Andrew Carnegie was born in Scotland to very poor parents. His family came to America in 1848, when he was 12 years old. Over six years, he worked his way up to a position as the private secretary to a local superintendant of the Pennsylvania railroad. One day, he single-handedly relayed messages that unsnarled a tangle of freight and passenger trains. His boss rewarded him with the opportunity to purchase stock in the company. His mother mortgaged their home to make the purchase possible, and Carnegie soon received his first dividend.
He went on to become one of the largest business leaders in America. He entered the steel business, and revolutionized management with his new practices, such as precisely controlling accounting and encouraging inter-company competition. He also used the idea of vertical integration, which is the practice of buying every single part of his business. He purchased coal fields, iron mines, ore freighters, and railroad lines, all essential parts of the steel business. He also engaged in horizontal integration, which is purchasing other steel producers to reduce competition. Because of his shrewd business strategies, by the time he sold his business in 1901, it produced the vast majority of the steel in America.
During the late 1800's, when industrialists pursued monopoly, they often bought out the stocks of their competitors. John D. Rockefeller, however, took a different approach to mergers. He joined with competing companies in trust agreements. The participants then turned their stock over to trustees. In the end, the companies were entitled to dividends on profits earned by trust. Rockefeller used this strategy to gain total control of of the oil industry in America.
Rockefeller earned massive profit by paying his employees very low wages and driving competition out of business by cutting the price of his oil to less than it cost to produce it. Once he dominated the market, he raised the price far above original levels. While some saw him as a robber baron, he gave away more than $500 million and established the Rockefeller Foundation, which provided funding for the founding of the University of Chicago and created a medical institute devoted to finding a cure for yellow fever. Andrew Carnegie also donated about 90 percent of the wealth he accumulated during his lifetime. His donations still support the arts and learning today.
"It will be a great mistake for the community to shoot the millionaires, for they are the bees that make the most honey, and contribute the most to the hive even after they have gorged themselves full." - Andrew Carnegie
Written by:
Derek and Aston
Nicely written and very informative. I never knew that Andrew Carnegie donated 90 percent of his wealth! It shows that the world is not just black and white.
ReplyDeleteThe success stories of Carnegie and Rockefeller were very interesting to read! You did a good job of concisely explaining business terms (like vertical and horizontal integration) while maintaining a balanced summary of their lives. I wonder if Rockefeller did more good by donating large sums of money to specific groups of people, or if he would have made as large an impact if he had paid fair wages or lowered the price of oil for the general public. Nice addition with the quote, too :o The only thing I would have changed are the oversized superscripts at the top of the post.
ReplyDeleteYou did a very good job and it was informative but also interesting. I liked the pictures and the quote which added a lot to the blog. Maybe you could have said a little more about Rockefellers background. Good job
ReplyDeletethat is a really good written text! It's a lot of information but you did a good job dividing the text into little pieces.
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