Andrew Carnegie

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Andrew Carnegie : biography

November 25, 1835 – August 11, 1919

Starting in 1853, Thomas A. Scott of the Pennsylvania Railroad Company employed Carnegie as a secretary/telegraph operator at a salary of $4.00 per week. At age 18, the precocious youth began a rapid advancement through the company, becoming the superintendent of the Pittsburgh Division. His employment by the Pennsylvania Railroad Company would be vital to his later success. The railroads were the first big businesses in America, and the Pennsylvania was one of the largest of them all. Carnegie learned much about management and cost control during these years, and from Scott in particular.Nasaw, David, Andrew Carnegie (New York: The Penguin Press, 2006), pp. 54–59, 64–65.

Scott also helped him with his first investments. Many of these were part of the corruption indulged in by Scott and the Pennsylvania’s president, J. Edgar Thomson, which consisted of inside trading in companies that the railroad did business with, or payoffs made by contracting parties "as part of a quid pro quo", as biographer David Nasaw writes. In 1855, Scott made it possible for Carnegie to invest $500 in the Adams Express, which contracted with the Pennsylvania to carry its messengers. The money was secured by the act of his mother placing a $500 mortgage on the family’s $700 home, but the opportunity was only available because of Carnegie’s close relationship with Scott. p. 79 A few years later, he received a few shares in T.T. Woodruff’s sleeping car company, as a reward for holding shares that Woodruff had given to Scott and Thomson, as a payoff. Reinvesting his returns in such inside investments in railroad-related industries: (iron, bridges, and rails), Carnegie slowly accumulated capital, the basis for his later success. Throughout his later career, he made use of his close connections to Thomson and Scott, as he established businesses that supplied rails and bridges to the railroad, offering the two men a stake in his enterprises.

1860–1865: The Civil War

Before the Civil War, Carnegie arranged a merger between Woodruff’s company and that of George Pullman, the inventor of a sleeping car for first class travel which facilitated business travel at distances over . The investment proved a great success and a source of profit for Woodruff and Carnegie. The young Carnegie continued to work for the Pennsylvania’s Tom Scott, and introduced several improvements in the service.

In spring 1861, Carnegie was appointed by Scott, who was now Assistant Secretary of War in charge of military transportation, as Superintendent of the Military Railways and the Union Government’s telegraph lines in the East. Carnegie helped open the rail lines into Washington D.C. that the rebels had cut; he rode the locomotive pulling the first brigade of Union troops to reach Washington D.C. Following the defeat of Union forces at Bull Run, he personally supervised the transportation of the defeated forces. Under his organization, the telegraph service rendered efficient service to the Union cause and significantly assisted in the eventual victory. Carnegie later joked that he was "the first casualty of the war" when he gained a scar on his cheek from freeing a trapped telegraph wire.

Defeat of the Confederacy required vast supplies of munitions, as well as railroads (and telegraph lines) to deliver the goods. The war demonstrated how integral the industries were to American success.

Keystone Bridge Company

In 1864, Carnegie invested $40,000 in Story Farm on Oil Creek in Venango County, Pennsylvania. In one year, the farm yielded over $1,000,000 in cash dividends, and petroleum from oil wells on the property sold profitably. The demand for iron products, such as armor for gunboats, cannon, and shells, as well as a hundred other industrial products, made Pittsburgh a center of wartime production. Carnegie worked with others in establishing a steel rolling mill, and steel production and control of industry became the source of his fortune. Carnegie had some investments in the iron industry before the war.