The Economic and Social Impact of Andrew Carnegie

Abstract 

The 19th century towards the 20th century was a time of immense discovery, innovation, and application of scientific skills in production. When discussing the 20th-century metal industry, one name will also remain at the top: Andrew Carnegie. He is known for applying the vertical integration model that enabled him to monopolized steel production, allowing for the emergence of cheap steel. Before the intervention, steel remained one of the most expensive commodities. With the availability of steel, improvements were witnessed in the field of manufacturing, production of ammunition for the military, and construction. Most fundamentally, he made enough profits to impact the American, Scottish, and British populations through charity and philanthropy. The research model will follow a systematic review fashion by analyzing twenty-eight sources and summarizing the information they have as regards the economic and social impact of Andrew Carnegie. The research will argue that the revolution in the production of steel impacted the economic and societal well-being of the 20th century American society. It is, therefore, a foreshadow that technological inventions and discoveries in the future will continue to have similar impacts in the coming decades. 

Introduction 

The last century has seen the emergence of some of the greatest people. However, only a few of these individuals have left behind a long-lasting legacy that positively impacted society. Andrew Carnegie's exploits in the steel industry qualify him as one of the most influential people of the 20 th century. Carnegie developed a reputation due to his role in the monopolization of the steel industry. He played a crucial role in the development of numerous companies to support the production of steel in the United States. Before his influence in the industry, steel was one of the most expensive items. Carnegie made and established his fortune in the steel industry. He was among the first individuals to apply a method of production known as the vertical integration management, which essentially reduces the cost of production. Between the 1800s and 1900s, the steel industry in the U.S. experience drastic shifts with Carnegie remaining at the center of the mass production (Carnegie, 2011). He made significant wealth out of the steel company which came to be known as the Carnegie Steel Company and later the U.S. Steel. Andrew carnage was regarded as an embodiment of the American Dream. His exploitation in the steel industry significantly reduced the prices of the commodity thus impacting the construction, manufacturing, and the military hardware industries enabling him to make enough money to change the social fabric of the society through philanthropy. 

Methodology 

The research will follow a systematic review that will focus on extracting information from twenty-eight primary and secondary sources highlighting information regarding the impact of Andrew Carnegie’s role in the steel industry. The following criteria were used to select the twenty-eight sources: 

They had to meet the credibility threshold for an academic source. 

They had to be written within the last twenty years. 

The sources must discuss the role of Andrew Carnegie in the steel industry and how it impacted the economic and social life of America. 

The research was built around three research questions that include: 

What was the role of Andrew Carnegie in impacting the price of steel? 

What were the major economic impacts that the advances in the steel industry had on manufacturing, construction, and the military industry? 

How did the advancement in the steel industry impact the social life of Americans? 

The following hypotheses were developed before the research began: 

Andrew Carnegie used the vertical integration method in steel production that enabled him to monopolize and produce cheap steel. 

The advances in the steel industry significantly influenced the manufacturing, construction, and military industries by availing the required raw materials. 

Through the profits made, Carnegie engaged in philanthropy and charity work, thus impacting American society. 

Literature Review 

Andrew Carnegie lived between 1835 and 1919. He is regarded as one of the most famous and wealthiest industrialists of his day. As an immigrant with roots in Scotland, his success in the U.S. has served as an illustration of how the American Dream has worked (Bridge, 2014). Although he had successfully established himself as a businessman, he was also an innovator. He possessed the desire to make steel more efficiently and cheaply, a factor that saw him utilized a means known as the Bessemer process. Reback (2012) asserted that through the Bessemer Steel Process, high-quality steel would be produced by means of shooting air into the molten steel in a bid to burn off impurities, including carbon. The manufacturing of reliable steel had already initiated a business revolution, especially in the United Kingdom (Desai & Mukherji, 2001). Andrew Carnegie made several business trips to the U.K. after the Civil War and keenly observed the Bessemer process. In 1872, Carnegie learned, through observation, that he could produce similar quality of steel in the U.S. By the mid-1870s, Carnegie employed this process in the production of steel in his mills (Rau, 2005). It is also interesting to note how Carnegie was able to make cheap steel, considering that the product was extremely expensive at this time. He achieved this by use of the vertical integration method of production. 

