Heights or Hill: The Compounding Interest of Andrew Carnegie

“There is no greater force known to man than compounding interest.” -Albert Einstein

Culture & History 

Headlines are never duplicated, even when the news stories are all the same. Yet our past appears to be catching up with us. That is, figuratively, of course. Herein the language has changed, but only somewhat. An American novelist, for example, may write a classic tale in the present tense about the tumultuous life of an ambitious Manhattan banker, then compare him with his predecessor from 100 years ago. Flashbacks will uncover what each man values most—worldly offerings  like wealth, power, and beauty. But not unlike the origins of a Greek myth, is real-life eerily similar, some stories are worth telling for 500 hundred years or more.

At the turn of the century, not unlike these times in which live, the nation was experiencing unprecedented growth, not in technology, rather the infrastructure sector as the population doubled then tripled to 4 million residents in Brooklyn alone. When you consider that today the populace of Brooklyn tops out at approximately 2.5 million, one may begin to understand the magnitude of growth assembling in the masses 115 years ago. Although, around this period of time, as “The American Dream” became our nation's undoubted ethos and millions of Europeans were welcomed in at Ellis Island, tens of thousands of New Yorkers lived in abject poverty or even worse. 

In 1842, of the times in New York, famed author Charles Dickens, who had visited areas of the city, only to be safely escorted on his tour by two NYC policeman, wrote:  “poverty, wretchedness, and vice, are rife enough where we are going now,” in his book entitled American Notes.

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The “Robbers Barons” or “Captains of Industry,” you may have your pick, whichever you prefer, herein men of means and privilege are one under split opinion. As the nation watched, each man built an empire. The Industrialists were Andrew Carnegie, J. Pierpont Morgan, Cornelius Vanderbilt, John Jay Astor and J.D. Rockefeller. Each man was the source of public envy, hate or adoration, appearing to own the world to the less fortunate whilst they bear the status quo ante. 

In 1997, of the Industrialists, J. Bradford DeLong wrote, “the [robber barons] were examples of how America was a society of untrammeled opportunity, where people could rise to great heights of wealth and achievement on their industry and skill alone; they were public benefactors who built up their profitable enterprises out of a sense of obligation to the consumer; they were well-loved philanthropists; they were industrial statesmen.”

On PBS, the American Experience called him, “the richest man in the world,” but as a poor child, Andrew Carnegie and his family struggled to survive. At age 13, he, his parents and brother emigrated, leaving the small village of Dunfermline in Scotland for the United States. The family laid down roots in Allegheny, PA. 

It was the dawn of the Industrial Revolution. As a burgeoning young man,  Carnegie was of legal age (13 years old) to dropout of school and look for work. His first job was a $1.20 a week factory position. He went on to work for a telegraph company (1849) and then to Pennsylvania Railroad (1853).  According to biography.com, “[Carnegie] worked as the assistant and telegrapher to Thomas Scott, one of the railroad's top officials. Through this experience, he learned about the railroad industry and about business in general. Three years later, Carnegie was promoted to superintendent.”

By 1868, Andrew Carnegie, a tiny 5’0 tall optimist, was poised to develop what would become his empire—Carnegie Steel Company. 

The Carnegie Steel Company was instrumental in building the America infrastructure.  As chief supplier of steel, the manufacturing agent would be a primary, if not monopolistic, material source for laying railroad tracks, future skyscrapers like the American Surety (1895), in particular, and bridges like the Brooklyn Bridge (1883). 

They were more than rich, the Industrialists were powerful beyond measure. Each one made millions, hundreds of millions of dollars during Expansionism. Indeed, the nation had been indoctrinated with a mission to expand by Manifest Destiny and other “flag waving” propaganda. Greed, racism, and exploitation were well camouflaged when fueled by the capitalist cause.  While many believed that slavery should be abolished, the same believed that blacks were inferior and had "their place," no doubt in subserviant roles. Sounding more like a part of Kipling's poem, “The White Man’s Burden,“ than the poem itself,  Carnegie once said, “We cannot afford to lose the Negro. We have urgent need of all and more. Let us therefore turn our efforts to making the best of him.”

Travel on the Pacific Railroad, where Carnegie had worked as a young man, beckoned the idiom “sea to shining sea". By now, Carnegie was heavily invested in the railways, vis-à-vis manufacturing steel tracks and building luxury railcars for Pennsylvania Railways, where he partnered. “The Pacific Railroad constituted one of the most significant and ambitious American technological feats of the 19th century,” according to an article in Wikipedia. Trains began travel from the original Pennsylvania Station (1910) (now demolished), up and down the East Coast, across the Continental Divide to San Francisco.

