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Andrew Carnegie Summary: David Nasaw
On Feb 4, 1901, Carnegie sold his steel business. It was sold for $400mn at that time. And with this sale, he became the wealthiest man in the world. J.P. Morgan bought his firm and used it as the base for U.S. Steel. But, are you seeking to learn how to get rich? Sorry, this isn’t the goal of this biography. Instead, David Nasaw presents a real tragic comedy in over 800 pages. It’s about the life of a poor, tragically short immigrant. This lad became successful during the golden period of capitalism. He was a robber tycoon, charity donor, and peacenik.
The author reveals many secret missions of Carnegie. These were used for exploiting his early employers and then his immature investors. This book Andrew Carnegie corrects biographies which don’t include Carnegie’s dark railroad bonds. The book also describes how Carnegie used his money for donations. We recommend this classic piece for its exciting portrayal of a unique man.
Take-Aways
- Andrew Carnegie was an industrial baron and a proud donor.
- He represents the “American Dream” rising from poverty to riches and power.
- Carnegie followed a semi-ethical, yet the legal path to becoming the richest man.
- He felt that the evolution law needed suppression of workers.
- His key to wealth was producing a high-in-demand product, i.e., steel. Also, he believed in insider trading, higher tariffs and low wages.
- His greatness made even J.P. Morgan come to him.
- After retiring from steel business, Carnegie began the charity business.
- His donation legacy stays in the libraries he built across the nation.
- He fought for world peace but in vain.
- Carnegie was a master of self-promotion. He asked his fellow businessmen to donate all their money before death.
Andrew Carnegie Summary
Rising from Tough Roots
Early capitalism came to surface with the theory of “survival of fittest.” This theory also justified the ruthless British business policies during the Industrial Age. These practices suited the robber barons of the 19th century. Andrew Carnegie was one of them.
He had poor beginnings and troubled childhood. His father was an unsuccessful weaver, but her mother was heroic. She worked hard to provide for the family. Carnegie’s mother borrowed money and migrated with her family to the US. This was to flee from a Scottish depression. The family arrived with no money but a will to work. Carnegie could’ve been just another teen among thousands of immigrants. But, he had fantastic math skills and a sharp memory. He started as a fellow Scot’s accountant. Later, he became his business partner.
Working for the Pennsylvania Railroad (Pennsy)
By 24, Carnegie was helping his boss manage sectors of Pennsylvania Railroad. This was when he got his first stocks as an insider. It was a legal, yet unethical financing deal. Carnegie judged inefficient workers and fired them. He said he felt so confident that he could do anything. Carnegie was working as a railroader near the intense battle of Bull Run. There he made some significant contribution to the Union. And, just off the war field, he got wounded. He later described this as having bled for the nation which gave him everything.
While working as a railroader, he learned the key to getting rich. Live cheaply in the starting, save money and then invest it. He saved money to invest in share market start-ups. Also, he invested in deals he came to know about by insider information. Insider trading was legal at that time. He made a killing after killing. And, he socialized with his seniors. Carnegie was very sensitive about his weaknesses. These were his short height and a Scottish accent. But, he became a chameleon. Images show that he masked himself as an older businessman. He would wear a thin beard, tall hat, and formal coat. All this to hide his baby looks.
Start of Entrepreneur Journey
Carnegie’s first big entrepreneur effort was oil drilling. Along with his Pennsy boss, he created an oil drilling firm. This company owned many acres where oil naturally came from the ground. They also formed a company to develop metal bridges. These bridges would replace the old wooden ones. Another creative plan was to create a humanmade lake to store drilled oil. They thought it would become valuable when oil wells would dry up. Most of the stored oil leaked out. But, they still sold it at a profit.
Carnegie earned a lot from 1860 to 1865. At that time, he was a member of a private pool of investors. This pool started a company to supply to railroad-repair firms. They hid their shares in the names of family members. Carnegie and his Pennsy boss got lucrative contracts with other railroad companies. This was in a very sneaky and unethical way. With such investment adventures, Carnegie flew like a rocket. He was only 35 when gossip was that his net worth was $1,000,000. All this while he was still unmarried. Besides, his yearly salary of just $2,500 from Pennsy.
Becoming a Tycoon in 19th Century America
Carnegie’s idea of a wealthy man was the British nobleman. Cultured, land-rich and patriotic. Hence, Carnegie also made himself a land-owner gentry of Scotland. For this, he first became an incredibly wealthy American baron. And then in 1862, he went back to Scotland in a heroic march. He wanted his relatives and townspeople to know that he had made it. His father died in poverty. But, Andrew and his mother were back. When they arrived, she burst into tears. She had gone away afraid and disgraced. But, had come back as a proud mother of a wealthy son.
Carnegie enjoyed going on frequent vacations. During that time, he let his managers run the business. He told young men that success doesn’t come from endless work. Instead, it came from being the right man at the right time and place. He asked them to be clean and free of vices. By 1862, his salary from Pennsy was just 1/20th of his income. His primary income was from other sources which gave regular dividend checks. But, he didn’t stick to the values he asked the younger businessmen to follow. Once he formed the final deal wholly to his benefit. He smartly separated the parties into two competing firms. This way he had control of both. He was aware that the division would fail. Within months, he combined them into the famous Union Iron. He became the president while his brother Tom became the VP.
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Not Every Unethical Move Pays Off
Carnegie lied to his brother about buying 2 British patents. These patents were for techniques to make very strong railway rails. Tom claimed that Andrew mustn’t risk the family money. Andrew agreed. But, he did what he wanted. And, after costly set-up, he found the new methods to be worthless. His pride proved costly, and he lost colossal family money. In his autobiography, Andrew said that he was never into speculation. But, this was a lie. He did manipulate deals and shares. Carnegie also made fast insider gains manipulating real estate. And, he also printed false, unauthorized Western Union share certificates. These certificates paid him dividends for years.
