Andrew Carnegie And The Rise Of Big Business

After arriving in the US, the Carnegies settle in Pittsburgh, where they find assistance from the Scottish immigrant community that has developed there. Margaret Carnegie’s sisters both live in Pittsburgh, and her sister, Annie, provides the Carnegies with “rent-free living quarters” (16). Will immediately takes up work as a hand-weaver, renting a loom and selling tablecloths “door-to-door” (16). Carnegie, meanwhile, receives work in a textile factory owned by a Mr. Blackstock, a fellow Scottish immigrant, and brings back $1.20 a week for his family.

While Carnegie commits himself to his new job, he finds the physical labor difficult, and immediately searches for opportunities to find better work. Carnegie enrolls in nightclasses to learn accounting, occasionally working as an assistant in the factory’s offices. Though Will also takes up work at the same factory, he “had no […] stomach” for industrial labor, and sticks to hand-weaving (18). This leaves Margaret as the primary caregiver for the Carnegie family, and motivates Andrew to succeed in business, where his father had failed.

Eventually, Carnegie becomes a messenger boy in a telegraph company, getting the job through a Scottish friend of Carnegie’s Uncle Hogan. He learns that success comes from opportunities, and that one has to “exploit the chance” when given (19). Compared to the factory, Carnegie enjoys the calmness of office life, and he devotes himself to his job.

Carnegie’s work in the telegraph office places him in the middle of America’s transition “from the old agricultural world to the new industrial one” (20). In the mid-1800s, Pittsburgh was becoming a major American business city, due to its prime location on rivers that link the city with trade routes running in all geographic directions. Pittsburgh developed into a center for iron manufacturing, controlled “by an oligarchy of merchants and manufacturers” (21). As messenger, Carnegie delivers telegraphs to all of Pittsburgh’s most important businessmen, learning the ins-and-outs of Pittsburgh’s business world.

Eventually, Carnegie makes the jump from messenger to telegraph operator, and becomes one of the foremost operators in the city by learning to read telegraphs solely by sound. He recruits fellow Scotsmen to work in the office, deftly managing them through his “force of example” (22). In letters home during this period, Carnegie extolls America’s way of life over that of European society. For Carnegie, America has the freedoms that political radicals in Britain had been continually fighting for, and Carnegie has little doubt that these freedoms allows for America’s financial prosperity. As Livesay argues, Carnegie’s successes confirm for Carnegie that the American system worked, cementing Carnegie’s belief in the “interdependence between political equality and economic superiority” (26). 

Carnegie’s work as a telegraph operator is so impressive that in 1852, Tom Scott, superintendent of the Pennsylvania Railroad’s western division, hires Carnegie to run the railroad’s personal telegraph line. Through working on the Railroad, Carnegie learns innovative managerial skills that he would later apply to his own work in manufacturing.

In the 1850s, the railroad industry requires a new system of organization in order to be profitable. Railroad companies are massive endeavors, employing thousands of people with specialized skills. They are also composed of numerous facilities, warehouses, and miles of tracks. Operating the railroads requires a constant influx of capital. This is often obtained through selling bonds, which require the railroad company to pay money back to investors at an interest rate. Where other businesses (such as textiles) are operated according to “experience, instinct […] [and] guesswork,” the railroad requires decisions to be made based upon highly-accurate information and statistics, if rail is going to be profitable (31).

The Pennsylvania Railroad is a particularly challenging case for managers to make a profit off of, due to its large size and the fact that its lines went over mountains. As superintendent, Scott develops a system to earn a profit through “optim[izing] traffic flow and minim[izing] unit cost” (35). The Railroad begins taking “detailed statistics” on every aspect of its operations, including such things as “number of passengers, delays, and breakdowns” (38). Such data allows Scott to pinpoint which train lines are profitable. Scott begins making changes to the railroad to cut down on costs, running “bigger cars” and “longer trains” so that each train could carry the maximum number of passengers and cargo (38). Then, Scott sets ticket prices low enough to keep the trains as packed as possible. Additionally, Scott develops a system of “meritocracy,” in which train supervisors’ performances are measured, with the lowest earners getting fired (39).

Carnegie devotes himself to becoming “Scott’s right-hand man,” thoroughly learning Scott’s managerial system as well as every aspect of the railroad line (36). One day, Carnegie arrives at work to find a crisis due to a train derailment, with Scott not yet at work to fix it. Carnegie uses his “mental blueprint” of the railroad to dictate where trains should go, efficiently solving the crisis (37). On another occasion, Scott leaves Carnegie in charge of the trains while Scott is away for ten days, showing his trust in Carnegie.

When Scott becomes vice-president of the railroad in 1859, he promotes Carnegie to superintendent of the western division, due to Carnegie’s thorough knowledge of Scott’s “efficient organization” (40). The job requires “twenty-four-hour attention,” and Carnegie excels at the position by implementing numerous cost-cutting measures (40). These include creating night train dispatchers so that trains could run through the night, and cutting commuter fares to beat out competition.