ANDREW KLOMAN
OUT OF WHOSE LITTLE FORGE GREW THE CARNEGIE STEEL COMPANY
The Inside History
of the
Carnegie Steel Company
A Romance of Millions
By
JAMES HOWARD BRIDGE
..- ' I.-'-."...'.
NEW YORK
THE ALDINE BOOK COMPANY
32-34 LAFAYETTE PLACE
COPYRIGHT, 1903, BY
JAMES HOWARD BRIDGE
Published, July, 1903
Entered at Stationers' Hall, London, England
Fourth Edition. (Sixteenth Thousand)
TO RECALL THEIR FORGOTTEN SERVICES
of a <$reat Business
is DrDtcatrt)
tfje pemon> of
the Men who Founded it y Saved if from early
Disaster , <2#;/ w0# its First Successes :
ANDREW KLOMAN
DAVID McCANDLESS
WILLIAM COLEMAN
THOMAS MORRISON CARNEGIE
WILLIAM R. JONES
WILLIAM P. SHINN
DAVID A. STEWART
HENRY M. CURRY
AUTHOR'S NOTE
TO THE THIRD EDITION
To meet certain criticisms which have been made concern-
ing the propriety of his publishing this book, Mr. Bridge wishes
to say that he was never Mr. Carnegie's "private secretary" as
that term is usually understood. For several years he assisted
Mr. Carnegie in literary work, especially in the preparation of
Triumphant Democracy ; and during this time he had neither
the opportunity nor the inclination to learn the business secrets
of the steel companies. This book does not contain a single
fact that was acquired by Mr. Bridge in a confidential capacity;
nor has any fact been included that was improperly obtained
by anyone else.
PREFACE
THIS book is the outcome of a magazine article undertaken
at an editor's request. Having spent a number of years in the
closest intimacy with one of the owners of the great steel works,
and enjoyed exceptional opportunities of becoming acquainted
with the men who had wrought their success, I entertained lit-
tle doubt as to my fitness for the task. So recalling the stories
I had heard the partners tell, and adding a few I found in the
writings of Andrew Carnegie, I wrote my article, and found I
had enough material left for a couple more. These also were
written, and in due time published.
To my surprise they brought an avalanche of dissent and
protest. From distant Oregon and near-by Meadville, from
Pittsburg and New York, came word from unknown corre-
spondents that my conventional story was only a repetition of
similar publishings, all faulty and all designed to glorify some
individual at the expense of his associates. One letter con-
tained an expression so vigorous that it has won a place for
itself in this book : " They have filched their laurel wreaths from
the tombs of the dead." Another assured me that what I had
deemed honorable success was but the outcome of " Macchiavel-
lian astuteness." I was told by one who had played an impor-
tant part in the early history of the enterprise that "the bad
faith, treachery, and chicanery that lie at the bottom of many
great fortunes had their parallel in the history of the Carnegie
interests." " Dear me ! " sighed an unknown Pittsburg corre-
spondent, "the humbug of greatness is so grotesque in the
careers of those we know that it makes one wonder at the acci-
dents which happen to men accidents which elevate mediocrity
vi PREFACE
and the commonplace to Olympian heights. " In other letters
were references to "porcine proclivities," " pachyderm entities,"
"a vainglorious medley of contradictions."
Under this interesting stimulus I determined to go to Pitts-
burg and stay there until I had got at the core of things
Carnegian. My experience was at once a disappointment and
an encouragement. With documentary proof before me I found
that almost every man who had written a line about the events
I was investigating had blundered; one in dates, another in
sequence of happenings, a third in the placing of credit for in-
ventions and improvements; and of them all I found Andrew
Carnegie's own narrative the least trustworthy. Knowing how
excellent is his verbal memory, it puzzled me to find him mis-
taking his own birth-year; claiming to have been the first in
America to operate the Bessemer process of steel-making; to
have originated iron railway bridges; to have been the founder
of the business that bears his name ; to have been ever on the
alert to adopt new processes and mechanical improvements ; to
have maintained without a break the friendliest of relations with
his partners ; to have been the principal factor in the gigantic
growth of the business; to have fervently tried to carry his
high ideals concerning labor into his own works. Instead
of this I everywhere found proof of the contrary ; and when,
finally, I was notified that I must agree to submit my manu-
script to the usual Carnegie revision before I could count on
any assistance of the present officers of the company, my disillu-
sionment was complete*.
But it made my work more interesting. To write a 'con-
ventional history from the official records of the company, with
the aid of the company's press agent and under the guidance of
an official censor, was a thing any journalistic fledgling could
do. To dig into the secrets of the great corporation, to expose
its enormous profits, reveal its peculiar business methods, its
ways of heading off competitors, its internal strife, to get its
first annual reports and even its later balance sheets, and to do
PREFACE vii
all this openly and without a bribe or the betrayal of a con-
fidence, to involve no employee in a covert act or breach of
faith this was a task of no small difficulty. It is for the
reader to judge of my success.
Thus disadvantaged, I have not hesitated to use personal
letters and private documents as I might not otherwise' have
done. Whenever an interesting fact has come to my knowledge,
properly authenticated, I have used it without regard to its im-
plications. Yet I have stated nothing that cannot be verified.
Often I have risked being tedious in order to quote a corrobo-
rative document. In other cases I have kept the proofs by me
in case my accuracy should be called into question.
From this independence has resulted a narrative more-truth-
ful than it could otherwise have been. Had the official repre-
sentatives of the Carnegie Steel Company revised this story, it
is certain that many of the statements it contains would never
have seen the light of day. More than once the company has
accepted a large monetary loss rather than disclose its secrets
in court. If, therefore, this book has any value it owes it to
its frankness. While the author expects censure for some of his
revelations, he is willing to accept it in the cause of truth.
The conventional history of the concern, based on benevolent
aphorisms and platitudinous maxims about thrift, industry, gen-
ius, and super-commercial morality, has been written a hundred
times, and will probably be written again and again.
The Carnegie Steel Company, as will be seen from this
narrative, is not the creation of any man, nor indeed of any set
of men. It is a natural evolution ; and the conditions of its
growth are of the same general character as those of the " flower
in the crannied wall. " Andrew Carnegie has somewhere said,
in effect : Take away all our money, our great works, ore-mines,
and coke-ovens, but leave our organization, and in four years I
shall have re-established myself. He might have gone a step
further and eliminated himself and his organization ; and in less
than four years the steel industry would have recovered from
viii PREFACE
the loss. This is not the popular conception of industrial evo-
lution, which demands captains, corporals, and other heroes;
but it accords with evolutionary conceptions in general.
This inevitableness of industrial growth is frankly recog-
nized by the most far-seeing but least talkative member of the
group. " The demands of modern life," says Mr. Frick, " called
for such works as ours ; and if we had not met the demands
others would have done so. Even without us the steel industry
of the country would have been just as great as it is, though
men would have used other names in speaking of its leaders."
This is a frank acknowledgment, from one of themselves, that
the kings of industrialism have no divine right.
Little is here said on the subject of the tariff. The book is
neither a protectionist's pleading nor a free-trader's argument.
It is simply the story of the growth of a great industry, and the
author deems his mission fulfilled in setting forth the facts as he
finds them, leaving the reader free to make his own deductions.
As this is not a political tract, neither is it an ethical trea-
tise; and the author considers it no part of his duty either to
extenuate or accentuate the lapses from a high moral plane
which may occasionally have been suffered by some of the in-
dividuals whose efforts are here described. The men who were
instrumental in building up this great business were, originally
at least, none of them philanthropists. There was hardly a
step in their progress which had not the impulse of unqualified
selfishness ; and if, in the light of retrospection, some of their
actions seem inconsistent with a book morality, it must be
remembered that in the fight for industrial life, as in that ear-
lier struggle for physical existence, the victory is not to the gen-
tle and the tender-hearted, but to the others. No great business
has yet been built on the beatitudes; and it is not all cynicism
that condenses a negative decalogue into a positive exhortation
to be successful " somehow ! "
CONTENTS
CHAPTER I
THE HUMBLE BEGINNING
1853-1863 : The little Kloman forge in Girty's Run Excellent work-
manship of the Kloman brothers Thomas N. Miller and Henry
Phipps join them Notable extension of business Prosperity
brought by the war A new mill is built at Twenty-ninth Street
Renewed prosperity Anthony Kloman sells out Quarrel
among the partners, .......... j.
CHAPTER II
"A MOST HAZARDOUS ENTERPRISE"
1863-65 : Andrew Carnegie enters as peacemaker Some particulars of
his life Hir, efforts produce fresh discord Makes agreement un-
der which Miller is forced out Thomas M. Carnegie gets an in-
terest Miller and Andrew Carnegie start a rival mill at Thirty-
third Street Its failure Consolidation of the two mills into
Union Iron Mills Company Andrew Carnegie's disappointment
Reproaches Miller for getting him into the iron business Calls
it a "most hazardous enterprise ", ....... 13
CHAPTER III
EARLY STRUGGLES AND SUCCESSES
1865 : Phipps and Carnegie go on foreign tour and leave the business
Its narrow escape from disaster T. M. Carnegie saves it Will-
iam Coleman's helpful advice Phipps' trials on his return Un^
fortunate outside venture Andrew Carnegie's quarrel with Miller
His depreciation of the enterprise Purchases Miller's stock
The first labor strike Importations of foreign workmen Inge-
nuity of a German He shows Kloman how to build a " Universal
Mill" Andrew Carnegie's resistance to innovations " Pioneering
don't pay" Opposes the great slabbing-mill Its excellent work
Kloman's inventive genius Economies of Mr. Phipps Brings
in John Walker, his brother-in-law Forms company to buy
Twenty-ninth Street mill Wilson, Walker & Co. Advantages
of the change, 25
ix
x CONTENTS
CHAPTER IV
IRON RAILWAY BRIDGES
1865 : Formation of the Keystone Bridge Company Incorporates pre-
vious business of Piper & S hi frier Andrew Carnegie's claims as
a pioneer His strange mistakes Character of Piper Iron used
in bridges a hundred years before Carnegie Early iron railroad
bridges Commercial morals and early railroad management
Officials and outside interests Influential backing of the Key-
stone Bridge Company Its early prosperity A balance sheet
Recent losses, ........... 39
CHAPTER V
A RIVALRY OF GREAT FURNACES
1872 : Schemes for iron-smelting Phipps and associates invited to join
them Coleman advises construction of independent furnace
Lucy furnace built Enters upon long rivalry with the Isabella
Interesting struggle for supremacy Remarkable achievements
Description of old-time methods Great services of H. M. Curry
Inventor Whitwell's improvements Valuable discovery by Mr.
Phipps His close trading Disagreements of partners Kloman's
unfortunate venture The panic of 1873 On the brink of bank-
ruptcy Kloman leaves the firm Record of the furnaces, . . 54
CHAPTER VI
BEGINNINGS AND GROWTH OF THE STEEL BUSINESS
1875 : Erroneous histories published of this event Vanity of supposed
founders Filching of laurel wreaths from dead men's graves
Coleman the real founder Secures option, with T. M. Carnegie,
of the Braddock site Gets his friends interested The elder Car-
negie's opposition Sees progress of Bessemer steel in England
Returns enthusiastic and joins the enterprise Helpfulness of
Colonel Scott and Mr. J. Edgar Thomson Curious result of strike
at Tohnstown Captain Jones made superintendent His remark--
able ability Letter exemplifying his broad views Causes of suc-
cess Discrimination in freight rates Shinn's methods of ac-
countingDisagreements of partners They lead to construction
of blast-furnaces Wonderful records made in smelting Also in
converting works and rail-mill Consternation in England, . 71
CHAPTER VII
SOME INSIDE FINANCIAL HISTORY
1875-1888 : Secrecy hitherto maintained concerning profits No longer
necessary First cost sheets and profits Andrew Carnegie's en-
thusiasm Forty-one per cent, dividends Carnegie's prophecy of
enormous profits Results even more astonishing One hundred
CONTENTS xi
and forty per cent, in one year Beneficent effects of the tariff
A golden stream of dividends First published statement of yearly
profits Where credit is due Services of Holley, Jones, Shinn
Jones' story of rivalries-^Part played by different partners Mc-
Candless, T. M. Carnegie, Stewart, Andrew Carnegie How the
advertising was done, 94
CHAPTER VIII
QUARRELS AND "EJECTURES"
Internal discord Dropping out of partners Andrew Carnegie's am-
bition Interesting letter Coleman leaves Then Kloman
Thomas M. Scott Death of McCandless Shinn 's departure Re-
sulting lawsuit Story of the dispute and arbitration Scott's
ejecture Carnegie's "foresight "Consolidation with Lucy Fur-
naces Important letters from Scott and Shinn Cost and earnings
of the works 117
CHAPTER IX
A GLANCE AT PROCESSES
General prevalence of iron ore Primitive smelting processes How
modern blast-furnaces are operated The hot-blast Use of coke
How it is made Why lime is added The puddling process
Cast and wrought iron The direct process of Bessemer steel-mak-
ing The Jones mixer The converter Brilliant pyrotechnics
Open-hearth steel process Its rapid growth, . . . .136
CHAPTER X
THE RISE AND GROWTH OF HOMESTEAD
1879: Establishment of Amity Homestead byjohn McClure Kloman's
rival rail-mill Joined by the Pittsburg Bessemer Steel Company
Pathetic death of Kloman His uninterrupted influence on Car-
negie enterprises Excellent mill and poor management^Trouble
with labor ; leads to disagreements in the company ; and final sale
to the Carnegies "Carnegie luck" Extensions and improve-
ments Julian Kennedy's skill Wonderful mechanical perfec-^
tion Purchase of the Carrie furnaces, . . . . . /. 150
CHAPTER XI
THE INCOMING OF HENRY CLAY FRICK
1882 : The enterprise attains its majority Ill-proportioned growth
Lacks mental development Frick gives coherency and definite-
ness to plans Gathers scattered plants into perfected organiza-
tion Previous attempts at consolidation Frick' s extraordinary
career His development of the coke industry His great fore-
sight Executive and organizing genius Henceforth the most
imposing figure in this history, 167
xii CONTENTS
CHAPTER XII
THE CAPTURE OF THE DUQUESNE STEEL WORKS
1889: Prick's remarkable feat of financiering Extensive works
bought without the outlay of a dollar ; they pay for themselves in
a year Story of their construction ; similar to that of Homestead
Splendidly equipped, badly managed Labor troubles Car-
negie heads them off desirable contracts Extraordinary methods
of competition Discouragement of shareholders Prick's clever
bargaining Amazing success ; buys works for bond issue and
pays bonds six times over from profits Their later development
Enthusiasm of local editor, 174
CHAPTER XIII
LABOR CONTESTS IN THEORY AND PRACTICE
Some moral causes of Homestead strike Utopianism versus business
The puddler's strike of 1867 The threatened trouble of 1875 at
Edgar Thomson No sentimentality Strike at Beaver Falls ; a
frank attempt to crush the labor-union Bad business policy An-
drew Carnegie's idealistic publishings "Thou shalt not take thy
neighbor's job " Incident in the washerwomen's strike Pander-
ing to the Knights of Labor ; its effects Strike at Edgar Thom-
son works; and employment of Pinkertons The coke strike of
1887; Carnegie's way of settling it Charges of bad faith ; their
justification Renewed disorder in the coke regions The troubles
at Homestead in 1889 Description of the hardships of the work-
men Carnegie's embarrassing talks for publication His cousin
illustrates with a parable Unfortunate settlement at
leads to further difficulties The labor-unions' joy,
S*)
CHAPTER XIV
THE HOMESTEAD BATTLE
1892 : Andrew Carnegie's chagrin Prepares for war Stern meas-
ures planned Secret instructions to Prick Prick tries concilia-
tion ; its failure Statement of the differences Small number of
men affected Closing of the works Strikers assume military
organization ; depose municfpal authorities ; other arbitrary acts
Sheriff powerless in presence of mob law The company's at-
tempt to land watchmen An all-day battle on the river Barbar-
ous use of dynamite and burning oil "No quarter to scabs"
Story of an eye-witness Surrender of the Pinkerton guards ;
brutal treatment of the wounded and defenceless Homestead in
a state of insurrection The calling out of the National Guard, . 203
CHAPTER XV
ATTEMPTED ASSASSINATION OF MR. PRICK
Furious attack on the chairman ; a desperate struggle in the office
Thrice shot and repeatedly stabbed, Mr. ^Frick makes a fight for
his life He saves the assassin from summary punishment His
CONTENTS xiii
magnificent display of courage His tender thought of Mrs. Frick
World-wide excitement The punishment of mutiny in the sol-
diers' camp Carnegie at beautiful Loch Rannoch ; denies himself
to reporters The interference of politicians Carnegie's cable-
gram to Whitelaw Reid Newspaper comment in Europe and
America Severe condemnation of Carnegie Prick's unceremo-
nious return to business, ......... 224
CHAPTER XVI
THE AFTERMATH OF WAR
Resumption of work at Homestead under protection of militia Sympa-
thetic strikes at other Carnegie mills World's interest in Home-
stead storm-centre Incidents of camp life and in the mills Con-
gressional investigations W. T. Stead's garbled reports The
Knights of Labor on Carnegie idealism "Thou shalt not take thy
neighbor's job" Despairing violence of the strikers Attempts
at wholesale poisoning of non-union men Conviction of the crimi-
nals Withdrawal of the militia; renewed violence Schwab's
conciliatory influence Carnegie opens another library Poetical
effusions in honor and condemnation The Republican debacle
Anger of the protectionists against Frick and Carnegie Some
good results of the conflict Carnegie's return His repudiation of
responsibility, and praise of Frick * 236
CHAPTER XVII
A RELUCTANT SUPREMACY
1892-99: Consolidation of Carnegie works ; effect of industrial war
The Union Railroad Romantic story of acquisition of Mesaba ore-
fields Due to Henry W. Oliver Carnegie's opposition ; leads to
coldness with Frick Interesting letters Alliance with the Rocke-
fellers Carnegie's renewed opposition; his amusing prophecy-
Free gift of many millions Frick's railroad projects Purchase
of a line to Lake Erie ; its economical operation Oliver's project
for Lake steamers adopted The company become self-sufficing
A perfect industrial unit 254
CHAPTER XVIII
THE WORKINGS OF THE CORPORATE MIND
1899 : The mental evolution of an industrial organism Workings of
machines watched and tabulated, but no regular record kept of
Board of Managers Mr. Frick's changes Weekly lunches estab-
lished and full reports kept of deliberations Spirit of good-fellow-
ship supplants unfriendly rivalries Secrecy concerning business
discussed Official record of such a meeting Purchase of Bethle-
hem machinery Important and costly additions New partners
admitted ; subject to the iron-clad agreement Steel car works
xiv CONTENTS
projected Conneaut pipe works recommended An interesting
contract Arbitration versus litigation Conneaut furnaces
planned Various reports The reorganization of the company, . 275
CHAPTER XIX
THE ZENITH OF PROSPERITY
Carnegie's attempt to sell out to English investors in 1889 ; prompted
by reduced profits ; its failure Great increase in gains under Mr.
Prick's management An amazing record Secret figures revealed
How these results were reached Rapid extensions at principal
works The Frick Coke Company ; the use of its credit to finance
the Carnegie concern Fresh attempts to sell out Carnegie's esti-
mates of values and future profits Plans a reorganization ; in-
volves retirement of Frick Fresh overtures for purchase The
famous option; bonus $1,170,000 Break in money market ; fail-
ure of the syndicate's plans Carnegie refuses extension of option
Impressive description of the company and its amazing profits
Schwab's enthusiasm over future prospects; rails $12 a ton
England out of the race Other plans of reorganization ; failure
of them all, , . . 293
CHAPTER XX
CARNEGIE'S ATTEMPT TO DEPOSE FRICK
Born of a quarrel, the company reaches its final form through conten-
tion Causes of Carnegie's animosity Intolerance of rivalship
Early effort to diminish Frick's prominence Differences concern-
ing price of coke Chagrin over the syndicate's failure to complete
purchase Ridiculous publication by Stead Annoyances caused
by advertisers The coke contract Carnegie's insinuation
Frick's resentment The matter becomes official Entry in min-
utes of company Carnegie tries to win Walker to his side
Schwab refuses to transmit Carnegie offer Frick's resignation
Carnegie not satisfied ; gives his orders to managers ; their reluc-
tance to act Schwab's difficult position Frick resists attempt to
force him to sell out ; Lovejoy and Phipps side with him^Equity
suit instituted Frick's pleadings and Carnegie's rejoinder Peace
overtures Conference at Atlantic City 316
CHAPTER XXI
THE FAILURE OF THE IRON-CLAD
Validity of the iron-clad agreement Its history Devised for control
of debtor partners Interest revocable New iron-clad of 1892
Phipps' energetic opposition to it ; not signed by senior partners
Agreement of 1897 ; signed only by Carnegie Renewed refusal
of Phipps to sign Agreement lies dormant until revived to meet
Frick case Extraordinary ritual to make it effective The docu-
CONTENTS xv
ment quoted Schwab's compliance to Carnegie's orders; Love-
joy's independence Protests of Phipps and Frick Attempt
proves abortive, 336
CHAPTER XXII
THE ATLANTIC CITY COMPROMISE
The training of junior partners Lovejoy the only one to resist ; his
independence helps to a settlement ; draws up agreement of con-
ciliationThe Board meets at Atlantic City ; adopts Lovejoy agree-
ment Final transformation of Carnegie Steel Company Con- .
solidation with the Frick Coke Company Enormous capitalization
The return of peace The Society of Carnegie Veterans, . . 346
CHAPTER XXIII
THE BILLION-DOLLAR FINALE
Prick's plans for Conneaut tube works ; revived by Carnegie to force
jmrchase The famous bankers' dinner Schwab's speech ; bless-
ings of industrial peace Morgan impressed Carnegie's skilful
diplomacy Sale to Steel Trust Price paid Growth of Kloman's
little business ; from less than $5,000 to nearly $500,000,000, . 358
APPENDIX
Some extracts from the pleadings of Henry C. Frick in the equity
suit. , 365
THE HISTORY; ......*.../;
OF THE
CARNEGIE STEEL COMPANY
THE HUMBLE BEGINNING
IN 1858 a small forge was started at
^N*V Girty's Run in Millvale, Duquesne
Borough, now a part of Alle-
gheny. It stood on the edge
of the straggling village,
and a muddy road ran past
f^^Kpegpc it along the river - bank.
M||AJ:. Judged by modern standards
it was an insignificant affair,
with a little engine and a
wooden trip-hammer that
first cumbrous mechanical substitute for the sledge-hammer.
The building was a light wooden construction, about a hundred
feet long and seventy wide ; but even in these narrow limits
the scanty machinery seemed at first lost It had been
brought from the basement of a near-by dwelling where the
business was started five years before. In the course of time
the vacant corners and empty spaces were gradually filled with
axle-bars, small forgings, and iron scrap of various kinds, and
the place took on a busy air.
The men who owned this little shop were typical black-
smiths, deep-chested, muscular fellows, who had grown up in the
light of the smithy and the music of the anvil. They were
Andrew Klowman and his brother Anton, who had come from
i i
2
THE HUMBLE BEGINNING
Treves ^ih Prussia a few years before. In time the superfluous
" w " of their name was dropped, and Anton became Anthony.
This: little place, which its owners valued, good-will and
stock, at $4,800, was the beginning of one of the greatest in-
dustrial aggregates in the world, valued and bought, forty-three
years later, for nearly five hundred million dollars !
In character the Kloman brothers were very different.
Andrew was a steady, plodding man of preternatural gravity,
earnest in his manner and watchful of every detail of cost and
A German trip-hammer.
From the American Manufacturer.
profit. Anthony, although the elder, had no high sense of
responsibility. He was careless and free with both money and
time; and the beer-can was often raised to his perspiring face.
Andrew preferred water, not only as costing less, but as leaving
him in better shape for bargaining. And in little things he
was a shrewd bargainer. He had been trained in a school
where a pfennig the tenth of a cent was the unit of expendi-
ture and a mark the equivalent of a dollar. Like the Prussian
workmen among whom his youth had been spent, he was suspi-
cious, and, at the outset of his career, more prone to insistence
A THIRD INTEREST FOR $1,600 3
on his own rights than solicitous about those of others. Later,
he outgrew this; but the trait led to great happenings.
The workmanship of Kloman Brothers, however, was fault-
less ; and they soon won a reputation for a reliable product.
Their specialty was axles, which they forged out of scrap-iron,
and sold to railroads and car-builders in and around Pittsburg.
The peculiarity of their product was caused by alternately re-
versing the direction of the fibres while forging the iron, which
gave their axles a superiority soon recognized by the trade.
The practice was original with Andrew Kloman.
Among their clients was the Pittsburg, Fort Wayne and
Chicago Railway, then called the Ohio and Pennsylvania, which
had shops and offices at Allegheny. The purchasing clerk of
this company was Thomas N. Miller, who was born in Allegheny
in 1835 and had grown up with a group of boys who were des-
tined to leave a deep impress upon the industry of their town.
Miller early recognized Andrew Kloman's abilities, and fre-
quently put business in his way by introductions and recom-
mendations to manufacturers using axles and forgings; and a
certain intimacy was thus established between them.
In 1859 Kloman came to Miller, and told him that his busi-
ness was growing so rapidly that, if he could get money to install
a second trip-hammer, he could double his output and easily
market it. He estimated the cost of this addition at $1,600;
and he offered Miller a third of the profits of Kloman Brothers
if he would put this sum into the business. As Miller was
purchasing clerk for a company which dealt with the Kloman
Brothers, he had some doubts about the propriety of directly
associating himself with them ; and he so expressed himself to
Kloman. " But I have a young friend," he added, " who might
represent me; and if you like I'll introduce him to you."
Kloman consented; and Henry Phipps was brought -into the
negotiation."
Henry Phipps at this time was just twenty years of age, hav-
ing been born in Philadelphia on September 2/th, 1839. His
THE HUMBLE BEGINNING
father was a shoemaker who had moved during Henry's child-
hood to Allegheny City, where he set up a little shop for him-
self in Rebecca Street. At the age of thirteen young Phipps
was earning a dollar and a quarter a week as general utility boy
with a jeweller named Barton, who had a small shop at the cor-
ner of Cherry Alley and
Liberty Avenue, Pittsburg.
In 1856 he entered the
office of Dilworth & Bid-
well, who had something
to do with iron and iron
spikes, and were also the
local agents of the Dupont
Powder Company. First
he was office boy, and later
became bookkeeper. In a
few years the firm was dis-
solved, Dilworth taking
the spike-mill and Bidvvell
the powder business ; and
young Phipps was taken by
the latter into partnership. He was, however, still bookkeeper
for Dilworth & Bidwell when Miller proposed that he should
take an interest in the Kloman forge.
Young Phipps readily agreed to join Miller in the enterprise,
and set out to raise his share of the $1,600 required by Kloman.
The problem was not easy; and it was only temporarily solved
when the elder Phipps agreed to mortgage his house for $Soo;
for, not knowing that this $800 would grow into $50,000,000,
he presently regretted his offer, and showed such distress that
his son felt obliged to release him from his promise. Finally
it was arranged that Miller should pay the whole of the $1,600
required by Kloman, and that Phipps should refund half of this
out of his profits in the business. In return he was to have
half of Miller's interest, which, for propriety's sake, was put in
Young Fhipps, trudging along the canal bank
on his way to Kloman's.
Plate II,
HENRY PHIPPS
OF KLOMAN & CO.; KLOMAN & PHIPPS; CARNEGIE, PHIPPS & CO., LTD.;
THE CARNEGIE STEEL CO., LTD.
PROFITABLE WAR CONTRACTS 5
the name of Phipps. In addition, Phipps was to keep the
Kloman books.
This arrangement proved very satisfactory to all parties;
and, the second trip-hammer having been installed, the business
grew rapidly. Miller secured the Klomans the preference of
the Fort Wayne business, and recommended them to new firms
building cars for the railroad, such as Whittaker & Phillips
of Toledo, Haskell & Barker of Detroit, Jessup Kennedy &
Co. of Chicago, Barney Parker & Co. of Dayton, and others,
from whom the bulk of their trade was soon received. Phipps,
with the energy which has always characterized him, walked
three miles out to the Kloman shop after his day's work at
Dilworth's, posted up the books, and then trudged back along
the dark towing-path of the Pennsylvania canal to his father's
house on Rebecca Street. And Kloman, with his sleeves rolled
up, worked with his brother and half-a-dozen men in the forge.
Then the war broke out, and axles, which had been selling
for two cents a pound, jumped to twelve cents a pound. And
when it came to filling government orders for parts of gun-car-
riages, there was no limit to price for quick deliveries. The
making of railway supplies dwindled; and soon the firm was
working almost exclusively on high-priced government orders.
Under this stress of prosperity the primitive forge in Girty's
Run was found inadequate before the war was a year old. A
new and larger mill was therefore decided upon, and the firm
was reorganized. Here are the articles of partnership :
Articles of agreement made and concluded this sixteenth
day of November, A.D. 1861, by and between Andrew and An-
thony Kloman, of Duquesne Borough, of the first part, and
Henry Phipps, Jr., of Allegheny City, of the second part, all of
Allegheny County and State of Pennsylvania, witnesseth :
That the said parties have agreed, and by these presents do
agree, to associate together as equal copartners in the business
of manufacturing, selling, and vending axles, iron forgings, and
the rerolling of scrap into iron bar, and the general work of an
iron-mill and all things pertaining thereto.
6 THE HUMBLE BEGINNING
It is agreed that the style of the firm shall be Kloman and
Company, of Pittsburg, Pa.
The capital stock shall be $80,000, to be paid in from time
to time as the wants of the business -may demand, in equal pro-
portion by the said parties.
It is further agreed that a full and correct inventory shall
be made of the machinery on hand at present in the buildings
now occupied by Kloman and Co., of Duquesne Borough, and a
fair valuation shall be made thereof after the removal of the
same to the new establishment ; and in case the said copartners
shall not be able to agree on a valuation, then the same shall be
adjusted by arbitrators, of whom the parties of the first part
shall choose one, the party of the second part one, and the two
so chosen shall select a third ; and the valuation arrived at shall
be binding, the amount so valued shall be allowed to the said
Andrew and Anthony Kloman as cash invested in the new
company, and six per cent, interest shall be allowed thereon to
the said Andrew and Anthony Kloman, from time to time, until
the accruing profits to the party of the second part shall equal
his share of the excess so admitted to Andrew and Anthony
Kloman.
It is further agreed that all purchases made after said ap-
praisement of Andrew and Anthony Kloman's stock shall be
made share and share alike individually in cash advancements,
the said Andrew Kloman, the said Anthony Kloman, and the
said Henry Phipps each advancing one-third of all the cash
required for the business of the firm, up to the full amount of
the capital stock aforementioned.
It is further agreed, and to these presents the parties do
bind themselves, that the said Andrew and Anthony Kloman
shall not engage in any other business whatever and shall give
their undivided attention and time to the business of the said
copartnership, without charge or compensation, unless when
travelling on business of the company, when necessary travelling
expenses shall be allowed.
The said Henry Phipps, Jr., shall keep the books of the
firm, or exercise a supervision over them during such evenings
as he can devote thereto, but he shall not be required to further
exertions in the business than such time as he can consistently
spare from his other engagements, and he shall lend his influ-
ence so far as he can towards forwarding the interests of said
copartnership.
There shall be kept during the copartnership of said firm
full, true, and correct books of account by double entry in regu-
ARTICLES OF PARTNERSHIP y
lar sets, in which shall be entered all purchases, sales, accounts,
and other transactions, and the same shall be neatly kept and
posted by the party of the second part, or by his direction, and
shall be open at all times to the inspection of the copartners.
A correct and true inventory shall be made and entered in
the Stock Book on the first day of July or January of each year,
and the profits and loss estimated.
No purchases or sales exceeding $1,000 shall be made by
any one of the said copartners to any one person or firm, with-
out due consultation and approval of all parties hereto.
No partner nor partners shall sign any Bond, Mortgage,
Note, or any Obligation, or make any endorsement, or assume
any liability, written or verbal, for the benefit of any other
party, nor shall any money be loaned from the firm without the
written consent of all the parties hereto.
And it is further agreed that neither of the parties hereto
shall sell or assign his interest in said business without the
consent of all the partners being first obtained in writing.
Neither party shall draw out more than his share of the
profits, and the party drawing out the largest amount shall pay
interest at the rate of six per cent, on the excess drawn.
It is agreed that in case of the death of any parties hereto,
the business of the firm shall be carried on by the surviving
partners until the first of January or July following, as the case
may be, when an account of stock shall be taken and profits
ascertained; and the one-third of the profits and stock, after
allowance of capital stock paid in by each of the partners
respectively, with interest, shall be paid over to the legal heirs
of the deceased partner, one-third to be paid in cash and the
remainder in equal instalments of one and two years.
Such copartnership shall commence on the first day of Janu-
ary, A.D. 1862, and embrace all contracts and business of the
present firm of Kloman and Company except their debts, and it
shall continue for and during the space of five years thereafter;
and if the said Henry Phipps, Jr. , shall see fit so to elect, he
shall have the privilege of continuing for a further period of
three or five years.
And it is further agreed that at the termination of this
copartnership a valuation shall be had of the real and personal
property of the firm, to be arrived at as in page one of this
agreement, and one-third of the amount (after allowance of
original capital with interest to each partner) shall be paid to
the said Henry Phipps, Jr., by Andrew and Anthony Kloman
in cash, if there be that amount of money available; if not,
8 THE HUMBLE BEGINNING
then so much as there is available, not less than one-third, and
the balance in one and two years with interest.
And it is agreed that in the event of Henry Phipps, Jr.,
retiring January 1st, 1867, he hereby binds himself to execute
and deliver to the said Andrew and Anthony Kloman a bond in
the penal sum of $10,000, conditioned that he will not engage
in a similar business for the space of three years from January
ist, 1867.
Witness the hands and seals of the parties aforesaid the
day and year above written.
ANDREW KLOMAN, L.S.
ANTON KLOMAN, L.S.
HENRY PHIPPS, JR., L.S.
Signed, sealed, and delivered in presence of
As to Andrew Kloman and
Henry Phipps, Jr.,
A. LUDWIG KOETHEN.
As to Anthony Kloman,
CHAS. A. BURROWS.
It is eloquent of hope and self-confidence that in the clause
providing for the purchase of a deceased partner's interest, only
profits are mentioned. No one entertained the possibility of
losses; and the event justified their faith. This clause has a
further interest as the precursor of similar provisions in later
articles of association, finally elaborated into the so-called " iron-
clad " agreement which became so famous in the annals of the
Carnegie Steel Company.
An interesting annex to this document is the inventory of
the first Kloman forge. It shows with indisputable exactness
the humble beginnings of the business which afterwards grew
to such impressive proportions. It is as follows : " One frame
building situate in Duquesne Borough; one steam-engine; two
hammers; one furnace; sundry tools and merchandise; one
small frame house and lot."
The new mill was built on a large plot of ground at
Twenty-ninth Street, Pittsburg, leased from the Denny estate
at an annual rental of $324 for twenty years, with the right
of renewal. It was a substantial affair, and provision was
AN EVENTFUL QUARREL 9
made for extensions. An inventory made after it had been a
year and a half in operation shows that it then comprised four
puddling-furnaces, four heating-furnaces, three boilers, one
large steam-engine, four small engines, one steam-hammer,
one trip-hammer, one tilt-hammer, one train of bar-rolls, one set
of muck-rolls, one squeezer, three blacksmith's forges, four
turning- lathes, one drilling-machine, one screw-cutting machine,
one safe, shafting, pulleys and belting connected with the above
machinery, sundry tools and merchandise, office furniture and
fixtures. This list is dated April i6th, 1863. It tells the
story of eighteen months of exceptional success, of progressive
management, of the development of new lines of business, of
earnings and profits put back into the business. Contrasted
with the meagre resources of the little Duquesne shop, the
Twenty-ninth Street mill, or the Iron City Forge as it was
called, was a large and well-equipped establishment, with a
large capacity for highly finished products worked up from the
crudest forms.
An idea of the great profits of a rolling-mill at this period
may be obtained from the fact that between 1860 and 1864 the
price of rolled bar-iron advanced from $58 to $146 a ton, while
the cost of pig-iron rose only from $22 to $59.
It will be noticed that, in the articles of partnership just
quoted, the Miller-Phipps interest was again put in the name /
of Henry Phipps, the original objection to Miller's open associa-
tion with the firm being still thought valid; although it was
a matter of remark by the Klomans that Miller, when making
purchases for the Fort Wayne Road, drove a closer bargain
with them than did any other of their customers. The condi-
tion was nevertheless an unfortunate one ; and, as might have
been expected, it presently gave rise to disagreements which
ended in a quarrel and rupture.
It is necessary to advert at some length to this quarrel be-
cause it had an important bearing on the subsequent history
of the enterprise. Indeed, it may be said to have completely
io THE HUMBLE BEGINNING
changed the current of events, giving them a shape contem-
plated by none at the outset, and bringing in new influences
which in the end dominated the firm and gave it a new name.
In June, 1862, Miller went to England for a holiday. In-
cidentally he made large purchases of railway supplies for his
road, which were shipped in haste in order to evade the war-tax
of thirty-five per cent, which had just been imposed on such
things. On his return in November he was met by Andrew
Kloman, who made a statement to him. This meeting and the
events which followed were so important that Miller at the
time wrote an account of them. In this statement he says :
" When in Europe was written to by Phipps that my pres-
ence would be a source of relief to them (Kloman & Co.). . . .
On my return I was soon approached by Mr. Kloman, who
stated that the business was growing too great for him, that his
brother was getting careless in business, and that he could not
sleep at nights owing to his many cares, and desired to know if
I would take an active interest in the concern and buy his
brother out. Mr. Phipps also joined in urging me to take active
part and buy out Anthony Kloman. I desired that if I did so
I might be privileged to stay with the P. Ft. W. and C. RR.
until January, 1865, but Mr. K. was very anxious that I
should take hold as soon as possible. So I accordingly com-
menced negotiations with Anthony, assisted by Phipps and
Kloman, and after considerable trouble induced him to sell at
$20,000, which was then estimated to be more than interest
conveyed was worth by two or three thousand dollars."
This transaction was closed on April i6th, 1863; and en-
dorsement of it was made on the original articles of partnership,
November i6th, 1861, quoted above. This endorsement reads
as follows :
Having by articles of agreement taking effect the sixteenth
day of April, 1863, bought the interest of Anton Kloman in the
above firm of Kloman & Co. and paid for same in hand the sum
of twenty thousand dollars (which sum covers other interests
also), and having done this by the assistance in influence and
by the desire and wish of the other two partners, and at a price
PARTNERS AT ODDS n
set by Andrew Kloman, I do this the thirteenth day of June,
1863, on the original papers handed to me by Henry Phipps, Jr.,
accept and assume the partnership of Anton Kloman to all in-
tents and purposes, to the full and complete responsibility in-
volved.
Witness my hand and seal the day and year above written.
THOMAS N. MILLER.
Witness,
J. H. MILLER.
It appears, however, from Miller's written statement that
before the actual transfer of Anthony's interest, Andrew Klo-
man betrayed great uneasiness at the passing of control into
the hands of his partners. To reassure him, Miller gave
Andrew Kloman a bill of sale of half the interest just acquired
NOTICE
HE HE BY GIVEN THAT
be t __ THOMAS N. MILLER is not a member of our firm,
MB nor baa he any authority to transact business on cur,
' "account.
120 B KLOMAN fe CO.
[Photographic Reproduction.]
E?
from Anthony ; and for a time Kloman seemed satisfied with
this. Presently he realized that he still owned only half the
stock of the company; and, to the surprise of Miller and the
alarm of Phipps, he demanded that the latter sell out to him.
Phipps naturally demurred to such summary ejection from a
business which was daily becoming more valuable, and which
he had helped to build up ; and he set himself to resist the pro-
posal. Then Kloman turned to Miller and asked him to sell ;
and presently all three were at odds. The situation was made
worse when Kloman discovered that Phipps, at Miller's sugges-
tion, had sold, some time before, a share of their first interest to
William Cowley, who had enlisted in the war and had died of
typhus fever contracted on the field of Fredericksburg. This
12 THE HUMBLE BEGINNING
share was now offered for sale by the young soldier's brother,
who was his executor. It was bought back by Miller for
$8,500; but Kloman was naturally alarmed to learn that any
part of the business which bore his name should be sold with-
out his knowledge and in contravention of the articles of part-
nership; and he became further incensed against Miller. The
strain reached fracture-point when Miller, pending a satisfac-
tory settlement, withheld, as agent of the Fort Wayne Road,
certain payments due from it to the Kloman firm ; and Phipps,
who had tried to remain neutral, was forced to take sides
against his old friend Miller.
It unfortunately happened about this time that a paragraph
appeared in a local paper to the effect that Miller had bought
an interest in the Kloman business, and that the style of the
firm was to be changed to Kloman & Miller. It was probably
one of those unauthorized statements which help to make
up the local news of a paper; but it had the merit of truth.
Nevertheless, by the advice of Ludwig Koethen, his lawyer,
Kloman next day inserted an advertisement contradicting the
statement. This appeared in the Pittsburg Evening Chronicle
on Thursday, August 2Oth, 1863.
This was the condition of affairs when the services of
Andrew Carnegie were sought as peacemaker, with results that
recall the ancient fable of the lawyer and the oyster. As the
world knows, each of the litigants got a shell.
Each of the litigants got a shell."
CHAPTER II
Carnegie's Birthplace.
A MOST HAZARDOUS ENTERPRISE"
ANDREW CARNEGIE was
born in a little tile-roofed cottage
in Moodie Street, Dunfermline,
Scotland, on November 25th,
1835. His father was a weaver
of fine damasks, taking the weft
and warp from merchants and
working them up on his own
loom at home. The introduc-
tion of steam-looms and the ex-
tension of the factory system to the linen trade put Carnegie
and other hand-weavers out of work; and in 1848 he migrated
to America with his wife and two sons. Making their way to
Pittsburg, where they had relatives, Carnegie found work in the
old Blackstock cotton-mill on Robinson Street, Allegheny City ;
and young Andy presently joined him there as bobbin boy at
$1.20 a week.
They lived in a little black frame house which stood in the
rear of what is now 336 Rebecca Street, Allegheny a district
then known as Slabtown and later as Barefoot Square. The
mother eked out her husband's earnings by taking in washing;
and her evenings were spent in binding boots for the father of
Henry Phipps, who lived next door but one.
A little later, when young Andy was fourteen, he got a
position in the bobbin-turning shop of John H. Hayes, on
Lacock Street, at $3 a week. His duties were to fire a furnace
in the cellar with wooden chips and to assist in running a
small engine. Later he was made bill clerk of the factory, and
13
14 "A MOST HAZARDOUS ENTERPRISE"
left when he was fifteen to become a messenger boy for the
Ohio Telegraph Company. Here he learned telegraphy, be-
came an operator, and was taken in 1854, when he was nineteen
years of age, into the service of Thomas A. Scott, then
superintendent of the western division of the Pennsylvania
Railway Company.
A year later, in September, 1855, the father died. The
house in Rebecca Street in which he lived had been purchased
out of his savings ; and this he left to his wife, who afterward
sold it for $1,500.
During the next few years young Carnegie engaged in
various outside enterprises, and through the aid of his chief,
Mr. Scott, often made money in them. Indeed, during this
fruitful period of his career, before he learned that " pioneering
don't pay," he appears to have been ready to go into any scheme
that was brought to his notice. Besides the Woodruff Sleeping
Car Company and the Columbia Oil Company, in both of which
Mr. Scott gave him an interest, and which are known to have
been the basis of his fortune, he had interests in a scheme for
building telegraph-lines along the Pennsylvania Railroad, in a
construction company, in a project for establishing a sutler's
business in soldiers' camps, in a horse-trading concern in con-
nection with General Eagan for the supply of cavalry mounts
to the Government, in a bridge-building company, in a locomo-
tive works, in the Duck Creek Oil Company, in the Birming-
ham Passenger [horse-car] Railroad, the Third National Bank,
the Pittsburg Grain Elevator, the Citizens' Passenger Railroad,
the Dutton Oil Company, and probably other ventures forgotten
by himself and all who knew him. By 1863, the date of his
entry into this story, when he was twenty-eight, he had made
quite a little money, and had been promoted to Scott's position
as local superintendent, with offices at the Outer Depot, Pitts-
burg. His brother Tom, some nine years his junior, was his
assistant.
As boys, Andrew Carnegie and Thomas N. Miller had be-
THE ORIGINAL SIX
longed to a group which called itself The Original Six. This
also included William Cowley, who has been mentioned, James
R. Wilson, who reappears later, James Smith, and John Phipps.
The last-named was Henry Phipps' brother, who died in youth.
The Original Six took walks in the country together, met at
/each other's homes, and some of them belonged to a singing-
class conducted by Ludwig Koethen, the lawyer, choir-master,
and assistant pastor of the Swedenborgian Church, of which
all the Carnegies were members. Henry Phipps, being four
years younger, belonged
to another group, which
included Tom Carnegie,
Henry W. Oliver, and
Robert Pitcairn.
Andy, as he was
generally called, was
looked up to by the rest
of the boys because he
was older than any ex-
cept Miller, who was
three months his senior,
and because of an as-
sertiveness in his man-
ner which the boys interpreted as evidence of fitness for
leadership. It was therefore not unnatural that both Miller .
and his young friend Phipps should submit to him their
difficulties with Kloman. Miller, in particular, left his inter-
ests in the hands of Carnegie, whom he held as his dearest
friend. They had been the previous year in Europe together,
where Miller had tended him in a long and dangerous illness.
He had also tried to induce Kloman to admit Carnegie into
their partnership ; but Kloman would not hear of it. So that
in many ways Carnegie's selection as peacemaker was appro-
priate. It was in this strange guise that Dame Fortune, having
already gently tapped several times at Carnegie's door, now
Some of them belonged to a Singing-Class."
i6
'A MOST HAZARDOUS ENTERPRISE
began a regular tattoo ; but so busy was he with his little
schemes that many years passed before he realized the meaning
of the noise.
Carnegie's efforts in the interests of harmony produced
nothing but fresh discord, until at length he decided upon the
ANDREW CARNEGIE.
GEORGE LAUDER.
Taken in Glasgow. 1862.
THOMAS N. MILLER.
1 elimination of the chief cause of trouble by ousting Miller him-
self. This was not his avowed intention; but it was the result
of his" method of restoring peace. A new partnership agree-
\ ment was drawn up, dated September 1st, 1863, in which
THE FIRST " EJECTURE" 17
Miller, in lieu of four-ninths, was given one-sixth, and made
a special partner. The capital of the company, now known as
Kloman & Phipps, was to be $60,000, and was to run for six
years and four months ; but there was a clause reading :
" But if at any time during the term aforesaid the said
Kloman and Phipps shall desire to terminate the same as to the
said special partner, then upon the said Kloman and Phipps
giving to the said Thomas N. Miller sixty days' notice in writ-
ing, and jointly signed, of their desire to that effect, the interest
of him, the said Thomas N. Miller, shall at the end of said
sixty days, and upon the payment to him of the capital invested
by him and share of profits coming to him, or, in case of loss, of
the total amount of capital still remaining due to him, retire
from said firm, and his interest therein shall at that time wholly
cease, and the same shall in such case accrue to the said Henry
Phipps, Jr., as having a pre-emption right thereto, upon his
paying in the capital for the purchase thereof. "
This agreement was signed by all the parties, Miller adding
to his signature a protest "against the sixty days."
In the course of a few months fresh disputes occurred, and
Miller was served with the sixty days' notice of expulsion.
Upon this Andrew Carnegie and his brother Thomas M.
Carnegie both drew up written and signed statements of their
connection with the quarrel ; and in these appears for the first
time the fact that Tom Carnegie had been admitted into the
partnership with money which his brother had furnished, and
that, in addition, to quote from Andrew's statement : " In the
event of Miller's ejecture one-half of this interest would fall to
my brother." This was the way in which the Carnegies first
went into the iron business.
In regard to the merits of the dispute itself, it is impossible
after this lapse of time to unravel the tangled evidence. The
suspicions and vacillation of Kloman seem to have contributed
more than anything else to the quarrel. First he wished to be
rid of his brother. Succeeding in this, he became desirous of
sacrificing Phipps in order to regain the lost balance of power.
i8
"A MOST HAZARDOUS ENTERPRISE"
Finally, he preferred to force out Miller, probably realizing
that his greater financial strength made Miller more dangerous
than Phipps, who, beyond his small salary, had nothing but his
interest in this firm. The elder Carnegie says in his statement
that Kloman was alarmed lest Miller and Phipps should have a
controlling interest. " A violent quarrel ensued, and the par-
ties were embittered toward one another. Finding Miller ob-
stinate and determined Mr.
Klowman eventually
thought Phipps would be
more desirable as a member
of the firm; and they be-
came friendly disposed as
the breach widened between
Miller and Klowman. For
some weeks," adds Carne-
gie, " scarcely a day passed
that I did not see one or
more of the parties. Hear-
ing both sides, I was fully
satisfied I could not estab-
lish harmony upon the basis
of a common partnership.
I finally got all "three to-
gether in my office and pro-
posed that Miller should
have his one-third interest
and be a silent (not special) member, Phipps and Klowman
transacting the business. This was agreed to; but unfortu-
nately ill feeling was created about a trifle, the result aimed
at was lost, and the conference separated under angrier feelings
than ever. Time only served to increase the violence of the
quarrel." After making reference to Miller's having stopped
the Fort Wayne payments, Carnegie continues : " But I con-
sidered it so essential to Miller's standing that the notice
THOMAS N. MILLER.
First partner of Kloman and Phipps, and
with them the founder of what afterwards
became the Carnegie Steel Company.
THE RUDIMENTARY "IRON-CLAD" 19
[i.e., the advertisement denying his partnership] be recalled, as
enemies were not wantin-g who began circulating slanderous
reports about his clandestine arrangement with Klowman while
acting as agent of the Fort Wayne Road, that I insisted upon
Miller agreeing to anything that would reinstate him in the
eyes of the public as a legitimate member of the Klowman
concern."
This was the weakness of Miller's position ; but it need not
have been fatal to it, since he had bought Anthony Kloman's
interest openly and in his own name. It is, indeed, impossible
to resist the thought that Andrew Carnegie compromised his
friend by giving serious attention to the puerile objections of
Kloman. Some of these, as quoted by Carnegie himself, are so
childish that one is astonished at their influence on Carnegie.
Kloman "told me," he writes, that he "found such a [special]
partner might possibly create trouble by insisting upon coming
into the mill, sitting in the office, talking to the men, etc., but
more especially he was afraid Miller might involve the firm in
some way, or attempt to do so, for revenge, or might insist
upon withdrawing his share of the profits at inconvenient times,
etc. To cover these objections I suggested that Miller's good
behavior might be secured by a clause giving the other part-
ners the right to eject him upon notice, provided the fears
expressed were realized. This was accepted and the present
papers executed. "
Having reached this extraordinary settlement with Kloman,
Carnegie telegraphed his brother to write Miller that he must
accept it, as otherwise " the position in which I [Andrew Car-
negie] would be placed would be that of an agent whose acts
were disavowed by his principal, and this would be the first
time during my life in which I had been so placed."
Miller therefore accepted the settlement under protest, and
allowed his interest to be cut down to what it was before the
purchase of Anthony's stock, and to hold even this interest
only on sufferance of his partners,
H
\
J S
1 J c
MILLER'S CABBAGE PATCH 21
The incident closed for the time being, after Miller had
accepted his expulsion and allowed his capital to be put in the
name of T. M. Carnegie as trustee. Thenceforward it was a \
partnership between Kloman, Phipps, and the younger Carnegie.
Even before the narratives of this quarrel were written
August 5th, 1864 Miller had quietly paid $400 to a gardener
named Cumming, as compensation for five acres of half-grown
cabbages which he destroyed to make room for a rival mill at
Thirty-third Street, Pittsburg, only four blocks from the Klo-
man- Phipps Iron City Forges. The lease bears date of July
1st, 1864. In this venture Andrew Carnegie, despite his ]
brother's interest in the Kloman mill, had a large share. The i
list of organizers also included the names of Aaron G. ShifHer /
and J. L. Piper, who had bridge-building works near, which .
were to be supplied with iron from the new mill. There were
also the names of John C. Matthews and Thomas Pyeatte on '
the association papers when these were published on October
1 4th, 1864. Pyeatte was the bookkeeper of the concern, and
Matthews was manager. The Cyclops Iron Company was the '
name given to the new organization ; and the mill was designed
to be the best in Pittsburg. None of the men, however, except
Matthews, had had any practical experience; and Matthews
was handicapped by the ambitious plans of his associates, who,
he used to complain, "wanted him to build a $400,000 mill on
a $100,000 capital. " The principal construction was 230 feet
long and 80 feet wide. The building and equipment of the
works occupied all winter; and when, in the spring, the ma-
chinery was started, the structure was found too weak for its
safe operation.
Tom Carnegie had watched with grave concern his brother's
connection with this enterprise ; and when his forebodings of
disaster seemed about to be realized he urged Andrew to seek a
union with the Kloman firm, so as to have the benefit of the
German's mechanical experience and skill in remodelling the
Cyclops Mill. Andrew, as was his wont when facing trouble,
CARNEGIE REPROACHES HIS LUCK 23
laughed at his brother's anxiety, but decided to follow his ad-
vice. Overcoming Miller's objection to an alliance with his
recent opponents, Carnegie authorized his brother to open nego-
tiations with Kloman and Phipps for a consolidation of interests.
In the meantime the Twenty-ninth Street mill had been
successful beyond all expectation ; and at the beginning of 1865
its capital was raised, to keep pace with its earning power,
from $60,000 to $150,000. The proposal for union with the
discredited Cyclops concern was naturally received by Kloman
and Phipps with coldness ; but Tom Carnegie had a persuasive
manner, and he made liberal offers. Finally it was agreed that
Andrew Carnegie and his group should turn over the Cyclops
Mill and a lump sum of $50,000, to be divided among the
Kloman partners, in return for a little less than half of the
shares of a new company, of which Andrew Kloman was to be
manager. This was done; and on May ist, 1865, the Union
Iron Mills Company was organized with a capital of half a
million dollars. Thenceforward the two mills were known as
the Upper and Lower Union Mills, and are so known to-day.
Andrew Carnegie's disappointment at the outcome of this
venture was carefully concealed at the time ; but he gave expres-
sion to it a couple of years later in a letter full of reproaches
which he sent to Miller. " I knew you had previously been
wronged," he wrote, " and felt you could not forget it. I did
what I could at the time to redress the wrong and went into the
most hazardous enterprise I ever expect to have any connection
with again, the building of a rival mill." And so, regarding it
as a "most hazardous enterprise," Andrew Carnegie found
himself fortuitously and complainingly thrust upon a road which
was to lead him to a fortune of $250,000,000.
The Cyclops Mill was built on five acres of land leased from
the Denny estate, which paid $5,000 to recover the leases held
by the market-gardener whose cabbages Miller dug up to make
room for his foundations. The annual rental was $2,000 for
twenty-one years, with a right of renewal for a similar term at
24 "A MOST HAZARDOUS ENTERPRISE"
the rate which should be found current in the neighborhood.
In 1884 the Dennys ascertained that rentals of adjoining prop-
erty had increased fifteen-fold in twenty years. So they de-
manded $25,000 a year for the old-time cabbage-patch, but
finally accepted $12,000. Additions have been made from time
to time to the original five-acre tract by purchase and by filling
in the river front, until the Upper Union Mills now cover eight
acres.
PITTSBURG.
The Allegheny River on the reader's left, the Monongahela on the right. They
form the Ohio at their junction. The first Kloman forge was at the (left) end of the
furthest bridge up the Allegheny, seen in the above illustration. The second Kloman
forge was almost opposite, on the Pittsburg side of the river.
Plate
HENRY PHIPPS, ANDREW CARNEGIE AND JOHN VANDEVORT
TAKEN IN 1865 DURING A WALKING TOUR IN ENGLAND
CHAPTER III
EARLY STRUGGLES AND SUCCESSES
THE war of the rebellion was draw-
ing to a close when the consolida-
tion of the two mills took place.
r
At once the demand tor govern-'
ment supplies ceased; and it be-
came necessary not only to find
new markets, but to make other
kinds of goods than the Kloman
mill had been producing. This was no easy matter ; and the
difficulty was increased by the need for finding an outlet for
the products of the new mill. Mr. Phipps says that business
runs wonderfully easily when it gets in a groove. But in the
beginning there are no grooves; and the paths of trade for
the Union Iron Mills had to be created.
With the carelessness of youth Phipps gave little thought
to the making of trade-grooves for the new company ; but hav-
ing just received his first large sum of money, he thought
the time had come for a great and glorious holiday. Andrew
Carnegie shared the idea; and, accompanied by John Vande-
vort, they went to Europe on a nine months' walking tour,
leaving Kloman in charge of the Lower Mill, with Matthews,
under his supervision, to manage the Upper Mill. Tom Car-
negie was to help in such ways as he could. Miller, who was
now the largest individual owner, took no active part in the
direction of affairs; but he occasionally made the firm an
advance of ready money. For it soon became evident to these
young men, venturing in untried fields and with conditions of
trade undergoing a sudden and radical change, that the finan-
25
26
EARLY STRUGGLES AND SUCCESSES
cing of their operations was going to be difficult. Recalling
this time, Miller long afterward used to express his wonder,
not only at their audacity, but at their luck. " It is no credit
to any of us that we did not 'bust ' twenty times," he used to
say.
As the weeks grew into months the ever-increasing financial
x pressure developed in Tom Carnegie a resourcefulness which he
himself had never suspected,
and was a constant surprise
to those who had known
him only as his brother's
assistant. He had a win-
ning personality, and made
friends even when asking
a favor. His nature was
broadly human ; and he
found a point of sympathetic
contact in everybody he
touched. The conviviality
which his more austere
brother afterwards so* freely
condemned had a positive
monetary value during these
trying times, when the tour-
ists in Europe were discuss-
ing cathedral architecture and falling into bewildered rapture
over the beauties of the blossoming heather. If the situation
was saved for the Union Iron Mills Company, it was due to
Kloman's mechanical genius and Tom Carnegie's ability to
make friends and then promptly to convert them into cash.
Despite all this, it is doubtful if the firm had survived
the return of the holiday-makers had it not been for the lucky
- speculation in oil which Miller had made in 1862, the returns
from which enabled him repeatedly to come to the company's
rescue. " A friend in need is a friend indeed," Tom would say
'Discussing cathedral architecture.'
COSTLY BLUNDERS 27
to Miller by way of preface when asking for a couple of thou-
sands to meet the wage-roll on Saturdays.
Then Kloman had his troubles. The new mill was even
more faulty in construction than he had supposed ; and large
sums were needed for alterations. Mr. Phipps says it had
almost to be rebuilt. Andrew Carnegie, in his reproachful let-
ter to Miller, says : "We had to spend at least $30,000 on the *
Upper'Mills to remedy blunders. " Rarely, indeed, has a great
enterprise been started under such hopeless conditions; and
had it been known how hopeless they were, it is likely that the
partners would have given up the struggle in despair and gone
back to their bookkeeping and their telegraph instruments.
Presently the tide turned. The railroads throughout the
South were being rebuilt, the West was opening up, the Union
Pacific was under way, and a general revival of the iron trade
took place. Tom Carnegie had the benefit of the ripe experi-
ence and solid judgment of William Coleman, a pioneer in the .
Pittsburg iron business, whose daughter he was hoping to wed.
Under Mr. Coleman's direction the energies of the firm were
directed into the channels which Kloman had partially known
before the .war; and the boom in railroad-building came in
time to save the Union Mills. In addition, a new outlet for
their product was opened through the connection which Andrew
Carnegie had formed with the bridge-building firm of Piper &
Shiffler, afterwards known as the Keystone Bridge Company.
This concern now bought all its shapes and most of its struct-
ural material from the Union Iron Mills ; and soon the altera-
tions which Kloman made in the Upper Mills enabled him to
roll beams large enough for bridge purposes.
