Carnegie was roundly condemned by the press for staying out of reach in Scotland even after an anarchist attacked, shot, stabbed, and nearly killed Frick, who still insisted, “There is no necessity for you to come home.” Carnegie knew that, if he returned, Frick would resign. The day after the pitched battle, he cabled Frick: “All anxiety gone since you stand firm. Never employ one of these rioters. Let grass grow over works.” When workers cabled, pleading with their “Dear Master” to intervene, Carnegie refused to answer. Had he been on the scene, he probably could have settled the strike, but his executives believed he would weaken and begged him to stay away.
Carnegie was badly stung by the public outcry. “This is the trial of my life,” he wrote his friend, British Prime Minister William Gladstone. Frick’s insistence on hiring strikebreakers was “a foolish step,” Carnegie said. It was “expecting too much of poor men to stand by and see their work taken by others.” His pain, he wrote, “increases daily.” The Homestead works “are not worth one drop of human blood. I wish they had sunk.” He set up a pension fund for widows, orphans, and workers who had lost their jobs. But with no union left to complain, those who got one of the remaining jobs worked longer days for less pay.
The Two Faces of Carnegie
Clearly, Carnegie and Frick were a poor match. Certainly, Carnegie admired Frick’s management skills and his ability to envision exciting technological changes, both of which were central to Carnegie’s ongoing business success. But the two men came from decidedly different backgrounds. Carnegie could never completely leave behind an upbringing that emphasized fair play and the unalienable rights of workers. Nor could he shake his inherent faith in those who labored for a living, even though he realized that their disappointments often led to violence and were a threat to his business success. So, as a capitalist intent on maximizing his profits, Carnegie was often at odds with himself as well as with Frick.
Frick, however, harbored no such qualms. He valued wealth and power above all else. He believed that his business success was his alone; therefore, he owed nothing to those he employed. Workers were simply cogs in the wheel that he made go round and round; they had no rights. Like Carnegie, Frick was a product of his upbringing. In the Frick home, duty and unchallenged obedience to a more powerful person - be it a father, grandfather, or employer – was honored. Underlings did what they were told. If not, they were punished.
At certain junctures, particularly when the economy was booming and Carnegie could afford to meet his workers’ demands, his conflicts with Frick were minimized. But when times were tough, as in the Homestead fiasco, Carnegie publicly agonized about his company’s response, but, tellingly, made no attempt to intervene.
Not surprisingly, Frick despised Carnegie’s penchant for saying one thing in public and another in private. At Homestead, Frick had permission from Carnegie to proceed as he saw fit. “We . . . approve of anything you do,” Carnegie cabled from Europe, following up with, “This is your chance to reorganize the whole affair.” But in a letter to his cousin, Carnegie criticized Frick’s handling of the tragic situation.
Nevertheless, Frick agreed to serve as chairman of the Carnegie board. Their prickly relationship continued into the twentieth century, when Frick called Carnegie “a God-damned cheat” after Carnegie had attempted to buy Frick’s Carnegie shares for much less than they were worth. Frick won the subsequent lawsuit. Some years later, Carnegie attempted to heal the breach, to which Frick replied: “Tell Mr. Carnegie I’ll meet him in Hell where we are both going.”
The Disgrace of Dying Rich
The Homestead tragedy and the new and more onerous working conditions that were put in place seem to have inspired Carnegie to focus on the philanthropic endeavors proclaimed in his 1889 book, Gospel of Wealth.
Even as his company became the largest steelmaker in the world, its profits reaching $40 million a year by 1900 (two-thirds of that amount going to Carnegie), he began to speak of himself as only a “steward” of his wealth. The lifecycle of a rich man, he wrote, should be divided into acquiring and distributing wealth. A “man who dies rich dies disgraced,” he proclaimed. He did not believe in hereditary wealth; he never considered his daughter, his only child, his heiress. He believed that the accumulation of enormous wealth had the potential for enormous evil, unless a rich man personally gave away his riches. In the late 1880s, he began an unparalleled program of benefactions.
Selling his controlling interest in Carnegie Steel in 1901 for $480 million, he endowed the Carnegie Corporation of New York with $125 million. He founded two Carnegie universities, in Pittsburgh and in Washington, D.C., built Carnegie Hall in New York City, and endowed the Carnegie Hero Fund and the Carnegie Awards for Excellence in Teaching. He sent $10,000 to buy a dinosaur skeleton for a museum, thus triggering a major archaeological dig in Wyoming that led to the discovery of a previously unknown late Jurassic species of dinosaur. It was named Diplodocus Carnegii in his honor.
But Carnegie’s favorite and most far-reaching philanthropy was the building of some 2,509 libraries all across the English-speaking world. He funded 1,679 libraries in the United States alone at a cost of $40 million. He built the entire twenty-five-branch system in Philadelphia and all the branch libraries of New York City, but most of his library grants went to small towns and cities in the West, South, and Midwest, where few libraries existed. The first library, he erected was in his native Dunfermline. He rode there with his mother in a coach to the cheers of his fellow Scots.
