Like most people, whenever the name Andrew Carnegie was mentioned, I used to think industrialist or philanthropist although Ive always been interested in how he got his wealth and when and how he started giving it away.
Its an interesting story. Inspirational and instructive. And it reflects much of what weve been talking about and will continue to talk about each morning in ETR.
He started at the bottom. Born in Scotland in 1835, he came to America with his family in 1848 to escape the European depression. The Carnegies settled in Allegheny, PA, now part of Pittsburgh. Having spent everything they had to get to this country, they were effectively bankrupt when they settled in. That meant Andrew had to forgo school shortly after he arrived in favor of working in a cotton factory for $1.20 a week.
Ambitious from the start, Andrew studied bookkeeping at night. This gave him the skill he needed to get a better paying job, one with a higher income and better career prospects. That job was clerking in a local office. There too, he was not content merely to do a good job. He continued his nighttime studies and volunteered for every possible task at work seizing every opportunity to take on new responsibilities.
His efforts and his developing knowledge were not lost on his employers. He quickly rose in rank, and saw his personal compensation rise as well.
But the business he worked for was not growing fast enough for him, so he gracefully parted ways to take a better-paying, higher-profile job at the Pittsburgh telegraph office. He was 15 when he started, and within two years he had worked himself up to be a full-time telegraph operator, one of the most senior and best-paying jobs in the office.
When he was 20, his father died leaving him with greater personal and financial responsibilities. He had to take care of not only himself and his own career but also his mother and his 12-year-old brother.
He worked even harder, making sure that his efforts were noticed both internally and by outside clients. Before long, he was offered a choice of two career opportunities: to take on a management position in the Pittsburgh office or to go to work for the division superintendent of the Pennsylvania Railroad as a telegraph operator and as his personal assistant. Recognizing the advantage of working closely with a powerful, well-positioned, and very successful businessman, Andrew opted for the slightly lower pay but much greater potential of the position with the superintendent.
By the time he was 24, having had the benefit of being mentored by the superintendent, he was promoted to superintendent of the Pittsburgh division.
He was earning pretty good money by then, enough to live a lifestyle few men his age enjoyed. But he recognized the difference between income and wealth. Borrowing $500 from a business friend, and using as collateral the reputation he had built, he began a lifelong program of investing in what he knew: his own industry, the railroad.
What a time to invest in industry! The railroads were changing the world, and Andrews investments were riding the crest of that economic wave. Since railroads were heavily dependent on steel, Andrew educated himself in that industry, too, and soon began to invest in steel production. If railroads were booming, steel was skyrocketing.
By the time he was 33, he was making $50, 000 a year (which might be the equivalent of making a million today) and was fantasizing about retiring to scholarship and travel.
But since he was now one of the largest shareholders of the Pullman Company, and a director of the Union Pacific Railroad, he couldnt. Understanding that the growing demand for steel would continue for some years, he made a relatively bold move. He left his job with the railroad and started his own company, Carnegie Steel.
Andrew Carnegie understood the importance of underpricing the competition and delivering a superior product. He went to work immediately, designing and redesigning his manufacturing methods until his company was making better steel quicker and cheaper than all of its competitors.
As a result, he saw a rapid expansion of his business and an equally fast surge in his personal wealth. In the next few years, Carnegie Steel became the preeminent steel producer in the world and Andrew himself became the worlds richest man.
At 66, Andrew Carnegie had reached the pinnacle of one of the worlds greatest business careers. If he retired to one of his mansions and never did another thing, hed have secured a place in history for his accomplishments. But he was far from retiring. He had always been up at the crack of dawn and wasnt going to stop doing that at the young age of 66.
He spent some time considering his options and then decided on a goal as ambitious and as impressive as before. He shocked the world by announcing that he was going to sell his holdings and devote the rest of his life to giving away every penny he had. He did just that, selling Carnegie Steel to J.P. Morgan, who used it as the launching pad for U.S. Steel (and then spent the next 18 years giving away all of his money).
My chief happiness, Carnegie wrote in 1911, lies in the thought that even after I pass away, the wealth that came to me to administer as a sacred trust for the good of my fellow men is to continue to benefit humanity for generations to come.
Was Andrew Carnegie lucky? He certainly was in the right place at the right time. But he didnt get there by accident. He did certain things . . . and avoided others . . . that made his great success, in retrospect, almost inevitable.
He was, first and foremost, an early riser. He went at each day like a lion, believing (as one of his protégés, Napoleon Hill, would later put it) that whatever his mind could conceive, he could achieve.
He was never content to do one job well. He looked around at the business he was in and found out what was missing, discovered what was needed, and identified the skills necessary to help him advance. He volunteered to do the work that would make him the one most likely to fill the next better job that came on the table.
He was a learner throughout his life. He studied his profession and related fields every night and every weekend. He understood that once he allowed himself to slow down intellectually, the rest of his life and all of his dreams would slow down too.
He understood the value of making things better . . . and producing them faster . . . and selling them cheaper. These three great business-building secrets were incorporated into the culture and master plan of his first and greatest business venture, Carnegie Steel.
Finally, he understood or came to understand that giving away your money is just as much fun as making it.
Im sure Andrew Carnegie had a lot of disagreeable habits and did some reprehensible things. But if you look at his lifes work from the perspective of a hundred years distance, you may see him as I do someone to admire and learn from.