In the spring of 1866 Phipps and the elder Carnegie re-
turned from their European trip ; and the former at once assumed
financial management of the company, thereby taking upon him-
self a burden which never left him for twenty years. In
these days of mammoth financial operations we are so accus-
tomed to see tens and even hundreds of millions raised for this,
28 EARLY STRUGGLES AND SUCCESSES
that, or the other purpose, that it is difficult to conceive of the
greatest constituent company of a billion-dollar organization
having trouble to find money to pay the wages of its workmen.
But Phipps had years of such experiences; and more than once
the men were obliged to accept, in lieu of wages, orders for
groceries on a local store. An amusing circumstance is recalled
to illustrate the chronic nature of this effort to do business
without adequate capital.
Mr. Phipps had an old black mare, Gypsy, which he used to
drive from one bank to another. This old horse made the
rounds so often that it
would stop of its own ,
accord whenever it came
to a bank; and it would
make a diagonal line
across Wood Street from
the Citizens' National to
the First National, and
then on to the Third Na-
tional, stopping before
each bank and quietly
"A diagonal line across Wood Street."
waiting until Mr. Phipps
had arranged for the day's necessities. It was impossible to
drive this old horse in a straight line on Wood Street.
The president of one of the old Pittsburg banks recently
said to the present writer concerning those times : " What we
used to admire in young Phipps was the skilful way in which
he could keep a check in the air for two or three days."
For a while financial conditions became easier ; but before
Mr. Phipps had grown accustomed to the change a fresh strin-
gency arose through an unwise incursion into a new field.
There was a pipe-works adjoining the Lower Mill, and some
one suggested to Andrew Carnegie that it would be a good
thing to buy this property; it would round out their holdings,
besides providing them with a new market for their iron. The
- CARNEGIE'S OFFER TO SELL OUT 2 Q
plan commended itself to the elder Carnegie, who was always
on the alert for new uses for the product of the mill; but Tom,
who often served as a balance-wheel to his brother's over-san-
guine temperament, and who, moreover, had had some personal
experience of the difficulty of financing a growing business
with a stationary capital, strongly opposed it, and showed that
the sort of iron used in the pipe-works was not the kind the
Union Mills produced. His opposition was nevertheless over-
ruled. "Tom was born tired," Andy used to say in excuse
of what he considered his brother's lack of enterprise. So the
pipe-works were acquired at a cost of $36,000; and soon af-
terwards they were burned down while only partially insured.
The loss in cash amounted to $25,000; but Mr. Phipps used
to say that this was offset by the advantage of being rid of a
white elephant, and by the comfort of $i 1,000 insurance money
in the till.
Despite the prosperous condition of the iron trade at this
time the difference between pig-iron and rolled bars was still
about $50 a ton the loss on the pipe-works, joined to that
resulting from the faulty construction of the Upper Mill, gave
a very discouraging aspect to the balance-sheet of the company.
Indeed, the scanty profits of the first three years hardly redeemed
the enterprise from failure. While there was no actual deficit
there was practically no profit none at all, in fact, if due allow-
ance be made for depreciation of the plant ; and Andrew Car-
negie expressed a desire to get out of the business at any
price. Writing to Miller on September 4th, 1867, he says:
" I want to get out of them [the Union Iron Mills], and will do
so before long. Even if I can't sell my stock it can go." And
he adds that " $27.40 per share will be very gladly received."
As he then held 1,600 shares, he would thus have received
$43,840 for his entire interest.
It is proper to state that the letter from which this quota-
tion is made was part of an effort to get Miller to sell out of
the Union Iron Mills Company. In the fall of 1867 the old
30 EARLY STRUGGLES AND SUCCESSES
quarrel had broken out afresh. Indeed, Miller, from the date
of the consolidation, had consistently refused to sit on the
board of directors with his former opponents; and against
Phipps in particular he cherished grievances that hampered the
harmonious working of the new organization. And now, to
make matters worse, a dispute occurred between him and the
elder Carnegie, concerning some shares in the Columbia Oil
Company which the latter had sold him " at cost," but which
Miller had reason to believe had yielded Carnegie a profit of
over three hundred per cent. The actual facts of this trans-
action have never been ascertained; but in 1896, when Miller
officially came into possession of the old books of the Columbia
Oil Company, he found on the minutes the original record of
Andrew Carnegie's purchase of some treasury stock at $2 a
share, and a protest of other shareholders against it. As Miller
paid Carnegie $6.37^ a share for similar stock probably not
the same he felt that he had been justified in his criticisms
of Carnegie. He later sold this stock, which had cost him
$637.50, for $72,000, after receiving many large dividends
which enabled him to make the loans to Tom Carnegie for the
Union Iron Mills Company.
Naturally this double dispute made Miller's position in the
company untenable ; and he set out to find some one to buy him
out. Carnegie offered to help him ; and the letters he then
wrote show the poor regard in which he held the enterprise.
In one he states that on his return from Europe he had " found
the Union Iron Mills, in my opinion, going as fast as they could
into bankruptcy " ; and he estimates (1867) " the mills as worth
(or as costing exclusive of the large sums paid to repair defect-
ive mill) $300,000. When we pay off $37,602.29 of debt,"
adds Carnegie, "they will be worth that." A month later he
writes : " Profits are not quite $30,000 " after running two
years and five months. " Our whole thing to-day could be re-
placed for $250,000, and we still owe a good deal upon it. I
could not recommend the purchaser to pay more than $27.50 for
FOREIGN WORKMEN IMPORTED
it per share. I would like to get rid of my own at that
figure."
The purchaser here referred to was supposed by Miller to
be David A. Stewart ; but when the sale was finally made the
buyer proved to be Andrew Carnegie himself. The price paid
was $32 a share for 2,300 shares. These included the holdings
of Matthews which Miller had previously bought. In this way
Andrew Carnegie increased his holdings to thirty-nine .per cent
of the total number of outstanding shares.
The lack of harmony in the council-chambers of the Union
Iron Mills was reflected at the works ; for about this time a
strike occurred among the
puddlers. In an unex-
pected, and even a roman-
tic, way this strike brought
about changes that, in the
end, benefited the firm to
the extent of millions of
dollars, and did much to
put it in the van of pro-
gressive iron-workers.
At this date the Am-
algamated Union did not
exist ; but there were sep-
arate trade associations for
each class of labor. The
puddlers were strongly or-
ganized under the title of
the Sons of Vulcan. By
reason of falling prices a
demand had been made
on the puddlers in the Pittsburg district to accept a reduction
of wages. This being refused, a lockout resulted; and the
firm had its first fight with labor. It was not a very serious
'A large number of foreigners were brought
over."
32 EARLY STRUGGLES AND SUCCESSES
one, for sympathetic strikes were then unknown ; and the rest
of the men in the mills continued to work as long as the
material on hand lasted or fresh supplies could be had.
During the summer of 1867 the manufacturers affected by
the strike raised a fund and sent to Europe for workmen to
take the places of the refractory puddlers. There being no
contract labor law to prevent it, a large number of foreigners
were engaged and brought over. They were of all kinds and
many nationalities. Some Germans who could not speak Eng-
lish were allotted to the Union Iron Mills because Andrew
Kloman, being a German himself, could easily control and
direct them. It is interesting to note that it was not these
drastic measures that broke the strike; for the increasing
boom in the iron trade soon absorbed the labor of all, at wages
even higher than before.
Among the Germans sent to Kloman was one named John
Zimmer, a bright, capable fellow, who knew not only his own *
business but that of the next man. After he had been a little
time in the works, he described to Mr. Kloman a mill that he
had worked on in Germany, on which it was possible to roll
plates of various widths having well-finished rolled edges.
Such plates were unknown in America. The mill described by ,
Zimmer consisted of a pair of horizontal rolls similar to the
ordinary plate-mill then in use, but having in addition two
movable vertical rolls that could be opened or closed at the
will of the operator. Mr. Kloman was at once struck with the
value of the improvement, especially for rolling material for
bridge orders; and with Zimmer 's aid he erected the first Ger-
man mill in the country. This is the machine now known in
the trade as the Universal Mill. It was capable of rolling plates
from seven to twenty-four inches wide, and from tjiree-six-
teenths to two inches in thickness, with rolled edges. From
the first day this mill was a mechanical success, and was the
forerunner of several improved mills of the same character
afterwards erected at the Upper Mill and at Homestead. In'
33
deed, the great slabbing-mill which was erected at Homestead
in 1888 was a lineal descendant of the little Zimmer mill built
in 1867-68 at Kloman's. This slabbing-mill now turns out
thirty thousand tons of steel slabs a month; and, as it has
steadily increased its production from year to year, it seems
probable that its limit has not been reached even yet. Before
its erection the average weight of an ingot that could be used
to make plates direct was about one ton ; whereas ten- and
fifteen-ton ingots are now rolled down to a thickness of four to
six inches, then cut while red-hot into the lengths needed at the
plate-mill.
This little idea of the German workman has been worth
millions of dollars to the firm that imported him to take the
place of a striker. As for Zimmer himself, his reward was a
well-paid position as foreman of the mill he erected and of its
improved successors. He accumulated a competence, and was
believed to be possessed of upwards of one hundred thousand
dollars before he died.
Despite the vaunted progressiveness of the American manu-
facturer, these machines, open to the inspection of anybody who
passed through the Union Mills, were but slowly adopted by
other firms. Even Andrew Carnegie, after twenty years' experi-
ence of the excellencies of the German mill, in consonance
with his dictum, " Pioneering don't pay," opposed the erection
of the slabbing-mill at Homestead ; although he afterwards be-
came an enthusiastic admirer of its work. The Carnegie works
to-day have still the most perfect-running Universal mills in
the country ; and there is not another slabbing-mill in the world
to compare in power, size, and efficiency with that at Home-
stead. Within five miles of Homestead, one of the largest
plate-mills in the country is producing, from the ingots which
it necessarily uses, not more than one-third the product of a
similar mill at Homestead, which works up the slabs made on
the giant descendant of the little Zimmer mill.
In the larger sphere now open to it Kloman's inventive
3
34 EARLV STRUGGLES AND SUCCESSES
genius found free scope. Even in the early days of the Lower
Mill he perfected many devices that resulted in improved
output and increased economies. Here he invented a machine
for "upsetting" the ends of eye-bars, which had previously
been made by forging and welding. At the Upper works he
put in a twenty-inch beam-mill, the first ever built in Pittsburg
that was planed and fitted complete, the rough casting style
having been the rule ; and on this were rolled the first beams
made in Pittsburg. He also erected the first Siemens re-
generative gas-heating furnace in Pittsburg. He invented a
machine for straightening and bending beams, channels, etc.,
cold; and the disc-saw for cutting beams, etc., cold, was first
introduced by him. In designing rolls for unusual shapes he
showed a rare capacity. Indeed, his ingenuity in this line of
work was unequalled by any master mechanic in the country,
and made his connection with the Union Mills valuable beyond
compute. Naturally he won the admiration of the men under
him, who were well qualified to recognize his powers ; and his
associates reposed entire confidence in his ability, gave him a
free hand in the works, and cordially sustained him in his pro-
gressive methods.
As financial director of the Union Iron Mills Company Mr.
Phipps did not limit his duties to supervising accounts, bank-
ing transactions, and the mere routine work of the office. He
went into the mill and watched the men at work, studied the
machinery, and familiarized himself with all the details of manu-
facture. Then he wandered into other works, and, comparing
methods and results, suggested improvements and economies in
his own. The spirit of enterprise that sanctioned the Zimmer
experiment led him to institute scientific tests of structural
material ; and he was one of the first in his line of business to
call in the aid of the chemist. He was ever seeking to get
the cost-line of mill productions to the lowest point consistent
with the quality required by the structural engineer. To his
; never-ceasing watchfulness are largely due the great economies
MR. P HIP PS' INGENUITY 35
in production which placed his firm always beyond the reach of
competition.
On one of his trips abroad Mr. Phipps was passing through
a mill in Germany when he noticed that the piles made ready
for the heating-furnace, to be used for rolling " I " beams, con-
tained more than double the amount of scrap-iron rails used in
^ittsburg. He quietly made a sketch of the pile, and on his re-
turn gave orders to change the piles at the Union Iron Mills to
correspond with his sketch. He then had the resultant product
tested, and, finding that the economy still left the factor of
safety unimpaired, made the change permanent. The cost of
this trip to Europe was saved almost daily thereafter to his
firm.
Another great economy was effected by Mr. Phipps in 1872-
1873. In the quiet, unobtrusive manner in which he habitually
worked, he made a long series of observations at the two mills
and then did a little careful figuring. After cautiously verify-
ing his conclusions, he announced to his partners that at a cost
of one-third the price for which he believed he could sell the
Lower Mill, he could enlarge the Upper Mill so as to make its
product equal to that of both. The saving in cost of manage-
ment and in the handling of material he reckoned would exceed
$25,000 a year, a sum equal to five per cent, on their capital.
His partners, who had learned to trust his instinct for economies,
offered no objection to the plan except the difficulty of finding
a purchaser for the Lower Mill. This difficulty Mr. Phipps
solved with his habitual originality : he got up a company to
buy it ! At the same time he brought in a new influence which
eventually became of great value to the concern. This was his
brother-in-law, Mr. John Walker.
At this time Mr. Walker was entirely without experience
in the iron trade ; but he had had a good commercial training
under his father. Endowed with an extraordinary memory, he
quickly mastered the details of his new business, and in the
course of time he became a compendium of facts and dates, tq
_, a;
a S
ENTRY OF JOHN WALKER 37
whom his colleagues referred for information of all kinds bear-
ing on their business. Cautious in his undertakings and con-
servative in his methods, he had the confidence of the local
bankers; and his financial connections were invaluable to his
firm and to Carnegie, Phipps & Co. when he afterwards became
chairman of that concern. Of studious habits and logical cast
of mind, he showed his independence and intellectual honesty
by openly combatting the protectionist theory ac a time when
this was held by his associates as the rankest treason. The
same frank spirit was shown in all the relations of his business
life ; and he had, in an exceptional degree, the confidence and
even affection of his partners and others with whom he was
associated.
With Mr. Walker as a consenting nucleus, Mr. Phipps pro-
ceeded with the creation of a company to buy the Lower Union
Mill. The firm of Berry, Courtney & Wilson, which had been
a large purchaser of iron from Mr. Phipps' company, was on the
eve of dissolution ; and no difficulty was found in persuading its
most active member, Mr. John T. Wilson, to join Mr. Walker.
The firm of Wilson, Walker & Co. was thus formed ; and at
once it bought the business and patents of Berry, Courtney &
Wilson for $50,000. Half of this sum coming to Mr. Wilson,
he put his $25,000 into the new company. Andrew Carnegie
added $60,000 as a silent member of the firm; and the rest of
the $200,000 capital was subscribed by John Walker, Alexander
Leggate, and Howard Morton. The two last named soon with-
drew from the firm. The old Kloman Iron City Forge, with its
little Zimmer mill, the four puddling-furnaces, now increased to
fifteen, its six heating-furnaces, four hammers, and five trains
of rolls, was now turned over to Wilson, Walker & Co., and the
Union Iron Mills Company concentrated itself upon the Upper
Union Mills. As makers of bar-iron, railroad-car forgings and
plates, the firm of Wilson, Walker & Co. ran as an independent
concern until 1886, when it once more became part of the
Phipps organization by inclusion in the firm of Carnegie,
38 EARLY STRUGGLES AND SUCCESSES
Phipps & Co., Limited, at a valuation of $340,000 above
$87,000 mortgage.
In regard to the Upper Mill, even greater economies than
those foreseen by Mr. Phipps resulted from the change described.
When the additions were made they were prudently designed for
heavy work ; and soon the company was rolling all sizes of beams
up to fifteen inches for structural purposes, all kinds of channels
up to fifteen inches, almost innumerable sizes of angles, tees, Z
bars, and other structural shapes, and universal plates on two
large and improved Zimmer mills, of which the enterprising
German was placed in charge. By 1881, when the Union Iron
Mills were taken into the consolidation of various properties
under the name of Carnegie Brothers & Co., Limited, the origi-
nal long building had been surrounded by nine others, some
almost equal to it in length. They contained one eight-inch
train of rolls, one twelve-inch train, an eighteen- inch muck-train,
an eighteen-inch scrap-train, a rotary squeezer, all operated by
five large horizontal engines. There were, moreover, nine
Siemens furnaces, one Swindell furnace, twenty-one puddling-
furnaces, two reverberatory furnaces, besides extensive ma-
chine-shops full of costly tools. The plant was taken into the
consolidation at a valuation of $630,000. As the Lower Mill
was sold to Wilson, Walker & Co. for $230,000, it thus appears
that the plant had increased in value seventy-two per cent, in
sixteen years.
CHAPTER IV
IRON RAILWAY BRIDGES
THE Keystone Bridge Company, to which ref-
erence has been made, was formed on April
25th, 1865, with a capital of $300,000.
The list of organizers included the names
of Aaron G. Shiffler, J. L. Piper, Andrew
Carnegie, Walter Katte, and James Stewart.
Its purpose, as stated in its prospectus, was
" the prosecution on an extensive scale " of the business of man-
ufacturing and erecting patent iron bridges " for railways, canals,
common roads, streets, &c., &c. Also wire suspension bridges,
ornamental bridges for parks and cities, pivot and draw bridges
for roads, canals and railways, . . . built according to plans and
specifications, as may be desired. "
The company is said further to have " purchased the exten-
sive Bridge Works of Messrs. Piper and Shiffler, located in the
Ninth Ward of the City of Pittsburgh, Pa., with the right for
the United States to manufacture and erect the celebrated Iron
Railway Bridges under the 'Linville & Piper' Patents, and
'Piper's Patent' Wooden Bridges and Roof Frames."
The works are described as having ample facilities " for the
extensive contracts now in progress, and will be increased as
rapidly as found expedient, in order to complete promptly the
most extensive structures."
" The ofBcers who superintend the manufacture and erection
of all structures " are said to be " practical men, with extensive
and varied experience, acquired in pursuing successfully, for
many years, the business of constructing and erecting Iron and
Wooden Railway Bridges, Roofs and Buildings.
39
40 IRON RAIL WA Y BRIDGES
" These Iron Bridges have been in constant use on the Great
Pennsylvania Central Rail Road and its dependencies and con-
nections, for many years. The great Iron Railway Bridge over
the Ohio River at Steubenville, Ohio, with spans varying from
210 feet to 320 feet was erected by this Bridge Company, in
accordance with the prescribed plans and specifications
"The success of the 'Linville & Piper ' Patent Bridges has
been unprecedented ; for many years they have borne without
visible defect or deterioration, the immense traffic of the Penn-
sylvania Central Rail Road, Philadelphia and Erie Rail Road,
Northern Central Railway, Junction Rail Road, and others.
Miles of wooden bridge superstructure have been replaced by
permanent iron structures, by the superintending officers of this
Company, without detention to the business of the roads. No
single instance of failure, either in materials or workmanship,
has yet been reported."
Mr. W. H. Wilson, chief engineer of the Pennsylvania Rail-
road, writing from Altoona on July 2ist, 1865, says :
" Messrs. J. L. Piper and A. G. Shiffler have been engaged
for the last eight years under my personal observation, and for
some years previously, in erecting bridges for the Pennsylvania
Rail Road Company. The wooden bridges have generally been
on the 'Howe ' plan; the iron bridges have been constructed
in the shops of the Company, from plans prepared by the Engi-
neer Department, some of them of boiler plate, but most of
them on the ' Pratt' plan of truss, with modifications intro-
duced at various times. All the work of raising and completing
these bridges has been performed by Messrs. Piper and Shiffler
in the most satisfactory manner. It affords me pleasure to
recommend them as unsurpassed for promptness, energy and
skill by any builders with whom I have had business relations."
It thus appears that Piper and Shiftier had been extensively
engaged in building bridges of wood and iron for at least eight
years prior to the formation of the Keystone Bridge Company.
Andrew Carnegie, however, in his account of the business,
speaks as though it originated with the Keystone Bridge Com-
42 IRON RAILWAY BRIDGES
pany, which he represents as his personal creation. In a short
biography which he recently published through the S. S.
McClure Newspaper Syndicate, he says :
" There were so many delays on railroads in those days from
burned or broken wooden bridges that I felt the day of wooden
bridges must end soon, just as the day of wood-burning locomo-
tives was ended. Cast iron bridges, I thought, ought to replace
them, so I organized a company, principally from railroad men
I knew to make these iron bridges, and we called it the Key-
stone Bridge Company. Development of this company required
my time, so I resigned from the railroad service in 1867."
Mr. Carnegie has an excellent verbal memory; but he is
especially prone to error when recalling events. He is, in fact,
constantly mistaking impressions for occurrences, as in this
case. That it is his memory which is here at fault is shown by
a further error in the same biography. Speaking of his entry
upon the manufacture of Bessemer steel he says :
" On my return from England [he is speaking of the year
1868] I built at Pittsburg a plant for the Bessemer process of
steel-making, which had not until then been operated in this
country, and started in to make steel rails for American railroads."
First noting that the construction of the first Carnegie Bes-
semer steel plant was not commenced until April, 1873, and was
not in operation until the end of August, 1875, it may be seen
by reference to any cyclopedia that the first Bessemer steel pro-
duced in America was made at Wyandotte, Michigan, in 1864,
and that the first Bessemer steel rails made in America were
rolled at the North Chicago Rolling Mill in presence of the
American Iron and Steel Institute in May, 1865, from ingots
made at Wyandotte. Some of these rails were laid in the track
of one of the railroads running out of Chicago ; and were still
in use ten years afterwards when the Carnegie firm made its
first Bessemer steel. Even if Mr. Carnegie's recollection had
been correct as to the date of this visit to England, it would
still be at fault in respect to the beginnings of Bessemer steel
PIPER'S MECHANICAL GENIUS 43
rails in America; for there were produced no less than 7,225
tons of such rails in America in 1 868. The prosaic fact is that
the earliest of the Carnegie steel enterprises was the eleventh
in America instead of the first to use the Bessemer process.
In themselves these discrepancies are of little moment. It
is probable that not one reader in a hundred would notice them ;
but the author deems it his duty to the exceptional reader to set
forth the facts as he finds them.*
The Keystone Bridge Company, then, was simply the incor-
porated business of Messrs. Piper and ShifBer. Carnegie, /
through his official position on the railroad, had long been
familiar with their work; and he had known Piper since 1858,
when the latter was employed for a time in the car shops at
Altoona, where Carnegie then lived.
Piper was a mechanical genius who was always inventing
* The author has taken such pains, by reference to original documents, to t
establish the dates of every salient event in the history of the Carnegie Steel
Company, that he ventures, even at the risk of being thought unduly insistent, to
point out a further error of fact into which Mr. Carnegie has fallen through over-
confidence in his memory. In itself the matter is trivial ; but it may have a value
in the determination of other questions of fact which may arise.
In the same biography Mr. Carnegie says: " For my father, who had been
naturalized as an American citizen in 1853, na d died soon afterwards. ... At
the age of sixteen I was the family mainstay."
The facts, as shown by the Allegheny county records on file in the Pittsburg
Court House, are as follows: On September I4th, 1855, the father of Andrew
Carnegie made a will, bequeathing a house and lot in Allegheny City to Margaret
Carnegie, his wife. Andrew was then within ten weeks of being twenty years of
age. This will was recorded on March 3Oth, 1858, when Andrew w r as in his
twenty-third year.
As regards "the family mainstay," the facts are as follows: During the
first of young Andy's working years, his wages were $1.20 a week, or $62.40 for
the year. At Lacock's he got $3 a week, or $156 for the year. Next he earned
$3-5. r $182 a year. Thus, at sixteen , years of age, his total earnings had
amounted to about $400, or one- quarter as much as his father had invested in the
little home at the time of his death.
But the elder Carnegie did not die until Andrew had almost reached his
twenty-first birthday ; and he worked until within a few weeks of his death. In
the year of his father's death Andrew Carnegie's salary was $35 a month ; but he
lived away from home and had hardly more than sufficed for his own necessities.
Even after this his mother kept a railway lodging-house near Twenty-Eighth Street,
Pittsburg, where Robert Pitcairn, his successor on the Pennsylvania Railroad, was
one of her lodgers.
44 IRON RAILWAY BRIDGES
things. One of his patents, still remembered by his associates
of that day, was a turn-table for locomotives ; and he afterwards
embodied some of the ideas it contained in a drawbridge. He
also devised an improved bridge-post which was extensively
used; and there were other things invented in conjunction with
Linville, who was bridge engineer for the Pennsylvania Railroad,
and later became president of the Keystone Bridge Company.
He was a man of impressive appearance, a physical giant, and
earnest and convincing in manner. At the same time he was
of singular trustfulness. One of the stories still current of Tom
Carnegie's ready wit bears on this trait of Piper's.
The Keystone Bridge Company enjoyed certain rebates or
discounts from the card rates of the Union Iron Mills Com-
pany, from which it bought most of its material. One time
when the price of iron had risen, the discounts were omitted
from the bill rendered to the Keystone Company, and the word
" net " appeared in their place. " What does that mean, Tom ? "
asked Piper as he indicated the word " net." Piper, like most
simple characters, loved a bargain; and Tom, knowing this,
hesitated to mention the withdrawal of discounts. So he an-
swered with his characteristic readiness, " Oh that ? That's
'nit. ' It means that there's nothing to be added ! " The reply
satisfied Piper, and he made no objection to the payment of the
bill.
Shiffler, the other founder of the business, had worked with
Piper in a contractor's gang under the firm of Stone, Quigley
& Co. on the Pennsylvania lines prior to 1857. This was
the period referred to by Chief Engineer Wilson, when he
said he had known them "for some years " prior to 1857 while
"erecting bridges for the Pennsylvania Rail Road." Here
they got the experience which made their firm so successful,
and qualified them for the direction of the Keystone Bridge
Company when that was formed. But neither of them origi-
nated the use of iron in bridges ; for this material had been so
used from the earliest days.
46 IRON RAIL WA Y BRIDGES
The first iron bridge ever attempted was at Lyons, France,
in 1/55. It was to have been an arch; but the work was aban-
doned, after a portion of the iron had been made, because of its
4 great cost. In 1/77-79 the first iron bridge was built by Abra-
ham Darby, over the Severn near Colebrookdale, in Shropshire,
the place taking the name Ironbridge. Its form is that of an
arch of i2O-foot span and 4 5 -foot rise. The next iron bridge
was built at Wearmouth in Devonshire. It was in the form of
a segmental arch of no less than 236-foot span; and it cost
,27,000. In Sunderland, also in England, a bridge was built
in 1796, of large segments of cast iron. It was justly consid-
ered a wonderful achievement. Affixed to it was the motto Nil
despcmndum auspice Deo ; and Sir Lowthian Bell says that every
traveller to the north of England considered himself bound to
visit what then was regarded as a most daring example of me-
tallic engineering. In France the iron foot-bridge across the
Seine near the Louvre was built in 1803 ; and during the ensu-
ing fifty years many other iron bridges were constructed in
Europe.
With these examples before them it is not surprising that
x American engineers adopted iron for railroad bridges early in
the history of steam transportation. As early as 1841 Squire
Whipple, called the father of American iron railroad bridges,
patented an iron truss-bridge ; though even he was not the first
in the field. It is said that Tom Paine built an iron truss-
bridge. Be this as it may, there were iron bridges spanning
the Erie canal as early as 1840; and by 1847 a company the
New York Iron Bridge Company had been formed for the ex-
clusive manufacture of such structures. A bridge built by this
company on the Harlem Railroad is described in the American
Railroad Journal for November 27th, 1847; and an'iron Howe
railroad bridge was already in existence on the North Adams
branch of the Boston and Albany Railroad, a few miles north of
Pittsfield, in April, 1847, where it was examined by Squire
Whipple. In 1848 Whipple built two iron bridges on the Erie
SOME EARLY EXAMPLES
47
Railroad; in 1849 he built two more near the Chester junction
of the Newburgh branch of the Erie. In 1852-53 the first iron
railroad bridge of considerable span, being 1 50 feet to centre
of bearings, was erected on the Albany Northern Railroad at
the crossing of the Erie canal between the cities of Troy and
J. L. PIPER,
Who, with Aaron G. Shiffler, founded the Keystone Bridge Works.
Cohoes. It stood for thirty years, and was removed in good
condition to make way for a double-track bridge. A bridge of
the same description was built in 1854 for the Black River and
Utica Railroad at Utica. In 1855 one was built for the same
road at Boonville, Oneida County. During the decade between
1850 and 1860, which brings us to the time of Piper and
4 8 IRON RAIL WAV BRIDGES
Shiffler, the firm of S. & J. M. Whipple alone built over a hun-
dred iron bridges of all kinds and shapes. In 1863 the Detroit
Iron Bridge Works was organized into a joint stock company;
and its prospectus states that its manager had " for some years
previous been engaged in the construction of iron bridges for
railways. "
Thus, so far from being the pioneer in the iron railroad
bridge business, Mr. Carnegie occupied a position a long way
down the list. When he finally did become interested with
Piper and ShifBer it was not, as he alleges, in " cast-iron bridges."
When cast iron was in vogue for bridge structures in England,
wood was used in America; and when wood was replaced with
iron it was wrought iron, and later Bessemer steel, that was
used. The only parts of Piper & ShifBer's bridges that were of
cast iron were Piper's patent posts ; and these were a very small
part of the whole, which, of course, was of wrought iron.
It is also worthy of mention that Andrew Carnegie's princi-
pal interest in the Keystone Bridge Company was given to him
in return for services rendered in its promotion. He paid no
cash for any of his shares; but desiring to have a larger hold-
ing than that gratuitously assigned to him, he gave his note to
the company in payment of the increased interest, and the first
four dividends sufficed to liquidate the debt.
It is possible that the standards of commercial morality
were as high forty years ago as they are to-day. Business men
of that period aver that they were higher. It is none the less
certain that the ethics of railroad management in early days
were formed after other standards than those of modern times ;
else had there been more general condemnation of the fault
which Andrew Carnegie discovered in Miller's "clandestine
arangement with Klowman while acting as agent of the Fort
Wayne Road." Such arrangements, not always clandestine,
seem to have been the rule in those days , and the early history
of the Carnegie enterprises affords many examples. Despite
EARLY RAILROAD MORALS 49
the fact that the principal business of the most important of
these enterprises was the manufacture of rails, railway struct-
ures, and railway material of various kinds, it was from the
salaried officials of railways that much of their first financial
support was received. Miller did not sever his connection with
the Fort Wayne road when he built the Cyclops Mill ; nor did
Andrew Carnegie resign from the Pennsylvania when he joined
him. Indeed, it was not an uncommon thing for the president
and vice-president of a railroad to own shares in a corporation
which obtained most of its business from such road. No doubt
the business was contracted for by faithful subordinates, and
was honestly and properly carried out by the contracting com-
panies; and while it is possible that no question of morals is
involved in the dual allegiance of such important officials, mod-
ern opinion would unhesitatingly condemn it as a breach of pro-
priety and good taste.
In the formation of the Keystone Bridge Company this in-
fraction of modern standards was especially conspicuous; al-
though the matter-of-fact way in which Mr. Carnegie speaks of
organizing a company "principally from railroad men" shows
that he, at least, had no idea that the propriety of such a pro-
ceeding might be questioned. President J. Edgar Thomson,
however, had his interest appear on the company's books in
the name of his wife. Besides Colonel Scott, vice-president, the
Pennsylvania Railroad officials who became stockholders in
the Keystone Bridge Company included the chief engineer, the
assistant general superintendent, the superintendent of motive
power and machinery, and Andrew Carnegie, the superintend-
ent of the Pittsburg division of the line. There were also the
president of another road, two chief engineers, and a general
superintendent. Carnegie says he did not resign his position
on the Pennsylvania Railroad until 1867, two years after the
formation of the Keystone Bridge Company ; * and Mr. Pitcairn,
* Another error. He left the Penr sylvania Railroad in 1865, in his thirtieth
year.
4
5 o IRON RAIL WA Y BRIDGES
his successor on the railway, afterwards joined the Keystone
board of directors.
It is deserving of notice that most of these gentlemen wrote
letters of recommendation to the Keystone Bridge Company, in
which the work of Piper and Shiffler was spoken of in the most
flattering terms ; and these were published by the company as
an advertisement. Here for example are those from Mr. J.
Edgar Thomson and Colonel Scott :
PENNSYLVANIA RAIL ROAD COMPANY
President's Office
Philadelphia, Sept. 25th, 1865.
Messrs. Piper and Shiffler, who will hereafter conduct their
business of Bridge Builders under the name of the " Keystone
Bridge Company," have for many years been engaged, both as
employees and contractors, in erecting bridges of wood and iron
on the Pennsylvania Rail Road and its connections. From the
uniform success that has attended their plans, and the character
of the work executed, I have no hesitation in recommending
them to the patronage of the officers of rail road companies, for
the erection of these structures, either upon the well tested
plans they have been building, or upon such as may be pre-
pared for them. Their facilities at Pittsburgh for building
bridges will enable them to execute work with dispatch.
J. EDGAR THOMSON,
President.
PENNSYLVANIA RAIL ROAD COMPANY
. Office of the Vice President
Philadelphia, July 28th, 1865.
The Keystone Bridge Company for several years past have
been engaged in erecting iron and wooden bridges, &c., for the
Pennsylvania Rail Road Company and its connecting roads.
I have had ample opportunities for observing the character
of their structures, and can cheerfully testify to the responsibil-
ity and skill of the Company. I consider the iron rail road
bridges as constructed at their extensive works, in Pittsburgh,
Penn'a., the best that I am acquainted with.
THOMAS A. SCOTT,
Vice President Penn'a. R. R. Co.
With such powerful backing the Keystone Bridge Company
soon became one of the most important factors in the business
SOME GREAT STRUCTURES 51
of bridge-building in the country. The extent of the work it
accomplished was officially set forth in 1883, when it was stated
that the bridges built by it, if placed end to end, would measure
over thirty miles in length, and that their cost exceeded
$23,000,000.
The most prominent of these structures, containing in each
Copyright, 1902.
THOMAS A. SCOTT,
Who gave Andrew Carnegie his start and many a subsequent lift.
case the longest span of its kind then in existence, are the fol-
lowing :
Steel Arch. The Mississippi River bridge at St. Louis,
Mo. ; one span of 520 feet and two spans of 502 feet. Double-
track and double deck railway and highway bridge.
Steel Truss. The Missouri River bridge at Plattsmouth,
Neb.; two spans of 402 feet each. Single-track railway
bridge for the Burlington and Missouri River Railway. Also,
the Ohio River bridge at Point Pleasant, W. Va., 3,805
52 IRON RAILWAY BRIDGES
feet long ; channel span, 420 feet. Single-track railway bridge
for the Ohio Central Railway.
Iron Truss. The Ohio River bridge at Cincinnati, O. ; chan-
nel span, 519 feet. Single-track railway bridge for the Cincin-
nati Southern Railway.
Iron Swing Bridge. One span of 472 feet, over Raritan
Bay. Single-track railway bridge for the New York and Long
Branch Railway.
A description of the Keystone Bridge Works published by
the company at this time shows that they "are exclusively de-
voted tb the manufacture of bridge and structural material, fin-
ished ready for erection. The shop buildings are fireproof, and
cover more than three acres of ground, and the capital invested
exceeds $1,000,000. The company employs over six hundred
men at these works and over three hundred and fifty in the
field, engaged in the erection of bridges, so that the total num-
ber of men on its pay rolls is about one thousand. The works
are equipped in the most comprehensive manner with special
machines and tools of the most approved type, among which
may be mentioned hydraulic, pneumatic and power riveting ma-
chines, a i5O-foot multiple punch, shears, planers, lathes, steam
hammers, drilling and boring mills, rivet and bolt making ma-
chines, and a 3OO-ton hydraulic testing machine. The works
are operated day and night, being lighted by the electric light
after dark. The company has lately made extensive and costly
additions to its plant, designed solely for the successful and
economical working of steel, it having become evident that this
material, in the near future, is destined altogether to take the
place of iron. These additions consist in a gas heating furnace
and [Kloman's] upsetting machine for the manufacture of
steel eye-bars, a gas annealing furnace 54 feet long, the only
furnace of this kind so far built, and a multiple reaming
machine."
The growth of the plant is thus seen to have been great,
though not phenomenal. The position of the company at the
A FINANCIAL STATEMENT
53
beginning of 1885 is shown in the following abstract from its
balance sheet :
Resources.
Real Estate $100,650.00
Shop Equipment account 272,267.36
Construction account 345,942.43
Sharpsburg and Lawrence Br. stock 1,100.00
$719,959.79
Available accounts $229,724.39
Overdue account (Pt. Pleasant Br.) 152,752.61
Doubtful accounts 2,964.48
Amount Inventory account 299,098.33
Cash 24,947.08
$709,486.89
Total Effects $i ,429,446.68
Liabilities.
Due Maury Heirs on Mortgage . . $50,000 .00
" Union Iron Mills (C. Bros. & Co) . . . 409,129.11
" Sundry accounts 134,423.37
Stock account .$447,200.00
Profit and Loss a/c 388,694.20
835,894.20
$1,429,446.68
Fourteen years later, just before the Keystone Bridge Com-
pany became part of the United States Steel Corporation, its
balance sheet for 1 899 showed a loss of over $67,000 on con-
tracts. Its principal gains came from castings and rivets ; and,
by a skilful manipulation of its "inventory adjustment," the
statement was made to show a slight profit.
Although one of the most talked-about branches of the Car-1
negie business, the Keystone Bridge Works was one of the least
profitable, and, when stripped of its false character as a pioneer, \
the least interesting of them all.
CHAPTER V
A RIVALRY OF GREAT FURNACES
THE Civil War, and
the great demand for
iron which a year or
two later followed it,
gave a great impulse
to the chief industry of Pitts-
burg ; and during the years
1866 to 1870 many schemes
were laid to meet the great local demand
for pig-iron. Up to that time the lack
of ore at convenient distances had han-
dicapped the smelting industry ; but when organized transpor-
tation made the ores of Lake Superior accessible, a more ,
promising aspect was given to schemes for smelting iron in \
Pittsburg on a large scale.
In the fall of 1870 two of these projects assumed a definite
shape, and the owners of the Union Iron Mills were invited to
join one of them. This was the project of a number of iron
manufacturers, including Lewis Dalzell & Co., J. Painter &
Sons, Graff Bennett & Co., Spang, Chalfant & Co., Henry W.
Oliver of Oliver Brothers & Phillips, and William Smith, owner
of a large pipe-foundry. At this time there were only seven
small blast-furnaces in the Pittsburg district with a total prod-
uct of some seventy thousand tons a year; and pig-iron was
selling at $40 a ton.
The Union Iron Mills were large consumers of pig-iron, and
the scheme was not without attractions to Phipps and his asso-
ciates, especially when presented by the most important firms
54
COLE MAN'S EXCELLENT ADVICE 55
in the business ; and after consultation among themselves, the
partners went to Mr. William Coleman for his advice. No one
was more fitted to give the young men wise counsel, for no one
had a closer knowledge of the iron trade or better business
judgment. Mr. Coleman considered the matter gravely, as was
his habit, and then unhesitatingly advised against joining the
combination. He pointed out that if the members of the Union
Iron Mills Company wanted to go into the manufacture of pig-
iron, it would be better for them to build one furnace themselves
than to own one-seventh of two furnaces which would not be
under their control or management. This advice was accepted,
and the decision communicated to the gentlemen named, who
at once formed the Isabella Furnace Company, and started to
build two furnaces, Later they added a third.
On December ist, 1870, Messrs. Kloman, Phipps, and the
two Carnegies organized the firm of Kloman, Carnegie & Co. ;
and when the winter was over they began the construction of a
blast-furnace at Fifty-first Street, Pittsburg. This was the
first Lucy furnace, so called after the wife of Thomas M. Car-
negie, the daughter of Mr. Coleman, as the Isabella plant was
called after Mrs. Herron, the sister of one of the members of
the firm of Spang, Chalfant & Co. Important departures were
made from established usages in American blast-furnace con-
struction, and many English ideas were utilized. The Clinton
furnace of 1859, the two Eliza furnaces of 1861, and the two
Superior furnaces of 1862-63 were all forty-five feet high and
twelve feet in diameter at the boshes; and owing to the ill-suc-
cess of the fifteen-foot furnaces first erected, the twelve-foot
bosh continued to be the favorite dimension. The Struthers
furnace in Ohio, however, was fifty-five feet high, with sixteen
feet diameter of bosh ; and its large output over sixteen hun-
dred tons of iron in one month made it much talked about in
Pittsburg, especially as this result was achieved with raw coal.
The English idea of furnaces of large capacity thus came into
favor ; and both the Lucy and Isabella furnaces were made sev-
5 6 A RIVALRY OF GREAT FURNACES
enty-five feet high, the former with twenty feet diameter of bosh,
and the latter with eighteen, afterwards changed to twenty feet.
A spirit of rivalry sprang up between the two concerns from
the outset. Isabella No. I and the Lucy went into blast about
the same time in the early summer of 1872; and each started
out by making 50 tons of pig-iron a day, which was a fair aver-
age at that time. Within a few weeks both furnaces increased
their output ; and by the end of the year the Lucy had made
13,361 tons, an average of nearly 500 tons a week, notwithstand-
ing a chill experienced in December. The Isabella followed
closely and produced 498 tons in a single week. The next year
the Lucy made 87 tons in a day and 578 tons in a week. Dur-
ing the early part of 1874 the Lucy kept ahead, and in Febru-
ary produced 593 tons ; but by August she was overtaken by
the Isabella's 612 tons. In October the Lucy shot ahead with
642 tons, and by the 24th of that month the Isabella had almost
caught up, with 651 against the Lucy's 653. On that day the
Lucy for the first time produced over a hundred tons ; and the
achievement was greeted with 'loud hurrahs at the works, and
heard of with incredulity by the iron trade. On November 2d
the Isabella's output for the week was 672 tons, and the follow-
ing week she broke all records with 702 tons. On December
24th she made 1 1 2 tons. Next year the contest between Mana-
ger Skelding of the Lucy and Manager Crowther of the Isabella
was continued as fiercely as ever ; and in October the former
passed his rival with 762 tons. In the same month Isabella No.
2 crept up with 714 tons, and the following month shot ahead
of the Lucy with 77 1% tons. The 800 mark was not crossed
until 1878, when the Lucy made 804 tons in a single week. In
March, 1880, she made 945 tons, and this was beaten by the
Isabella, February, 1881, with 1,000 tons. The trade gasped
with astonishment, and editors asked : " What will these Titans
do next ? " On March 3<Dth the same furnace made 215 tons,
and next day 217^ tons, bringing her average for the week up
to 1,130 tons. In April she made 1,282 tons, and in October
58 A RIVALRY OF GREAT FURNACES
1,438 tons, the Lucy dragging behind with an average weekly
output of about 1,000. Mr. Kennedy then joined the struggle
with a new furnace at Braddock and ran the Isabella very close.
In 1883, as related elsewhere, he shot so far ahead that neither
the Lucy nor the Isabella was in the race until he himself took
the management of the Lucy and brought her daily output to
over 300 tons. But even this record was beaten again and
again by the same firm, as new furnaces were put in operation,
and the lessons learned by earlier experience showed managers
what to avoid and what to practise.
An interesting account of the Lucy Furnace in 1873 was
given in the Iron Age of that date, which is worth quoting. It
is as follows :
To one accustomed to the methods of blast-furnace construc-
tion as practised east of the Allegheny Mountains, the Lucy
Furnace possesses much interest. It may be said to embody
the best features of the Western practise, both in construction
and management, and will well repay a visit from any Eastern
iron master who may find himself in Pittsburg, either on busi-
ness or pleasure. The furnace is located on the bank of the
Allegheny River, about four [two] and a half miles from the
centre of the city. The location is attractive as well as con-
venient. From the top of the stack one overlooks a little valley
of unusual beauty on the one side, with the Isabella furnaces in
the distance and a pretty river between ; and on the other the
suburbs of the Iron City, overhung with its cloud of black smoke
not beautiful, indeed, but busy, prosperous, and progressive.
Switches connect the stock-house and cast-house with the Alle-
gheny Valley Railroad, which affords easy facilities of connec-
tion with the Pittsburg market and with the termini of the vari-
ous lines of transportation by which ores and fuel are received.
The Lucy Furnace was built by Messrs. E. J. Bird and
William Tate, and went into blast in May, 1872. It is seventy-
five feet high by twenty feet diameter of bosh. Like most West-
ern furnaces, it is an iron cylinder lined with fire-brick, with an
independent iron gas-flue, around which winds an iron stairway,
by means of which access is had to the top of the furnace. The
fuel and ores are carried to the tunnel head in barrows by means
of a pneumatic lift, from which they are run under cover of an
iron roof to the top of the stack and dumped by hand. In its
A KLOMAN NOVELTY 59
external appearance the furnace is neater and more attractive
than the stone stacks of the East, and in many respects more
convenient.
The machinery of the works is of the best quality, though
of a very different character from that usually seen in the East.
There are three excellent blowing engines by Messrs. Macin-
tosh, HemphiU & Co. of Pittsburg, and four pumping engines
to raise from the Allegheny the water needed about the furnace,
by Messrs. Epping, Carpenter & Co., Keystone Pump Works,
Pittsburg. The locomotive used about the works is by Messrs.
Porter, Bell & Co. of Pittsburg. All the machinery is in the
best condition, being comparatively new and having only the
most careful and intelligent management. Steam is raised by
a battery of eight boilers, each sixty feet long by forty-three
inches in diameter.
The capacity of the furnace is about 550 tons a week, taking
the average of the seasons. The ores used are mostly Lake Su-
perior, specular and hematite. During the present season the
furnace will have received about twenty-five thousand tons from
the Kloman mine, the property of the company near Negaunee,
Mich. [This is an error.] Some Iron Mountain ores have been
smelted in the furnace; but they were found more costly than
profitable, and their use has been abandoned. The fuel is a
coke made from the slack of the bituminous mine near Pittsburg
at ovens located at Carpenter's station on the Pennsylvania
Railroad, about nineteen miles distant. The fuel costs but
$3.60 per ton at the furnace, and we are informed that the con-
sumption in the stack is only about one and a half tons to the
ton of pig-iron made.
Among the novelties to be seen at these works is a very
simple and practical machine for cooling slag, invented by Mr.
Andrew Kloman, one of the proprietors. Its object is simply
to cool the slag quickly in blocks of convenient size for removal,
thereby saving both time and labor. It consists of an annular
water trough, with supply and waste pipe's, in which, by suitable
appliances, a series of cinder boxes are made to rotate so that
they may be brought successively under the slag spout. The
boxes taper slightly toward the bottom so as to admit of the
easy withdrawal of the slag cakes when sufficiently cool. On
the bottom of each box is placed an iron wedge with a broad,
flat head, upon which it stands upright, and with a hole in the
taper end by which it may be lifted out. The slag runs around
these wedges which stand up in the middle of the boxes and
project for some inches above the upper crust. Around, under,
60 A RIVALRY OF GREAT FURNACES
arid between the boxes water flows continuously, and their inner
surfaces are kept so cool that in a few minutes the slag is suffi-
ciently solid to be removed in carts. The transfer is effected
by means of a small hydraulic crane. The hook at the end of
the chain is fastened in the hole in the taper end of the wedge,
and the cake is lifted out of the box and deposited on the floor
of the cart, which has a square hole in its bottom to facilitate
the removal of the wedge. The slag cake is so placed that the
head of the wedge comes over the hole, and a smart blow with
a hammer causes it to drop out on the ground. The cake is
then carried off and dumped. In construction and operation
this machine is perfectly simple, and it may be worked so rap-
idly as to dispose of the slag as fast as it can be run from the
spout. There are seventeen cinder boxes ; and by the time the
last has been filled the slag cake in the first is ready to be lifted
out and removed. The proprietors of the Lucy Furnace con-
sider it altogether the cheapest and best method of disposing of
the cinder they have ever tried, and we have no hesitation in
pronouncing it the most practical device of its kind we have
ever seen in use.
Some months ago the furnace got a chill, and but for the in-
genious manner in which it was cleared the company would have
suffered a heavy loss in consequence. The following account
of the means employed, which we take from a paper lately read
by E. C. Pechin before the American Institute of Mining Engi-
neers at Philadelphia, will be read with interest : " She had been
working well on low-grade ores of about fifty per cent., produ-
cing daily sixty-eight to seventy-five tons. There was on stack
five hundred tons of Republic ore one of the purest and best
of the Lake Superior ores, averaging over sixty-eight per cent,
of iron which had been procured for the purpose of making a
trial for Bessemer iron. This was charged by itself, and Mr.
Skelding, the founder, reports that he did not succeed in get-
ting a single cast when it came down, before the furnace chilled
from the hearth to the top of the bosh, some twenty-five feet.
Every effort was made to save her, but without avail ; and the
disagreeable jduty of cleaning her out was begun. The hearth
was dug out some five or six, or perhaps eight, feet up, when Mr.
Skelding remarked, in the hearing of one of the proprietors,
that he wished he had a cannon. A mortar was forthwith pro-
cured from the arsenal, and -they commenced firing shots into
the chilled mass. A large number of shots were fired and with
considerable success, bringing down from time to time portions
of the chill. But by and by the mass became pasty, and the
CURRY'S GOOD WORK 61
cannon balls, of which they only had three, stuck fast. Mr.
Skelding put in a large charge of powder, and then, to the
amusement of the bystanders, rammed the mortar full of cotton
waste, and on top of this placed a lump of hard ore weighing
about fifty pounds. This novel shot brought down the scaffold
and cannon balls, and the furnace is again running and doing
exceedingly well." As far as the writer knows no patent has
been taken out for this process (for a wonder!), so that it is
available for any furnace man who is so unfortunate as to have
a scaffold.
Another experiment is shortly to be tried at this furnace
which is novel, at least in this country. It is proposed to use
two tiers of tuyeres, one eighteen inches above the other seven
below and five above. There is a theory that by elevating the
zone of fusion a larger product of superior metal would result.
The Lucy Furnace will test this theory on a large scale and
under the most favorable circumstances, and the result will not
be without interest to all in the business.
This nai've description gives a better idea of the primitive
methods of furnace practice then in vogue than could possibly
be obtained from any modern authority.
Much of the excellent work of the Lucy Furnace in early
years was due to the skill and enterprising management of H.
M. Curry, who remained an important factor in the success of/
the Carnegie enterprises until his death in 1899. Mr. Curry
was born on January 3Oth, 1847, at Wilkinsburg, a suburb of
Pittsburg, where he spent his early years. At sixteen he joined
the army as a private, and served in the Fifth Army Corps as a
member of Company F, i 5 5th Pennsylvania Volunteers, for three
years, and was mustered out of servi'ce as a sergeant. He was
slightly wounded at the battle of Five Forks, but only spent a
few days in the hospital. His first position on returning from
the war was with the firm of Haleman & Caughey, pig-iron
brokers, where he attracted the attention of Mr. Phipps, who,
towards the close of 1870, gave him a position as pay and bill
clerk in the Upper Union Mill. In 1871 he was transferred to
the Lucy Furnace, where he was given charge of the record
department of furnace burdens. His simple cordiality won the
62
RIVALRY OF GREAT FURNACES
devotion of the men, while his thoroughness and conscientious
attention to duty gained the confidence of his employers ; and
when, after two or three years, certain structural changes in the
furnace were decided upon, Mr. Curry was put in charge of
them. On thej~etirement of the first superintendent, William
Skelding, Mr. Curry, at the urgent recommendation of Mr.
Phipps, was put in his place, and under his management the
Lucy Furnace won the
records just described.
Of course such results
were not entirely due to
any one man's skill. Many
of the improvements made
were suggested by others ;
but Mr. Curry was so free
from conceit that he was
just as ready to cherish
the ideas coming from out-
side as he was to fondle
his own.
Another man to whom
no small part of the credit
of the improvement is due
was Mr. Whitwell, the in-
ventor of the famous stoves
that bear his name. In
1873 this gentleman came
to Mr. Phipps, and showed him that if he would shape the bell
of the furnace so that the contents would be thrown toward the
sides, it would not only preserve the lining of the furnace and
save the great cost of frequent renewals, but it would result in
such a segregation of the contents as to make a better draught,
with resulting increase of output. The proposition was so revo-
lutionary that Mr. Phipps naturally hesitated to make the change ;
and Mr. Whitwell had a glass model of the improved furnace
"The experiment was repeated.'
A WONDERFUL RECORD 63
made and erected in the Lucy yards. At once the beneficial
effect of the change could be seen through the glass as the
miniature loads of ore, lime, and coke were poured into the
model. It was a bitterly cold day when the demonstration was
made ; but the event was so important that the partners endured
the icy blasts for hours, and the experiment was repeated again
and again. All the partners conceded that it was eminently
successful but next day most of them were laid up with colds,
and Andrew Carnegie did not reappear at the works for a week.
When the change was made in the furnace the results predicted
by Mr. Whitwell were surpassed, and again a new furnace record
was made for the world.
In 1877 the second Lucy furnace was built, and "blown in"
on September 27th of that year. Its general dimensions were
those of the first Lucy furnace. By 1878 it made a monthly
output of 3,286 tons on a coke consumption of 2,973 pounds
per ton of iron, and in a single week it made 821 tons. In
twelve consecutive months the output was 33,931 tons on a coke
consumption of 2,850 pounds, a remarkable achievement at that
time.
The first Isabella furnace also made a wonderful record,
when it ran continuously from January, 1876, until May, 1880,
making a total output of 117,575 tons of pig-iron, an average
of 2,264 tons a month. The coke consumption averaged about
3,000 pounds.
The Lucy furnaces during all this time were the especial
care of Mr. Phipps. For months he almost lived in their vicin-
ity, and sat up with them at night when they were ailing as he
would have watched by the sick-bed of a favorite child. As he
had earlier watched the machinery at work at the Union Mills,
he now attended the operation of the furnaces night and day,
thinking, scheming, and studying them in every aspect. An
example of the ingenuity he displayed in his never-ending quest
of economies is here recalled.
One of the products of the furnace was known as mill-iron.
64 A RIVALRY OF GREAT PURNACES
This was the iron resulting from a mixture in the furnace of
seventy-five to eighty per cent, of Lake Superior ore and twenty
to twenty-five per cent, of puddle-furnace cinder. The cost of
this cinder per unit of iron was less than one-tenth the cost per
unit of iron made of ore ; but the cinder contained more than
three times the phosphorus that was in the same amount of ore,
which limited the use of the cheaper mixture. Mr. Phipps
knew that the Union Iron Mills, in common with all similar
works, made a large amount of heating-furnace or flue cinder,
which was considered a waste product and thrown out on the
river-banks. He quietly had some of this cinder analyzed, and
found it as rich in iron as the puddle-cinder. It also worked
equally well in the furnace, and carried less than one-fifth the
amount of phosphorus contained in the puddle-cinder. He
therefore changed the furnace mixture to sixty per cent, of flue-
cinder and forty per cent, of Lake Superior ore ; and, despite
this great economy, a better pig-iron was produced than before.
This was kept a trade secret for years, during which thousands
of tons of flue-cinder were bought at prices much below the
cost of puddle-cinder. Indeed, the firm for years sold its pud-
dle-cinder through brokers at $i and $1.50 per ton, which found
its way into the hands of a competitor, and in the same way
bought this competitors flue-cinder for fifty cents a ton. Nat-
urally the Lucy Furnace was prosperous and making money
when rival concerns, thus disadvantaged, were running behind.
This incident, one of many that might be cited, fairly illus-
trates the character of the services which Mr. Phipps was con-
stantly rendering his firm ; for of course his discovery was only
used to benefit the company. It also recalls the fact that not
all the partners took the same broad view of their obligations
to the common interest; for one of them, a protege and cousin
of the Carnegies, who had recently been admitted into the
partnership, engaged in a private speculation on the strength of
Mr. Phipps' discovery. He bought up all the flue-cinder he
could hear of; but, lacking a knowledge of the correct percent-
P HIP PS, THE POCKET-NERVE 65
ages, or being estopped by partnership obligations from making
them known, he could find no market for his cinder -heaps, and
he made a large loss.
Mr. Phipps acquired a reputation for close trading at this
time which is still remembered. In buying scrap-iron he had K
to bargain with all sorts of odd characters, one of whom would
insist in the strongest brogue that " divil a cint was left to a
harrd wurrking man afther a thrade with Harry Phipps, bad
cess to him ! " Another was detected in an ingenious method
of evening things up. He had two carts shaped and painted
exactly alike, but one weighed about five hundred pounds more
than the other. On delivering his first load of scrap at the ,-
furnace he would use the light wagon,
which was weighed both before and after
unloading, and the difference constituted
the net weight of scrap for which he was
paid. On subsequent trips, however, he
used the heavier cart, and failed to weigh
it after unloading. The clerk, believing
that it was the same cart as had previous-
. " Bad cess to him !"
ly been weighed empty, credited him every
trip with five hundred pounds more than had been delivered.
It was at the Lucy Furnaces that Mr, Phipps first employed
a chemist with excellent results. The Pennsylvania Steel Com-
pany at Harrisburg were large buyers of Bessemer pig-iron, and
their requirements were stated in chemical terms, the princi-
pal one being that the metal should not contain more than ten
hundredths of one percent, of phosphorus; and twenty-five
cents a ton was deducted from the price for every increase of
one- hundredth of one per cent. In this way it was early im-
pressed upon Mr. Phipps, who was the pocket-nerve of the con-
cern, that a practical chemist was a necessary member of their
staff; and it is believed that this company was the first not
directly connected with Bessemer steel production to benefit by
the services of an expert chemist.
66 A RIVALRY OF GREAT FURNACES
It is unfortunate that the disagreements of partners should
occupy so large a place in this history; but as these invariably
had a more or less important bearing on the subsequent devel-
opment of the enterprise, by eliminating some members and
elevating others, they must rank with other factors in the evolu-
tion of this great business. This time it is the story of Klo-
man's withdrawal from the firm ; and in view of the many
erroneous statements which have been made concerning this
event, it is especially desirable that the facts should at last be
set forth.
Shortly after the construction of the Lucy Furnace was
started Mr. Kloman was persuaded to join a group of enthu-
siasts for the purpose of mining and smelting ore in Michigan.
Joseph Kirkpatrick, the leader of the group, was a flighty in-
dividual of the Colonel Sellers type, who is described by an
acquaintance as being able. to "talk the buttons off your coat."
The mining company was known as the Cascade Iron Company,
and the smelting concern was called the Escanaba Furnace
Company. None of the other Carnegie partners would have
anything to do with the enterprise.
The Cascade Company, having a large body of ore in sight,
made special exertions to get a contract to supply the Lucy
Furnace; and it is told of Kirkpatrick that, having found a
specially rich specimen, he had it analyzed, and, on the strength
of its high metallic contents, he undertook to supply ores " equal
to any Lake Superior ores, Columbia ore only excepted. " With
this guarantee a contract was made with the Lucy Furnace
Company; but when the Cascade mineral was worked in the
furnace it developed only forty-five to fifty per cent, of metallic
iron instead of sixty-two to sixty-six per cent, as had been ex-
pected. By this time new mines in the Lake Superior region
had developed ore bodies which approached very closely in value
to the Columbia ore ; and, under the guarantee, the owners of
the Lucy Furnace felt that they had a claim against the Cas-
cade people for damages. The claim was made, and was met
m mm
68 A RIVALRY OF GREAT FURNACES
by denials and counter-claims ; and after some unpleasant corre-
spondence the Carnegies entered suit for $200,000 damages.
Before this came into court, Jay Cooke & Co. failed and the
panic of '73 ensued. The Cascade and Escanaba companies,
having used up most of their funds and all of their credit
which was exceptionally good at the outset found themselves
in no position to meet panic conditions while burdened with
this great suit. They therefore deemed it prudent to compro-
mise with the Lucy Furnace owners for $100,000, to be paid in
instalments. Few payments were made under this settlement
before both the Cascade and the Escanaba companies failed;
and the members found themselves personally responsible for
the companies' debts. Mr. Kloman, who had imagined the
concerns to be limited liability companies, was a shining mark
for the creditors, and he was pushed to the verge of bank-
ruptcy.
Fearing that such a catastrophe, if forced by Kloman 's credit-
ors, would involve the other concerns with which he was con-
nected and entail a dissolution of them, Andrew Carnegie made
a written offer to Kloman to restore him to full partnership if
he would make a voluntary assignment and get a judicial dis-
charge. This Kloman agreed to do ; and a committee of the
creditors was formed to appraise his interests, which the Carne-
gies bought. Kloman was thus enabled to make a settlement
of fifty cents on the dollar.