Carnegie was among the first person to utilize the vertical integration methods to dominate the steel market. Bostaph (2017) said, “It allowed him to cut prices and assert his dominance in the market.” Carnegie Steel was a pioneer in the use of this method of production during the late 1800s. Standiford (2006) asserted that the firm was responsible for all the iron mines that provided the ingredient used in the manufacture of steel. It also controlled the coal mines responsible for providing the much-needed fuel for steelmaking. Other entities controlled by the company included the railroads for the transportation of the raw materials and the steel mills. With his company holding almost all the tools needed in the process of production, he was able to produce steel at a much cheaper price. Blackford (2010) summarized his achievements by saying, “By using vertical integration, Carnegie Steel achieved levels of efficiency never before seen in the steel industry.” However, by today’s standards, the vertical integration as a method of production has been severely banned due to its impact in monopolization. It also carries associated risks as all the factors of production are controlled by a single business entity. 

The economic impact of the steel industry developed under Carnegie cannot be overemphasized. In 1870, he decided that other than being a capitalist, he would venture into the steel industry exclusively. As previously shown, he was a pioneer in the efficient mass production of steel (Livesay, 2007). As a result, this enabled him to venture into the construction of steel rails for the railroad lines. The open hearth furnace system developed in his homestead in 1886 enabled him to develop steel that would be used in armor plate and structural beams for the U.S. Navy. The American economy expanded towards the end of the Civil War. As railroads crisscrossed different parts of the country, Carnegie decided to invest in the companies dealing with the manufacturing of tools required in the construction of the rails and the bridges (Harvey et al., 2011). It is, therefore, crucial to appreciate that his influence cut across the manufacturing and construction industry. Also, the impact of the steel revolution in the creation of military hardware cannot be ignored. The Bessemer steel production enabled the manufacturing of steel and iron products which were supplied to the military companies to help in the production of arms and ammunition (Blackford, 2010). 

Carnegie’s exploits in the steel industry enabled him to impact both the economic and social life of the people. The first economic impact that he had on society was reducing the cost of steel. As earlier shown, steel was one of the most expensive metals prior to the Civil War. Carnegie Steel was important as it revolutionized the field of transportation in the U.S., especially with the creation of the railroads. Many steel structures, including beams, were erected across the U.S. (Giarratani, Madhavan, & Gruver, 2013). As earlier indicated, it gave rise to the military industry as it enabled the production of the navy armor plates. The construction industry also developed due to the availability of the steel with the first skyscraper created in Chicago. After this skyscraper, other 100,000 buildings emerged due to the availability of steel (Skrabec, 2012). His company also created many jobs for the American people. Despite the economic impacts that Carnegie had on the American people, he is probably known due to the social impacts he had on society. Historical research shows that he donated close to 90% of his fortune to the development of public facilities such as libraries and museums, among other factors (Levine, 2016). 

A keen look into his life, biography, and writings, Carnegie was a man guided by a philosophy which placed the interests of the society at the center. He believed that people should distribute the wealth that is "best calculated to produce the most beneficial results for the community” (Carnegie, 1889). He engaged in a social work that can best be described as scientific philanthropy where he gave support to programs that would, in turn, help the people. As such, his philosophy drove him to engage in a host of charitable and philanthropic activities throughout the nation. Between the years 1874 and 1919, he made donations worth about $6 million to support the church not only in the U.S. but also in the U.K. (Carnegie & Kirkland, 1889). Bremner (2017) pointed out that he also created libraries, especially in his native Scotland as a way of improving education. Carnegie also funded multiple higher education projects. He also pumped another $20 million that helped in the funding of projects in the colleges and universities. Solomon (2017) noted, “Carnegie donated more than 90% of his wealth to various nonprofit organizations and charitable trusts before his death in 1919.” 