Carnegie’s unique talent was to make money the immoral way. He floated bonds and stocks on “paper entities.” These were firms which were sure to go broke. His ability to “hang paper” on immature investors drove him to Manhattan. He opened his office just two blocks away from House of Morgan. For years, he sold U.S. railroad bonds immature Europeans. Securities trading was also not regulated. So, though he was often sued, he’d beat the rap. Plus, Carnegie also gambled in shares. He held stocks in a speculative St. Louis bridge firm. Carnegie knew in advance that it was going under. Hence, he sold his shares before Morgan declared the bonds worthwhile but shares worthless. His autobiography brags about this Wall Street time.
Reaching Olympus and Then the Metamorphosis
Andrew entered the steel industry in 1870. He was attracted by a new duty Congress put on imported steel. Carnegie was wooed to put money in a steel plant. So, he walked to check the Bessemer-converter plant and other nearby furnaces. He asked many questions till he was convinced this was the future. And so, he set up a steel factory near Pittsburgh with an old friend. He became moral and hired a good quality board. Now almost 50, he wished to marry. One could often spot him in snobby clubs or horseback riding. It is then that he met Louise Whitfield. She was his riding partner. Carnegie then proposed marriage to her. And, she said yes. The couple had a daughter during their happy marriage.
Labor Troubles
Carnegie’s new factory was well-located on 106 acres. It had great rail connections. He named the plant ET after architect Edmund Thomson. Carnegie pushed orders. Hence, ET earned profit from day one. But, not much after its opening, labor issues began. Their demands were typical. That is, better conditions, less working hours and more pay. Carnegie felt that when capital and labor come face-to-face, capital wins. So, to prove this, he addressed the strike strongly. And, he rejected unions. This face-off led to his union breaking at the Homestead mill. He thought that at this mill the fight would be apparent. But, it was not. Why? Because the union made a war chest and fought. Carnegie’s dealing with Homestead was cruel. He fought the battle from Europe, using Pinkerton guards. But, the union workers also put up a fight. This battle ruined his employee-friendly image.
When he recited his version, Carnegie refused any responsibility. He even denied using Pinkertons. Carnegie masked his excuses with dishonesty saying he retired from business years ago. But, he was active all through the Homestead situation. Carnegie did business all his life. Even in his last months when he moved his assets to personal trusts. The union breaking strike at the mill ended brutally. Carnegie starved the laborers into giving up. He banished the union at Homestead and ET. Plus, he imposed a 12-hour, $1.30-$1.50 daily wage rate. Hence, he was able to make his firm profitable. Carnegie hid the vast profits from the public eye.
Charity and Change
He sold his firm to J.P. Morgan for $400mn. And thus, Carnegie became the wealthiest man in the world. Later on, he changed himself into a philanthropist. His charities and gifts are famous and many. He paid for many public libraries throughout the US. His gifts exceeded $200mn when he was alive. But, during the last years, his wealth was growing automatically. Hence, he had to find a smart method to get rid of it. So, he came up with a way. This method allowed him to be rich and die poor. He used the legal way of making large donations to personal charity trust.
But, Carnegie’s real charitable calling wasn’t in libraries and schools. Instead, he fought for world peace. He became obsessed with the challenge of world peace. He was called maniac as he asked world leaders to adopt his war-avoidance plans. But, Carnegie kept on going.
The Carnegie Endowment
Carnegie set up the Carnegie Endowment when William Howard Taft became president. This was a significant foundation dedicated to world peace. He knew this trust would outlive him. Carnegie wrote a flattering letter to Taft. In this, he praised Taft’s devotion to peace. He even offered to fund the set-up of a peace organization. Carnegie didn’t know that Taft and his wife hated him. But, Carnegie knew how to achieve anything.
Taft invited him to stay at the White House. They put his ideas into action. Carnegie wrote the legal device for the peace organization himself. Plus, he gave $10mn worth of 5% gold bonds of U.S. Steel to Carnegie Endowment. The gifts were around $3.5bn in long-run value.
“AT 40, AS THE TIGHT-FISTED EMPLOYER, HE REDUCES WAGES THAT HE MAY PLAY PHILANTHROPIST AND GIVE AWAY LIBRARIES.”
His Last Years
Carnegie liked dealing with people he saw as his equals. That is kings, four presidents, and the Kaiser. He was a close friend of President Woodrow Wilson. Wilson took Carnegie’s plans seriously. Eventually, Wilson built the idealistic but powerless League of Nations. But, the Great War headed that victory. Carnegie dreams were crushed as men killed men brutally. He turned from a big talker to a defeated old man. As a last act of charity, he gave all his wealth to his trust. Hence, he died broke on paper. But, he became immortal through his namesake charities. Carnegie couldn’t attain world peace. But he raised endless philanthropy.
Andrew Carnegie Quotes
“A messenger boy of the name Andrew Carnegie… yesterday found a draft of the amount of $500. Like an honest little fellow, he… deposited the paper in good hands.” [– Pittsburgh Daily Gazette, 1849]
“The longer the men stayed out of work, the hungrier and more desperate they and their families would become, and the easier it would be to break their strike.”
“The result of breaking the union was, as Carnegie had expected, an unprecedented boom in productivity and profits.”
“Carnegie would spend the rest of his life trying to remove the stain of Homestead from his reputation.”
“It is difficult to imagine a 30-year-old man, in good health and of medium frame weighing 109 pounds and standing no more than five feet tall.”
“Carnegie was committed to funding schools for working people, black and white.”
“The tragedy of Carnegie’s last years was that no one took him as seriously as he took himself.”
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