The disaster shook the Carnegie concern to its foundations ;
and for a time it seemed as if they all would be overwhelmed in
a common ruin. But the high financial standing of McCand-
less, Stewart and Scott, with whom the Carnegies had just
made an alliance, as will be told elsewhere, arid the ingenuity
of Mr. Phipps, enabled them to weather the storm.
The disentanglement of Kloman's affairs occupied three or
four years, during which he worked with the Carnegies, and re-
ceived a salary of $5,000 a year. When he was free to hold
property again, Andrew Carnegie offered him an interest of
KLOMAN'S WITHDRAWAL 69
$100,000 in the various enterprises, to be paid for out of profits.
This dij:l not satisfy Kloman, who valued his interest at several
times one hundred thousand dollars; and he demanded com-
plete reinstatement in all the Carnegie companies, in accordance
with the previous understanding. As he had no binding con-
tract the written offer and its acceptance had carried no
legal consideration he was unable to enforce his demand,
and he withdrew from the Carnegie group in bitterness and
ager.
The later history of the Lucy Furnaces as a separate organi- j
zation can be told in a few sentences. In June, 1881, a two-
thirds interest was sold to Wilson, Walker & Co. ; and James
R. Wilson of that firm, one of the Original Six of Andrew
Carnegie's boy-friends, was made chairman of the Lucy Furnace
Company, Ltd., which was now organized. The purpose of this
change was to release Mr. Phipps and Mr. T. M. Carnegie from
the close attention which they had been giving the furnaces,
that they might concentrate their efforts on the business of the
Edgar Thomson plant at Braddock. Mr. Wilson was in poor
health at the time of his accession to power at the furnaces ;
and his new duties and responsibilities aggravated his trouble.
He died in 1883 and was succeeded by E. A. McCrum. Later
Mr. Julian Kennedy had charge of the furnaces ; and, with the
same skill as he has applied to all his work, he soon won back
for the Lucy the laurels she had lost to the newer furnaces at
Braddock.
On January ist, 1886, the Lucy Furnaces, the Upper and
Lower Union Mills, and the Pittsburg Bessemer plant at Home-
stead were all brought together in one organization, Carnegie,
Phipps & Co., Limited, of which Mr. John Walker became
chairman.
The complete record of these furnaces, on which the atten-
tion of the iron-making world was riveted for many years, will
be found on the following page.
A RIVALRY OF GREAT FURNACES
LUCY FURNACES.
No. i. No. 2.
Tons per annum. Tons per annum
1872 I3,36l ......
1873 21,674
1874 24,543
1875 22,984
1876 16,174
1877 28,918 6,644
1878 33,980 28,151
1879 25,942 31,668
1880 20,910 33,931
1881 38,186 30,978
1882 22,385 35,453
1883 44,317 24,235
1884 Rebuilding. 58,416
1885 68,047 47,498
1886 56,209 64,266
1887 64,259 57,099
1888 63,970 55,834
1889 60,447 70, 749
1890 76,019 72,155
( No iron April 'gl
I8 9' ' 72,128 53,186 | _ Coke str f ke
1892 66,203 Relining. 71,289
1893 59,413 48,787 6 months only.
1894 81,395 82,419
1895 102,867 87, 542
1896 102,341 104,411
1897 113,060 104,963
1898 62,967 Relining. 61,186 Relining.
1899 88,777 37,102
1900 62,231 Relining. 57,895 Relining.
1901 82,677 41,251
1902 73,537 38,575
CHAPTER VI
BEGINNINGS AND GROWTH OF THE STEEL
BUSINESS
MANY accounts of the beginnings of the
Carnegie Bessemer steel business have ap-
peared from time to time in magazines and
other periodicals, some unwittingly fanci-
ful, others obviously unfair, and most of
them contradictory. Indeed, so far as the
author knows, the actual facts concerning this important event
have never been correctly set forth in any of the numerous
historical sketches of the enterprise which have been written,
nor in the many published biographical notices of the men asso-
ciated with it. Even the more carefully compiled books which
occasionally have been published on the subject have contained
more' romance than fact. This is equally true of all the other
branches of the Carnegie business.
The reason of this ever-increasing accumulation of misstate-
ment is not far to seek. Hitherto no documentary history of
the constituent companies of the Carnegie Steel Company
has beeu attempted. No independent effort has been made to
go back to the beginnings of things to trace to their source
the tiny, separate rivulets which, later, came together and formed
such a great and impressive stream. Having no authoritative
data before them, early writers were led into errors and mis-
statements of facts which have been transmitted from one gen-
eration of historians and biographers to another, until now it is
hardly possible for the chance investigator to disinter even an
occasional truth from the mass of error under which it is
buried.
71
72 THE STEEL BUSINESS
Another thing has contributed to give these fictions the
semblance of fact : they have been tacitly accepted as true by
those who knew better. The Carnegie Company grew to such
vast proportions as practically to dominate the steel industry of
America; and the honor of founding and guiding it to success
was very flattering to the vanity of those to whom it was ascribed.
During the later history of. the concern, when the trade-grooves
of which Mr. Phipps so aptly speaks had been made, and the
business was running smoothly, there came into prominence a
group of "young geniuses," as Andrew Carnegie calls them,
whose achievements have overshadowed those of the men who
did the first hard work and made the grooves. Many of these
being dead, the credit which was rightly theirs has been
given to the living, and generally accepted without disclaimer.
Many laurel wreaths are being proudly worn to-day which, in
all honor, should deck the graves of Andrew Kloman, William
Coleman, Thomas M. Carnegie, David A. Stewart, William P.
Shinn, David McCandless, Henry M. Curry and others who
have long since joined the silent and unprotesting majority.
The important part which William Coleman had in the ori-
gin of the Lucy furnaces has already been mentioned. To him
also is due the honor of founding the Carnegie Bessemer steel
business.
Early in 1871 Mr. Coleman, who had been a manufacturer
of iron rails,* visited the various steel works throughout the
* The first steel rails used in the United States were imported from England
in 1862 by the firm of Philip S. Justice & Co. of Philadelphia and London.
Mr. J. Howard Mitchell of that firm reported the transaction to the editor of Iron
Age in 1882. Steel rails were then used to a limited extent in England'; and so
enthusiastic in their praises of these rails were the managers of the lines on which
they were used that the firm in question endeavored to have American railroads
make some experiments with steel. But the Philadelphia firm were looked upon
as fanatics, if not swindlers, when they talked about steel rails to American rail-
road managers ; and it was seldom that they could obtain the earnest attention of
the proper officers. " The rule was," Mr. Mitchell says, " to bow us out of the
office and end the annoyance of being talked to by a dreamer."
In 1862, however, after many efforts in this and other directions, J. Edgar
Plate IV,
THOMAS M. CARNEGIE
A. T THE A E OK NINETEEN
COLEMAN THE FOUNDER 73
country at Johnstown, Cleveland, Harrisburg, Spuyten Duy-
vil and Troy in order to observe the operation of the Bes-
semer converters which had been installed at these places dur-
ing the preceding four years. He was then sixty-five years
old, but full of energy, and enterprising and far-sighted beyond
most of his contemporaries.
The first result of his observations was to secure a site for
a steel works. In this he got his son-in-law, Thomas M. Car- ,
negie, to join him; and together they obtained the option of
purchasing a tract of one hundred and seven acres of farm land
called Bradcjock's Field, being the identical site of the defeat
of General Braddock in 1755, on the Monongahela River, a
dozen miles above Pittsburg. Bounded on the north by the
Pennsylvania Railroad, traversed through its centre by the Bal-
timore and Ohio, with the Monongahela affording water trans-
portation on its southern boundary, it was an ideal spot for the
purpose.
Mr. Coleman resided at this time in the old homestead of
Judge Wilkins on Penn Avenue, Homewood; and young Car-
Thomson, then president of the Pennsylvania Railroad Company, was induced to
give steel rails a trial ; and he ordered one hundred tons at $150 per ton in gold
equivalent at that time to something like $300 per ton in currency. But unfortu-
nately the trial lot of rails was made of crucible steel, which proved to be very high
in carbon, though made to resist wear. They were put in the tracks of the com-
pany in yards and at other points where the greatest wear took place ; and during
the following winter, which was a very severe one, many of them broke. Such a
result might have been a crushing blow to the use of steel rails if it had happened
under the management of a less sagacious man than Mr. Thomson. He saw,
however, that if he could get rails that would not break, yet would endure the
great traffic on his railroad with as little wear as this lot had shown, it would be
extremely desirable ; and he therefore gave further orders, first for five hundred
and then for one thousand tons, which at that time were looked upon as wonder-
fully large orders.
In 1867 Messrs. Philip S. Justice & Co. sold to the old Beaver Meadow Rail-
road Company, now part of the Lehigh Valley Railroad Company, one hundred
tons of steel rails for $162.50 per ton in gold, or about $250 per ton in currency,
and other lots at $135 per ton gold. These rails were still in the tracks in 1883,
and Mr. Lloyd Chamberlin, then treasurer of the Lehigh Valley road, told Mr.
Mitchell that they were excellent rails and were still in use. Very slowly did the
use of steel rails grow from these humble beginnings. ( Vide Iron Age, August
i6th, 1883.)
74
'1HE STEEL BUSINESS
negie lived in a smaller place adjoining. Coleman and his son-
in-law used to drive to town together; and the plans of the new
steel works were developed during these drives. Their nearest
neighbors were David A. Stewart and his brother-in-law, John
Scott, both railway men, the former being also president of the
Pittsburg Locomotive Works, while the latter was a director of
the Allegheny Valley Railroad. Mr. Stewart was also presi-
dent of the Columbia Oil
Company, of which Mr.
Coleman had been one of
the original organizers;
but making over his stock
to Andrew Carnegie, Mr.
Coleman did not materially
benefit by the fabulous div-
idends which made Andrew
Carnegie rich.
On mentioning the
scheme to his neighbors,
whose connections with the
railroads made their co-
operation especially desir-
able, Coleman readily ob-
tained the adhesion of both .
Stewart and Scott. At the
same time young Carnegie
brought the project to the
attention of his brother, who lived in New York and was
engaged in various construction companies and similar schemes.
The elder Carnegie strongly opposed it, and refused to con-
nect himself with it in any way. It conflicted with his theory
about the unprofitableness of pioneering. Tom then sought
the co-operation of Mr. David McCandless, one of the most
prominent merchants of Pittsburg, and vice-president of the
Exchange National Bank. Mr. McCandless had known the ,
WILLIAM COLEMAN,
Who, with his son-in-law, Thomas M. Car-
negie, founded the Edgar Thomson Steel
Works.
CARNEGIE'S BELATED ZEAL 75
younger Carnegie since childhood through his connection with
the Swedenborgian Church, of which all the Carnegies were
members; and being familiar with the excellent work he had
done during the early struggles of the Union Iron Mills, he
consented to join him and Coleman in the new venture, pro-
vided that his friend William P. Shinn was taken into the firm
and made treasurer of it.
In the spring of 1872 Colonel Scott, who was ever seeking
to put profitable things in the way of Andrew Carnegie, had
him commissioned by President J. Edgar Thomson, of the Penn-
sylvania Railroad, to go to Europe to market a block of the .
bonds of a new railroad which was to run to Davenport, Iowa.
Carnegie sailed in April, and was successful in selling $6,000,-
ooo of the bonds. His aggregate commissions for he was
fortunate enough to get them from both sides amounted to
$150,000. Incidentally the loss to the purchasers of the bonds -
was $6,000,000 every cent they put in ; and a futile effort was
afterwards made to hold Carnegie responsible for the loss.
During this European trip Carnegie made a study of the
Bessemer steel situation there. In England the industry was *
firmly established; and Bessemer steel rails were being made in
ever-increasing quantities at good prices. At Derby visitors
were shown a double-headed Bessemer rail which had been laid
down in 1857 at a point on the Midland Railway where previ-
ously iron rails had sometimes to be renewed within three
months and which after fifteen years' constant use was still in
good shape. In the presence of exhibits of this kind Carnegie
was readily convinced that Coleman's Pittsburg scheme was not
only practicable, but likely to be extremely profitable. This
conviction was strengthened by the prospect of an additional
outlet for the product of the Lucy Furnace ; and on his return
he was found to be an enthusiastic supporter of the Bessemer
project. Indeed, he volunteered to put into the venture the
whole of his European profits, in addition to a commission of
$75,000 which he had made the previous October on the sale ,
76 THE STEEL BUSINESS
of a block of Oilman bonds, also a commission won through the
friendship of Colonel Scott.
Andrew Carnegie had sailed on this mission in April, 1872.
During the same month Coleman, Scott, McCandless and the
younger Carnegie entered upon a real-estate speculation. They
bought the Mowry homestead tract in Pittsburg and subdivided
it into building lots. The venture resulted in a large profit,
and left the partners in good financial shape to enter upon their
steel enterprise. On Andrew Carnegie's return with his golden
sheaves and his new enthusiasm, the project was at once put
into execution. On January ist, 1873, Mr. Coleman took up
the option on Braddock's Field for himself and associates, pay-
ing the sum of $59,003.30 for the entire tract, subject to a
mortgage of $160,000; and on the I3th of the same month the
firm of Carnegie, McCandless & Co. was organized with a capi-
tal of $700,000. Coleman himself put $100,000 into the firm,
Messrs. Kloman, Phipps, McCandless, Scott, Stewart, Shinn,
and the younger Carnegie each subscribed $50,000, and An-
drew Carnegie added $25,000 to his European profits and put
$250,000 into the venture. For by this time his ambition to
own the largest individual interest in all the enterprises with
which he connected himself had become definite, although it
was not yet the absorbing passion it became later. Thus was
started the great enterprise which afterwards became famous as
the Edgar Thomson Steel Works.
In 1874 the legislature of Pennsylvania, prompted by the
widespread ruin of the panic, passed an act authorizing the
formation of limited liability companies ; and Kloman's failure
having brought home to the other members of his firm the
danger of partnership agreements, they took advantage of the
new law, and on October I2th, 1874, the firm of Carnegie, Mc-
? Candless & Co. was dissolved, and the Edgar Thomson Steel
-? Company, Limited, was incorporated with a capital of $1,000,-
ooo to take its place. On October 3ist the unfinished works
N at Braddock were transferred to the latter corporation, the con-
OX THE VERGE OF DISASTER
77
sicleration being $631,250.43, subject to a mortgage now
amounting to $201,000.
The works were laid out under the supervision of A. L.
Holley, the well-known Bessemer engineer, who offered a guar- '
antee that the plant would have a capacity of seventy-five thou-
A. L. HOLLEY,
Builder of the principal Bessemer Steel Works in America.
sand tons of ingots a year. Ground was broken on April 1 3th,
1873. Before the work was more than well started, however,
the panicjnvolved the firm in great financial difficulty ; and but
for the high standing of McCandless, Stewart, and Scott, the
infant industry would have suffered an early death. As it was,
an issue of bonds was found necessary. These conferred on
78 THE STEEL BUSINESS
holders the right to exchange them within three years for paid-
up stock in the company. J. Edgar Thomson took a hundred
of these bonds; and Colonel Scott, true to his traditional help-
fulness, took fifty. This gave the firm $i 50,000 at a time when
it was worth double that amount ; and Gardiner McCandless,
son of the chairman of the company, bought about $70,000 of
the bonds for himself and friends. Besides tiding it over a
period of difficulty and danger, this bond issue brought to the
company the prestige and favor of President Thomson and
Colonel Scott, as was found as soon as it entered the market
with its rails.
While the works were in course of construction a curious
development took place at Johnstown, which greatly benefited
the Edgar Thomson Company. In the spring of 1873 a labor
dispute took place at the Cambria Iron Works. The trouble
grew out of an extraordinary situation. Foreseeing difficulty
with the local labor union, the Cambria Company induced its
principal men in all departments to become members of tlu
organization ; hoping that in this way they would get control of
it and manage it in the company's interest. For some reason
these men failed to get control, and a strike being ordered by
the union they had no alternative but to obey, at least for the
time. Hoist by their own petard, the company's officials capped
their blunder by telling these foremen that their situations
would be forfeited unless they brought the dispute to an end.
In those days, as we have seen in the case of the puddlers'
strike at the Union Iron Mills, labor disputes with capital were
in an elemental stage; and it is barely possible that the simple
measures of the Cambria officials might have ended the trouble.
But Andrew Carnegie, hearing in New York of the dispute,
returned hastily to Pittsburg, and proposed to his firm that
these heads of the Cambria departments be invited to join the
new works at Braddock. This was done; and Capt. William
R. Jones having accepted the invitation, the leading men in
every department hastened to follow his example. In this way
JONES THE PEERLESS 79
* Carnegie, McCandless & Co. secured a corps of trained men
who had gone through the costly apprenticeship of Bessemer
steel-making at the expense of a rival concern. It was a master
stroke, and at once carried the embryo business past the experi-
mental stage.* Among the men thus secured, in addition to
) Captain Jones, who was without a peer, were Captain Lapsley,
superintendent of the rail mill, John Rinard, superintendent of
the converting works, Thomas James, superintendent of machin-
ery, Thomas Addenbrook, head furnace builder, F. L. Bridges,
superintendent of transportation, and C. C. Teeter, chief clerk.
Later, scores of others followed. Indeed, there was hardly a
skilled workman in the whole of the Cambria plant that did not
want to join his beloved "Bill" Jones; and when the Edgar
Thomson mill was ready to open, many of them did so. During
the panic the first arrivals were put on board wages, and kept
about the place until the trouble was passed, and the work of
construction resumed.
Captain Jones, who was made superintendent of the works,
was probably the greatest mechanical genius that ever entered
the Carnegie shops. He had passed, moreover, through every
branch of the iron and steel manufacture ; and there was nothing
in the works of which he had not that intimate knowledge
which comes through the hand alone. His power to manage
men, joined to his inventiveness and thorough practical training,
made him the most conspicuous personal element in the phenom-
enal success which attended the enterprise from the very first.
He gave many valuable suggestions to Mr. Holley while the
plant was being erected, which were frankly adopted; and his
later inventions added enormously to the profits of the firm
every year of his life, and long after. Even in 1903 the United
States Steel Corporation filed a bill i:i equity to restrain the
* " Its [the Edgar Thomson plant] successful operation is greatly due to the
large experience in Bessemer manufacture of Capt. William R. Jones, general
superintendent of the works and of Capt. Thomas H. Lapsley, superintendent of
the rolling mill, who have a force under them largely composed of men experienced
in the manufacture of rails." American Manufacturer, November i8th, 1875.
8o
THE STEEL BUSINESS
Pouring hot metal into the Jones Mixer.
Jones & Laughlin Steel Company from using the famous metal
mixer which Captain Jones invented for the Edgar Thomson
Company ; .and this one de-
vice, used as it is in every
Bessemer department of the
great steel corporation, is still
the means of saving it mil-
lions of dollars every year.
At the same time no detail
was too small for Captain
Jones' personal attention.
This indeed was one of the
secrets of his success with
workmen. He was ever on
the lookout for their comfort.
He personally attended to the
ventilation of the shops ; and, as another little illustration of his
care, may be mentioned a generous supply of oatmeal and water
for drinking purposes. To
Captain Jones is also due the
system of rewards for excep-
tional service which after-
wards characterized the ad-
ministration of all the Car-
negie properties, and which
has since been extended, with
beneficial effects, to all the
constituent parts of the Unit-
ed States Steel Corporation.
In illustration of the wise
and broad views held by Cap-
tain Jones in regard to labor,
an interesting letter written
by him at this time may here be quoted. It also gives some data
concerning profits which are worth preserving. It is as follows :
Molten metal flowing from the Jones Mixer.
A VALUABLE LETTER 81
WORKS, Feb. 25, '75.
E. V. McCandless, Esq.
DEAR SIR : I wrote you somewhat hastily last night. In
regard to the figures I gave you of cost of mixture, I gave you
the Cambria figures, viz. mixture at $35 which of course in-
cludes spiegel metal which is (a) great deal more than it really
cost them. A friend of mine who has gone over their estimates
carefully gives as the cost of one ton of steel rails $44. Now
allow for at least 15$ on half they pay for labor as profit they
derive from their store, and you will readily see that the profits
of the Cambria works on steel are simply enormous.
I will give you their figures again in a more intelligent
manner :
Cost of mixture : pig-iron and spiegel $35
Credit allowed converting department per ton of ingots. ... 9
44 blooming mill per ton of blooms 3
44 rail mill 44 44 44 rails 10
Total cost of producing a ton of rails $57
Now in order to show you how much more above the actual
cost they put their figures, I know of plenty of men who will
take their rail mill at $4.00 a ton and find everything.
Now I know that the profits in manufacturing steel rails are
enormous. If such works as the Pa. Steel Co. and Newburgh,
Ohio can manufacture rails and make money these works can
certainly yield very handsome profits.
Now I will give you my views as to the proper way of con-
ducting these works.
ist. We must be careful of what class of men we collect.
We must steer clear of the West where men are accustomed to /
infernal high wages. We must steer clear as far as we can of
Englishmen who are great sticklers for high wages, small pro-
duction and strikes. My experience has shown that Germans
and Irish, Swedes and what I denominate " Buckwheats "
young American country boys, judiciously mixed, make the
most effective and tractable force you can find. Scotsmen do
very well, are honest and faithful. Welsh can be used in lim-
ited numbers. But mark me, Englishmen have been the worst
class of men I have had anything to do with; and this is the
opinion of Mr. Holley, George and John Fritz.
2nd. It should be the aim of the firm to keep the works run-
ning steadily. This is one of the secrets of Cambria low wages.
The workmen, taking year in and year out, do better at Cambria
6
82 THE STEEL BUSINESS
than elsewhere. On steady work you can calculate on low
wages.
3rd. The company should endeavor to make the cost of liv
ing as low as possible. This is one bad feature at present but
it can be easily remedied.
These are the salient points. The men should be made to
feel that the company are interested in their welfare. Make
the works a pleasant place for them. I have always found it
best to treat men well, and I find that my men are anxious to
retain my good will by working steadily and honestly, and in-
stead of dodging are anxious to show me what a good day's work
they have done. All haughty and disdainful treatment of men
has a very decided and bad effect on them.
Now I have voluntarily given you my views. I have felt
this to be a necessity on my part; -for I am afraid that unless
the policy I have marked out is followed we need not expect the
great success that is obtainable. These suggestions are the
results of twenty-five years' experience obtained in the most suc-
cessful iron works in this country : Crane and Thomas Iron
Works, Port Richmond Iron Works, and the Cambria works.
You are at liberty to show this letter to your father and Mr.
Coleman; otherwise regard it as a confidential letter.
Yours truly
W. R. JONES.
The converting works were completed in August, 1 875 ; and
on the 22d of that month the first blow was made. On Sep-
tember ist the first rail was made, and a piece of it, made into
a paper weight and stamped with this date, presses on this page
as it is written.
At this date Bessemer steel production in America had pro-
gressed to important proportions, the output of the country for
1875 being 375,517 tons. Of this amount 290,863 tons were
rolled into rails. The business had grown from 3,000 tons in
1867. In England Bessemer steel rails had been known since
1857; so that in no sense was the Edgar Thomson Company
a pioneer. It is indeed noteworthy that in anticipation of the
change from iron to Bessemer steel which every railroad man
foresaw, the production of iron rails in the United States fell
from 900,000 tons in 1872 to 500,000 tons in 1875. In this
RAILROAD FAVORS 83
one decade the output of steel rails multiplied nearly thirty
times from 34,000 tons in 1870 to 954,460 tons in 1880.
The subsequent advance has also been great ; for from less than
a million tons of steel rails produced in 1880, the output rose
to 3,000,000 tons in 1902, while the price had fallen from $106
a ton in 1870 to $17 a ton in 1898.
Many things combined to make the Edgar Thomson enter-
prise a success from the start ; and in so far as these were fore-
seen and planned, they serve as evidence of the consummate
skill of its projectors. Coleman must be credited with the
great advantage which resulted from the intimate relations the
The Edgar Thomson steel works in 1875.
firm had with the chief officials of the Pennsylvania Railroad.
It was he who induced Stewart and Scott to join the scheme.
To him also was due the exceptional pains taken to educate
Andrew Carnegie in the merits of the enterprise, and thus indi-
rectly to reach Carnegie's late associates, Mr. J. Edgar Thomson
and Colonel Scott. That these important men favored the
company which bore the name of one of them is evidenced by
the fact that some of the directors of the railroad, who were
interested in rival concerns, presently insisted upon a fair divi-
sion of the Pennsylvania's patronage, so that a portion of their
orders for rails afterwards went to the steel works at Johnstown
and Harrisburg.
In regard to the charges of preferential treatment in the
matter of freight rates which have often been made in this con-
84 THE STEEL BUSINESS
nection, it can be said in all frankness that, while they were not
unfounded, they were greatly exaggerated. The Edgar Thom-
son Company got exactly the rates and rebates that other ship-
pers of equal importance had. Full local rates were paid; but,
owing^to the saving to the railroads resulting from the steel
company's system of loading cars, and even at times making up
the train, it was only fair that the latter should share in the re-
sults of this economy. So there was established a system of
rebates. A monthly statement of the sums paid for freight and
due in rebates was made out ; and the rebates were paid almost
as soon as the statements were presented to the railway com-
pany. While these sums were considerable, and probably in-
; ured to the injury of com-
peting iron-rail makers in
is& the same district, they were
no greater than those re-
L < ceived by other manufact-
urers of steel rails who
loaded their own ship-
J ments.
At first this rebate sys-
tem was confined to the
"There goes that bookkeeper."
Pennsylvania lines ; but
presently President Garrett, of the Baltimore and Ohio Rail-
road, who had some suspicion of the facts, sent representatives
to Pittsburg to learn the reason of the apparent discrimination
against his road. As a result of their report Mr. Shinn, general
manager of the Edgar Thomson works, received an invitation to
visit Mr. Garrett in Baltimore, when an arrangement similar to
that in force with the Pennsylvania company was made, and
the traffic was then divided between the two roads.
Another factor which contributed in no small degree to the
success of the firm was the voucher system of accounting which
Mr. Shinn introduced. This had long been used by railroads,
and the Standard Oil Company's accounts were thus kept; but
SHINN'S SYSTEM OF ACCOUNTS 85
it was not in general use in manufacturing concerns, and the
Edgar Thomson Company was the first to adopt it in Pittsburg.
No order i :>r rails was ever accepted until there had first been
ascertained the actual cost of every element entering into their
manufacture, and options obtained on the pig-iron of which they
were to be made. An eloquent testimony to the efficiency of
this method of accounting was given by a workman engaged
in building a heating-furnace : " There goes that book-
keeper. If I use a dozen bricks more than I did last month, he
knows it and comes round to ask why ! " This was no exag-
geration. The minutest details of cost of materials and labor
in every department appeared from day to day and week to week"
in the accounts ; and soon every man about the place was made
to realize it. The men felt and often remarked that the eyes
of the company were always on them through the books. If the
workmanship was exceptionally good, or the output beyond the
high average which was insisted upon, the head of the depart-
ment received a letter of congratulation and perhaps a present at
Christmas. If it fell behind in either quality or output, the
fact was promptly brought to his notice, and Captain Jones him-
self would see if the fault lay in the machinery. If it did, he
generally knew how to remedy it. If the defect was in the \
human machine, and reproof did not suffice to correct it, the
man was replaced by the understudy which Jones usually had
trained in view of such a contingency.*
In 1877 it was found that more steel ingots were being
* Dr. Frank Cowan has written a unique poem on the contrast presented by
the actual condition of Braddock's Field with that of the day of the battle on
July gth, 1755. Here are a couple of verses :
Where the cannon of Braddock were wheeled into line.
And swept through the forest with shot and with shell
But woe to the Britons! In vain they combine
The thunder of heaven and the lightning of hell!
There the turning converter, while roaring with flame,
Pours out cascades of comets and showers of stars,
While the pulpit-boy, goggled, looks into the same
Thinking little of Braddock and nothing of Mars.
86 THE STEEL BUSINESS
made than the rail-mill could roll ; and an attempt was made to
capture the local market for merchant steel. Some billets of
high-carbon steel were made and submitted to a firm of buggy-
spring makers. To their astonishment the material was satis-
factory ; and they gave a large order for billets at three cents a
pound. Then some samples of axle steel for cars were sub-
mitted to the Pennsylvania Railroad Company, and subjected to
tests by experts who did not know that they were not the cruci-
ble steel usually employed for car-axles. Again the tests were
satisfactory, and large orders resulted. Next came the more
difficult test of making steel for plow-shares, which required a
soft ductile metal capable of being welded to sheets of crucible
steel. Even these severe conditions were met. Finally the
firm made steel capable of being rolled cold down to a paper
thinness for use as stove-pipe, roofing-channels and cartridge
cases stamped out of the sheet. So that, two years after the
realization of his dreams, Tom Carnegie had the satisfaction
of showing to his brother as many varieties of excellent steel
made at the Edgar Thomson works as he had previously seen
in England. But by this time the elder Carnegie was the most
enthusiastic member of the company and needed no such re-
minders.
The profits of this line of business were very great ; but the
capacity of the rail-mill having been enlarged, and the demands
of the railroads ever increasing, the company abandoned the
manufacture of merchant steel for the time being and returned
to the exclusive production of rails. The demand that had thus
been created, suddenly found itself shut off from supplies ; and
Where the guns of the foe were revealed by a flash
A report and the fall of the killed and the wounded,
Till the woods were ablaze, and a deafening crash
With the wail of the wounded and dying resounded ;
There the ingot aglow is drawn out to a rail,
While the coffee-mill crusher booms, rattles and groans,
And the water-boy hurries along with his pail,
Saying, Braddock be blowed! he's a slouch to Bill Jones.
A RIVAL IN THE FIELD 87
an interesting development resulted. This was the establish-
ment of a rival converting plant at Homestead by the group of
manufacturers who had been educated in the use of Bessemer
steel in place of the more costly crucible steel which they had
previously used. Pending the erection of the new plant, an
enterprising firm of Pittsburg brokers got Mr. McCandless, the
former bookkeeper of the Edgar Thomson Company, to go to
England to buy the merchant steel necessary to fill local de-
mands. In two years this firm sold nearly two million dollars'
worth of English steel at a profit of $5 to $15 a ton, after pay-
ing forty- five percent, duty and both ocean and railroad freights.
At the end of two years the Edgar Thomson Company sought
to head off the independent manufacturers at Homestead and
resumed the manufacture of merchant steel. The import busi-
ness suddenly ceased ; and these profits with others went into
the erection of a series of blast-furnaces which became the won-
der of the iron-making world.
Up to this time the Lucy furnaces had been supplying most
of the pig-iron used by the Edgar Thomson Company; but as
the members of the latter corporation were not all interested in
the furnaces, there arose differences among them as to the
proper price that should be paid for pig-iron. Although these
differences were finally adjusted by a sliding scale based on the
price of steel, the discussion developed in Shinn, McCandless,
Stewart, and gcott a desire to own their own blast furnace.
The desire was strengthened by the phenomenal profits of the
Lucy plant, which had paid for its construction in a single year.
Eventually an agreement was reached, and furnace A was
erected at Braddock.
This furnace was a part of the Kloman wreck, namely, the
little charcoal furnace which he had built at Escanaba. It was
bought for a mere song a little over $16,000 and such parts
as could be transported were brought down and installed at the
Edgar Thomson works. This was in 1879. Mr. Julian Ken-
nedy was put in charge of its erection, and afterwards of its
88 THE STEEL BUSINESS
operation. It was "blown in" in January, 1880, and yielded
442 tons of pig-iron the first week. In view of the fact that its
cubical capacity was but 6,396 feet compared with 15,000 feet
in the Lucy Furnace, this large product excited great astonish-
ment. The fourth week, however, it made 537 tons; and dur-
ing the following month (March) its output reached a total of
JULIAN KENNEDY.
2,760 tons, while the coke consumption was reduced by May to
1,945 pounds per ton of iron produced. Later the output of a
single week ran up to 671 tons, and the iron-making world
regarded the achievement with wonder.
In April, 1880, a second furnace, constructed by Mr. Ken-
nedy, was put in blast, which in its third month showed an
output of 4,318 tons, and at the end of the first half year was
making the marvellous total of 4,722 tons in a single month.
A GREAT EVOLUTION 89
During the first twelve months this furnace produced 48, 179
tons. In 1883 a third furnace was put in, and in its second
month passed all previous records by a yield of 6,045 tons; and
in the first twelve months made 65,947 tons of pig-iron. Dur-
ing the next three years two other furnaces were erected ; and
in December, 1885, one of them yielded 6,451 tons, the total
for twelve months being 74,475 tons. In October, 1886, still
another furnace was "blown in," and in January, 1887, three
months afterwards, it produced 8, 398 tons on a coke consump-
tion of 1,935 pounds per ton of pig-iron. Its total output for
twelve months was 88,940 tons. These were the world records
at the time ; but changes in the construction of one of the other
furnaces, made under the supervision of Mr. James Gayley,
one of the ablest of the so-called "young geniuses," brought
the monthly record in December, 1889, to 10,603 tons on a
coke consumption of only 1,756 pounds! These figures indi-
cate at once the rapid growth of the business of the Edgar
Thomson Steel Company and the proportionate advance made
by its superintendents in the art of iron production. Both rec-
ords, at that time incomparable even in this great land of
rapid growth, have since been repeatedly broken by the same
firm.
Here this great evolution may be seen at a glance :
FIRST FURNACE.
Pounds of coke
Years and months. Tons produced. , .
per ton of iron.
1880 April 2, 723 2, 536
May 3,718 2,574
June 4,318 2,344
July 4.345 2,706
August .... 4, 60 1 2, 8 1 1
September 4,221 2,757
October 4, 722 2, 736
SECOND FURNACE.
1882 Second month 6,045 2,617
Average for twelve months 5,495 2, 570
Best month 6, 131 2, 387
THE STEEL BUSINESS
THIRD FURNACE.
Years and months. Tons produced. P Unds f f C ke
per ton of iron.
1885 October 6,320 2,396
November 6. 306 2, 396
December 6,451 2,172
1886 January and February Shut down.
March 6,352 2.105
FOURTH FURNACE.*
1886 November 6, 735 2, 128
December 7, 494 2, 105
1887 January 8,398 1,935
1889 October 6,512 2,450
November 9,097 1,897
December 10, 603 i , 756
1890 January 10, 536 I, 736
February 8,954 ^859
March 9-94 1 I 845
April 10,075 1,847
May 10,035 1,884
Hardly less remarkable were the results achieved in the con
verting and rail departments. In the four months ending De-
cember, 1875, 6555 tons f rails were produced, although,
through a scarcity of Spiegel, the works lost two weeks. At
this time a thousand tons a month was considered a good aver-
age for the first year of a two five-ton converter plant. In the
twenty-six working days of January, 1876, the product of 433
blows was 2,550 tons of ingots, or 2,055 tons of rails. In a
single week in February 119 heats gave 707 tons of ingots,
while the blooming -mill passed 709 tons, and 560 tons of rails
were rolled. During the first full year of its operation (1876)
the mill produced 45,563 tons of steel. The tonnage of rails
was 32,228. In January, 1877, the product of a week was
more than double the extraordinary record of the preceding Feb-
ruary ; the output being 1,543 tons of ingots and 1,129 tons f
rails. The way this was done is naively explained by a local
* Twelve years later one of the above furnaces produced in one month,
December, 1902, a total of 17,449 tons f pig-iron on an average coke consump-
tion of 1,875 pounds.
AMAZING RECORDS 91
journalist of that day: "Mr. Campbell, a roller, ten days or
two weeks ago, rolled 540 rails in eleven and a half hours, which
is 1 08 more than the usual run for twelve hours. This put
John Little, another roller, on his mettle, and last Thursday
night he rolled 600 thirty-foot rails in eleven and a half hours
thus beating his competitor by 60 rails and the usual run by
1 68 rails. John may be Little, but the Edgar Thomson wants
that Little here below, and wants that Little long ! " In the
twenty-four working days of the following February, 915 blows
produced 5,993 tons of ingots; 4,474 tons of rails were rolled
and 182 tons of billets. On the 26th of February the day's
product was 383 tons of ingots half as much as was produced
in a week the year before. The product for March was 8,002
tons of ingots.
A little less than two years before this Mr. A. L. Holley,
then managing the Rensselaer Steel Works at Troy, wagered
the Hon. John A. Griswold, one of the proprietors, that their
Bessemer plant (two converters) could produce in one month
1,500 tons of ingots. He won his bet, of course; and the fig-
ures i, 500 and 8,000 mark the advance of American steel- mak-
ing at this time in twenty-three months.
This rate of progress was maintained during the next two
years. In September, 1879, the Edgar Thomson beat all the
records of two-converter plants by producing 10,788 tons of
ingots. The tonnage of a single day was 519, of a week, 2,536.
The output for the year (1879) was 107,877 tons of ingots, of
which 76,043 tons were rolled into rails. In November the
two converters produced 13,116 tons of ingots, and the mill
10,037 tons of rails. The total rails for the working year, nine
months and twenty-nine days, was 100,094 tons. Incidentally
the profit of the Edgar Thomson works for 1880 amounted to
$1,625,000; and there were orders booked for 8o,OQO tons for
the following year.
The known facts of course no outsider knew the profits,
which are now made public for the first time produced surprise
92 THE STEEL BUSINESS
and chagrin in competing plants. In England the news was
received with doubt. "An almost incredible statement," said
E. Windsor Richards, the British steel manufacturer ; and when
Captain Jones, in a paper read before the British Iron and Steel
Institute, gave details and dates, incredulity gave way to con-
sternation, for it was plainly to be seen that England's suprem-
acy in steel was at an end. Here is the amazing record in
detail :
NOVEMBER, 1880.
Number of vessels, 2. Blows, 1,746.
Average charge, 7^ tons.
Tons of Ingots .............................. I3,n6|
Blooms .............................. 12, i68|
Rails ................................. ".037tHt
Billets
Merchant blooms
Total finished product ..................... 11,100
At this date the Edgar Thomson had held the record for
nearly three years. During the next six months it beat this
record out of shape. In the first six months of 1881 the two
converters produced 76,756 tons of ingots as against 55,428
A train of rolls.
tons for the corresponding period of 1880 an increase of thir-
ty-eight per cent. The best twenty-four hours' work was 623
tons. The product of a week was 3,433 tons; the best month,
14,033 tons more than nine times the tonnage of Holley's bet
CAPTAIN JONES' TRIUMPH 93
six years before ! The rail-mill in the same time produced
65,087 tons as against 43,372 tons in the corresponding half of
1880 an increase of a fraction over fifty per cent. The aver-
age weekly yield of rails was 2,503 tons as compared with 1,664
tons in 1880.
These newer facts were again presented by Captain Jones
to the British Iron and Steel Institute ; and before the astonished
Englishmen had time fully to digest them, he sent a fresh record :
November, 1881 Ingots 16, 193 tons.
Rails 13,646
Best 24 hours' work Ingots 700
" " " " Rails 608
Best week's work Ingots 3,902
" " " Rails 3,202
Soon afterwards the works were enlarged and the direct metal
process was introduced ; but the product was not proportion-
ately great, and the record passed from Captain Jones to Mr.
Julian Kennedy, who by this time had been put in charge of
the Homestead works. Captain Jones' great and noteworthy
triumph forms one of the most picturesque episodes in the his-
tory of the Carnegie organization.
* For purposes of comparison a few details of the product of the earlier steel
works in America may here be given. These were, like the Edgar Thomson, all
two five-ton converter plants, working eleven turns or five and one-half days a
week.
Tons Tons
Tons Ingots,
month.
500
Harrisburg.
1,700
2,000
1868 .
Heats, Heats,
24 hours. week.
Ingots,
24 hours.
Ingots,
week.
1870 Troy and Marrisburg
I
Cambris
1872 Harrisburg
640
187-?
H arrisburg
. . 25 to 30 180
890
1874, Harrisbm ;
Cambria
46 189
956
" Troj
CQ
267
" Troy
IQC
072
*' Cambria. .
211
2,899
3,526
These were all two five-ton converter plants working eleven turns or five and
one-half days a week.
CHAPTER VII
SOME INSIDE FINANCIAL HISTORY
THE striking achievements just set forth formed
a legitimate source of pride and exultation
in the firm; and the gratification of every
member was increased by the wondering
comments of the trade and the public,
whose attention was invited to these
mechanical victories by officially verified
newspaper notices and by papers and
speeches before the iron and steel associations in England
and America. Braddock became the Mecca of iron and steel
manufacturers from all over the world.
On the subject of profits there was naturally no disposition
to take the public into the confidence of the firm. The protec-
tion of infant industries was a subject on which there was
divided opinion in the council-chambers of the nation; and
manufacturers showed a proper caution in concealing the extent
of their gains. Indeed, the Carnegies at this time accepted
what seemed to them a large monetary loss rather than produce
the books of the Edgar Thomson Steel Company in court in
response to a judicial order. Now, however, that the golden
harvest is safely garnered and beyond the reach of legislators
and others who might " break through and steal," there is no
reason why the gratifying results of the government's wise pol-
icy of protection should not be set forth.
The admirable system of accounting introduced by Mr.
Shinn enabled the Edgar Thomson managers to see at a glance
the exact cost of every one of the many operations entering into
the manufacture of a ton of ingots, blooms, or rails. Every
94
EARLY COST SHEETS 95
month cost sheets were made out in which these items were
given to the hundredth part of a cent. These statements were
marvels of ingenuity and careful accounting.
The first was issued on October 1st, 1875. It gave in de-
tail the output and cost of the first month's run, together with
the name of the purchasing railroads and the prices received.
It was a gratifying document to the anxious partners. The
output for September, 1875, was 1,1 iQ^-f J^ tons of rails. Their
cost was exactly $57 a ton, including all charges, even to office
expenses and maintenance of the plant. The prices received
averaged $66.50 a ton at the works, thus leaving a clear profit
of $9.50 a ton, and a total of over $10,000 on the month's work.
In the second month the output was i,8i7^-|J-j}- tons, which cost
$57.20 and sold for $66.32. At the end of the year the aver-
age of four months' operations showed that ingots had cost
$44.33 a ton, blooms $47. 17, and rails $58.45. The average
price at which they sold was a fraction under $66 a ton, giving
a total profit on rails of $41,970.06. The percentage of rails
from pig-iron and spiegel was eighty and fifty-six hundredths ;
and this was afterwards used as a basis on which to figure the
making of contracts.
During the following year the improvements in processes
made by Captain Jones, already referred to, greatly increased
the output and reduced the cost. On the other hand, prices also
fell. Andrew Carnegie wrote this year to one of his colleagues :
" We must not loose sight of the fact that the great products
now made must effect prices. I look for Cost to be reached for
a short time say 5O 50 at mills with us. Some concerns must
stop, therefore any orders we can take netting above 52 50 had
better be taken 55$ at mills is a tall price. Penna steel [i.e.
Pennsylvania Steel Co.] has offered 60$ Balto to Georgia RR.
but I hope to get a small order
In the same letter, however, he waxes enthusiastic over the
future :
" What do you really figure we can put rails at cost run-
96 INSIDE FINANCIAL HISTORY
ning double 4000 Tons per Mo. on this basis Cant we shade
50$ If so where is there such a business
And so alluring is the picture in his mind that in the next sen-
tence he says:
" I want to buy Mr. Coleman out & hope to do so. "
But that is another part of the story.
Concerning his great expectations at this time, the following
extract from a letter of his to Shinn, dated April I3th, 1876, is
interesting. He estimates future profits at forty per cent, per
annum, or $300,000 net on a capital of $750,000.
J 6c*~Jis
[Photographic reproduction.]
The price of rails this year (1876) dropped steadily from
$67 in January to $52 in December; but the average price re-
ceived by the Edgar Thomson Company for the sixteen months
ending December 3ist, 1876, was $60.61 6 . The product for
the year was 32,228 tons, and for sixteen months 38,284-5^^.
FIRS 7' GREAT PROFITS
97
tons. The cost of manufacture, which averaged $56. q8 5 for
the first seven months, had dropped to $53. 19 for the second
seven months. The net earnings for the year amounted to
$181,007.18 on a capital issue of $731,500.
The Edgar Thomson Steel Works in 1890.
The output of rails for 1877 was 42,826^-^ tons. Both
prices and cost of manufacture show a remarkable decline.
They are as follows :
Cost at Price
E. T. works. at mills.
January $46. 67 76 $49.00
February 44. 89 49.00
March 44. io 28 49.00
April 43. 58 5 49.00
May 4S-63 35 47-25
June 42. 28 03 46.50
Cost at Price
E. T. works. at mills.
July $44.87 60 $45-25
August 42. 55 54 44-75
September 43.83* 44.00
October 42. oo 48 42.25
November 4O.I3 14 40.50
December 40. 3 5 88 40.50
It must not be inferred from this that during the later
months of the year the company was running at a loss ; for the
rails made in November and December had been sold at prices
prevailing nine or twelve months earlier. At the same time
98
INSIDE FINANCIAL HISTORY
iw/4 UM
vmtacvvttl cli
/
MMsTV^ M &
<ff
/
/ / /
tyuJiS .
/
c^Ax
_X
a/ad^ss&L/^
'
/
/'y/
PAGE OF FIRST ANNUAL REPORT,
Photographic copy of the original document.
" WHERE IS THERE SUCH A BUSINESS!" 99
profits were greatly diminished, and the year's balance sheet
showed only a net gain of $36,673.33. But about $115,000
had been spent on the works and some $20,000 of indebtedness
had been paid off. As a matter of fact, the profits of all the
Carnegie works this year aggregated $190,379.33.
In February of this year the first dividend was declared,
being twenty-five per cent, in scrip. In August a second divi-
dend of fourteen per cent, was declared, part of which was ap-
plied on stock and part paid in cash. In this way the capital
was raised to $1,000,000. In October dividend No. 3, of two
and three-fourths per cent., was declared ; making a total for the
year in cash and stock of forty-one and three-fourths per cent.
At the beginning of 1878 Andrew Carnegie indulged again
in his habit of prophecy, and scribbled for the benefit of one of
his partners his great expectations for the year. This rough
memorandum is not very clear in its details, but it shows that
further reductions in cost to $38 were expected, while the price
to be received was put at $42.50, with an allotment by the steel
rail pool of 60,000 tons. This would give a profit of $240,000
from rails, and other additions not now traceable were expected
to bring the total net profit to $250,000. Well might he ex-
claim, "Where is there such a business ! "
Let us see how the prophecy turned out. By March, 1878,
thanks to Captain Jones' excellent practice at the works, the
monthly product of rails had reached 7>383|-|-J-- tons. The
cost of ingots had been reduced to $29. 50 and that of rails to
$37.77. During the year the cost of making rails did not go
more than a few mills above $38. In April it was $38.o6 6 ;
in May, $36.81 ; in June, $37-92 5 ; in July, $38.01 3 ; in August,
$37.82 9 ; in September, $36.98 7 ; in October, $36.1 1 4 ; in No-
vember, $36.41 5 ; and in December, $36. 52 5 . The average
price at which they were sold was $42.50, exactly correspond-
ing with Carnegie's guess. The net profits of a single month
(November) amounted to a fraction over $52,000; and Andrew
Carnegie, a propos of lofty heights, writes from Sorrento :
ioo INSIDE FINANCIAL HISTORY
" Pyramids & Mt Etna & Vesuvius have been our last climbs
Mt E of course we did only from the base, Tell Capt
Jones there was a proud little stout man who gave a wild hurrah
when he saw E T ahead. Was nt it a close race with C I.
Co. but they had a start, besides we had to go through the
measles you know "
The earnings of the Edgar Thomson works this year were
$401,800 over thirty-one per cent, on its capital, which had
been increased to $1,250,000. Andrew Carnegie, by the way,
subscribed for the whole of this increase ; and a year later was
THEORY.
< 4 We are creatures of the tariff, and if ever the steel
manufacturers here attempt to control or have any
general understanding- among them the tariff would
not exist one session of Congress. The theory of pro-
tection is that home competition will soon reduce the
price of the product so it will yield only the usual
profit. Any understanding among us would simply at-
tempt to defeat this. There never has been or ever
will be such an understanding." Andrew Carnegie, in
American Manufacturer, July 251 'h,
shown by the balance sheet to owe the company $175,000 on
account of stock subscription a simple and easy method of
becoming a "majority stockholder."
The next year the price of rails took a sharp upward spurt,
reaching $67 a ton in December and $85 by February, 1880.
In the same period the cost of manufacture was slightly re-
duced. In January, 1879, ra ^ s cost $38.6o 6 a ton to make, and
in May, $35.845. During the first six months of this year the
Edgar Thomson works made $252,854. The second half of the
year the gains were even greater. In August, with rails selling
at $48, there was a clear profit of $10.50 a ton (pig-iron had
PROFITS 140 PER CENT. 101
gone up $12.50); in October a fraction under $15, and by De-
cember over $22 a ton net profit. The monthly output of in-
gots now exceeded 10,000 tons, and of rails five to six thousand
tons. " Where is there such a business ! "
These golden times continued throughout* V/ie' knowing
year. In January the difference between j;h'e^ Sealing giice> of
rails and the cost of pig-iron was $53 a ton, the' former being
$75 and the latter $22 a ton. The next month it was $65, and
of this something like $40 a ton was clear profit to the Edgar
Thomson Steel Company, who were running day and night and
PRACTICE.
Profit. Loss.
EDGAR THOMSON STEEL WORKS.
On rails, payment by rail pool. $123,983.28
HOMESTEAD STEEL WORKS.
Axles, pool assessments .. $22,345.32
Beams, " " .. 29,392.84
Channels, " " .. 13,002.74
Armor plate pool 100,842.59
UPPER UNION MILLS.
Zees,- pool assessment. .. 5,518.70
Angles, " " .. 57,755.08
Tees, " " .. 4,456.32
Beams, " " .. 351.32
Channels, " " .. 366.97
From Profit and Loss account of Carnegie Steel Company for 1899.
had orders for 80,000 tons of rails. Without burdening this
narrative with further details of costs and prices, it may be
briefly stated that in this twelve months the Edgar Thomson
works made a profit of $1,625,000. For an infant industry not
out of its swaddling-clothes that was a very fair showing; and
was certainly as legitimate a cause of exultation on the part of
the members of the firm as those more public triumphs in me-
chanics already spoken of. The highest price of rails reached
this year was $85 a ton. Who shall say in presence of these
facts that protection is not synonymous with prosperity?
To the Carnegies the tariff was specially helpful at thi?
102 INSIDE FINANCIAL HISTORY
time, when an extraordinary demand arose for iron and steel in
all its forms. The American manufacturers were unable to
meet this demand, and prices rose to a point at which importa-
tions of foreign steel could be made despite the high duties.
{From '$'1 9, : OOc\G f oo in 1879 these importations rose to over
$71,000,000 in 1880, $60,500,000 in 1881, and $68,000,000 in
:82. " Simultaneously the profits of the Carnegie companies
rose from $512,068.46 in 1879 to $2,000,377.42 in 1881, and
$2,128,422.91 in 1882; for while the cost of rails was between
$34 and $38.50, the average price received during these years
was $56.26. It is obvious that but for the tariff these enor-
mous gains would have been impossible; and the magnificent
series of blast-furnaces, into the construction of which these
profits went, would never have been built. Of course, the rail-
roads of the country paid the difference; but they eventually
got it back, and more, out of the enormous tonnage of ore, coke,
and lime needed by the furnaces. Here, however, we are
trenching upon debatable ground ; and that is neither necessary
nor desirable in a work of this kind, which aims only to set out
the facts and leave the reader free to draw his own conclusions.
During the following years, before Mr. Frick came into su-
preme power and multiplied the Carnegie profits elevenfold in
eleven years, the net earnings of all the properties whose his-
tory we are tracing reached the following annual totals. The
average price of steel rails for these years is also given.
1883 $1,019,233.04 $37-75
4 , 1,301,180.28 30.75
5 i,i9 T >993-54 28.50
6 2,925,350.08 34.50
7 3,441,887.29 37.08
8 1,941,555.44 29.83
The causes of this abundant prosperity were not confined to
the tariff, however. Some of them have been briefly adverted
to in the course of this narrative ; others have not been men-
tioned. A general review of this interesting division of the
subject is therefore not out of place at this point in our story.
CAUSES OF SUCCESS 103
First and foremost among the causes of the extraordinary
success of the Edgar Thomson works is the fact that they were
planned and constructed under the immediate direction of the
late A. L. Holley. In his day he died in 1882 Mr. Holley
was the most experienced Bessemer steel man on the continent.
It was he who negotiated the purchase of the American patents
in 1864, and who built the experimental works at Troy. He
developed them into a commercial success, and was in charge of
their management until 1867. In this year he built the Har-
risburg Bessemer plant and superintended it until 1869. Then
he rebuilt and enlarged the Troy works, which had been de-
stroyed by fire. He next planned the Bessemer works at Chi-
cago. All this was before the Edgar Thomson works were even
thought of; and so completely had he identified himself with
the English process of steel-making and the erection of Bes-
semer converting works, that when the Edgar Thomson scheme
was first mooted Mr. Holley was the only man in the country
to whom a prudent manufacturer would confide the construction
of a new steel plant. There were, moreover, certain inventions
and improvements of his without which no converting plant was
complete. In a history of the Bessemer Steel Industry in
America, Mr. Robert W. Hunt thus speaks of the Edgar Thom-
son works :
" In arranging these works, Mr. Holley made many improve-
ments over any of his previous efforts, and, assisted as he was
(by Mr. P. Barnes, resident engineer, and Mr. W. R. Jones),
the works stand to-day as a fit monument of the progress of the
Bessemer process in this country." *
* It is a little singular in view of these well-known facts that Andrew
Carnegie should claim that he " built at Pittsburg a plant for the Bessemer proc-
ess of steel-making, which had not until then been operated in this country."
Mr. Weeks, editor of the American Manufacturer ', commenting on the comple-
tion of the Edgar Thomson works remarked [September gth, 1875]: " We [in
Pittsburg] have been slow to take advantage of the Bessemer process, though one
at least of the owners of the Bessemer patents for this country is a prominent
steel manufacturer of this city [James Park, Jr.]. This dilatoriness is the more
remarkable as there has not been the least doubt as to its success and value both
104
INSIDE FINANCIAL HISTORY
In the schedule of cost of the Edgar Thomson works is an
item, under patent fees, "$5,000 for Holley's Improvements,"
a sum equal to that paid for the license to use the Bessemer
patents. This represents
the measure of their value.
The mechanical genius
of Captain Jones, however,
refused to be bound by pre-
cedent, and many innova-
tions were made in the
equipment of the Edgar
Thomson works by his force-
ful insistence. An instance
is here recalled :
Captain Jones had
ordered a certain type of
open-topped housing for the
rail-mill which had been
found unworkable in other
plants. " But, Mr. Jones,"
remonstrated Mr. Holley in
his gentle way, "how can you justify the putting in of open-
topped housings when you know that they tried them at the
Lackawanna works and abandoned them ? "
"Why," replied Jones in his positive way, "they put them
'And why in Hades shouldn't I?'
practically and commercially. Indeed it is to this country and to an American,
Mr. A. L. Holley, that we are indebted for some of the most valuable inventions
connected with the Bessemer plant, inventions that, taken in connection with those
of the two Fritzes, have made it possible with an American plant of a given
nominal capacity, to turn out two or three times as great a product as with the
English. We have so often referred to the incredulous astonishment of the mem-
bers of the British Iron and Steel Institute when Mr. Holley told them what we
were doing in this country, that we need not repeat the statement here.
Notwithstanding this delay in taking up this process, Pittsburg can now con-
gratulate herself that she has as fine a Bessemer plant as the world can boast,
not so extensive as some, but as complete and perfect as any and much more so
than others."
SKILFUL MANAGEMENT 105
down with three-inch round iron bolts. I'm putting mine in
with four-inch square steel bolts. "
" I grant you," answered Mr. Holley, " that if you put them
in with four-inch square steel bolts you will be able to hold them."
"And why in Hades shouldn't I put 'em in with four-inch
steel bolts if that will accomplish what I'm after? "
In this way Jones was constantly making little changes and
improvements, too insignificant to patent or even to mention
outside of the works ; but they did much to ensure the perfect
working of the machinery. The writer recalls one such im-
provement. It was only a couple of pieces of old rail, shaped
to throw the half-rolled bloom onto a moving bed as it came
through the rolls ; but it saved the labor of a dozen men and
did the work better.
But greater than all of Jones' inventions was his progres-*
sive policy. Familiar with all sorts of machinery, he saw to it
that only the best and most modern appliances were installed;
and thereafter he was quick to adopt improvements as fast as
they were made. The young men whom he trained ably sec-
onded him, as is shown in the remarkable achievements of
Julian Kennedy and Gayley at the blast-furnaces, and by Schwab
and Scott at Homestead. The famous scrap-heap for outgrown,
not outworn, machinery was instituted by Jones, who never hesi-
tated to throw away a tool that had cost half a million if a bet-
ter one became available. And as his own inventions saved the
company a fortune every year, he was given a free hand. Under
this greatest of all the captains of the American steel industry
a group of younger men grew up, trained in his broad views and
habituated to his progressive methods; so that when, in 1889,
he was removed from his sphere of activity in a horribly tragic
way by the explosion of one of his furnaces, there were men
ready trained to take up his work and continue it.*
*The following passages are from a beautiful obituary notice of Captain
Jones, written and published by the late Joseph D. Weeks, who was so well
qualified to appreciate his genius: " He was a Captain of Industry, unsurpassed
1 06 INSIDE FINANCIAL HISTORY
Nor can the important services of Mr. Shinn be overstated.
As related in another place in a letter of Andrew Carnegie, his
associates used his name as a prayer of thanksgiving every
night before going to bed. An example of his contributions to
the prosperity of the firm may be added to those given else-
where in this history.
The moulds into which the molten steel was poured out of
the converting- vessels were at first made out of a grade of cast-
iron which soon fractured under the extremes of temperature to
which they were subjected. The loss from this cause at one
time added about sixty cents to the cost of making a ton of
steel. In going over his cost sheets one day with Captain
Jones, to try to find some detail capable of judicious pruning,
Mr. Shinn 's attention was arrested by the high cost of ingot-
moulds. He thereupon worked out a metal mixture capable of
as an organizer, marvellous in his knowledge of detail, fertile in expedients and
invention; always planning new victories and winning them. His success is
written in the monster establishment at Bessemer, which will remain a monument
to his energy, his skill, his achievements.
The position he filled was one that demanded a higher order of executive
ability than that required of the President of the United States or any of his
cabinet, and this fact was recognized by a salary equal to that of the President.
As an executive officer alone he was great ; but in addition to this executive
ability his position demanded the possession of the inventive faculty in the highest
degree, coupled with the power of analysis on the one hand and of generalization
on the other that are rarely found combined in any one man. He not only knew
what he wanted done but how to do it. Never trammelled by precedent he set all
rules at defiance if he could more surely and quickly reach the object sought by so
doing.
Many of the inventions of details that have made other inventions successes
and have placed Bessemer steel-making where it is to-day are his.
And yet after all we doubt not that the fact that would give him the most
sincere gratification is the knowledge that he preserved in such a high degree the
respect, the love of the thousands that were under him, and he deserved all the
love they bear him and all the respect they pay his memory. No one more
honestly and with more singleness of purpose strove in every way to help and
benefit those under him than Captain Jones. Himself from the ranks of labor,
he never forgot the fact and looked at all questions affecting the relations of em-
ployer and employed in the works he managed from the standpoint of both of
these relations ; and both employer and employed have come to realize that his
judgment was in the main wise as they have always believed it was honest."
American Manufacturer, October 4th, 1889.
SPIRIT OF COMPETITION 10;
greater resistance to alternations of heat and cold, and had some
moulds cast of this at the foundry of Macintosh & Hemphill.
Instead of being destroyed after less than twenty heats, as here-
tofore, the new moulds withstood the strain of sixty heats or
more; and the ingot- mould-cost per ton of steel dropped from
sixty to fifteen cents. On a product of 10,000 tons a month,
the saving was over $40,000 a year a sum almost sufficient in
itself to determine the financial success or non-success of the
works under ordinary conditions of trade. Nor was this all.
The new moulds were made of Bessemer iron ; and when they
broke they were simply passed into the converter and made into
steel rails.
