BRIAN LAMB, HOST: Peter Krass, author of -- how do you pronounce it?
PETER KRASS, AUTHOR, "CARNEGIE": Carnegie, emphasis on the middle syllable.
LAMB: Not Carnegie.
KRASS: No. No. And if you go into New York City and you go to Carnegie Hall, you'll pronounce it Carnegie. And when he was growing up, his nickname was "Neg." So that kind of settles the dispute right there.
LAMB: How long did you spend with this man in order to get this book written?
KRASS: Start to finish, two-and-a-half years, and it was solid through every day. I was completely dedicated to it.
LAMB: How many books have you written?
KRASS: Well, this is my first biography. I did a series of business anthologies that were classic writings by the greats, including Andrew Carnegie, which is when I first became familiar with him.
LAMB: Why Carnegie?
KRASS: He is incredibly complex. He typifies the titan of the gilded age, and I think the American public is still fascinated with that time. Recent Morgan and Rockefeller biographies are evidence of that. And if you're looking for a character to work with as a biographer, Carnegie's fantastic because he was so complicated. He had an incredible internal conflict, and his behavior was often so contradictory that you just want to dig in and find out what was driving this man.
LAMB: Your own relative did what with Carnegie at one time?
KRASS: My great-grandfather worked in a Carnegie -- now the Duquesne Mill -- right outside of Pittsburgh. And he was a skilled laborer who worked in the furnaces, changing the lining. This was back -- he lived from 1872 to 1931. So most of his tenure there was post-Carnegie. But even post-Carnegie, the life as a steelworker was tough.
LAMB: Anything passed on in the family?
KRASS: No. You know, I actually didn't know about that till I started this project, and an aunt came to me and said, "You're not going to believe this. You've got a great-grandfather who worked in a mill." And so there really isn't anything passed on except stories, and they're not pleasant stories. As a matter of fact, my great-grandfather tended to imbibe to soothe his pain, and so most of the stories center around his drinking.
LAMB: What were some of the stories about working there?
KRASS: Just that -- you know, it just ground him down so much that when he came home, he was just so tired, bitter. They had at least 10 kids. And so you can imagine working in a mill all day, coming home to that kind of brood. So it was tough.
LAMB: You say in your book that John D. Rockefeller is the richest man in history in the United States, $200 billion, based on today's money?
KRASS: That's right. There was an economist who did an article for "The New York Times" back in 1999, and that's where I lifted this information from. And he actually -- he used -- he didn't use the CPI index. He had a funky formula to estimate what these titans would be worth today. And he put Rockefeller at a little over $200 billion, and he put Carnegie at a little over $100 billion. And then we'd have Gates at, you know, mid-$40s billion, depending on his stock price.
LAMB: Before we talk about Mr. Carnegie, let's go to the end and ask about what he did with his wealth. Where can we see things today that Carnegie spent his money on in this country?
KRASS: Well, there's a number of major foundations still in existence that he created. The primary one is the Carnegie Corporation in New York. You've got the Carnegie Institution in Washington, D.C., which funds a lot of scientific work. You've got the Carnegie Institute out in Pittsburgh, which is an incredible facility that includes a museum, art museum -- or museum of natural history, library. You've got Carnegie-Mellon, which became Carnegie-Mellon, I believe, in the '50s or '60s. They merged.
KRASS: Right, university. And then over in Scotland, you've got a number of foundations still in existence. So his legacy is still felt by literally millions of people.
LAMB: How big is something like the Carnegie Foundation?
KRASS: Well, the Carnegie Corporation in New York has a fund now at about $2 billion. And to give you an example of the work they're doing, several years ago, they gave $15 million to urban libraries, which is exactly what Carnegie himself would want them to be doing today because libraries were his centerpiece, and he felt that they would best uplift the masses. And by giving that kind of money to urban libraries certainly fits right in with what he wanted.
LAMB: How many libraries would not be in existence today in this country without his money?
KRASS: Well, in the world, it would be close to 3,000. I'm not sure what the number is in the U.S. Now, you have to realize some of those library buildings become decrepit. They were torn down, replaced. However, there were close to 3,000 communities.
LAMB: You say there's -- I don't know where you got this figure, but 27 percent of them don't have his name on them.
KRASS: That's right. That's right.
LAMB: Twenty-seven percent have the name on. The rest don't.
KRASS: That's right. Because there's this misconception that Carnegie forced his libraries on communities and wanted his name on those buildings, sort of the Ramses II factor, you know, where he built temples all over Egypt and slapped his name on them. And that comparison's been made. But in fact, that's not true because it was the communities that would come to him. It was mainly women's clubs, ministers, town councils would come to Carnegie, request a museum. They'd have to fill out an application. It'd have to be OK'ed by Carnegie's secretaries. And never was his name required to be on the building. In fact, the state of Indiana, which received numerous libraries, not one had his name on the building.
LAMB: Where did you go to get the information for the book? And is there anything new in here?
KRASS: Well, I went to Pittsburgh, obviously. The Heinz History Center there has boxes of Carnegie papers. So does the Library of Congress, New York City, and then over in Scotland.
