Andrew Carnegie came from nothing to become one of the richest people the world as well as a visionary philanthropist. In 1848, his family emigrated from Scotland to Pittsburgh, Pennsylvania, when he was 12 years old. Carnegie quickly began his legendary career, working his way from a factory boiler room to the telegraph office. His position as a telegraph messenger gave him the opportunity to meet Thomas A. Scott, the superintendent of the Pennsylvania Railroad’s western division. Carnegie was a hard worker and had a keen eye for recognizing opportunity and the people who could help him become more successful.
In 1853, Carnegie took a position as the personal telegrapher and assistant to Scott at the railroad company. His work ethic and thirst for knowledge impressed Scott enough to alert him of the impending sale of 10 shares in the Adams Express Company and lend him $500 to invest. Carnegie’s mother mortgaged their house as collateral, and when he received his first dividend check of $10, Carnegie was forever hooked on investing.
Using his dividend checks and railroad salary, Carnegie began investing in businesses he knew, such as telegraph and railroad companies. He understood that railroad expansion meant longer trips and that passengers would enjoy the comfort of sleeping cars. His successful investment in the Woodruff Sleeping Car Company was his first major windfall and the foundation of the Carnegie fortune.
As his fortune grew, he began taking more risks and diversifying his portfolio. After making several wise investment choices in oil, he left the railroad in 1865, focusing on his investments and becoming a partner in the Keystone Bridge Company. Always ahead of the curve, Carnegie recognized iron bridges were stronger and safer than wooden structures and invested heavily in the production of iron.
In 1867, Carnegie, along with his mother, moved to New York City, where he began selling bonds while running his Pittsburgh-based companies from afar. By the time the final spike was driven into the Transcontinental Railroad in 1869, Carnegie had perfected the vertical integration business strategy, demanding ownership of the resources needed, their delivery method and the final product.
The 1870s and 1880s
Following the Civil War, Carnegie took another chance, putting the fate of his fortune in the strength of steel. In 1872, he traveled to Europe and witnessed a new way to create large quantities of steel, which had previously only been made in small crucibles in the United States. Carnegie opened his first steel mill in 1875 and purchased his main rival, Homestead Steel Works, in 1883.
Carnegie was a staunch believer in keeping costs as low as possible, hiring wave after wave of immigrant workers who were willing to work long hours for little pay. He was also widely known to pressure his partners into giving up their profits to invest in company expansion. Cutting costs was always top priority for Carnegie; however, he always took every opportunity to invest in production improvements.
The 1890s and 1900s
Carnegie's vast empire continued to expand, and the Carnegie Steel Corporation was officially formed in 1892. Through continued expansion and technological innovations in steel production, Carnegie grew the company into the largest manufacturing company in the world. Choosing to spend more time with his family, Carnegie sold his company to J.P. Morgan’s U.S. Steel Corporation (NYSE: X) for $480 million in 1901, famously making him the richest man in the world.
The Bottom Line
Believed to be the second-richest person of all time, behind only John D. Rockefeller, Carnegie’s peak net worth, when estimated into modern currency, would have been approximately $309 billion. A visionary who built a financial empire through hard work, perseverance and calculated risk, Andrew Carnegie’s story is truly one of rags to riches.