This metal mixture was kept a secret for some years, during
which the Edgar Thomson Company had an important advan-
tage over competitors. After a time the secret was given to
Leander Morris, in whom Andrew Carnegie, his cousin, had an
interest of a peculiarly close and confidential nature. This is
a story in itself, full of romance and pathos. Mr. Morris was a
member of the foundry firm of Morris & Marshall, and for years
they had a practical monopoly of the business of casting ingot-
moulds.
Another cause of success is to be found in the spirit of com- <
petition which animated every man about the place. A keen
rivalry had existed from the first among the Bessemer steel
men; and this was intensified by the building of the Edgar
Thomson works, with all the improvements resulting from Mr.
Holley's ten years of experiments. Captain Jones has graphi- ,
cally told the story of this rivalry in the paper already referred
to, which was read at the meeting of the British Iron and Steel
Institute in May, 1881. He says:
'
" Now as to the cause of the great output of American steel
works.
On the introduction of the Bessemer process in America,
quite a number of young men, who believed that the process
would revolutionize the metallurgical world, became anxious to
io8 INSIDE FINANCIAL HISTORY,
identify themselves with its development. At the Troy works,
which may be considered the pioneer Bessemer works of the
country, Mr. A. L. Holley was applying his brilliant talents to
the perfecting of American plants. Forsythe, of the North
Chicago works, was also assiduously studying the process. A
few years later the Pennsylvania Steel Works, the model of
nearly all the subsequent American works, were constructed by
Mr. Holley. Some years later still the Cambria works were
built. At all these works there were ambitious young men
closely studying and carefully watching all possible points of
development.
From the Cambria graduated Mr. R. W. Hunt, general
superintendent of the Albany and Rensselaer works; Jones
and Fry, at present connected with the Cambria ; Rinard, of the
Edgar Thomson ; Stanton, of the Vulcan ; Williams, of the new
Pittsburg Bessemer works ; and myself.
Mr. Holley, as editor of Van Nostrand's Eclectic Magazine,
a few years ago, records as follows : ' We have information from
the (Penn.) steel works that on Tuesday of last week they had
succeeded in making eight blows or conversions in ten hours. '
I quote from memory.
Soon the Cambria Iron Works commenced to creep up to
thirty-six heats or about one hundred and sixty tons in twenty-
four hours. After the dispersion at the Cambria works attend-
ant on the death of Mr. George Fritz, one of the ablest of Amer-
ican metallurgists, Mr. Hunt assumed control of the Bessemer
department of the Cambria works. A strong rivalry imme-
diately commenced between these two gentlemen ; and great was
my astonishment at this time on receiving from Mr. Hunt a
telegram stating that 'in the last twenty-four hours we have
made fifty heats, or about two hundred and fifty tons.' This
achievement caused great surprise in the Bessemer world. In
the meantime Forsythe, having concluded his studies at Troy,
had assumed the reins at North Chicago ; and reports soon cir-
culated about what he was doing there. This only stirred up
Messrs. Fry and Hunt and Liebert, of Bethlehem, to greater
achievements ; and so the product kept on increasing, while
we of tJie Edgar Thomson were compelled (being engaged in erect-
ing the works) to listen to tJieir wonderful stories. In 1875 the
Edgar Thomson began operations, followed soon afterwards by
the Scranton and Vulcan works, while the Joliet works under
an efficient organization had again entered the field.
In the latter year the output of American works began to
assume those proportions which have caused so much surprise
CAPTAIN JONES' EXPLANATION 109
in England. The output soon reached 1,500 tons of ingots a
week, then 1,800 tons, then 2,000 tons, and ultimately increas-
ing to 3,000, 3,100, 3,200, and 3,300.
I am frequently asked by people, 'Where will you Bessemer
men stop? ' and 'What is the limit of your production? ' I can
only reply : 'Ask some one who knows more about it than I do.'
But I really believe we are on the verge of the elastic limit of
production, although it may yet reach a product of 14,500 to
15,000 tons for what I term a 'long month ' of twenty-one days
per pair of converters. [Julian Kennedy afterwards brought the
record to over 19,500 tons.]
The output of American works is governed by the facili-
ties for getting the ingots out of the road. This is the sticking-
point just now. [This difficulty was met by casting the ingots
on trucks and hauling them away by locomotives.] Therefore
the works that cast their tonnage in the least number of moulds
have a decided advantage in reaching the ultimate production of
the present American or Holley plant. The race, so far as the
Edgar Thomson works are concerned, will soon cease. A few
months more and the Edgar Thomson will change from a two
seven-ton converter plant to a three ten-ton plant, and then our
efforts willbe concentrated upon keeping pace with the Bethle-
hem four-vessel plant, and with the North Chicago and Pennsyl-
vania Steel Company's three-vessel plants.*
Next to the strong but pleasant rivalry of the young men
who have assumed control of the works, and who have worked
hard and faithfully to excel, the development of American prac-
tice is due to the esprit de corps of the workmen after they get
fairly warmed to the work. As long as the record made by the
works stands the first, so long are they content to labor at a
moderate rate ; but let it be known that some rival establish-
ment has beaten that record, and then there is no content until
the rival's record is eclipsed.
Another marked advantage which the American works
have is the diversity of nationality of the workmen. We have
*One day in November, 1891, the mill started out to beat the best day's
record of the South Chicago mill of the Illinois Steel Company, which was 1,700
tons. The attempt was a remarkable success, as the following figures show :
Rails made in twenty-four hours !,924 tons.
Ingots, same time 2,074 "
Best twelve hours (night turn) rails 981 "
" " ingots 1,087 "
Best run two hours 201 ' '
no INSIDE FINANCIAL HISTORY
representatives from England, Ireland, Scotland, Wales, and all
parts of Germany, Swedes, Hungarians, and a few French and
Italians, with a small percentage of colored workmen. This
mixture of races and languages seems to give the best results,
and is, I think, far better than a preponderance of one nation-
ality.
In increasing the output of these works, I soon discovered
it was entirely out of the question to expect human flesh and
blood to labor incessantly for twelve hours, and therefore it was
v decided to put on three turns, reducing the hours of labor to
eight. This proved to be of immense advantage to both the
company and the workmen, the latter now earning more in eight
hours than they formerly did in twelve hours, while the men can
work harder constantly for eight hours, having sixteen hours
for rest.
Another important matter connected with fast working is
. the maintenance of the machinery. As fast as the weak parts
in the machinery are developed they are strengthened. In all
new machinery the aim is to get an excess of strength; the
usual factor of safety in new rolling machinery is not allowable.
The machinery must be made extra heavy and strong, so that
the inertia of the mass will swallow all strains thrown upon it." *
Following in importance the protective tariff, the mechani-
cal excellence of the works, the inventive skill of its managers,
and the rivalry of competing plants, as factors in the extraordi-
nary success of the Edgar Thomson Steel Company, come cer-
tain personal influences. These were subtle and vague, and not
easily traceable except in results which were rarely visible to
outsiders. As a consequence, biographers and historians have
been led into all sorts of fanciful conceits concerning the rela-
tive importance of some of the individuals connected with the
concern.
One closely associated with the group, being asked to define
the functions of the various partners in the Edgar Thomson
Company, recently made the following trite comparison : " Shinn
bossed the show; McCandless lent it dignity and standing;
* Which recalls Captain Jones' remark to Holley on the advantage of heavy
steel bolts to hold the housings of the rail-mill.
A HAPPY SIMILE
in
Phipps took in the pennies at the gate and kept the pay-roll
down; Tom Carnegie kept everybody in a good humor, with
Dave Stewart as his understudy." "And Andrew Carnegie? "
he was asked. " Oh, Andy looked after the advertising and
drove the band wagon ! " was the ready reply.
With due allowance for its humorous exaggeration, this
blunt comparison fairly represents the facts. The high com-
mercial and social standing of Mr. McCandless not only gave
dignity to the enterprise, but won financial support for it in its
days of need. Without him, the
company would hardly have tided
over the troublous times of 1873
and the lean years following the
panic. The special capacity of Mr.
Phipps has been abundantly illus-
trated in connection with
preceding enterprises. Mr.
T. M. Carnegie's abilities
were too numerous and
complex to be summed up
in a sentence. He was a
man of sterling integrity ;
and it was a common say-
ing in Pittsburg that his
word was better than some men's bond. He had remarkable
judgment; and his opinion on commercial questions was valued
above that of much older and more experienced men. Quick
and keen in his perceptions, cautious but progressive in his
ideas, faithful to his engagements, and just in all. his dealings,
he gave to his company that which corporations are habitually
lacking, namely, a conscience. His death in 1886, at the early
age of forty- three, was a loss not only to his associates, but to
the whole business world of .Pittsburg. To this day all who
knew him, great and small, rich and poor, workman and master,
revere his memory and regret his loss. Mr. Stewart never
'Andy drove the band wagon."
112
INSIDE FINANCIAL HISTORY
sought prominence, and was content to the day of his death, in
1889, to merge his own personality in the organization he worked
for. Devoted to Tom Carnegie, he allowed no personal injury to
affect his loyalty to his friend; and more than once he stoically
accepted the rough rebukes of the elder Carnegie because Tom
wished for peace. Once, indeed, exasperated at the gibes given
at his own table, he rose in anger, saying that the bounds of all
reason had been reached and the laws of hospitality outraged ;
but the apology which Tom arranged
was at once accepted and peace was
restored.
The part at first selected by An-
drew Carnegie for himself was the
development of outside trade and '
the procurement of orders. Here he
displayed an originality so marked
that it amounted to gen-
ius. Endowed with a
ready wit, an excellent
memory for stories, and
a natural gift for reciting
them, he became a social
favorite in New York
and Washington, and
never missed a chance to
make a useful acquaint-
ance. His mental alert-
ness, ready speech, and enthusiastic temperament made him
a delightful addition to a dinner party; and many an uncon-
scious hostess, opening her doors to the little Scotchman from
Pittsburg, has also paved the way to a sale of railroad material, i
Carnegie early found that his power to promote sales grew in
proportion to his own importance. His natural love of promi-
nence was thus fortified by its commercial value ; and he lost no
opportunity of adding to his interest in the firm. As a result
"An unconscious hostess.'
UNFRIENDLY RIVALRIES 113
he was soon regarded as the sole founder and builder of
the enterprise which bore his name, and his partners, if
thought of at all, were ranked with the other machinery of tha
works.
At first Andrew Carnegie's attention was principally occu-
pied in schemes of his own construction companies for new
railroads and bridges, and the marketing of bonds. But as the
iron businesses in which he was financially interested grew in
importance, he gave them more of his time and attention. Re-
lieved of the routine of detail and the never-ending cares of
management which were his partners' daily lot, he had a mind
free to range over the industrial field, picking up scraps of
information concerning the requirements of railroads, and bring-
ing news of many a large contract. Supplied with daily reports
of the product of every department of each of the works, he had
leisure to make comparisons, and to prod with a sarcastic note
any partner or superintendent whose work did not rank with the
best. In time he became very expert at these postal proddings ;
and with half-a-dozen scathing words scribbled on the back of
his address card, he could spur the best of his managers to still
more heroic achievements. Captain Jones, who was too high-
spirited a war-horse to brook such spurrings, sent in his resigna-
tion with almost rhythmical periodicity, and was then tempted
back into harness by a handsome gift and still handsomer apol-
ogy. As he put his head into the halter again, he would fling
a gibe at the other managers who took their rowellings more
tamely. " Puppy dog number three," he would say in sarcastic
parody of the scribblings from New York, "you have been
beaten by puppy dog number two on fuel. Puppy dog number
two, you are higher on labor than puppy dog number one."
And so on. This was the lighter side of the system of un- .
friendly competition which Andrew Carnegie originated and fos-
tered. Some of these managers and partners did not speak to
each other for years, so skilfully were their jealousies and rival-
ries played upon ; and there was hardly a man at the head of
8
INSIDE FINANCIAL HISTORY
any department of the Carnegie concerns whose flanks were not
ripped open, in the fierce race for supremacy. Some, like Cole-
man, Shinn, Scott, Griffin, Kennedy, Abbot, and Walker, re-
volted and flung back the taunts with interest. Others let their
anger be transmuted into fresh energy and a determination to
win. These are the ones who remained and became " young
geniuses. "
" You cannot imagine the abounding sense of freedom and
relief I experience as soon as I get on board a steamer and sail
past Sandy Hook," once said Andrew Carnegie to Captain
" Carnegie did not roost in the tree. . . . He would
sit afar off, on the rail-fence, apparently idly watching-
the spaders and waterers and trimmers and caterpillar-
killers, all desperately at work, with the sweat stream-
ing. Presently he would descend from his rail-perch,
catch up a great club and lay frantically about him.
Bruised skulls here ; broken skulls there ; corpses
yonder ; fellows with raw heads and aching- bones,
crawling rapidly into the cover of the tall grass ; im-
precations filling the air. A scene of peaceful industry
transformed into a shambles. Grinning- grimly at his
club, Carnegie would stroll back to his rail-perch,
usually Skibo." "The Men who Made the Steel Trust" by
David Graham Phillips.
Jones. " My God, think of the relief to us ! " exclaimed Jones
with his usual bluntness. The retort was not all in jest.
In his social campaign Andrew Carnegie did not neglect the
quest for political influence. The Government brooded lov-
, ingly over the industries which paid their owners fifty to a hun-
dred per cent, per annum ; and there is a law of political equiva-
lents which Mr. Carnegie never ignored. The leaders of both
parties became his intimate friends ; and liberal subscriptions to
r their respective campaign funds justified his reliance on their
favor. "How would you like to invest $10,000 in the sena-
torial fight in ? " wrote James G. Elaine in 1886. As the
"A BAND OF DEVOTED FRIENDS" 115
Keystone Bridge Company had an uncollectable account of
some $200,000 against one of the junior American republics
for a steel building at the New Orleans Exposition, Mr. Carne-
gie was glad to make the investment ; and the friendly offices of
the State Department secured an early settlement of the claim.
No one had more faith than Carnegie in the helpful effect of a
congratulatory telegram to a president-elect or a new senator;
nor did ever a Scotchman better gauge the trade possibilities
of a dinner at which Western congressmen might meet the
great ones of earth in literature and philosophy. Never was
" My partners are not only partners, but a band of
devoted friends, who never have a difference. I have
never had to exercise my power, and of this I am very
proud."
" I never enjoyed anything more than to get a sound
thrashing in an argument at the hands of these young
geniuses."
' ' When I could not bring my associates in business
to my views by reason I have never wished to do so
by force. As for instructing or compelling them under
the law to do one thing or another, that is simply ab-
surd. I could not if I would, and I would not if I
could." Andrew Carnegie.
band wagon driven with such skill. The box of Carnegie's
chariot became the "seats of the mighty." Herbert Spencer's
acquaintance was made on board a transatlantic liner, as was
that of sundry British peers ; and the visits of these personages v
to the Pittsburg works were reported in a thousand newspa-
pers from Maine to California and from Land's End to John
O'Groats.
And so a politico-social campaign went on hand in hand
with the rail, bridge, armor-plate, and structural-steel business,
through seasons of opera, concerts, lecturings, and book-publish-
ings, until the name Carnegie was written in bright letters
n6
INSIDE FINANCIAL HISTORY
across the sky of two hemispheres, and people forgot that there
were any other steel works in the world.
Meanwhile in Pittsburg the partners worked steadily on,
building dollar by dollar the great golden pyramid by which
their majority stockholder was to be immortalized.
Steel works by night.
Copyright by S. S. McClure Co.
CHAPTER VIII
QUARRELS AND EJECTURES
DESPITE this great and uninterrupted good
fortune, the internal diScord in which all
the Carnegie enterprises were born and
brought up continued without abatement,
and wrought many changes in the person-
nel of the organization. Ranking with
other evolutionary factors in the development of the business,
and more influential than any in stamping it with the Carnegie
personality, these disagreements are deserving of a more than
passing reference.
At the organization of the steel company, Andrew Carne-
gie's interest was one-third of the whole; but it appears Jrom
a printed statement of Mr. Shinn that he early developed " a
sentimental desire to have an even half." This he got, and
more, as one by one the founders of the organization dropped
away from it.
The first to go was Mr. Coleman ; and his interest was
bought by Mr. Carnegie "after a bitter quarrel between them,"
to quote from a letter addressed to the author by one of the old
members of the corporation. Before its purchase, however,
Andrew Carnegie repeatedly speaks of this Coleman interest as
a desirable acquisition. In the letter of April I3th, 1876, now
before me, immediately following the exclamation quoted,
" Where is there such a business ! " he goes on to say :
" I want to buy Mr. Coleman out & hope to do so. Kloman
will have to give up his interest. These divided between Tom,
Harry You and I would make the Concern a close Corporation
Mr. Scott 9 loan is no doubt in some Bankers hands & may also
117
us QUARRELS AND EJECTURES
be dealt with after a little then we are right & have only
to watch the Bond conversions."
Photographic reproduction of a letter written by Andrew Carnegie on April i3th,
1876, in which he outlines plans for the purchase of partners' interests.
In a letter written a little earlier he mentions the easy terms
on which he hoped to acquire the Coleman interest :
"Yesterday in talking with Mr Coleman ... I said I
would be willing to take his 100.000$ stock 5 years at Par 6%
int pr ann payable semi annually principal payable after 5
years in i 2 & 3 years say He wanted much better bargain
but I would do no better finally he said to write Tom what I
offered & he would talk over it I suppose it will be arranged."
And so it was. At the same time disagreements arose
among the other members of the firm, growing out of the price
A SCHEME OF ELIMINATION 119
to be paid the Lucy Furnace Company for pig-iron ; and Messrs.
T. M. Carnegie and Phipps sold half of their stock in the Edgar
Thomson to Andrew Carnegie, refusing to engage in the erec-
tion of a second Lucy stack unless he bought it. The dispute
concerning pig-iron was finally settled by a sliding scale follow-
ing the prices of rails; but before long fresh troubles arose
through the inferior quality of the Lucy product. On April
27th, 1877, Mr. Shinn, general manager, in a letter marked
" private and confidential," wrote to Andrew Carnegie as follows :
" Another matter comes up in this connection for most seri-
ous consideration. It is this. If the L. F. Co. is to furnish
us the most, or all of, our metal, it is of the utmost consequence
that we should have the fullest confidence in each other, and
that we could feel assured at all times, that no material would
be used to cheapen the metal, that would or could injure our
product. That the cinder used last year did this I am very well
satisfied ; and when Mr. Phipps assured me in January last that
no cinder was being used, and that no change would be made
without consulting or advising us, I felt easy ; but we have had
some ' split ends' among our Lake Shore rails and now comes
the (to me) painful rumor that cinder is being used. You are
most interested in our getting and keeping a reputation for
making the best rails in America, and to do that we must use
the best material. My reputation, as well as my capital, is in-
volved in the matter, and if I am to make it my life occupation,
and cut loose from all RR. associations, it can only be, as you
can readily see, upon a basis of full confidence between us, and
between us all as associates, in all our relations."
The difficulties thus arising, joined no doubt to the ever-
increasing output of the steel works, developed in the partners
of the Edgar Thomson Company not interested in the Lucy
furnaces a determination to make their own pig-iron. And
thus it came about that the Edgar Thomson people erected
their own blast-furnaces and inaugurated a new era in iron-
making. But the cabal resulting from these disagreements
precipitated the "ejecture" of those who were most strenuous
in their opposition to the Lucy Company having any undue ad-
vantage through their connections with the Edgar Thomson.
120 QUARRELS AND EJECTURES
The next one to go out was Andrew Kloman, under circum-
stances already related. He had an interest of $50,000 in the
Edgar Thomson, which Andrew Carnegie acquired.
Then came the little fellows who held the convertible bonds
and wanted stock for them. To these Andrew Carnegie was
frank enough to say that they were not wanted and that their
most profitable course would be to quietly take back their money
and get out. The privilege of conversion was highly valued
when these bonds were sold, because it gave their holders a
speculative chance of becoming permanently interested in the
concern if it proved successful, and if not they still held a lien
on a property that had cost three times the sum of their mort-
gage. But the privilege was disputed; and in most cases the
bondholders chose to accept their money rather than go into
litigation with the now powerful corporation. Young Gardiner
M. McCandless, however, insisted on his rights. He was reluc-
tantly admitted to the firm, and became Carnegie's secretary.
Colonel Scott and Andrew Carnegie had a timely quarrel,
and the former took back his money, declaring that nothing
would induce him to become permanently interested in the
Edgar Thomson. As for Mr. J. Edgar Thomson, he died be-
fore the bonds matured, and his executors also waived their
rights and accepted cash in discharge of the obligation.
The other partners included in the scheme of elimination
were under a surveillance which they little suspected. Some
of them had engaged in a disastrous stock speculation, which
Andrew Carnegie, referring to Mr. McCandless' share in it,
characterized in one of his letters as " miserable conduct," and
hinted at certain changes he had long had in mind. But before
this he wrote to Mr. Shinn (May ist, 1877) :
"There are possible Combinations in the future
It is n't likely McCandless Scott & Stewart will remain
with us. I scarcely think they can I know Harry & Tom
have agreed with me that you out of the entire lot would be
wanted as a future partner & I think W3 will one day make it a
DEATH OF McCANDLESS
121
partnership Lucy F Co U Mills, E T &c & go it on that basis
the largest and strongest Concern in the Country."
Mr. McCandless, however, was eliminated by the kindly
hand of death; and Andrew Carnegie's grief was intense and
profound. Writing from Bombay on February 22d, 1879, where
he heard the sad news, he says :
" It does seem too hard to bear, but we must bite the lip &
go forward I suppose assuming indifference but I am sure none
DAVID McCANDLESS,
First Chairman of the Edgar Thomson Steel Company.
of us can ever efface from our memories the image of our dear,
generous, gentle & unselfish friend To the day I die I know
I shall never be able to think of him without a stinging pain at
the heart His death robs my life of one of its chief pleasures,
but it must be borne, only let us take from his loss one lesson
as the best tribute to his memory, let us try to be as kind and
122 QUARRELS AND EJECTURES
devoted to each other as he was to us. He was a model for all
of us to follow One thing more we can do attend to his
affairs & get them right that Mrs. McCandless & Helen may be
provided for I know you will all be looking after this & you
know how anxious I shall be to cooperate with you."
The partners accordingly carried Mr. McCandless' interest
undisturbed until Mr. Carnegie's return the following summer.
The great profits made during this period have been adverted to,
as well as Carnegie's joy on Mount Etna or some such elevation.
Despite this, he insisted on the purchase of Mr. McCandless'
interest at the book value shown by the appraisement made be-
fore Mr. McCandless' death. The member of the old corpora-
tion previously quoted writes me :
" But this decision was not made until late in July follow-
ing, after Mr. Andrew Carnegie's return from his trip around
the world, when large profits had been made and still larger
were shown by the orders entered on the books for delivery dur-
ing the following nine months. . . . Legally the company acted
fairly."
No share of these profits was included in the price paid to
Mrs. McCandless, and she only received some $90,000 for her
husband's interest. It had cost $65,000 in cash.
Mr. Shinn was the next to go out of the concern ; and the
story of his leave-taking found its way into the courts. When
Mr. McCandless died, Mr. Shinn expected to be made chairman
in his place. He was the largest stockholder after the elder
Carnegie ; and as he had done much to make the business a suc-
cess, he felt that his services and interest entitled him to the
most honorable position in the company. But Carnegie, who
controlled the board, had left orders before leaving on his trip,
that in the event of a vacancy in the chair his brother was to
be elected to fill it. This was accordingly done, Shinn protest-
ing by letter to Carnegie in Egypt, and plainly setting forth his
claims and disappointment. Carnegie replied, urging Shinn to
" let the matter rest until my return, & we will meet as friends
THE FIGHT WITH SHINN
123
desirous of pleasing each other, & I am sure our happy family
will remain one. "
Shinn's claim was a reasonable one, judged in the light of
the letters he had received from Carnegie.
" Remember I can see no fault with your management as it
is," Carnegie wrote him in August, 1876.
" On the contrary I assure you there are few nights in which
before sleeping I dont congratulate myself at our good fortune
in having you there Tom and Harry ditto but we. dont think
we can have too much of 'so good a thing ' & want somehow or
other to get you root & branch."
A)e * ,~ j?vL+. ,)^
c* &it>
J <2 c/ A*-~T~st3
Photographic reproduction of part of a letter from Andrew Carnegie to William P.
Shinn.
Again :
" I like the tone of your personal letter. Much Have al-
ways known you would find it necessary if E. T. proved what
124 QUARRELS AND EJECTURES
we expected to give it all your time and thought It is a
Grand Concern & sure to make us all a fortune. With you at
the helm, & my pulling an oar outside, we are bound to put it
at the head of rail making concerns
My preference would be for you to double your interest &
manage it to the exclusion of everything else we to carry the
second 50.000$ until you could pay it & allow you to draw on a/c
profits any sum required for expenses, but this shall be as you
prefer. We shall not quarrel about Your Compensation "
Accordingly Shinn had resigned his position on the rail-
roads, had bought a part of the Coleman interest, and was now
giving his whole time to the management of the Edgar Thom-
son works.
On the elder Carnegie's return, however, the chairmanship
was permanently vested in his brother Tom.
Meanwhile other matters of dispute had arisen between
Shinn and his colleagues which had become the subject of out-
side gossip and comment ; so that the slight was doubly felt by
him, and he sent in his resignation. In his letter of withdrawal
from the management of the company, dated September i3th,
1 879, he says :
" I have full confidence in the pecuniary success of the E. T.
S. Co. Limited and purpose to remain your business associate;
and it will be my desire, as it will be my interest, to advance
its success by any and all means in my power. "
This, however, did not accord with Carnegie's plans, nor
with the policy, now first inaugurated, that no officer of the
company should retain his interest after he had resigned his
office ; and a committee was appointed by the Board of Managers
to confer with Mr. Shinn about the purchase of his interest.
This committee consisted of John Scott and Andrew Carnegie.
The former has reduced his statement of the transaction to
writing. It is as follows :
*In this and other Carnegie letters the spelling and punctuation of the
originals are preserved.
Plate VI,
WILLIAM P. SHINN
FIRST MANAGER OF THE EDGAR THOMSON STEEL WORKS
"MALICIOUS MENDACITY" 125
'In the month of September 1879, the latter part of the
month, the E. T. Board met and accepted the resignation of Mr.
Shinn. At the meeting the board appointed Mr. Carnegie and
myself to confer with Mr. Shinn about the purchase of his in-
terest- in the Company. After the board adjourned Messrs.
Carnegie, Shinn and myself remained, the others having retired.
Mr. Shinn then proposed to sell his whole interest for a certain
sum, the amount I have forgotten. Mr. Carnegie refused to
recognize that the stock in dispute had any value to him. Mr.
Carnegie offered Mr. Shinn on behalf of the E. T. Co. one hun-
dred and five thousand dollars for his interest standing in his
name on the books of the Company, which offer Mr. Shinn de-
clined. Some time during the interview Mr. Carnegie made the
remark that he would rather have given one hundred thousand
dollars than have Mr. Shinn leave.
The next day when the board were about ready to meet,
knowing Mr. Shinn was at the office of F. Wayne Co. I went
up to see Mr. Shinn and urged him to accept the offer of $105,-
ooo which had been made him the day previous by Mr. Carne-
gie. At my earnest solicitation Mr. Shinn finally gave his con-
sent to accept the offer. Mr. Shinn shortly after came down to
the Edgar Thomson office and asked Mr. Carnegie and myself
to come out into the hall. Mr. Shinn then stated to Mr. Car-
negie and myself, that he was willing to accept the offer of
$105,000 whenever they could agree on a satisfactory agreement
to refer the question of the stock in dispute to arbitrate. This
being reported to the board, they authorized the officers to close
the purchase. The board did not make the condition for the
agreement to arbitrate, that having been done by Mr. Shinn."
The agreement to arbitrate here referred to concerned the
right and title of Mr. Shinn to the stock which Andrew Carne-
gie had sold him out of that which he had bought from Messrs.
Coleman, Phipps, and T. M. Carnegie. It was a full share of
$50,000. Mr. Carnegie denied Shinn's right to this stock and
the premium to which it had advanced, on the ground that part
of the consideration Shinn had agreed to pay for it was that he
would remain general manager of the works as long as Mr. Car-
negie wanted him. Shinn indignantly repudiated such an un-
derstanding, which he characterized as " slavery; " and the mat-
ter was submitted by agreement to the arbitrament of Messrs.
126 QUARRELS AND EJECTURES
B. F. Jones, John W. Chalfant, and William Thaw, prominent
business men of Pittsburg.
The documents in the case assumed voluminous proportions,
as the disputants brought charge and countercharge against each
other ; and some of them became almost virulent in character.
Andrew Carnegie injected into his statement of the case charges
against Shinn and his friends amounting to conspiracy to de-
fraud ; but unfortunately he entered into irrelevant details and
tripped up on his facts. The most singular of the lapses of
memory by which his case was injured was contained in the
following statement to the arbitrators :
" When in India I was rendered anxious by receiving a tele-
gram from him [Shinn] asking me to get an important letter at
Aden, and reply by telegraph. You can imagine what thoughts
arose. The most probable emergency that suggested itself to
my mind was that some important financial question had arisen,
and that it was necessary parties should receive my personal
guarantee in some way, and at once. It was several weeks be-
fore I could obtain the expected letter, and judge my surprise,
nay rather indignation, when the document proved to be five
closely written pages in Mr. Shinn's own handwriting, setting
forth his personal disappointment and dissatisfaction at the
board of managers not having seen fit to promote him to the
chairmanship, in place of our late lamented friend Mr. McCand-
less, I was requested to telegraph a reply, instructing the board
to undo its action. Instead of this, I wrote an indignant answer,
but as there were many days before the mail left, I had time to
reflect, and finally destroyed the letter, and sent instead a short
note asking him to await my return."
Shinn's answer, for a few pages, was a clever piece of judi-
cial reasoning; but having been accused in no equivocal terms
of dishonorable and contemptible practices, he later allowed
himself the free use of his somewhat caustic pen, and marred
his otherwise able presentation of the case by charging his
opponent with " wilful and malicious mendacity. "
"In regard to his [A. C.'s] statements," he says, "it may
well be said as has been said of a much more prominent person,
SHINN "ON TRIAL" 127
'Where most people remember, his lordship fancies, and in his
case what is most convenient naturally offers itself. This has
very much increased his brilliancy, for the process leaves its
practicer utterly unhampered. But nobody should ask for both
strict accuracy and Lord B.'s quick free wit. It is demanding
an unreasonable combination.' So much on the 'go-as-you-
please ' style is Mr. Carnegie's historical account of our transac-
tions, that the above quotation is unavoidably suggested. . . .
Mr. Carnegie refers to a telegram which he received in
India, asking him to get an important letter at Aden, and reply
by telegraph, and tells you of his emotions when he re-
ceived it.
I sent no such telegram to Mr. Carnegie while he was in
India, nor indeed was any such telegram sent him at any time.
The letter he refers to was written to him Feb. 22nd, 1879, ad-
dressed to him at Aden, which was the address he gave for let-
ters to be sent at that date. The author of 'Around the World '
says: 'Bombay, Monday, Feb. 24th, We sailed at six in the
evening by the splendid P. and O. steamer, Pckin/ that being
the date he left India. On March I2th we received a telegram
from him dated Cairo, Egypt, and on that date I telegraphed him
as follows :
Carnegie, Cairo. Bison, Cling, Black, Cloak, Angel, Feb.
22nd, Aden, Bacon, telegraph and mail. Shinn.
The first four words related to our profits in Jan. and Feb.,
the balance is translated thus : Angel. Have you received our
letter of Feb. 22nd, Aden ? Bacon. Where shall we address
you, telegraph and mail ?
Not one word, as you will see, about answering by tele-
graph, or about letter being important, and sent sixteen days
after he left India.
But you would expect a matter which caused him so much
anxiety as he alleges to be mentioned in his letters, and what
does he say?
In his letter dated Bombay, Feb. 22nd, he does not mention
it, for the good reason that he knew nothing of it. In his letter
dated Sorrento, March 23rd, the first received after he got the
telegram, he writes,
'I expected your Aden letter to-day, but next mail will
undoubtedly bring it, reaching me at Naples, Wednesday even-
ing on our arrival.'
In his next, dated Rome, March 29th, he says :
'Yours from Aden not yet received although I ordered it
here. May come Tuesday, when I will telegraph/
123 QUARRELS AND EJECTURES
You find no trace of anxiety or other deep emotion in these
letters. . . .
To complete the record I inclose my pressed copy of the
Aden letter which instead of 'five closely written pages/ con-
sists of two closely written and one-half page, not very close.
In it you will look in vain for any request to telegraph a reply.
In fact the whole of these emotions over the Aden letter seem
to be a case of 'reflex action ' excited by the claim in contro-
versy.
You will note in his reply to the Aden letter that he says :
* Let the matter rest until my return and we will meet as friends
desirous of pleasing each other, and I am sure our happy
family will remain one.' This was his 'indignation' referred
to.
He has told you how we 'met as friends ' in the first con-
versation we had on the subject, when he says : 'And upon my
return and before any question of this claim arose, I told him I
had twice already bought his life work,' etc. ; he also insulted
me still further by telling me, in reference to the increase of
salary voted me unanimously by the Board, 'You might as well
have put your hand in my pocket and taken out $750 ' (his half
of it).
On the same day he told another person who subsequently
informed me that he 'hoped most sincerely he (I) would resign
his (my) connection with the E. T. Steel Co., Limited, as he
was determined to get rid of him ' (me), and later on, in the same
conversation, he said I had better resign now, as he would make
it so warm for me that he would have my resignation before
Christmas. (Sworn evidence of this statement can be had if
desired by the arbitrators.)
Without further conversation with, or notice to me, at a
meeting of the Board of Managers held late in July, at which he
had no official standing or right (not being a member), he in-
sultingly demanded my resignation as Treasurer, under the false
pretence that I had myself suggested it in my Aden letter,
which pretence he repeats in his statement to you. . . .
He thus took from me, as by violence, the responsible and
honorable office of Treasurer, which I had held since the forma-
tion of the company and now comes before you asking 'equity,*
alleging that I left the company without his consent.
I myself saw a letter in his handwriting, in which he said,
referring to me byname: 'Thank God his name is off our
paper,' and 'Mr. Shinn is on trial,' etc.
Under these circumstances you will not wonder that I left
CHARGES OF CONSPIRACY 129
Mr. Carnegie's company, and I do not therefore feel called upon
to reply to his history of my departure."
To all this Carnegie retorted in kind, becoming if possible
more offensive than before in his charges of conspiracy.
" In a very short time," he says, " the Edgar Thomson
Company would have been fleeced upon most of its supplies.
With the railway manager bribed and the purchaser of our
supplies interested, the combination seemed complete, and does
credit to the genius of our late general manager."
This ended for the time being the effort at a "peaceful "
settlement, for Shinn angrily revoked his agreement to arbitrate
and withdrew all the papers. On the same day he tendered
the purchase-money of the stock in dispute, and brought suit in
the Allegheny County Court. Carnegie then petitioned for
removal of the case to the United States Circuit Court, which
was granted ; and Shinn in his turn secured an order of court
for the production of the Edgar Thomson books. For obvious
reasons this was a measure distasteful in the highest degree to
the Carnegies; and when the case was called for trial on June
1 6th, 1 88 1, an adjournment was asked for an hour. The law-
yers then got together in an adjoining room and patched up
another agreement to arbitrate. The case was thereupon sub-
mitted to the same arbitrators as before on the old pleadings,
subject, however, to a re-statement of Shinn 's claim on the
question of value, and leaving that question wholly to the arbi-
trators free from the restrictions of the original submission,
which limited the premium to fifty per cent. This was an im-
portant gain for Shinn, since it left to arbitration the question
of Shinn 's right to participate in the enormous increase in value
which the stock had undergone during the previous two years.
The exact terms of the award were long kept secret ; but it is
betraying no confidence to state now that Shinn won on the
main issue and received his full claim with a substantial pre-
mium representing the increased value of his stock. It was just
under $200,000. But he lost his contention that he could re-
9
130 QUARRELS AND EJECTURES
main a member of the corporation after he had accepted service
with a competing concern.
The pleadings and answers in the civil suit were withdrawn
from the court files, so that to-day there is nothing in the
official archives but the most meagre record of the case.
The next " ejecture " was that of John Scott, in 1 882. Like
so many others before and since, it was the outgrowth of per-
sonal difficulties with Andrew Carnegie. Mr. Scott obtained,
however, a very high premium for the $50,000 which he had
originally invested in the company ; as did also Gardiner McCand-
less, who was induced to sell out the same year. Mr. McCand-
less received $183,000 for his original investment of something
like $42,000 in the convertible bonds.
Thus did events justify the amazing foresight displayed by
Andrew Carnegie when, only eight months after the opening of
the Edgar Thomson works, he outlined, in his letter of April
1 3th, 1876, the principal changes in the personnel of the organi-
zation which have just been described. It is an astonishing,
almost an uncanny, exhibition of that clairvoyant faculty for
which he has always been noted. In one aspect, too, it illus-
trates the practical working of the Carnegie motto : " Concen-
tration ! First honesty, then industry, then concentration."
A further change was hinted at in Carnegie's letters for
which the way was thus being gradually prepared. This was
the combination of the Union Iron Mills, the Lucy Furnaces,
and the Edgar Thomson Steel Works.
The causes which brought about this consolidation are not
very complex. On the one hand was the elder Carnegie's am-
bition to make the works, which were now to bear his name, as
impressive as possible. On the other hand, was the wish of his
brother and Mr. Phipps to have a larger share in such a good
thing as the Edgar Thomson Company. Forty odd per cent, in
dividends is very attractive; and no doubt both Mr. Phipps and
young Carnegie were by this time thoroughly sorry that they had
sacrificed any part of their shares in the Edgar Thomson Com-
THE PIG-IRON DISPUTE 131
pany. Accordingly a scheme of consolidation was made, and the
manner in which it was carried out is told, with much interest-
ing detail, in the following letters :
PITTSBURGH, PA., Mch. 3ist. 1881.
Wm. P. Shinn y Esq., Pittsburgh, Pa.
DEAR SIR: In 1879, tne subject was broached, I do not re-
member by whom, to consolidate the Lucy Furnace Co. and the
Union Iron Mills with The Edgar Thomson Steel Co. Limited.
We had so many disagreements and much trouble in fixing
the price of pig-iron furnished by the Lucy Furnace Co. that I
at once concluded that it was a good thing to do, and expressed
myself in favor of the scheme provided it could be carried out
on a fair basis. I was governed entirely to vote on your recom-
mendation that the proposition of 55 for the E. T. S. Co. Limd.
and 45 for the other property.
Now that I have become familiar with the subject, and our
experience of working the past year under the consolidation, I
do not think the property put in should have [been] taken at
over 30$.
Having had the utmost confidence in your judgment, in such
matters, I have a curiosity in learning what governed you in
giving the advice you did, and thought it due you to give you
an opportunity to explain how you made such a mistake.
Yours truly
JOHN SCOTT.
PITTSBURGH, April 4th. 1881
John Scott Esq. Pittsburgh, Pa.
DR. SIR: I have your letter of March 3ist, in which you
refer to the basis of consolidation of interests of the Edgar
Thomson Steel Co. Limited with the Lucy Furnace Co., Car- ]
negie Brothers & Co and Carnegie & Co. on the basis of 55'
per cent to the former and 45 per cent to the latter, and ask
how I came to recommend what you characterize as " such a
mistake."
In reply, I will state the circumstances under which the pro-
posed consolidation was first discussed, and what led me to as-
sent to the basis named.
In August 1879 I was invited to Mr. T. M. Carnegie's one
evening, where I found Messrs. A. Carnegie, T. M. Carnegie
and H. Phipps.'
The subject of the consolidation was broached, and they
132 QUARRELS AND EJECTURES
produced statements of cost and earnings of their properties as
follows :
Cost to July ist. Earnings, 1878. Six mos. 1879.
Union Iron Mills $813,000.00 153,000.00 98,000.00
Lucy Furnaces 662,000.00 120,000.00 70,000.00
Coke Works, 4/5ths 100,000.00 20,000.00 16,000.00
Total 1,575,000.00 293,000.00 184,000.00
The cost of E. T. works, exclusive of the amount expended
on furnaces and the earnings for the same period had been as
follows :
Cost of E. T. works July i, '79 $1,522,159.16
Profits, 1878 $401,800
" 6 mo. 1879 252,845
654,645.00
The costs and earnings of the two properties compared then
as follows :
Cost. Earnings 18 mo.
E. T. S. Works $1,522,000 654,645
Carnegies' Works 1,575,000 477,000
But the E. T. S. Co. had furnaces A and B well under way, and
expected to complete them by Jan. ist, 1880; and I claimed
there should be added to the cost and earnings of E. T. S. Co.
an amount equal to four-fifths the cost and earnings of Lucy
Furnaces, or to cost say $528,000
and to earnings 200,000
This made them compare as follows :
Cost. Earnings 18 mo.
E. T. S. Works $2,050,000 $854,645
Carnegies' Works 1,575,000 477,000
the proportions of which were relatively
Cost. Earnings 18 mos.
E. T. S. Works of cost 56^ of earnings 64 per cent.
Carnegies' Works " " 43 T 5 7 " " 36 "
the average of which gave
E. T. S. Works 60
Carnegies' 40
and I therefore proposed to accept 60 per cent for E. T. S.
works.
T. M. Carnegie demurred to this, alleging that the E. T. S.
Works had been unusually profitable in past 18 months, while
Plate VII,
ANDREW CARNEGIE
IN 1884
SERIOUS CHARGE 133
the furnace property had been very unusually depressed, pig-iron
having sold at very low prices; and he insisted on 50 per cent
for the Carnegie Works.
A. Carnegie then pointed out that the E. T. S. Works had a
debt of $186,000 on its land, which would have to be assumed
by the joint interest, which if deducted would allow only $1,864,-
ooo as cost of E. T. S. Works, or 54 per cent of the whole.
Upon these considerations, and for the reason named by you,
viz. to destroy the unceasing strife and bad feeling in the fixing
of prices for metal bought of Lucy Furnace Co. in which I had
been annoyed almost beyond endurance, I suggested 55 per cent
as a compromise which was agreed to.
It was not mentioned, nor was I aware, that the land on
which the Lucy Furnaces and Union Iron Mills were built was
not owned by them; and when Mr. Carnegie urged the mort-
gage on the E. T. S. property in reduction of its value, he knew
that a similar and much more important incumbrance was on the
Union Iron Mills property, which I now understand was only
leased, at a rental of $4,855 annually and liable to be greatly
increased when present leases expire.
This is equal to a mortgage of $ 80,900
Mortgage on Lucy Furnace property 160,000
Making a total incumbrance of $240,900
of which no mention was made at the time, of which I had not
the slightest knowledge or suspicion, and which good faith re-
quired should have been set forth.
Had I known of these incumbrances I never would have
agreed to consolidating on the basis of 55 and 45 per cent, nor
would I have agreed to it at all, except to harmonize our inter-
ests on the point which had caused so much difficulty and hard
feeling.
I see that in the new firm of C. B. & Co. Limd. they put in
the respective properties
E. T. S. property $2,500,000 62^ per ct.
Carnegies' " 1,500,000 37^ " "
4,000,000
which is much nearer what the real proportionate value was a
year ago. Yours truly
WM. P. SHINN
134 QUARRELS AND EJECTURES
The following interesting data appeared in a foot-note to
Mr. Shinn's letter:
1880
Profits E. T. S. Works $1,625,000.00
Lucy $294,524.97
Coke 96,295.97
Union Mills 55,836.71
446,657.65
2,071,657.65
Chgd. Impts.
Lucy Fur. Co 131,259.57
Union Mills 55,200.62
186,460.19
Leaves actual profits 260,197.46
The new firm referred to by Mr. Shinn was Carnegie Broth-
ers & Co., Limited, which was organized on April ist, 1881,
with a capital of $5,000,000. Of this, $4,000,000 was repre-
sented by the Union Iron Mills, the Lucy Furnaces, certain
unimportant coke interests of Andrew Carnegie, and the Edgar
Thomson works. The rest was to be paid in cash. In this
consolidation the interests were apportioned as follows :
Andrew Carnegie .$2,737,977.95
Thos. M. Carnegie 878,096.58
Henry Phipps 878,096.58
David A. Stewart 175,318.78
John Scott 175,318.78
Gardiner McCandless 105,191.00
John W. Vandervort 50,000.00
The last named was Carnegie's companion on his trip around
the world. He soon fell sick and withdrew from active business
to California, where he died in 1897.
The earning powers of the several properties are given in the
foot-note to Mr. Shinn's letter quoted above. Their estimated
values are given in the articles of incorporation as follows :
Mortgage.
Edgar Thomson works $2,385,000 594,
Coal mines and Coke ovens at Unity 80,000
Ore lands at Patton 35,ooo
Lucy Furnaces 750,000 160,000
Union Iron Mills 630,000
Four-fifths interest in Larimer Coke works 120,000
$4,000,000
INCOHERENT PLANS 135
The advantages of industrial consolidation had not, at this
date, received any general recognition ; and, as we have seen, it
was other considerations than increased efficiency and economy
that prompted the first imperfect combination of the Carnegie
properties.
As illustrating how vague and incoherent were the plans of
the group of men controlling the property at this time, it may
be mentioned that two months after the consolidation described,
the Lucy Furnaces were taken out of it and turned over to Wil-
son, Walker & Co. During these eight weeks, however, their
value was supposed to have increased from $750,000 to $1,000,-
ooo ; and Messrs. John T. Wilson, James R. Wilson, and John
Walker each subscribed for $142,857 of stock in the Lucy
Furnace Company, Limited, with its million-dollar capital. An-
drew Carnegie's share in it amounted to $420,627; the rest of
the group holding interests from $58,539 in the cases of Thomas
M. Carnegie and Henry Phipps, to $3,333 in the case of John
Vandevort.
CHAPTER IX
A GLANCE AT PROCESSES
AT this point a brief description
of the processes of iron and steel
making is necessary in order that
readers unfamiliar with
these arts may intel-
ligently follow the
course of this narra-
tive. While it is not
Blowing engines for blast-furnace. possible that Slich a
rough outline can con-
vey more than a hint of the wonderful transformations in-
volved in modern methods of iron and steel manufacture, it may
nevertheless help the reader to appreciate the nature of the
great industrial evolution we are tracing.
There is not a State in the American Union in which iron-
stone is not found. Indeed, one may say there is no consider-
able area of the earth's surface where it does not exist. The
ancients undoubtedly knew how to mine and smelt it ; but, un-
like other metals found in the tombs and habitations of vanished
races, iron, unless protected from air and moisture, rapidly
perishes through oxidation. In other words it rusts away.
The oldest known piece of wrought-iron of any great size is
found in the pillar of a temple at Delhi, India. It is sixteen
inches in diameter and weighs about seventeen tons. No one
knows when or how it was made.
Many tribes of savages existing in our own time have been
found in possession of primitive means of smelting. Speke and
Livingstone describe the miniature blast-furnaces of the natives
136
EARLY FURNACE PRACTICE 137
of Central Africa; and it is not improbable that these simple
operations were learned from the Egyptians, whose routes of
trade are now known to have penetrated into what had become
in our own time " Darkest Africa."
It is not, however, with ancient practices that we are now
concerned. It is rather with those mammoth operations which
have given a special character to modern civilization and made
it different from anything that has preceded it.
The first operation is to mine the ore. This needs no de-
scription for the present. The separation of the metal from the
earthy substances usually associated with it is effected in the
blast-furnace, where it is converted into pig-iron, the crudest
form of manufactured iron.
A modern blast-furnace is a giant structure shaped some-
what like the chimney of a kerosene-oil lamp. The point of
greatest diameter where the lamp chimney swells out to make
room for the flame is called the bosh, frequently mentioned in
this work. This furnace is filled with a mixture of iron ore,
fuel, and lime; and a blast of air is forced through it from be-
low. This draft at first was cold air ; but an ingenious English-
man discovered, sixty or seventy years ago, that the ore was re-
duced more quickly, and with a smaller consumption of fuel, if
the blast was heated before being forced into the furnace. To
the bewilderment of the scientists of that day this simple change
resulted in doubling the iron product of a given quantity of fuel.
Before that happy discovery the output of a blast-furnace had
ranged from fifteen and a half tons a week, in 1788, to thirty-
five tons in 1827; and at the former date the yearly product of
the whole of England did not amount to as much as was recently
produced in four months by a single American furnace. In
these forty years the total annual iron production of England
rose from 70,000 to 700,000 tons. In the forty years following
the introduction of the hot blast the furnace product rose from
thirty- five tons weekly to four hundred tons. This shows a
wonderful development of the art of iron production ; but the lat-
138
A GLANCE AT PROCESSES
ter figure was multiplied seven times by the Lucy furnace in the
succeeding twelve years, and almost fifteen times by one of the
furnaces built since at Duquesne.
In the early blast-furnaces the gases freed in the process of
reduction were allowed to escape in flames at the top of the
stack, illuminating the country for miles around ; but towards the
middle of the nineteenth century means were devised for utiliz-
ing this vast volume of flame for the purpose of raising steam
and heating the blast. For the latter purpose it was led from
the throat of the furnace into ovens containing iron pipes through
which the blast was blown. These iron pipes limited the tem-
perature of the blast
to that of their own
melting-point. Pres-
ently the pipes were
displaced by enor-
mous stoves contain-
ing fire-brick, against
which the flames are
now directed. After
the fire - brick has
been brought to a
great heat, the gas is
turned into a second
stove, to perform the same service there; while the air-blast
is admitted to the first stove, where it is raised to a very
high temperature 1200 to 1600 Fahrenheit. So in alterna-
tion the stoves are thus heated, and the blast passed through
them one after the other, on the regenerative principle invented
by Dr. Siemens. To the higher degree of temperature thus
secured is due a large part of the increased output of the Lucy
and Isabella furnaces during their long contest. In the first
photograph of the former made in 1873 the stack seems to stand
alone, because the hot-blast stoves were small at this date. In
the second illustration the stack can hardly be seen for the stoves,
Lucy furnaces, showing hot-blast stoves.
A CHILLED STACK
139
which, indeed, to the untrained onlooker, seem the most impor-
tant part of the plant.
At the time the Lucy furnace was built the lines of blast-
furnaces were not the graceful curves of the lamp chimney that
Drawing the finished coke. The method of charging the raw coal is also seen. It is
dropped from the donkey-car through an opening in the top of the oven.
has been used to illustrate them. They were almost straight
lines ; and the bosh formed an angle. A few months after the
Lucy had been started, the mass inside got chilled, so that the
metal stopped running down. The furnace was therefore emp-
140
A GLANCE AT PROCESSES
tied ; and to the surprise of everybody connected with it, the
wooden lining that had been built to protect the inside from
the first loads of ore, etc., which were poured into it, was found
in some places almost intact. Of course it ought to have been
burnt up; but in-
stead of that large
parts remained and
were hardly charred.
This set some men
thinking; and the
outcome of their
cogitations was the
idea that the shape
of the furnace was
all wrong. It was
evident that in this
furnace the zone of
Casting-pit of blast-furnace, where the metal is made
into "pigs."
fusion did not ex-
tend beyond the narrow range of the central funnel, and that,
consequently, the benefit of its large interior capacity was
mainly lost. Builders therefore gradually changed the shape
of furnaces, cutting out all angles, lengthening the curves,
and increasing the size of the hearth. In 1872 the Lucy
furnace was 75 feet high, 20 feet in diameter at the bosh,
and 9 feet wide at the hearth. The product was fifty to sixty
tons a day. In 1902 the same furnace was 90 feet high with
the same diameter of bosh as formerly, and I2j4 feet wide at
the hearth. The product has been as high as 500 tons a day
and 1 2,000 tons a month ; and for every man employed the
average product of pig-iron is now two tons a day, as against
one ton thirty years ago.
The fuel first used in blast-furnaces was charcoal ; but the
threatened depletion of the forests of Britain caused the substi-
tution of pit-coal. As early as 1773 charred coal or coke was
tried in England ; but its use did not become general until well
PROCESS OF COKING 141
into the last century. In America charcoal was largely used
long after it was found that anthracite, which is a natural coke,
was suitable for smelting. As related elsewhere in this work
the use of coke or "cake " coal did not become general until
the early seventies. It was the proximity of the Connellsville
beds of bituminous coal which is singularly free from sulphur
and other impurities that gave Pittsburg its leadership in the
iron industry of America.
The purpose of changing this coal into coke is to rid it of
the sulphur and phosphorus which is found in greater or less
quantities in all soft coals. There is a saying among iron-workers
that these elements are to iron what the devil is to religion. As
a matter of fact they are worse ; for there are some good work-
able religions that could not get along without the devil, but
there is no good workable iron with sulphur and phosphorus in
it. The process of coking consists of baking the coal in hot
ovens, so that, to continue the theological simile, the diabolic
parts are driven off as flaming gas from the top of the oven.
These flaming ovens give a wild and picturesque aspect to the
coking country as one passes through it by night. Presently
the coal fuses into a cake, which is cooked for forty to sixty
hours, until hardly anything but carbon remains. This cake
is then drenched with water, and pulled out of the oven by a
door which up to this time has been sealed. The sudden cool-
ing of the mass splinters it into the form so familiar to all who
travel on the railroads. In the best furnace practice seventeen
or eighteen hundred pounds of coke are now used to smelt one
ton of pig-iron. In the Lucy furnace the amount first used
was about double that amount.
The lime which accompanies the ore and coke into the blast-
furnace produces certain chemical changes which are too com-
plicated for description here. It also serves as a flux to carry
away the earthy matters with which the iron is associated in its
mineral form. These residues constitute the slagj or scum of
the liquid iron.
142
A GLANCE AT PROCESSES
The furnace is tapped about every four hours ; and the
molten iron runs, a limpid, glowing stream, into channels and
moulds that have been prepared for it, where it cools and hard-
ens into shapes which have suggested the name "pig." Hence
pig-iron. The channel leading to the pigs is called the "sow, "
and as they are seen lying together the simile is obvious.
In modern practice the iron is usually poured into enormous
ladles, which are
drawn by locomo-
tives to the convert-
ers, where it is made
into Bessemer steel.
Before following
a train of these la-
dles to the convert-
ing house, it is worth
while to see what be-
comes of the pigs of
Train of ladles. iron as SOOn as the 7
are cold enough to
be taken out of their moulds. In former days they were usually
converted into wrought-iron in such places as the Union mills.
Placed in a puddling-furnace an oven with a concave floor
with a certain amount of ore for " fettling," they were reduced
to liquid form and boiled and stirred about until most of the
impurities were driven off. When the bubbling mass thickened
and assumed a pasty consistency, the puddler passed a long bar
through a small opening in the furnace door, and rolled the paste
into a ball. This ball was then withdrawn and carried, dripping
with liquid fire, to a queer arrangement of big wheels which
crushed and rolled the ball over and over, squeezing out all sorts
of useless stuff and further solidifying the mass. This machine
has been mentioned in another chapter as the squeezer. The
ball was then re-heated, and passed under hammers and through
rollers; and the kneading it thus repeatedly underwent gave it
THE JONES MIXER 143
the fibrous quality of wrought-iron. When it had been finished
into bars it was ready for the market. This was the material of
which Kloman made his famous axles.
The Bessemer process of steel-making has displaced the art
of puddling, except for a few special purposes. Steel rusts more
readily than iron; and for this reason chains for cables are still
made of puddled-iron.
Cast-iron is pig-iron mixed with ore and scrap, melted in a
cupola and then cast into moulds of the shapes required. When
cold it is drilled, planed, and finished into the heavy parts of
machinery where great resistance is called for. When fractured,
cast-iron is seen to have a granulated form, like dirty sugar ;
whereas wrought-iron has a fibrous quality that makes it ductile
and tough.
And now it is necessary to return to the train of ladles be-
fore the contents cool. Covered with coke dust to retain the
heat, the liquid pig metal can be transported a dozen miles to a
converter; and this is sometimes done. At every curve and
bump of the locomotive, some of the metal slops over the edge
of the ladle, and breaks into a galaxy of shooting stars. Pres-
ently the train arrives alongside the Jones mixer, a huge iron
chest lined with refractory bricks, and capable of holding fifty
to two hundred and fifty tons of liquid pig metal. It is hung
on trunnions, so that it may be swung to and fro like a cradle ;
for here the contents of many ladles are mixed to equalize the
variations of both chemical composition and temperature of the
furnace product. Before the invention of the mixer, the pig-
iron had to be re-melted in a cupola before it could be converted
into steel. One by one the ladles are emptied into the mixer,
the liquid flowing clean and creamy, with fairy lights dancing
over its surface. Whenever a few drops spill to the ground
they rebound in thousands of tiny points of fire, exploding with
the noise of a miniature fusillade. A boy of thirteen or four-
teen, his imp-like face black with soot, stands near the flaming
funnel of the mixer, shouting shrill directions to his fellow
144 A GLANCE AT PROCESSES
demon, who, somewhere concealed among the dark shadows of
the wheels and chains aloft, reverses the five-ton ladles with the
ease of a society woman emptying her cup of tea. At night the
scene is indescribably wild and beautiful. The flashing fire-
works, the terrific gusts of heat, the gaping, glowing mouth of
the giant chest, the quivering light from the liquid iron, the
roar of a near-by converter, the weird figure of the child and the
pipings of his shrill voice, the smoke and fumes and confusion,
combine to produce an effect on the mind that no words can
translate. Dante in his most hellish conception never ap-
proached such a reality. The most eloquent preacher that ever
described the condition of the damned was as a babbling brook
in a soft summer landscape compared with this. And who shall
tell of what goes on in the giant chest where two hundred and
fifty tons of liquid iron have just been poured, to be rocked to
and fro, a seething, swirling, bubbling mass ?
In one aspect this is the cradle of civilization. Here, in
the Jones mixer, goes on the first of the processes by which is
made the steel of locomotives, rails, and ships that link race to
race throughout the world ; of the engines of mines and facto-
ries ; of the machines of thousands of mills ; of the reapers and
harvesters of farms ; of the beams and angles and bars of which
modern cities are largely built. Here rocking in this huge box
are the springs of chronometers that keep pace with the prog-
ress of the stars; the needles that point the manner's way;
the tubes through which the astronomer watches the birth of
worlds ; the disks that talk through a thousand "miles of space ;
and most of the other miracles that make the sum of modern
civilization. To the intelligent onlooker there is as much poetry
in Jones' box as there was in Pandora's ; and even this does not
contain all the wonders of the beautiful transformations which
have given Pittsburg a yellow crown of light.
From the mixer the molten iron, now uniform in composi-
tion, is transferred to the converter. Samples have been quickly
cooled and analyzed, so as to afford a guide to future operations,
BRILLIANT PYROTECHNICS 145
that the final product may have just the qualities of resistance
or ductility required of it. With the same spluttering and scin-
tillations as before, the liquid is poured through the lower open-
ing of the mixer into fresh ladles, which in turn are emptied
into an egg-shaped vessel. This is the Bessemer converter, the
most beautiful and perfect piece of mechanism ever devised by
the human mind. Itself of enormous proportions and weight,
it is so delicately poised that when filled with ten or fifteen tons
of liquid iron, it can be moved at the touch of a finger. The
metal is poured into the vessel while suspended in a horizontal
position. A blast of cold air is then forced through a number
of holes in its lower end, and simultaneously the great oval
mass becomes erect. Sir Henry Bessemer has himself elo-
quently depicted the beauty of the transformation which now
takes place :
" The powerful jets of air spring upward through the fluid
mass of metal. The air expanding in volume divides itself into
globules, or bursts violently upward, carrying with it some hun-
dredweight of fluid metal which again falls into the boiling mass
below. Every part of the apparatus trembles under the violent
agitation thus produced ; a roaring flame rushes from the mouth
of the vessel, and as the process advances it changes its violet
color to orange, and finally to a voluminous pure white flame.
The sparks, which at first were large like those of ordinary
foundry iron, change into small hissing points, and these gradu-
ally give way to soft floating specks of bluish light, as the state
of malleable iron is approached. During the process the heat
has rapidly risen from the comparatively low temperature of
melted pig-iron to one vastly greater than the highest known
welding heats ; the iron becomes perfectly fluid, and even rises
so much above the melting-point as to admit of its being poured
from the converter into a founder's ladle, and from thence to be
transferred to several successive moulds."