And as far as new material goes, there's an interesting story. Henry Clay Frick, who was obviously a key partner in this business of his, had kept all his papers, as well. And the Frick family over the years has bickered over whether his papers should be in Pittsburgh or whether they should be in New York. As a result, scholars often don't have access to those papers. But there was a window of opportunity in the '90s, and a British scholar by the name of Kenneth Warren got a hold of them and put them in a book of his called "Triumphant Capitalism." So I was able to access those papers through his book, of course, that prior biographers didn't have access to.
And by weaving them into what was already out there, you start to get a different picture of Carnegie during certain events. You get a fuller portrait of him. Also, the last biography was in 1970. Since then, we've got all these electronic databases, these incredible search engines. So by using those, I was able to find papers in other families, completely unrelated to the Carnegie basically, but that referred to Andrew Carnegie. So again, it gives a fuller picture of him. And some of these kind of peripheral papers actually are even better to go to because they weren't out there for posterity's sake. They were never meant to see the light of day, so you get a more honest picture of him, at times.
LAMB: You say he was born in Scotland in 1835 and died in Lenox, Massachusetts, in 1919. When he died, how much money did he have?
KRASS: Twenty-five million dollars.
LAMB: Based on the dollar back then?
KRASS: Yes. Right.
LAMB: In 1919.
KRASS: Right. And in his will, every penny went to various institutions, and nothing was left for his wife and daughter, who had already been taken care of. And at that point, he'd already given away $330 million, $340 million.
LAMB: Jump into a letter in the middle of your book to his fiancée at this time. By the way, how often did he marry?
KRASS: He only married once.
LAMB: And when did he marry?
KRASS: He was 51. So we're looking at 1887.
LAMB: How old was she?
KRASS: She was about 20 years his junior.
LAMB: In this letter, he says, "Our parents are better, and I have always known what you said recently was true. To leave your mother, you cannot think of it, nor could I mine. Mother seems really better. It's miraculous. I trust yours is also better. Everything does hang upon our mothers with both of us. Our duty is the same, to stick to them to the last. I feel this every day."
KRASS: Well, there's been some debate whether or not he promised his mother not to marry until she died because they lived together, you know, right up until her death. And in fact, I'm certain that that promise was made to her because she died in the fall of '86, and he married in April of '87. And everything he did was for his mother. You can't discount that he was driven for her to ride in a fancy carriage, for her to live in a fancy mansion, for her to have servants.
KRASS: Growing up in Scotland -- that was a period called the "Hungry '40s," and there was an incredible economic downturn. His father was a hand-loom weaver, and the Industrial Revolution was kicking off in Britain before it reached here. And he eventually found himself out of work. The steam-powered looms took over. And it was his mother who came to the rescue. She started mending shoes at night. She started working during the day in a little grocery shop she set up in the front window of their house. And she became his heroine. His father basically faded completely from the picture. And he dedicated his life to her, to reward her for what she had done.
LAMB: Here's the house you say he was born in?
KRASS: That's right. Actually, he lived in half of that house. It was a duplex. And I visited there, and just to give you an idea of what the actual size is, if you took eight paces across and six paces across the other way, that was basically your floor plan.
LAMB: Where is it?
KRASS: It's in Dunfermline, Scotland, which is just north of Edinburgh.
LAMB: What's the town like?
KRASS: It's very gray. Its nickname is "The gray old town," and it was a manufacturing center that's certainly seen better days.
LAMB: Now, you also brought along this picture, and this picture is in the book.
KRASS: Right. I just wanted to give you a contrast of where he started and where he ended up because we all talk about Andrew Carnegie being the classic rags-to-riches story. And certainly, those two photos tell that story right there.
LAMB: Where is this?
KRASS: That's Skibo Castle, which is in the highlands. It's about an hour north of Inverness.
LAMB: So what year did he come to the United States?
KRASS: In 1848.
LAMB: How old was he?
KRASS: He was 12.
LAMB: Why did he come here?
KRASS: Well, the situation -- the economic situation had gotten so bad in Dunfermline that his parents felt they had no choice. And again, it was his mother who was the driving force for this move. His father would have been very happy to struggle along, I think, in Dunfermline. But they were looking for a better life.
LAMB: And they moved to where?
KRASS: The town is called -- was called Allegheny City. It's now the north side of Pittsburgh. And in those days, the nickname was "slab town."
LAMB: You said that his mother worked on shoes.
LAMB: Over in Scotland or here?
KRASS: In Scotland. And then -- so they come to the United States, and Andrew's father, William, tries his hand again at hand-loom weaving, but there's just no market for it. He briefly takes a job in a cotton factory, doesn't last long at all. So his mother again steps into the void, and she starts mending shoes for an English neighbor whose last name is Phipps. And again, she saves the day. And the Phipps family became very tight with the Carnegie family. In fact, Harry Phipps, who was the son of the shoemaker, became a lifelong partner of Carnegie.
LAMB: Andrew Carnegie made his money how?
KRASS: In a series of phases. Everyone thinks of Andrew Carnegie as a steel magnate, but you really have to go back to the 1850s to start tracking his rise, and you have to think that -- realize that he didn't get into steel until the mid-1870s. Long before he was in steel, he was an investor, and he bought stocks, bonds, and he got into a bridge-making company, which was what really started to launch him. And he says that was his pet of all businesses because during the Civil War, iron bridges were in huge demand, due to -- you know, it was so easy for the two sides to burn wooden bridges. So iron bridges were in great demand. He gets into iron bridge-making, and it starts generating huge profits.
