Andrew Carnegie & the American Steel Industry

Andrew Carnegie was an industrialist who emigrated to America and worked his way up to become one of the wealthiest men in America during his time. His smart business maneuvers and commitment to work allowed him to dominate the steel industry in such a short period of time. The need for steel was rising as the second Industrial Revolution was revolutionizing the way things were built and what materials they were built with. Carnegie jumped on every opportunity of the latest technological innovations to become a master in efficiency and productivity, which allowed him to capitalize on steel-making.

Andrew Carnegie was born in the Scottish town of Dunfermline on November 25, 1835. The first Industrial Revolution caused handloom weavers, like Carnegie’s father, to struggle financially as the cottage industry began to die out. Will Carnegie, Andrew’s father, participated in the Chartist movement, largely comprised of the British working class. It called for annual elections, pay for Parliament members, abolishment of property qualifications to run for Parliament, secret ballots, and giving all men the right to vote. Members of the movement believed that if the public were allowed to take control of Parliament, life would be better for the working class. However, the Chartist movement was short-lived and slowly died out by the 1850s.

The Carnegie family eventually sold some of their belongings and borrowed money from a relative to emigrate to the United States in 1848. In the late 19th and early 20th centuries, many people traveled from abroad to permanently settle in US cities in hopes of a better life. They arrived in New York City and traveled on a canal and by steamboat for about three weeks before reaching their final destination in Allegheny, Pennsylvania. Will Carnegie took over a relative’s weaving shop, which they lived above, but the business was unsuccessful. Andrew Carnegie and his father found work at a cotton mill. Andrew worked as a bobbin boy and was tasked with bringing bobbins to workers at the looms. His total earnings for one week of work was $1.20, which would equal about $40 today.

Andrew Carnegie moved on from his bobbin boy position to work for the Ohio Telegraph Company as a messenger. He learned how to use the company’s equipment and was promoted to operator. Carnegie left the Ohio Telegraph Company to pursue a position as secretary and telegraph operator at the booming business of the Pennsylvania Railroad Company. His hard work helped him move up to superintendent of the Pittsburgh Division of the company by the time he was in his mid-20s.

Company executives Thomas A. Scott and J. Edgar Thomson took note of Carnegie’s work ethic and taught him more about investing. Scott suggested that Carnegie invest in ten shares of the Adams Express Company, which he did with the help of his mother. Other business opportunities rolled Carnegie’s way throughout his time at the railroad. His first major business deal was with Theodore Woodruff and the Woodruff Sleeping Car Company. Carnegie was offered a share of the company, which he later bought. By the time Carnegie was 30, he was juggling several business matters between different industries, including oil, railroads, and iron. The oil industry was fairly new at the time, but Carnegie saw another opportunity on the horizon: the steel industry.

The second Industrial Revolution brought many technological innovations to America. Iron was in high demand due to the innovation of the steam engine. Scottish inventor James Watt made improvements to the Newcomen steam engine that allowed coal to be mined more efficiently. Watt noticed that Newcomen’s engine wasted a lot of steam and decided to make adjustments to improve it. He was able to reduce the amount of steam waste, which was more cost-efficient. The innovation of the steam engine was revolutionary to industrialist operations at the time. Coal was in high demand because it was used as fuel for many different things, including Watt’s steam engine. It was also used to make iron and steel, but steel was still an expensive material in the mid-19th century.

The use of iron for things like railroad rails was eventually replaced with steel. Iron wasn’t as durable as steel, and the demand for steel grew even more once it was capable of being mass-produced. The Bessemer converter is partly responsible for revolutionizing the steel industry. English inventor Henry Bessemer created the Bessemer converter as the first process to inexpensively mass-produce steel. Although the Bessemer steel-making process was an improvement, it wasn’t effective in removing phosphorus components. The open-hearth steel-making process was introduced in the 1860s, which became the primary way to make steel for the next several decades. The impurities were separated during heating using an open-hearth furnace.