The chemical changes accompanying this gorgeous display
are equally beautiful. The liquid pig metal contains a percent-
age of manganese, silicon, and carbon. If we could conceive
of these elements as endowed with human emotion, we might
10
146 A GLANCE AT PROCESSES
say that every particle is in love with some atom of oxygen.
The converting-vessel is the meeting place of the lovers and the
scene of their marriage. With noisy celebration the union of
the little globules of air and the tiny atoms takes place, and
emerging from the
lip of the converter
in sparkling radi-
ance the happy pairs
soar away to spend
their short lives to-
gether. Scientists
stolidly call this
marriage " chemical
affinity. " Goethe
named the similar
union of human
Filling Ingot-moulds with molten steel.
souls elective affin-
ity. " The comparison suggested is not so fanciful as it seems.
Every atom of every element in the twelve-ton charge now roar-
ing and flaming before us will eventually find and unite with
the atom of oxygen for which it has an affinity chemical or
elective it matters not. It may be this moment or the next, in
the violent ebullition of the Bessemer converter; it may be
thousands of years hence in the beam of a sky-scraper; but
sooner or later, every atom of iron as well as every atom of
silicon and carbon will find its mate in the oxygen of the air,
and so separate itself from its fellows. This is a predestination
of matter not found in theologies.
When the flame at the lip of the converter becomes white it
is a sign that the manganese, silicon, and carbon have united
with the oxygen blown through the mass and escaped into the
air. Now the iron itself is following the same course, and that
means waste. So the youth, who has been watching the con-
flagration through colored goggles from a distant platform,
touches a lever; and the huge vessel slowly bends forward so
Plate VIII,
Courtesy of S. S. McClure. Co. Copyright by the S. S. McClure Co.
BESSEMER CONVERTER IN OPERATION
OF THE
UNIVERSITY
OF
THE BESSEMER PROCESS
as to let the metal flow into the body of the converter, and un-
cover the air-holes beneath. With a mighty rush the blast now
sweeps along the surface of the metal, detaching a million minor
particles of glowing matter and sending a shower of sparks
across the converting-pit. It is the brilliant finale of the gor-
geous display. To replace a part of the lost carbon, a few
shovelfuls of spiegeleisen or ferro-manganese are thrown into
the mass, which is then poured into moulds, to solidify into
ingots of steel. When taken out of the moulds the steel is
passed under heavy rollers to give it the shapes needed for its
intended use as rails, beams, or plates, as well as to knead it into
that fibrous texture which we saw resulted from similar action
in the making of wrought-iron. The first rolling thus makes
blooms ; and these cut into lengths make billets, which again
are shaped into a hundred and one things as needed. , Such in
brief, and in rough outline, is the process of Bessemer steel
manufacture.
Henry Bessemer, who was knighted in recognition of his
beautiful invention,
took out his first
patent in 1856. Ten
years later the
world's output of
Bessemer steel
amounted to about
100,000 tons. By
1870 it reached
300,000 tons. In
the first year of the
present century it
had attained a total
of 19,000,000 tons, of which nearly 9,000,000 tons were pro-
duced in the United States.
Since 1886, however, a newer method of steel-making has
grown with even greater rapidity. This is known as the open-
steel ingot about to enter the rolls.
148
A GLANCE AT PROCESSES
hearth basic process. It is probable that this will soon displace
the beautiful and simple invention of Sir Henry Bessemer, just
as the latter displaced puddling.
Huge ingot being forged for armor-plate under the i 2 ,ooo-ton hydraulic press at
Homestead.
The advantage which the basic open-hearth possesses over
the Bessemer converter is that it enables the steel- maker to use
ores high in phosphorus. It also permits the easy working-
over of scrap, spoiled ends of billets and rails, and old stuff of
THE BASIC OPEN-HEARTH 149
all kinds. At Homestead are two large basic furnaces from
which the entire top can be removed ; and parts of old machines
weighing many tons are lifted bodily into them for re-conver-
sion. Moreover, the capacity of the largest Bessemer converter
is about fifteen tons. In the basic furnace fifty tons are often
made at once ; and the product of several hearths can be drawn
at the same moment to make an ingot of a hundred and fifty
tons if desired. This has been done at Homestead.
The basic open-hearth is simply a huge and improved pud-
dling-furnace. A bath of pig metal is used in which to dissolve
scrap of all kinds with a mixture of ore. The charge and lin-
ing of the furnace are alkaline, so as to convert the acids of
phosphorus into a neutral base, which, with other so-called
impurities, floats on the metal as slag as it is drawn off. The
process has none of the picturesque aspects of the Bessemer con-
verter. The most interesting thing about it to a layman is to
see, through colored glasses, how the steel boils and bubbles
as if it were so much milk. The bigness of it its fifty-ton
ladles swinging in space, its hundred-ton ingots under a twelve-
thousand-ton press as seen at Homestead makes it impressive ;
but the gentle boiling of steel for hours without any fireworks
or poetry, in a huge shed as empty of workmen as a church on
week-days, is not a very interesting sight. Indeed, it would
seem as if all that is spectacular will have been lost in the
manufacture of steel with the passing of the Jones mixer and
the Bessemer converter. To the chemist, however, the basic
process is full of interest; but this short description is not
designed for him. In 1886 the product of this process was
218,973 tons in America and in England, 694,150 tons. In
1902 it approximated five and a half million tons in America,
and in England three and a half million tons. The present
rate of increase in the United States is over a hundred thou-
sand tons a month.
CHAPTER X
THE RISE AND GROWTH OF HOMESTEAD
AMITY HOMESTEAD was
the name given by John Mc-
Clure four generations ago to
a quaint country seat which
he built in the bend of the
Monongahela a mile or so be-
low Braddock's crossing, and
ten miles from Pittsburg. He
is said to have been a fox-hunting Presbyterian, with all the
rigorous rectitude, blunt virtues, and frank hospitality which
this implies. Thus planting the traditions of the old home in
a new environment, he passed the picturesque place on to his
son John, and through him to his grandson Aldiel. In 1872 the
latter sold one hundred and thirteen acres to a banking and in-
surance company ; and a town was forthwith laid out and called
Homestead. The first sale of lots was made to all the old-time
accompaniments of a brass band and free junketing; and the
Pittsburg, Virginia and Charleston Railroad building across the
empty lots the following year, the town took a good start and
bade fair soon to grow as big as the older places in the region.
But the panic of 1873 came and gave it a set-back from which
it was long in recovering. In 1879 there were less than six
hundred inhabitants in the place.
On October 2 1 st of that year, however, an event occurred of
first importance in the history of Homestead. This was the in-
corporation of the Pittsburg Bessemer Steel Company, Limited,
with a capital of $250,000. The founders of this company were
all connected with the firms which had been supplied with
150
KLOMAN STARTS RIVAL WORKS 151
merchant steel for a time by the Edgar Thomson Company and,
as already related, had been suddenly cut off from supplies
through the refusal of that firm to fill orders for billets. Their
subscriptions were as follows :
Wm. G. Park, of Park Bros. & Co 5 shares, $50,000
Curtis G. & C. Curtis Hussey, of Hussey, Wells & Co. 5 50,000
Wm. H. Singer, of Singer, Nimick & Co 5 50,000
Reuben Miller, of the Crescent Steel Works 4 40,000
Wm. Clark, of the Solar Iron and Steel Works 4 40,000
Andrew Kloman, of the Superior Mill, Allegheny 2 20,000
The Singer concern made a specialty of tool cast-steel, pa-
tent rolled saw-plates, spring and plow steel, axles, tires, etc.
The Hussey firm made refined cast- steel for edge tools, homo-
geneous plates for locomotives, boilers, and fire-boxes, and cast-
steel forgings for crank-pins, car-axles, etc. Park Brothers
were the owners of the Black Diamond Steel Works, and were
in a somewhat similar line ; while Kloman had leased the Supe-
rior Mill in Allegheny and had recommenced the manufacture
of eye-bars and structural material. He was also rolling light
rails.
Kloman's lease ran out in 1879; and he decided to build a
mill of his own. He bought a small tract of land adjoining the
City Farm at Homestead, and commenced the erection of a
building 684 feet long by 85 wide ; to contain a twenty-one inch
rail-mill, two Universal mills, a sixteen- inch bar-train, and a
muck-train. At the same time the Pittsburg Bessemer Steel
Company bought some forty of fifty acres of land adjoining
Kloman's, and commenced the erection of a converting works
and blooming-mill. The two concerns were designed to work
together, Kloman taking the surplus product of the Bessemer
Steel Company and working it up into structural shapes. One
Universal mill and four steam-hammers were to be constantly
run on the Kloman patent solid eye-bars; and he gauged the
capacity of his plant at 50,000 tons of steel rails and 30,000
tons of structural material annually.
While building his own mill Kloman supervised the erec-
152 GROWTH OF HOMESTEAD
tion of the adjoining converting works; and his skill and expe-
rience, joined to those of Macintosh & Hemphill, who had the
contract for the engines, and later became stockholders in the
enterprise, proved of inestimable value to his associates.
The result was unsurpassed not only in the completeness and
efficiency of the works, but in the rapidity of their construction.
While the Edgar Thomson plant was over three years in build-
ing a delay not entirely due to the panic the Homestead
works were put in operation fifteen months after the land was
bought. The first steel was made on March iQth, 1881, and
the first rail on August Qth of the same year.
Before the mill was quite completed, however, Kloman died.
After a life of patient and fruitful endeavor, of numberless vic-
tories in the realm of invention, of successes ever ripening into
fortune but always falling at the feet of others, the pathos of
his career reached its culmination when hope was brightest.
From the very conception of the great industry whose growth
we are tracing, until the moment of his death, Andrew Klo-
man's influence persisted without a break. He founded the
business ; built the Twenty-ninth Street mill; rebuilt and made
successful the Thirty-third Street mill. He was prominent in
the Lucy Furnace enterprise ; and he worked hard for the Edgar
Thomson works. Finally the great Homestead plant was of
his founding; and even to-day some of the machines he built
there are running in testimony to his thoroughness. *
The Pittsburg Bessemer Company at once purchased Klo-
man's unfinished mill, and carried out the contracts for rails
that he had made. By September, 1881, they were turning out
200 tons of rails a day and had orders booked for 15,000 tons
at profitable prices. The Carnegies looked on with surprise
" In broad charity, in great patience, in uncomplaining endurance of
wrongs^ in conscientious veracity and uprightness of integrity, in calmness and
serenity of manner, we recognize the higher type of Christian manhood." From
the resolutions of the Board of Directors of the Pittsburg Bessemer Steel Com-
pany, on the death of Andrew Kloman,
ARBITRARY MANAGEMENT
153
and alarm. Up to this time they had been the only makers
of rails in the Pittsburg district. Here was competition at
their very door. Councils of war were held once more on Brad-
dock's Field ; for it looked as if the prosperity which had hung
so lovingly over the Edgar Thomson works had now crossed the
river and alighted upon the rival enterprise at Homestead.
Had the wisdom which governed the designing and construc-
tion of the works been maintained in their management, it is
likely that their initial prosperity would have continued until
they had surpassed their great rivals at Braddock. That the pos-
sibilities of a phenomenal success were there was brilliantly
3S*6W-^Lc.
y^ X ^'^~ '
f e e fit'/ ifJ2$&L.&
Assessment Jfo K^^,bem^i.per cent on
Shares Stock of The Pittsburgh Bessemer Steel Co., Limited
An assessment notice.
demonstrated a few years later under other leaders. But, un-
fortunately, there was no Captain Jones to weld into unity the
conflicting racial elements with which the new works were rilled.
The rail-mill was controlled by the Welsh ; and if a desirable
post became vacant, it was not filled by the next man, but by
some newly imported friend of the Welsh foreman. The Irish
were supreme in the converting works ; and in the blooming-
mill yet a third nationality was in power. Over all was an un-
reasonable and arbitrary management ever tending to open con-
flict with the workmen. In a few months this conflict came,
and set up dissensions which ultimately destroyed the corpora-
tion.
William Clark, who was put in charge of the works, was a
bitter opponent of labor-unions ; and before going to Homestead
he had incurred the dislike of the men for his prowess as a
" strike-breaker," of which he was rather proud. It was not
long before the trouble he was ever looking for came. One day
154 GROWTH OF HOMESTEAD
after the furnaces had all been charged with ingots, the men
came to him in a body and made some demand which he had
previously refused. As a stoppage would have involved the
firm in a great loss, the workmen's requirements were met, but
with mental reservations on the part of Clark. At the end of
the year he issued an order requiring employees to sign an
agreement renouncing their right to join labor-unions, and re-
quiring union men to leave their organizations at once. The
alternative presented was dismissal from the company's service.
Most of the men were members of the Amalgamated Associa-
tion of Iron and Steel Workers; and on the 1st of January,
1882, these refused to sign the agreement, and were locked out.
After the works had been idle a week, the company gave notice
that the men could not return to work, even if they signed the
agreement, unless they would accept a reduction of wages. This
intensified the bitterness of the workmen ; and the Amalgamated
Association took cognizance of the dispute.
At this time the Amalgamated Association was the most
powerful labor organization in existence, having a membership
of 70,000, and controlling every department of the iron and steel
industry. Except in a few small works, there was not a wheel
turning nor a fire burning from Maine to Texas that was not
cared for by an Association man. From the newly established
furnaces in Colorado to the oldest rolling-mill in the Keystone
State the authority of the Amalgamated Association was almost
supreme; and, generally speaking, its power at this date was
beneficently and properly exercised. Its origin may be briefly
outlined.
In 1858 some men in the Pittsburg iron-mills attempted
the formation of a society for the protection of working men
against unreasonable exactions of employers, and for the discus-
sion and reform of long-standing grievances. Inasmuch as the
new movement was regarded by employers with suspicion, the
workmen were obliged to conduct their deliberations with se-
crecy; and thus disadvantaged the movement failed. A couple
FIRST HOMESTEAD STRIKE 155
of years later the effort was renewed, and the United Sons of
Vulcan was established by the puddlers, heaters, rollers, and
roughers. The new organization won recognition from employ-
ers; and in February, 1865, it justified itself by securing the
first sliding scale of wages. Following the example of the
Sons of Vulcan came other labor organizations, until every de-
partment of iron and steel working was included in the move-
ment. After the long strike of 1874 the obvious advantages of
consolidating these different bodies led to the formation, in
August, 1 876, of the Amalgamated Association of Iron and Steel
Workers of the United States, with Mr. Joseph Bishop as presi-
dent. In January, 1880, Mr. John Jarrett took Mr. Bishop's
place ; and the contest at Homestead now came under his direc-
tion.
Mr. Jarrett at once sought an interview with the managers
of the company; and while his right to meddle in the dispute
was not questioned, he was put off from day to day with vari-
ous excuses, and was admitted to a conference only after the
gravity of the situation had been increased by mutual charges
and recriminations in the newspapers. Nothing came of the
conference ; and the labor leaders, seeing in the attitude of the
owners of the Homestead mill a disposition to. attack the Amal-
gamated Association throughout the Pittsburg district, threat-
ened to call out the men from every other mill in which these
owners were interested. " If this condition of affairs continues
at Homestead," said Mr. Jarrett, "the stockholders in the
Homestead works who have mills in Pittsburg may have to fight
the association in their own mills. We shall not much longer
permit several firms to conveniently fight us in this concentrated
shape." Response was promptly made to this threat by the
eviction of the striking workmen from the homes they had rented
from the company. The labor leaders thereupon embodied their
threat in a formal resolution, and a date was fixed for the sym-
pathetic strike.
Thoroughly alarmed the company now offered to withdraw
156 GROWTH OF HOMESTEAD
the objectionable agreement; substituting one requiring the
men to give three days' notice of an intention to stop work, and
not more than three men to give such notice at one time. This
might have been satisfactory to the men ; but they refused to
accept the reduced scale of wages. In vain the company urged
that the improved machinery at their command made the work
easier and the output greater than at similar works. The men
had won one concession and were determined not to yield a
point so important as that which remained. So both sides
made ready in the newspapers for a general strike in all the
works belonging to the owners of Homestead, to begin on the
nth of March; and the labor leaders took the opportunity
of including in their resolution three other Pittsburg mills in
which disputes of various kinds had long been pending. This
meant the calling out of about 6,000 men, with dangerous pos-
sibilities of extensions ; and the manufacturers of Pittsburg
were not unnaturally alarmed at the prospect.
It is interesting in the light afforded by a hundred sympa-
thetic strikes since, to read the nai've expressions of opinion
published at that time by the Homestead managers. Mr. Singer
" could not see how the Amalgamated Association could order
a strike in mills where there was no trouble existing between
employers and employees ; " and similar views were voiced by
others who took the employers' side of the dispute. So the
thing went on, each side daily publishing columns of protests,
accusations, and threatenings, until it seemed as though all the
iron works in Pittsburg would be involved in the struggle.
The days of grace accorded to the Homestead people thus
passed by, the dispute ever waxing fiercer in the newspapers
until the very eve of the threatened sympathetic strike, when
the company capitulated. On the iith of March the first
Homestead strike was reported settled ; and men of all classes
throughout the Pittsburg district read their papers that morning
with relief and thanksgiving. It had lasted ten weeks.
The joy was short-lived, however. The next day misunder-
THE TROUBLE SPREADS 157
standings arose between Mr. Clark and the Amalgamated Asso-
ciation concerning the force and scope of a verbal agreement
made at the time of the supposed settlement; and the strike
was resumed with greater bitterness than ever. At Homestead
there was great excitement, resulting in a pitched battle be-
tween deputy sheriffs and strikers, in outrages on " scabs," and
even in murder. Demands were made for the state militia by
the company, and requests for fresh conferences by the labor
leaders. The newspaper war was renewed ; and Clark threat-
ened to close the works indefinitely. Appeal was made by out-
side interests to the other owners, who, publicly vowing they
were powerless, nevertheless stepped between Clark and the
strikers and insisted upon a settlement. For a time the con-
test was transferred to the council-chambers of the owners and
there waged with hardly less bitterness than before. Indeed,
the differences which now arose were mainly responsible for the
final disruption of the company.
Some degree of harmony was at length reached; and on
March 2Oth the newspapers announced that the strike was " set-
tled once more. " The terms of the peace were so worded as to
give it the aspect of a compromise. Practically it was a vic-
tory for the men. Clark promptly sent in his resignation, and
it was as promptly accepted.
Encouraged by its success, the Amalgamated Association a
few weeks later demanded a general advance of five to fifteen
per cent, in the wages of all iron and steel workers throughout
the country. A thunderbolt out of a clear sky, to which this
demand was compared, could not have excited greater surprise
and consternation. Anathematizing the Homestead works and
all its managers, the iron manufacturers of the country prepared
for the greatest contest with labor that had ever been seen.
June ist, 1882, was the day fixed by the association for the be-
ginning of this struggle ; and on that day the Carnegies and
two of the firms connected with the Homestead works, who by
this time had come to hold the Amalgamated Association in
I S 8
GROWTH OF HOMESTEAD
awe, agreed to the latter's demands. In all other mills where
union labor was employed, work was suspended in Pittsburg,
Wheeling, Cleveland, Cincinnati, St. Louis, Springfield, Chi-
cago, and other places. The iron industry of the country was
paralyzed in a day; and for nearly four months the struggle
thus inaugurated continued, marked with wonderful endurance
on the part of the men and great
determination on the part of the
manufacturers.
For a while the works
at Homestead managed to
struggle along, under the
terms of the settlement, with
a force composed partly of
union and partly of non-
union men ; but the disor-
ganization of the iron and
steel trade was more than
it could cope with, and, on
August 2 ist, the works were shut
down for lack of orders, as the manage-
ment frankly stated.
On September 2ist the general strike ended
in the complete discomfiture of the men, who
for over a month had been dropping from the Amalgamated
Association, starved into submission. The struggle had cost
millions and benefited nobody.
On the very next day a fresh strike occurred at Homestead,
where an effort had been made, a couple of weeks before, to
start up again. The cause was a trifling incident growing out
of the previous dispute. The men objected to the presence of
a " scab " who, during the troubles, had shot one of them in
self-defence ; and to even things up the management also ex-
pelled the workman who had been thus wounded.
The new trouble did not last long; but it served to increase
"Shot one of them
in self-defence."
PURCHASE OF THE STEEL WORKS 159
the discontent of the stockholders of the concern, whose greater
interests in their respective mills were thus repeatedly jeopar-
dized ; and their dissensions became acute. About this time,
too, the price of steel was rapidly falling; and, alarmed by the
imminent call for more capital, some of the Homestead stock-
holders hastened to get out of the company. One of them hav- j
ing secured an option on the shares of some of his associates,
went to the Carnegies and offered them the control thus
acquired.
The offer was promptly accepted. Although trade was now
very bad and daily growing worse, the Edgar Thomson works
in the past had been inconveniently drawn upon for supplies of
steel by the Hartman Steel Company at Beaver Falls, and for
billets by the Union Iron Mills. The Keystone Bridge Works
were also using increasingly large quantities of steel ; and the
Carnegie people were prompt to embrace the opportunity offered
them of acquiring possession on easy terms of a plant which
would at once relieve the pressure from the Edgar Thomson
works and remove from their immediate neighborhood a danger-
ous rival.
Accordingly in October, 1883, the Homestead mills became .
the property of the Carnegie group. The price paid was the
cost of the plant, with a reasonable allowance for increased land
values. Little cash was paid; and the notes given in pay-
ment were subsequently liquidated out of the profits of the
mills.
The Carnegies, with a view of holding for themselves the
markets created by the old stockholders, offered the latter the
privilege of remaining in the enterprise; but with one unimpor-
tant exception they declined the offer, and, taking their little
checks and notes, went out of the enterprise with grateful
hearts. The interest of the one who remained was eventually
sold for about eight millions.
It is illustrative of the unfailing luck of the Carnegies that
the Homestead works, thus acquired when the steel trade was
1 6o
GROWTH OF HOMESTEAD
suffering an unparalleled depression, should pay their cost
within two years. Few of the steel works of the country were
working up to their full capacity at the end of 1883, and many
of them were closed. At $35 a ton, none but the best-equipped
mills could make rails without loss. Even at this price there
were few orders to be had; and six of the nine Western mills
were shut down. At the beginning of December the Edgar
Thomson had only
enough work in
sight to last a few
days and one con-
tingent order of
8,000 tons of rails,
not to be rolled until
the order had been
confirmed. The
Homestead works
had been put on bil-
lets for the Union
Iron Mills, and had
only enough work in
sight to keep running
till the middle of Janu-
ary. Wilson, Walker &
Co. stopped work on Decem-
ber 5th for lack of orders.
The Joliet mill had just shut
down ; and the old Chicago mill
"Went out of the enterprise with
grateful hearts." had long before stopped running
for like reasons.
But the Carnegie partners had faith in the future, and still
greater confidence in the genius of the men who had made their
other enterprises successful ; and so, utilizing these dull times
for repairs and changes, and profiting by low prices of labor and
material for extensions, they struggled through the period of
GROWTH OF THE PLANT 161
depression and were ready for the harvest of prosperity when it
came.
The conversion of the Homestead works to the production
of steel specialties is a very striking indication of the new uses
to which steel was then being put. As we have seen, the works
apart from Kloman's were projected for the manufacture of
steel ingots and billets to be used by the crucible steel-makers
of Pittsburg. They were not now used for their original pur-
pose, but for the manufacture of steel specialties which were
fast taking the place of iron. Steel bridges were now used to
replace those of wood; and the low price of Bessemer beams
and other structural shapes gave an impulse to their use in
architecture which, in a few years, wrought the revolution cul-
minating in the sky-scraper. There were thus developed new
markets which soon brought back prosperity to the trade ; and
the temporary depression had but served to benefit the far-
sighted manufacturer who knew enough to utilize the period of
low prices to add to the capacity of his works.
At the time of its purchase the Homestead mill was already
one of the best-equipped plants of its size in the country; but
during the next few years important additions were made to it
which put it at the head of the steel works of the world. On
October, 1885, a new bar and angle mill was constructed, giving
employment to four hundred men ; and by the middle of July,
1886, the converting works, under the skilful management of
Mr. Julian Kennedy, were turning out six hundred tons of
Bessemer steel a day. In the month of March, 1887, the two
four-ton converters produced the unexampled total of 19,572
tons of ingots, and further broke the record with an output of
915 tons in one day.
During their most active period of growth Mr. Julian Ken-
nedy was superintendent of the works ; and their success was
in no small degree due to his exceptional engineering skill.
Just as a new era in blast-furnace construction and product was
inaugurated under his management at the Edgar Thomson works
ii
MR. P HIP PS' PROGRESSIVENESS
163
in the early '8os, so now was initiated a revolution in rolling-
mill practice. The slabbing-mill, already mentioned as the
giant descendant of the little Zimmer mill at Kloman's, was
erected by him, as was also the II 9-inch plate-mill, the largest
machine of its kind that up to that time had been built. A
slight modification in the arrangement of the slabbing-mill a
machine that cost nearly a million fitted it for the rolling of
armor-plate and doubled its usefulness. Mr. Kennedy invented
Ninety-ton steel ingot at Homestead.
ingenious labor-saving devices by which massive shapes of red-
hot steel were tossed lightly about at the will of a single oper-
ator, and excited the wonder, not only of chance visitors, but
of trained engineers who travelled half round the world to see
them.
By the insistent progressiveness of Mr. Phipps the first
basic open-hearth furnace in America was erected by Mr. Ken-
nedy at Homestead, and was so successful that others followed
in quick succession. To this early entry into a new field and
1 64 GROWTH OF HOMESTEAD
to persistent cultivation of it is due the supremacy which the
Homestead plant has won over the steel works of the world.
This broad statement is verified by a comparison. In 1886,
when the first open-hearth plant was built at Homestead, the
production of steel by this process was only a little over 200,000
tons in the whole of the United States. Last year (1902) the
Homestead works alone produced over 1,500,000 tons of open-
hearth steel. This is about twenty-five per cent, of the total
output of the country, although there are seventy-seven other
works in America making open-hearth steel. Added to the
product of the Bessemer process this gives a total of 1,889,000
tons of steel made at Homestead last year.
These results are in a large measure due to the use of natu-
/ral gas in the open-hearth furnaces. The chance which placed
the Carnegie enterprises in the natural-gas region is to be
credited with much of their exceptional success; and in the
manufacture of open-hearth steel this fortuitous factor has been
of first importance. The heating power of natural gas is far
greater than that of the ordinary " converter gas " used else-
where, thus making the operation of fifty-ton furnaces an easy
matter; while its cost to the Carnegies does not exceed five
cents a thousand feet, thanks to the enlightened policy of Mr.
1 Frick, who, in spite of much opposition, secured large areas of
gas territory for his firm. It is to this single fact that much of
the astonishing growth of the business, described later, is due.
It is at Homestead that wonders are performed as amazing
as those of the Arabian Nights. Here machines endowed with
the strength of a hundred giants move obedient to a touch,
opening furnace doors and lifting out of the glowing flames
enormous slabs of white-hot steel, much as a child would pick
up a match-box from the table. Two of these monsters, appro-
priately named by the men " Leviathan and Behemoth," seem
gifted with intelligence. Each is attended by a little trolley-
car that runs busily to and fro, its movements controlled by the
more sluggish monster. This little attendant may be at one
WONDER-WORKING MACHINES 165
end of the long shed and the Leviathan at the other; but no
sooner does it seem to see its giant master open a furnace door
and put in his great hand for a fresh lump of hot steel, than it
runs back like a terrier to its owner and arrives just as the huge
fist is withdrawn with a glowing slab. This the Leviathan gen-
tly places on its attendant's back ; and, to the admiration of all
beholders, the little thing trots gayly off with it to the end of
the building. Even then the wonder is not ended; for the
little fellow gives a shake to his back, and the glittering mass,
The Leviathan and its attendant.
twice as big as a Saratoga trunk, slides onto a platform of rollers
which carry it to the mill. And no human hand is seen in the *
operation.
In another place lady-like machines seem to dance lightly
in front of the furnaces, occasionally stretching out a hand, seiz-
ing a red-hot billet, and waltzing with it to the rolling-mill.
These marvels of mechanical skill have swelling skirts that make *
the idea of the ball-room irresistible. Being suspended from
above so that their mechanism is not visible by night, they move
backwards and forwards, from one side to the other, tripping
1 66 GROWTH OF HOMESTEAD
along a row of furnaces and pirouetting diagonally back with a
swift, graceful, and noiseless sweep in a fashion that suggests
nothing but play and Virginia reels. And the beautiful lumps
of steel, white-hot and dripping with fire, are carried as lightly
as a girl's bouquet, and deposited just as lightly in the lap of
a chaperone, when their owner glides with easy turnings out
into another dance.
In yet another place is a comical being that runs busily about
carrying hot things round corners. When this grotesque ma-
chine gets to the end of his track he makes a quick half-turn to
the right and runs on again. And all the while he holds in
one hand a long rubber tube, like a boy at a May-pole. This
contains the electric wires that give him life and intelligence.
The wizard who has endowed these machines with their
amazing power is a quiet, modest young fellow, Alva C. Dinkey,
the present superintendent of the great works. If any of the
junior partners merit the title of " young geniuses," Mr. Dinkey
is certainly one of the first.
Mr. Dinkey has also charge of the four Carrie blast-furnaces
just across the river at Rankin, which supply a part of the pig-
iron used at Homestead. One of these was removed from Ohio
by the Carrie Furnace Company, rebuilt here in 1883 and blown
in on February 2Qth, 1884. Another was built by the same
company in 188890. The Carnegie Steel Company built the
others. They are each 100 feet high, with 2 3 -foot bosh and
15-foot hearth. Their total annual capacity is 672,000 tons of
metal, which is hauled, in a molten state, by locomotives across
the river bridge to Homestead. The last built of these furnaces
produced 206,650 tons of pig-iron in 1902. This is believed to
be the world's record.
CHAPTER XI
THE INCOMING OF HENRY CLAY FRICK
IN 1882, the iron and steel
business whose growth
we are tracing may be
said to have attained its
majority. Just twenty-
one years had elapsed
since the building of the
Kloman mill at Twenty-
Coke-ovens. .
ninth Street, when the
infant industry emerged from the embryonic state of Girty's
Run. Thanks to skilful nursing, it had passed easily through
the dangers and diseases of childhood; and under the stimulat-
ing pabulum of a high tariff it had waxed big and lusty beyond
all precedent. Like most overgrown things, however, it was
ill-proportioned and awkward. There was an uncertainty
about its movements which showed that its physical growth
had outstripped its mental development. There was none of
that harmonious working of parts and effective unity of in-
terests which bespeak the well-balanced organism.
This was now to be changed not suddenly and by a con-
scious effort, but, as is the nature of all growth, quietly, gradu-
ally, and by unnoticed movements.
The most conspicuous step in the mental evolution of this \
industrial organism was the simple and prosaic incident which
brought Henry Clay Frick into contact with it. At the time
this seemed a very commonplace occurrence. Similar things
had happened in the history of the enterprise a dozen times
without attracting more than a passing attention. The present
167
1 68 HENRY CLAY FRICK
one produced a revolution. A simile from the science of biol-
ogy suggests itself. One of the lowest forms of life exists as a
little floating globe of jelly, which surrounds and absorbs into
itself every smaller thing that bumps against it. Sometimes,
however, a more highly developed creature comes along and
reverses the process. Something akin to this happened now.
Up to the time of the incoming of Mr. Frick the group of
men with whom he now allied himself had had no definite pol-
icy. The several industrial establishments had all been started
by some outer accident, and each had developed along its own
line as the needs of the day required, and as the fostering hand
of the Government was laid more or less kindly upon it. The
Kloman germ grew under the stimulus of the war; and the
Twenty-ninth Street mill was built to meet the increased de-
mand for Kloman axles. The Cyclops or Thirty-third Street
mill was but an accidental offshoot of the Kloman stem; and
the business of both grew with the country's growth and the
general development of the iron trade. The Keystone Bridge
Company was simply the incorporation of an existing business.
The suggestion of the Lucy furnaces came from outside ; as
did also that which resulted in the steel business at Braddock.
The Homestead works were built by outsiders ; and their absorp-
tion by the Carnegie group was a mere accident. And yet, in
conformity with those laws underlying all growth, the line of
progress was one which ever tended to round out and complete
the series of operations in the conversion of crude iron ore into
finished materials. But this was a natural and unconscious
development growing out of trade conditions. There was at no
time a well-defined plan or policy of expansion.
With the incoming of Mr. Frick, however, this vague pro-
gression at once assumed a definite character. It was the
marshalling of hosts into a coherent unit, with one mind ruling
all for the good of each.
To give a just idea of the revolutionary character of the
changes inspired by Mr. Frick, it is necessary to anticipate
Plate IX,
HENRY CLAY FKICK
A MIRACLE OF INDUSTRIALISM 169
events a little, and give a rough outline of the perfected organi-
zation which he built up out of the scattered units which he
found. These units were the Upper and Lower Union Mills,
the Lucy Furnaces, the Edgar Thomson Steel Works, the Key-
stone Bridge Works, the Pittsburg Bessemer plant at Homestead,
and the little interests in coke and coal at Larimer and Unity,
and in ore at Scotia. There was also, at Beaver Falls, the
Hartman Steel Works, an unqualified failure and source of
uninterrupted vexation to its owners. Apart from the Edgar
Thomson works and the Upper Union Mill, which had been
consolidated, each of these plants had its separate organization.
Such exchange of benefits as was possible among them was off-
set by the petty factions and jealousies which the Carnegie sys-
tem of unfriendly rivalry had established.
While there was a feeble attempt at consolidation made in
1886, before Mr. Frick assumed supreme power, it did little
more than modify the disunion described. Once in control,
Mr. Frick assembled these disorganized units into a solid, com-
pact, harmonious whole, whose every part worked with the ease
and silent motion of the perfectly balanced machine. This
mammoth body owned its own mines, dug its ore with machines
of amazing power, loaded it into its own steamers, landed it at
its own ports, transported it on its own railroads, distributed it
among its many blast-furnaces, and smelted it with coke simi-
larly brought from its own coal-mines and ovens, and with
limestone brought from its own quarries. From the moment
these crude stuffs were dug out of the earth until they flowed
in a stream of liquid steel into the ladles, there was never a
price, profit, or royalty paid to an outsider. Without any cessa-
tion of motion and with hardly any loss of heat, this product
passed with automatic precision into the multitudinous machines
which pressed it into billets, rails, armor-plate, bridge structures,
beams, and the endless variety of shapes required in modern
architecture. Finally these highly finished materials were often
conveyed to consumers over the same transportation systems as
i;o HENRY CLAY FRICK
before ; and the profit of every movement, as of every process
and change of form, passed without deduction into the exchequer
of what was now the Carnegie Steel Company, Limited a
single organization with one mind, one purpose, one interest.
The annual earning power of this great institution increased
under Mr. Frick's direction from $1,941,555 to $40,000,000
in a dozen years ; while its annual product of steel increased
during the same period from 332,111 tons to 3,000,000 tons.
The change thus baldly and inadequately expressed in terms of
dollars and tons makes the most impressive record, for such a
short period, of any manufacturing
* i rf organization in this or any other
country.
Henry Clay Frick, to whose
remarkable executive and admin-
istrative ability this miracle of
industrialism is due, was only
thirty-three years of age when he
joined the Carnegies; and already
he had achieved the most note-
worthy success in the coke indus-
VVP try of Pennsylvania. Born at
West Overton in 1849, young
"Small farm chores." FHck ^ found ^ ^ Q age of ten
gathering sheaves in the wheat-fields, carrying wood and water,
and doing such small farm chores as came within his child's
strength. This was his way of spending the summer holidays.
It afforded him the best of exercise, and probably gave him that
vigor and recuperative power which, later, astonished the sur-
geons who were probing to find the assassin's bullets in his
sadly wounded body. In undertaking this farm work the child
acted on his own impulse. He did it to earn enough money
to buy his clothes. Then he went back to school, where he
displayed the same earnestness of purpose. At the age of
fourteen he not only bought his own clothes but entirely
THE ROMANCE OF COKE 171
maintained himself, working behind the counter of a country
store. At nineteen he became bookkeeper in his grandfather's
flouring-mill and distillery at Broad Ford, in the centre of
what is now the Connellsville coke region. At the threshold
of manhood he thus found himself fortuitously placed in the
field of his future activities, where he was destined to find both
wealth and honor.
The history of the development of the Connellsville region
is necessarily a sketch of the personal career of Henry Clay
Frick. He was one of the first, even at this youthful age, to
recognize the importance to the expanding iron industries of
Western Pennsylvania of this wonderfully rich deposit of cok-
ing coal. He has been the leading spirit in its development ;
so that to-day, in some of the iron-producing centres of the
United States, Connellsville coke is known only as Frick coke.
He built railroads for transporting it ; and he alone effected the
consolidation of the industry as it now stands.
Every great industry has its romance. That of Connells-
ville coke began in 1842, when a couple of small barges loaded
with it were floated down the Ohio to Cincinnati. There the
furnace men looked on it with suspicion and called it " cinders."
It was sold in small lots at eight cents a bushel ; and a large
quantity remained after three weeks' effort to dispose of it.
This remainder was finally traded for a small patent grist-mill,
which was brought to Connellsville, and turning out to be a
failure, was there sold for $30.
But the foundryman who got the coke afterwards thought
well enough of it to make a trip to Connellsville to get more.
In this he was disappointed. No one was willing to repeat the
experiment, for a time at least. In. 1850 there were only four
establishments making coke in the whole of the United States.
In 1860 the census shows that there were twenty-one such
establishments, all in Pennsylvania; and ten years later, when
Frick had already appeared on the scene and had become inter-
ested, there were but twenty-five coking plants in the country.
i;2 HENRY CLAY FRICK
In 1871 young Frick organized the firm of Frick & Co. with
Abraham O. Tintsman, one of his grandfather's partners, and
Joseph Rist. They had three hundred acres of coal lands and
a plant of fifty coke-ovens. At this time there were not four
hundred ovens in the whole
Connellsville region, which
included an area of one
hundred square miles. The
Mount Pleasant and Broad
Ford Railroad, of which
Frick was one of the pro-
jectors, was opened about
the same time. The next
year Frick & Co. erected
Coke-ovens under construction.
one hundred and fifty more
ovens. Then the panic of 1873 came, and everybody but Frick
thought the business had come to an end. But he had gauged
its possibilities ; and, with a confidence in the country's growth
rare in one of his years, he realized that the depression was of
that tidal character which would eventually carry the business
to higher levels than before. Timid competitors anxious to
sell out at any price found a ready purchaser in the firm of
Frick & Co. ; and in the lean years following the panic he
acquired the interests of his partners, who, burdened with
unpaid-for purchases, staggered and finally fell in the storm.
By a singular paradox the panic which ruined his partners
made Henry C. Frick' s fortune. When the trouble had passed,
the price of coke rose from ninety cents to $4 and $5 a ton ;
and the boom put young Frick at the head of the coke industry.
By 1882, when Frick admitted the Carnegies into his business,
he had acquired 1,026 ovens and 3,000 acres of coal land.
The business was now reorganized with a capital of $2,000,-
ooo; and a year later this was increased to $3,000,000 to keep
pace with the expansion of the trade. By 1889, when its capi-
tal was increased to $5,000,000, the H. C. Frick Coke Com-
A GREAT BUSINESS
173
pany owned and controlled 35,000 acres of coal land and nearly
two-thirds of the 15,000 ovens in the Connellsville region, three
water plants with a pumping capacity of 5,000,000 gallons daily,
thirty-five miles of railroad track, and 1,200 coke-cars. The
company employed 11,000 men. The volume of shipments
amounted to 1,100 car-loads a day, or 330,000 cars a year.
This is equivalent to 10,000 train-loads, which, strung together,
would extend from New York to San Francisco, or from London
across the continent of Europe, through Persia, and well on the
road to India.
In 1895 the capital of the H. C. Frick Company was further
increased to $10,000,000. It now owned 1 1,786 ovens; 40,000
acres of Connellsville coal .
lands, out of a total of sixty
to sixty-five thousand acres,
and its capacity was 25,000
tons of coke a day, or eighty
per cent, of the entire pro-
duction of the Connellsville
region. A little later its
monthly output amounted to
an even million tons !
Coke-ovens under construction.
Such, baldly stated, are
the achievements of the man who from now on becomes the
most conspicuous and imposing figure in this history.
CHAPTER XII
THE CAPTURE OF THE DUQUESNE STEEL
WORKS
MR. FRICK'S first great achievement
after assuming the leadership of Car-
negie Brothers & Co. was the capture
of the rival steel works at %
Duquesne, on the Monon-
gahela River, a short dis-
tance above Homestead
and Braddock. This mas-
terly move eliminated a
dangerous competitor from
the rail market, and gave
the Carnegies one of the
most modern and best- '
equipped steel works in
the country without the
outlay of a single dollar.
Even the unparalleled rec-
ord of Carnegie successes contains no greater industrial victory
than this; and business men in Pittsburg still regard it as the
greatest example of skilful financiering and management in the
history of the American steel trade.
The building and early history of the Duquesne steel works
recall those of Homestead. In a sense, indeed, the former may
be considered a continuation of the latter ; for they were planned
for similar reasons, completed by the same men, failed for kin-
dred causes, and were eventually sold to the same purchasers.
The Duquesne Steel Company was organized on June 4th,
17*
Kloman's successor forging an axle.
TO CHECK COMPETITION 175
1886, with a capital of $350,000. Before the plant was com-
pleted, disagreements arose among the promoters, and these,
joined to a call for more money, resulted in the suspension of
construction work. The enterprise was subsequently reorgan-
ized ; and the Allegheny Bessemer Steel Company was formed,
in March, 1888, with a capital of $700,000, to take over the
unfinished plant and carry it through to success. Among the
incorporators were E. L. Clark of the Solar Iron Works and
William G. and D. E. Park of the Black Diamond Steel Works.
These gentlemen subscribed for nearly six-sevenths of the total
capital. The other members of the corporation were also
practical men. Mr. C. Ansler, consulting engineer of Macin-
tosh & Hemphill, superintended the building of the works; and
neither money nor pains were spared to equip them with the
most improved machinery. The buildings were of an unusually
substantial and enduring character. They comprised convert-
ing and blooming house, 75 feet by 200; a rail-mill 68 feet by
380; a building covering the hotbeds 80 feet by 200; while
the wings inclosing the finishing machinery were 48 feet by
64. There were two Bessemer converters, each with a capacity
of seven tons.
Operations were commenced in the blooming-mill on Feb-
ruary Qth, 1889, and a month later in the rail-mill. The long-
threatened competition with the Carnegie rail monopoly in the
Pittsburg district had begun. It was met by Andrew Carnegie
in a distinctly original fashion.
The Duquesne people, in their search for improved methods,
had planned to run their ingots from the soaking-pits, without
further heating, through the various rolls that pressed them
into billets and rails. This was an unheard-of innovation in
America, although something of the kind had been done in Eng-
land; and Sir Henry Bessemer had long ago predicted that the
practice would become general. The ingots, having passed
through the 32-inch blooming-mill, went at once through the
26-inch roughing-train. After shearing, the piece went straight
1/6
CAPTURE OF DUQUESNE
on to the two finishing-trains, which were equipped with espe-
cially powerful engines. Thus the re-heating of ingots was
dispensed with ; and from the mould to the finished rail the
steel passed only once through the furnace, instead of twice
or thrice, as in other works.
On learning of the adoption of this economy by a competi-
tor, Andrew Carnegie drafted a circular to the railroads, warn-
Ingots going from the Duquesne soaking-pits to the rolls. The mechanical
perfection is shown by the small number of workmen visible.
ing them against using the rails thus made, which he repre-
sented as defective through lack of homogeneity. Although
this was not believed by the Carnegie officials, the circular,
having been sent to Pittsburg for that purpose, was printed
and mailed to the purchasing agents of the railroads throughout
the country. When asked if he considered this a legitimate
form of competition, one of the Carnegie partners of that time
replied that " under ordinary circumstances he would not have
TROUBLE WITH LABOR
177
thought it legitimate ; but the competition set up by the Du-
quesne people was also not legitimate, because of their use of
this direct rolling process." In further self -justification he
added : " They were a thorn- in our flesh and they reduced the
price of rails. If they had made rails by our method, w*e
would have recognized them as legitimate competitors ; but
when we were attacking their method of rolling we could not
recognize them by letting them take a contract."
Pressed to explain the last sentence, Mr. Carnegie's partner
said : " We could not divide business with them as we other-
wise would have done."
It is worthy of remark that this method of direct rolling
was not abandoned when the Carnegies acquired the Duquesne
mills. On the contrary it was
adopted in all their other works,
and is now general throughout
the country. Presumably
steel-makers have learned to
overcome the lack of homo-
geneity against which Mr.
Carnegie warned the railroads.
The mechanical superiority
which the Duquesne works
showed over every similar plant in
the country was not enough in it-
self to offset the deficiencies of
management which soon became manifest. There were also
contentions with labor. The old antagonism to trades-unions
that brought trouble to the first owners of Homestead, cropped
out at Duquesne. Signs were put up all over the yards and
shops announcing that " no union men are allowed on these
works." When Mr. William G. Park saw them he gave orders
that such signs as were accidentally destroyed should not be
renewed. The directors dared not discredit their manager by
removing the offensive placards; but they let it be quietly
The offensive placards.
1 78 CAPTURE OF DUQUESNE
known that a driver who knocked one of them down and de-
stroyed it would not be punished for carelessness. Some of
these signs were still in existence when Mr. Frick bought the
works.
There were also defects in the operating department ; so
that large quantities of second- and third-rate rails accumulated
in the yards. The dissatisfaction of the owners with the man-
agement was augmented by several serious losses growing out
of undesirable contracts. In fairness to the managers, however,
it should be confessed that they were really obliged to take
these contracts in order to keep running ; for the rail pool, at
the instigation of the Carnegies, constantly headed them off
from all desirable business, and obliged them to take such orders
as no mill in the pool wanted. As a result the stockholders
were soon called upon for additional capital. First $100,000
was called for; then twice .as much. This the stockholders
refused; and Mr. William G. Park had to pay it all. So that a
suggestion from Mr. Frick that the Carnegie Company might
buy the property at a bargain found Mr. Park in a particularly
receptive mood.
The price first talked about by Mr. Frick $600,000 was
considered too low by Mr. Park, as no doubt it was. The works
had cost nearly twice that sum. They had made as much as
five hundred tons of rails and billets in twenty- four hours ; and
while their cost from pig-iron to rails was high $8.14 in
October, 1889 the stockholders were loath to accept any very
great loss. On the other hand, Mr. Frick showed no disposi-
tion to increase the bid which he had thrown out in a tentative
way ; and so the thing dragged on for nearly a year. During
this time Mr. Park obtained options on his partners' holdings ;
and when the negotiations were resumed he was able to offer
the entire stock of his company. During the month of August
preceding the final sale the output of the rail-mill was the largest
in its history 16,814 tons. The output of raw steel was over
20,000 tons ; and 1 7,000 tons of blooms were made.
BRILLIANT FINANCIERING 179
On this showing Mr. Frick, in October, 1890, raised his
bid for the plant to $1,000,000 in bonds, material on hand to
be appraised and paid for in cash. On the 3Oth of the month
this offer was accepted; and a couple of weeks later the plant
was turned over to the Carnegies. Once more they were with-
out a rival rail-mill in their own territory.
At this time the works consisted of two seven-ton converters,
six cupolas four for iron and two for spiegel seven soaking-
1
Copyright by S. S. McClure Co.
Pouring steel from converter into ladle.
pits, four trains of rolls, and the necessary boilers, engines, and
other equipment to successfully operate a blooming and rail mill
of that size.
It is commonly believed in Pittsburg that the plant thus
bought with nothing but an issue of bonds, paid the new owners
$1,000,000 in the first sixty days. This is not true; but the
works did pay for themselves within a year, for, with his habit-
ual foresight, Mr. Frick had provided a market for their prod-
uct before he bought them. The rail-train was changed to
make billets ; and these were promptly marketed at good prices.
i8o CAPTURE OF DUQUESNE
Before the bonds became due the plant had paid for itself six
times over; and the surplus earnings had gone into the construc-
tion of four large blast-furnaces.
Mr. Frick always had an instinct for picking out the right
man for every place ; and his intuition did not fail him when
he selected Thomas Morrison for Duquesne's first superintend-
ent under the new regime. This young man was a distant con-
nection of Andrew Carnegie; but he made no attempt to trade
the fact for favors. He took a humble place in the machine-
shops at Homestead, and caught the notice of his superintend-
ent, Mr. Potter. Mr. Prick's attention having been drawn to
the youth, he watched him for a while, and decided that he was
capable of better things than he was doing. Greatly to the
young man's surprise he was selected for the responsible posi-
tion of superintendent at Duquesne. Here the men tried to
take advantage of his youth ; but he met the attempt with dig-
nity, and, being supported by the firm, had no further trouble
of that kind. In one of Mr. Prick's weekly reports in June,
1891, he says: "Matters have been looking threatening at
Duquesne. Morrison has handled the matter very well. He
is not much of a talker." In that he was a man after Mr.
Prick's own heart.
Early in 1892 Morrison was instructed to get up plans for
two blast-furnaces at Duquesne, which he did ; and the same
month he was given a small interest in the Carnegie Company.
During this time the plant was being operated as the Allegheny
Bessemer Steel Company, the former owners not having yet
closed all the old transactions. By July this had been done ;
and the plant was taken into the consolidation of all the Car-
negie works that formed the Carnegie Steel Company.
Owing to the disturbing effects of the Homestead strike the
two Duquesne furnaces, planned early in 1892, were not com-
menced until November 5th, 1894. By August of the follow-
ing year, 1,700 men were at work on them; and the first one
was blown in on June 8th, 1896. On October /th the second
A WONDERFUL RECORD
181
furnace went into blast. In May, 1897, a third furnace was
lighted ; and a fourth followed in June.
Three of these stacks are 100 feet high by 22 feet at the
bosh. The fourth is the same height and a foot narrower. For
nearly four years they held the world's record; as much as
18,809 tons of metal being produced by a single furnace in a
month.* Then the broom of supremacy, previously flaunted by
Duquesne furnaces.
the Lucy, and then by the Edgar Thomson furnaces, passed to
another Carnegie stack, that known as Carrie No. 3.
It is worthy of remark that when the Duquesne furnaces
were put in operation, with all their labor-saving appliances,
they cut the cost of labor per ton of iron produced to one-half
that prevailing elsewhere.
The rivalry started thirty years ago by the Lucy and Isabella
furnaces still persists. Late in 1901 Carrie No. 3 made 790
tons in twenty-four hours. A month or so later furnace No. 2
of the National Steel Company at Youngstown, Ohio, produced
* In October, 1898, the output of these four furnaces was as follows:
No. i 1 8, 672 tons.
2 17.717 "
3 18,809 "
4 .. 18,060 "
1 82 CAPTURE OF DUQUESNE
806 tons. This furnace is 106^2 feet high and 23 feet in
diameter. Later, furnace E at the Edgar Thomson works made
901 gross tons. It is probable that before these pages are in
type some more modern furnace will make a thousand tons in a
day. If so, the difference between the 50 tons that the Lucy
first made, and 1,000 tons, will mark, in a way easy to under-
stand, the progress in blast-furnace construction and practice of
the period covered by this story and the one group of workers
to which it relates.*
To describe the further growth of these works in detail
would take more space than is possible here. They were Mr.
Prick's pride; and he lavished his best thought upon them.
Hardly a month passed that did not see some important change
and addition ; until for economy of operation they stood unri-
valled among the steel works of the world. Here are the most
important items in this record of growth and improvement :
1896 June ii Purchase of 57 acres of Hays estate adjoining.
Oct. 9 Purchase of 65 acres from Oliver estate, including plats
between railroad and river ; price about $200,000.
Nov. 10 Purchase of 50 acres from Dr. W. S. Huselton for
$150,000.
" Dec. 19 Jones mixer, 200 tons, put in operation ; largest in the
country.
1897 Feb. 2 Work commenced at Duquesne on Union Railroad.
" May 6 No. 3 furnace blown in.
" June 10 No. 4 furnace goes in blast.
" Dec. 19 Work started on new billet-mill.
1898 June i Union Railroad completed and first run of hot metal
from Duquesne to Homestead.
" July 8 New i6-inch continuous mill put in operation.
July 19 Union Railroad bridge finished, connecting Duquesne
with Edgar Thomson works.
" Aug. i Duquesne tube works sold by sheriff for $141,500 to
Carnegie Steel Company.
* At the Lucy furnaces at this date, 1903, the present superintendent, James
Scott, was employed at the same plant soon after its construction, thirty years ago.
No man in the Carnegie Steel Company, or indeed anywhere else, has been closer
to the great changes described than Mr. Scott, and few men have contributed
more to produce these changes.
ANTICS OF A METEOR 183
1899 Feb. 7 Howard Glass House and 27 acres purchased for
$300,000.
" Apr. 10 Coal dock on Monongahela River contracted for.
' ' Oct. 6 New blooming and billet mills and open-hearth plant to
cost $2,500,000 first publicly announced.
" Nov. 20 Excavations for open-hearth plant started.
1900 Feb. 1 6 Plans for new i-j-inch continuous billet-mill announced.
" Apr. 5 Plans for new 10- and 13-inch double-storage mill an-
nounced.
" Oct. i Two new open-hearth furnaces started.
" Nov. 27 4O-inch mill began operations.
Dec. 13 Two more open-hearth furnaces started.
1901 Jan. 2 Excavations started for new 14-inch mill.
" Feb. 7 Excavations for foundations of two new merchant mills.
" Mar. i Date of merger with United States Steel Corporation.
The present capacity of the works is 750,000 tons of pig-
iron a year, and 600,000 tons of raw steel. The whole of this
material can be made into finished products on the place. These
totals are twenty times as great as the first year's output of the
Edgar Thomson works. In view of the short time in which
these results have been attained, the enthusiasm of the local
editor is pardonable, even when after comparing Duquesne to
" the meteor that has darted out of space and cut a brilliant
path across the sky" yet "remains in the horizon, more lus-
trous than ever," he calls it "the acknowledged young giant
and the mastodon of the unconquered and the unconquerable
Monongahela valley." There is certainly much in Duquesne
to arouse local pride.
CHAPTER XIII
LABOR CONTESTS IN THEORY AND PRACTICE
THE great Homestead strike, which forms the
most dramatic episode in the history of all
the Carnegie enterprises, grew out of con-
ditions without parallel in the industrial
history of this or any other country. Su-
perficially, this contest was a commonplace
struggle between capital and labor concern-
ing the equitable division of the results of
their J int efforts. But behind this were
certain moral causes, growing out of the con-
I flict between the idealistic platform-theories of Andrew Car-
I negie and the unsentimental exigencies of business. A brief
i glance at the attitude towards labor of Carnegie the manu-
facturer, as contrasted with the academic utterances of Carnegie
the philanthropist, is necessary to an understanding of the re-
moter and more obscure causes of this titanic struggle, which,
marked as it was with all the ferocity of civil war, caused -a
shudder to run through the civilized world. Incidentally such
a retrospect will also show that no successful business can be
built on philanthropic aphorisms. Nor can Utopianism be
grafted upon an industrial system still rudimentary in its de-
velopment, without producing fruit of an unexpected and inju-
rious variety.
The first strike in the history of the Carnegie iron business
was that of 1867, when, as has been related, the puddlers
resisted a reduction of wages. This was ended by a sudden
boom in the iron trade which called all idlers back into the
shops at better wages than before. The Carnegies, however, in
184
PHILANTHROPIC POSTURING 185
common with other manufacturers, had attempted to break the
strike by the wholesale importation of foreign labor. While at
this time there was no open hostility on the part of the manu-
facturers to labor-unions per se y there was also no public glori-
fication of them. As for Carnegie himself, his influence was
too unimportant to have much effect on his partners ; but so
far as is known, the business man was still dominant in the
dual personality which later puzzled partners and workmen
alike by an altruism never before professed by any employer.
At the end of 1875, just after the starting of the Edgar
Thomson works, mutterings of discontent were heard amongst
the men, and a strike became imminent. During the few weeks
that the plant had been in operation some minor weaknesses
and defects had shown themselves in the machinery ; and, to
remedy these, the excuse offered by the discontent of the men
was seized upon to shut down the works. Stunned into sub-
mission by the swiftness of the blow, the men readily signed
the agreement presented to them by the company before they
were allowed to return to work; and the lesson thus learned
lasted long. Many years of peace supervened at the Edgar
Thomson works. There was still no philanthropic posturing.
It was all business, and very properly so.
In July, 1884, the Carnegies had a strike at their Beaver
Falls mill. This plant, known as the Hartman Steel Works,
was an unimportant but costly side-issue growing out of an
effort to find new markets for raw steel. Designed to lead the
world in nails and wire rods, the enterprise was an unqualified
failure from the start ; and, except for a brief period under the
management of Mr. P. R. Dillon, it remained so to the end,
when it was cleverly sold by Mr. Frick to the Wire Trust, and
closed and dismantled. The strike referred to was a frank trial
of strength between the Carnegies and the Amalgamated Asso-
ciation. Andrew Carnegie entered upon it with many misgiv-
ings, telling Hartman, his partner, that no one could success-
fully fight the Amalgamated Association "within the smoke of
1 86 LABOR CONTESTS
Pittsburg. " Hartman thought otherwise; and, being empow-
ered to carry the fight to a finish, did so in excellent style and
won a complete victory over the labor organization. The con-
test had all the usual features the importation of workmen
from other districts, followed by rioting among the strikers, at-
tacks on the " black sheep," and the arrest, trial, and conviction
of the rioters. There was no display of sentimentality among
* the owners ; and the labor-union was temporarily crushed out
of the mill.
The folly of thus crippling a labor organization that gave
the Carnegies an advantage in their iron works over competitors
whose plants were less favorably located, was not yet recognized.
With the possible exception of Mr. Walker, none of the Carne-
gie partners seemed aware of the economic principle underlying
the Amalgamated Association's requirement of uniform wages
for the same class of work regardless of other conditions a
principle that inured to the advantage of the best-equipped and
most favorably located plants. Given a uniform price of labor
throughout the country, the Pittsburg iron-mills, by reason of
their proximity to coal and ore, and their unequalled transporta-
tion facilities, possessed enormous advantages over competitors
in other districts; and an enlightened business policy would
have encouraged any organization that, without unduly interfer-
t ing with the management, kept the cost of labor down to the
level of that possible in the worst-equipped and least favorably
situated works in the country. Recognition of this principle
came later; and brought a change in the company's treatment
of labor organizations. But unfortunately the change was
\ credited to humanitarian motives, instead of being frankly stated
as a business principle; and there inevitably arose conflicts
between the ideal and the real between Andrew Carnegie's
philanthropy and his material interests.
In 1885 Andrew Carnegie made his first public address,
and began that series of lectures and essays on the natural
rights of labor with which his name has since been identified.
" TRIUMPHANT DEMOCRACY" 187
A year later Triumphant Democracy was published. Ostensu
bly a record of the material progress of the United States dur-
ing the preceding fifty years, this book was made a vehicle for
the advanced views of Carnegie on the political and social
equality of all men. It was also a glorification of the toiler.
The book attained a large circulation, especially among work-
ingmen, who were enabled to buy it at a nominal cost through
their labor organizations.
In the same year he also published, in the Forum, an essay
on the relations of capital and labor, in which appeared the
following paragraph :
" While public sentiment has rightly and unmistakably con-
demned violence even in the form for which there is the most
excuse, I would have the public give due consideration to the
terrible temptation to which the workingman on a strike is
sometimes subjected. To expect that one dependent upon his
daily wage for the necessaries of life will stand by peaceably
and see a new man employed in his stead is to expect much.
