Andrew Carnegie: From rags to the richest man in the world

In the late 19th century of the United States, there is a period of time called The Gilded Age, from the 1870s to about 1900. The early half of the Gilded Age roughly coincided with the middle portion of the Victorian era in Britain and Belle Époque in France. The Gilded Age was an era of rapid economic growth, especially in the North and West. As American wages were much higher than those in Europe, especially for skilled workers, the period saw an influx of millions of European immigrants. The rapid expansion of industrialization led to real wage growth of 60% between 1860 and 1890, spread across the ever-increasing labor force. However, the Gilded Age was also an era of abject poverty and inequality as millions of immigrants, many from impoverished European nations, poured into the United States, and the high concentration of wealth became more visible.

Portrait Andrew Carnegie_patrick dwyer merrill lynch_American Financial Titans
Image courtesy of Carnegie Library of Pittsburgh at Flickr.com

With the factory system, mining, and finance increasing in importance, the railroads were the major industry. Immigration from Europe and the eastern states led to the rapid growth of the West, based on farming, ranching and mining. Labor unions became important in the very rapidly growing industrial cities. Two major nationwide depressions, the Panic of 1873 and the Panic of 1893, interrupted growth and caused social and political upheavals. The South after the Civil War remained economically devastated; its economy became increasingly tied to cotton and tobacco production, which suffered from low prices. With the end of the Reconstruction era in 1877, black people in the South were stripped of political power and voting rights and were left economically disadvantaged.

The most powerful people during this period would later be called robber barons. They were capitalist titans that held great industrial monopolies and unprecedented wealth. One of them is Andrew Carnegie.

Carnegie was born in Scotland, his life came from rags and went to being the richest man in the world. When he was young, his first job involved changing spools of thread in a Pennsylvania cotton mill for $1.20 a week. His initial wealth came from managing railroads; he ended up plowing investments into ironworks that supplied Union soldiers. He retired from business in 1901 at the age of 66 after selling Carnegie Steel to J.P. Morgan for $487 million. The deal made Carnegie the richest man in the world.

For generations, the Carnegie were master weavers. But as the Industrial Revolution brought steam weavers, the family business collapsed. The family became so poor that they went to bed early each day, hoping to “forget the misery of hunger”. Later, he was moved after seeing his father forced to beg for a job, he then decided that when he became a man, he was to overcome that wound.

At the age of 12, Andrew moved with his family to Pittsburgh, where two aunts lived. They all slept in the same room. When he was 13, he started working in the steam room of a textile factory. In the night, he used to have nightmares about the explosion boiler. Soon after that, he began working as a messenger in a telegraph office. During those years as a teenager, he tried to meet as many important people of the city as he could.

Andrew Carnegie Pittencrieff Park_American Financial Titans_patrick dwyer merrill lynch
Image courtesy of Douglas Sprott at Flickr.com

When he reached 17 years, he started working in the telegraph and as an assistant in a local railroad, for an astounding wage of $35 a month.  During the next decade, he became an important part for the functioning of that profitable railroad.

He also started investing. An investment of $217 in a bed car company made him win $5,000 a year. He helped form a steel foundry to build bridges for railways. His investments were so profitable that his wage of $2,400 for his job in the railroad were just the 5 percent of his income.

At the year of 1865, Andrew left the railroad and moved to New York, where he and his mother at first lived in a suit of the famous San Nicholas hotel. In 1873, Carnegie arranged the first of his Steel Works. In the next decades, Carnegie Steel will became an empire, thanks to the rapid implementation of the new Bessemer process for the steel and some other innovations.

In 1897 he returned to Scotland and bought the 40,000 acres of the Skibo Castle, located to the west of Dornoch in the Highland county of Sutherland, Scotland, overlooking the Dornoch Firth. By the year 1900, Carnegie Steel produced more Steel than all Great Britain.

At his 66 years, in 1901, Andrew Carnegie sold Carnegie Steel to JP Morgan for $480 million, and half of that went directly to him, and with that arrangement, he became the richest man in the world at the moment.

 

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