How Andrew Carnegie Became The Richest Man In The World


There are but a few men in the history of humanity who have accumulated fortunes like that of Andrew Carnegie. A man who was as complex as he was rich after selling his company. His net worth would equal a staggering two percent of America’s GDP. In today’s blog we’ll explore how one Scottish immigrant armed with just five years of schooling would rise from poverty to the status of the world’s richest man. This blog would not
have been possible if it wasn’t for our
friends at acorns an investment app with
over 6 million users it makes investing
as easy as spending acorns rounds up
your debit card transactions to the
nearest dollar and then automatically
invests that spare change for you into a
diversified portfolio sign up for acorns
using the link in the video description
below and they’ll deposit five dollars
into your portfolio that’s free money to
help you get started with investing so
be sure to check them out
the link is in the video description
Carnegie was at one point the richest
American in history but he wasn’t born
in America Andrews story begins across
the Atlantic Ocean in Dunn firm line
Scotland where he grew up in what could
only be described as abject poverty his
mother would work around the clock
sewing shoes his father would make cloth
and other material and weaving looms
that was of course until the steam
powered loom came into the picture with
weaving technology rapidly improving his
father’s loom business would crumble
finding himself crushed by the
Industrial Revolution watching his
father suffer as he begged for work
would impact the young Carnegie
profoundly in 1848 the Carnegie set out
in search of a better life outside
Scotland after selling all of their
possessions and borrowing 20 pounds the
family embarked on their journey to the
land of opportunity America they would
restart their lives from scratch in
Pittsburgh the hub of manufacturing but
still found themselves unable to escape
hardship in their new country his father
and mother both struggled to find work
leaving Andrew no choice but to drop out
of school to support his family he would
finally catch a break from the scorching
heat of the boiler rooms when he landed
a job at her local telegraph office as a
messenger boy he would deliver telegrams
by bike
all over Pittsburgh he would memorize
the faces of everyone he delivered to so
that he could greet them by name if he
saw them outside of work it would
provide Carnegie with a unique
opportunity to familiarize himself with
the city’s business community at 17 he
would perfect his telegraphed skills he
would grow increasingly skilled at
hearing Morse code impressively he could
recite messages without needing to write
them down this caught the eye of Thomas
Scott a regional manager for the
Pennsylvania Railroad company who hired
Carnegie to be his personal telegrapher
and private secretary for the sum of $35
a month at the time the Pennsylvania
Railroad Company was the largest
corporation in the world for the
business savvy Carnegie it was an
opportunity like none other
a front-row seat on how to run a
cessful business Tom Scott his boss
realized Carnegie’s potential and
decided to take the boy under his wing
mentoring him like a second father it
would later be Tom’s advice to invest in
stocks that provided carnegie with his
first taste of capitalism fast forward
to the American Civil War Carnegie is
drafted into the Union but instead of
fighting in the war Carnegie would
profit from it he was able to escape
harm’s way after paying 850 dollars for
a substitute to take his place on the
battlefield it was during this time that
Carnegie noticed that the wooden bridges
were easily burnt by the troops and that
there was a desperate need for iron
bridges to replace them he capitalized
on the opportunity launching the
Keystone bridge company but it would be
his next move that would define him as
an astute businessman Keystone didn’t
just build bridges they also had their
very own iron mills which provided the
iron that was needed for constructing
the bridges owning the iron source
meant that Carnegie’s bridge building
company would not be dependent on mining
or extracting companies for iron like
their competitors this not only gave
Carnegie more control over the entire
process it also improved their margins
after the bridge was built he would
leverage his connections in the railroad
industry to make money there -
essentially he was operating a triad of
three companies each strengthening one
another first a mining extraction
company second of bridge building
company which used the iron provided
from his mining company and then once
the bridge was built his third business
would monetize by selling rail the
concept worked to a tee always looking
for the next big opportunity
Andrew set his sights on New York City
the undisputed business capital of the
world in the city he expected to find a
hustling culture and mingle with other
distinguished businessman but what he
found instead was disappointment he
would describe the wealthy individuals
around him as scoundrels Carnegie wrote
a note to himself promising that in two