Discussion 

Andrew Carnegie was arguably one of the most influential people of the 20 th century. His contributions cut across almost all aspects of life, including social and economic spheres. From the literature, review, discussions surrounding him can be divided into economic and social impact. Economically, he monopolized the steel business after studies in the U.K. and created an empire in the shape of Carnegie Steel. He employed the vertical integration technique that led him to the creation of an empire that produced affordable steel. He impacted the manufacturing and construction industry. Thanks to the availability of the inexpensive steel, he also managed to improve the military industry both in the U.S. and the U.K. Carnegie, through his company, created job opportunities for thousands of people. However, he is normally accredited for his impact on the social fabric of the people. He dedicated most of his fortune to service to the community and impacting schools and other public institutions. As seen in the case of steel, other materials, and technologies in the future can also have a similar impact on the economic and social welfare of the people when properly leveraged. 

A similar technology that will revolutionize humanity in the next half a century is virtual reality. Onyesolu & Eze (2011) define virtual reality as "A highly interactive, computer-based multimedia environment in which the user becomes the participant in a computer-generated world." It is regarded as a technology that will enable human beings to visualize, manipulate, and interact with computers, including additional extreme data. However, it is important to appreciate that it is an artificial environment made by manipulating computer hardware and software. The user then interacts with the artificial environment in a way that feels like a real environment (Fuchs, Moreau, & Guitton, 2011). Although it is not a new technology, its use has not taken root among humans. Many people continue to wonder how this technology will be tapped by humans to impact society either economically or socially. According to Mandal (2013), virtual reality has primarily found its use invisibility and ergonomics. The authors continue to provide an outlook of some of the social benefits associated with technology. For instance, it has been used in the extensive treatment of phobias such as heights, spiders, flying, and a mental health condition such as post-traumatic stress disorder (Maples-Keller et al., 2017). 

Other social applications of virtual reality are found in the field of gaming. Furht (2011) maintained that most computer games would apply the virtual reality concepts of three-dimensionality, making it more enjoyable, especially to the new generation that continually wants new things. Also, this will be capitalized by entrepreneurs who will change it into a business opportunity. Although this has begun, it is still an expensive venture that cannot be managed by many. However, it remains a viable business that will create employment for many people in the next few years. The market is on the rise, and by 2020, it is estimated that it will generate revenue of up to $150 billion (Sherman & Craig, 2018). 

However, questions have emerged on how the technology of virtual reality could be helpful from a business point of view. Technology companies such as Google, Apple, and Samsung are continuously engaging in the production of virtual reality devices at a speed that will shape the next 50 years (Seidel & Chatelier, 2013). With virtual reality, companies will be poised not only to visualize but also design better products than never before. The advent of the 3D technology that enables manufacturers to view products from a three-dimensional point of view will enable them to come up with products that will better meet the needs of the customers (Sherman & Craig, 2018). In the next few decades, virtual reality will revolutionize business meetings and conferences. As a result, it will reduce the costs incurred by traveling and the distance covered. With different teams spread across the globe, they can engage in virtual meetings hence revolutionizing business operations and decision-making (Brown, Recker, & West, 2011). 

In business, the e-commerce sector will also thrive if virtual reality technology is properly utilized. Wexelblat (2014) outlined that virtual reality creates a new platform that could enable individuals to access e-commerce platforms, assess the commodities, and make decisions. More importantly, it will also provide many businesses with competitive advantages. With this technology, the business will not need to create a physical store. They can only resort to the creation of virtual stores, which will require less effort and resources compared to the creation of a physical one. Earnshaw (2014) contended that marketing could also receive significant acceleration as a result of technology. As the business stores are placed in secrecy, a business can remain competitively ahead of their rivals. The virtual reality will also revolutionize the professional interview process. The interviewing team will employ virtual interviewing where they remotely question the applicant and in turn, observe their body language (Biocca & Levy, 2013). As such, companies will save a lot of money, and the recruitment process can be streamlined. 

Conclusion 

Andrew Carnegie is regarded as an embodiment of the American Dream. His exploitation in the steel industry significantly reduced the prices of the commodity thus impacting the construction, manufacturing, and the military hardware industries enabling him to make enough money to change the social fabric of the society through philanthropy. Many regard him as a man who went against all the odds to become not only rich but also influential in American society. He established a paradigm shift in the production of steel through the use of lessons he acquired in the U.K. He utilized the Bessemer method, and through vertical integration, he managed to monopolize steel production. As a result, this gave him the much-needed impetus to create inexpensive steel. Economically, his greatest influence was seen in the manufacturing, construction, and military industries where steel acted as an important raw material in the production process. He managed to make immense amounts of profits, which he in turn used in philanthropy. He directly impacted society through charity and philanthropy, thereby establishing a legacy that will never be forgotten. With the development of many technological aspects today, it is expected that the virtual reality will significantly impact business in the future. It will also impact the social fabric of the nation through its effect in reducing phobia and improving gaming technology. 