A “start to finish” business ideology would compound interest, monetarily, as an executive and philanthropist for Carnegie, securing his role in the industry as a “dominant force.”

Over the years, “Carnegie built plants around the country, using technology and methods that made manufacturing steel easier, faster, and more productive. For every step of the process, he owned exactly what he needed: the raw materials, ships and railroads for transporting the goods, and even coal fields to fuel the steel furnaces,” according to biography.com.

Amassing exponential wealth, like Carnegie’s, in the 21st Century is major, but in the late 1800s, creating wealth, as such, was a phenomenon. The American people had never seen anything like Carnegie and the other Industrialists. There were even cries of “Imperialism” and comparisons to the British monarchy. The country was growing critical of the wealthy, particularly Carnegie, who was viewed as highly exploitive to his steel plant workers, many of them children as young as 12. There were no child labor laws and with no pensions or benefits or union and working 12-hour shifts, seven days a week, the Carnegie Steel plant workers, were in fact, being exploited. The Carnegie Steel Company was duly labelled a monopoly and monopoly capitalism it was, a system typified as squashing any like competition. President Theodore Roosevelt was critical of the "malefactors of great wealth" and “embraced a public, political role for the government in "anti-trust": controlling, curbing, and breaking up large private concentrations of economic power,” writes  DeLong.

By 1901, at the age of 66, Andrew Carnegie was ready to retire.

He sold the Carnegie Steel Company to J.P. Morgan for 200 million dollars.  But Carnegie believed that an ostentatious deameanor or “showing off” was a curse of wealthy. He would not live extravagantly, nor would any of his family inherit his fortune. Carnegie's, most interesting, virtuous principle in life: conditional generosity.

This, then, is held to be the duty of the man of wealth: To set an example of modest, unostentatious living, shunning display or extravagance; to provide moderately for the legitimate wants of those dependent on him; and, after doing so, to consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer, and strictly bound as a matter of duty to administer in the manner which, in his judgement, is best calculated to produce the most beneficial results for the community—the man of wealth thus becoming the mere trustee and agent for his poorer brethren.

—Andrew Carnegie

Carnegie devoted the rest of his life to philanthropic causes, chiefly schools (Carnegie Tech/ Carnegie Mellon University, 1900), the arts (Carnegie Hall, 1891) and books (Carnegie Libraries).

Built between 1823-1929, the Carnegie Libraries, a worldwide system of 2,509 public libraries, with a total of 1,689 in the United States and 21 of those a part of the Brooklyn Public Library system here in Brooklyn, New York. Amongst them the Bedford Library in Bedford Stuyvesant and the Park Slope Library which is closed for renovations, due to re-open this fall 2012, hence will not be reviewed here. The is not included in the list of Carnegie Libraries.

In 1904, ground was broke for the Bedford Library in Bedford Stuyvesant Brooklyn. The firm, Lord & Hewett, built the library in the popular Renaissance Revival architectural style.  When the library was opened in 1905, it was “praised by architectural critics and the Library Journal for its interior layout and design, featuring a central reception area, large reading room, and children’s section,“ says Montrose Morris of brownstoner.com.  Bedford Library is still not a designated landmark, “but really, really should be,” she says, “when Bedford Stuyvesant became the catchword for urban decay, the library offered reading and literacy programs, and was a mainstay of the community.”

At the time of his death, Carnegie had given away 90 percent of his fortune, leaving the remaining 10 percent to his family. “I would as soon leave my son a curse as the almighty dollar,” he once said. Andrew Carnegie was estimated to be worth $289.3 billion dollars (2007 dollars), which is the second largest fortune accumulated by anyone. His net worth was $400 million at the end of his reign, giving away $350 million to charitable causes.

In life, like a novel or a play, a narrative takes shape for each one of us. We are the subject and the author of the script, a channel for our own life story. A legacy is the aftermath of a life story. It’s what we leave behind. Oftentimes, a legacy is settled in life with an endowment, or inheritance, or if you were Andrew Carnegie—a library. 

*The historical photographs are in the Public Domain. Library of Congress, etc. No copyright laws applicable. No known restrictions. Please find the link for each copyright tag, photo #1, #2, #3, #4

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