Andrew Carnegie was poor when he came to America at age 12, but by age 30 he was one of the richest people in the world. And steel was but a glimmer in the corner of his eye. I've been listening to David Nasaw's celebrated biography of the industrialist. How'd Carnegie get so rich so fast? If anything, the answer appears to lie in his acting in ways that no modern corporate lawyer could possibly condone. Carnegie was the named partner in Pennsylvania Railroad supply contracts that enriched his silent partners - the two people who ran that railroad - and himself. He got involved in bond sales early, traveling to Europe to sell American railroad bonds that frequently failed to perform. And inevitably, he got sued all the time. A cost of doing business, apparently, and by age 35, Carnegie controlled at least six corporations, all of which he would abandon within five years to concentrate on steel. But before that, the model was recognizable - go public but closely held, sell bonds, and sell necessaries to corporations. However, in Nasaw's account, the model was realized by befriending and working for talented executives who ran their companies well but skimmed off plenty of the upside from contracts with shell supply companies. Carnegie also tended to get to the office early and call it a day circa noon - like some other famous market makers.
So I'm enjoying the biography. But boy is it a test of the audio format. 33 hours, and in my view, the limited upside of doorstop books is the chance to skip around. You can't do that with the Nasaw on CD. I may never finish it. But I don't regret the chance to get halfway through.
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1. Posted by Gordon Smith on December 17, 2007 @ 22:50 | Permalink
David,
I am glad that you blogged about this book. It is excellent, and I am hoping to get back to it after I grade exams!
2. Posted by David Zaring on December 17, 2007 @ 22:58 | Permalink
It's interesting stuff, isn't it? Unsurprised that it has caught the attention of multiple of our team!
3. Posted by The Epicurean Dealmaker on December 18, 2007 @ 7:28 | Permalink
David - Do not underestimate the fact that Carnegie and his fellow "robber barons" built their fortunes in an era where personal income tax was minimal to non-existent. Not to take anything away from those truly extraordinary capitalists (the tax "break" was available to anyone), but wealth sure compounds a lot faster if you do not have to send a chunk of it every year to the IRS.
4. Posted by David Zaring on December 18, 2007 @ 9:23 | Permalink
It has to help - and it's one reason why I like the state of Tennessee. But Carnegie must have paid state income tax - Nasaw documents the rise in wealth with reference to Carnegie's annual tax returns.....
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