1920

Andrew Carnegie opened his posthumous 1920 Autobiography by grounding his origin in Dunfermline, Scotland, where he was born on November 25, 1835, in the attic of a one-story weaver's cottage at the corner of Moodie Street and Priory Lane. His father, William Carnegie, was a damask weaver, and Dunfermline had long been the center of the Scottish damask trade. Carnegie took conspicuous pride in his grandfather Andrew, a wit remembered around Patiemuir as chief of the lively club nicknamed Patiemuir College, whose seventy-fifth-year Hogmanay pranks still circulated among village old-timers. The first chapter is avowedly intimate in posture, written, as he said, not as one posturing before the public but as one speaking among his own tried-and-true friends and family, modeling the book on Judge Mellon's private Pittsburgh memoir, which had given him such pleasure that he hoped his own informal record might do the same for his descendants.

Carnegie dated his entry into iron manufacturing to November 1861, when Thomas N. Miller, the pioneer of the group, lent Henry Phipps eight hundred dollars to buy a one-sixth interest in a small iron mill with Andrew Kloman in Allegheny City. Carnegie and his brother joined Miller, Phipps, and Kloman to insure uniform quality and to make shapes unavailable from other mills. He singled out Kloman, a German mechanic who had discovered that whatever was worth doing with machinery was worth doing well, as the first man in Pittsburgh to introduce the cold saw that cut iron to exact lengths, the upsetting machines that made bridge links, and the first universal mill in America. When Captain Eads could not obtain couplings for the St. Louis Bridge arches because contractors had failed to make them, Kloman said he could and did, rolling the largest semicircles to that date, which Carnegie treated as the proof of his German thoroughness.

Carnegie dated his steel-making revolution to roughly 1870, when chemistry was almost unknown in American pig-iron manufacture and the Lucy Furnace lurched from trouble to trouble on rule-of-thumb management. He and Henry Phipps put shipping clerk Henry M. Curry in charge and hired a learned German chemist, Dr. Fricke, whose analyses opened great secrets: ironstone from mines with high reputations contained ten, fifteen, even twenty percent less iron than credited, while supposedly poor mines yielded superior ore, turning the entire purchasing logic upside down. Nine-tenths of the uncertainties of pig-iron making, Carnegie wrote, were dispelled under the burning sun of chemical knowledge. Competitors claimed afterward they could not afford a chemist; Carnegie replied that, had they known the truth, they would have known they could not afford to be without one, a posture he treated as the central lesson in how science converts cost into competitive distance.

Carnegie's account of the Homestead Strike begins with the date July 1, 1892, during his absence in the Highlands of Scotland, calling it the one really serious quarrel with his workmen in the firm's whole history. He framed the prior twenty-six years of labor relations as the pride of his life and quoted a 1904 letter from his chief partner Henry Phipps affirming that Carnegie was always disposed to yield to the demands of the men, however unreasonable, which was precisely why one or two of his partners did not wish him to return during the strike. The Bessemer open-hearth and basic inventions had made old machinery obsolete, and the firm had spent several million dollars at Homestead reconstructing and enlarging the works, with the new machinery making roughly sixty percent more steel than the old, while two hundred and eighteen tonnage men were still on a three-year contract and had already captured much of that gain.

On the substance of the Homestead dispute, Carnegie wrote that the firm offered to divide the sixty percent production gain with the tonnage men, leaving the workers' earnings about thirty percent above the old scale while returning thirty percent to the firm to recompense its capital outlay, since the improved machinery did most of the additional work. He judged the offer not only fair and liberal but generous, and under ordinary circumstances it would have been accepted with thanks. The complication, as he framed it, was that the firm was then making armor plate for the United States Government, which Carnegie had twice declined to manufacture but which was urgently needed, and also held the contract for material for the Chicago World's Fair Exhibition, which gave the workers' leaders leverage they would not otherwise have possessed. Carnegie treated that strategic vulnerability as the reason a generous offer was rejected.

Carnegie's Problems of Labor chapter narrates a separate dispute at the steel-rail works, where blast-furnace men sent a round-robin demanding higher wages by Monday at four o'clock despite an agreement that ran to year's end. Carnegie took the night train from New York and summoned the three committees that governed the works — blast-furnace, mill, and converting — meeting them with hats off in what looked like a model assembly. When he asked the mill committee chairman, Mr. Mackay, whether they had an agreement, Mackay removed his spectacles and answered that Carnegie did not have enough money to make them break it. The rail converters' chairman, Mr. Johnson, answered that he signed only what suited him and kept what he signed. Carnegie treated both replies as the voice of the self-respecting American workman, while Captain Jones, his impulsive superintendent, supplied the contrast that disciplined cross-examination is the only honest way to settle labor disputes.

