Andrew Carnegie was a Scottish-born American industrialist who led the enormous expansion of the American steel industry in the late 19th century. He was also one of the most important philanthropists of his era.
How Andrew Carnegie became the richest man in the world
There have been few men in the history of humanity to have accumulated fortunes like that of Andrew Carnegie, a man who was as complex as he was rich.
After selling his company his net worth would be 2% of the American’s GDP
Let’s understand a person with just 5 years of schooling rose from poverty happened to be the world’s richest man of America
Andrew Carnegie at one point was the richest in America’s history, but he wasn’t born in America
His early life
His story begins across the Atlantic ocean in Dunfermline in Scotland, where he grew up and can be described as abstract poverty
He was born on 25th November 1835
His mother would work around the clock sewing shoes, his father would make clothes and other materials, hand weaving looms
But that was only until the steam-powered looms came into the picture.
With weaving technology rapidly improving, his father’s loom business would crumble, finding himself crushed for the industrial revolution, watching his father suffer as he begged for work would impact the young Carnegie profoundly
The family left Scotland and marched to America
In 1848, the family left Scotland in search of a better life
After selling all their possessions and borrowing 20 pounds, the family advanced on their journey to the land of opportunities, America
They would restart their lives from scratch in Pittsburgh, the hub of manufacturing but still found themselves unable to overcome the hardships in their new country
His parents struggled to fetch bread, having no choice Carnegie dropped out of school to support his family
Finally, he landed in the Atlantic and Ohio Telegraph Company as a messenger boy. He would deliver telegrams all over the city
He would also memorize the faces of everyone he delivered to so that he would greet them by name if he saw them outside of work
It would provide Carnegie a unique opportunity to familiarize himself with the city’s business community
At 17, he would perfect his Telegraph skills. He would grow increasingly skilled at hearing most, impressively he would recite messages without the need to write them down
His turning point
His skill caught the eye of Thomas Scott, regional manager for the Pennsylvania Rail Road Company who hired Carnegie to be his personal telegrapher and his personal secretary for the sum of $35 a month ( $1000 in 2019)
At that time, the Pennsylvania Rail Road Company was the largest cooperation in the world. For business-savvy Carnegie it was an opportunity like never before for planting the seeds of how to build and run a business
Thomas Scott, his boss realized Carnegie’s potential and decided to take the boy under his wing and mentored him like a second father
It was later Thomas’s advice to Carnegie to invest in stocks which provided Carnegie his first taste of capitalism
Fast forward to American civil war
Carnegie is drafted into the union but instead to fighting in the war, he would profit from it
He was able to escape all the harms after paying $850 ( $27000 in 2019) for a substitute to take his place in the battlefield
Launching Keystone Bridge Compan
It was during the American Civil War that Carnegie noticed that the wooden bridges were easily burnt by the troops and there was a desperate need for iron bridges to replace them
He capitalized on that opportunity launching the Keystone Bridge Company, it was his next move for finding him as a good businessman
Keystone did not only build iron bridges but also owned their very own iron mills, which provided the iron needed for the construction of the bridge
After the bridges were built, he would leverage his connections in the Rail Road industry to make money there too
He was running a triad of 3 companies, each strengthening another
The iron extracting company, bridge building company, and business by selling rail
Moved to New York
Always looking for opportunities, Carnegie set his eyes on the New York City, the undisputed business capital of the world
In this city, he identified a hustling culture and mingled with other businessmen but what he instead found was a disappointment. He would describe wealthy individuals around him as “Scoundrels”
Carnegie wrote a note to himself promising in 2 years he would retire and focus on making the world a better place
Built America’s first steel plant
But his wish went unfulfilled
In 1856, a new venture by Henry Bessemer, a Bessemer converter would allow for the mass production of steel, which was previously thought to be impossible
It would finally be for the first time ever that it would be feasible to construct large structures from steel eventually giving birth to the first skyscrapers, forever transforming the city’s skyline
Carnegie moved with a lightning speed successfully building America’s first steel plant
In doing so, he hired the best engineers and architects money could buy
He focussed a lot on increasing efficiency and started using the latest technology and pushed their employees to their maximum physical and mental capabilities
He was also notorious for acquiring employees to work 364 days a year only allowing them to rest on 4th of July
As technology continued to advance, he would seek ways to replace his workers with machines in every possible opportunity
Unlike men, machines didn’t need sleep and also didn’t ask for raises
Carnegie, a master salesman decided to name his venture not as Carnegie steel but J.Edgar Thompson steelworks, who was one of his customer’s in the railroad company, to show his appreciation for their business and maybe secure even more orders from the railroad and it did
The first order from Thompson consisted of 2,000 steel rails. Naming a mill after a customer was more than just a sales tactic, it was a part of the large sales strategy.
