Man of steel -- and ink

A new biography shows Andrew Carnegie as a wily deal-maker and zealous correspondent who used his desire to give away his fortune to justify his drive to get rich.

By T.J. Stiles

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Oct. 25, 2006 | In l859 or so, as John Brown stormed the federal arsenal at Harper's Ferry, as tavern and churchyard chatter across the county turned to the likelihood of civil war, young Andrew Carnegie took an interest in sleeping cars.

He was an unthreateningly tiny man (no more than 5 feet tall), an eager-to-please 24-year-old who had worked hard to erase the Scottish accent in his ready banter; he was also the protigi of Thomas A. Scott, a rising power in the mighty Pennsylvania Railroad. As Carnegie himself later told the tale, he was approached in 1858 or '59 by an awkward but brilliant inventor, Theodore Woodruff, who had developed a new kind of sleeping berth for railway cars. The lad quickly saw its potential, and brought it to the notice of Scott and J. Edgar Thomson, the Pennsylvania's president. They gave a contract to Woodruff, who gratefully offered Carnegie stock in his company. It was a turning point in the young man's path from penniless immigrant to industrial capitalist.

"It is a charming story," observes David Nasaw in this massive new biography, "Andrew Carnegie." "The only problem is that it wasn't true." In reality, Carnegie facilitated nothing; Woodruff arranged his own contract with Scott and Thomson. The shares that Woodruff gave the young man were, in fact, a payoff to the two executives, "a kickback in the form of partial ownership of the company." As Scott's assistant, Carnegie "functioned instead as a sort of 'bagman,'" holding his superiors' stock -- along with a few shares for himself.

In the last full-scale biography of the famous steel maker, written in 1970, Joseph Frazier Wall pointed out the same errors in Carnegie's self-congratulatory account, but it took Nasaw to identify the kickback behind the entire transaction. "Capitalizing on insider information to invest in companies that were about to be enriched by lucrative contracts was standard operating procedure for railroad executives," he writes.

It's a nice piece of research and analysis -- but a troublesome question lingers in its aftermath. If the kickback was legal, and perfectly ordinary for the time, why did Scott and Thomson try to hide it? Why did they need a bagman at all? Nasaw's penetration of this tale speaks to the power of this important new work, but that unanswered -- indeed, unasked -- question suggests just how complicated the biographer's task can be.

Make no mistake: David Nasaw (author of the highly regarded "The Chief: The Life of William Randolph Hearst") has produced the most thorough, accurate and authoritative biography of Carnegie to date. Perhaps no story in the history of American business is more familiar than that of the poor 13-year-old who immigrated from Scotland in 1848, made himself into a fabulously wealthy steel maker, sold his company to J.P. Morgan to create U.S. Steel in 1901, then gave away his fortune and spoke out for world peace. Carnegie has been the subject of a number of studies, and authored an autobiography of lasting influence. It speaks highly of Nasaw's prowess as a researcher, then, that he has uncovered entire episodes previously unknown to historians. I came away convinced that he has read everything Carnegie ever wrote -- and suspecting that I had as well, thanks to the copious quotations that help swell the text to 800 pages.

Researcher, however, is only one of three roles played by a good biographer. Just as important are the parts of historian and writer -- the first to explain the times, the second to craft a purposeful narrative. To put it another way, the researcher provides depth, the historian breadth, the writer life. Nasaw mines Carnegie's life more deeply than anyone ever has, but he often fails to look up from his digging to engage the wider world or to shape the story in a way that would bring out its full meaning and drama.

To be fair, balancing the three roles is never easy. The process of picking through letters and other papers demands an intense focus on the subject, but context and good storytelling require panoramas and tracking shots of secondary characters. In the case of Carnegie, the balance is even harder to maintain, for the perverse reason that he wrote so much. In this, he could not have been more unlike the typical Gilded Age tycoon (if there were such a thing). Jay Gould preferred to plant stories in the press rather than give interviews; Cornelius Vanderbilt wrote, in one of his few surviving letters, that he hated writing letters; Daniel Drew was so silent that some contemporaries thought he was illiterate.

Carnegie, on the other hand, wouldn't shut up. At the age of 18, he waged a political debate with his cousin via transatlantic correspondence, comparing American and British institutions. ("We have given to the world a Washington, a Franklin, a Fulton, a Morse," he wrote. "What has Canada ever produced?") A fanatical autodidact, he spurted a steady stream of literary quotations at Scott and Thomson. Eager for literary acclaim, he began to publish as soon as his wealth gave him the leisure to do so -- battering the world with article after article, book after book, good, bad and infinite, or so they must have seemed.

Like a dogged private investigator, Nasaw tracks his subject relentlessly through this processed forest of paper, following him from business meetings with his partners to a late-night rendezvous with an apparent mistress. Sometimes, however, Nasaw needs to follow less obvious leads to tell us what we really need to know.

Take the story of the Woodruff payoff. The setting seems familiar enough: a corporation, a contract, a few venal officials. But the past is indeed a foreign country, where familiar words have unfamiliar meanings, where our most basic assumptions do not apply. Nasaw correctly explains the prevalence of insider trading, but he does the reader a disservice by failing to ask why this supposedly commonplace kickback was kept secret. The answer is that the corruption of Thomas A. Scott and J. Edgar Thomson was not so commonplace after all. Once we understand how and why it differed from ordinary insider trading, we see the full significance of this period in Carnegie's life.

In 1859, when Carnegie served as bagman, American society was in the midst of confusion, even torment, over the emergence of the corporation. For most Americans, this new and invisible creature was a mystery, known only by reputation. Corporations were so few that the New York Stock Exchange traded stocks (and bonds) one at a time. Brokers on the trading floor shouted out their bids as each security was called from the chair. Then they had lunch. Then they ran through the whole list once more.

Next page: Scott and Thomson invented a new kind of corruption: They skimmed money as it flowed in and out