An Economist's Biography Of Andrew Carnegie

Nov. 07, 2017 8:03 PM ET1 Comment
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By Greg Kaza

[From the Quarterly Journal of Austrian Economics.]

A review of Andrew Carnegie: An Economic Biography by Samuel Bostaph.

Entrepreneur Andrew Carnegie (1835–1919) emigrated to the United States from Scotland at age 12, working entry-level jobs (bobbin boy, messenger, telegraph operator) that taught him about the importance of initiative and self-taught education. At age 17, Carnegie became a railroad superintendent’s personal secretary when his employer discovered he could read and write. He became privy to challenges faced by railroads, and was enterprising enough to grasp opportunities for improvement and self-enrichment. Trusted with greater authority, Carnegie learned about investments and cost-accounting, was promoted to railroad superintendent, and formed a company to manufacture iron for rails. Carnegie also invested in coal, express, horsecar and oil companies, and owned $400,000 in assets ($6.8 million today) by age 33 when he wrote a memo to himself vowing to set aside his business affairs and devote his time to philanthropy, formal studies and a public policy career. He achieved the philanthropic goal but not before playing a key role in creating the first billion-dollar U.S. corporation.

Non-economists (MacKay, 1997; Nasaw, 2006) have authored other Carnegie biographies. Univ. of Dallas Emeritus Professor of Economics Samuel Bostaph has written a biography that is engaging on several levels. First, Bostaph applies economic ideas about entrepreneurism, production and protectionism to Carnegie’s commercial activities. He contrasts Carnegie’s commercial acuity with his self-serving use of lobbying, tariffs and other forms of crony capitalism. Second, Bostaph explains, in some detail, technological advances within the iron and steel industries. Finally, he presents a side of Carnegie that should not be ignored: international peace advocate and opponent of imperialism who bought a replacement to avoid military conscription in the Civil War.

Bostaph begins by explaining three theories of entrepreneurship developed by Frank

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