“Show appreciation for others in public and acts like this would continue to pay massive dividends throughout the career”
To help run Carnegie’s steel mills he would bring on board a cutthroat executive known for his ruthlessness and attention to the bottom line Henry Clay Frick
As a team, Carnegie and Frick were powerful with work and would show how ruthless the two could be
Look at the story of Duquesne Works
With the help of Frick, Carnegie spread a rumour that the Duquesne Works was producing defective steel, it was not true, but it did not matter
Carnegie claimed Duquesne’s rail road’s customers by telling Duquesne’s railroad lacked what was called “homogeneity”, few only knew the meaning but that did not matter.
Carnegie used that word because it sounded scary enough to frighten off railroads who were concerned that they weren’t getting good products
If Duquesne’s sales slowed they would eventually become unprofitable and run out of money
To expertise in their domain Carnegie and Frick further squeezed their price
Within 2 years, Duquesne’s finances were in ruins leaving them in no other choice than to sell it to Carnegie at a bargain price
For Frick and Carnegie, the rules of engagement were clear
“Do whatever it takes to win”
But this ruthlessness came with a hefty price because they would soon discover that one of their largest steel plants in Homestead, Pennsylvania where Carnegie has just invested millions of dollars optimizing the efficiency of Homestead and labelling it to produce more steel than any other mill comparable to its size
But there was another part of the profit machine that was yet to be optimized: labour costs
This was a problem for Carnegie who had been working on rebranding his image from an oppressive steel factory Billionaire, full champion of workers rather
So, instead of risking his reputation, he would have his right hand Frick execute all the dirty work
Meanwhile, Carnegie distanced himself travelling to his homeland Scotland
Carnegie knew that he did not want to be around already frustrated 10,000 low paid workers
In 1892, tensions between the workers and mill owners were particularly heightened
After an ever-widening wealth gap continued to grow
The richest persons in America were accumulating fortunes faster than at any time in America’s history
Things went on
In 1901, Carnegie made a dramatic change in his life. He sold his business to the United States Steel Corporation, started by legendary financier J.P. Morgan.
The sale earned him more than $200 million. At the age of 65, Carnegie decided to spend the rest of his days helping others.
While he had begun his philanthropic work years earlier by building libraries and making donations, Carnegie expanded his efforts in the early 20th century.
Carnegie, an avid reader for much of his life, donated approximately $5 million to the New York Public Library so that the library could open several branches in 1901. Devoted to learning, he established the Carnegie Institute of Technology in Pittsburgh, which is now known as Carnegie-Mellon University in 1904.
The next year, he created the Carnegie Foundation for the Advancement of Teaching in 1905. With his strong interest in peace, he formed the Carnegie Endowment for International Peace in 1910.
He made numerous other donations, and it is said that more than 2,800 libraries were opened with his support.
Besides his business and charitable interests, Carnegie enjoyed traveling and meeting and entertaining leading figures in many fields
In his final years, Carnegie’s net worth was US$475 million, but by the time of his death in 1919, he had donated most of his wealth to charities and other philanthropic endeavours and had only US$300000 million left to his personal fortune.
You might call him a hypocrite or a dictator for making his workers work so much and for less
But the best part is he spent all of his hard-earned money for the welfare of others
All’s well that ends well
So now let us see what is
Andrew Carnegie’s Advice for Young People
- Discover your strength and focus all your energy on a single thing for the long term
- Be persistent because good thing takes time
- Be self-motivated because if you are not other people will motivate to serve there own purposes.
- Figure out who can do what you’re doing and delegate to them so that you will focus on something more important.
- Always seek to know where the world is going and figure out how to be there before everyone else.
- Do not look for approval except for the consciousness of doing your best.
- Be confident that you are in control of your life and an important figure in the world’s affairs.
- Concentrate your energies, your thoughts, and your capital. The wise man puts all his eggs in one basket and watches and basket.
- To get all you want out of life, look for how to help other people get what they want they want
- Pay attention to what people do, not what they say
- If you want to be happy, set a goal that commands your thoughts and librate your energy and inspires your goal
Andrew Carnegie quotes
- Concentration is my motto – first honesty, then industry, then concentration.
- No man will make a great leader who wants to do it all himself or get all the credit for doing it.
- The average person puts only 25% of his energy and ability into his work. The world takes off its hat to those who put in more than 50% of their capacity, and stands on its head for those few and far between souls who devote 100%.
- People who are unable to motivate themselves must be content with mediocrity, no matter how impressive their other talents.
- You cannot push anyone up a ladder unless he is willing to climb a little himself.