Skip the office and give your money away: a Victorian billionaire’s guide to financial triumph

But Carnegie’s story is one of striking contradictions: a businessman who crushed labour strikes, yet also a philanthropist determined to give away his fortune. His philosophy of wealth still resonates in debates about capitalism and responsibility today.

“Carnegie was a prideful man, but I can’t emphasise enough his commitment to giving away his money,” says Carnegie biographer David Nasaw, speaking on the HistoryExtra podcast.

From poverty in Scotland to steel riches

Carnegie was born in Dunfermline, Scotland, in 1835, into a family of weavers living on the edge of poverty.

“It was a little Scottish town – a one-industry weaving town – but the industry was in trouble and factories were beginning to take over,” says Nasaw. This industrialisation replaced the labour that weavers provided, stripping many of their jobs while leaving the area and its workers facing a dead end.

For Carnegie, it was an important moment. “He went to school for the briefest of time, with 60 children to a class, and didn’t get much of a formal education. [But] Carnegie’s mother saw that there was no future for her boys, and that the industry was disappearing.”

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So, in 1848, the family left their country behind and emigrated to Pennsylvania as part of a wave of Scottish workers seeking new opportunities in America.

At twelve or thirteen, Andrew went straight to work: first in a cotton factory, then as a telegraph messenger in Pittsburgh. His quick intelligence and remarkable memory for names and routes helped him stand out. Within a few years he had become one of the city’s best telegraph operators.

“He was smart, he was charming, and he was personable, and he rose up through the ranks of the Pennsylvania railroad,” says Nasaw.

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These personal attributes, combined with his professional talents, brought Carnegie to the attention of Pennsylvania Railroad executive Thomas A Scott, who hired him as a personal assistant. Scott became Carnegie’s mentor, teaching him how railroads were built, financed and managed. More importantly, he was introduced to the world of insider investing.

When Scott and other executives offered him chances to buy shares in railroad suppliers, from sleeping car companies to bridge firms, Carnegie borrowed and scraped together the funds. The dividends were generous. By the end of the American Civil War, he was already a wealthy young man.

The war had expanded his opportunities, too. The Union Army’s reliance on railroads and iron bridges showed him how industry, government contracts and infrastructure could work together. He invested in oil and iron, built a bridge-building company, and learned to diversify. “By 30 he was a millionaire and ready to move on,” Nasaw notes.

Carnegie now had the capital, contacts and confidence to focus on one material he saw as central to America’s future: steel.

Building a steel empire

Steel was stronger and more versatile than iron, but in the 1860s it was still expensive to produce. Carnegie saw the potential of the Bessemer process, a method for producing steel cheaply and in large quantities. He poured money into steel mills that adopted this technology, reinvesting profits rather than spending lavishly.

He also benefited from broader political decisions and used them to his advantage. “Congress put a huge tariff on steel, which locked out the British, Germans and French, and gave American steel makers a giant heads up,” explains Nasaw. Those steel makers included Carnegie.

By 1892, Carnegie consolidated his operations into Carnegie Steel, a company so efficient and dominant that it set the standard for the industry. His mills produced the steel that built bridges across rivers, railways across the continent, and skyscrapers that transformed American cities.

In 1901, he sold Carnegie Steel to financier JP Morgan for $480 million, equivalent to over $18 billion today. Morgan folded it into US Steel, the first billion-dollar corporation in history. The sale made Carnegie the richest man alive.

Efficiency over showmanship

Carnegie’s expanding empire was built on relentless efficiency, as well as a personal determination. “ He came from nothing,” says Nasaw. “He understood that if he was going to make his way in this new land of America, he had to be smarter than everybody else, and he had to be one step ahead of everybody else.”

Seeing where money could be made, Carnegie demanded that costs be slashed, adopted new technologies ahead of rivals, and ploughed profits back into expansion. His managers were rewarded for cutting expenses, and he constantly monitored production figures.

