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Chapter One

Andrew Carnegie

From Rags to Richest

You seem to be in prosperity. Could you lend an admirer a dollar & a half to buy a hymn book with? God will bless you. I feel it. I know it.... P.S. Don't send the hymn-book, send the money. I want to make the selection myself.

Money

Sometime between 1886 and the turn of the century, Andrew Carnegie was visiting his widowed sister-in-law Lucy at the estate his late brother had bought in Dungeness, Florida, just off the coast of the border between Florida and Georgia. Andrew and Lucy got along well. He had named his first blast furnace for the production of pig iron after her (it was the custom in the iron trade to name furnaces after women); and she had named one of her sons (she and Tom were the parents of nine children) Andrew.

During this visit, Lucy was complaining to her bemused brotherin-law that her son Andrew neglected to write her from the college which he was attending. Without missing a beat, Carnegie told her that he could induce a response from the young collegian by return mail. He was sure enough that he bet her $10, a wager to which she immediately agreed.

So Andrew drafted what has been described as a "nice, newsy" letter to his nephew and namesake. He added a postscript that he was enclosing a check for $10 as a gift. He then deliberately left the check out of the envelope.

In no time, young Andrew Carnegie wrote back to his uncle, gratified by the gift but distressed that it had not been enclosed. Carnegie triumphantly presented the letter to Lucy; she paid him the $10 she had lost on the bet, and Carnegie sent that $10 off to his nephew.

Andrew Carnegie and John D. Rockefeller were the two greatest American businessmen produced during the nineteenth century. They were the two richest and the two most powerful. As individuals, however, it would be hard to imagine two people less like one another. Carnegie was ebullient; until the very end of his life he was incurably optimistic; he was by turns genuinely sincere and hypocritical, intensely realistic and grandiose. Slightly manic, he was a man of enthusiasms which could be painlessly transformed into wholly different enthusiasms. He was capable of physical exertion, but he was also a physical coward. He was loyal; he was fickle. He could love. He could betray.

There was an unbridgeable gulf between the man he wanted to be and the man the business world rewarded him for being. This is a critical attribute of Carnegie's career, and one which he shares with many another businessperson. There can be no better illustration than what Joseph Frazier Wall called "the most traumatic and highly publicized episode in his business career," the bloody lockout of labor at the Homestead plant in 1892.

Carnegie had an insatiable thirst for public approbation, a need which comported ill with his insatiable thirst for money and power. He wrote incessantly, and what he wrote was as liberal and fair-minded as the image he wanted to have of himself. In April of 1886, he wrote in Forum magazine that "my experience has been that trades-unions, upon the whole, are beneficial both to labor and to capital."

Not many employers were publishing words like that in 1886. The month after the April article, the Haymarket "riot" occurred, placing labor and radicalism in the same boat to much of middleclass America. Nothing daunted, Carnegie rushed back into print. In his "Results of the Labor Struggle" in August of 1886, he wrote: "To expect that one dependent upon his daily wage for the necessities of life will stand by peaceably and see a new man employed in his stead, is to expect much. There is an unwritten law among the best workmen: 'Thou shalt not take thy neighbor's job.'"

These sentiments struck a profoundly responsive chord among workingmen, and Carnegie was lionized for them by unions. The Brotherhood of Locomotive Engineers named a division after him and conferred upon him an honorary membership, which Carnegie happily accepted:

As you know, I am a strong believer in the advantages of Trade Unions, and organizations of work men generally, believing that they are the best educative instruments within reach.... I feel honored by your adopting my name. It is another strong bond, keeping me to performance of the duties of life worthily, so that I may never do anything of which your Society may be ashamed.

The reaction of Pittsburgh's business community, dominated as it was by Carnegie's principal partner, Henry Clay Frick, and Frick's banker, Judge Thomas Mellon, can be imagined. Unions were anathema to these men and to the old-time ironmasters at the center of Pittsburgh's business economy.

Labor violence was endemic in Pittsburgh. There was a lockout in the city's iron mills in 1874-1875. This was followed by the "Great Labor Uprising" of July 1877. During the course of the riots at the time, twenty or more Pittsburghers were killed by National Guardsmen. Paul Krause, the leading historian of labor in Pittsburgh during this era, has written that the 1877 riot was to employers "a palpable reminder that the Paris commune might yet come to the United States."

The Pittsburgh Bessemer Steel Company was formed in October 1879 by some of the most successful industrialists in Pittsburgh. The company's goal was to put up a state-of-the-art steel mill to compete with the "ET," as Carnegie's Edgar Thomson mill came to be called. The site they chose for the mill was Homestead, close to the ET.

From the first, Homestead experienced labor troubles, or from labor's point of view what would be better labeled "owner troubles." Unlike the ET, Homestead was unionized from the start. The Amalgamated Association of Iron and Steel Workers (AAISW) was engaged in....

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Excerpted from Giants of Enterprise: Seven Business Innovators and the Empires They Built by Richard S. Tedlow
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