Money Games

Preface to First EditionBig Money Legends

It was a brisk autumn day in 1900, and Andrew Carnegie, 66 years old, was enjoying winning a game of golf against 39-year-old Charles M. Schwab, the president of Carnegie Steel Company. Carnegie was, at that point, one of America's most prominent businessmen. Carnegie Steel, the company he had founded, had revolutionized industrial steel production and had become the largest steel company in the world. Unbeknownst to Carnegie, Schwab had been working on a plan with John Pierpont Morgan, America's most powerful financier. Schwab's mission was to talk Carnegie into selling his company to Morgan. It was widely known that winning a game of golf always eased the Scottish-born industrialist's temperament—and so Schwab played to lose. After the game, Schwab raised the idea with Carnegie, who seemed receptive.

The next day, Carnegie handed Schwab a piece of paper scrawled with numbers adding up to $480 million, a colossal amount in 1900 (approximately $14.5 billion in U.S. dollars today). It was the price Carnegie was willing to accept for the sale of Carnegie Steel. Schwab took the paper to Morgan.

Morgan glanced at the figures and said, simply, “I accept it.”

On a handshake, Morgan acquired Carnegie Steel for $480 million. Around the same time, Morgan consolidated several other steel companies to create U.S. Steel in March 1901. Capitalized at $1.4 billion ($42 billion in 2019 dollars), it was the first billion-dollar corporation in the world. ...