Then what he does is -- he's like an octopus, in a sense, that with each tentacle, he kind of reaches out with each new project. What he does is, he starts taking over the building of the railroads that are going to cross these bridges. In the meantime, he's also invested into an iron-making business. So he uses that iron business to buy all the iron he needs for these other endeavors. And it's a really neatly interlocked organization he's got going.
Then he takes it a step further. They want to build a bridge across the St. Louis -- at St. Louis, across the Mississippi River, which is an incredible technological feat in those days. And it's going to cost a lot of money. Now, railroad companies had been selling bonds to fund their businesses, but never before had bonds been sold to fund a bridge-building project. And they decided that's what they need to do.
Well, Carnegie immediately raises his hand and says, "I'll sell the bonds, too." So he's building the bridge, the railroads. Now he's going to sell the bonds to fund this. He goes over to England, where he meets Junius Morgan, J.P.'s father, and sells these bonds. And what he realizes is, you know, I am a great salesman. I can sell anything. And so he goes full-tilt into bond selling, nets incredibly huge profits, and he uses those profits to now fund his steel-making.
So what people don't realize is that Carnegie actually made his first fortune as a bond salesman.
LAMB: There's a picture of him here from 1862, which is right in the middle of the Civil War. What did he do during the Civil War?
KRASS: At the start of the Civil War, you had -- the Confederates have basically cut off Washington by sabotaging some railroad lines and bridges. Carnegie's boss at the Pennsylvania Railroad, which is where he was working at the time, is brought into Washington by the secretary of defense to rebuild these lines and open Washington back up so they can get troops in there, protect the city. He brings in Carnegie, who's been his right-hand man, to oversee the field operations.
Carnegie works night and day. He was the kind of guy who could get a catnap for an hour and go the next 23 hours. So they're working night and day to rebuild the bridge across the Potomac. They accomplish that. The troops go over. We've got the first battle of Manassas. Carnegie's in charge of getting the troops there by train. Of course, the Union ends up on their heels and retreats. Carnegie's out there getting the troops back on the trains, the wounded. He takes one of the last trains out.
So he had quite an experience, and it actually took its toll on him. He suffered from heat stroke and took a vacation soon thereafter.
LAMB: Did he ever fight?
KRASS: No, he didn't. As a matter of fact, he thought he was sort of immune from ever being recruited or drafted to fight because there was a 2-year-old law passed that exempted railroad men and people in crucial positions. But he -- in fact, he was drafted, and instead of going to war, he hired a substitute for $850.
LAMB: And we know from past books that J.P. Morgan bought his way out of the Civil War for $300. Grover Cleveland bought his way out of the Civil War for $300. How much of that went on back then?
KRASS: It was fairly common practice. If you had the money, you did it. In fact, you could buy your way out by spending the $300, which went straight to the government. But if you were more patriotic, you'd spend the $850 to actually hire a soldier to replace you.
LAMB: Born in Scotland, came here to the United States, moved near Pittsburgh, worked for the Pennsylvania Railroad for how long?
KRASS: He started in the early '50s -- '52 -- and he retired -- didn't retire, but he quit in 1865. He was ready. It was time for him to -- it's a little over a dozen years, say. It was time for him to pursue his own interests because he had quite a portfolio by 1865, and his salary from the railroad was actually just a very small portion of it.
LAMB: How much education did he have?
KRASS: In Scotland, he went to school from about age 8 to age 12, when they emigrated. And that was it, at that point. When he came to the U.S., he had to go to work. However, after he had been working for a few years here, he's now got a job as a telegraph operator. It's not a grueling job. He's got free time at night. He goes to night school to learn double-entry accounting. He goes to the libraries and just reads everything he can get his hands on, as far as history goes, American politics goes. So there was an incredible amount of self-education.
LAMB: How many other siblings -- or how many siblings did he have?
KRASS: Just one, Tom.
LAMB: And what was his relationship to him?
KRASS: Well, Tom was eight years younger, so he was always going to be the baby brother. And Andrew was very good about taking care of Tim financially. He brought him into the Pennsylvania Railroad. He hired him as his personal secretary. Later they were partners in business together in iron and steel. However, the two had a contentious relationship, as well. And to give you an idea of how that relationship ended, Tom died in his mid-40s from complications from being an alcoholic because he was driven so hard by Andrew. And the reason why he felt such pressure is because Andrew moved to New York eventually. Tom stayed in Pittsburgh, where the business was. So you can imagine, Tom is dealing with all the day-to-day affairs. Not only that, he's got Andrew on his back to make sure it's managed properly.
LAMB: How long did he live in the Pittsburgh area?
KRASS: Well, they moved there in '48, and Andrew Carnegie moved in '67.
LAMB: To where?
KRASS: To New York City, to a nice -- a fancy hotel.
LAMB: There's a letter in here, or a diary entry, December, 1968 -- I mean, 1868, from the Saint Nicholas Hotel...
LAMB: ... in New York. What's the circumstances of this?
KRASS: OK. Well, he's moved to New York the prior year, and he's convinced you've got to be in New York because that's where the action is. That's where the money is. And anyone who wants to build a large business has got to be there. But when he gets there, what he finds is that you've got all these scoundrels on Wall Street, like Daniel Drew and Jay Gould. And he was expecting sort of the London of the United States, a cultured city, but that's not what he finds.