years when he turned 35 he would retire
and focus on making the world
better place but this note would go
unfulfilled in 1856 a new invention by
Henry Bessemer called the Bessemer
converter a pear-shaped furnace would
allow for the mass production of steel
something previously thought to be
impossible for the first time ever it
would finally become feasible to create
large structures from steel eventually
giving birth to the first skyscrapers
forever transforming a city’s skyline
Carnegie moved with lightning speed
successfully building America’s first
steel plants in doing so he hired the
best engineers and architects that money
could buy
he focused maniacally on increasing
efficiency always using the latest
technology and pushing his employees to
their maximum physical and mental
capabilities he was also notoriously
employees to work 364 days a year only
allowing for rest on the fourth of July
as technology continued to advance he
would seek ways to replace his workers
with machines at every possible
opportunity unlike men machines didn’t
need sleep they also didn’t ask for
raises and they certainly did not try to
unionize Carnegie a master salesman
decided to name the venture not Carnegie
steel but rather J Edgar Thomson steel
works the name of one of his customers
in the railroad industry Carnegie hoped
a steel mill named after a customer
would show his appreciation for their
business and maybe even secure more
orders from their railroad and it did
the first order from Thompson consisted
of 2,000 steel rails naming a mill after
a customer was more than a sales gimmick
it was part of a larger strategy showing
appreciation in public for others acts
like this would continue to pay massive
dividends throughout the titans career
to help run Carnegie steel mills he
would bring on board a cutthroat
executive known for his ruthlessness and
attention to the bottom line Henry Clay
Frick as a team Carnegie and Frick were
a powerful force to be reckoned with and
to show how ruthless the two could be
look no farther than the story about
Duquesne works with the help of Frick
Carnegie spread a rumor which alleged
that Duquesne’s mill was producing
defective steel it wasn’t true but it
didn’t matter
Carnegie claimed to do Kane’s railroad
customers that their rails lacked what
he called homogeneity few if anyone
actually knew what the word meant but
that wasn’t important
Carnegie used the word because it
sounded scary enough to frighten off
railroads who were concerned that they
weren’t getting good products if
Duquesne sales slowed they would
eventually become unprofitable and run
out of money to expedite their demise
Carnegie and Frick would proceed to
undercut Duquesne on price further
squeezing the company within two years
Duquesne’s finances were in ruins
leaving it no other choice than to sell
to none other than Carnegie at a bargain
price for Frick and Carnegie the rules
of engagement were clear do whatever it
takes to win but this ruthlessness came
with a hefty price as they would soon
discover at one of their largest steel
plants in Homestead Pennsylvania
Carnegie had just invested millions of
dollars optimizing the efficiency of
Homestead enabling it to produce more
steel than any other mill comparable to
its size but there was another part of
the profit machine that was yet to be
optimized labor costs this posed a
problem for Carnegie who had been
working on rebranding his image from an
oppressive steel factory billionaire to
a champion of workers rights so instead
of risking his reputation he would have
his right-hand lieutenant Henry Frick
execute the dirty work meanwhile
Carnegie would distance himself
traveling abroad to his home country of
Scotland Carnegie knew that he wouldn’t
want to be around the plant after
cutting wages for 10,000 already
frustrated low paid workers in 1892
tensions between workers and mill owners
were particularly heightened after an
ever widening wealth gap continued to
grow the richest people in America were
accumulating fortunes faster than at any
time in American history meanwhile
workers felt that they were property of
the rich and that their shrinking voice
could only be heard through a union to
make things even worse Frick who took
his orders from Carnegie demanded
increased factory
which would mean even more hours slaving
away but to top it all off Frick would
not be increasing their income he’d be
reducing it longer hours and less pay
but homestead at a boiling point the
strikers also demanded safer working
conditions and for a good reason in 1898
9% of all steel workers industry-wide
would die on the job when the workers
refused Frick’s aggressive demands for
longer hours and less pay he decided to
lock out all employees and bring in a
substitute group of immigrant workers
who would be willing to do their
dangerous jobs for less to escort the
immigrant workers as they made their way
to the factory Frick called on a 300
person army for hire called the
Pinkertons armed with rifles they made
their way to the factory where they were
met by 10,000 angry strikers refusing to
give up what they called home historians
don’t know who fired the first gun shot
