How the Scots Invented the Modern World (61 page)

In 1848 new power looms driven by Watt’s steam engine were replacing the old hand looms, so the Carnegie family left for America. Andrew was twelve when they settled in the former Fort Pitt at the confluence of the Allegheny and Monongahela Rivers, which had been renamed Pittsburgh. The town was a magnet for Scots looking for work in the coal mines, iron foundries, and lumber mills that were transforming Pittsburgh into the industrial workshop of the upper Mid-Atlantic. The Carnegies found a place to live with an aunt, who rented them two backrooms in a grim, overcrowded alley in the working-class suburb of Allegheny City. While his father took work in a textile factory, Andrew became a bobbin boy in the same factory for a dollar twenty a week. He was just a few months shy of thirteen.

Yet, like the “lad o’ parts” of popular Scottish novels of the day, Andrew Carnegie was grimly determined to better himself. That meant education. He read everything he could get his hands on, and learned Morse code. Within a year he landed a job as a messenger boy at the Atlantic and Ohio telegraph office in Pittsburgh. Most of the other young boys were also Scots or Ulster Scots, who all became successful in later life, as did their supervisor, James Douglas Reid. But Andrew outdid them all. He memorized the locations of all the office’s main customers, so he lost no time in delivering messages. He could translate the clicks of the telegraph even before they appeared on the printed tape. It was a skill bound to attract attention; and when Thomas Scott of the Western Division of the Pennsylvania Railroad learned about it, he hired Carnegie on the spot as his personal telegraph operator and secretary. The job paid thirty-five dollars a month, almost three times what his father earned after a lifetime’s experience of manual labor. When Scott asked him, “Are you native born?” Carnegie answered, “No, sir, I am a Scotchman”—a reply that, he wrote later, made him “feel as proud as ever Roman did when it was their boast to say, ‘I am a Roman citizen.’”

Carnegie’s first fortune came not in the iron or steel business, but in the railroads. He was only twenty-two when his boss moved to Philadelphia, leaving the post as supervisor of the Western Division to his young assistant. When the Civil War broke out, Carnegie moved to Washington, where he helped to create the system of military supply by rail that helped to guarantee a Union victory. At war’s end the rising young executive sank his personal savings into a new company that was manufacturing sleeping cars for passenger trains. The company owner was George Pullman. In less than a year Pullman made a fortune, as did his investor. Andrew Carnegie could count his personal worth at more than $400,000. The only question was what to invest in next.

The answer seemed obvious: steel. It was essential to railroad construction, which was clearly the key to America’s next stage in economic development, and to the military. But it was also becoming the primary material of a rising industrial civilization, for buildings, bridges, machine tools, and even household items such as cooking utensils and sewing machines. The British had dominated the steel industry for more than a century, thanks in large part to James Watt’s steam engine and J. B. Neilson’s blast furnace. Now an English scientist named Henry Bessemer had developed a new way of forging steel directly out of molten pig iron, which drastically cut the labor involved and dramatically increased the production.

Carnegie met Henry Bessemer on a trip to England in 1873, and decided his new method held the key to the future of steel. He began inspecting a neighbor’s land for a site on which to build the first Bessemer plant in North America. He bought the land and started building the plant, naming it after Edgar Thomson, the president of the Pennsylvania Railroad, who he assumed would be his largest customer. A collection of fellow Scots joined the Carnegie “clan” as partners in the business: his brother Tom, his cousin “Dod” Lauders, John Scott, and Gardner McCandless, as well as non-Scots such as Henry Phipps and Charles M. Schwab. Together they bought out other steelmakers and converted their businesses into Bessemer plants, all the while relentlessly finding ways to make the process simpler, quicker, and cheaper. The Scottish thoroughness and attention to cutting business costs, and willingness to take risks, paid off. In less than twenty years, by 1892, the Carnegie Steel Company was producing steel equal to one-half of the entire production of Great Britain.