So I think he's feeling a little melancholy about his situation there. He's missing his friends in Pittsburgh. Then he sits down in December, end of the year, and writes this note to himself, where he pledges to himself that he's going to retire in two years, which would put him at the age of 35. He's going to dedicate himself to literary pursuits. He wants to move to Cambridge in England and meet men of letters. And he wants to spend all his surplus income on philanthropy uplifting the masses.
LAMB: He's 33 when he writes this.
KRASS: That's right.
LAMB: Let me read straight from this -- that you have in the book. "Man has an idol. The amassing of wealth is one of the worst species of idolatry. No idol more debasing than the worship of money. Whatever I engage in, I must push inordinately, therefore should I be careful to choose that life which will be the most elevating in its character. To continue much longer overwhelmed by business cares and with most of my thoughts wholly upon the way to make money in the shortest time must degrade me beyond hope of permanent recovery. I will resign business at 35."
I notice also -- and you talk about this in the book -- that he spelled things differently than most of us.
KRASS: That's right. He wanted to spell things phonetically. He thought the American version of English was too complicated. And just -- I'll give you just another quick story, is he eventually funds this spelling reform movement because he feels if English is more phonetic, it'll be adopted as a world language and there'll be better communication throughout the world, and thus world peace.
LAMB: "The amassing of wealth is one of the worst species of idolatry." And here's a guy that was the second richest American in history.
KRASS: That's right. I think that's a reaction to what he saw in New York, and he realizes that. And yet he also realizes that he's so driven internally, he can't -- he can't shut himself down. I mean, he's got to go 100 percent. So he's warning himself.
LAMB: Go back to the mother, Margaret. What was that all about?
LAMB: I mean, he actually lived with her, physically lived with her until he was 51 years old.
LAMB: Until she died.
KRASS: That's right. I think that -- you know, I spoke a little bit about how she came to the rescue, and she was a driving force for him. And he just could not let her go. He just -- he stepped into his father's shoes. I don't want to get into any psychobabble, but he stepped into his father's shoes, and he felt it was his duty to take care of her. Not only that, she had a lot of common -- just street business sense.
And to give you an idea -- when he was a boy and he finally went to school, they had to recite proverbs. So it's Andrew's turn now. And what does he say? He says, "Mind the pence and the pounds will take care of themselves." So all the kids get a great laugh because, obviously, that's not in the Bible. But that's what his mother always told him. And later in life, what drives him? "Mind the costs, and the profits will take care of themselves." So you can see that his mother, even her little proverbs had such an impact on him through his entire business career.
LAMB: What was he like? How big was he?
KRASS: He was 5 foot 3 on a good day. He would wear lifts in his shoes. His chair at the dining table was two inches taller. He had just white -- blond, almost white hair. And at one point, he struggled to grow a beard so he would look older because he didn't get much respect from other people because he always had this baby face.
You got to imagine this -- you know, so you have to imagine this 5-foot-3 man just with incredible energy, always bounding about.
LAMB: How much did he weigh?
KRASS: He was always -- I don't know how much he weighed, but he was always in excellent shape. He prided himself on that.
LAMB: Now, the picture you have here on the cover of this book is from what year, do you know?
KRASS: I don't know, but he's got to be in his early 80s, at that point.
LAMB: And when you went after your resources on this, were there a lot of photos available for you?
KRASS: Oh, yes. Yes, a tremendous -- a tremendous number of photos, especially out in Pittsburgh. He loved to have his photos taken. And in fact, his wife, Louise, that was her hobby. And when I was in Scotland doing the research, I sat down with one of Carnegie's ancestors, and she pulled out a family photo album from the 1880s with all these photos Louise had taken.
LAMB: But you call his own autobiography "suspect."
LAMB: Did you read it?
KRASS: Oh, yes.
LAMB: And what year was it written?
KRASS: He started it off and on, but most of it was written in the later years of his retirement. So let's, you know, say the early 1900s, say 1910 on.
LAMB: Why is it suspect?
KRASS: Well, it's self-serving, to a great degree. And in it, I found that he recounted episodes in his life that in no way matched up with the letters and documents of what was happening.
LAMB: How often did you find him not telling the truth?
KRASS: There were at least a half dozen instances where there were -- let's call them blatant lies. And in fact, even in 1912, there was a commission investigating U.S. Steel as a monopoly, and he got on the stand and just told stories that simply weren't true. And I don't think you can say that it all was due to just being an older man who had forgotten the facts.
LAMB: You say he was a self-proclaimed pacifist. What evidence do you have of that?
KRASS: Well, you have to go back to the Spanish-American war, 1898, and he joined the anti-imperialist movement because there was a great concern that once we won that war, we were going to take over the Philippines, Cuba, Puerto Rico and impose ourselves on them. So there's this anti-imperialist movement. He becomes a leader, and he wrote letters to anyone who would listen, from, you know, Roosevelt to the other presidents in that period of time.
And these are letters with language you would not believe. I mean, if you read a letter that was written by a businessman today to George Bush that had these kind of -- this kind of language -- you know, he was calling presidents "bubbleheads," basically, and "cowardly" and "spineless," and "You've got to leave the Philippines alone." So there's plenty of evidence that he was a pacifist.
