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Andrew Carnegie and 'big' business

AMERICA has viewed its famous businessmen of the 19th century with suspicious eyes - a strange phenomenon for the most capitalistic country of the world. This might be one reason Americans do not observe the anniversaries of magnates such as the Scottish immigrant Andrew Carnegie, whose birth 150 years ago would be observed in the coming year.

To be sure, this untoward reaction is not attributable to Carnegie personally or to John D. Rockefeller, J. P. Morgan, or other businessmen who dominated the age of industrialism. Nor is the matter related to the perception that big-business men were stingy in returning some of their vast wealth to society. Indeed, it is well-known that Carnegie as well as Rockefeller made enormous contributions to society. In an 1889 article entitled ''Wealth'' in the North American Review, Carnegie stated that it was ''the duty of the man of wealth . . . to consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer . . . to produce the most beneficial results for the community. . . .

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Both Carnegie and Rockefeller even devised a system of scientific philanthropy - getting the most use from each charitable dollar - that is the model of sophisticated benevolence today.

The dilemma of Carnegie and other businessmen in terms of their perception by the public was that big business came to be equated with bad business. The nation's first industrial units, for example, were big to the average American's eye: They were smokestack industries such as Carnegie's steelworks or railroads that dwarfed viewers, making them feel powerless against such giants. Their corporate form, with its increasing hierarchy of personnel, confirmed the popular view of bigness based on impersonality. And even when the large-scale enterprises practiced modern management concepts, they found that the popular interpretation could be negative. Take the issue of railroad rates. The tariff for hauling a farmer's goods from point A to point B, a distance of 100 miles, might be 10 cents per unit, whereas the distance from point A to point C, a 200 -mile haul, might be only 15 cents. To farmers who had no notion that fixed costs would fall more proportionately on short hauls than long hauls, such ratemaking appeared scandalous. What was worse, the lower rates for long hauls often induced farmers to ship produce into unknown markets, thereby exacerbating their own special problems of overproduction and falling prices of their goods.

In the popular press of the late 19th century, big businesses were depicted in cartoons as obese men whose waistlines rivaled the globe. And no matter that economists at the time began to suggest that businesses became large because of the economies of scale they could provide. For the era was a democratic one in which popular views would become law, such as in the Interstate Commerce Act, which authorized a commission that would preside over a course of action that was synonymous with the decline of railroads. Or in the Sherman Antitrust Act, which declared monopolies illegal and applied a redress system that was punitive , namely, treble damages.

Of course, the Sherman Act would be modified over time, and very few corporations would actually be broken up in the 20th century. Instead, the compromise route of consent decrees, requiring corporations to stop anticompetitive practices, would be employed. But the concept of big being bad is still widespread in contemporary America, as reflected by polls that consistently place big-business men on the same low level of public respect accorded politicians. Small-business men, on the other hand, are second only to physicians on the public's most admired list.

Perceptive corporations today continue to minimize their bigness as, for example, IBM, with advertisements that tout the small hat shop with its computerized operations or the Midwestern farmer who decides to put Nellie and the rest of the cows on a computer-monitored milking schedule. In spite of such ads, college students, when asked to draw a mental picture of American corporations, often see belching smokestacks and piles of money.

No doubt, I can't change that, but at least my students know from my lectures that Andrew Carnegie, well - he was a thin, small man in physical appearance.

Thomas V. DiBacco is a historian at The American University.

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