This was Adam Smith’s capitalism on a truly gigantic scale. In fact, Carnegie Steel Corporation, later United States Steel, is the ancestor of the modern industrial corporation. Carnegie created a perfectly “vertically integrated” business, controlling every aspect of production from extraction of the raw iron ore and coal to the distribution of the final product, much as John Rockefeller did with Standard Oil. But Carnegie also changed the nature of division of labor, which for a hundred years Adam Smith and his disciples had understood to be the source of all productive wealth. He did this by effectively standing the relationship between business and technology on its head. Before Carnegie, business had to wait for technological advances by scientists such as Charles Macintosh (the inventor of vulcanized rubber) and engineers such as James Watt to create new products or increase production. Now the demands of production themselves would force technological change. The manager, not the engineer or the foreman or the quick-witted employee, decided by looking at his flow charts where processes could be made more efficient or pennies could be saved. The engineer and the employee followed the manager’s lead. If they did not, they were fired. It was a principle all of Carnegie’s managers and supervisors followed, such as William Jones and Charles Schwab and Henry Clay Frick. Industrial capitalism had become as simple, and as ruthless, as that.

And all the time, Carnegie and his subordinates were constantly probing, checking, and rechecking for ways to save money. It became the key to Carnegie’s way of doing business. Once he asked his friend the New York publisher Frank Doubleday how much money he made in the course of a month. Doubleday could not say; he pointed out that publishers generally drew up their balance sheet at the end of the year. “Do you know what I would do if I were in that kind of business?” Carnegie asked. “No, what?” said Doubleday. “I would get out of it,” Carnegie replied.

And by examining his records so minutely, Carnegie discovered a new principle: that the best way to cut the cost of making a product was to make
more
of it. He stated it clearly and simply: “Cheapness is in proportion to the scale of production. To make ten tons of steel a day would cost many times as much per ton as to make one hundred tons. . . . Thus the larger the scale of production the cheaper the product.” Carnegie had discovered “economies of scale,” an indispensable idea for modern industrial production, and for corporate capitalism generally.

Yet this hardheaded, relentless business sense was balanced by his keen, buoyant optimism. Carnegie believed not just in his own corporate future, but in the possibilities for America and the world generally. He was a keen disciple of Adam Smith, but also of Robert Burns. Burns’s refrain “a man’s a man for a’ that” constantly rang through his public pronouncements, which tended toward the radically progressive. He wrote a book called
Triumphant Democracy
in which he prophesied that industrial capitalism would become the great vehicle for the expansion of democratic opportunity. “The Republic may not give wealth or happiness,” he wrote, “she has not promised these. It is the freedom to pursue these, not their realization, we can claim. But if she does not make the emigrant happy or prosperous, this she can do and does do for everyone, she makes him a citizen, a
man.
”

He often visited Scotland, where he lectured his former countrymen on the need to make Britain more democratic. He spoke to large crowds in a voice that was “occasionally marred by an American accent,” as a Scottish journalist noted, “but his feeling is always Scotch and his Americanisms soon relapse into his mother tongue.” Carnegie extolled the virtues of the American system, telling Britons, “The great error in your country is that things are just upside down. You look to your officials to govern you instead of you governing them.” He became an enthusiastic admirer of the English libertarian philosopher Herbert Spencer, who expanded Adam Smith’s belief in the virtue of free markets into an entire social philosophy. Carnegie foresaw “a new industrial world” taking shape, a world “without war or physical violence, in which through the genius of invention and the miracle of mass production, the fruits of industry would become so abundant that they could be made available to all.” The title of Carnegie’s next book summed it all up:
The Gospel of Wealth.
Capitalism had become a form of secular redemption; it was the final permutation of the Scottish school’s celebration of commercial society, civilization, and progress.

Unfortunately, Carnegie had to pass through a personal purgatory first. His hopes for “an industrial world without war or physical violence ” were shattered by the bloody Homestead Strike in 1892. Nine people died at his steel works at Homestead, Pennsylvania, in the worst labor violence in American history, and he was vilified across the country. Carnegie recognized his responsibility and bitterly regretted that he had allowed the response to the strike to fly out of control. “The pain I suffer increases daily,” he wrote to a friend. “[T]he Works are not worth one drop of human blood. I wish they had sunk.” But the memory of Homestead marred his public image and ruined his love affair with the steel business. In 1901 he approached the financier J. P. Morgan to ask what he would pay in order to own U.S. Steel. Morgan told him to name his price. Carnegie took a pencil and on the back of an envelope wrote the number: “$480 million.” He passed it to Morgan, who looked at it and said without hesitation, “I accept.”