He also wanted arbitration treaties with all the other European countries, especially England, Germany, France, so that there would never be war. He wanted everything arbitrated, regardless of what it was. And of course, Roosevelt, who was a jingoist, just could not buy into this at all.
LAMB: How much money did he make off of war?
KRASS: It's hard to say, but he claimed millions in his letters to his partners. Let's go back to 1898. While he's proclaiming himself a pacifist and promoting the anti-imperialist movement, he's urging his managers in Pittsburgh to build a projectiles mill, the projectiles to go into cannons, because you don't want to build canons because you only build one canon, but it'll fire a hundred projectiles, let's say. So canons were out, projectiles were in because there were greater profits in that.
So when you look at that -- and again, this is why I love exploring a character like this -- you've got to wonder what is he thinking because, obviously, profits were ruling over ideology, at this point.
LAMB: Earlier, when we were talking about what he did with his money, you didn't mention the Carnegie Endowment for -- international endowment -- Endowment for International Peace or...
KRASS: That's right.
LAMB: What is that?
KRASS: Well that was founded in 1910 and what he wanted to do was use it as an educational institution to educate people on the drawbacks of war. For example, if there was a war in the Balkans, they analyzed it and said look, this is what happened. This is what you could have done to prevent it. However, when that foundation was created, it was really ridiculed in the press because he gave $10 million to them. They said what are you going to do with $10 million in the name of peace?
LAMB: Are they living off that endowment today?
KRASS: Oh, yes. Yes. As a matter of fact they're active right now.
LAMB: So, what do you think? I mean does anybody ever go over this business that he made a lot of his money from war. He said he was a pacifist. He didn't fight in the Civil War. He paid not to fight in the Civil War, gave money for an endowment for peace that they're still living on today and they wouldn't have the money today if it hadn't had been for war and the whole steel business in the first place.
KRASS: What I say at the beginning of the book is that you've got to think of Carnegie as a flawed Shakespearian hero and he thought the world was a stage, and while he was on that stage, he wore a number of masks and I just don't think you can reconcile those masks. And again, we got to go back to his childhood and look at something here.
When he was growing up, his family were political radicals. They were the working class. They were fighting for the right to vote, the right to own land, better working conditions, better wages, OK. So, he's got this radical side of him. Now he goes to the United States and there he embraces capitalism.
He becomes a rabid Republican, so this is in complete opposition to his ancestors. And, I think what you have through his whole life are these two sides in conflict fighting each other, and I think you can just use that. It seems over-simplified but you can use that to explain a lot of his contradictory behavior.
LAMB: I'm not sure I've got the right year or the right candidate but I remember you saying at one point that in like 1912 when William Howard Taft was running against Woodrow Wilson and Theodore Roosevelt that J.P. Morgan, John Rockefeller, and Carnegie gave $250,000 each to Taft. Am I right about that?
KRASS: I think it was William McKinley was the first president they supported with a huge amount of money for tariff protection. By the time Taft was running against Roosevelt, Taft had already been in office for four years and he had bungled the treaties Carnegie wanted and there was a falling out and Roosevelt and Carnegie had a falling out even before he entered the picture.
LAMB: The reason I bring it up and whatever, did they give that much money back then, $250,000?
KRASS: Oh, yes. Yes.
LAMB: And if you project that up to now that's in the millions.
KRASS: It's huge, right. And today, you know there's an outcry against big money invading politics and it was no different 100 years ago. In fact, Carnegie and the Morgans of the world back then were constantly dinner guests at the White House and they had a lot at stake because back then the tariff which put a duty on imports into our country, depending on how high that tariff is, it meant millions to these industrialists.
LAMB: So, go back to the fact that he left the Pennsylvania Railroad in, I don't remember the year but he was...
LAMB: '65. What did he do then?
KRASS: Well, he's got his bridge building concern I mentioned. He's got an iron business. He's also got a sleeping car business he's invested in.
LAMB: You say he tried to take credit for the sleeping car and it wasn't his.
KRASS: That's right. That's right. The inventor or one of the inventors of the sleeping car came to the Pennsylvania Railroad because the president, Edgar Thomson, was big into investing in new technology and he came directly to Thomson. However, somehow Carnegie twisted the story that this inventor Woodruff came to Carnegie because he saw him on a train, was introduced to him, said basically hey can you get me in the door at the Pennsylvania Railroad?
I include some letters in there where Woodruff completely denies Carnegie's version of events and, in fact, Carnegie doesn't refute Woodruff's version of the events. So, you got to believe Woodruff; however, when I talk about some of his writing being suspect, even after that point Carnegie keeps his version for his autobiography and some later essays he wrote.
LAMB: You were about to tell us how he got involved in steel.
KRASS: Steel. This is a great story because it has sort of Machiavellian intrigue to it. The year is 1861 and a boyhood friend of his has become a partner in an iron business with two Bavarian brothers. They have a falling out and they invite Carnegie to mediate.
Carnegie ends up getting his brother involved because his brother is a very even-tempered person and he thinks his brother will bring even-handed management to this company. Carnegie loans his brother $10,000 to buy into this partnership. However there had to have been some kind of agreement between Andrew and his brother Tom because when you look at the income records of Andrew within the next couple of years, the money he's making off this iron enterprise is not interest on a loan. It's a tremendous amount of money.
