Andrew Carnegie And The Rise Of Big Business

Harold Livesay’s 1975 biography, Andrew Carnegie and the Rise of Big Business, follows the life of entrepreneur Andrew Carnegie as he builds one of the biggest manufacturing companies in 19th-century America. As Livesay narrates Carnegie’s life, he also describes the many societal shifts occurring throughout the 19th century, during which life in America and around the globe transitioned to a modern, industrial society.

In the opening chapters, Livesay focuses on Carnegie’s humble beginnings. Carnegie is born in Dunfermline, Scotland, a town whose traditional industry had been hand-weaving textiles. The coming of the Industrial Revolution and the power loom makes hand-weaving obsolete, eliminating jobs for people like Carnegie’s father, Will. Facing the poverty of the “hungry forties” in Scotland, Carnegie’s family immigrates to America in 1848, settling in Pittsburgh. Though only 13 years old, Carnegie is eager to help take care of his family, and he begins working in a factory to bring home more money.

Eventually, Carnegie grows tired of the difficult factory work and takes a job as a telegraph operator, spending long hours to become the most highly-skilled operator in the office. Carnegie earns a reputation for himself among the Pittsburgh business community, catching the eye of Tom Scott, who is looking for someone to run the telegraph line for the Pennsylvania Railroad. Scott hires Carnegie, who soon becomes Scott’s “right-hand man,” working tirelessly to learn everything he can about the railroad industry. Though Carnegie begins in the telegraph division, his expertise allows him to take charge of various crises on the railroad, earning him further respect from Scott and a promotion to superintendent.

Scott takes on the role of mentor for Carnegie, at one point urging Carnegie to begin investing his money. Though Carnegie is initially uncertain about the idea of investing, he becomes ecstatic the moment he earns a dividend check and recognizes that he can earn money without working. Carnegie begins to engage in more investment ventures, earning particularly large fortunes from his investments in the Woodruff Sleeping Car Company and the Keystone Bridge Company. Unrelenting in his desire to increase his wealth, Carnegie soon engages in deals of speculation, earning him a reputation as a manipulator. Though Carnegie is adept at such speculative deal making, he begins to grow ashamed of the shady business practices he engages in to earn his fortune.

In 1872, Carnegie opens the Edgar Thomson Works, a steel mill, as Carnegie is convinced that steel will soon replace iron in building railroads. In setting up his steel mill, Carnegie implements business strategies that he first learned from working in the railroad industry. These strategies include a precise cost accounting system and a bureaucratic structure with a clear line of command. Carnegie also invests in scientific research, ensuring that his steel mills have the most advanced technology available. Such business strategies had never before been used in the field of manufacturing, and Carnegie’s steel corporation is tremendously successful as a result. In addition to the railroads, one of Carnegie’s chief customers is construction, with skyscrapers being built in America’s growing cities. Carnegie’s corporation expands to include numerous mills and warehouses, and vertically integrates with producers of raw material for steel.

In 1892, Carnegie is faced with the Homestead Strike, one of the largest obstacles of his career. Throughout the 1880s, the labor unions stage numerous strikes at Carnegie’s companies, so as to win more progressive labor policies. Carnegie’s usual approach to strikes is to wait the strike out until the union agrees to Carnegie’s stipulations. However, when dealing with the Homestead Strike, Carnegie leaves one of his executives, Henry Frick, in command. Frick attempts to break the strike by bringing in scab labor, leading to an intensely violent conflict. The blame for the strike ultimately falls on Carnegie, with numerous newspapers publishing highly critical accounts of the strike.

Despite such setbacks, Carnegie Steel continues to grow in scale and profits throughout the 1890s. Soon, Carnegie finds himself faced with competition in the form of trusts—large conglomerations of several smaller companies. Rather than strike a deal with the trusts, Carnegie decides to fight them head-on, announcing plans to add a division to his corporation focused on manufacturing finished products. Knowing that the trusts cannot compete, J.P. Morgan, the head of one of the trusts, makes an offer to purchase Carnegie Steel, making Carnegie the “richest man in the world” (188). In his retirement, Carnegie follows through on the ideas outlined in his 1889 article “The Gospel of Wealth,” using his fortune to fund public institutions and help build a better society.