This poor man may have a wife and children dependent upon
his labor. Whether medicine for a sick child, or even nourish-
ing food for a delicate wife, is procurable, depends upon his
steady employment. In all but a very few departments of labor
it is unnecessary and I think improper to subject men to such
an ordeal. In the case of railways and a few other employments
it is, of course, essential for the public wants that no interrup-
tion occur, and in such case substitutes must be employed; but
the employer of labor will find it much more to his interest,
wherever possible, to allow his works to remain idle and await
the result of a dispute than to employ a class of men that can
be induced to take the place of other men who have stopped
work. Neither the best men as men, nor the best men as
workers, are thus to be obtained. There is an unwritten law
among the best workmen: 'Thou shalt not take thy neighbor's
job.' '
Lofty in spirit and purpose as this essay was, its humani-
tarian intent was grossly perverted by the labor agitator; and
its broad and liberal principles were garbled so as to seem an
authoritative excuse for violence. Unfortunately for the work-
1 88 LABOR CONTESTS
men of Braddock and Homestead, they mistook these high phil-
anthropic views for the serious designs of their employer towards
themselves; and this misunderstanding was intensified by Car-
negie's method of ending the coke strike, mentioned later, and
also by an incident which happened about this time at Braddock.
This was somewhat as follows :
On account of some grievance the women employed in the
Pittsburg laundries refused to work, and enlisted the aid of the
Knights of Labor to keep other women from taking their places.
The Knights of Labor went to Captain Jones and demanded
the discharge of an old Carnegie employee, whose two daugh-
ters were working in one of the proscribed laundries. Jones
refused in that sonorous language with which he was so highly
gifted. The matter was thereupon taken direct to Mr. Carne-
gie, who ordered the man's dismissal, with the remark, " We
cannot afford a strike for a principle. " At the same time he
ordered the old man's wages to be continued for a couple of
months. Strange to say, the sturdy old fellow refused them.
No one was more surprised at this compliance with their
demand than the Knights of Labor themselves ; and its effect
on this dictatorial organization was most disastrous for the Car-
Regies. Within a little while they had a strike of their own as
a result of the meddling of the leaders of this most offensive of
all labor-unions.
In Captain Jones' statement of the causes of the great out-
put of the Edgar Thomson works, quoted in a previous chapter,
he says :
" I soon discovered it was entirely out of the question to
expect human flesh and blood to labor incessantly for twelve
hours, and therefore it was decided to put on three turns, reduc-
ing the hours of labor to eight."
He adds that
"this proved to be of immense advantage to both the company
and the workmen, the latter now earning more in eight hours
ANDREW CARNEGIE'S PINKERTONS 189
than they formerly did in twelve hours, while the men can work
harder constantly for eight hours, having sixteen hours for rest."
Jones' praiseworthy effort to amend the lot of the laborer was
afterwards found to put the Edgar Thomson works at a disad-
vantage with competing establishments where two twelve-hour
turns were the rule; and an effort was made in 1887 to induce
the Edgar Thomson men to return to the old system. At the
same time a sliding scale of wages was proposed, similar to
that which had been found successful in the North Chicago
rolling-mill and in the Crescent Steel Works at Pittsburg. The
men were willing to accept the sliding scale ; but they were
unwilling to return to the twelve-hour system. The usual
strike resulted ; but before it had gone far a committee of the
strikers went to see Mr. Carnegie at the Windsor Hotel, New
York. There he reasoned with them, and talked them into a
conciliatory frame of mind; and they agreed to sign the con-
tract he put before them. The affair seemed to have reached a
happy conclusion ; and the labor leaders left for Pittsburg in
the best of spirits. As Mr. Carnegie bade them good-bye, he
pressed into the hands of each a copy of his Forum essay. This
the men read on the train ; and on their arrival at Braddock
they promptly repudiated the agreement they had signed and
continued the strike.
Mr. Carnegie made no effort to conceal his disappointment
and chagrin. Summoning Captain Jones to New York, a brief
conference was held at the Windsor; and from there Jones
went over to Philadelphia and engaged a little army of Pinker-
ton guards for service at Braddock. Then Mr. Carnegie retired
to Atlantic City, where he was kept posted as to the current of
events by his cousin, George Lauder.
Under the protection of Pinkerton guards the works were
now put in operation by non-union men. The usual disorders
took place, resulting in a slight loss of life ; but eventually the
contest was won by the company. The struggle lasted from.
1 9 o LABOR CONTESTS
December, 1887, till May, 1888. Thus ended the eight-hour
day in a night of sorrow and suffering.
Unfortunately the effect of this incident did not end with
the strike. It is being used in 1903 as an argument against
the compulsory eight-hour day which Congress is now consid-
ering; so that this great step in the elevation of the laborer
will probably be delayed by Jones' unlucky experiment.
Andrew Carnegie's later opinion of the Knights of Labor,
whom he blamed for the untoward result of his efforts at
conciliation, was not very high. When asked by an English
reporter if we have not such an organization in America as the
Knights of Labor, he replied with emphasis :
" Say rather we had. It was one of those ephemeral organi-
zations that go up like a rocket and come down like a stick.
It was founded upon false principles, viz., that they could com-
bine common or unskilled labor with skilled."
The coke strike^ to which reference has been made, also
took place in 1887. This at first was a matter of wages pure
and simple; but, as in so many contests between master and
workmen, higher considerations were soon involved.
As has been related, the Carnegies bought a large interest
in the H. C. Frick Coke Company in 1882. In 1886, by the
withdrawal of two of Mr. Prick's earlier associates, this interest
was largely increased ; and the Carnegies acquired a majority
of the coke company's stock. For the regulation of output and
to control competition, the coke operators of the Connellsville
region had some sort of a gentlemen's agreement; and when, in
1887, trouble concerning wages arose, these owners acted in
unison, and all conferences with the workmen's unions were
conducted by a joint committee. By agreement with the trades-
unions the Knights of Labor and the Miners' and Mine
Laborers' Amalgamated Association the matters in dispute
were submitted to arbitration. The Board of Arbitration con-
sisted of two members appointed by the manufacturers, two by
BAD FAITH ALLEGED 191
the labor-unions, and these four elected a fifth, who was to
serve as umpire in qase of a failure of the whole board to reach
an understanding. This contingency arising, the decision was
left to the umpire ; and his award, when issued, was unfavor-
able to the men. Thereupon a strange condition arose. The
main bodies of the labor-unions accepted the umpire's judgment,
as in good faith they were required to do ; but the local lodges
denounced it as "unjust and unwarranted," and refused to be
bound by it. A strike ensued, which the Knights of Labor
called illegal; and, as if to further justify the characterization,
the men resorted to all the old-time acts of violence. Men who
were willing to work were maltreated and shot; dynamite was
used to blow up the mines ; machinery was destroyed, and thou-
sands of tons of coke were allowed to spoil in the ovens.
It was at this stage that Carnegie cabled from Scotland a
positive order to accede to the strikers' demands ; and, as he
and his partners controlled the Frick Coke Company, the order
was carried out regardless of outstanding obligations to the
other manufacturers. Naturally the defection of the most im-
portant member of the group excited in the rest the bitterest of
feelings ; and Mr. Frick promptly resigned the presidency of
the company which bore his name but which he no longer con-
trolled. The rest of the manufacturers set their teeth and
continued the struggle ; and, to the surprise of everybody, finally
gained a complete victory over their men.
The apparent act of bad faith on the part of the Carnegies
received universal condemnation. It was ranked above that of
the strikers who had repudiated the decision of their umpire.
The breaking up of the combination was also deplored because
it involved demoralization of prices on which the wages ulti-
mately depended ; so that in the long run the workmen would
suffer by the act. But those who made these criticisms did not
consider the risk which the Carnegies ran in banking up their
blast-furnaces. The best furnace will not stand banking for
more than three months ; and during this time there is always
1 92 LABOR CONTESTS
a danger of its becoming chilled. When this happens it has to
be blown out, and partially if not wholly relined at a cost of at
least $35,000. At this date the Carnegies had seven furnaces
banked; so that there was almost a quarter of a million dollars
in hourly peril. In addition, there was a positive loss amount-
ing to many thousands of dollars daily through the stoppage of
iron production, and further losses in the steel-mill through lack
of material. On the other hand, the advantage which the Car-
negies would have over competing iron manufacturers by get-
ting a regular supply of coke and continuing work while all
others were idle, was one almost beyond compute. While this
alone might not tempt the average manufacturer to a breach of
faith, it would do much to console him for it if other conditions
produced it.
Of course the workmen were not informed as to all the
reasons which prompted the Carnegies to yield to their de-
mands ; and they not unnaturally supposed that their victory was
due, in some mysterious way, to the inalienable rights of labor
and all the other pretty texts with which they had become
familiar. There is no doubt that this misunderstanding gave
rise to the frightful disorders that ensued, three or four years
later, in the same region.
The settlement just narrated was made in July, 1887. From
that time until early in 1890 the H. C. Frick Coke Company
paid twelve and one-half per cent, more for labor than did other
operators. In February, 1890, however, a general scale was
agreed upon covering wages in the Connellsville region under
which all operators paid the same rate. This scale expired a
year later; and the men refused to sign the new one designed
in continuation of it. After repeated conferences, at which no
agreement was reached, an effort was made to start the mines
and ovens with new workmen. For three months the whole
region was given over to rioting, arson, and murder. Armed
mobs attacked the mines and coking plants, killing and maim-
ing the workers, destroying the machinery, and defying the
ETIQUETTE FOR STRIKERS 193
county officials who sought to bring order out of the industrial
chaos. Gangs of men marched through the night terrorizing
the peaceful members of the community; and when deputy
sheriffs attempted to arrest them, the strikers assumed military
formations and shot their pursuers at sight. One such body
marched across a large extent of the country, occasionally
brought to bay, when battle was given and taken with all the
tactics of irregular warfare. In this guerilla-like march and
pursuit eight of the strikers were killed and many more were
seriously wounded. As the Carnegies had a fair supply of coke
on hand at the outbreak of hostilities, and as the prices of steel
and rails were low, the war was fought to the bitter end.
Eventually the rioters were caught or driven out of the region,
and others willing to accept the wages they refused received
adequate protection.
A year after the establishment of peace came the Home-
stead strike. In the mean time, however, Mr. Carnegie's Fonim
essay, in the hands of undiscriminating workmen, had become
a veritable manual of etiquette for strikers. The last quoted
sentence, the Carnegie contribution to the decalogue, became
in its terse and picturesque vigor, the most understandable of
all the tenets of "the little boss; " and there was no Slav nor
Hungarian at Connellsville and Homestead so mean of intellect
as not to realize its full purport. As for the Knights of Labor,
over whom Mr. Carnegie had pronounced so slighting a funeral
oration, they sprang to a joyful resurrection with this text as
their watchword : "Thou shalt not take thy neighbor's job."
Before proceeding to a review of the immediate causes of
the greatest of all the Carnegie struggles with labor, it is fit-
ting that a glance should be given at the material conditions
surrounding the workmen at Homestead. To this end may be
quoted the sympathetic summary of a description of the men at
work which is published in Bernard Alderson's biography of
Mr. Carnegie under the latter's own supervision :
194
LABOR CONTESTS
"Thus far," says Mr. Alderson, "we have studied Mr. Car-
negie in theory. Now let us see how he has put all these ad-
mirable sentiments and unimpeachable principles into practice.
The best test that can be applied is the condition of labor sur-
rounding his own workmen. Mr. Hamlin Garland, a well-
known writer, though having no technical experience, describes
the impressions he received from a visit to the Homestead
works. His training as a novelist naturally impelled him
to look at things from
the descriptive writer's
point of view, and not
become interested in the
picturesque, both horri-
ble and attractive. In
his approach to Home-
stead Mr. Garland was
struck by the desolate
appearance of the dis-
trict, and the wretched-
ness of the town itself,
he says, was deplorable.
'The streets were hor-
rible; the buildings
were poor; the side-
walks were sunken and
full of holes; and the
crossings were formed
of sharp-edged stones
like rocks in a river-
bed. Everywhere the
yellow mud of the
streets lay kneaded into
sticky masses, through
which groups of pale,
lean men slouched in
faded garments, grimy with the soot and dirt of the mills.
The town was as squalid as could well be imagined, and the
people were mainly of the discouraged and sullen type to be
found everywhere where labor passes into the brutalizing stage
of severity. '
These depressing conditions are apparently inseparable from
a newly established iron or steel mill in any locality, and this
is especially true where soft coal is used. Grime, heat, hard,
exhausting labor, these are conditions that are to be found in
Copyright by S. S. McClure Co.
'Looks like hard work."
"A DOG'S LIFE" 195
every steel-mill, and the works of the Carnegie Company differed
little from other manufactories of the same kind except in ex-
tent, but it may be truly said that the larger the mill the more
depressing the conditions.
After commenting on the muggy, smoke-laden atmosphere,
he [Garland] proceeds to describe the conditions inside the
mills, and the men engaged at their tasks, and tells us that they
worked with a sort of desperate attention and alertness.
'That looks like hard work/ I said to one of them to whom
my companion introduced me. He was breathing hard from
his labor.
'Hard! I guess it's hard. I lost forty pounds the first
three months I came into the business. It sweats the life out
of a man. I often drink two buckets of water in twelve hours ;
the sweat drips through my sleeves and runs down my legs and
fills my shoes.'
'But that isn't the worst of it, said my guide, a former
employee. 'It's a dog's life. Now those men work twelve
hours, and sleep and eat out ten more. You can see a man
don't have much time for anything else. You can't see your
friends or do anything but work. That's why I got out of it.
I used to come home so exhausted, staggering like a man with
a jag!"
With this picture in mind it is worth while to quote from
Mr. Alderson's preceding page a characteristic phrase from
Andrew Carnegie :
" The lot of a skilled workman," he says, " is far better than
that of the heir to an hereditary title, who is very likely to lead
an unhappy, wicked life."
Little wonder that the skilled workman, with the sweat
dripping through his sleeves and running down his legs and
filling his shoes, failed to understand the man in whose inter-
est he was making such terrific exertions. " Kind master," he
cabled during the strike, " tell us what you want us to do and
we will do it ! "
" Again and again he [Hamlin Garland] is impressed, " con-
tinues Mr. Alderson, " with the general appearance of exhaus-
tion that is shown in the haggard faces of the toilers, and he
says 'their work is of the sort that hardens and coarsens.'
196
LABOR COXTESTS
Everywhere in the enormous sheds were pits gaping like the
mouth of hell, and ovens emitting a terrible degree of heat, with
grimy men filling and lining them. One man jumps down,
works desperately for a few minutes, and is then pulled up. ex-
hausted. Another im-
mediately takes his place ;
there is no hesitation.
When he spoke to the
men they laughed. It
.vinter when he made
his visit. They told him
to come in the summer,
during July, when one
could scarcely breathe.
An old workman, relat-
ing the experience of his
first day's toil, says he ap-
plied for work, and the su-
perintendent, saying he
looked strong and tough,
set him on the pit work.
For the first time in his
life he fainted repeatedly,
and when he left at night
he could scarcely drag
himself home.
They take great risks,
too; and the injuries sustained are of a most frightful char-
acter. An explosion in the pouring of the molten metal, and
half-a-dozen men are terribly mangled and one or two killed.
Such incidents are not infrequent. The continuous dread of
an accident, combined with the intense drive of the work,
constitute a fearful strain. This is a fearful picture, painted
in the darkest, most repulsive colors, but this is but one
side of it. Nothing is said of the comfortable homes which
steady employment at from four to ten dollars a day enable
the steady, sober workman to maintain the self-confidence
that continuous employment begets. The environments of
the mills were improved as rapidly as possible, streets were
paved, schools were established, and public institutions of
various kinds were initiated. Several free educational institu-
tions-were founded by Mr. Carnegie in an attempt to help his
workmen help themselves. The other side of the picture is
full of light and hope, though there are many exceptions.
Copyright b\ S. S. HcClure Co.
Preferable to a peerage.
DANTE S INFERNO
197
;y of the men have happy families, and those of the better
class are very well off. The company houses are very good,
and have all modern conveniences, and the men who are sober
and care for their families, besides being prosperous live
comfortably.
The effect of the work on these men was brought out in
a conversation which Mr. Garland had the morning after his
visit to the mills. 'The worst part of the whole business,' said
the workman, 'is, it brutalizes a man. You can't help it. You
start to be a man, but you become more and more a machine,
and pleasures are few and far between. It's like any severe
labor; it drags you down mentally and morally just as it d<x
physically. I wouldn't mind it so much but for the long hour
Twelve hours is too long. ! '
Allowing for a certain journalistic exaggeration this lurid
picture is a fairly truthful one. But in the glare of furnace
fires shadows loom big and black; and these have caught the
journalist's attention. The fierce heat, the ruddy light, the
tense, stripped figures
of the workers, in-
evitably suggest
Dante's Inferno; and
thoughts of bodily
suffering and mental
anguish come to the
onlooker in the nat-
ural sequence of asso-
ciated ideas. Greater
familiarity with the
processes of open-
hearth steel-making
would have given Mr.
Garland the means of distinguishing subjective impressions
from outside facts. If a furnace man drinks two buckets of
water in twelve hours, the sweat will run down his legs and into
his shoes ; and while his condition may not be preferable to that
of an heir to a peerage, it may yet be free from bodily suffering.
'More and more a machine."
I 9 8
LABOR CONTESTS
It is, however, this peerage idea and others akin to it which,
coming with all the glamour of the Carnegie name into such
works as those just described, wrought trouble for the managers,
and did more than any one thing to make the men obstinate
and unreasonable. The man who climbs down into the pit to
break up the red-hot slag is not himself an idealist, nor has he
the mental equipment to make necessary allowances for the
enthusiastic ideal-
ism of another. In
his hands Trium-
phant Democracy be-
came not the gospel
of a universal eman-
cipation it was in-
tended to be, but a
special message of
independence from
his master to him-
self. The exaltation
of labor turned the
laborer's head ; and he
gravely accepted the
tributes to his superi-
ority with which the
mere capitalist en-
dowed him. This was shown a hundred
times during the strike, when the men
thought that all they had to do was to let Andrew Carnegie in
Scotland know what his wicked managers at Homestead were
doing, for him to order its discontinuance by cable.
Concerning the difficulties under which the Board of Mana-
gers constantly labored through this tendency of their chief to
talk for publication, Mr. Lauder, his cousin, relates how he
once told the following parable to Mr. Carnegie. It is more
grewsome than funny, but it has a moral.
'Not an idealist.'
LAUDER'S GREWSOME STORY 199
Once upon a time a man collided with a street car. The
remains were collected and built up into some human sem-
blance, and placed on view in the undertaker's for identifica-
tion. After a while a lady drove up and claimed the corpse as
that of her husband ; and she ordered the handsomest funeral
that money could buy, with flowers, plumes, and every costly
accessory to mourning. As she was about to leave the estab-
lishment, the undertaker's assistant, in hastening to open the
door for her to pass, gave a jar to the slab on which the de-
ceased reposed; and the dead man's jaw fell open, revealing a
golden tooth. At sight of this the lady hurriedly counter-
manded the orders she had given for the imposing obsequies,
saying that she saw by the golden tooth that she had made a mis-
take and that it was not her husband after all. As she passed
out of the door, the disappointed undertaker turned and apostro-
phized the deceased. " What kind of an idiot are you anyway?
If you'd only known enough to keep your mouth shut ! "
Mr. Carnegie, who tells so many stories on others, laughed
heartily and promised to moderate his speech-making.
Coming now to the more immediate causes of the great strike
of 1892, mention should be made of the difficulties which pre-
ceded it in 1889, when the sliding scale of wages first went into
effect at Homestead.
Up to the summer of 1889, the wages of workers making
merchant steel, or steel to take the place of merchant iron, had
not been put upon a settled basis. At first the work was done
in iron-mills ; and after some discussion the same wages were
paid as were given for working iron. With the building of
mills especially to work Bessemer and open-hearth steel into
merchant sizes and shapes, and with their improved machinery
and appliances, the output per worker was very largely in-
creased ; and as the wages were based on tonnage, earnings had
grown beyond all reason. Rollers and heaters, for instance,
were earning from five to ten times as much as the skilled
200 LABOR CONTESTS
mechanics who had erected the machinery on which the former
worked. A general reduction amounting to about twenty-five
per cent, was therefore proposed by the firm; and a sugges-
tion was made for the automatic regulation of future wages by a
scale which should follow, from month to month, the movements
of the prices received by the firm for raw steel. This was
naturally resisted by the tonnage men ; and both sides prepared
for the struggle which seemed unavoidable.
On the Carnegies' side these preparations took on some-
what of an opera-bouffe character. Detectives in greasy caps
and smutty clothes were sent into the local stores and saloons,
where they sat on barrels or
stood at bars listening to
the workmen's talk. They
K m^ sought lodgings in the town,
and talked with wives and
mothers ; and the gossip
thus picked up was sent to
New York, where Andrew
Carnegie read it surrounded
by the humanitarian texts
and quaint heraldic devices
A detective.
in honor of the toiler with
which he had covered his library walls. Then he planned a
strenuous campaign for his partners, and went to Scotland.
The result was very much as if Napoleon had attempted
the conquest of the Rhine provinces from Josephine's bower in
the Tuileries. A hundred or more deputy sheriffs, picked off
the streets of Pittsburg, went up to Homestead, where they
were met by the strikers, relieved of their maces, caps, and coats,
and sent back home. And this was the comedy out of which
grew the tragedy of Homestead.
Henry Clay Frick was not yet in full control ; and the work-
men interpreted the weakness and vacillation of the company
as fresh expressions of the benevolent theories of " the little
DEPUTY SHERIFFS ROUTED 201
boss." The discomfiture of the deputy sheriffs was followed
by a conference with the leaders of the strikers' union, the
Amalgamated Association of Iron and Steel Workers of the
United States, and again the firm received a defeat. Mr.
Abbot, who conducted the negotiations for the Carnegies, pro-
claimed that " both sides are victors, and both sides are proba-
bly vanquished in minute details." The principle of the sliding
scale was accepted by the men ; but instead of a monthly adjust-
ment of prices, as the Carnegies first demanded, the rate was
fixed for six months, and " the average price of said six months
shall be the basis upon which wages shall be paid for the next
three months, the rate to change every three months thereafter
based upon the average price of the preceding three months."
This excellent rule was nullified by numerous exceptions, which
led to constant bickerings and disputes for the next three years.
In many departments the rate of payment was left unchanged
with more exceptions. These exceptions, in the form of
foot-notes, were more numerous in the agreement than the
rules they were designed to elucidate. The old force of men
was retained ; but where places could be found for any of the
newcomers no objection was to be made to them.
The organ of the labor-unions, commenting on this settle-
ment, remarked that the Amalgamated Association now " stands
head and shoulders higher than ever before, for it comes out of
one of the most difficult crises in its history intact, with honor
and with the renewed confidence of the public. It is a victory
to the association, for thoroughly prepared as that body was to
pursue the contention to the bitter end, yet in the midst of hours
when minds were naturally inflamed conciliation prevailed, and
the strength and usefulness of organization were demonstrated.
It is a victory for the firm in that the management displayed
reason, substituting as they did concession for the 'ultimatum.' '
And verily the " concession " thus substituted was far-reach-
ing beyond anything ever dreamed of by the management.
Every department and sub-department had its workmen's " com-
202 LABOR CONTESTS
mittee," with a " chairman " and full corps of officers, who,
fearing that their authority might decay through disuse, were
ever on the alert to exercise it. During the ensuing three
years hardly a day passed that a " committee " did not come for-
ward with some demand or grievance. If a man with a desira-
ble job died or left the works, his position could not be filled
without the consent and approval of an Amalgamated commit-
tee. Usually this committee had a man in waiting for it ; and
the firm dared not give it to any one else. The_rjieth0d-4^ap-
portioning the work, of regulating the turns, of altering the ma-
chinery, in short, every detail of working the great plant, was
subject to the interference of somje busybody representing the
Amalgamated Association. Some of this meddling was special
under the agreement that had been signed by the Carnegies,
but much of it was not; it was only in line with the general
policy of the union. This is shown by the constitution of the
Amalgamated Association, in which, to take an instance from
its rules for puddling-mills, it was provided that "when a va-
cancy occurs in the boiling department the oldest boiler, if he
so desires, shall have the preference of the furnace so vacated."
The heats of a turn were designated, as were the weights of the
various charges constituting a heat. The product per worker
was limited; the proportion of scrap that might be used in
running a furnace was fixed; the quality of pig-iron was stated;
the puddlers' use of brick and fire clay was forbidden, with ex-
ceptions ; the labor of assistants was defined ; the teaching of
other workmen was prohibited; nor might one man lend his
tools to another except as provided for. And under similar
irksome regulations the Carnegie managers conducted their
business for three years, losing money on almost every ton of
ingots, blooms, and billets turned out. During this time some
of the men earned from $12 to $15 a day; and Homestead be-
came familiar with the sight of steel-workers being driven to
the mill in their carriages. Thus did their lot become compa-
rable to that of an heir to the peerage.
CHAPTER XIV
Strikers arresting a news-
paper correspondent.
From Harper's Weekly.
THE HOMESTEAD BATTLE
THE chagrin experienced by Andrew
Carnegie at the unsatisfactory outcome
of his plans in 1889 was forcibly ex-
pressed in many of his characteristic
letters to Pittsburg during the three-
year term of the agreement with the
Amalgamated Association ; and as
the time approached for its revision
measures were taken to avoid a repeti-
tion of the former fiasco. What these
were may now be frankly stated.
The injudicious attempts of Mr. Carnegie's literary friends
to deprive him of his proper share of the honor or responsibil-
ity of planning the discomfiture of the Amalgamated Associa-
tion, joined to his own modest disclaimers, have led to much
mystification in the public mind concerning his real position
in the matter. It is time to let in the light on this much-
debated question.
On April 4th, 1892, nearly three months before the expira-
tion of the agreement with the Amalgamated Association, An-
drew Carnegie sent to Pittsburg the draft of a notice to the
Homestead employees. Mr. Frick, who was to be chairman of
the consolidated Carnegie Steel Company, then in process of for-
mation, disapproved of this notice, so that, despite Mr. Car-
negie's wishes, it was never issued, and has never before been
published. It is as follows :
203
204 THE HOMESTEAD BATTLE
ANDREW CARNEGIE,
5 West51stSt
New York, April 4, 1892.
NOTICE
TO EMPLOYEES AT HOMESTEAD WORKS.
These Works having been consolidated with the Edgar
Thomson and Duquesne, and other mills, there has been forced
upon this Firm the question Whether its Works are to be run
'Union' or 'Non-Union.' As the vast majority of our em-
ployees are Non- Union, the Firm has decided that the minor-
ity must give place to the majority. These works therefore,
will be necessarily Non-Union after the expiration of the pres-
ent agreement.
JHiis-^doeajiotirnply that tjernen will rnake lower wages.
On the contrary/most ot the men at Edgar Thomson airchBtr*
quesne Works, both Non-Union, have made and are making
higher wages than those at Homestead, which has hitherto been
Union.
The facilities and modes of working at Homestead Works
differ so much from those of steel mills generally in Pittsburgh
that a scale suitable for these is inapplicable to Homestead.
A scale will be arranged which will compare favorably with
that at the other works named ; that is to say, the Firm intends
that the men of Homestead shall make as much as the men
at either Duquesne or Edgar Thomson. Owing to the great
changes and improvements made in the Converting Works,
Beam Mills, 'Open Hearth Furnaces, etc., and the intended run-
ning of hot metal in the latter, the products of the works will be
greatly increased, so that at the rates per ton paid at Braddock
and Duquesne, the monthly earnings of the men may be greater
than hitherto. While the .lumber of men required will, of
course, be reduced, the extensions at Duquesne and Edgar
Thomson as well as at Homestead will, it is hoped, enable the
firm to give profitable employment to such of its desirable em-
ployees as may temporarily be displaced. The firm will in all
cases give the preferences to such satisfactory employees.
This action is not taken in any spirit of hostility to labor
organizations, but every man will see that the firm cannot run
Union and Non-Union. It must be either one or the other.
CARNEGIE'S UNCOMPROMISING ATTITUDE 205
On his original draft of this notice Mr. Carnegie adds :
" Should this be determined upon, Mr. Potter [the superin-
tendent] should roll a large lot of plates ahead, which can be
finished, should the works be stopped for a time."
At this time an exchange of views had taken place between
the Amalgamated Association and the firm ; and the workmen
had been given till June 24th to definitely decide whether they
would accept a new agreement embodying certain reductions in
the wage- scale. Before any word had been received from the
workmen's organization Mr. Carnegie went abroad ; and on June
loth he sent a long letter setting forth his views as to the con-
duct and possible outcome of the negotiations. The part relat-
ing to these is as follows :
COWORTH PARK,
SUNNINGDALE,
BERKS.
June 10, 1892.
"As I understand matters at Homestead, it is not only the
wages paid, but the number of men required by Amalgamated
rules which makes our labor rates so much higher than those
in the East.
Of course, you will be asked to confer, and I know you will
decline all conferences, as you have taken your stand and have
nothing more to say.
It is fortunate that only a part of the Works are concerned.
Provided you have plenty of plates rolled, I suppose you can
keep on with armor. Potter will, no doubt, intimate to the men
that refusal of scale means running only as Non-Union. This
may cause acceptance, but I do not think so. The chances are,
you will have to prepare for a struggle, in which case the notice
[i.e. that the works are henceforth to be non-union] should go
up promptly on the morning of the 25th. Of course you will
win, and win easier than you suppose, owing to the present
condition of markets." ......
ANDREW CARNEGIE.
Notwithstanding Mr. Carnegie's desire, thus expressed on
June loth, that no further conference should be held with the
workmen, Mr. Frick, in his anxiety to avoid open conflict, met
206 THE HOMESTEAD BATTLE
Mr. Weihe, the president of the Amalgamated Association, and
a committee of about twenty-five men from Homestead on June
23d. The conference lasted from ten o'clock in the morning
until late in the afternoon; and resulted in Mr. Prick's making
an important concession on one of the three points of differ-
ence between the firm and the men. Neither side being willing
to yield on other points, the conference broke up and prepara-
tions were made for the struggle.
In the mean time other letters had been received from Mr.
Carnegie, showing his uncompromising attitude towards the
labor-union. Writing from Coworth Park, Sunningdale, Berks,
on June i/th, 1892, he underlined a passage as follows :
" Perhaps if Homestead men understand that non-acceptance
means Non-Union forever, they will accept."
Again on June 28th, he wrote, also from Coworth Park,
Sunningdale, Berks :
" Cables do not seem favorable to a settlement at Home-
stead. If these be correct, this is your chance to reorganize
the whole affair, and some one over Potter should exact good
reasons for employing every man. Far too many men required
by Amalgamated rules.
From indications, I cannot resist the conclusion that the
'Force Report' has not received necessary attention at Home-
stead, but I see you are pegging away on the right track."
The outstanding differences between the firm and its work-
men at this time were truly insignificant; and there is no doubt
they would have been promptly settled but for the fact that the
general rolling-mill scales were also under discussion ; and the
Amalgamated Association feared that any concessions at Home-
stead would weaken them in their contest with the iron-
mills throughout the country. The questions involved were
these :
First, a reduction in the minimum of the wage-scale. This
was based upon the price of 4 by 4 Bessemer billets ; the reduc-
tion proposed being from $25 to $22.
CAUSES OF THE STRIKE 207
Second, a change in the date of the operation of the scale
from June 3Oth to December 3ist.
Third, a reduction of tonnage rates at those open-hearth
furnaces and mills where important improvements had been
made and new machinery added, whereby the output had been
largely increased.
As to the justice of the company's demands there is no
question. The price of all the products of the Homestead mills
had fallen, during the term of the last agreement, from sixteen
to thirty-nine per cent. ; and billets had dropped from $27 a
ton to $22. Under the old agreement there was no decline in
wages after billets had got below $25 a ton, no matter how low
prices went ; and the steel company not unreasonably claimed
that as they were willing to pay proportionate wages when
prices rose, the men ought to accept reductions to a reasonable
point when prices declined. So they fixed upon $22 as a mini-
mum; and Mr. Frick, at the conference of June 23d, raised this
to $23. The men contended for $24, and there the matter
ended.
Concerning the second point, the company claimed that as
contracts for material were generally made at the beginning of
the year, the price of labor ought to be fixed at the same time.
This was resisted by the men on the ground that if a contest
arose between themselves and their employers it was better
that it should come in summer than in winter. No doubt past
experience of the horrors of mid-winter strikes justified their
opposition to the change; but unfortunately for the consistency
of the men, the steel company was able to point out that in
some competing establishments the Amalgamated Association
permitted their scale to expire on December 3ist. The com-
pany's demand was therefore strengthened by precedents.
As to the third point, which involved the most important
matter of all, the reasonableness of the Carnegie demand was
beyond question. The proposed reduction in tonnage rates
applied to only three departments in the works : namely, the
208
THE HOMESTEAD BATTLE
32-inch slabbing-mill, the n 9-inch plate-mill, and the open-
hearth furnaces. An illustration will best serve to make clear
the point at issue.
When the scale for 1889 was signed for the 1 1 9-inch plate-
mill, it was based on rolling plates direct from ingots, and the
output was about 2,500 tons a month. But when the ingots
were first passed through the 32-inch slabbing-mill the great
The ii9-inch plate-mill.
Copyright by S. S. McClure Co.
machine that had developed out of Zimmer's little Universal mill
and then through the 1 1 9-inch plate-mill, the tonnage of the
latter was more than doubled. With the sweet unreason of the
toiler, the men who operated the 1 1 9-inch plate-mill refused to
share with their employers the cost of running the slabbing-
mill, and demanded just as much for rolling plates from slabs
as they had been getting for rolling plates from ingots ; insist-
ing, moreover, upon receiving all the benefit of the investment
that had gone into this million-dollar machine. Similarly in
FIRST ACTS OF VIOLENCE 209
the open-hearth department. When the 1889 scale was signed,
this was a comparatively new business ; and in three years it
had been vastly improved. Tonnages had increased ; labor had
been made easier by the substitution of machines; but the
benefits had mainly gone to the workmen.
Most striking of all, however, is the fact that out of over
3,800 men employed at Homestead, the wages of only 325 were
affected by the new scale. Over 3,500 men stood exactly as
they did before, and were satisfied. During the previous week
most of them had signed agreements with the company for the
ensuing three years ; and although 3,000 of them belonged in
no way to the Amalgamated Association, and, indeed, were for
the most part ineligible for membership in it, they broke their
contracts and joined the dissatisfied clique that controlled the
local lodges of the labor-union. It should be said, however, in
justice to them, that ninety-nine men in a hundred believed the ,
Carnegie Company was simply " bluffing " as it had done in
1889; and even the hundredth man was convinced that "the
little boss " would never enter into a serious conflict with work-
men for whom he had expressed such affection. So they hanged
Chairman Frick and Superintendent Potter in effigy ; and when
an assistant was sent to rernove the figures he was drenched
Vvith streams of water fropa hose pipes and jeered out of the
shops. One man who ventured to express his intention of con-
tinuing at work was badly beaten, then conducted to the train,
and banished from the town.
A few days after the fruitless conference of June 23d the
eight lodges of the Amalgamated Association at Homestead
created an Advisory Committee, consisting of five delegates
from each lodge, with Hugh O'Donnell as chairman. The pur-
pose of this Advisory Committee was to take charge of the
strike. Its first active measure was to pass a resolution order-
ing the mechanics, laborers, and other employees of the mill, who
had made new contracts with the company, to refuse to work
until the Amalgamated Association was recognized and its
210 THE HOMESTEAD BATTLE
terms agreed to. It being evident that the order would be
obeyed, the company gradually closed the several departments
of the works, until on the ist of July there was not a wheel
turning nor a furnace burning in the entire plant.
At the same time the Advisory Committee proceeded to
organize an army and navy for offensive and defensive opera-
tions, and a local government to supplant the municipal authori-
ties. In speaking of these proceedings the chairman of the
Advisory Committee used the following language :
" The Committee has, after mature deliberation, decided to
organize their forces on a truly military basis. The force of
four thousand men has been divided into three divisions or
watches, each of these divisions is to devote eight hours of the
twenty-four to the task of watching the plant. The Command-
ers of these divisions are to have as assistants eight captains
composed of one trusted man from each of the eight local
lodges. These Captains will report to the Division Command-
ers, who in turn will receive the orders from the Advisory
Committee. During their hours of duty these Captains will
have personal charge of the most important posts, i.e., the
river front, the water gates and pumps, the railway stations,
and the main gates of the plant. The. girdle of pickets will
file reports to the main headquarters every half hour, and so
complete and detailed is the plan of campaign that in ten min-
utes' time the Committee can communicate with the men at any
given point within a radius of five miles. In addition to all
this, there will be held in reserve a force of 800 Slavs and
Hungarians. The brigade of foreigners will be under the com-
mand of two Hungarians and two interpreters."
Details of pickets were sent out upon every highway leading
to Homestead, or towards the steel works, instructed to permit
no person who could not give a satisfactory account of himself
to enter Homestead. A steamboat was chartered to patrol the
Monongahela River with an accompanying fleet of some fifty
rowboats, located where they would be available for an armed
body of men on the shortest possible notice. A system of
signals was adopted, flags being used in daylight, and lights
and Roman candles at night. A large steam-whistle was pro-
STRIKERS' MILITARY ORGANIZATION 211
cured and placed upon the Electric Light Works in the borough
of Homestead; and a code of signals arranged so that the num-
ber of blasts from this whistle would be understood to indicate
the point at which the commanders desired their men to assem-
ble for battle.
The efficiency of this organization was quickly put to a test.
On the very first evening of the lockout intelligence was re-
ceived at headquarters that two hundred "black sheep" were
on their way to the works. In less than two minutes shrill
blasts from the steam-whistle conveyed the false news to the
waiting scouts ; and before another ten minutes had elapsed a
thousand men had been marshalled at the point of the expected
landing. Such alarms becoming inconveniently frequent, camp-
fires were lighted along the river-banks and more pickets estab-
lished; and all night long the stream was patrolled by the
strikers' steamer Edna, which had been furnished with special
steam-whistles for signalling.
On the second day a slight indication of smoke was ob-
served at one of the chimneys of the works ; and the Advisory
Committee sent a written notice to the company that the fact
"caused considerable excitement among our men," and that "if
the gas is not turned off we cannot be responsible for any act
that may be committed." At the same time placards were
printed and posted in the hotel and places of business in Home-
stead, saying :
All Discussion of the Wage Question
in This Place is Positively Forbidden.
By order of the
ADVISORY COMMITTEE.
In the same arbitrary manner the strikers refused to admit
men to the works whose presence and attention was necessary
to prevent deterioration and destruction of machinery.
212 THE HOMESTEAD BATTLE
On July 4th the Carnegie Company served a written notice
upon the sheriff of Allegheny County, calling upon him to pro-
tect the property, and holding the county responsible for its
injury or destruction. The next day the sheriff accompanied
by deputies went to Homestead, and was escorted round the
works by the Advisory Committee, who pointed out their
"guards," and asked the sheriff to give them an official status
by making them his deputies. The astonished official declined
the request and returned to Pittsburg. The same day he sent
up a dozen deputies, who were met by the strikers and promptly
hustled out of town. The Advisory Committee aided their
departure by conveying them across the river in their steamer
and putting them in the trolley-cars for Pittsburg. A sheriff's
proclamation against unlawful acts was torn down and the bill-
poster escorted out of town.. Such were the results of the at-
tempts of the county officials to safeguard the works.
The same night two barges, containing some three hundred
watchmen hired by the Carnegie Steel Company through Pin-
kerton's Detective Agency and destined for Homestead, were
towed up the river from a point a few miles below Pittsburg.
The men were accompanied by a deputy sheriff ; and arrange-
ments had been made to deputize them, if circumstances arose
to require it. The barges were fitted up with sleeping bunks
and cooking arrangements ; and, besides a store of provisions,
they carried several cases of firearms and ammunition. In
other respects they were just like any of the other barges used
on the river. In spite of all precautions to keep the character
and destination of the boats secret, they were observed by a spy
of the Advisory Committee as they passed under the Smithfield
Street bridge, Pittsburg, soon after midnight ; and a warning
was promptly telegraphed to Hugh O'Donnell. Similar notice
was sent from Lock No. i, some three miles below Homestead.
At once the preconcerted signal was given; and the sleeping
town was roused by the shrieks of the committee's steam -
whistle. Men, women, and children tumbled into the streets
THE ARRIVAL OF THE PINKERTONS 213
in wild disorder and hurried towards the river-bank. Many
openly carried guns, rifles, and revolvers; and others armed
themselves with staves torn from 'the garden fences as they ran
along.
At the river all was dark and silent. A mist hung over
the water and dimmed the glare of the electric lamps and
fires of the Carrie furnaces across the stream. In a little
while the lights of the barges were sighted; and the strikers'
steamer Edna gave the alarm by blowing her whistle. Pistols
were also fired from numerous little boats and by dozens of
pickets along the bank. Every steam- whistle in town joined
in the shrill demonstration ; and the slumbering Pinkertons
turned out of their bunks at the sound and started to break
open the cases of rifles to defend themselves. Only a dozen
were at first allowed to have the rifles. Thus the barges, pelted
by the strikers' bullets, passed the town of Homestead; while
the shouting crowds ran along the banks, keeping pace with
them and firing as often as they could reload their arms. One
bullet passed through the pilot-house of the Little Bill, the tow-
ing steamer, and others rattled against the sides of the barges.
When the people on the banks reached the steel works they
were stopped for a moment by the wooden fence which sur-
rounded the place ; but a section of this was soon torn down,
and the crowd swept through the gap, arriving at the pumping
station in time to see the barges thrust against the shore.
By this time the dawning light of a new day was breaking
upon the scene. As the gangplank was shoved ashore from the
barges, the crowd rushed down the slope to the water's edge
with loud cries and threatening gestures. One of them, a
young fellow, who, curiously enough, was a religious leader in
the community, threw himself flat upon the gangplank, as if
daring the Pinkertons to march over his prostrate body. Dur-
ing the struggle to push the fellow aside a shot was fired, fol-
lowed first by a scattering volley from the crowd, then by the
return fire of a dozen of Pinkertons. The fusillade lasted for
2I 4
THE HOMESTEAD BATTLE
a couple of minutes, during which most of the crowd on shore
scrambled up the bank in terror and confusion, and took refuge
behind the piles of steel in the yards. During this exchange
of shots two of the strikers were killed and several wounded.
A number of the Pinkerton men were also injured, one of them
fatally.
After the people on shore had retreated behind the piles of
metal and the Pinkerton men had taken refuge inside the barges,
The Homestead Battle.
~-Froi)i Frank Leslie's Illustrated Weekly.
the firing ceased ; and a short conference was held between the
leaders on shore and the chief of the watchmen. The latter
explained that he and his men had been sent there to take
possession of the works to guard them for the company, and
that they would certainly enter the place, using force if need
be. The strikers defied the leader of the watchmen, saying
that before he entered those mills he would " trample over the
dead bodies of 3,000 honest workingmen. "
DYNAMITE AND FIRE-RAFTS 215
A couple of hours later a number of watchmen stepped
ashore from the barges, and were met by a rattling volley from
the strikers, who had erected barricades of steel billets and
beams in the mill yard. The Pinkertons rapidly sought shelter
in the boats again; and then returned the fire through windows
and port-holes.
Soon after nine o'clock the mill workers secured a small
cannon ; and with this they opened fire from the opposite side
of the river. During the second skirmish the tugboat Little
Bill, which was the only means of moving the barges, went up
the river with the dead and wounded ; and when she returned
an hour or two later to haul away the two barges, she was sub-
jected to a merciless fusillade. One of her crew was killed and
several wounded ; and the pilot was obliged to lie down to avoid
being shot, as the boat drifted through the gauntlet of fire and
so escaped to Pittsburg. Thus, left helpless in their stranded
barges, the wretched watchmen spent the long sultry day a
day in which American workmen seemed inspired with the spirit
of the French Reign of Terror. There was no horror conceived
in that barbaric time that had not its counterfeit presentment
at Homestead. Oil was pumped onto the boats and spread
upon the river, to burn up the imprisoned Pinkertons. Burn-
ing rafts were floated down to them. Dynamite was hurled
upon the barges to break them open that sharpshooters might
more readily pick off some crouching figure. A car, loaded
with oil, was set on fire and run down an inclined track towards
the barges, in the hope that some of the burning stuff would
reach them. Natural gas was directed from a main near by so
as to envelop the boats, and rockets were fired into it to explode
it. The cannon on the opposite bank, soon re-enforced by a
second one, played upon the barges and their helpless occupants ;
and riflemen from a hundred points of vantage potted any un-
wary sufferer who ventured near a window or other opening for a
gasp of fresh air. But as if to keep the name of the American
workman from everlasting infamy, every diabolical effort failed.
216
THE HOMESTEAD BATTLE
The dynamite exploded harmlessly; the oil-covered waters
flowed away from the barges ; the burning car stopped short in
its course; the fire of the cannon was wild, and it was stopped
after a shot had taken off the head of a striker. But the hor-
rors that were achieved were enough to give this 6th of July a
place of its own in the history of Western Pennsylvania. A
white flag was shown on the barges, and greeted with shouts of
Shooting at the Pinkerton guards from behind barricades of steel.
From the London Daily Graphic.
" No quarter," and a volley of bullets. A man was seen to fall
near the flag ; and the shouts of anger changed to cheers. Every
eminence about the works, the long trestle and the new station
in the mill, were black with vociferous crowds. The adjoining
hills were lined with watchers ; and everywhere the thirst of
human blood was manifest. No voice was raised in pity; no
word was spoken for peace. From Pittsburg, and even from
the Edgar Thomson works at Braddock, armed re-enforcements
marched to help the strikers, who were already fifteen to one,
and sheltered by fortifications of solid steel. The wretched
SAVAGERY OF THE MOB 217
watchmen, cooped up in stranded boats, had neither the power
to advance nor to retreat.
The events of this dreadful day have been told by Myron R.
Stowell, an eye-witness, in a little book full of sympathy for the
workmen. For this reason his story cannot be impugned on
the ground of prejudice against the strikers. He says:
" Many a battle has gone down in history where less shoot-
ing was done and fewer people were killed. There were hun-
dreds of men, well armed, thirsting for the lives of others in the
boat, while thousands of men and women stood just out of range
and cheered them on. Each crack of a rifle made them more
blood-thirsty and each boom of the cannon more eager for the
blood of the officers. One of the strikers remarked :
'There are but two weeks between civilization and barba-
rism, and I believe it will take only two days of this work to
make the change.'
Indeed, it looked as if the veneering of gentility had al-
ready been cracked.
Then another shot and another cheer told that somebody
had been hit. The Pinkertons were too badly scared to make
any effort to shoot, and were crowded like sheep into the barge
which lay farthest from shore. Fresh ammunition and arms
had arrived from Pittsburg for the strikers and the men bent
harder to their tasks. They worked nearer the river that their
fire might be more deadly. The workers could be seen drag-
ging their bodies like snakes along the ground to where they
could get a better shot. The cannon would again roar, but the
shot would land in the water above the boat. Once a piece of
one of the doors fell with the shot. Several of the imported
officers were revealed, and a score of shots were fired in quick
succession. Some one must have fallen, for cheer on cheer of
triumph went up from thousands of throats. At every shot of
the cannon thereafter a volley of shots was heard from the
sharpshooters, who had seen some one on the boat. They only
shot when they saw something, and every crack of a rifle meant
an attempt on a human life.
At one o'clock there was a wild commotion at the new sta-
tion. A tall, brawny workman waved two sticks of dynamite
high above his head. By his side was a basket full of the
deadly explosive. The excited gathering, that a moment before
had been wild, was silent, and listened. His voice was loud
and distinct. He said :
21 8 THE HOMESTEAD BATTLE
'Men of Homestead and Fellow Strikers: Our friends
have been murdered our brothers have been shot down before
our eyes by hired thugs ! The blood of honest workmen has
been spilled. Yonder in those boats are hundreds of men who
have murdered our friends and would ravish our homes ! Men
of Homestead, we must kill them ! Not one must escape alive ! '
'Aye, aye, aye!' shouted a half thousand voices. Then
the Herculean workman continued :
'The cannon has failed to sink the boats the oil has failed
to burn them. Who will follow me ? These bombs will do the
work ! '
As he spoke he flourished the dynamite. A score of men
raised their clubs, and regardless of the fact that they were
within the range of the Pinkerton rifles, followed him. They
ran in their haste to take human life. They were not savages,
but men of families, who, perhaps a few hours before, had held
infants on their knees or kissed their wives farewell. They
were good, strong men, wrought up by the sight of blood, and
ready to take the lives of those who threatened them and theirs.
With their penknives they scooped up holes for the car-
tridges and fuse. The latter was very short it would burn
quickly. The crowds could see them light the matches and hold
the messengers of death until they burned closely. Then, with
strong right arms drawn until every muscle showed like a whip-
cord, they let fly, and the explosions were cheered by the excited
men and women. The distance was long, and the bombs had
to be thrown from behind some shelter, and many of the mis-
siles fell short of the mark, but when one landed on the roof
cheer upon cheer went up. One man had crawled down on the
structural iron, and then, by making a throw of nearly a hun-
dred feet, struck the boat. The front end heaved and a few
boards flew. He lighted another fuse and another stick of
dynamite. It described a semi-circle in the air, leaving a trail
of smoke behind. It was going to land squarely on top of the
Monongahela, but instead of striking the roof it splashed into
a bucket of water. It sizzled for a moment and then went out
without exploding. It had hardly died, however, when another
from the pump-house fell on the roof. It lay there smoking a
moment while the strikers prayed it might wreck the craft.
There was ah explosion, and a hole was torn in the roof. It
was not then known whether it killed anybody inside, but when
the boards flew up a gondola hat went flying into the air.
Another bomb was thrown into the bow of the boat. The clear-
ing smoke showed a door was gone. Human forms were seen
SURRENDER OF THE WATCHMEN 219
within, which was a sign for the sharpshooters to do some exe-
cution At i 135 o'clock several men went out on the bow of
the boat to pick up their dead and wounded companions. There
were a half-dozen shots and two more men fell. Then came
more curses for the firm and additional cheers of victory.
Another stick of dynamite fell five minutes later, and in
three minutes more another tore off a part of the planks. Then
the men drew closer and their work became more deadly.
Then it was decided to throw oil again and burn the boat.
At 12:10 o'clock the hose carriage belonging to the city, and
half a dozen barrels of lubricating oil were brought to the water
tanks, together with a fire engine, but there was great difficulty
in getting it to work. In the meantime a new supply of dyna-
mite had arrived. The boxes were knocked open and the men
drew out the explosives as unconcernedly as they would have
handled their dinners. Then they made another rush for the
barges and there was more sharp firing.
About this time a coal steamer's whistle was heard and the
sharpshooters stampeded to the rear for an instant, thinking
another corps of deputies had arrived. The alarm was false,
and they soon resumed operations. Then they got the oil to
flowing, but, as in the morning, it circled around the boats and
refused to burn.
The fight still continued and more attempts were made to
burn the boats and the three hundred Pinkertons within. It
was four o'clock when the giant form of President William
Weihe, of the Amalgamated Association, appeared. Hundreds
followed him into one of the mills. He tried to address the
men but they refused to listen to him. President-elect Garland
was there also, but the cries of 'Burn the boats, kill the Pinker-
tons, no quarter for the murderers,' drowned his voice."
Towards five o'clock a fresh attempt at surrender was made
by thQ men in the barges. Again a white flag was displayed.
Fortunately at this moment the leaders of the strikers were con-
ferring as to what measures should next be taken; and the Pin-
kertons' signal suggested a way of ending a desperate situation.
O'Donnell, chairman of the Advisory Committee, stepped down
the embankment to receive the message of peace. The spokes-
man of the imprisoned wretches offered to surrender on condi-
tion of protection from mob violence. This being agreed to,
the doors were flung open, and the victorious strikers crowded
220
THE HOMESTEAD BATTLE
into the barges. The reporters who followed them found one
dead and eleven wounded watchmen. The rest were disarmed
and marched out, while the crowd swarmed over the boats for
loot. Cases of provisions were broken open and the contents .
distributed among the women and children; bedding and every
portable thing was taken away. Then the barges were set on
fire ; and the strikers turned to escort their prisoners to a pub-
lic hall in town. One by one, with bared heads, the latter de-
The burning barges, the evening of the surrender.
scended the gangplank, climbed up the incline to the mill yard,
and across it to the public road ; and never did captives suffer
more in running a gauntlet of redskins. For nearly a mile the
watchmen walked, ran, or crawled through a lane of infuriated
men, women, and children ; and at every step they were struck
with fists, clubs, and stones. Their hats, satchels, and coats
were snatched away from them ; and in many cases they were
robbed of their watches and money. Not a man escaped injury.
One of them, Connors, unable to move and defend himself, was
deliberately shot by one of the strikers and then clubbed.
CRUELTY TO CAPTIVES
221
Another, named Edwards, also wounded and helpless, was
clubbed by another striker with the butt end of a musket. Both
of these men died ; and another became insane and committed
The attack on the surrendered guards.
From Leslie's Weekly.
suicide as a result of the fearful beating received after surren-
der. About thirty others were afterwards taken to the hospital
with broken arms and disjointed ankles, shattered noses, gouged
eyes, bruised heads, and injured backs.
222 THE HOMESTEAD BATTLE
At midnight a special train went to Homestead in charge of
the sheriff of Allegheny County, and took the Pinkerton men
to Pittsburg for safety. The day's casualties were ten men
killed and over sixty wounded. Several died later.
Flushed with victory the strikers now put the borough of
Homestead into a state of siege. All strangers were excluded,
including a party of prominent railway and state officials who
chanced to be passing through Pittsburg. Many citizens were
arrested and taken before the strikers' committee, just as in the
early days of the French revolution. Hotel keepers were noti-
fied not to lodge or accommodate newspaper reporters whose
accounts were not favorable to the insurrectionist government.
Telegraph operators were compelled to exhibit to the self -con-
stituted authorities private messages that were left for transmis-
sion over the wires of the public companies, so that it might be
ascertained if anything detrimental to the dignity or the inter-
ests of the Advisory Committee was being sent out. Several
journalists were arrested and held until satisfactory evidence
could be obtained as to their identity; and all reporters were
required to have credentials and passports from the Advisory
Committee, and to wear a conspicuous badge of the Amalga-
mated Association to insure their personal safety. Some re-
porters who had incurred the strikers' ill will by publishing
reports unfavorable to the workmen were arrested, and com-
pelled, hatless and coatless, to leave the town at midnight afoot,
the privilege of securing even a private conveyance being denied
them. And while these conditions obtained, a delegation of
strikers was at Harrisburg, assuring the governor of Pennsyl-
vania that perfect peace and tranquillity prevailed in the bor-
ough of Homestead; that the civil authorities were respected
and obeyed; and that the sheriff's call for troops should be
disregarded.
It chanced, however, that the governor's own representative,
sent to Homestead for the purpose of reporting on the condi-
tion of affairs, was arrested by the strikers and roughly escorted
ARRIVAL OF THE NATIONAL GUARD 223
out of town. He returned, and again he was hustled away.
This happened three times. Such a practical illustration of
the negation of the rights of citizens sufficed to convince the
governor of the need for state troops; and on July loth he
issued an order to Major- General Snowden to call out the en-
tire division of the National Guard, numbering some 8,000 men,
and mass them at Homestead to aid the sheriff of Allegheny
County. Two days later the troops arrived ; the open reign of
terror at Homestead came to an end ; and the Carnegie officials
were put in possession of their property.
CHAPTER XV
ATTEMPTED ASSASSINATION OF MR. FRICK
BEFORE the country had recovered from the
thrill of horror which succeeded the Home-
stead battle, an attempt was made to murder
Mr. Frick; and the bloody details of the
assault were cabled to the ends of the earth,
bringing fresh disgrace upon the unhappy town
of Homestead. On Saturday, July 23d, a Russian
anarchist shot and stabbed Mr. Frick while he was
seated in conversation with his associate, Mr. Leishman. This
man had made several previous visits to the Carnegie offices,
where he represented himself as the agent of a New York em-
ployment bureau. Once he had a brief interview with Mr.
Frick, who told him he thought there would be no need for the
services of any agency, as the managers were making arrange-
ments by which they hoped to get their old employees back.
On the day mentioned this man called again and sent in his
card to Mr. Frick, who had just returned from lunch and had
dropped into a chair at the end of the flat-topped desk at which
he usually worked. It was not his usual seat; and he had
moved into it to be nearer Mr. Leishman, who sat diagonally
opposite. Mr. Frick had swung round in his chair so that his
side was turned to the door through which the boy brought the
card. Before the boy could regain the front office with Mr.
Frick's message, the man stepped through the swinging door
and glanced quickly around. Mr. Frick looked up in surprise
at the sudden entry of a stranger, and saw the man make a
quick movement towards his hip pocket. Realizing the mean-
ing of the movement, Mr. Frick sprang to his feet. At the
224
A DESPERATE STRUGGLE 225
same moment the fellow had drawn and fired a revolver with
lightning rapidity, and the bullet, after passing through the
lobe of the left ear, struck Mr. Frick in the neck. The shock
sent him to the floor ; and as he lay on the carpet the assassin
fired a second time, and again the bullet struck Mr. Frick in
the neck.
While this was happening Mr. Leishman had jumped from
his seat and was running round the long desk to get at the fel-
low. He reached him just as he fired a third time, and either
seized or knocked up his hand, so that the shot went wild, the
bullet striking the wall near the ceiling. Mr. Leishman cour-
ageously grappled with the fellow, and while he was wrestling
with him for the revolver, Mr. Frick struggled to his feet and
grasped his assailant from behind. In this way the three men
swayed violently to and fro for a few thrilling moments, and
then all three fell with a crash against the low wall just under
the window overlooking Fifth Avenue, the Russian underneath.
A crowd, attracted by the shots, stood on the opposite side of
the street ; and seeing Mr. Frick struggling near the win-
dow, thought he was trying to raise it to give an alarm, or to
escape from some enemy invisible from the sidewalk. This
occasioned one of the many erroneous reports sent out to the
newspapers.
The fall had loosened Mr. Frick 's grasp of the fellow's left
arm ; and while Mr. Leishman still held on to the right hand and
the revolver, the Russian drew a dagger made from an old file
and plunged it again and again into Mr. Frick, who, bending
over him and weak from his exertions and wounds, was unable to
avoid the blows. First the dagger was thrust into his hip, just
behind the head of the femur; then it struck him in the right
side and glanced along one of the ribs; and a third blow tore
open the left leg just below the knee. Despite his terrible in-
juries Mr. Frick again threw himself on the ruffian, and finally
pinioned his arm to the floor. Then the clerks, who had watched
the struggle from the door as if spellbound, rushed in and
226 ATTEMPT ON MR. PRICK
secured the anarchist. The revolver and dagger were torn from
his grasp and he was dragged to his feet. Covered with the
blood that had flowed from Mr. Prick's wounds, he was a sorry
looking object; and Mr. Leishman looked almost as bad. The
latter, who had so bravely seized the smoking revolver a few
moments before, and heard the trigger snap even a fourth time,
now collapsed utterly, and had to be carried from the room.
Mr. Frick, the only calm person present, leaned against the
desk and watched the last ineffectual struggles of the wretch
who had tried to kill him.
Thrown at last into a chair and held there, the Russian ap-
peared to be mumbling something, and all but Mr. Frick were
too excited to notice it. At this moment a deputy sheriff
rushed in with a drawn revolver and made as if he would shoot
the man. Mr. Frick interposed. " No, don't kill him," he
said ; " raise his head and let me see his face." As they did so
it was seen that the man's apparent mumbling was caused by
his chewing something; and on his mouth being forced open,
a cap containing fulminite of mercury, such as anarchists had
previously used to commit suicide, was found between the des-
perate fellow's teeth. Even when overcome by numbers, he
still sought to carry out his devilish purpose by an explosion
which would involve Mr. Frick and a dozen innocent men in
his own destruction.
By this time the office was filled with an excited crowd. A
German carpenter, who had been at work in the building, broke
through the throng and aimed a blow at the Russian's head
with his hammer. It missed him. Then arose cries of " Shoot
him ! " " Lynch him ! " and amid all the excitement no one
seemed to give a thought to Mr. Frick, who still stood leaning
against the desk, with the blood streaming from his many
wounds. A number of policemen who had been attracted by
the noise quickly surrounded the assassin to protect him, and
led him from the room. Then the others turned to Mr. Frick.
A score of hands hastened to his support ; and he was gently
MAGNIFICENT COURAGE 227
placed on a lounge in an inner room, while hurried calls were
sent for physicians.