So, before you know it, Carnegie's in the door. He actually ends up starting a rival iron business because the trouble with the other company, his friend finally drops out of this company and Andrew says all right, come on, we'll start our own iron business. So now he's competing with his brother, Tom, over here and he's got a mill up the river here and it's like the divide and conquer scenario.
This mill when Tom meets Andrew's sales capabilities, this mill here that Andrew's running needs the Bavarian brothers' mechanical skills, so they end up merging. When they merge, Andrew eventually has the majority of the business interests. So now he's got this iron business going and it's incredibly profitable, especially during the Civil War and the years after with the railroad boom.
Now we get to the 1870s and steel has been around for over ten years so Carnegie was not a pioneer in steel, which is another legend that needs to be dismissed. He had been monitoring it very carefully. By the 1870s, they've worked out a lot of the problems in the manufacturing of steel and a quote from Carnegie is pioneering don't pay and that's where it comes from.
So, now he's determined to build the most advanced steel mill ever, which he does just outside of Pittsburgh and he hires this guy Holley who's already built several steel mills as the most experienced because he always only wants the best men. That's one feather in his cap. He always hired only the best, and he gives Holley carte blanche. He says just I want the best and what that allows Holley to do is to have form follow function. In other words, this was an incredibly efficient operation and that's sort of the story of how he eventually got into steel.
LAMB: What was the name of the steel company?
KRASS: Edgar Thomson and it was named after the president of the Pennsylvania Railroad because Carnegie understood the power of vanity and he figured if I name this mill after the president of the Pennsylvania Railroad, I'm going to get huge orders for steel reels from this guy.
LAMB: Did it work?
KRASS: No, because Thomson died before the mill opened and Carnegie still had a lot of respect from the Pennsylvania Railroad. There was still a reasonably good relationship there but it was still a struggle because you have to realize that that mill opened in '75 and you just had the financial panic of 1873, so he entered into an incredibly tough market.
LAMB: You write about the panic of '73, '93, '07. All through those panics and those downturns and depressions, did Andrew Carnegie protect himself through all that?
KRASS: He did. He did and he came out stronger. He was - in one sense he was very much a cutting edge entrepreneurial type who was willing to take risks. On the other hand, he was very conservative with his money and so when the 1873 panic hit, he had cash and what he realized, what he learned from that experience is that he was still in the process of building that mill and now he could build it cheaper because he could get his labor cheaper.
He could get all his material cheaper because all these people were suffering, struggling. They'd do anything to sell their product or to get a job. And so for every downturn, what you find is Carnegie will shut down his mills and make improvements on them, every time there was an economic downturn and he'd come out stronger.
LAMB: Again, he lived from 1835 to 1919. When did he start giving his money away?
KRASS: Wholesale giving was when he retired in 1901.
LAMB: But he started before then giving some away?
KRASS: He did. His first major benefaction was 1873. He gave baths to his hometown of Dunfermline. Then in the 1880s, he gave Dunfermline an impressive library and Braddock, Pennsylvania where Edgar Thomson was located, he gave them an impressive library. Then in 1889, he writes an essay called "The Gospel of Wealth" where he starts to lay out his template for giving. Later in that year, he writes a second essay on the best uses of wealth, which is now the complete picture of what he thinks the wealthy ought to do with their money.
So, from 1890 on, it starts to pick up its pace but it's when he sells out to Morgan in 1901 for an astounding $480 million that now he's got all the money to just fund these incredible institutions he set up.
LAMB: Was he finished with the steel business in 1901?
KRASS: Yes and this is what - Carnegie, I had a love/hate relationship with him but one of the things I respect is when he retired he was 65 years old and now he dedicated his life to philanthropy. He cut all ties to the business and he didn't just give his money away. He had this template I was just talking about and he was hands-on to make sure it was spent in the best way possible to uplift as much of the American public as he could.
Now, he was hands-on but, on the other hand, when you look at the language of the trusts he set up and the foundations, he always gave his trustees a free hand and at any time they could vote to change the direction this institution could take. So, he was also very broadminded when he did this. Now when you look at magnates today, CEOs today, I find it discouraging that a lot of them when they retire, they either go to an investment bank or they keep their hand in the cookie jar at their old company. You know it would be nice to see someone step up in that same manner and just go into it with a template in mind.
LAMB: So, came here from Scotland after 12 years, settled in Pittsburgh, worked for the Pennsylvania Railroad eventually for how many years was it again?
KRASS: About a dozen.
LAMB: Moved to New York City, lived there for how long?
KRASS: He spent the rest of his life there for the winters and the summers were spent in Scotland.
LAMB: Involved with the steel company, total number of years there?
KRASS: You're looking at 75, 25 years let's say.
LAMB: And then when he retired in 1901, what did he do until death at 1919?
KRASS: Philanthropy was a full-time job.
LAMB: Involved in some of these foundations?
LAMB: And you say that he got cross wise with the people that ran them eventually?
KRASS: Right, well in the beginning he set them up. He was hands-on. You know it wasn't this huge staff of 50 people. It was him, three secretaries, and his wife basically and then some advisers out there who he would go to. But, as the years progressed, the trustees now want to be more autonomous. And so, he starts getting shut out, which is hard for him because he's in the twilight of his career. This is now his entire life.
