You probably know the prestigious venue of Carnegie Hall in New York City if you love music. Of course, Carnegie Mellon University is one of the well known universities in the world. On your next visit to your local public library or museum, you may find it was affiliated to one of the original 2,500 Carnegie libraries. The person who bears his name with all these institutions is Andrew Carnegie.
Carnegie was born on November 25, 1835 in Dunfermline, Scotland, as second sons of a modest family. The father, a handloom weaver, and the mother who did sewing work for local shoemakers lost their jobs as the weaving machines displaced labor work in the midst of industrial revolution. The family immigrated to the United States in 1848 and settled in Pittsburgh area of Pennsylvania. As America went through the industrialization process, Andrew Carnegie made his fortune in the steel industry and became a major philanthropist at the time.
His formal education ended when he left Scotland. He started working at age 13 to help the family earning $1.20 per week for a 12 hours day and six days a week in a cotton factory. Ambitious and hard working, he went on to hold a series of jobs: a telegraph messenger boy at $2.50 per week in 1850, a secretary and telegraph operator at a salary of $4.00 per week in 1853 for Pennsylvania Railroad Company. He learned quickly and earnestly on the job and advanced rapidly. In 1859 at age 24, Carnegie succeeded his boss as railroad division superintendent. While in this position, he made profitable investments in a variety of businesses.
His expertise in telegraph and railroad operation were put into good use in the civil war. With the U.S. railroad industry then entering a period of rapid growth, he expanded his railroad-related investments and founded such ventures as an iron bridge building company and a telegraph firm, often using his connections to win insider contracts. Carnegie had become a very wealthy man. On a “Income 1863 list” sheet, he jotted down his assets and investments of fifteen entries with a bottom line total of $47,860.67 (nearly $8.5 million today). Of course, Carnegie was not the only one who made money from the war by providing the Union armies with fuel, uniforms, shoes, rifles, ammunition, provisions, transportation and financing. To name a few of them, there were John D. Rockefeller, George Pullman, J. P. Morgan, and Collis P. Huntington.
Carnegie took a year off from 1865 to travel in Europe in learning the culture for his own education. In England, he observed new way of producing rails, so he put his money into new ventures for investments. However, they did not work out and he had lost about half of his fortune. The early failures did not deter him from new ventures, but he became more prudent in his investments. Carnegie continuously advanced his own education by visiting England and befriended with prominent in the iron and steel business. His determination to advance himself in the pursuit of knowledge, befriend with people, and his business acumen paved his way to become the giant in the Steel industry.
Struggling with the outputs of his Lucy Furnace pant, Carnegie replaced the plant manager and hired a doctorate chemist to oversee the production process. Carnegie wrote in his autobiography, “The Lucy Furnace became the most profitable branch of our business, because we had almost the entire monopoly of scientific management.” This example illustrated his philosophy of finding talents and hiring the right people to build the enterprise. Andrew Carnegie had inscribed on his tomb stone, “Here lies a man who knew how to enlist the service of better men than himself.”
Carnegie shared his beliefs and advices in his autobiography. “The surest foundation of a manufacturing concern is quality.” “A great business is seldom if ever built up, except on lines of the strictest integrity. Not the letter of the law, but the spirit, must be the rule. It is essential to permanent success that a house should obtain a reputation for being governed by what is fair rather than what is merely legal.” He advised people to specialize in one area where your passion lies and spend whole energy in it single-minded so as to achieve excellence. He said, “I believe the true road to preeminent success in any line is to make yourself master of that line.’’ Focus and concentration are keys to success.
Carnegie said, ”Teamwork is the ability to work together toward a common vision. The ability to direct individual accomplishments toward organizational objectives. It is the fuel that allows common people to attain uncommon results.” If you are specialized in one area, then you will not know everything by default. Therefore, the only way to get a complex task done is to work with other people who are experts. Teamwork is essential in business and any institution. Carnegie built an outstanding team of executives who helped him to build one of the leading steel companies in the U.S.
Andrew Carnegie was on his deathbed. He was asked, “You are the most famous industrialist of all time. What is the secret to your success? Do you have a lesson for posterity?” Andrew Carnegie answered, “Fill the other guy’s basket to the brim, then making money becomes an easy proposition.” He had demonstrated win-win strategy in his business and fortune. “No‐one becomes rich without enriching others.” In his day, Andrew Carnegie made 38 other men millionaires.
However, Carnegie did have his misstep as a capitalist in the Homestead Strike of 1892. The Homestead Strike was a bloody labor confrontation on wages lasting 143 days in 1892, one of the most serious in U.S. history. While on vacation, Carnegie directed his partner with anti-union reputation in charge. He hired private security guards, Pinkerton, and resulted in a fight which 10 men were killed and hundreds wounded. The state militia was sent in to reclaim control of the plant. The operation resumed afterwards with many non-union workers. This incident marks the end of Carnegie’s image as a friend of the worker. Some said this incident delayed the union movement for 40 years.
Carnegie was a defendant of Capitalism against Communism. In his essay of Gospel of Wealth in 1889, Carnegie laid out his views on rich and poor, and solution for the rich to help the poor. He wrote, “The man who dies (thus) rich dies disgraced.” It was clear to him that wealth was “not chiefly the product of the individual under present conditions, but largely the joint product of the community.” When he sold Carnegie Steel Company for $400 millions in 1901 (more than $200 billions, today), he was considered the second wealthiest person after John Rockefeller in American history. While he had begun his philanthropic work years earlier, Carnegie devoted the remainder of his life to large-scale philanthropy. He administered to distribute the wealth he accumulated into 23 charitable organizations and gave most of money to public charity in his retirement.
Some of the philanthropy by Andrew Carnegie includes:
- Vast number (more than 2,500) of public libraries in the US and abroad.
- Carnegie Music Hall in New York City in 1891
- Carnegie Mellon University in Pittsburgh and Carnegie Institute in Washington DC
- Created Large pension funds to Homestead workers
- Financed the Pan American Palace in Washington DC
- Established Carnegie Corporation of New York in 1911 to manage the charitable activities on his behalf.
By the time of his death in 1919, Andrew Carnegie had given away about $350 million (90% of his wealth), an unimaginable fortune in an era when there was no income tax and hence, no tax incentive for philanthropy. The legacy of his generosity continues to unfold in the work of the trusts and institutions that he endowed.
Additional Comments:
Carnegie had set precedence for Warren Buffett who urged the wealthy people to pledge donating at least half of their wealth to charity in 2010. It is not only the percentage of the donated wealth but also the timing of the donation that have separated Carnegie from many of the philanthropists. Bill and Melinda Gates are the contemporary example who meets the challenges set forth by Carnegie to donate the wealth while alive in their late life. Another legacy was his instigation to young Napoleon Hill to interview, analyze, and document the factors which are common to the successful people. Many characteristics and principles of Carnegie were captured in the book of The Law of Success by Napoleon Hill published in 1928.
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Written in November 2012