Carnegie Steel Company & the Homestead Strike

Steel became one of the main materials used to build railroads, bridges, buildings, and tools. By the beginning of the 20th century, America’s steel production had rapidly expanded to producing more than 10 million tons of steel. This figure doubled within a decade. Andrew Carnegie was happy with his business investments by the late 1860s. He had pledged to resign from the business industry at the age of 35, which would have allowed him to live off of a $50,000 annual salary. However, he decided to invest more time in the steel industry in 1875 and built his own steel plant in Braddock, Pennsylvania. Known as the Edgar Thomson Works, Carnegie’s steel mill adopted the Bessemer steel-making process and any other technological innovations that helped factory operations run more efficiently.

Less than a decade after opening his first steel mill, Carnegie decided to purchase a rival steel mill known as Homestead Works, located in Homestead, Pennsylvania. He hired Henry Clay Frick as the chairman of the Carnegie Steel Company. He was a notable industrialist and financier but is most known for his actions in dealing with the Homestead Strike of 1892.

One of the lowest moments in Carnegie’s career was when his image took a huge hit by the deadly ending of the Homestead Strike. Several hundred workers at the Homestead Steel Works were a part of the Amalgamated Association of Iron and Steel Workers, a union that advocated for fair pay and other work regulations.

Tensions between the union workers and management of the Homestead plant began to rise as Henry Frick began to make his disapproval of unions more known. Frick thought the union workers were holding up production and could be doing more for the company. Carnegie didn’t make his opinions on unions very known at the time, but he gave Frick his approval for handling the union. Disagreements continued as union workers demanded higher wages, while Frick insisted that wages should actually be lowered. The two parties couldn’t settle on an agreement, and a strike began in June 1892. To make matters worse, Frick hired Pinkerton guards to keep strikers away.

The plant went on a militaristic lockdown. Shots were fired at one point in the strike, creating confusion and chaos. Pinkerton guards responded to the shots by firing back. It ended with more than ten strikers and Pinkerton guards being killed. The Pennsylvania state guard got involved by order of Governor Robert Pattison, and the mill was opened shortly after. The event shined a negative light on Carnegie and Frick for their reaction to the strike but also caused labor unions who used aggressive tactics during strikes to be heavily criticized. Carnegie operated his steel company for another nine years following the strike. In 1901, he sold it to J.P. Morgan for $480 million and retired. He dedicated the rest of his life and most of his earnings to philanthropic work, as he initially intended to do in 1868.

Andrew Carnegie was one of the wealthiest men in America by the time he exited the steel industry and began focusing on his philanthropies. He was a firm believer that those who were wealthy should share it with others. One of the essays he authored titled “Wealth” expressed these views. This written work later became a part of one of his most famous titled “The Gospel of Wealth.” It identified problems with the administration of wealth in society at the time.

Carnegie established several trusts and institutions and donated significant amounts of money to various causes. One of the earliest trusts that Carnegie established was The Carnegie Trust for the Universities of Scotland. Created in 1901, its mission is to assist students, fund research projects, and help expand universities in Scotland. The Carnegie Corporation of New York is a grantmaking foundation that Carnegie established in 1911. It promotes international peace and supports the “advancement of education and knowledge.”

Libraries were a big part of Carnegie’s focus on philanthropy as well. He donated more than $40 million to various areas to build new libraries. By 1920, Carnegie had funded more than 1,500 libraries across the nation. He used more than half of his fortune that he accumulated in his lifetime to fund his philanthropy activities.

Carnegie spent about $350 million on philanthropy projects. Although some of his business practices were questioned by critics, including decisions he made during the Homestead Strike, Carnegie was different compared to other tycoons of his time. Many other wealthy entrepreneurs during the late 19th and early 20th centuries participated in monopolistic practices and hoarded their fortune. Andrew Carnegie managed to work his way up from a bobbin boy in a cotton mill to a wealthy businessman who dominated the steel industry and became an influential philanthropist after his retirement.