Carnegie’s share came to over $300 million—in the era before income taxes, an almost unimaginable sum. In keeping with his egalitarian principles, he said, “the man who dies rich dies disgraced,” and for the next decade he set about translating that sentiment into action. Like Bell, he came to think of his fortune as public property. More than $180 million of his money went to a variety of very Scottish projects. One was building public libraries. Soon there were more than 2,800 Carnegie libraries around the world, including nearly two thousand in the United States. By the time of Carnegie’s death, the total number of readers in the United States using his free public libraries every day was estimated at 35 million. He also built 7,689 pipe organs for churches, as well as parks, swimming pools, auditoriums (such as Carnegie Hall in New York), and medical research laboratories (such as the one at New York’s Bellevue Hospital).

A very large chunk went to education, albeit only of a certain kind. Carnegie took to a new extreme Benjamin Rush’s principle that “knowledge is of little use, when confined to mere speculation.” He saw science, engineering, and vocational training as the future of American education, and refused to fund anything that strayed outside those practical bounds. “The flavor and philosophy of Poets and wise men is the sweetest of all foods,” he used to say, “but for others, not so and these the majority who must earn a living.” To Carnegie, offering a new school for petrochemical research or hydraulic engineering promised more for the future of democracy than the same old courses in Roman drama—or even philosophy, the traditional mainstay of Scottish higher education. The new president of Princeton University, Woodrow Wilson, discovered that when he approached Carnegie in the summer of 1902.

It was an important moment. The two strands of the Scottish legacy for America, already closely related, were about to briefly cross paths. One traced its origins to the Scottish Enlightenment’s vision of intellectual effort as the benchmark of progress, which Princeton University embodied and Wilson touched through his predecessors McCosh and Witherspoon. The other represented the raw human power of the Scottish diaspora, which understood progress in terms of technical know-how and good business sense. In his letter to Carnegie, Wilson leaned heavily on Princeton’s Scottish heritage: “She has been largely made by Scotsmen, being myself of pure Scots blood, it heartens me to emphasize the fact.” He saw Princeton raising a great School of Jurisprudence and Government with Carnegie’s largesse, for the training of future statesmen and jurists. However, he was willing to add this proviso: “[N]o doubt it would be wise . . . to expand the part which commerce and industry have played, and increasingly must play, in making for international as well as national peace and for the promotion of all the common interests of mankind.”

Carnegie visited Princeton, and did give generously to the school. But it was not a school of government, or a library, or even a laboratory. Instead, it was a lake. Carnegie told Wilson he wanted Princeton to have a rowing team like Harvard and Yale, in order “to take young men’s minds off football.” The fifty-acre body of water known as Lake Carnegie was the result. That, and nothing else. The two strands of Scotland’s legacy had met, and retreated in mutual incomprehension.

The intellectual legacy of the Scottish Enlightenment in America was nearly spent. But its practical scientific side seemed to be just getting started. While Carnegie and Woodrow Wilson were parting company, two other men were organizing a momentous experiment in Washington, D.C., along the banks of the Potomac. They were Alexander Graham Bell and Samuel Langley. They had met at the Smithsonian Institution, where Langley was executive secretary, and which had been turned from an antiquarian curiosity shop into an important center for scientific and engineering research by another son of Scottish immigrants, Joseph Henry.
⁴⁵
Langley had told Bell about his new idea of creating a heavier-than-air machine that could fly. Bell was enthusiastic, and gave Langley five thousand dollars for more research. On May 6, 1896, Langley made his attempt at unmanned flight, with his steam-powered Aerodrome V. It flew for nearly half a mile before it settled into the waters of the Potomac. Langley and his team winched it out of the river and set it off on another successful trip, the first airplane flight ever recorded on film. The man handling the camera was none other than Bell himself. Afterward he wrote, “No one who was present on this interesting occasion could have failed to recognize that the practicability of mechanical flight had been demonstrated.”