In his final years, Andrew Carnegie advocated world peace and arbitration of national disputes even as he saw World War I approaching. He built the Hague Peace Palace in the Netherlands, and he visited Kaiser Wilhelm II in Germany in 1907. When hostilities broke out in August 1914, he supported Great Britain’s declaration of war and American preparedness. But his health rapidly declined as the steel he had become wealthy producing was turned into weapons of mass destruction. Prevented from reaching his beloved Scotland by the German submarine blockade of the British Isles, Carnegie grieved and died in 1919, at age eighty-four. He had kept far less of his money than most people thought, having given away 95 percent of it. By his own definition, Carnegie had narrowly avoided disgrace.
Lessons
Carnegie’s was a life of legend, and it also provides some vital lessons that all can employ.
Work, then work some more.
From a young age, Andrew Carnegie poured all his energy and talents into every job he undertook – from dipping bobbins that made him nauseous to learning Morse code and landing a more lucrative telegrapher’s position. Eventually, his work ethic and the managerial and financial skills he learned along the way enabled him to build and lead major corporations.
Any leader can profit by emulating Carnegie’s example, given that hard work seldom goes to waste.
Watch and learn.
Carnegie had a unique vantage point as Tom Scott’s secretary. He was present at the implementation of a new and efficient business system that enabled the railroads to adapt management and finance techniques designed for their immense size and complexity. He was inculcated with management techniques along with economic principles and was introduced to a network of business colleagues. He also learned that he could sell shares of corporate stock and bonds to support growth without the risk brought on by borrowing money and paying interest. And most importantly, perhaps, Carnegie came to understand that efficient service was the railroad’s real product.
As a leader, do you know exactly what you are selling? Is it a particular product or is it the benefit your product provides?
Make revenue from capital.
The day Tom Scott gave Carnegie the chance to make money on investments, he recognized the incredible opportunity and did all he could to take advantage of it. He allowed his mother to mortgage the family’s house, and he borrowed from an uncle to scrape up the needed $500. Eventually, that investment was returning $1,400 a year. Similarly, he borrowed $217 to get a on
e-eighth interest in T.T. Woodruff’s Palace Car Company. Soon the $217 investment was yielding $5,000 a year.
Are your capital assets being put to their most lucrative use?
Anticipate demand.
Carnegie seemed to have a knack for divining opportunities, be it Woodruff’s sleeping car for rail travel, the demand for iron to build cannon, gun barrels, and bayonets for the Civil War, or the iron railroad bridges that replaced the decrepit wooden railroad trestles. Seeing the opportunity, Carnegie founded the Keystone Bridge Company in 1865, which made steel and wrought iron. By the next decade, the steel industry had become his main focus, and Carnegie Steel was revolutionizing production.
In today’s borderless marketplace, are you staying abreast of the deluge of competitors’ products and services? Are you coming up with world-beating offerings of your own?
“Watch the costs, and the profits take care of themselves.”
Carnegie put systems in place to monitor expenses by the day and the penny, and he praised and rewarded managers who came up with cost-cutting measures and processes. He particularly applauded those devices that made skilled artisans obsolete because unskilled labor cost him less.
Look for opportunities for savings.
Stay in touch.
When Carnegie began chasing capital in New York and Europe, he left Henry Clay Frick in charge at home. Unlike Carnegie, who had built a reputation as a friend of the laboring man, the ruthless Frick set the stage for the worst labor debacle of the 1890s. And in a two-faced turnaround, Carnegie secretly backed Frick’s vow to break the Carnegie Steel craft unions.
From his summer home in Scotland, Carnegie learned of an all-day battle between the strikers and the Pinkerton strikebreakers hired by Frick. Three Pinkerton men and ten strikers were killed, and the National Guard moved in to lock out workers. The press blamed the debacle on Carnegie’s decision to remain abroad. Feelings ran high because most observers thought he could have settled the strike had he come back to Pennsylvania.
Leadership doesn’t demand perfection, but it does require a constancy of beliefs and convictions. Your people must know where you stand when the going gets tough.
Pick your partners carefully.
Putting Frick in charge was Carnegie’s first big mistake. The men were mismatched, Carnegie unable to dismiss an upbringing that treasured fair play and the rights of workers, while Frick valued money and power above everything else: In his mind, he alone was responsible for his business success. Workers were little more than cogs in the wheel that he made go ‘round. They had no rights.
Leadership can be tough and messy, but the best leaders know who they are and what they want out of themselves and those they lead.
Spread the wealth.
Carnegie’s singular pursuit of wealth and his business career kept him from marrying until he was fifty-one. But the tragedy at the Homestead works seemed to crystallize his attitudes about wealth and philanthropy. With company profits reaching $40 million a year in 1900, he wrote that a “man who dies rich dies disgraced.” He did not believe in inherited wealth, providing for his wife and daughter before he died.
Carnegie amassed a fortune and then gave it away. Most famous as a benefactor of libraries, funding more than 2,500 around the world, he also founded two universities, built Carnegie Hall in New York City, and endowed a fund for heroes and an award for excellence in teaching. Archaeological digs and the Hague Peace Palace owed their provenance to Andrew Carnegie. At his death, he had given away 95 percent of his money.
Published by New Word City, Inc., 2014
www.NewWordCity.com
© Willard Sterne Randall and Nancy Nahra
All rights reserved. No part of this book may be reproduced, in any form or by any means, without permission in writing from the publisher.
ISBN 978-1-612306-24-7
Andrew Carnegie Page 2