While the blood-sodden clothes were being removed, and
before the physicians arrived, Mr. Frick talked calmly about the
assault, and commented with a smile on the assassin's amazing
muscular power; nor did his courage fail him when the sur-
geons began probing for the bullets. At first the doctors said
there was little hope of recovery. The first bullet had entered
the side of the neck, cutting the lobe of the ear, and had ranged
backwards and downwards until it almost reached the shoulder.
The second bullet had followed a similar course, but from right
to left.
While the doctor was probing in the wounds Mr. Frick
calmly directed him as to the place where the bullet would be
found, and then as the instrument reached it, he remarked :
"There! that feels like it, doctor." And while the probing,
cutting, and sewing up of the wounds were going on, he dictated
a cablegram to Mr. Carnegie, telling him that he was not
mortally injured, and he signed several letters which he had
previously dictated. He also completed the arrangements
which he had begun earlier in the day for a loan; and signed
all the necessary papers. The doctors said that it was the
most magnificent exhibition of courage they had ever seen.
Most touching of all, and even more characteristic of the
man, was his manner of greeting Mrs. Frick on his arrival
home a few hours later in the ambulance. Mrs. Frick had been
critically ill ; and the excitement of the Homestead battle had
rendered her condition precarious. Mr. Frick's first thought
after the attack was of his wife; and he gave very emphatic
orders that no alarming reports be permitted to reach her.
Then he sent two of her relatives who had hastened to the
flffice on hearing of the assault, to break the news to her gently,
and to let her understand that his injuries were trifling. So
well did they succeed that, as Mr. Frick was carried past her
bedroom door, she was in no way alarmed. Telling the stretcher
228 ATTEMPT ON MR. FRICK
bearers to turn his head around so that he could speak to his
wife, Mr. Frick addressed her by name, and called out a cheery
inquiry after the youngest child. Then he assured her that he
was not seriously hurt and would be in to see her before very
long.
The fanatic who made this ferocious attempt on Mr. Prick's
life had nothing to do with the strikers. He was of the usual
type of European anarchist ; and he had been only a few years
in the country. He went from New York to Pittsburg specially
to kill Mr. Frick. When asked why he selected Mr. Frick in
particular, he exclaimed in astonishment : u Why, what would
the company do without Mr. Frick ? Carnegie is thousands of
miles away, and he would not dare to oppose the men as Frick
has done." So here again was an echo of Carnegie idealism.
As for the undiscriminating criminal himself, he was sentenced
to twenty-one years in the penitentiary for the assault, and one
year in the workhouse for carrying concealed weapons.
The news of the attempted assassination created intense ex-
citement at Homestead, where it was bulletined a few minutes
after the occurrence. Crowds gathered at every street corner
and in front of the telegraph stations and newspaper offices ;
and whenever a man received a message hundreds crowded
around him to hear the latest news. The strikers heard of the
attempt with mixed feelings. The more ignorant workmen
rejoiced openly. " Frick's dead by this time and we've won
the strike," shouted one. " The Carnegie Company don't amount
to shucks without Frick," commented another, as he joyfully
predicted the early collapse of the firm's resistance. But at the
headquarters of the labor-union the news was received with dis-
may. While the leaders believed the strikers blameless of this
particular horror, there already had been so much to set the
public against them that they feared the discredit of this fresh
act of violence would fall on them. And their alarm was jus-
tified. From one end of the country to the other, and across
the oceans from distant lands, swept a wave of fierce indigna-
THE ROGUE'S MARCH 229
tion against the strikers and denunciation of their methods.
Innocent of this particular crime, the strikers had to bear the
disgrace of it.
On Mr. Frick himself the incident seemed to have no effect
except for the pain and inconvenience it occasioned. His sorely
wounded body suffered ; but while nurses and attendants were
prostrate under the intense heat of July, the patient made no
complaint. From the first day he insisted on being kept in-
formed of the progress of events. Newspapers, letters, and
telegrams were read to him ; and he dictated answers to many
of the latter. His grasp on the strike situation was never
relaxed for a moment. No move was made by the men that was
not instantly telephoned to him; and nothing was done by the
managers that did not emanate from him, or that was not previ-
ously submitted for his approval. Except that the contest was
now conducted from Mr. Frick's Homewood residence instead
of from his Fifth Avenue office, no difference was to be seen in
the situation.
By this time the scene of disorder near Pittsburg had be-
come the centre of interest for the whole world. No other war
was being fought; no other event of universal interest was
taking place ; and the attention of the people of every land was
focussed on the beautiful spot on the Monongahela which John
McClure had so infelicitously named Amity Homestead. In
every country columns were daily printed describing the hap-
penings at the works and the military camp ; and imaginary
scenes at the bedside of Mr. Frick found their way into news-
papers printed in many languages.
As if to keep this interest from flagging, a young soldier
in the camp called for three cheers for Frick's assassin. His
outraged commander immediately had him triced by the thumbs
to a tent-pole and then drummed him, with his head half shaved,
out of camp to the tune of the Rogue's March. The fellow had
swallowed some tobacco juice while undergoing his punishment,
and this had made him sick. So the sensation-loving journals
230 ATTEMPT ON MR. PRICK
exploited the incident as a brutal punishment ; and this ran
round the world as a valuable item of news.
There was one spot, however, where these items of news
did not readily penetrate; and that was Rannoch Lodge, on
beautiful Loch Rannoch. Here, thirty-five miles from the
nearest railway and telegraph station, Andrew Carnegie, in ac-
cordance with plans previously made, denied himself to report-
ers and refused to answer telegrams or letters relating in any
way to Homestead. Having delegated his authority to Mr.
Frick, he knew that the measures they had jointly planned
would be carried out to the letter, despite the efforts of anarch-
ists or the protests of politicians of a less ruddy hue. And so
he went fishing; and the London papers sought in vain to get
an expression of opinion from him either on the Homestead
battle or the attempt on Mr. Prick's life.
In the account of the Homestead strike which Mr. W. T.
Stead published in 1900, after, as he claims, "talking on the
subject with Mr. Carnegie this autumn," he repeats the story
that the labor leaders " had applied to Mr. Frick for Mr. Car-
negie's address in order to telegraph him Mr. Carnegie being
at that time absent in Scotland, and his address not being
known to any one in this country except his business associates.
Mr. Frick refused to give the address; whereupon Mr. Reid
obtained it from our Consul- General in London, John C.
New, and then cabled Mr. Carnegie, in which he accepted
the terms proposed by Mr. O'Donnell, and urged that Mr.
Frick be seen immediately with a view to effecting the settle-
ment."
This statement is so incoherent that it is not clear who
"accepted the terms proposed by Mr. O'Donnell." The idea
sought to be conveyed is that it was Mr. Carnegie who ac-
cepted the terms of the strikers, since no one else mentioned in
this strange narrative had anything to accept. To make this
matter clear once for all Mr. Carnegie's cablegrams are here
given as received in Pittsburg:
CARNEGIE'S CABLEGRAMS 231
RANNOCH, July 28, 1892.
We have telegram from Tribune Reid through high official
London Amalgamated Association reference Homestead Steel
Works. The proposition is worthy of consideration. Replied
"nothing can be done. Send H. C. Frick document. " You
must decide without delay. Amalgamated Association evidently
distressed. *
The next day this was modified by the following :
RANNOCH, July 29, 1892.
After due consideration we have concluded Tribune too old.
Probably the proposition is not worthy of consideration. Use-
ful showing distress of Amalgamated Association. Use your
own discretion about terms and starting. George Lauder,
Henry Phipps Jr., Andrew Carnegie solid. H. C. Frick forever !
And in his answer to Mr. Whitelaw Reid, Mr. Carnegie
cabled that no compromise would be considered by him, and
that he would rather see grass growing over the Homestead
works than advise Mr. Frick to yield to the strikers.
The rest of the story quoted by Stead is fairly accurate.
" Mr. Frick was obdurate. He refused to consider the matter
at all, denounced the strikers as assassins, and declared that if
Carnegie came in person, in company with President Harrison
and the entire Cabinet, he would not settle the strike."
In regard to Stead's complaint that Mr. Carnegie's address
in Scotland was not given to the strikers, he should have known,
after he had "talked on the subject with Mr. Carnegie this
autumn," that the latter had selected such an out-of-the-way
residence as Rannoch Lodge for the very purpose of eluding
the appeals of the workmen which it was foreseen his speeches
and writings would call forth. And his silence during all the
exciting happenings at Homestead was in accordance with plans
made long before.
Mr. Carnegie's consistency at this time provoked much com-
ment. Two days after the assault on Mr. Frick, the St. James'
Gazette reported that " Mr. Carnegie has preserved the same
232 ATTEMPT ON MR. FRICK
moody silence towards all the members of the American Lega-
tion here ; and all other persons in London with whom he is
usually in communication have not heard a word from him since
the beginning of the troubles at Homestead." The publica-
tion went on to say that " the news of the shooting of Mr. Frick
has intensified the feeling of all classes against Mr. Carnegie.
A large meeting of the labor representative leagues was held in
this city yesterday, at which a resolution was adopted strongly
condemning the course of Mr. Carnegie in regard to the Home-
stead troubles. The resolution added that should Mr. Carnegie
insult British workmen by further philanthropic efforts in their
behalf, it was hoped that they would show their detestation of
him by contemptuously refusing to accept any offers of help
from him."
Now became prominent the contrast between Mr. Carnegie's
idealistic utterances and the doings at Homestead. News-
papers in every country and of every political color drew atten-
tion to the startling discrepancy; and not a few of them saw in
the violence of the strikers the logical outcome of the Carne-
gie commandment : "Thou shalt not take thy neighbor's job."
The host of critics, that arose with angry clamor, discovered
in Mr. Carnegie's practical philanthropy but the expression of
an unmitigated egotism; and many brutal and insensate taunts
were flung at him as he lay silent and self-contained in his
Highland shooting-lodge. It was altogether a pitiful exhibi-
tion. Even the London Times could not forego the chance to
fling a sneer. Commenting on the assault on Mr. Frick, the
writer concludes his editorial thus :
" Mr. Carnegie's position is singular. The avowed cham-
pion of trades-unions now finds himself in almost ruinous con-
flict with the representatives of his own views. He has prob-
ably by this time seen cause to modify his praise of unionism
and the sweet reasonableness of its leaders. Or, are we to as-
sume that this doctrine is true in Glasgow but not in the United
States, or that it ceases to be applicable the moment Mr. Car-
negie's interests are touched? "
OUTBURST OF PUBLIC ANGER 233
A day or two later the representative of the Associated
Press reported that he had driven from Kingussie to Rannoch
Lodge, " and made repeated efforts to obtain an interview with
Mr. Carnegie in order to obtain a statement from him of his
views regarding the troubles at Homestead, Pa., and more espe-
cially concerning the shooting of H. C. Frick, " but "his mis-
sion then proved fruitless. This morning, however, he was
more successful," and Mr. Carnegie, "after persistent inter-
rogation by the caller, finally said, 'Well, I authorize you to
make the following statement : I have not attended to business
for the past three years, but I have implicit confidence in those
who are managing the mills. Further than that I have nothing
to say.' "
The storm raised by the publication of this short interview
proved how wise Mr. Carnegie had been in previously saying
nothing. The tide of sympathy, which had swept from the
strikers, now returned to them ; and municipal bodies, work-
men's unions, political clubs, vied with preachers, lecturers, and
editors in England and America in fierce denunciation of one
whose acts, it was said, " conform so little to his verbal utter-
ances." Some of these expressions of contempt and hatred were
puerile and stupid in their violence. " Count no man happy
until he is dead," wrote the St. Louis Post- Dispatch. "Three
months ago Andrew Carnegie was a man to be envied. To-day
he is an object of mingled pity and contempt. In the estima-
tion of nine-tenths of the thinking people on both sides of the
ocean he has not only given the lie to all his antecedents, but
confessed himself a moral coward. One would naturally sup-
pose that if he had a grain of consistency, not to say decency,
in his composition, he would favor rather than oppose the or-
ganization of trades-unions among his own working people at
Homestead. One would naturally suppose that if he had a grain
of manhood, not to say courage, in his composition, he would
at least have been willing to face the consequences of his incon-
sistency. But what does Carnegie do ? Runs off to Scotland
234
ATTEMPT ON MR. FRICK
out of harm's way to await the issue of the battle he was too
pusillanimous to share. A single word from him might have
saved the bloodshed but the word was never spoken. Nor has
he, from that bloody day until this, said anything except that
he 'had implicit confidence in the managers of the mills.' The
correspondent who finally obtained this valuable information,
expresses the opinion that 'Mr. Carnegie has no intention of
returning to America at present.' He might have added that
America can well spare Mr. Carnegie. Ten thousand 'Carnegie
Public Libraries ' would rot compensate the country for the
direct and indirect evils re-
sulting from the Homestead
lockout. Say what you will
of Frick, he is a brave man.
Say what you will of Car-
negie, he is a coward. And
gods and men hate cowards."
In spite of the outward
show of indifference with which
Mr. Carnegie received these vicious
attacks, his sensitive soul suffered
T?:. keenly. He afterwards told a repre-
sentative of the Associated Press that
"the deplorable events at Homestead
had burst upon him like a thunderbolt from a clear sky. They
had such a depressing effect upon him that he had to lay his
book aside and resort to the lochs and moors, fishing from morn-
ing to night."
Meanwhile Mr. Frick, propped up in bed, and swathed in
bandages, daily received the reports of the managers of the dif-
ferent works, dictated replies to letters and telegrams, and
allowed neither bodily pain nor a domestic bereavement to
slacken his grasp of the situation. On Friday, August 5th,
thirteen days after the attempt on his life, he astonished his
business associates by suddenly walking into the office as if
'Fishing from morning to
night."
MR. PRICK'S RETURN 235
nothing had happened. He left his home unattended, entered
a street car, and without fuss or ceremony returned to the office
and took his seat at his desk. It was characteristic of the
man's simplicity. The previous day he had attended the funeral
of his youngest child, born in the midst of this excitement and
dead because of it. The mother's life was almost involved in
the sacrifice.
CHAPTER XVI
THE AFTERMATH OF WAR
UNDER the protection of the state
militia, workmen willing to accept
the wages which the strikers re-
fused were at once introduced into
the deserted mills. Major-General
Snowden, who was in command of
the troops, took a firm hold of the
situation the moment he arrived; and open
defiance of law and order ceased at the sound
of the first bugle-call. The impression had
gone abroad among the strikers that the
militia had come to prevent the landing of more Pinkertons.
The illusion was dispelled in a single sentence of the com-
mander : "The gates are open. Any one may go in if the
company permits it." In three days a hundred men were at
work; in two weeks nearly a thousand were inside the mill, and
one of the regiments had left for home.
With the fatuity that had characterized the actions of the
Amalgamated Association from the outset, a sympathetic strike
was now ordered in the other Carnegie works. Although the
scale had been signed at the Upper and Lower Union Mills and
at Beaver Falls, the men at these establishments broke their
agreement on July 1 4th, and left the mills in a body. Super-
intendent Dillon had both the Pittsburg mills running full with
non-union labor within four weeks ; and the unprofitable enter-
prise at Beaver Falls was allowed to remain idle for several
months. Thus the Amalgamated Association unnecessarily
236
AN INDUSTRIAL STORM-CENTRE
237
lost three more mills at a time when it was fighting for its very
existence.
The newspaper files of that period show that the industrial
storm-centre at Homestead still held the attention of the world.
At Little Rock, on July i6th, Carnegie was burnt in effigy.
The same day the London Echo, once owned by Andrew Car-
negie, demanded explanations of him as to the report that he
had " fortified his works with barbed and electrically charged
Military camp overlooking the Homestead Works.
wire." The London Financial Observer of the same date
preached a sermon on the text of Nero fiddling while Rome was
burning.
" Here we have this Scotch- Yankee plutocrat meandering
through Scotland in a four-in-hand, opening public libraries
and receiving the freedom of cities, while the wretched Belgian
and Italian workmen who sweat themselves in order to supply
him with the ways and means for his self-glorification are starv-
ing in Pittsburg."
Pittsburg newspapers at the same time were gravely discuss-
ing the advisability of refusing Mr. Carnegie's recent gift of
money for a library ; and in both chambers of the American
Congress denunciations of Frick, Carnegie, and Pinkerton were
freely uttered. The world seemed topsy-turvy ; and the strange
doctrine that the strikers had a natural right to work in the
238 THE AFTERMATH OF WAR
Carnegie mills at wages fixed by themselves was voiced in a
hundred different forms. In some cases sympathy with the
strikers took a practical form ; as when the Fairport Fishing
Company of Ashtabula offered them " 2,000 pounds of fresh or
salt fish." A day later a Chicago bishop joined the Financial
Times of London in abusing "Czar Carnegie."
On the 1 9th warrants were issued for the arrest of the prin-
cipal leaders of the riot on a charge of murder; and the news-
papers simultaneously reported that Mr. Dillon had 800 men
at work in the Union Mills. The same day a special commit-
tee appointed by Congress to investigate the Homestead labor
troubles held its first meeting ; and work was resumed at the
open-hearth department and the armor-plate mill. The gov-
ernor of Pennsylvania also arrived at Homestead. On the 2Oth
Keir Hardie, M. P., who had achieved notoriety by his bad man-
ners and grotesque behavior in Parliament, sent the strikers'
fund ;ioo which Andrew Carnegie had previously given him
towards his election expenses ; and Ben Butler came out in an
erudite opinion on the possibility of extraditing Carnegie on a
charge of murder. So laughter followed tears.
On July 22d the non-union men at Duquesne stopped work
in sympathy with the Homestead strikers ; but some of them
regretting their action a few days later, a little riot occurred
when they tried to get back into the mill. A few soldiers were
sent over from Homestead ; a dozen warrants were issued for
the arrest of the ringleaders ; and the trouble ended in a pic-
turesque man-hunt on the hills and the sending of the mana-
cled prisoners to Pittsburg. These men were all convicted of
rioting.
The last day of this eventful month fell on Sunday. The
scene in the works was thus described in the papers next
morning :
" With for a church the biggest mill in America, boarded by
a high fence and a protectorate of one hundred and fifty armed
watchmen, with one thousand soldiers in easy reach, the non-
STEAD'S GARBLED STORY
239
union men in the Homestead plant gave thanks to God this
morning. About four hundred of the new men had gathered
in the beam-mill and found seats on rough, improvised benches.
An orchestra from Pittsburg played ' Nearer, My God, to Thee,'
and Chaplain Adams of the Sixteenth Regiment, standing where
the sunshine glistened on his epaulets, preached a sermon that
The Sheridan cavalry and the Governor's troop going to the rescue of Battery B's
cannon, which the strikers would not permit to be unloaded from the cars.
From Harpers' Weekly,
touched many hearts, on a famed biblical character, Saul of
Tarsus."
The same paper, under the caption " Everybody Condemned,"
tells of a conference on the Homestead situation of the Central
Labor Union in New York.
By the 5th of August fifteen hundred men were at work at
Homestead ; and on the 8th the strike at Duquesne ended in a
stampede for work in which more men were hurt than in the
previous riot. About the same time the members of the con-
gressional committee of investigation fell out among themselves,
refused to sign their chairman's report, the minority of two be-
240 THE AFTERMATH OF WAR
came the majority, and of the other members each made a report
for himself. Thus five reports were submitted by the commit-
tee ; and it is from one of these expressions of individual opin-
ion that Mr. W. T. Stead quotes a phrase in condemnation of
Mr. Frick which has since been embodied in Alderson's author-
ized biography of Andrew Carnegie :
" The Committee of Investigation of the House of Repre-
sentatives," says Mr. Stead, "roundly condemned Mr. Frick and
his officers for lack of patience, indulgence, and solicitude, and
they say :
'Mr. Frick seems to have been too stern, brusque, and
somewhat autocratic, of which some of the men justly com-
plain. We are persuaded that, if he had chosen, an agreement
would have been reached between him and the workmen, and
all the trouble which followed would thus have been avoided.' '
This quotation, which, by the way, is garbled by Mr. Stead
so as to omit a qualifying clause and to include an important
word (" chosen ") not used in the original, expresses the views
of a single individual, Mr. Gates, and the other members of
the committee who had heard the evidence refused to sign it.
Mr. Stead's conclusion that "Mr. Frick, indeed, seems to have
been the villain of the piece all through " is also adopted by
Mr. Carnegie's biographer. In such ways history is made.
While the confused and contradictory reports of this com-
mittee of investigation contain little of value, the testimony of
the witnesses examined by it has much in it that suggests the
underlying causes of the strike and the violence offered to the
company's watchmen. As this is a matter of public record it
need not be repeated here. A single quotation from the testi-
mony of Mr. T. V. Powderly, General Master Workman of the
Knights of Labor, will serve as an illuminating example.
" Does your organization countenance the prevention of non-
union men taking the place of striking or locked-out men ? "
Mr. Powderly was asked.
" THY NEIGHBOR'S JOB" 241
" We agree with Andrew Carnegie, 'Thou shalt not take thy
neighbor's job,' " answered the chief of the Knights of Labor.
The report of the Senate Committee also made use of a
quotation from Carnegie's Forum article ending with the same
terse commandment, to illustrate the course which Mr. Frick
ought to have followed in his treatment of the workmen ! Under
all this censure Mr. Frick remained silent, and to this day he
has never said a word either in explanation or self-defence.
During all this time the strikers, overawed by the militia,
had been fairly peaceable. A few assaults on non-union work-
men were made whenever a small body of the latter was caught
by night or in an out-of-the-way place ; but the growing hope-
lessness of their position now made some of the old workers
desperate. Superintendent Potter was stoned as he sat on his
porch. The company's steamer was fired on by men concealed
in a passing train. The house of a "scab" was set on fire;
and an attempt was made to burn down a big boarding-house
where non-union men were lodged. Dynamite was used in an
attempt to injure one of the Union Mills. But these sporadic
outbreaks had no effect beyond that of alienating the sympathy
which the press and people of the country had so conspicuously
bestowed upon the strikers a little while before. A butcher
was boycotted for supplying the troops with ice; a school was
deserted because the teachers were the daughters of an Associa-
tion man who had wearied of the strike and gone back to work.
The oorough council was crippled because the unionists would
not sit with the non-unionists. Through it all the condition of
the works was slowly improving; and day by day more men
were found at work. By the third week in September more
troops had been sent away, and the strike was practically a
thing of the past.
Organized labor, however, was slow to acknowledge its de-
feat. Up to this time the Knights of Labor had contributed
16
242 THE AFTERMATH OF WAR
nothing to the cause of the strikers beyond a voluminous sym-
pathy and some talk of a general boycott of Carnegie products.
Now, in the hands of Master Workman Hugh Dempsey of Dis-
trict Assembly No. 3, it brought to the strikers' aid a weapon
hitherto happily unknown in American industrial warfare.
This was poison a mixture of croton oil and arsenic varied
with powders of antimony. The hellish plot was carefully in-
vestigated by a jury presided over by one of the ablest judges
of Pennsylvania ; and the accused had the benefit of counsel of
unquestioned force and influence. The verdict of guilty, the
sentence of the chief criminals to seven years in the peniten-
tiary, the refusal of the board of pardons a year later to com-
mute the punishment, may be taken as conclusive proof of the
existence of this diabolical conspiracy, which brought dishonor
to organized labor.
During September and October there was an alarming num-
ber of dysentery cases among the non-union men who got their
meals inside the Homestead mills ; but the sickness was at first
attributed to bad water, careless habits, and the unaccustomed
hardship of the work around the furnaces. When the disorders
failed to yield to the usual remedies, the doctors began to sus-
pect a worse condition ; and their suspicions were strengthened
when the patients improved under treatment for antimony pois-
oning. Some deaths taking place, the lesser criminals became
panic-stricken, and hastened to confess that they had been
bribed by Dempsey and an associate to put yellow powders into
the soup and coffee served to the workmen. After conviction
one of these creatures withdrew his confession, acknowledged
perjury, and the next day recanted again and swore that his
first evidence was true. It turned out that he had been tempted
into a fresh conspiracy, which this time had for its purpose the
pardon of the entire band of poisoners. It is worthy of men-
tion that the Knights of Labor stood by their fallen official with
a steadfastness worthy of a nobler cause ; and despite his sen-
tence to the penitentiary kept him on their rolls.
INDICTED FOR TREASON 243
On September 2ist true bills were found against one hun-
dred and sixty-seven participants in the Homestead battle
three for murder and the rest for aggravated riot and conspiracy.
The next day Mr. Lovejoy, secretary of the Carnegie Company,
was arrested at the behest of the Amalgamated Association on
a charge of aggravated riot and assault and battery; and Mr.
Frick and a dozen other officials of the company were included
in the indictment.
With the exception of three ringleaders of the rioters, who
were held on a murder charge, all of these persons were ad-
mitted to bail. The murder charges duly came to trial. In
two cases the accused had no difficulty in proving an alibi ; and
the third, that of O'Donnell, resulted in an acquittal. Nine
months later the cases against the Carnegie officials were
dropped ; and the same day an order of court was issued releas-
ing from bail the strikers who were under indictment. Fifty-
seven men in all had been arrested, of whom thirty-three were
indicted for treason the first cases of the kind in the history
of the commonwealth twenty-one for rioting, and three for
murder.
On October I3th, after ninety-five days' service, the last of
the soldiers left Homestead ; and their withdrawal was at once
followed by a recrudescence of violence. At this time the
situation was as follows : Over two thousand workmen were in
the mill, among whom were about two hundred of the former
employees. A number of skilled workmen from Braddock,
Duquesne, Pittsburg, and other places were among the non-
union workmen. From clay to day additions were being made
to the forces in the mill, a limited number of them being
Homestead men. The non-union men lived in and about the
works. Business men of the borough generally admitted that
the strike was lost to the Amalgamated Association. On the
other hand, between two and three thousand idle workmen
walked the streets, anxious, angry, or despairing; and in hun-
dreds of homes near by, wives and mothers saw with dread the
244 THE AFTERMATH OF WAR
approach of a winter of suffering. Yet, obedient to the clique
that ruled the local lodges of the Association, these poor people
watched strangers coming in, singly and by dozens, to take
away their only chance of keeping their little home together.
Here was " the terrible temptation " to violence which Andrew
Carnegie wrote about in the Forum ; and many of them yielded
to it. Assaults on the new workmen became more frequent
than ever; and even murder was done. Every day brought its
story of outrage. Within two weeks of the withdrawal of the
militia a new reign of terror had set in ; and for their own de-
fence many of the new workmen were sworn in as deputy sheriffs.
At the same time a ringing protest against the prevailing out-
lawry was voiced at a public meeting of the peaceful citizens of
Homestead, but with little avail. The violence lasted as long
as the strike had an official existence. One was born of the
other, lived with and by it, and could not die alone.
In the mean time many letters and cablegrams were received
from Mr. Carnegie of the same tenor as those previously quoted.
A paragraph from one of these, sent early in October, has some
bearing on Mr. Stead's unfair statement that " the responsibility
for the industrial war at Homestead lies upon Mr. Frick and
Mr. Frick alone." It is quoted in the following letter:
October I2th, 1892.
MY DEAR MR. CARNEGIE :
I quote from a personal note received from you as follows :
" This fight is too much against our Chairman ; partakes of
personal issue. It is very bad indeed for you very, and also
bad for the interests of the firm." .....
" There is another point which troubles me on your account,
the danger that the public, and hence all our men, get the im-
pression that it is all Frick. Your influence for good would
be permanently impaired. You don't deserve a bad name, but
then one is sometimes wrongly got. Your partners should be
as much identified with this struggle as you. Think over this
counsel. It is from a very wise man, as you know, and a true
friend."
CARNEGIE'S SOLICITUDE 245
I am at a little loss to know just why you should express
yourself so. 1 know it is not from any other than a friendly
interest, but, as you should know, it seems to me that I am
particularly anxious that no action of mine should under any
circumstances cause loss of any kind to the firm, and that I am
not naturally inclined to push myself into prominence under
any circumstances. It seems to me wherever it was possible to
put any of our people forward I have not let the opportunity go
by. That is to say, when they have been asked by any one
whether some arrangement could not be made by which this
thing could be fixed up they have had instructions to reply, on
their own responsibility, that we could not under any circum-
stances agree to a compromise of any kind ; that we held no
resentments against any of our old men ; that we did not care
whether they belonged to a union or not, but that we would
expect, if they wished to re-enter our employment, that they
would apply as individuals, and if their positions were filled they
would be offered other ones, provided they had not been guilty
of violating the law &c. &c., and I think whenever any of our
people here have had such an opportunity presented to them
that they have most promptly acted, and thus identified them-
selves with the struggle.
I note the counsel you give, but I cannot see wherein I can
profit by it, or what action could be taken by me that would
change matters in respect to that which you mention.
Yours truly,
H. C. FRICK.
To Andrew Carnegie, Esq.,
care Messrs. J. S. Morgan & Co.,
London, England.
A wise move was made about this time by Mr. Frick. He
brought Mr. Charles M. Schwab from the Edgar Thomson
works, and made him superintendent of Homestead in place of
Mr. Potter, whom he promoted to the position of consulting
engineer of all the Carnegie works. Mr. Schwab had graduated
at Braddock under Captain Jones, and, displaying exceptional
ability as a manager of men, had quickly won his way from one
of the lowest positions in the yards to the highest in the office.
His cheery friendliness made him especially popular among the
246
THE AFTERMATH OF WAR
workmen ; and he had many admirers among the strikers at
Homestead. Tactful and conciliatory, he at once set himself
to win back the heads of departments and foremen ; and before
many days had passed had secured the best of them. The
immediate consequence was
that better work was done
,AW inside the shops, and the
foremen were soon
. :i^'C -4^fc followed into the
works by their fav-
I I orites among the
strikers.
Meanwhile,
around the Union
,(.- ' 'j~ ^nSjOfr . I ron Mills and at
Beaver Falls, some
thousands of other
workmen walked the
streets in idleness,
with feelings of anger and
fear of the future, because
of their sympathy with the
men of Homestead. This
was the aftermath of war.
"At bonny Ayr."
During this eventful Octo-
ber, when the dead leaves were fluttering from the trees at
Homestead, with dire whisperings of a winter of suffering for
the strikers and their families, Andrew Carnegie was at bonny
Ayr, the birthplace of Burns, where another library was being
dedicated, with dinners, speeches, poems, and processions. A
local bard on this occasion burst into song:
" Independent and valiant from childhood to age
To pretence meeting scorn, to unrighteousness rage
In Carnegie ' the man and the brother ' we see
Whom, ' for a' that and a' that ' Burns sang with such glee."
THE REPUBLICAN DEBACLE
247
And simultaneously another poet, in distant Winona, sang in
tuneful prophecy :
;< The mills of the gods grind slowly,
And they grind exceeding fine ;
And in the ides of November
You'll find us all in line.
Our bullets made of paper,
We'll plunk them in so hot
That the G. O. P. will wonder
If they ever were in the plot.
For we are the people and
We'll occupy the land
In spite of the Carnegies'
Or Pinkerton's brigands."
In grace of diction, such as it is, the disciple of Burns has
the advantage ; but for blunt truth-speaking, he of Minnesota
takes the palm. For the Homestead battle became a national
issue in the presidential election a month later, and brought
defeat to the Republican hosts. This was another of the
sheaves gleaned from the crop sown
on July 6th. One of the disap-
pointed leaders General Grosvenor
of Ohio stigmatized Mr. Carnegie
as "the arch-sneak of this age,"
a judgment which Chauncey Depew
ungraciously refused to reverse
when it was submitted to him. " As
a matter of fact," replied Mr. De-
pew, " the Homestead strike was
one of the most important factors
in the presidential contest, and led
to a distinct issue in the campaign.
It happened at a crisis and injured
us irremediably. . . . The Repub-
lican leaders attempted early in the
campaign to have the strike settled and cabled to Mr. Carnegie
direct without consulting Mr. Frick. Every inducement was
"I TOO KNOW A GOOD THING!"
On the wall is a copy of Andrew
Carnegie's congratulatory tele-
gram to President Harrison on
his second nomination : "The pub-
lic knows a good thing when it
sees it."
From the Chicago Times.
248
THE AFTERMATH OF WAR
made to bring Mr. Carnegie into the canvass, but he persistently
declined to lend his influence or to pay one dollar to the cam-
paign fund. "
Another Republican leader was quoted by the New York
Times as saying :
" Carnegie four years ago was the best friend the Republican
party apparently had. His contributions were heavy and spon-
taneous. The Fifty-first Congress gave him all the protection
he needed. By this legislation he increased his profits fifty per
An Ami- Harrison cartoon, with Mr. Frick represented as bringing on his head the
tribute he never paid.
cent. The Homestead strike happened at the very worst mo-
ment for the Republican party. Every argument was used to
Frick and Carnegie to end it."
President Harrison naturally expressed himself more cau-
tiously; but he nevertheless ascribed his defeat to the discon-
tent and passion of the workingmen growing out of wages or
other labor disturbances, which did not permit of that calm
consideration by these workmen of the effect of the protective
system upon his wages. His exact words were :
VIEWS OF POLITICIANS
249
"The facts that his [the workman's] wages were the highest
paid in like callings in the world, and that a maintenance of
this rate of wages, in the absence of protective duties upon the
product of his labor, was impossible, were obscured by the pas-
sion evoked by these contests."
It is also certain that the farming vote was adversely affected
by the broadcast publication of the high wages received by the
Homestead workmen under a protective regime which left the
CHARGE OF THE MERCENARIES.
Mr. Frick is represented in the lead, with Mr. Carnegie following.
From the New York World.
agriculturist on the outside. And so the Democrats rode into
place on the Pinkerton barges; and the names of Frick and
Carnegie became anathema maranatha to all good Republicans.
It was a most unexpected aftermath.
For a few weeks longer the stubborn contest continued at
Homestead, needlessly prolonging the suffering of the men
and their families and breeding disorder in the township. One
of the unhappy men was "goaded to suicide," as the newspapers
250
THE AFTERMATH OF WAR
expressed it. He had had no work since the strike. Before
that he owned his home and had a well-paid position. His
wife, " momentarily expecting to become the mother of a second
child," was in "a most critical condition and may not recover."
Amid such happenings the public disorder was such as to
lead to a demand for a return of the troops. Happily this met
with no response; and on November i8th there was such a
rush among the strikers for work
that men were trampled in the
crowd. Three days later the strike
was reluctantly called off by the
local lodges of the Amalgamated
Association; and the three thous-
and workmen who had never be-
longed to the union, and had no
rights of any kind in it, were per-
mitted to seek work in the mill on
any terms they could get. The
struggle had lasted twenty weeks,
had cost a score of lives, millions
of dollars, and, so far as any one could then see, had benefited
nobody.
With the perspective afforded by lapse of time, however, it
can now be seen that this titanic struggle was not in vain.
Greatly as the suffering attending it must be deplored suffer-
ing that ceased not with the official declaration of peace by the
Association lodges, but stayed throughout the winter with the
families of many of the strikers it is nevertheless evident
that the marvellous prosperity which, a year or two later, fol-
lowed this struggle was made possible because of it. The
mental and moral attitude of the workmen towards their em-
ployers and towards other workmen which found expression in
the savagery of the attack on the company's watchmen, in the
use of dynamite, burning oil, and the wounding of defenceless
prisoners, belonged to a barbaric past, and was wholly incom-
Unconditional surrender !
From the Chicago Times.
HALF-WAY DOWN NIAGARA 251
patible with modern industrialism. The usurpation of the
functions of government, the summary arrest and punishment of
inoffensive citizens, and the displays of lawless arrogance by the
Advisory Committee, implied a misconception of the mutual
rights and duties of laborers and employers which could only be
destructive of that harmonious co-operation essential to prog-
ress ; and thoroughly imbued with false ideas as the workmen
were, nothing but the most drastic measures would have sufficed
for their correction.
One of the most intelligent of the strikers told the Senate
committee of investigation that when the workmen found them-
selves " confronted with a gang of loafers and cutthroats from
all over the country, coming there, as they thought, to take
their jobs, why, they nattirally wanted to go down and defend
their homes and tlieir property and tlieir lives with force , if neces-
sary, and that is the way the men felt at Homestead."
Confronted with such a theory of the natural rights of labor,
the inflexibility of Mr. Frick, so thoughtlessly condemned at
the time and often since, was the salvation of the workmen
themselves, as they were afterwards among the first to admit.
The talk of compromise with such ideas was foolish and inju-
rious. There are some things that cannot be compromised.
Insurrection Is one of them. It is not possible to jump half-
way down Niagara.
In January, 1893, all being quiet on the Monongahela, An-
drew Carnegie returned from Europe; and on the 3Oth of that
month he published a carefully prepared statement of his con-
nection with the Homestead strike. Summarized, it is as fol-
lows :
" I did not come to Pittsburg to rake up, but to bury, the
past, of which I knew nothing. . . . For 26 years our concerns
have run with only one labor stoppage at one of our numerous
works. ... I desire now, once for all, to make one point clear.
Four years ago I retired from active business; no considera-
252
THE AFTERMATH OF WAR
tion in the world would induce me to return to it. . . . I have
sold portions of my interests and am gradually selling more to
such young men in our service as my partners find possessed of
exceptional ability and desire to interest in the business. I
am not an officer of the company but only a shareholder.
To the numerous appeals which I have received urging me
to give instructions in regard to recent troubles, I have paid no
attention, but to all these people, and to any others interested
THE PITTSBURG PRESS.
IN HUMANITY'S NAME.
The Press Appeals for Aid for ;
Suffering Homestead.
IXTREME DESTITUTION IN THE UNFORTUNATE BOROUGH.
What the Investigation of a Press Re-
porter Revealed.
WOMEN AND CHILDREN WHO WANT FOR BREAD
The Work of Relief Far Greater Than the Local
Committee Can Undertake.
PRIDE SEALS THE LIPS OF STARVING MEN AND WOMEN
The Frees Starts the Relief Fund With a. Contribu-
tion of One Hundred Dollars-
SOLOMON & RUBEN ADD ONE HUNDRED DOLLARS MORE.
in the subject, let me say now that I have not power to instruct
anybody connected with the Carnegie Steel Co. Ltd. The
officers are elected for a year and no one can interfere with
them. . . . I do not believe in ruling through the voting power,
even if I could. . . . When I could not bring my associates in
business to my views by reason I have never wished to do so
by force. As for instructing or compelling them under the law
to do one thing or another that is simply absurd. I could not
if I would, and I would not if I could. . . .
And now one word about Mr. Frick. I am not mis-
CARNEGIE'S EULOGY OF PRICK
253
taken in the man, as the future will show. Of his ability, fair-
ness and pluck no one has now the slightest question. His four
years' management stamps him as one of the foremost managers
of the world I would not exchange him for any manager I know.
People generally are still to learn of those virtues which
his partners and friends know well. If his health be spared
I predict that no man who ever lived in Pittsburg and managed
business here will be better liked or more admired by his em-
ployees than my friend and partner Henry Clay Frick, nor do I
believe any man will be more valuable for the city. His are
the qualities that wear ; he never disappoints ; what he prom-
ises he more than fulfils. . . .
I hope after this statement that the public will understand
that the officials of the Carnegie Steel Company, Limited, with
Mr. Frick at their head, are not dependent upon me, or upon
any one in any way for their positions, and that I have neither
power nor disposition to interfere with them, in the manage-
ment of the business. And further, that I have the most im-
plicit faith in them."
>uur PROTECTED * M^KINLEY TARIFF Ano AftMY o> PIN KEftTONS. \&S\
*t!L*jy * SHOTS AT TO S OPTION 69 H.C.KKICX
A campaign pleasantry.
CHAPTER XVII
Ore-docks" and vessels.
A RELUCTANT SUPREMACY
IT is something more than
a coincidence that the day
that marked the beginning
of the Homestead strike
saw the birth of the
Carnegie Steel Company,
Limited. On July 1st,
1892, for the first time in
their history, the separate
establishments whose
growth we are tracing were brought into a single organization,
and endowed with one mind, one purpose, one interest. Mr.
Frick was too wise a general to enter a battle with his
forces needlessly scattered ; and while fences were being built
around the company's works, their corporate strength was also
concentrated and made instantly responsive to his will.
The consolidation of the different Carnegie interests had,
however, long been contemplated by Mr. Frick. As early as
February, 1890, he had discussed the project with Mr. Abbot,
chairman of Carnegie, Phipps & Co., and had made it the sub-
ject of a written communication to Mr. Carnegie. But at that
time there were obstacles of a financial nature. One concern
was used to make paper for the other, as the phrase is. That
is, one Carnegie company selling to another was able to discount
the notes it received in payment ; so that the transaction had
all the banking advantages of an outside trade. On occasions,
too, such notes could be discounted without any antecedent
254
A GREAT CONSOLIDATION 255
sale. In transactions of this kind Mr. Stewart, with his strong
financial connections, had long proved very useful.
Mr. Stewart had died in 1889. His interest had been
acquired by Mr. Frick, who, adding it to his previous holdings,
thus became as large a stockholder as Mr. Phipps, and second
only to Mr. Carnegie. At the same time Mr. Frick became
chairman of Carnegie Brothers & Co., Limited, as well as a
director in Carnegie, Phipps & Co. Having previously resumed
the presidency of the coke company, which he had resigned
under circumstances already related, Mr. Frick freely used its
credit to finance the two steel companies and their subsidiary
interests, and thus made it unnecessary to maintain their organi-
zations separate. The consolidation of thece interests would
have come in the course of time as a measure of economy; but
the combination was hastened by the threat of war with labor.
The sociologist will be interested in this illustration of the
unifying effect of war in industrialism. Predatory competi-
tion, which is a form of warfare, has a similar consolidating
effect; and the modern trust is its most conspicuous expression.
The processes of industrial evolution often take a form that in-
evitably suggests the thought that even such great leaders as
Mr. Frick, with their apparent independence and strong govern-
ing power, are little more than passive instruments through
which natural forces operate. The changes which an industrial
organism undergoes in its development are unquestionably
governed by the same laws as those which mould the less com-
plex forms of life, to which the doctrine of evolution is popu-
larly limited; and it often appears that the strong personality
of the greatest captain of industry can do little more than con-
trol the direction of this growth. His power is comparable to
that of the gardener who fastens the young shoots of his peach
tree to the southern wall, and causes it to spread out in the
sunshine more than it would if left alone.
In the consolidation of July ist, 1892, the Carnegie Steel
Company, Limited, became the owner of the Upper and Lower
256 A RELUCTANT SUPREMACY
Union Mills, the Lucy Furnaces, the Edgar Thomson Steel
Works, the mills at Homestead, the newly acquired property at
Duquesne, the Keystone Bridge Works, the unprofitable and
prolonged experiment at Beaver Falls, with a few other interests
in ore and natural gas sprinkled about Western Pennsylvania.
1 .The capital was $25,000,000. It was a gigantic concern; but,
as De Tocqueville says of the United States of his time, it was
"a giant without bones." It had gristle, however, and this
soon hardened into bones.
Having brought the separate establishments into a single
organization, Mr. Frick now sought to harmonize their relations
so that each plant would serve to supplement and round out the
operations of every other. This he effected by the Union Rail-
way, which he built to connect the principal works with each
other and with all the different transportation systems entering
the Pittsburg district. It was a masterly conception; for it
unified the scattered works and made them as easy to operate as
if they had been contiguous. At the same time it gave them
unequalled transportation facilities through direct connection
with every important railway system in Western Pennsylvania.
The advantages of easy exchange of products among the
different works cannot be stated in figures ; but they have their
place in the phenomenal record of the firm's profits given else-
where. The saving in switching charges alone paid interest
on the cost of the railroad ; and the company was allowed twenty-
five cents a ton rebate on ore rates.
A further advantage was that the company thus regained
possession of its own yards. Hitherto the different railroads
running into the works had control of all tracks and sidings ;
and so tenaciously did they hold to these cheaply acquired
rights that they often resisted the extension of a mill that in-
volved the removal of a track. This cause of annoyance now
came to an end; and a judicious rearrangement of tracks and
sidings, so as to meet changed conditions, resulted in a great
saving of yard space and expedited the handling of vast ton-
THE EDGAR THOMSON SI
THE HOMESTEAD STE1
THE DUQUESNE STEE
Plate
L WORKS, BRADDOCK, PA.
\ V "XL,
WORKS, MUNHALL, PA.
VORKS, DUQUESNE, PA.
THE UNION RAILROAD 257
nages. The superiority of this system, by which the traffic was
regulated by one organization instead of by several railroads, is
readily seen when a statement is made of the total tonnage
entering and leaving the works of the Carnegie Steel Company.
In 1899 this amounted to 16,000,000 tons as much as the
combined total freight handled by the Northern Pacific, Union
Pacific, and Missouri Pacific railways, with their 13,000 miles
of track, 1,500 locomotives, and 50,000 freight-cars.
The next step in the progress of this great industrial aggre-
gate towards completeness was that which gave it possession of
the iron ore it needed. This was the only thing it had to buy
of outsiders. So long as it did not itself produce everything it
needed, it could not be considered a perfect industrial unit, such
as it was Mr. Prick's ambition to make it. An accident helped
him to a realization of his great plans ; though they were nearly
frustrated through the unexpected opposition of Mr. Carnegie.
The story of the way the Carnegie Steel Company acquired '
its great ore mines on Lake Superior lacks none of the romance
that makes the history of Homestead and Duquesne so inter-
esting. It is the story of a huge profit made with hardly a <
dollar of investment, and the accepting of an impregnable posi-
tion in the industrial world with a reluctant and complaining
consent. It is the amplified tale of the " most hazardous enter-
prise," told afresh ; but where a thousand dollars was then in-
volved, a hundred millions now hold our interest. Unfortu-
nately it is a story that shatters all preconceptions of the genius
necessary to achieve millionaireship ; but that is merely inci-
dental.
Among the boy companions of Thomas M. Carnegie was
Henry W. Oliver. He had become one of the cleverest busi-
ness men of Pittsburg, and had made several fortunes in iron
and steel manufacture before he reached the maturity of mid-
life. He was singularly far-sighted and enterprising, and a
skilful financier. Some time in 1892 he formed a company,
called after himself, to operate the Missabi Mountain mine on
17
2 5 8
A RELUCTANT SUPREMACY
the Mesaba range; his main object being to provide a cheap
and uninterrupted supply of high-grade Bessemer ore for his
own furnaces.
Mr. Frick, who had similar ideas for his own works, watched
the experiment with interest ; and presently he suggested to
Mr. Oliver that an ore combination with the Carnegie Steel
Company might be made mutually beneficial. Mr. Oliver was
quick to see the advantage of such a union; permitting him, as
Group of miners near Lake Superior.
it would do, to bargain with independent miners and transporta-
tion companies on a basis of a high minimum. In other words,
the enormous consumption of ore of the united plants would
enable him to offer a guaranteed tonnage to railways and steam-
boat companies in exchange for low rates, as well as to make
exceptional offers to mine owners willing to let their ores be
worked on a royalty basis. He therefore viewed the sug-
gestion with favor, and, after some negotiations, agreed to Mr.
Frick' s proposal to give the Carnegie Company one-half the
A DISCREDITED PROPHET 259
stock of the Oliver Mining Company, conditioned on a loan of
half a million dollars, secured by a mortgage on the ore
properties, to be spent in development work. In this ingenious
way Mr. Frick so arranged that the Carnegie ore interest would
not cost a dollar.
The matter was at once brought to the attention of Mr.
Carnegie, who laconically opposed it as follows, in a letter dated
Rannoch Lodge, Kinloch-Rannoch, Perthshire, August 2Qth,
1892:
" Oliver's ore bargain is just like him nothing in it. If
there is any department of business which offers no inducement,
it is ore. It never has been very profitable, and the Massaba is
not the last great deposit that Lake Superior is to reveal. "
Mr. Frick, however, made the combination with Mr. Oliver ;
and, on his return from Europe, Mr. Carnegie expressed him-
self so vigorously in condemnation of it that there ensued the
first coldness between himself and Mr. Frick.
Mr. Carnegie's attitude was not modified by the successful
working of the arrangement ; and during the next two years he
repeatedly placed himself on record, with increasing emphasis,
as being opposed to any venture in Lake Superior ores. Writ-
ing to the Board of Managers from Buckhurst Park, Withyham,
Sussex, on April i8th, 1894, he says again:
"The Oliver bargain I do not regard as very valuable.
You will find that this ore venture, like all our other ventures
in ore, will result in more trouble and less profit than almost
any branch of our business. If any of our brilliant and talented
young partners have more time, or attention, than is required
for their present duties, they will find sources of much greater
profit right at home. I hope you will make a note of this
prophecy. "
Of course the managers made a note of the prophecy; and
it afterwards furnished subject for many a subdued laugh at
their meetings.
26o A RELUCTANT SUPREMACY
It subsequently transpired, however, that Mr. Carnegie
thought his company was entitled to a larger share than one-
half of the Oliver Mining Company's stock; and, to please him,
Mr. Oliver consented to sell the Carnegies an additional interest
of one-third, making their holdings five-sixths of the total
stock. But he took care to safeguard his own interests by a
contract under which the Oliver furnaces were entitled to one-
An open-pit mine.
sixth of all ore mined by the company. At this time the capi-
tal of the Oliver Mining Company was $1,200,000.
In 1896 Messrs. Oliver and Frick made the celebrated
Rockefeller connection, by which they leased the other great
mines on the Mesaba range on a royalty basis of only 25
cents a ton. This low price was given by the Rockefellers in
consideration of a guaranteed output of 600,000 tons a year, to
be shipped over the Rockefeller railroads and steamships on the
Lakes, with an equal amount from the Oliver mine. This
A SAVING OF $27,000,000 261
amounted to 1,200,000 tons a year; and as the contract was to
run for fifty years, it meant a guarantee of 60,000,000 tons of
freight, at 80 cents a ton by rail and 65 cents a ton on the lakes *
a consideration great enough to justify the low royalty of 25
cents when other mine owners were getting 65 cents. To the
Carnegie- Oliver iron interests it meant a visible saving of
$27,000,000.
This alliance with the Rockefellers had an unexpected re-
sult. It produced a panic among the other mine owners ; and
stockholders in Boston, Chicago, Cleveland, and the Northwest
hastened to get rid of their ore properties at almost any price.
The demoralization extended to the ore markets; and Norrie, ,
which sold at $6 a ton in 1891, dropped to $2.65 on the docks
at Cleveland.
This was Mr. Oliver's opportunity; and backed by Mr. -
Frick and some of the more enterprising Carnegie managers,
like Curry, Schwab, Gayley and Clemson, he hastened to secure
options on all the best mines in the Lake Superior region. The
following is the argument he submitted to the Carnegie mana-
gers on July 2 /th, 1897 :
NEW YORK, N. Y., July 27, 1897.
H. C. FRICK, Chairman,
DEAR SIR : I mail you my specific reports on the Norrie,
Tilden, and Pioneer mines.
I now address you mainly to impress my views that it should
be our policy to acquire all three of these properties. We (I
mean the -Carnegie and Oliver furnaces) have paid more than
our share of tribute to Cleveland and Northwestern miners.
Part of their receipts were profit, but a large part was wasted
in expenses that we will in the future save : in exploration, In
which we will benefit; in development of mines that have
proved failures ; and in excessive freight rates to steamship lines
controlled by the Cleveland middle-men. All this should stop.
I claim that we could produce and deliver our ore to Lake Erie
ports 20 to 30 cents per ton cheaper than it can be done by
those now in control of the mines we seek. Our saving would
262 A RELUCTANT SUPREMACY
be in steady and more regular mining, in avoiding a line of high
salaried officers, in procuring lower Lake freights, and in sav-
ing the Cleveland commission of 10 cents per ton. I am satis-
fied that the economies that we will practise in the lines above
indicated will be fully equivalent, in the future, to any royalties
we may pay. The Carnegie furnaces and the Oliver furnaces
will require about four million tons of ore per annum. Our
minimum, under my proposition, would stand as follows :
Mesaba 1,200,000
Norrie 700,000
Tilden 400,000
Pioneer , 500,000
TOTAL , 2,800,000 Tons
On the above, the only cash obligation that we will have if
my plan is carried out, is in the purchase of the Norrie stock.
The Mesaba leases we can throw up on six months notice, and
the Tilden and Pioneer leases on three months notice. The
amount that we would invest in the Norrie is a very small item,
considering the immense stake we have in the business and the
fact that if we do not fortify ourselves on the plan that I have
indicated, it would be easy for the mine owners to exact three
to four millions of dollars, or even a greater sum, from us, as a
profit on the ore we consume. A glance at the prices paid for
ore the past 10 or 15 years will show that my estimate of the
profits that we have paid them is extremely conservative
Excuse me for bringing to the attention of yourself and
your associates the fact that the Carnegie Company never here-
tofore hesitated to invest millions of dollars to save 25c to 5<Dc.
per ton in the manufacture of pig iron. You destroy old plants
and erect new ones to save a quarter of a dollar per ton. You
are now engaged in building a railroad to the Lakes, at an im-
mense expenditure of treasure and credit, with the ultimate ob-
ject of making a saving (in which your competitors to a cer-
tain extent will share) of 25 to 30 cents per ton, and to protect
Pittsburgh against high ore rates in the future. I propose at a
risk of using our credit to the extent of $500,000, or possibly
one million dollars, to effect a saving, in which our competitors
will not share, of four to six million dollars per annum. All
arguments to the contrary notwithstanding, I know I am right
in these matters; as, in my judgment, with a knowledge of the
nature of the ownership of the mines in the Northwest, no
power can prevent their soon coming together and exacting the
old time prices for ore.
HENRY W. OLIVER'S FORESIGHT
263
On the Gogebic Range, the mines I have selected comprise
over 80^ of developed ore or " ore in sight." They comprise
in this year's pool about 60^ of the allotment, the allotment
being made not on the basis of ore in sight, but on the basis of
the preceeding year's shipments. They are the only mines on
the Range that can mine iron ore at present prices and make
money. The other mines with their small product and heavy
general expenses, are not making one cent per ton. The result
An ore-train.
is that one or two of the smaller of these mines are being
thrown up this year; and, with proper care and attention, if we
were on the ground, we should be able to take up practically
all of them.
Doubts may arise as to the quantity of ore in the properties
we propose to take up. The question is, however, if the ore is
not in the mines I propose to acquire, where can it be shown to
exist, in properties available for lease or purchase, in the Ranges
other than the Mesaba Range ? I have selected as the proper-
ties we should acquire the mines that common report names as
having the largest quantity and our special reports confirm that
view. If there be not large quantities of ore in the properties
we have under consideration, then there are no large deposits
264
A RELUCTANT SUPREMACY
of Bessemer ore yet known, outside of the Mesaba Range, and
the Chapin and Minnesota Iron Go's properties. In that case,
Bessemer ores will shortly appreciate in value and we, with
others, will have to pay the holders thereof a large advance on
present prices.
An important point, in making the venture in the Gogebic
region and securing a large body of ore, is the effect it will have
upon the guarantee made us, by the Rockefeller party, that our
ore shall be as low as any other Mesaba ore at Lake Superior
ports. The possession of a large body of ore in the Gogebic
Range will strengthen our position, in holding the Rockefeller
people down to low freight rates from the Mesaba Range.
The three properties I propose to take up contain not only
the largest body of ore in sight, but are practically the only
mines excepting a few extra low phosphorus mines and the
Chapin and Minnesota Iron Co., properties, that are this year,
under their system of mining and expenses, producing ores at a
profit. In addition to this, as showing their standing in the
trade, they have
been allotted, on the
basis of last year's
shipments, over 50^
of the Gogebic out-
put, and over 25^
of the total, in a
Pool of 4,250,000
tons, comprising all
the Bessemer ores
(including Chapin)
produced in the
Northwest, except-
ing only ores from
the Mesaba Range.
I am not ignor-
ing the strong posi-
tion we hold on the Mesaba Range. With two exceptions,
we possess the only steam shovel mines and the low cost of
this ore is extremely gratifying. More Mesaba ore can be
used in our mixtures, but it is not a wise policy to quickly ex-
haust the rich quarry we have on the Mesaba Range, taking
off rapidly the surface ore. Although we are mining it at
present for less than five cents per ton for labor, we must
look to the future, when we will have to go deeper, pump
water and lif.t the ore. We should rather prolong the period
A BUCYRUS SHOVEL AT WORK.
" Five cents a ton for labor."
Plate XI
HENRY W. OLIVER
A STRONG ARGUMENT 265
of cheap steam shovel mining, take in the other Range prop-
erties I suggest for mixture; and, by working one Range
against the other, keep down costs of freights. I desire to
impress upon you the fact, that if it had not been for our
Rockefeller-Mesaba deal of last year, with the consequent de-
moralization in the trade caused by the publication thereof, it
would not have been possible for us to now secure the other
Range properties I propose to acquire, either by lease or for any
reasonable price. We simply knocked the price of ore from
$4.00 down to say $2.50 per ton. Now let us take advantage
of our action before a season of good times gives the ore
producers strength and opportunity to get together by com-
bination.
I trust that when you read this letter and my reports you
will not attribute the strong position I take to my usually
optimistic nature. It is true that I generally like to view the
bright side of affairs, but these practical matters I have digested
in a thoroughly judicial spirit, and my conclusions are the result
of great thought and most thorough investigation. You do not
hear of the many properties I have condemned and turned down
as being not worthy of your consideration. I have selected,
for the decision of my associates, only the very best. The
Minnesota Iron Company properties are out of the question;
the banns have been published and union with the Illinois Steel
Company is only a matter of time. All others, however, I
have, in one shape or another had before me. The Chapin is
too high in phosphorus and held by too stiff a crowd. Other
Menominee properties (the Aragon, for instance, that was
sold the other day), too small and expensive. I have not
recommended or tried to lead you into waste of money on ex-
plorations of virgin property. Mr. A. M. Byers told me that
he, with Kimberly, had worked for years, spending over a mill-
ion of dollars, in sinking shafts through solid rock, hunting a
lost vein of ore, on the Ludington mine, which adjoins the
Chapin. Please recall that on the Mesaba Range I condemned
poor properties such as the Sauntry and others ; that I stood
strongly against the Mahoning out of which they have great
difficulty this year in mining any but non-Bessemer ores, and
that I only brought before you, for approval, the magnificent
properties on the Mesaba Range that we are now operating.
Pardon me for mentioning the above. I only do it to impress
upon you the fact that I have analyzed this question most thor-
oughly. I have given months of thought to these questions,
where others have scarcely given minutes. I know I am right
266 A RELUCTANT SUPREMACY
and trust you and your associates will give me opportunity to
prove it. The future will show that all my predictions will
come true to the letter. Yours &c
HENRY W. OLIVER.
This document was sent by special messenger to Mr. Frick
in London and by him transmitted to Mr. Carnegie in Scot-
land. To the surprise and dismay of everybody concerned, Mr.
Carnegie again opposed the project. From the fastnesses of
his Highland retreat he again issued a laconic veto, with a quip
and a chuckle at his partners' enthusiasm. Thereupon MK
Oliver despatched the following cablegram :
G87CM697
THE CARNEGIE STEEL COMPANY, LIMITED.
PRIVATE TELEGRAPH SERVICE.
Telegram Sent from General Offices; Carnegie Building, Pittsburg, Pa.
Sent by Received by Time,
Dated. September 25, 1897.
To CARNEGIE LAGGAN
I am distressed at indications here that Norrie options ex-
piring on Monday, are to be refused. It would be a terrible
mistake. The good times make it that I could not possibly
secure these options again at fifty per cent., advance. The
Norrie mine controls the whole situation. They have sold over
one million tons this year. With the additional property we
will get from the fee owners, we secure fifteen to twenty million
tons of the ore that the Carnegie Company are purchasing this
year five hundred and fifty thousand tons. I will guarantee,
counting the surplus they have in their treasury, to return in
profits every dollar we invest in two years. Do not allow my
hard summer's work to go for naught.
HENRY W. OLIVER
chg. O. M. Co.
It will be seen from this that the Carnegies had just bought
550,000 tons of this very ore, which was yielding the mine
owners $i to $1.25 a ton profit. By instructions from Scotland
REFUSAL OF $500,000,000!
267
they had made this purchase just at the critical moment that
Mr. Oliver was negotiating for options on the shares of the
Norrie mine; and his task was made doubly difficult by the
fact. Before this the Norrie owners had sold only 150,000
tons, as against ten times that amount in previous years. Not-
withstanding this embarrassing purchase, Mr. Oliver was able
to secure options from about four hundred stockholders, who
resided in every part of the country, and, one might say, in
Piles of iron ore ready for loading.
every part of the world. This was the " hard summer's work "
which was rendered futile by a word from Carnegie.