And, to give you an example, let me step back. One of his tenants for giving was only help those who help themselves, OK. So now, let's go to 1910-ish in there and over in Scotland he's got his trust for Dunfermline and he goes to the trustees there and he says you know we need to do something to better housing for the poor.
Now this is not Carnegie at all because you never help those who can't help themselves. He wants to build low income housing that these poor people can afford and the trustees just shake their heads and they say there's no way we're ever going to do this, especially not in Britain which is so class conscious.
So he say OK, well how about if we take the housing that already exists and we just improve it. Let's give these people indoor plumbing. Let's give them heat. You know let's give them a chance to submit to old age and again they just say no. They shut the door on him. So, there are certain situations like that that this started to crop up more frequently later on.
LAMB: You're from Hanover, New Hampshire. How did you find yourself there?
KRASS: I was living in Wilton, Connecticut, Fairfield County, right next to New York City.
LAMB: Doing what?
KRASS: I was writing and my wife was still supporting us.
LAMB: Doing what?
KRASS: She was working for Anderson Consulting, which is now Accenture, not to be confused with the other Andersen, and my career got to a point where we could now basically go wherever we wanted and we just wanted to get out of the New York Metro area and escape north. We love the outdoors. Hanover is home to Dartmouth, so there's great research facilities there. It's just a great place to be.
LAMB: Where did you grow up?
KRASS: All over the place. My father worked for Union Carbide so we were moving every two to three years.
LAMB: Where did you spend the most time?
KRASS: In Wilton. I actually went to high school there. Then after college, I bounced around a bit. We came back to Wilton for a few years before we high-tailed it.
LAMB: And where did you go to college?
KRASS: Lafayette College.
LAMB: What did you study?
KRASS: Economics and business.
LAMB: Do you have a family?
KRASS: Yes, three kids.
LAMB: And can you make a living off of writing?
KRASS: Barely. It is tough but you know what you don't do it for the money. I love to write and when I look at this book, I don't think of myself as a biographer. I don't think of myself as a historian. It's my craft and I just want to bring that character to life with language.
LAMB: One of the notes that I wanted to ask you about is that you said you wanted to thank Carol for a séance in Skibo. Would you like to explain that?
KRASS: Yes, OK. It's one personal story. I go to Skibo, which is now a club, an international club. You got people coming from all over the world and interesting people.
LAMB: Where Carnegie used to live?
KRASS: Right, right. So, the second morning I'm there, I come down to breakfast and I've met two couples and the one woman says "you're not going to believe this. I saw Carnegie's ghost last night. I know I saw his ghost and there was banging. I can't explain it." The other woman, her friend, says to me "I think your presence here has disturbed him and I think we need to do a séance" because she's into the occult.
And, I was flabbergasted at this and I said you know what, I'm just not into this and, in fact, I actually had an appointment luckily with one of Carnegie's ancestors who runs an organic farm on property adjacent to Skibo, so that was my excuse to high-tail it out of there. But she had the séance anyway and did this automatic writing thing and then afterward gave me her notes and she claimed Carnegie spoke to her about how Skibo is for the people and everything he did was always for the people and that was that.
LAMB: Mr. and Mrs. Carnegie had one child. They named her Margaret, any ancestors?
KRASS: Yes. There are still - Margaret had a few children and they go find ancestors in Scotland, New York City, even out in Colorado, so there's quite a few around. They're very inconspicuous. Carnegie gave away most of his money. There's not these huge trusts like the Rockefeller family enjoys.
LAMB: The big difference between what Rockefeller did with his money, Morgan did with his money, and Carnegie did with his money?
KRASS: Morgan was a spendthrift. Carnegie felt that the wealthy should live very modest lives so Morgan was not someone Carnegie cared to deal with. He did give away some of his money. I think most of it went to the Episcopalian Church because he was a philanderer and I guess it redeemed his soul.
Rockefeller, however, actually went to Carnegie for advice on many of the foundations and trusts that he set up. Rockefeller funded the University of Chicago. He was bit into education, medical schools that kind of thing, and Carnegie loved that he left that to Rockefeller. And then we've talked a bit about what Carnegie did; however, Rockefeller did give away $500 million, which is an astounding amount of money but he did pass $500 million along to his children.
LAMB: So, all of the Rockefellers, the Nelsons and the Davids and the Lawrences and all got money from the family and even beyond. One big chapter here is the Homestead tragedy. In the middle of all this, in the middle of the steel business, what was the Homestead tragedy and what impact did it have on Mr. Carnegie?
KRASS: The Homestead tragedy took place in the summer of 1892 when the workers there went on strike for better wages. Now, there's a couple of intriguing things. Ultimately you need to know that 13 men died. The Pinkertons were brought in to suppress the strike. However, there's a couple of intriguing things.
One is that you had 3,800 men there but only a little over 300 were going to be affected by these wage cuts and yet the entire workforce got behind this strike, and so you've got to wonder why, and the answer is in the book and I don't want to divulge it. So that's one intrigue.
The other intrigue is that Carnegie was criticized, just brutally criticized by the press for being in Scotland at the time of the strike, for hiding in Scotland. That is not true at all. He had been going to Scotland every summer for years at this point. In fact, the day of the strike, of the violence, July 6th, he was in Aberdeen, Scotland. He was receiving a Freedom of the City, because he had just dedicated a library there. So, everybody knew where he was. Another piece of lore is that Carnegie was not involved that this was Frick's game.
