The Carnegie Way
When Mario Longhi took the helm of US Steel in 2013, his vision for the company—which was once the largest steel producer in the world—involved modernizing, streamlining, and most significantly, downsizing. Plant closures and layoffs have defined Longhi’s tenure, with four facility shut-downs announced this month alone. But aside from the temporary idling of two tubular plants in reaction to dropping oil prices, the company insists the rest of the mass layoffs are part of its grand plan.
That plan is called The Carnegie Way, with a strategy that aims to consistently turn a profit instead of riding the peaks and troughs of the commodity markets. It makes sense in a global context, with Europe-based ArcelorMittal claiming the top spot in worldwide steel production and China driving overcapacity with bargain-basement prices. And it even makes sense domestically, with Nucor out-producing and out-profiting US Steel quarter after quarter. But the plan doesn’t make sense in the context of its namesake: profits above all else might be the mantra of US-style capitalism, but it didn’t belong to one of America’s greatest capitalists, Andrew Carnegie.
After a hardscrabble childhood in Scotland and difficult young adulthood as a poor immigrant in Pennsylvania, Carnegie worked his way from bobbin boy at a textile factory to the father of the US steel industry. It was a true rags-to-riches story, the kind of boot-strap individualism that conservative politicians hold up as a beacon against the encroaching horror of entitlement culture. But while Carnegie’s hard work and business savvy might have made him a legend, it’s only half the story. What he did with the wealth he earned is often ignored, possibly on purpose.
Many people, even within the steel industry, are unaware that Carnegie was also known during his time as a successful writer. He wrote three travel memoirs and several books and papers with a political bent, and one of his most well-known works in his time was his article “Wealth” published in 1889 in the North American Review. In the article, Carnegie argued that the life of a wealthy industrialist should be two-fold: first, the accumulation of wealth; second, the distribution of wealth to benevolent causes.
In a letter to himself written when he was 33, Carnegie said: “Man must have no idol and the amassing of wealth is one of the worst species of idolatry! No idol is 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.”
Carnegie so strongly believed that philanthropy was the key to a worthwhile life that he famously planned to die penniless—and he came close. By the time he died in 1919, he had given away over $350 million (the equivalent of $4.8 billion in 2010 dollars) to build universities and libraries and museums and concert halls and other institutions that contributed to the public benefit, and his will bequeathed the remaining $30 million to foundations, charities and pensioners. In fact, Carnegie was one of the driving forces in the early 20th century to make free libraries available to all.
To Carnegie, it would be an immoral waste to spend such vast wealth on personal luxuries. And it would be even more immoral to hoard wealth, keeping it locked away where it can’t benefit the economy that helped produce it. If Carnegie somehow time-traveled to 2015 and met the one-percenters who brag about how much they’re worth while at the same time lobbying the government to cut spending on education and the arts, there’s a good chance he’d throw a well-aged Scotch in their faces.
In essence, Carnegie believed that there wasn’t a point to being rich if you didn’t use your wealth to make the world a better place—and donating a few measly millions for PR clout and tax breaks doesn’t cut it. The true Carnegie Way isn’t profits above all else—it’s profits with a purpose. If US Steel succeeds in turning its consistent red quarters into black, the best way to honor the man who made that company possible would be to make those profits count, by sponsoring training programs and building technical schools and investing in communities that surround its mills and—a radical thought—paying its employees far beyond what’s typical for the industry.
Carnegie owed his prosperity to the nation that provided him with unlimited opportunities. US Steel owes his legacy a more benevolent interpretation of The Carnegie Way.