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But his pursuit of efficiency often came at a human cost. The most notorious case was the Homestead Strike of 1892, when workers at one of his Pennsylvania plants resisted wage cuts. While Carnegie was abroad, his lieutenant Henry Clay Frick brought in 300 armed Pinkerton detectives to break the strike. A pitched battle left at least 10 dead and dozens wounded. Though Carnegie distanced himself from the violence, he was ultimately responsible for the policies that caused it, and his reputation as a ruthless industrialist was sealed.

But Carnegie wasn’t the stereotypical workaholic tycoon. He preferred to spend his afternoons writing, reading or travelling, leaving managers to handle the finer details.

“At one point he was in New York and a young man came to his office and said, ‘I’m the first man in the office and the last one to leave.’ Carnegie looked at him and replied, ‘Well, you must not be a very good businessman if you have to be there all day. If you’re efficient, then work in the morning and then do other things.’”

For Carnegie, business was about systems and efficiency – not endless hours spent behind a desk.

Carnegie’s Gospel of Wealth

In 1889, Carnegie published The Gospel of Wealth, an essay that crystallised his philosophy of riches. He argued that great wealth was not an individual achievement but the product of collective circumstances – and that it carried obligations.

Nasaw explains: “He says, ‘Look, you didn’t make this money by yourself. You made it as part of a community. You are the trustee for this wealth, and it is your responsibility to give it back and to give it back to the people.’”

The essay was scandalous among the mega-rich. Many saw wealth as a personal reward to be spent or hoarded freely. Carnegie, by contrast, insisted that luxury was wasteful and that philanthropy was a duty.

“He was probably the most unpopular, disliked and despised millionaire of his time because he said, over and over again, ‘you are only the trustee for this wealth’.”

The struggle to give it away

Carnegie vowed to give away his fortune before he died. He endowed universities, supported cultural projects and funded pensions. But he still found that his fortune grew faster than he could spend it.

“One of Carnegie’s great failures in life was that he couldn’t give all his money away: he was defeated by compound interest,” explains Nasaw. “He would donate money, look at his bank account, and there would still be a great sum in there.”

Eventually, Carnegie’s lawyer persuaded him to set up permanent foundations, including the Carnegie Corporation of New York, established in 1911. It still funds education and research today, more than a century later.

Building libraries and public–private partnerships

One of the most famous components of Carnegie’s legacy was his network of Carnegie Libraries.

Between 1883 and 1929, his money funded the construction of more than 2,500 libraries worldwide. Many were modest red-brick buildings in small towns, while others were grand halls in major cities.

Carnegie’s model was unique: he would only fund construction if local authorities made certain commitments.

“He would only build in towns where the town officials promised to support the library through taxes once it was built. Carnegie would pay to staff it, maintain it, and buy the books. [But] if the leaders of the town weren’t willing to [support it too], they didn’t get a Carnegie Library,” says Nasaw.

This insistence on local buy-in made the libraries sustainable. Carnegie didn’t want to just be a donor; he wanted to reshape civic life, compelling communities to invest in education. His model prefigured the public–private partnerships that underpin many modern philanthropic projects.

The contradictions of a capitalist philanthropist

Carnegie embodied the complexity and paradoxes of the Gilded Age. He amassed his fortune through wage cuts, harsh management and union-busting, yet used that fortune to fund libraries, universities and peace initiatives. He was simultaneously admired for his generosity and condemned for his ruthlessness. But what is uncomplicated was the moral clarity of his public message.

“There was a lack of hubris,” concludes Nasaw. “He had an understanding that the wealthy among us have a responsibility, and they have to take that seriously.”

By the time of his death in 1919, Carnegie had given away more than $350 million – equivalent to over $6 billion today. His institutions, from the Carnegie Corporation to the Carnegie Endowment for International Peace, continue to shape education, science and culture worldwide.

Is it possible to be both a hard-nosed capitalist and a visionary philanthropist? Carnegie believed the answer was yes. And his formula was straightforward: build your fortune ruthlessly and then give it back… and don’t waste your life chained to a desk.

David Nasaw was speaking to Elinor Evans on the HistoryExtra podcast. Listen to the full conversation.