LAMB: Who was Frick, by the way?
KRASS: Henry Clay Frick was his partner. He was president of the company at this time. He was in charge of all the operations. So, Carnegie is over in Scotland; however, there's communication between him and Frick right up until July 4th and this is where those letters that were available in the Kenneth Warren book come into play.
He was in communication right up until July 4th. Carnegie was right in there planning the campaign to oust the union from the mill. So in actuality, you should be more critical of the fact that Carnegie was right there planning this campaign than the other criticism that he was hiding in Scotland.
So that's another just interesting piece that I work on in this chapter and there's one other point I should make is that when you look at the letters all together between Frick and Carnegie, there was a lot of waffling on their part. Should we give in to the union? Should we grant hem wage raises? Should we recognize the union? And that waffling I think led them to mishandle the situation. Events got out of control and you had the men killed.
LAMB: Henry Clay Frick, there have been books written about him?
KRASS: He's another titan, collected art. His legacy certainly lives on. He had such an impact on the Carnegie legacy from Homestead but also he was an incredible business manager who generated just enormous profits from Carnegie until they broke in 1900. So, also now he came up through the coke industry. Coke goes into steel-making, so he's in the coal field. Coke is made from coal. He got into that in 1871, becomes a partner with Carnegie in 1881. In that year, Frick was recognized as the most deplorable, brutal employer in the coal fields.
So, there's all sorts of just violent stories around the Frick Coke Company but you know what, Carnegie just turns a blind eye. Again, you know, it's that profits over ideology thing. He wanted Frick because Frick was a great business manager who would make money.
LAMB: When was Henry Frick shot and why?
KRASS: This was after the Homestead violence.
LAMB: By the way, Homestead is located where?
KRASS: Just up the river from Pittsburgh, so it's just right outside of Pittsburgh.
LAMB: Still there?
KRASS: The mill is no longer there but Homestead certainly is. He's in his office dealing with the repercussions of the strike and a man comes to see him who says, oh I've got workers for you because they're talking about bringing in strike breakers, and this man turns out to be an anarchist. He just bursts into the office and shoots at Frick, hits him in the neck, shoots him again and they're on the ground struggling. He stabs Frick, still can't kill him.
Another Carnegie lieutenant comes in. They wrestle this guy to the ground. His name was Alexander Berkman, and Frick won't leave the office. The doctor has to come there, tend to his wounds. He sends Carnegie a telegraph apprising him of the situation but telling him, you know, I'm still in control and then finally they convince him to go home and recuperate.
LAMB: Why did they break in 1900?
KRASS: Frick's coke company was always his baby; however, within years of Carnegie and he becoming partners in 1881 in the coke business, Carnegie is now the majority owner and Frick always resented that. So there's friction always between these two men. They're too much alike anyway. You know they're both independent, strong men and it's amazing that they survived the amount of time they did.
So, you got to picture this friction is building. Frick tries to quit the business a couple of times. Carnegie coaxes him back. Now we're in 1900. Carnegie wants the Frick coke company to offer the Carnegie Steel Company coke at a ridiculously low price. Frick says there's no way in heck I'm going to do that because he has to protect his own shareholders too, plus he feels like Carnegie's just been taking advantage of him for so long that that's it. They break and the break was incredibly acrimonious.
Carnegie said fine. I'm going to buy your shares back at book value. We're done. And Frick says now wait a minute, you know. You can buy my shares back but you got to do it at market value, which is umpteen times more than what they are at book value because you have to keep in mind Carnegie never took his company public. It was always held by a tight group of partners.
So now they're going to go to court over this but, you know, Carnegie doesn't want to open his books up to the public because they'll realize how obscene his profits are. So they eventually settle and Frick is happy but the two men never talk again and, in fact, years later Carnegie who hated to be disliked by anybody sent an emissary to Frick and said "Hey can we patch things up?" And Frick just said very bluntly: "You can tell Mr. Carnegie I'll see him in hell where we both belong."
LAMB: You brought along with you a couple of pictures of gravesites. First of all, what's this one?
KRASS: Well, that's the gravesite of my great-grandfather and the cemetery is very cluttered, busy streets around it and then I have...
LAMB: Where is it by the way?
KRASS: This is in a town just outside of Pittsburgh. The second picture, it's a little tough to tell but that's Carnegie's gravesite in Sleepy Hollow, New York and it's just a beautiful, bucolic setting and the reason I visited both gravesites and took the photos is because I wanted to always keep in mind the contrast between the workers and Carnegie and you do those kinds of things just to keep yourself emotionally connected to your work, to your book, to the characters.
LAMB: When people refer to the big hall in New York City, you almost always hear Carnegie Hall. Is it Carnegie Hall and did he fund it originally?
KRASS: He did. It should be Carnegie Hall but you know over time you lose track of that sort of thing and he did fund it. He actually didn't give it to the city. It was a privately-held company. However, you know, it was for everyone to use and it was originally called just the Music Hall. He didn't want his name attached to it in fact and then later the trustees insisted it be called Carnegie Hall because that would just give it more pop, more respect.
LAMB: There's a lot more in the book. It's called "Carnegie" written by Peter Krass, our guest. Thank you very much for joining us.
KRASS: Thank you for having me.
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