THE RISE OF ANDREW CARNEGIE

In an era without personal or corporate income taxes, some business leaders accumulated enormous fortunes and economic power. Under the aggressive leadership of Thomas A. Scott, the Pennsylvania Railroad—for a time the nation’s largest corporation—forged an economic empire that stretched across the continent and included coal mines and oceangoing steamships. With an army of professional managers to oversee its far-flung activities, the railroad pioneered modem techniques of business organization.

Another industrial giant was Andrew Carnegie, who emigrated with his family from his native Scotland at the age of thirteen and as a teenager worked in a Pennsylvania textile factory. During the 1850s, Scott hired Carnegie as his private telegraph operator and, by the eve of the Civil War, had promoted him to one of the Pennsylvania Railroad’s major management positions. During the depression that began in 1873, Carnegie set out to establish a “vertically integrated” steel company—that is, one that controlled every phase of the business from raw materials to transportation, manufacturing, and distribution. By the 1890s, he dominated the steel industry and had accumulated a fortune worth hundreds of millions of dollars. Carnegie’s complex of steel factories at Homestead, Pennsylvania, were the most technologically advanced in the world.

Carnegie’s father, an immigrant Scottish weaver who had taken part in popular efforts to open the British political system to working-class participation, had instilled in his son a commitment to democracy and social equality. From his mother, Carnegie learned that life was a ceaseless struggle in which one must strive to get ahead or sink beneath the waves. His life reflected the tension between these elements of his upbringing. Believing that the rich had a moral obligation to promote the advancement of society, Carnegie denounced the “worship of money” and distributed much of his wealth to various philanthropies, especially the creation of public libraries in towns throughout the country. But he ran his companies with a dictatorial hand. His factories operated nonstop, with two twelve-hour shifts every day of the year except the Fourth of July.

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