentor, Tom Scott, was appointed assistant
secretary for war. Carnegie followed him to Washington. Scott sent him to Annapolis,
Maryland, to repair rail lines damaged by Confederate sympathizers. While Carnegie
worked to free and repair damaged telegraph lines, one slashed his face. Carnegie boasted
of the wound as a scar of battle. Scott and Carnegie profiteered in the war.
“Work for the rail-
road also strength-
ened Andy’s sense Exhausted, Andrew Carnegie took a leave of absence in 1862 and traveled back to
of being, righteous Dumfermline, Scotland. He found many of his relatives sympathetic to the Confederacy,
character and des- because they drew a parallel between the South’s struggle against the mighty Union
tiny.”
and Scotland’s own struggle against England. Aghast at the lack of ambition he saw in
Scotland, Andrew strengthened his resolve to become a man of independent means.
Carnegie © Copyright 2004 getAbstract 3 of 5
 Within just a couple of years, Carnegie’s financial statement listed numerous investments
that provided an income of $45,000 per year, dwarfing his $2,400 railroad salary. In the
“In 1869, Carnegie following years, he invested in oil, insurance, coal and brick manufacturing; expanded
entered his first his Western Union investment and bought real estate. He invested in an iron forge, but
pool — for iron took control of the venture when he found himself managing conflicts between the other
beams — with
three other firms. partners. His future fortune came from iron and steel.
As with most
pools, it was only When his draft notice arrived in 1864, Carnegie hired a substitute to serve in the Union
a matter of time Army in his place. Instead of taking up arms, in 1865, he established the Keystone
before paranoia Bridge Company to build bridges with iron. Then, he left the railroad.
and greed tore it
apart with the ven-
Carnegie, Scott and several others founded the Keystone Telegraph Company in 1867
omous words and
spite more suitable and negotiated for rights to string telegraph wires along the Pennsylvania Railroad poles
to lovers scorned.” between Pittsburgh and Philadelphia. Before any work was accomplished, The Pacific
and Atlantic Telegraph Company bought Keystone in an all-stock deal that tripled the
“In September founders’ investments. Carnegie and his partners profited even more when Western
1883, Carnegie — Union acquired The Pacific and Atlantic years later.
tentatively —
asked Louise for 1868-1872
her hand in mar- Carnegie signed a contract to provide the superstructure for a bridge across the Mississippi
riage. He then
argued ardently River, linking Illinois and Iowa. He wrote a pledge to himself that he would:
that she could
have a meaningful • Become financially independent within two years and leave business.
life with him… • Go to Oxford, associate with men of letters and learn public speaking.
managing a large
• After three years, relocate to London, buy a newspaper or magazine and dedicate
estate and direct-
ing munificence…” himself to advancing the interests of the poor.
He did not make any pledges about romance but, in 1870, a friend introduced him to
“The birth of Mar- 21-year-old Louise Whitfield, who lived with her invalid mother. They began a courtship
garet initiated a
but did not get married for 17 years.
transitional phase
in Carnegie’s life.
He had to think
Traveling in England in 1872, Carnegie learned the details of the Bessemer steel process by
more of the family visiting Bessemer’s plants. He became convinced that steel would replace iron and returned
and how his to Pittsburgh with a proposal to build a huge Bessemer steel mill. Carnegie named the mill
actions might
The Edgar Thomson Works in honor of an important decision-maker at the railroad whose
affect his child’s
life, an added and voice would matter greatly when steel rail contracts were assigned. The company produced
weighty responsi- the first steel rails in 1875, filling an order from the Pennsylvania Railroad.
bility.”
1881-1892
By 1881, Carnegie also owned a small but mediocre coke operation, but it proved
“As Carnegie cheaper to outsource coke than to make it. He approached Clay Henry Frick of the
mulled over the Frick Coke Company to see whether Frick would buy his coke plant. Frick needed
matter, his shrewd
mind understood capital. In 1881, they worked out a deal: Carnegie invested in Frick’s firm, which bought
that while he would Carnegie’s coking unit.
be giving away
money, his philan- In 1883, Carnegie purchased the Homestead Works, a hotbed of labor activism where
thropy would yield antagonisms ran deep. In 1886, he published two essays in Forum magazine, enunciating
other rewards,
such as the res- progressive opinions about the rights of labor to organize, saying, “The right of the
pect, power, and working-men to combine and to form trades-unions is no less sacred than the right of
glorification he so the manufacturer to enter into associations and conferences with his fellows, and it must
desired.”
sooner or later be conceded.” In 1889, in the Gospel of Wealth, he further argued that the
rich have a moral obligation to use their wealth to serve society.
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 In 1886, Carnegie fell ill with typhoid, and while he was bedridden, his mother died of
pneumonia. The doctor ordered that her death be kept secret from her son, to spare him the
shock, even lowering her coffin from her bedroom window so that her son would not see
“Books fed his it being taken down the stairs. The following year, Carnegie married Louise Whitfield.
imagination and
knowledge. As a
result, library Carnegie was vacationing in Europe in 1892 when workers organized a strike at the
giving would Homestead plant. Henry Frick, now Carnegie’s chief deputy, took strong counter-
become the man- measures, recruiting scabs and hiring ruthless Pinkerton strikebreakers. Arriving
telpiece for his phi-
lanthropy.” by barge, the Pinkerton men shot at a worker on the riverbank, touching off 12
hours of violence. The outnumbered Pinkerton agents surrendered. The crowd beat
them without mercy, seriously injuring several. Frick narrowly survived an attempted
assassination, and bore his bullet and knife wounds stoically. The Pennsylvania militia
arrived to take over the plant and restore order. This rendered Carnegie’s reputation as
a progressive capitalist laughable.

1897-1919
After Carnegie’s daughter Margaret (named for his mother) was born in 1897, the family
relocated to Scotland’s Skibo Castle. By the turn of the century, Carnegie and Frick
were having bitter disagreements. Frick filed a lawsuit that ended in an out-of-court
“The stark contrast settlement. In 1901, Carnegie sold his steel interests to J.P. Morgan for his $480 million
between “the des- asking price. Morgan combined the Carnegie interests with others to create U.S. Steel.
olate streets of
Braddock and the
Thereafter, Carnegie dedicated himself to philanthropy, eventually giving away more
vitality discovered than $300 million. He is widely known for supporting libraries. His other foundations
in Carnegie’s and institutions include:
libraries best sym-
bolizes the great
contradictions • Carnegie Institution — a research center.
within Carnegie
• Carnegie Teacher’s Pension fund.
himself.”
• Carnegie Endowment for International Peace.
• Carnegie Corporation.

In 1914, Carnegie left Scotland to settle again in the United States. In 1916, he bought an
estate in Massachusetts called Shadowbrook, where he died in 1919.

About The Author

Peter Krass is the author of The Book of Business Wisdom, The Book of Leadership
Wisdom and The Book of Investing Wisdom, and has contributed to Investor’s Business
Daily and Across the Board.

Buzz-Words
Bessemer / Coke / Pinkerton / Trades-unions

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