Carnegie dated his shift from accumulation to distribution to the publication of his Gospel of Wealth essays, after which, he wrote, it was inevitable that he live up to its teachings by ceasing to struggle for more wealth. He resolved to stop accumulating and begin the infinitely more serious and difficult task of wise distribution. Profits had reached forty million dollars per year, and the firm figured that seventy million was achievable under its extension plans. He recorded that at this juncture, in March 1901, Charles M. Schwab told him that J. P. Morgan had said he would like to know whether Carnegie wished to retire from business, and that Schwab had already consulted the partners, who were disposed to sell. Carnegie replied that if his partners desired to sell he would concur, and the deal was done. Carnegie emphasized he never saw Morgan or anyone connected with him on the subject — only his own memorandum, which Morgan judged eminently fair.

On the financial structure of the 1901 sale, Carnegie noted that he had declined to take anything for the common stock of the new combination, even though it would have given him roughly one hundred million more dollars in five-percent bonds, an amount Morgan himself later said Carnegie could have obtained. Carnegie defended the concession by pointing to the speculative deception then rampant in old iron and steel mills being foisted on innocent purchasers at inflated values, with hundred-dollar shares trading for a trifle. He wanted no part of that game. Events proved the sacrifice was unnecessary, since the common stock paid five percent continuously afterward, but he had, as he put it, enough to keep him busier than ever trying to distribute it, and the refusal to take common stock was the price of moral distance from the promoters' culture he distrusted.

Carnegie recorded his fifteen-million-dollar pension fund for aged university professors, given in June 1905 and organized at a meeting of twenty-four university presidents at his house, as the fourth important gift of his philanthropic phase and one very near and dear to him. He secured Frank A. Vanderlip, whose Washington experience proved of great service at the start, and chose Henry S. Pritchett as the indispensable president. He framed the gift by his shock, on first taking a Cornell trusteeship, at how small professorial salaries were, ranking below those of his own clerks, and by his conviction that the teaching profession, though it should rank with the highest, was the most unfairly and meanly paid of all. Without pension funds, universities were compelled to retain men no longer able to perform their duties; the fund's first beneficiary list contained names of worldwide reputation, and Carnegie kept the letters from widows as a permanent cure for melancholy.

Carnegie described the Carnegie Trust for the Universities of Scotland as originating in his friend Thomas Shaw's article showing that many poor Scottish families could not afford the fees to give their children a university education, although some had deprived themselves of comforts to do so. He responded with ten million pounds in five-percent bonds, half the yearly revenue to pay the fees of deserving poor students and half to improve the universities. The first trustees' meeting was held in 1902 in the Edinburgh office of the Secretary of State for Scotland, with Lord Balfour of Burleigh presiding over a notable body including Prime Minister Balfour, Sir Henry Campbell-Bannerman, John Morley, James Bryce, the Earl of Elgin, Lord Rosebery, and Lord Reay. Carnegie told them he could not entrust funds to the Scottish university faculties after reading a recent commission's report, to which Balfour replied, Not a penny, not a penny.

Carnegie recorded that the Gospel of Wealth, published as a book by the Century Company of New York in 1900, contained magazine articles written between 1886 and 1899 and appearing in the Youth's Companion, the Century Magazine, the North American Review, the Forum, the Contemporary Review, the Fortnightly Review, the Nineteenth Century, and the Scottish Leader. He dated the title itself to the Pall Mall Budget, which republished the North American Review essay in England at Gladstone's request, and recorded that Gladstone, Cardinal Manning, Rev. Hugh Price, and Rev. Dr. Hermann Adler answered the essay and that he replied to each. The book became the operating charter for his philanthropic phase, the public commitment under which, as he wrote in the next chapter, it became inevitable that he live up to its teachings by ceasing to struggle for more wealth.

Carnegie's narrative of his early career turned on his intimacy with Thomas A. Scott, the Pennsylvania Railroad superintendent who became his mentor, and on the chapter titled Telegraph Office, where he recalled learning Morse as a messenger boy and then as an operator in Pittsburgh. The railroad service chapter records his promotion, still in his teens, into positions of authority on the Western Division, and the chapter titled Superintendent of the Pennsylvania tracks his ascent into divisional command. The Civil War Period chapter describes his secondment to Washington under Scott, then Assistant Secretary of War, to organize military telegraph and rail transport, and the Bridge-Building chapter pivots from railroad payroll into his first equity stakes in bridge construction and the Woodruff sleeping-car patent, the combination of salary and equity that built his initial capital long before steel. The chapter structure itself shows how the future steelmaker's apprenticeship was paid for by railroad payroll and sleeping-car royalties.

Decision — Founded as a dealer in closely held securities — “buyers of last resort”. Context: The niche that attracted Graham’s brokerage business. Outcome (known): The firm operates to this day — 100+ years.