References 

Biocca, F., & Levy, M. R. (2013). Communication in the age of virtual reality. Routledge. 

Blackford, M. G., (2010). American Manufacturing, 1850–1930: A business history approach. OAH Magazine of History, 24(1), 17-22. 

Bostaph, S., (2017). Andrew Carnegie: An Economic Biography. Rowman & Littlefield. 

Bremner, R. H., (2017). Giving: Charity and philanthropy in history . Routledge. 

Bridge, J. H., (2014). The Inside History of the Carnegie Steel Company: A Romance of Millions. The University of Pittsburgh Pre. 

Brown, R., Recker, J., & West, S. (2011). Using virtual worlds for collaborative business process modeling. Business Process Management Journal, 17(3), 546-564. 

Carnegie, A., (1889). The best fields for philanthropy. The North American Review, 149(397), 682-698. 

Carnegie, A., (2011). The Autobiography of Andrew Carnegie. Public Affairs. 

Carnegie, A., & Kirkland, E. C., (1889). The gospel of wealth (pp. 1-44). FC Hagen & Company. 

Desai, A., & Mukherji, A., (2001). The evolution of vertically integrated organizations: the role of historical context. Management Decision, 39(3), 233-243. 

Earnshaw, R. A. (Ed.). (2014). Virtual reality systems. Academic Press. 

Fuchs, P., Moreau, G., & Guitton, P. (2011). Virtual reality: Concepts and technologies. CRC Press. 

Furht, B. (Ed.). (2011). Handbook of augmented reality. Springer Science & Business Media. 

Giarratani, F., Madhavan, R., & Gruver, G. (2013). Steel industry restructuring and location. Handbook of Industry Studies and Economic Geography, 11. 

Harvey, C., Maclean, M., Gordon, J., & Shaw, E. (2011). Andrew Carnegie and the foundations of contemporary entrepreneurial philanthropy. Business History, 53(3), 425-450. 

Mandal, S., (2013). Brief introduction of virtual reality & its challenges. International Journal of Scientific & Engineering Research, 4(4), 304-309. 

Maples-Keller, J. L., Bunnell, B. E., Kim, S. J., & Rothbaum, B. O. (2017). The use of virtual reality technology in the treatment of anxiety and other psychiatric disorders. Harvard Review of Psychiatry, 25(3), 103. 

Onyesolu, M. O., & Eze, F. U. (2011). Understanding virtual reality technology: Advances and applications. Adv. Comput. Sci. Eng, 53-70. 

Reback, C. S., (2012). Merger for monopoly: The formation of U.S. Steel. Essays in Economic & Business History, 25. 

Seidel, R. J., & Chatelier, P. R. (Eds.). (2013). Virtual reality, training’s future?: Perspectives on virtual reality and related emerging technologies (Vol. 6). Springer Science & Business Media. 

Sherman, W. R., & Craig, A. B. (2018). Understanding virtual reality: Interface, application, and design. Morgan Kaufmann. 

Skrabec Jr, Q. R. (2012). The Carnegie Boys: The Lieutenants of Andrew Carnegie that Changed America. McFarland. 

Solomon, L. D., (2017). Tech Billionaires: Reshaping Philanthropy in a Quest for a Better World. Routledge. 

Standiford, L., (2006). Meet you in hell: Andrew Carnegie, Henry Clay Frick, and the bitter partnership that transformed America. Broadway Books. 

Wexelblat, A. (Ed.). (2014). Virtual reality: Applications and explorations. Academic Press. 

Rau, D. M., (2005). Andrew Carnegie: Captain of Industry. Capstone. 

Livesay, H. C., (2007). Andrew Carnegie and the rise of big business . Longman. 

Levine, M., (2016). Andrew Carnegie and Bill Gates: Philanthropy and oligarchy, then and now. American Journal of Orthopsychiatry, 86(1), 1.