15 September 2009

The Richest Man in the World

 

Andrew Carnegie, circa 1886

Andrew Carnegie, circa 1886

This article is excerpted from the book Outline of the U.S. Economy, published by the Bureau of International Information Programs. View the entire book (PDF, 3.26 MB).

In the post-Civil War Gilded Age, a generation of immensely wealthy industrialists rose to prominence. Hailed as “captains of industry” by admirers and as “robber barons” by critics, these titans dominated entire sectors of the American economy. By the end of the 19th century, oil had its John D. Rockefeller, finance its J. Pierpont Morgan and Jay Gould, and tobacco its James B. Duke and R. J. Reynolds. Alongside them were many others, some born into wealthy families, and some who personified the self-made man.

None climbed further than Andrew Carnegie. He was the son of a jobless Scottish textile worker who brought his family to the United States in the mid-1800s in hopes of better opportunities. From this start, Carnegie became “the richest man in the world,” in the words of Morgan, who along with his partners would in 1901 purchase what became U.S. Steel. Carnegie’s personal share of the proceeds was an astonishing $226 million, the equivalent of $6 billion today, adjusted for inflation, but worth much more than that as a percentage of the entire U.S. economy then.

Carnegie’s life exemplifies how an industrializing America created opportunities for those smart and fortunate enough to seize them. As a teenager in Pennsylvania, Carnegie taught himself the Morse code and became a skilled telegraph operator. That led to a job as assistant to Thomas A. Scott, a rising executive in the Pennsylvania Railroad, one of the nation’s most important lines. As Scott advanced, becoming one of the most powerful railroad leaders in the country, his valued protégé Carnegie advanced too, sharing lucrative financial investments with Scott before going into business himself to build iron bridges for the railroad. By the age of 30, Andrew Carnegie was a wealthy man.

After quitting the railroad, Carnegie also prospered in oil development, formed an iron and steel company, and shrewdly concentrated on steel rails and steel construction beams as railroad, office, and factory construction soared. His manufacturing operations set standards for quality, research, innovation, and efficiency. Carnegie also availed himself of secret alliances and advance knowledge of business decisions, practices forbidden by today’s securities laws as “insider” transactions but legal in Carnegie’s era.

Andrew Carnegie was a study in contrasts. He fought unionization of his factories. As other industry leaders did, Carnegie imposed hard, dangerous conditions on his workers. Yet his concern for the less fortunate was real, and he invested his immense wealth for society’s benefit. He financed nearly 1,700 public libraries, purchased church organs for thousands of congregations, endowed research institutions, and supported efforts to promote international peace. When his fortune proved too great to be dispensed in his lifetime, Carnegie left the task to the foundations he had created, helping to establish an American tradition of philanthropy that continues today.