The phoney patriarch
Out of the Big Four of the socalled heroic age of American business – Andrew Carnegie, JP Morgan, JD Rockefeller and Henry Ford – Carnegie undoubtedly emerges as the most interesting psychological study. He was a contradictory, multitudinous man in Walt Whitman’s sense.
Born in Dunfermline, he was the son of a weaver who emigrated to the US in 1848. The young Carnegie got a job as a telegraph operator and soon mastered both that trade and the entire intricate system of American railroads. By 1860, at the age of 25, he was the superintendent of the Western Division of the Pennsylvania Railroad and, as such, vital to the Union war effort when civil war broke out the following year. Granted exemption from the draft, Carnegie was able to avoid the bloodletting and concentrate on business: he made his first big money in 1862 by investing in an oil company, then diversified into steel.
By the end of the war he was already worth $8m in today’s money. Carnegie was lucky to live in an era of rapid technological advance and benefited particularly from the explosion of railways in the US, for which he supplied the iron and steel. But David Nasaw makes the important point that Carnegie scaled the financial heights not simply by manufacturing iron and steel but by stock-market speculation in an era when insider trading was legal (it was not outlawed in the US until 1934). It was a side to his career the disingenuous Carnegie covered up in his self-serving and mendacious autobiography.
By the early 1870s he was regularly crisscrossing the Atlantic, stitching together complex financial deals. Here again he benefited from the technological revolution. By 1870 it took just eight days to sail from New York to England, whereas in 1848, when Carnegie first made the trip as a poor emigrant, the voyage had lasted 42 days. Carnegie’s importance in the 1870s was that he was the chief, and often the only, liaison b e t w e e n E u r o p e a n b a n k e rs a n d the American entrepreneurs in railway, road and bridge construction; only he knew how all the pieces in the jigsaw fitted together.
Having weathered the deep financial crisis of 1873 without significant losses, chiefly through following his own maxim that one should never endorse another’s loans, Carnegie went from strength to strength and was soon the richest man in the world. When he sold his company, Carnegie Steel, to JP Morgan in 1901 (Morgan formed a new company called US Steel), he received $226m ($120bn in today’s money). Returning to his native country, he retired to Skibo Castle in Sutherland and announced his intention to give away his fortune before he died. He endowed hundreds of libraries, enriched the cities of Pittsburgh and Dunfermline, and showered benefactions on universities on both sides of the Atlantic. He managed to give away tens of billions in today’s money and left a relatively small amount to be given away in his will.
Carnegie did not just make fabulous amounts of money; he also wrote about the theory of riches in books expounding what he termed the “gospel of wealth”. Decrying socialism as a creed for dreamers and losers, he embraced Herbert Spencer’s then culturally hegemonic theories of social Darwinism and argued that the tycoon was a benefactor, a kind of trustee for the community.
According to Carnegie, the millionaire benefited his community twice over. He made money, thus enriching others through the trickle-down effect, and he then showered further largesse on the community by giving money away. It was far better, Carnegie thought, to provide libraries, universities and concert halls with t h e su r p l u s extracted from the worker than to pay higher wages, which would be frittered away on drink and unnecessary consumer goods. Thus he posed as the friend of the ordinary working man.
Nasaw clearly shows how this pose was a sham. If the price of steel fell, Carnegie cut wages ruthlessly. No believer in collective bargaining, he used armed thugs, sheriff deputies and Pinkerton agents to crush the steel unions where necessary. A notorious armed confrontation after a lockout at the Homestead Steel Works in Pennsylvania in 1892 led to a dozen deaths. Carnegie liked to d istance himself f ro m the dirty work, and was said to be incommunicado in Scotland at the time of the Homestead incident, but in reality he was directing the confrontation by telegram.
The word that most readily comes to mind after a perusal of Carnegie’s selfjustifying screeds is phoney. His book
Triumphant Democracy, for example, a paean to the United States as utopia, is a piece of Panglossian nonsense. According to this tome, in nineteenth-century America t h e re wa s n o v i o l e n c e , corruption, racial discrimination, labour problems or class distinctions. But he does at least have the grace to admit that the key to worldly success is a simple matter of being in the right place at the right time.
In short, Carnegie was a slippery, mendacious and duplicitous cove, and Nasaw has done well to reveal the reality behind all the cant. The Scot was a man of great intelligence, self-taught and widely read, who could recite virtually the whole of Shakespeare and Robert Burns from memory. To his credit, he believed that every businessman should have a liberal education rather than the narrowly focused MBA of our era, for success in business depends on understanding human nature, and the great literature of the past taught that more successfully than courses on accountancy and administration.
But Carnegie shared the faults of most autodidacts in overrating his own intellectual capacity. He was a tiresome know-all who, in his own mind, knew everything about everything and thought nothing of correcting world experts in their own areas of specialism. He had literary pretensions and courted the company of men like Matthew Arnold, Herbert Spencer and Mark Twain, as well as politicians such as William Gladstone, Teddy Roosevelt and John Morley.
They tolerated him because of his wealth; Roosevelt secretly detested him but manipulated him into paying for one of his luxury big-game hunting safaris in Africa. He loathed Carnegie’s pacifism and anti-imperialism (Carnegie publicly opposed both the British in the Boer War and the American annexation of the Phillippines) and thought him a humbug. Why, Roosevelt mused, would one agonise about the victims of war but not the victims of capitalism? Why were the suffering of Filipinos to be deplored but not those of underpaid steelworkers?
The truth is that Carnegie was a psychological oddity. Twain, in the privacy of his journals, denounced him as an egomaniac. Carnegie, he said, was incapable of reflection or self-knowledge. Self-deluding, he imagined himself courageous and original, but was in fact conventionally minded and star-struck by kings and emperors and the attention they seemed to lavish on him.
Two facets of Carnegie were especially salient. Only five feet tall, he was deeply sensitive about his height and wore top hats and high-heeled boots to conceal his lack of stature. Photographs show him to be a troll-like creature with a white Santa Claus beard. The other psychological quirk about Carnegie was his “mother complex”. Obsessed by his mum in a way perhaps only Norman Bates could appreciate, he refused to marry until she died, even though he claimed to have found the love of his life 10 years earlier; the poor woman was kept hanging around until the matriarch passed away.
There are many other quirks and oddities in the Carnegie story but, despite his ruthlessness, lies and severe human deficiencies, it becomes hard not to feel sorry for him as Nasaw ends his story with a tale of heartbreaking disillusionment. It was almost as though Carnegie was granted a long life (he died at the age of 83) simply so that he could see all his hopes for a new world order turn to dust. Like his fellow tycoon Henry Ford, a convinced pacifist, Carnegie had the slaughter of the First World War as a pay-off for all his efforts for world peace. This is an absorbing biography and, though it is maybe two hundred pages too long, Nasaw is to be applauded for his scholarly labours.
The diminutive Andrew Carnegie, centre, relaxing on board his yacht with Sir John Ross, left, and Sir W Robertson