but what we do know is that the day
would no longer be called the Homestead
strike but rather the Homestead massacre
by the end of the battle nine factory
workers and seven Pinkertons will be
dead hundreds would be injured the
fighting was so extreme that the
governor ordered for 8,000 militia
troops to provide backup under the
protection of the state’s troops the
factory would be reopened and
unfortunately for Carnegie’s workers
they would be returning with lower pay
longer working hours and the same safety
conditions another collateral damage
from Homestead came in the form of
Carnegie’s reputation prior to the
tragedies at Homestead he would often
advocate in public for better conditions
in steel mills and increased wages but
these words were far from aligned with
his actions hypocrisy was incredibly
prevalent while he preached increased
wages and improved safety conditions he
was simultaneously reducing labor costs
by slashing paychecks and doing little
if anything to make his factories a
safer place to work Carnegie was widely
called a coward for using Frick as his
scapegoat not only for the tragedy but
for all the other dirty work that he
didn’t want his name to be associated
with but in spite of the tensions and
animosity the steel mills
in you to thrive in fact by 1900 the
company would produce more steel than
the entire nation of Great Britain but
in 1901 Carnegie grew tired of the game
and wanted to spend time with his wife
and daughter financier JP Morgan was a
rising competitor in the steel industry
in Carnegie now nearing 70 became open
to the idea of selling the company he’d
spent his entire life building Carnegie
wrote on a scrap of paper what he would
be willing to accept Charles Schwab the
president of Carnegie steel delivered
the offer to Morgan as the story goes JP
Morgan glanced at the offer and without
hesitation accepted it Morgan would buy
Carnegie steel for four hundred and
eighty million dollars making Carnegie
the single richest man in the world at
the time
Carnegie would completely cut ties with
his business life and dedicate 100
percent of himself to serving the world
through philanthropy not a single dollar
would be left to his family because
Andrew had only five years of schooling
he had a soft spot for libraries which
he credits for helping him achieve the
financial success he acquired over the
course of his life he would donate over
two and a half thousand libraries the
cities all around the world but it
wasn’t all self-promotion he was
generous for generosities sake his name
was only displayed on less than 500 of
those libraries one example of his
generosity is Carnegie Hall one of New
York’s most recognizable landmarks built
in 1891 Carnegie built and donated the
building as the Music Hall but its
original name of the Music Hall was only
changed to the current version after his
death and not by his request but through
the music halls board members and from
1901 until his death in 1919 in Lenox
Massachusetts Carnegie’s full-time job
was giving away the vast wealth he had
built up for himself as we mentioned at
the beginning of this story Carnegie was
a man who was as complex as he was rich
did he employ abusive labor techniques
to keep his factories producing maximum
profit yes was he hypocritical of course
did he make up slander to put his
competitors out
business absolutely while these things
are all true
Carnegie’s philanthropic impact is also
equally great perplexing to say the
how can a man commit such sins and then
become a saint
perhaps he viewed donating his money as
a way to atone for his business sins
making money is a great feeling but an
even better feeling is giving it away if
you want to grow wealth and perhaps
donate to noble causes like Carnegie did
be sure to download the acorns app
imagine if you could make investments
every time you swipe your debit card
matt’s acorns the app automatically
rounds up your transactions to the
nearest dollar
and then invests that spare change for
you into a diversified portfolio in
other words just spend money like you
normally do and acorns will
automatically invest for you in the
background but here’s the best part
we’ve teamed up with acorns to provide
all business casual viewers with a
special signup bonus of five dollars
simply sign up using the link in the
video description below and acorns will
deposit five dollars into your portfolio
that’s free money to help you get
started with investing whether you’re
saving money for your kids college
tuition or for retirement there’s no
excuse not to start investing you don’t
need to be as rich as Carnegie to get
acorns makes it super easy to set aside
smaller amounts like five dollars a week
which can compound over time their app
provides pre-constructed portfolios
containing thousands of stocks and bonds
so you don’t have to worry about
choosing the right investments or timing
the markets so be sure to check out the
app by using the link in the video
description below and thank you for
watching this video if you enjoyed be
sure to hit the like button and
once subscribed click on the bell icon
and you’ll be notified each time we
upload new videos until next time stay