Andrew Carnegie's Steel Fortune
You can say to Andrew Carnegie that I will meet him in hell (where we are both going) but not before.
A business partner's reply to a request for reconciliation
New York is the playground of the super rich. They're said to roll their cigars with hundred dollar bills and stud their wives hats with diamonds. But Manhattan Island's land values are the highest in the world, and even they can't afford to expand the headquarters of their empires sideways.
The only way is up. But load bearing issues and the sheer number of stairs means most buildings don't go above five storeys. Building skywards requires mechanised lifts and a critical ingredient which is much too expensive – steel. It's been around for 2000 years but it's so expensive to make that its limited use has been by rich samurai in swords, or by even richer women, for jewellery.
Scottish born, American immigrant, Andrew Carnegie started as a telegraph clerk at seventeen. He's then secretary to the head of the Pennsylvania Railroad. He's also a broker in Wall St selling railroad bonds for huge commissions. As he was making around $50,000 a year during the Civil War, he, like many robber barons, pays $300 to have a substitute fight the war for him.
A British inventor shows Carnegie his revolutionary method of making steel. Hot air is blasted through molten iron, burning off carbon impurities, creating steel, and in a way that it can be mass produced. It has the potential to make him one of the richest men the world has ever seen.
Carnegie returns to Pittsburgh to build a massive steel works larger than 80 American football fields. He risks everything. The 1873 stock market collapse means he has to borrow even more money. Against all the odds, in August 1875, his plants are ready to test. Hot enough to vaporize a man in seconds; five tonnes of molten metal are poured at 1650 degrees Celsius. The first steel comes off the first modern production line. By 1880 he's producing 10,000 tons of steel a month, making $1.5m profit a year. Pittsburgh's population triples transforming it from a sleepy town to the industrial heartland of America. The new steel railways distribute Carnegie's product nationwide
prices plummet 80% but Carnegie dominates the market and makes millions.
By 1900, 11 million tonnes are being produced and Carengie's annual profit is $40m. That year, he sells the lot at a dinner party on a scribbled note to the banker and railway robber baron, J.P Morgan From that Morgan forms U.S Steel, the first billion dollar trust. It works 200,000 men twelve hours a day.
Did you know?
Carnegie sold his steel company for $480,000,000, By the end of the 19th century, and thanks in large part to Carnegie's steel railways and steel skyscrapers, America's urban population increased 87 times. In Chicago alone, in just ten years, they built 50 steel frame buildings, and in just 20 years, its population more than doubles to almost 1.7m. From 1860 to 1900 the population of the US grows from 31m to 75m.