On receipt of Mr. Oliver's cablegram, however, Mr. Carne-
gie so far reconsidered his objections as to leave the decision
to the chairman and Board of Managers in Pittsburg ; and these
gentlemen promptly authorized Mr. Oliver to close the deal.
This action was the pivotal point in the gathering together,
by the Carnegie-Oliver interests, of the great ore properties
268 A RELUCTANT SUPREMACY
which gave them their impregnable position in the iron indus-
try of the country. On the organization of the United States
Steel Company, the Carnegie- Oliver company owned two-thirds
of the known Northwestern supply of Bessemer ores roughly,
500,000,000 tons, which Mr. Schwab has since valued at $500,-
000,000. It would be difficult to find a parallel to this inci-
dent in any romance of American industrialism.
It is only fair to Mr. Carnegie to add that he afterwards so
far modified his estimate of Mr. Oliver as to offer him an inter-
est in the Carnegie Steel Company.
The great value of the gift which Andrew Carnegie thus
reluctantly allowed Mr. Frick to accept for the company may
be further illustrated. The first Mesaba mine secured by Mr.
Oliver is of such character that 5,800 tons of ore have been
mined and loaded into cars by one steam shovel in ten hours;
and the output for one month was 164,000 tons. This was the
work of only eight men. Three such machines, made by the
Bucyrus Company of South Milwaukee, mined from its natural
bed 915,000 tons of ore during the season of 1900, working day
shift only. Some of the other great mines are of the same
character. The method of mining is shown in the accompany-
ing photographs. Five tons of ore are lifted by the machine
each stroke; and five full- weight lifts will fill a car. A 25-ton
car can be filled in two and a half minutes, which is at the rate
of 600 tons an hour. Andrew Carnegie often says that Fortune
timidly knocks at every man's door at least once during his
lifetime. The statement is too modest to fit his own case; for
Fortune has repeatedly battered clown the barricades with which
he has tried to exclude her. Nor has she been scared away by
the inscription above the Carnegie threshold, " Pioneering don't
pay!"
Having thus provided an unfailing supply of the best Besse-
mer ores at the mere cost of mining them, Mr. Frick at once
began to elaborate plans for their cheap and certain transporta-
tion to the furnaces. A contract with the Bessemer Steamship
THE LAKE RAILROAD 269
Company, a Rockefeller concern, ensured the regular delivery
of 1,200,000 tons a year at Lake Erie ports; and an agree-
ment was simultaneously made with the Pennsylvania Railroad
for the land haul of some two hundred miles. But this condi-
tion of dependence was unsatisfactory ; and Mr. Frick boldly
talked of building his own railroad to the Lakes. This brought
an offer from the president of the Pennsylvania Railroad of bet-
ter facilities; and Mr. Frick proposed an arrangement under
which the Carnegie Steel Company should run its own ore
trains from Lake Erie, equipped with its
own locomotives and crew, over the
Pennsylvania tracks. This plan was
well received by the officials of the
Pennsylvania Railroad ; but before
anything definite had been
decided upon, a telegram was
received from Mr. Carnegie
in Florida, asking that all
negotiations be suspended
until the arrival of his letter.
When this came it was found
that he had entered into an
"Battered down the barricades."
agreement with Mr. Samuel
B. Dick, president of the Pittsburg, Shenango and Lake Erie
Railroad, to reorganize that company, which was on the verge
of bankruptcy, and to build an extension from its terminus at
Butler to a point on the Union Railroad at Bessemer.
This Pittsburg, Shenango and Lake Erie had had an event-
ful history, involving receiverships, reorganizations, and con-
solidations ; and at this time it had little more than a right of
way and two streaks of rust, as the saying is. It had certain
terminal facilities at Conneaut Harbor, however; and during
the previous year (1895) a quarter of a million tons of ore had
been handled there. The Government was dredging the harbor,
and its facilities were capable of some; improvement, though not
2/0
A RELUCTANT SUPREMACY
to the extent expected when this deal was made. The harbor
has frequently been inconveniently crowded.
On July 25th, 1896, the first contract was let for the exten-
sion to Pittsburg; and simultaneously the work of renewing
the old track was begun. One-hundred-pound rails were laid
down, grades lowered, wooden trestles replaced with steel, and
in other ways the road was so changed as practically to make it
Ore vessels in Conneaut Harbor.
a new one. A maximum south-bound grade of thirty-one feet
per mile was secured over the entire route, an achievement of
no small difficulty in the hilly parts of Western Pennsylvania.
A steel bridge across the Allegheny two-thirds of a mile long
was the most noteworthy engineering feature of this road;
and the whole work of renewal and the building of forty-two
miles of new track occupied only fifteen months. By October
4th, 1897, ore trains consisting of thirty-five steel cars, each
carrying 100,000 pounds, were running from the company's own
SOME IMPRESSIVE RECORDS 271
docks on Lake Erie over the company's own line to Bessemer,
and there distributed over the company's Union Railroad to the
blast-furnaces at Braddock, Duquesne, and Pittsburg. It was
a long step in the progress towards self-sufficiency at which Mr.
Frick had long been aiming; and it had cost nothing beyond an
issue of bonds, which the volume of traffic furnished by the -
Carnegie Steel Company itself made gilt-edged.
The results of the operation of this road, now known as the
Pittsburg, Bessemer and Lake Erie, and its docking facilities
at Conneaut, as set forth by Mr. J. T. Odell, its former vice-
president, are as follows :
" The lowest rate per ton per mile, the highest average
length of revenue haul in proportion to its track mileage, the
greatest density of tonnage in proportion to its freight-train
mileage, the greatest average paying load, and the lowest ' ton-
mile cost * of any road on the American continent reporting to
the Interstate Commerce Commission. The average paying load
of all its freight trains, including three branches, and with but
little back loading, was, for the year ending December 31,
1899, 777 tons. It is confidently expected, when the south and
north bound tonnage is 70 per cent, and 30 per cent, respect-
ively, and the tonnage reaches 5,000,000 tons annually, as it
promises, that the average paying load will be not less than
900 tons, or four and one-half times greater than the present
average paying load of the country. The maximum weight of
the paying load for the year was 1,580 net tons, with the aver-
age, as before stated, of 777 tons. Of the ore trains, each
earned on a 3}t-mi\l rate per ton per mile (gross ton) $5.13
per train mile. The road is laid with loo-pound rail and the
track ballasted with furnace slag. The bridges will carry 6,600
pounds to the lineal foot. The standard locomotive is the con-
solidation pattern, having cylinders 22 by 28 inches and weigh-
ing 170,000 pounds on the drivers alone. The ore equipment
consists mostly of steel cars, weighing 17 tons and carrying
50 tons of ore. The company is having built a few of what
will prove to be the heaviest locomotives in the world, having
cylinders 23 by 32 inches and weighing 217,000 pounds on the
drivers. With these locomotives the total weight of an ore
train, including the locomotive and light weight of the cars,
will be about 2,600 tons.
2/2
A RELUCTANT SUPREMACY
Ore-discharging machines at Conneaut.
" But it is not only in the operation of the road that great-
est economy is obtained, but also in the transfer of the ore
from the lake steamers to the trains. The steel company owns
the entire harbor at Conneaut. Nine ships can be docked at
the same time. Twenty-five thousand tons of all classes of
freight can be handled every ten hours. The most modern ma-
chinery is used for handling ore and coal. A 6,000- ton ship
can be cleared in fourteen hours, and in the same time from the
moment the hatches are opened the ore can be at the furnaces
at Pittsburg. A new steam
shovel was completed last
winter by which a train of
35 to 40 cars will be loaded
with ore in two hours. A
4O-ton car of coal can be
unloaded and partly trimmed
in the ship in thirty-six
seconds. Most of the
switching at Conneaut is
done by the haulage system
(a cable running between
the rails at about 4 miles
per hour). The operating
officers believe that with this railroad the utmost limit of all
that is possible in solving the problem of cheap transportation
has been reached. Their achievement shows what remains to
be done and can be done by the other railroads of this country
in the same direction."
The only gap that now remained was that on the Lakes.
To fill it the company should operate its own line of steamers.
While the contract with the Bessemer Steamship Company
provided for the conveyance of 1,200,000 tons a year, the steel
company was dependent upon the small fleet of ships owned by
individuals to a greater extent than seemed desirable ; and early
in 1899 the Oliver Iron Mining Company purchased the Lake
Superior Iron Company's fleet of six vessels, each capable of
carrying 3,000 tons, as well as its ore properties on the Mar-
quette range. Before taking over these steamers at the end of
the year, certain changes in organization were made in con-
formity with the suggestions of Mr. Oliver, contained in the
LAKE TRANSPORTATION 273
following letter to the Board of Managers of the Carnegie Steel
Company :
Under our attorney's advice, taking in view the legal com-
plications that might arise in a mining company being interested
in navigation, we have settled that our venture in the purchase
and building of vessels on the Great Lakes should be conducted
Ore docks.
under an organization distinct from the Oliver Iron Mining
Company. We have taken out a charter and organized the
PITTSBURGH STEAMSHIP COMPANY.
The officers of the Company, the Board of Directors and
the Stock interests are identical with those of the Oliver Iron
Mining Company.
To finance the Company, I propose, first a paid up capital
stock in cash of One million dollars ($1,000,000.00), and the
issue of 5^ gold bonds, interest payable semi-annually, of four
million dollars ($4,000,000.00). The Union Trust Company of
Pittsburgh to be the trustee of a mortgage covering all the
vessels of the fleet, and to issue to the purchasers of the bonds
interim certificates for eighty per centum of the cost of the
vessels on the delivery to them of satisfactory bills of sale or
chattel mortgage for each vessel as it is turned over by the
seller or the builder of the vessel to the new Company ; that is
18
274 A RELUCTANT SUPREMACY
to say, as fast as each vessel is delivered to the new Company,
the bondholders advance 80^ of its cost, and the stockholders
the remaining 20% of its cost. On the completion of the fleet,
as now projected, bonds in proper shape, reciting what vessels
they cover, with proper requirements for insurance, etc., will
be exchanged by the Trust Company for the interim certificates
above recited. The cost of the vessels under contract (which
is all we propose to acquire this season) aggregate about two
million, nine hundred thousand dollars ($2,900,000.00).
Kindly advise me if the above plan is satisfactory to the
Carnegie interests.
Bonds to be payable as follows :
Series " A, " Five years $1,000,000.00
Series " B," Ten years 1,500,000.00
Series " C," Fifteen years 1,500,000.00
Total $4,000,000.00
In this way, on the very day of Mr. Prick's retirement from
the chairmanship of the Carnegie Steel Company, the huge
corporation became a complete industrial unit, owning every-
thing it needed in its business, controlling every movement of
its material, and in all its operations, from mining the crude
ore to the shipment of the finished steel, paying no outsider a
price.
Ore docks by night.
CHAPTER XVIII
THE WORKINGS OF THE CORPORATE MIND
In a Mesaba mine.
IN a former chapter refer-
ence was made to what was
there called the mental evo-
lution of the great indus-
trial organism whose growth
we are following, and a hint
was given of the important
part played in it by Mr.
Frick. One of the most
conspicuous directions of
this mental growth was that involved in the systematization of
the consultative work of the Board of Managers.
Although this board was the brain of a great body, its func-
tions were long performed without regularity or method, and
the results of its work were but imperfectly recorded. This is
one of the most surprising features of this great business ; for
while the workings of every furnace and every machine were
carefully watched and tabulated, the operations of the greatest
machine of all, its brain, were spasmodic, unmethodical, and
for the most part unnoted. The Board of Managers met by
chance, there being no fixed time for its meetings. Consulta-
tions and deliberations were conducted in a haphazard way, and
often no minutes of them were taken. If an important change
was to be made, perhaps a meeting would be called; or it
might happen that the managers most interested in it would
have an informal meeting at the works, when the matter would
be decided. The old minute-books of the various companies
often show a gap of several months without an entry.
275
THE CORPORATE MIND
With the accession of Mr. Frick to the headship of the
concern, this was promptly changed. A rule was made that
the Board of Managers should meet every Tuesday at lunch, and
that a full report of their subsequent deliberations should be
kept. Similarly every Saturday, at noon, the different super-
intendents and their assistants, some foremen, purchasing and
sales agents and their principal assistants, to the number of
Superintendents at lunch.
thirty or more, met about a larger table, and, after lunching to-
gether, talked over all matters of common interest. Here the
unfriendly rivalry of former times gave place to a spirit of good
fellowship and mutual helpfulness. Around the friendly board
it was impossible for two important officers to refuse to speak
to each other for five years, as happened more than once in the
past. And such competition as grew up among them was that
of friends animated by a common purpose to do the best each
could for the association.
MINUTES OF A BOARD MEETING 277
Of course none but officials were ever admitted to these
meetings ; and the results of their deliberations were kept in
profound secrecy. Except for the copies of the minutes sent
to Mr. Phipps and Mr. Carnegie, the records were never seen
by any one not entitled to attend the meetings in person. To
give completeness to this narrative, however, and to illustrate
in a practical way the workings of the corporate mind, the
official record of one of these meetings is here given. Nothing
has been changed in it, except that a long statement made by
Mr. Frick is omitted. This concerned the proposed sale of the
Carnegie- Frick companies, or in default of a sale, their consoli-
dation. It is referred to elsewhere. In other respects the fol-
lowing is an exact reproduction of the official minutes of a meet-
ing held in January, 1899. It is possible that many readers
will find an intrinsic interest in the discussions of these "young
geniuses " some of whom, by the way, have already reached
the dignity of grandsires.
. At a meeting of the Board of Managers of
THE CARNEGIE STEEL COMPANY, LIMITED,
held at the general offices of the Association, Carnegie Build-
ing, Pittsburg, Pa., at 12 -.30 P.M., on Monday, January 16, 1899,
there were present MM. Frick (chairman), Singer, Schwab,
Peacock, Phipps, Clemson and Lovejoy (secretary); also MM.
George Lauder, James Gayley and H. P. Bope. (Mr. Curry in
Pasadena; Mr. Wightman in Florida.)
The minutes of the meeting of the Board of Managers held
January loth were read, and, on motion, approved.
The following communication from the president to the
Board, under date of January I2th, was read :
" As reported by Mr. Phipps last week, we have finally
closed for the purchase of the Bethlehem Plate Mills, which
purchase the Board has already approved.
" The Mills, as you are aware, comprise a Slabbing Mill of
the latest design; a 128" Plate Mill, complete in every particu-
lar; and a 42" Universal Mill of the latest and best construc-
tion. There are no changes in all these Mills we would suggest.
2 ;8 THE CORPORATE MIND
"We should have a capacity of 12 to 14,000 tons of Plates
out of these Mills, besides some excess of Slabs which could
be sold outside.
" It is estimated that the cost of putting these Mills in oper-
ation; foundations, buildings, furnaces, etc., will be approxi-
mately $500,000.00, and would like the Board to authorize this
expenditure."
The following communication from W. E. Corey, general
superintendent, Homestead Steel Works, to the president, un-
der date of January 1 1 th, was read :
"The building of ten (10) new Furnaces at Open Hearth
No. 3 will cost about $80,000.00 per Furnace, or a total of
$800,000.00. This, of course, includes all cranes, tracks, grad-
ing, filling in, etc., and also a stripper for the stripping of large
Ingots for the new Slabbing Mill.
"Kindly authorize the expenditure of this money, and
oblige."
The following communication from the president to the
Board, under date of January I2th, was read:
" The demand for Open Hearth, instead of Bessemer Steel,
is increasing each day. A careful calculation would indicate
that ten (10) additional Open Hearth Furnaces are necessary
for our Homestead Steel Works.
" Enclosed please find Mr. Corey's estimate and recom-
mendation for same.
" We would propose making the Furnaces identical in every
particular with those now built, which have been very satisfac-
tory.
" Would recommend that the Board permit me to proceed
with the erection of these Furnaces at once. They can be
completed within about five months."
MM. Phipps and Clemson moved the authorization of an
appropriation of $1,300,000.00, in accordance with the recom-
mendations of the president.
Mr. Frick: "That cost appears high."
Mr. Schwab: "Mr. Corey admits that it is high, but does not
want to get caught again with an insufficient appropriation.
He will not waste money, and, if all is not needed, so much
the better."
COSTLY ADDITIONS AUTHORIZED 279
Mr. Frick : " We must have the Furnaces anyway, and may as
well appropriate the outside cost. These are large amounts,
but the whole matter has been thoroughly discussed outside
of the Board Meetings, and all appear satisfied."
Mr. Schwab: "These Furnaces will increase our capacity 30,-
ooo tons of Open Hearth Ingots per month. This pur-
chase renders it unnecessary to build the Plate Mill which
was agreed upon, although no appropriation was author-
ized when we discussed the Car Works. There is no
Plant I know of so well equipped as this. It is the latest
and best in Plate Mills."
Mr. Lauder: " It is the right thing to do."
The motion was adopted ; the vote being unanimous, and
all present concurring.
The following communication from W. E. Corey to the
president, under date of December 3Oth, was read :
" In line with my conversation with you concerning the
changes in Beam Yard, beg to make the following report. In
the first plan as proposed in my letter of November i8th, it
will necessitate the expenditure of $40,000.00, and would en-
able us to make an average delivery of 10 days time on all
Beam and Channel orders.
" Under this arrangement 30^? of all Beams and Channels
would be cut from stock, which would increase the cost per ton
on Beams and Channels shipped from Homestead eight cents
per ton.
" Now in going over this matter the second time, it seems
to me that it would not be a paying investment to spend $40,-
ooo.oo and increase the cost of production, if there is any other
alternative.
" Now if our customers could be satisfied with an average
delivery of 1 5 days on all orders, I would recommend that noth-
ing be done towards this expenditure for another year, or until
it is decided to move the Fitting Shop.
" I would, therefore, ask that you authorize an expenditure
in the Beam Yard of $15,000.00, to be expended as follows:
$6,000.00 each for two ten ton electric traveling cranes, one to
be placed immediately outside the 40" Mill at the roadway, and
the other at No. 3 roadway to handle material from the small
saw; $3,000.00 to be spent in moving small saw 40 feet due
west from the present location, and making necessary change
in tracks.
280 THE CORPORATE MIND
" This would enable us to make 1 5 day deliveries without
increasing the cost of production.
" Kindly advise me at your earliest convenience what you
think of this proposition."
Mr. Schwab : " These are only additional Cranes for the Beam
Yard equipment we have now. While we save nothing by
the expenditure, we save in time of filling orders."
Mr. Frick : "Money spent in expediting delivery is well spent,
and especially now when we expect so large a business. "
Mr. Schwab: " When this matter first came up in November,
I was unwilling to recommend the expenditure of $40,-
ooo.oo, and referred Mr. Corey's letter back to him.
When we rebuild the Fitting Shop, we can spend the
$40,000.00 to very much better advantage. I would
recommend the expenditure of $15,000.00."
On motion, (Peacock and Singer), the expenditure of $15,-
ooo.oo, as recommended by the president, was authorized ; the
vote being unanimous.
The following letter from W. E. Corey to the president,
under date of January 1 1 th, was read :
"Please find below an approximate estimate of expenditure
for improvements at our Carrie Furnaces, as recommended by
Mr. G. K. Hamfeldt, Superintendent.
Furnace with new shell, down-take, and dust-catcher with
linings, incline with top arrangement, hoisting engine,
and one coke and limestone bin, with track for stock
yard, complete $136,000.00
Extension and relining of two stoves 18,000.00
One compound condensing blowing engine, 40" X 72" X
60" X 84", with foundation, extension to Blowing En-
gine House, with foundations and Piping 46,000.00
Weise Condenser, 3600 HP, complete 18,000.00
Total $218,000.00
"The detailed plans for same have not as yet been com-
pleted, but, as soon as completed, I will arrange with Mr. Gay-
ley to go over them with Mr. Hamfeldt.
" Kindly advise me if you will authorize the expenditure of
this money."
MM. Phipps and Clemson moved the authorization of an
expenditure of $218,000.00.
FRICK TELLS SECRET OF SUCCESS 281
Mr. Schwab : " This will put Carrie No. 2 in practically the
same shape as our other Furnaces, and will make the Fur-
nace equal to " F " or "G." It is in this direction we
must go in making improvements."
Mr. Gayley (In reply to the chairman) : " It should increase
the product 100 tons per day."
Mr. Schwab : " We have no place to use the surplus steam at
Carrie, and it will not pay us to compound the engines
there at present. We can compound them later on, if it is
found advantageous."
Mr. Singer : "This is a wise thing to do."
Mr. Peacock : " We should put all our Furnaces in good shape."
Mr. Gayley : " I am satisfied we need to do this."
Mr. Clcmson : " It is a mistake to do anything else but keep
our Furnaces in the best possible condition."
Mr. Lauder: " I think it is the right thing to do."
Mr. Phipps : " We all expected to do this when we bought the
Plant."
Mr. Lovejoy : "It is in line with our policy, and should be
done."
Mr. Gayley : " The Carrie Furnace Company intended to do
a part of this work, if they had not sold."
Mr. Frick : " It is a large amount ; but to our willingness to spend
large amounts in improvements^ we owe our success."
The motion was adopted ; the vote being unanimous.
Mr. Schwab: "At a Meeting in New York of our principal
Partners and Managers, it was decided that the following
changes and new Interests should be made, commencing
with January I, 1899; subject to the approval of the
Board and of the Shareholders.
" It is proposed to give \% to each of the following :
W. B. Dickson ;
A. C. Case;
John McLeod;
Charles W. Baker;
and to give an increase of
\% to James Gayley ;
\% to D. M. Clemson;
\% to A. M. Moreland;
\% to L. T. Brown ;
\% to J. E. Schwab."
282 THE CORPORATE MIND
On motion (Singer and Peacock), the following resolution
was adopted :
"Resolved; That F. T. F. Love joy, Trustee, be and is now
hereby directed, authorized and empowered to transfer out of
Trust ' N ' certain Capital of this Association, to the per-
sons and in the amounts named, as follows :
To James Gayley, \% or $27,777.78 ;
D. M. Clemson, \% or 41,666.67;
A. M. Moreland, \% or 27,777.78 ;
at its Book Value at the close of business December 31, 1898;
subject to all of the conditions of the " Iron Clad Agreement,"
and subject also to confirmation at the next Meeting of the
Shareholders; and
"Resolved; That having so done, F. T. F. Lovejoy be
released and discharged from any further accountability as to
his Trusteeship for the seven-eighteenths per centum of the
Capital of this Association, the transfer of which is authorized
hereby;"
the vote being unanimous.
On motion, (Singer and Peacock), the following resolution
was adopted :
"Resolved ; That F. T. F. Lovejoy, Trustee, be and is now
hereby directed, authorized and empowered to transfer out of
Trust ' N ' certain Capital of this Association, to the Trust
Accounts and in the amounts named, as follows :
To Trust " W " for L. T. Brown, \% of \% or $27,777.77 ;
To Trust " AB " for J. E. Schwab,
To Trust " AE " for W. B. Dickson,
To Trust " AF " for A. C. Case,
To Trust " AG " for John McLeod,
To Trust " AH " for Chas. W. Baker,
or 55,555-55;
or 27,777.78;
or 27,777.78;
or 27,777.78;
or 27,777.78;
the same having been sold to the said persons at Book Value
December 31, 1898; subject to all of the conditions of the
' Iron Clad Agreement,' and subject also to confirmation at
the next Meeting of the Shareholders " ;
the vote being unanimous.
Of THE
UNIVERSITY
THE CONNEAUT TUBE PROJECT 283
Mr. Schwab : " As the members of the Board are aware, I go
East tonight and sail for Southampton on Wednesday,
expecting to be back here April 4th. During my absence,
the plans for the new Car Works will proceed without any
delay, and be ready with actual bids for aft- the machinery
and other Contract items by April 1st, when an estimate
of the cost will be given to the Board and an appropriation
asked for. No expenditure will be necessary meantime."
(In reply to the chairman) :
" I have not figured closely on the cost at all, but would
say in round figures the Works will cost from $750,000.00
to $1,000,000.00."
Mr. Peacock: "I think while we are on the subject of Car
Works, it would be well to consider our present position
with the new Steel Car combination. They have already
approached us on the subject of a Contract, and would be
willing to buy probably 1,000 tons of Steel per day, pro-
vided we stay out of the Steel Car business. I think,
under a favorable Contract, I would favor this, especially
since they are re-organized, and will be in good financial
condition and safe to sell to."
Mr. Schwab : " I do not think anything should prevent our
going ahead with our Car Works. "
Mr. Clemson : " There is room for two, and they will have to
come to us."
Mr. Phipps : " I would favor going ahead."
Mr. Lander: " It would bear some thought, but, on the whole,
I think I would go ahead with the Works."
Mr. Singer: "I think we should go ahead with our plans, but
I am a little inclined to agree with Mr. Peacock. There
is a great deal of detail connected with the Car business,
and we will probably make as much money if we sell the
Plates as if we turned the Plates into Cars and sold them."
Mr. Gay ley : " I would go ahead with the Works."
Mr. Clemson : " I would build the Car Works, and would also
look into the Steel Pipe business. I believe there is
money in that."
Mr. Lovejoy : " I think we should go ahead with the Works,
believing we can sell both Plates and Cars, and, having the
Car Works, we can compel Schoen-Fox to buy from us."
Mr. Frick : " Is our Car as good as the Schoen or Fox car? "
Mr. Schwab : " I think it is better, but it is heavier. We
expect to improve on it, and I believe we can make it as
284 THE CORPORATE MIND
light as theirs, and, at the same time, a better and stronger
Car."
Mr. Frick : " I am strongly in favor of going ahead. There
will be room for both."
Mr. Clemson : " We brought in some good Gas Wells during
the latter part of December, and are now in as good shape
for Gas as we were this time last year. I will guarantee a
sufficient supply of Gas for this year."
Mr. Frick: "That is very gratifying news."
At this point, Mr. Clemson withdrew from the meeting,
having been called as a witness in a case pending.
A letter from Andrew Carnegie to the president, under date
of December soth, was read, as follows :
" Several times I have been upon the point of writing you
about settling with James C. Carter, the lawyer here.
" We consulted him in regard to our claim against the Gov-
ernment for remission of fine imposed [for supplying defective
armor-plate]. I suppose it is the general feeling that we had
better not disturb that question, better just let it pass. If you
find this to be so in the Board, then I should like a note to be
written to Mr. Carter stating that we do not wish the case pur-
sued any further and to send us his bill. His address is No.
277 Lexington avenue."
Mr. Frick : " Suppose Mr. Phipps should write to Mr. Carter
in effect as follows :
" ' We have not yet decided whether or not we wish to
abandon our claim, but, should we decide to press it, we
would wish to retain him. Meantime, however, as the
case has been hanging fire for some time, we would be
glad to have a bill for his services to date, which we will
pay.'
"That complies with Mr. Carnegie's wish, and, at the
same time, does not close the matter absolutely."
This met with general approval, and, on motion, the matter
was so decided upon.
Mr. Frick : " I would like to ask Mr. Peacock if he is selling
much Material today, and if he is getting advanced
prices ? "
AN INTERESTING CONTRACT 285
Mr. Peacock : "I think the only increase in Billets sold, shown
in our statements during the last four weeks has been
where we have sliding scale Contracts. We have today
nothing to sell but Structural Material, on which we are
getting good prices.
" We have under consideration a Contract with the
American Tin Plate Company of New Jersey, which has
been agreed to, subject to the action of the Board."
The Contract was read in full, the features thereof being :
Quantity: 125,000 gross tons of Tin and Black Plates,
Bars (not including Sheet Bars) per year, for a period of Five
(5) years, from July I, 1899, and thereafter until after One
year's written notice, which may be given by either party, on
or after July I, 1903.
The amount to be
added to the price
of Pig Iron for
When the Price of Pig Sheet Bars shall
iron per gross ton is : be :
$ 8.99 or under. ; $5-45
9.00 to 9.99 5.60
10.00 " 10.99 5-75
ii. oo " 11.99. . . 6.00
12.00 " 13.99 ' 6- 2 5
13.00 " 14.99 6 -5o
13.00 " 14.99 6 -75
15.00 " 15.99 7.00
1 6. oo or over , 7.25
Price to be fixed monthly and averaged for six months.
Payments : Cash on the 2Oth of each month.
Deliveries : Approximately 10,416 tons per month.
Buyer may specify up to iofo Basic Open Hearth at 1.50
per ton advance.
Buyers may not re- sell without first putting Material through
a process of manufacture.
Sellers agree, so long as the Buyers perform their part of
this Contract " They will not sell to any competitive person or
Company in the United States, Tin or Black Plate Bars of the
character covered by this Contract;" and Sellers agree "Not
to enter into competition with The Carnegie Steel Company,
Limited, in any of the products which The Carnegie Steel
Company, Limited manufactures, during the life of this Con-
tract."
286 THE CORPORATE MIND
Buyers also agree, if their capacity be increased, Sellers
shall have the privilege of selling the same proportion of the
new requirements.
Any dispute as to price to be referred to A. H. Childs.
Mr. Frick : " Would it not be well to have all matters of dis-
pute under this Contract referred to an Arbitrator ? "
Mr. Peacock : " It might be, although our Attorneys advise us
our position is better if we do not agree to defer all mat-
ters to an Arbitrator, since we would probably be com-
pelled to appeal to the Courts to sustain the award of an
Arbitrator, and we might as well fight out the whole thing
in Court."
Mr. Frick : " I do not agree. The decision of an Arbitrator is
usually binding and conclusive among reputable business
concerns."
All spoke in favor of the making of this Contract, and, on
motion, (Schwab and Phipps), its execution was authorized ; the
vote being unanimous.
Mr. Peacock : "This represents 25$ of their total requirements
of last year."
Mr. Schwab : " It is more than double what we sold last year."
Mr. Peacock : " We have in process of negotiation a Contract
with the National Transit Company for Plates, but it is
not quite in shape to report to the Board. It also is a
sliding scale, and on $10.00 Pig, gives us $1.15 for Sheared
Plates."
Mr. Schwab (In reply to the chairman) :
"That would give us $8.00 per ton profit."
On motion, (Phipps and Schwab), the making of this Con-
tract was left with Mr. Peacock, with power to act.
MM. Gayley and Clemson, appointed as a Committee De-
cember 1 3th, made the following report :
"The Committee appointed to investigate the property of
the Pittsburg & Conneaut Dock Company, at Conneaut Har-
bor, Ohio, to determine if land was available for the erection of
a Blast Furnace Plant, would report as follows :
" A number of plans have been prepared to determine the
best location, and with such plans before us a personal inspec-
288 THE CORPORATE MIND
tion of the property was made during the past week. The plot
selected is just east of the present coal unloading slip. The
new drawbridge crossing the creek to the new dock will permit
the largest ore vessels to pass. At a point on the creek 300
feet east of the drawbridge the vessels can turn into a slip,
which will have to be dredged, which allows ample room for
stock yards and furnace plant on the East side. By this ar-
rangement, there is obtained on the Western side a strip of
ground 400 feet wide which can be used by the Dock Company
in further dock extensions, the length of such dock can be from
1,000 to 2,000 feet long as found necessary to dredge. There
is provided in this arrangement ample room for a furnace plant
between the slip and the hillside, and lengthwise will be found
room for a number of furnaces. The low ground extending
along the railroad for some distance affords an excellent space
for disposal of slag for many years, or the slag can just as read-
ily be conveyed to the upper end of the new dock and dumped
into the lake, and in this way providing for dock extensions.
There is sufficient flat land adjoining the furnace location, of
which the Dock Company owns part, which if filled with slag
would be suitable for Steel Works and other manufactories.
" The slip your Committee had in view for a furnace site
comprised about 25 acres, with plenty of just as suitable prop-
perty adjoining.
" The dock frontage at Conneaut for discharging ore is as
follows :
Old Dock 1,900 feet.
Direct unloading Dock 1,200 "
New Dock (under construction) 1,100 "
Total 4,200 "
New Dock can be extended 1 , 100 "
Furnace Dock as outlined 1 ,000 "
Making a Total of 6,300 feet.
and this can be increased by extensions into the lake and of the
Furnace slip. The above figures are for ore unloading alone,
and do not include the side of dock for coal or rail unloading.
" A Furnace at Conneaut Harbor making 300 tons of iron
per day would require per annum 100,000 net tons of Coke and
40,000 gross tons of limestone."
Mr. Frick : " We will leave that report on the Minutes for con-
sideration, and take up the matter at some future time. "
THE CONNEAUT SCHEME 289
Mr. Gay ley : " We have made the following purchases of Man-
ganese Ore :
" Caucasian Ore :
" Everitt & Company, 10,000 tons at 10^ pence, ship-
ment March to September.
"F. Haeberlin, 10,000 tons at 10^ pence, shipment
March to October.
"John Carr & Company, 6,000 tons at 10^ pence,
shipment March to May.
" Cuban Ore :
" We have purchased from the Ponupo Mining & Trans-
portation Company, their product for this year up to
25,000 tons at 24 cents per unit, at sea-board."
Mr. Gayley (In reply to the chairman) :
" We have several old Caucasian Ore Contracts at lower
prices than these, but find it difficult to get deliveries.
Making these Contracts, we will be able to get deliveries
under both the old and new Contracts. These prices on
Caucasian Ore are up about $1.50 per ton, while the Cu-
ban Contract has come down about $2.00 per ton. The
average increase in the cost of Ferro- Manganese this year
will be $1.50 per ton."
Mr. Peacock : " But we are getting from $4.00 to $5.00 per ton
more for Ferro than we did a year ago."
On motion, (Schwab and Peacock), the purchases reported
were approved, ratified and confirmed.
Mr. Gayley : " The Operations at Conneaut Dock, for the five
days ending January I3th, were as follows:
Receipts, None.
Shipments, 11,3 59 tons.
(In reply to the chairman) :
"Everything at the Docks will be ready for next year's
business."
Mr. Frick : " It would be well to bear in mind the necessity of
getting the Cars under Contract with the Schoen Company
in time. Mr. Gayley might put a man on to look after
this."
Mr. Bope, as assistant general sales agent, submitted the
following report :
290 THE CORPORATE MIND
STATEMENT OF SALES OF STANDARD RAILS SINCE
NOVEMBER 18, 1898.
Sales. Options (minimum). Totals.
Carnegie 326,623 46,000 372,623
Illinois 342,713 36,000 378,713
Cambria 65,266 65,266
Colorado 20,698 20,698
Total 755,300 82,000 837,300
" All of our own sales above reported have been included
in our report of obligations following, although formal Contracts
for only 197,000 tons have been executed."
" The statement given below compares our estimated obliga-
tions (for the classes of material specified) at the opening of
business, Friday, January 6 and January 13, 1899:
Material. Jan. 6th. Jan. i3th. Difference.
Rails 564,110 556,541 Loss 7,569
Billets, Blooms, Sheet
Bars, etc 445,227 433,739 Loss 11,488
Structural and Ship Ma-
terial 174,564 180,923 Gain 6,359
Axles and Bars 38,110 39,742 " 1,632
Plates 41,693 46,245 " 4,552
Total 1,263,704 1,257,190 Loss 6,514
"All in Gross Tons, based on our minimum obligations."
Mr. Phipps : " As the members of the Board are aware, we
have been building a foot-bridge over the Railroad at Du-
qijesne, and are asked to sign a Contract, agreeing to keep
it in good order."
On motion, (Phipps and Schwab), the execution of such a
Contract was authorized ; the vote being unanimous.
Mr. Phipps : " We have divided the Fawcett Land into Lots,
and a plan has been prepared showing 29 Lots, on each
side of the boulevard. This plan should be adopted, in
order that it may be recorded in the Court House."
On motion, (Schwab and Peacock), the plan submitted was
approved and adopted ; the vote being unanimous.
PROJECT TO SELL OUT 291
Mr. Phipps : " Collections have been coming in so freely that
we have found it advisable to anticipate our Ore payments,
up to and including those for March."
Mr. Lauder : " Referring to the question of Lake freight on
Ores : I think we can transport much cheaper than it is
being contracted for, by building large barges and handling
these by tugs in relays, running the business as a Railroad
would transport cars. The barges should hold say 10,000
tons ; two barges per day during the shipping season run-
Whaleback ore steamers in port.
ning regularly would give us our supply, and would, I be-
lieve, although I have not figured on it in detail, effect a
saving of 40 to 50$ in freight cost."
Mr. Frick : " In this connection, I was told by W. L. Brown
that they transported ore from Escanaba to South Chicago
for 17 cents. That should be looked up by Mr. Gay ley,
and we should also bear Mr. Lauder 's suggestion in
mind. "
Mr. Schwab : " I think it practicable, but do not see where the
great saving would come in."
Mr. Gayley : "The barges suggested are only 3,000 tons larger
than those now in use. The traffic is a little uncertain
on the Lakes and tugs might have to lie over and lose time.
This is what keeps the rates higher than they would be
292 THE CORPORATE MIND
otherwise. The suggestion is worthy of investigation, and
I will take it up."
Mr. Frick here made the statement concerning the reorgani-
zation of the company, and asked : " Whom will you name as
the Committee ? "
On motion, (Schwab and Singer), MM. Frick, Peacock,
Phipps (L. C.) and Lovejoy were appointed as the Committee,
in charge of the Organization of THE CARNEGIE COMPANY,
LIMITED ; there being no dissent.
Mr. Frick : " The Committee will report progress to the Board
from time to time; meanwhile, all should consider this,
and be prepared to make suggestions on any points that
occur to them.
" I may add that the question of Buying and Selling
Value of Capital Stock in the new Company that is, what
will be paid to retiring Partners, or what will be paid by
new Shareholders admitted is having careful consider-
ation, will be fixed on a fair basis, and will be set forth in
an Agreement similar to our present ' Iron Clad Agree-
ment,' to be signed when the new Company takes posses-
sion."
On motion, adjourned.
(Signed) LOVEJOY,
Secretary.
Approved at meeting held,
Chairman Board of Managers.
Copy to A. C., New York;
H. P., Jr., Washington, D. C. ;
H. M. C., Pasadena.
17 January, 1899.
CHAPTER XIX
THE ZENITH OF PROSPERITY
JH^^^^ IN 1889 negotiations were
entered into by Andrew Car-
negie with certain English
bankers and capitalists with
a view of selling out the
iron and steel enterprises with
which he was connected. At
that time British investors were
absorbing American industrial
stocks with astonishing avidity; and
Carnegie, believing the zenith of pros-
perity had been reached in his own
business, thought the time an opportune one to sell out to
the English. The project was resisted by Mr. Phipps, who
had sold seven-eighteenths of his interest the previous year;
but he finally yielded to his partner's insistence and gave a
reluctant consent to the sale of the properties.
So far as could be seen at the time, Carnegie's lack of faith
in the future was justified. Three years before, the profits of
the several companies had amounted to nearly three million dol-
lars. In 1887 they aggregated close on three and a half mill-
ions. Then in 1888 they dropped to $1,941,555; and it
seemed a prudent measure to slip out of the business on what
looked like the passing boom of 1889. The negotiations, how-
ever, had no satisfactory result; and Mr. Phipps, hearing of
their failure, expressed his relief. Incidentally he gave ex-
pression to his opinion on the impropriety of selling out to a
293
294 THE ZENITH OF PROSPERITY
trust an opinion that makes strange reading nowadays. Here
is the beginning of the letter he wrote to Mr. Carnegie :
GRAND UNION HOTEL
Dresden, Saxony,
Nov. i, 1889
DEAR ANDREW
Few pleasures on a foreign trip are equal to a friendly letter
from home like yours of the i8th.
I am gratified that we are not to go out of business, and
especially to make room for a trust, which is by no means a
creditable thing. As you say the tariff would be repealed on
rails and rightly so.
With Mr. Frick at the head, I have no fear as to receiving
a good return upon our capital. Being interested in manufac-
turing keeps us within touch of the world and its affairs in-
stead of being on the shelf. Of course I am anxious that
you should not be worried by the business only pleasantly
interested. . . .
Yours truly
H. P. Jr.
It was a very fortunate thing for Carnegie, Phipps/and all
the partners that the project failed; for in 1889 the profits of
the year amounted to $3,540,000, the largest up to that date in
the history of the various enterprises, despite the fact that rails
were down to their lowest point, $29.25. Next year's profits
were $5,350,000. The effect of Mr. Frick's management was
beginning to be seen. In 1891, owing to dwindling prices and,
in larger measure, to excessive cost of labor at Homestead, there
was a falling off of a million dollars ; and a still further reduc-
tion took place in 1892, the year of the strike. The profits this
year were only $4,000,000. In 1893 panic year a further
reduction of a million dollars was recorded; and this marked
the bottom. Thenceforward the annual balance sheets showed
an ever-increasing profit, regular and slow at first, then by
extraordinary leaps and bounds. Here is the gratifying
record :
PROFITS NOW FIRST PUBLISHED 295
NET PROFITS OF THE CARNEGIE ASSOCIATIONS, CARNEGIE
BROTHERS & CO., LTD. (TO 1892), CARNEGIE, PHIPPS & CO.,
LTD. (TO 1892), AND THE CARNEGIE STEEL COMPANY,
LTD. (FROM JULY, 1892).
1889 $3,540,000*
1890 5,350,000
1891 4,300,000
1892 4,000,000
1893 3,000,000
1894 4,000,000
1895 $5,000,000
1896 6,000,000
1897 7,000,000
1898 11,500,000
1899 21,000,000
plus $4,500,000 reinvested.
These sums, added to those given on a previous page for the
years 1875 to 1888 inclusive, bring the aggregate net profits of
all the Carnegie associations to the impressive total of $93,- ^
391,005.41. In the year 1900 the last of its separate exist- -
ence the Carnegie Steel Company made a profit of nearly
$40, 000,000, and a sum was taken from the Contingency Fund .
to bring it up to this even figure.
It is believed by the Carnegie officials, and with some show
of reason, that this magnificent record was to a great extent
made possible by the company's victory at Homestead. From
that time on the firm profited by the heavy investments it had -
made in labor-saving machinery; and costs got so low that one ,
year when the Carnegies made over four million dollars, their
chief competitor, the Illinois Steel Company, had upwards of a
million dollars' loss. The following year the Carnegies made
over five millions, while the Chicago company made only $360,-
ooo. By 1897 the cost of steel rails on gars at the Braddock
mill was only $12 a gross ton!
One of the most marked economies in production resulted
soon after the Homestead strike, when Mr. Frick created a posi-
* At this date a change was made in the method of accounting, by which the
odd sums were dropped from Profit and Loss and put into a " Contingency Fund."
Later any amount under half a million was so disposed of ; and, on the other hand,
when the Profit and Loss account showed an odd sum of more than half a million,
enough was borrowed from the Contingency Fund to make the total balance in
even millions. That is why, on another page, the profits of the association are
given to within a cent, while here they are stated in even millions.
296 THE ZENITH OF PROSPERITY
tion, without any distinctive name, for Mr. P. R. Dillon, who
had done such excellent work at the Union Iron Mills and at
Beaver Falls. His duties were advisory, covering mechanical
as well as labor equipment, and extended to every department
of the company's service. By skilful adjustments he increased
the capacity of one group of workers after another, here adding
a man, there taking two away; in one place gearing up the
machinery, in another reducing it, until a high degree of me-
chanical perfection was reached, and there was not a super-
fluous wage-earner in the shops. At Homestead alone five
hundred men were thus saved ; and in all the Carnegie works
The Carrie Furnaces.
the reductions amounted to over fifteen hundred workmen.
And this without diminishing the output of a single group.
Indeed, the better practice thus resulting soon brought back the
displaced men ; and the tonnage of the works increased more
rapidly than ever before. The increase between 1893 and 1894
amounted to almost as much as the entire output of the works
in 1888, and exceeded it the following year.
During these years and those immediately following them
the growth of the several works was nothing less than phenome-
nal. No great expansion was possible at the older establish-
ments, such as the Union Iron Mills and the Lucy Furnaces;
but at Braddock, Homestead, and Duquesne additions were
made every year greater than the entire plant had been a short
AMAZING RECORD OF GROWTH
297
time before. At Homestead one set of open-hearth furnaces
was rapidly added after another, and new mills erected to finish
the increased output of steel. In one case only sixty days in-
tervened between the turning of the first sod and the casting of
an ingot on the same spot. The two Carrie furnaces, just
across the river, were bought by Mr. Frick with his usual
issue of bonds, and the bonds liquidated out of profits. Later
two other furnaces were added; and these great stacks have
broken the world's record for yearly tonnage. At Duquesne
the same nervous activity was displayed. Four 1 huge blast-
furnaces were built to supply the metal required by the exten-
sive open-hearth plant that soon supplemented the two Besse-
mer converters which Mr. Frick found there when he bought
the works. At the Edgar Thomson works almost every year
witnessed an addition to its great battery of blast-furnaces, un-
til Kloman's little Escanaba stack was but as a single letter in
half the alphabet. Here, expressed in gross tons of steel in-
gots made, is the great record of the growth of the combined
business of these plants under the management of Henry C.
Frick :
1888 332,111
1889 536,838
1890 660,071
1891 797,286
1892 877,602
1893. 863,027
1894 1,115,466
1895 1,464,032
1896 1,375,249
1897 1,686,377
1898 2,171,226
1899 2,663,412
The import of these statistics is seen by a comparison. In
1885 Great Britain led the world in the production of steel.
Her total output for that year was 695,000 tons less than the
product of the Carnegie Steel Company in 1899.
During this period the H. C. Frick Coke Company, while
still supreme in its field, had not expanded with anything like
equal rapidity. This was partly because it was already great
enough to supply the Carnegie demands twice over, and partly
because its profits and credits had been used to develop the
steel company. Beginning as early as 1888, during the Edgar
298 THE ZENITH OF PROSPERITY
Thomson strike, the credit of the coke company had been con-
tinuously used to strengthen the steel companies ; and ambitious
as Mr. Frick was to put the latter concerns at the head of the
steel-producing establishments, not only of America, but of the
world, he let the profits of his own special business go into
blast-furnaces and open-hearth plants, when his personal promi-
nence would have been furthered by putting them into coal
lands and new ovens.
In 1899 the H. C. Frick Coke Company owned 40,000 of
the 60,000 acres of unmined coal land in the Connellsville re-
Shoveling ore from its native bed into cars.
gion, 20,000 acres of surface land, 11,000 coke-ovens, 2,500
railroad-cars, and 3,500 dwellings. Its capital was $10,000,-
000, of which Andrew Carnegie personally owned a little over
one-quarter, the Carnegie Steel Company about the same, and
the rest was held by Mr. Frick and a number of smaller own-
ers, of whom the principal ones were Mrs. T. M. Carnegie and
Mr. John Walker. It was in no way affiliated with the Car-
negie Steel Company, except that it worked in harmony with it.
At times the necessities of the latter conflicted with its proper
MORE SCHEMES TO SELL OUT 299
interests, and then these had to give way to the Carnegie con-
trol.
Ten years having elapsed since the failure of the attempt to
sell the works to English investors, new schemes of a like char-
acter were made in 1899. For a long time past Mr. Carnegie
had lived principally abroad, and Mr. Phipps had withdrawn
from active participation in the affairs of the company. Mr.
Prick's had been the guiding hand that had led the concern to
a prosperity surpassing the dreams of the most sanguine of his
colleagues ; and in all plans for the future his continued leader-
ship seemed a necessity. But Carnegie was loath to resign in
favor of one whose prominence threatened to overshadow his
own; and the plans he made for 'his own final withdrawal in-
variably included the simultaneous resignation of Frick. And
Frick, full of energy and not yet fifty years of age, had no
thought of resigning ; so that the plans never got beyond the
nebulous stage until the shock of litigation forced them into
some degree of definiteness. The result was an illustration of
what Herbert Spencer calls "a consolidation effected by war."
Before dealing with this sensational suit and the causes
leading up to it, a more detailed reference should be made to
some of these earlier schemes of consolidating the steel and
coke businesses, and selling them to outsiders. This will serve
to correct the prevalent idea that the sale which was finally
made to Mr. J. Pierpont Morgan for the United States Steel
Corporation was due entirely to commercial conditions, and not
to any desire on the part of the Carnegie people to be rid of
their property.
Early in January, 1899 to be specific, on Thursday, the
5th of that month a meeting was held at the house of An-
drew Carnegie in New York, attended by Messrs. Hy. Phipps,
Frick, Schwab, Love joy, Peacock, and Lauder, for the discus-
sion of two questions. The first was the price that should be
named for the properties of the Carnegie Steel Company and
300 THE ZENITH OF PROSPERITY
the H. C. Frick Coke Company in response to certain overtures
to purchase which had been made by a syndicate of New York
and Chicago capitalists. The second question was whether the
two companies should be consolidated in case of a failure to
sell them, and on what terms. Both matters were carefully
considered; and a decision to sell having been reached, the
price of $250,000,000 was fixed upon for the steel company's
stock, " carrying with it all that is on its books/' including the
shares in jhe coke company. Payment was to be made one-
half in cash and one-half in fifty-year five-per-cent. gold bonds.
When these terms were laid before the syndicate they were
rejected. While the members did not say so, they had evi-
dently expected to make a partial payment in stock.
A consolidation of the coke and steel business was then
decided upon; and on January I4th Andrew Carnegie wrote his
wishes to his cousin, George Lauder, as follows :
"Mr. Rodgers, Standard Oil and Federal, said truly, 'Too
big a dog to wag so small a tail.' Now H. C. F. and I talked
over the matter. He will proceed to get plan, new charter,
bonds, etc., as proposed.
I wish you and Peacock and Lawrence, Clemson, Love joy,
Gayley, etc., to decide whether you wish to buy the other
Frick Coke Company Stocks at $35,000,000.00, which Frick
now wants ; or prefer to let things stand as they are with the
present fixed rate on Coke.
The Frick Company price was $30,000,000.00, if $75,000,-
ooo.oo Mortgage Bonds only made by C. S. Co., and you may
prefer to do this, or might make the Mortgage $100,000,000.00,
and only issue $75,000,000.00 now, and provide only the other
issue for new property to be acquired, which would be the same
thing practically as the $75,000,000.00 Mortgage.
I am just as willing to keep my Frick Company Stock as to
sell it to C. S. Co., and I suppose H. C. F. is. He can make
it pay us more than the interest on the $35,000,000.00.
You should consult all the Managers, including Singer, and
let each state frankly his preference. Also ask Schwab if he
has not gone ; if he has, I will see him here.
It is a matter for all of you to decide, not for me. As I
told you, C. S. Co. paying in Bonds makes it easy payments
CARNEGIE'S FORECAST OF PROFITS 301
no cash which is different from heavy yearly payments to
make. Personally am glad to have this year to ourselves to
show what we can do. If we wish to sell out, believe me, we
can do so ourselves for more than $250,000,000.00."
The reference to the proposed purchase of " the other Frick
Coke Company Stocks at $35,000,000" is misleading. The
price was to include all the stock of the coke company, as is
shown by the Frick plan to which Mr. Carnegie refers. The
clause relating to this reads :
" The [projected] Carnegie Company Limited shall purchase
all the property and business of the H. C. Frick Coke Com-
pany, the Youghiogheny Northern Railway Co., Youghiogheny
Water Co., Mt. Pleasant Water Co., Trotter Water Co. and the
Union Supply Co. Ltd. subject to all their debts, obligations
and engagements, or all of the Capital Stock of said Companies
as shall in the consummation of the general purpose of this
agreement be subsequently deemed most desirable by the Com-
mittee hereinafter designated, for the sum of Thirty-five million
dollars ($35,000,000) to be paid as hereinafter stated."
In other words the entire business of the Frick Company
and all its dependencies was offered at $35,000,000. This is
exactly half the price paid for it a year later in settlement of
the famous litigation.
Mr. Frick's plan, thus referred to, of a company with a
capital of $60,000,000 and a bond issue of $100,000,000, was
not acceptable to Mr. Carnegie, who drew up a prospectus in
substitution of it, and sent it with the following letter to his
colleagues in Pittsburg. The phraseology of these documents
is not very clear ; but in the prospectus the retirement of Mr.
Frick is distinctly provided for :
"WE (THE CARNEGIE STEEL COMPANY, LIM-
ITED, and the H. C. FRICK COKE COMPANY) [shall]
make this year, under the lowest prices on record, say close to
$15,000,000.00.
We had only six months of Carrie Blast Furnaces; aot six
months work of the big new Blooming Mill; no Armor deliver-
302 THE ZENITH OF PROSPERITY
ies, except for three months; a loss of nearly $1,000,000.00
profit.
Had these been running as now our net would have been
beyond $ 1 5 ,000,000. oo.
For 1899 '
We, with half product, sold 1,200,000 tons,
orders on our books, at higher prices of at least
$ I. oo deliveries $1,200,000.00
We have of Armor going to work for years
ahead another 1,000,000.00
Carrie Blast Furnaces ; the Blooming Mill all
he year, another 500,000.00
If we get $1.00 more pull on the remaining
1,200,000 tons 1,200,000.00
$3,900,000.00
Our increased product of Furnaces and Mills
give us a big increase, but there is a gain of . . . .$4,000,000.00
Which might easily be $5,000,000.00.
Frick Coke is now making at the rate of a
$1,000,000.00 more per year; even better pros-
pects 1,000,000.00
$5,000,000.00
The Light Rail Mill begins say July ist; our new Mines
this year will increase profits there; our big new Universal
Mill goes into operation say May ist.
Mr. Fricks estimate of , . . . . $15,000,000.00
Frick and Superior Mines over 5,000,000.00
Net for 1 899 $20,000,000.00
Just as likely to be above as below, I think more so, but
say $20,000,000.00.
In I()OO :
We had the big Plate Mill ; Steel Car Shops ; new Axle
Plant; Car Wheel Foundry; all arranged for came in early
in 1899; also two new Blast Furnaces at Carrie.
For 1900, therefore, present conditions are good for $25,-
000,000.00. These conditions are very low. Prices liable to
advance $2.00 to $5.00 per ton.
$37>5 00 >oo A YEAR 303
The first would give us $ 5,000,000.00 more, 30, 000,000. oo
The second 12,500,000.00 more, 37,500,000.00
I am certain that in two years hence we shall be on the
basis of $25,000,000.00 net yearly, even at low prices.
We have to supply the world note last week's British
advices less Ore this year and last from foreign points ; great
scarcity; prices wild; coke put to 15/6 [fifteen shillings and
sixpence] at Works, best grade; bad to get at that; near $3.75
per ton and scarce. Impossible to increase supply of either
Coke or Ore.
Since we reach Atlantic ports at $1.00 per ton, we have
the trade of the world.
I favor holding on for two or three years ; no question but
we can sell our property at $400,000,000.00.
200,000,000 Bonds @ 5^ = $10,000,000.00
200,000,000 Stock @ 6f = 12,000,000.00
$22,000,000.00
Surplus 3,000,000.00
We shall beat this why then not wait. If you wish to sell
now then here is the plan. A. C."
(PROSPECTUS)
THE CARNEGIE STEEL COMPANY, LIMITED, and
'the H. C. FRICK COKE COMPANY.
In pursuance of a decision of long standing, the four princi-
pal owners of The Carnegie Steel Company, Limited, and the
H. C. Frick Coke Company (MM. Carnegie, Phipps, Frick and
Lauder) now retire from active business. To enable them to
do so, and with the approval of all the younger Partners, the
partnership has been changed to a corporation Capital $300,-
000,000.00.
One half $150,000,000.00 Gold Mortgage Bonds;
Preferred Stock, 6%. . . .75,000,000.00
Common Stock, 75,000,000.00
All the Bonds and Preferred Stock will be taken payment
by the four outgoing Partners.
Part of the Common Stock will be held by the present
younger Partners ; part is now offered to the public.
Applications from Pittsburg and Western Pennsylvania,
304 THE ZENITH OF PROSPERITY
especially in Manufacturers of Iron and Steel, will be given
preference, the desire being to enlist as many experienced busi-
ness men at home as possible.
All the present Partners agree to continue in the service
for Five (5) years. MM. Carnegie, Phipps, Frick and Lauder
also agree to remain for that period in their present positions
as Consulting Partners.
The Partners have agreed to make good any deficiency in
the Net Earnings, should such occur during said five years, in
the amount necessary to pay interest on Bonds and upon Pre-
ferred Stock, and 6% upon Common Stock.
To meet this liability there has been deposited with ....
Trust Company, $20,000,000.00 of Bonds,
contributed pro rata by the Partners.
The present earnings of the Companies exceed the sum
required for the payment stated and leaves a satisfactory sur-
plus for contingencies. Additional Works now in progress,
which the demand of the ever growing business required, will
add to the earnings. The property of the new Company em-
braces all the property of the two former Companies ; every-
thing is included real estate, railroads, coke lands (38,000
acres unmined), mills, furnaces, houses, offices, water rights,
mines, and everything of every description.
The debts of the Company, including all Mortgage Bonds,
etc., are more than covered by the quick assets the Stock of
Material, and the Bills Receivable, and the Cash on Hand.
The Company starts with Working Capital.
(SIGNATURES)
This prospectus is true ; nothing kept back.
These different plans of consolidation and reorganization
were still under consideration when, towards the end of March,
overtures were made by ex-Judge W. H. Moore of Chicago for
the purchase of the Carnegie- Frick properties, with the view of
combining them. This time an effort was made to get a price
on Andrew Carnegie's individual holdings of stock in the two
companies, carrying as they did control; but, for the sake of
appearances, Mr. Carnegie refused to deal with outside parties,
and stipulated that the negotiations should be conducted in the
names of his principal partners, Phipps and Frick. Accord-
ingly these gentlemen joined the syndicate, with the under-
THE MOORE OPTION 305
standing that Moore and his friends should finance the entire
scheme.
Carnegie demanded a million dollars for a ninety days' op-
tion on his entire interests at a price of $157,950,000; and he
afterwards raised this bonus to $1,170,000. The increase was
met by Messrs. Phipps and Frick each contributing $85,000,
Carnegie agreeing to return these sums to them later. The
other members of the steel and coke companies required no
bonus for an option on their shares except the nominal sum of
one dollar. These agreements were signed on April 24th.
If the sale, had been consummated it would have been on
the basis of $250,000,000 "for the entire ownership of first
party [Andrew Carnegie] and associate owners and interests in
all the properties and assets of The Carnegie Steel Co. Ltd.,
except its holdings in the stock of the H. C. Frick Coke Co.,
and allied interests, namely : about thirty (30) per cent, of the
whole of the said H. C. Frick Coke Co., in which thirty per
cent, in said H. C. Frick Coke Company interests the said
second parties [H. C. Frick and Henry Phipps, Jr.] may take
first party's interest on the basis of Seventy millions of dollars
($70,000,000) for the whole of the said H. C. Frick Coke Co.
properties and allied interests." And "as to the first party's
individual holdings of stock in the H. C. Frick Coke Co. and
allied interests, this shall be upon the basis of Seventy millions
of dollars for the entire property and assets of the H. C. Frick
Coke Co. of which stock the holdings of the said first party is
about twenty-five (25) per cent, of the whole."
To quote still further from the original option, "the first
party agrees to take as part payment for his interests as above
one hundred millions of dollars ($100,000,000) in five per cent,
fifty year, gold bonds, to be executed by such individual cor-
poration or limited partnership association, as may be desig-
nated by the second parties, or their assigns, which bonds shall
be secured by a mortgage upon all the real estate of the Carne-
gie Steel Co. Ltd. and to be a first lien thereon, except so far
20
3 o6 THE ZEXITH OF PROSPERITY
as the same shall be now encumbered, and which shall cover all
of the stocks, interests and securities covered by this option."
... " The remainder of the consideration for the sale of the
interests hereby optioned is to be in cash."
In this way Carnegie would have been so secured that he
would virtually have had a first mortgage on all the partnership
assets, thus gaining a preference over all his partners.
An instrument of a like tenor and purport was signed by
other members of the Carnegie- Frick companies, without any
forfeitable bonus.
At the time this option was bought the money market was
in such condition that no difficulty was anticipated by Judge
Moore in raising the necessary funds to carry out his plans,
huge as these were. He represented that he would have the
co-operation of the National City and the First National Banks
of New York. The death of Roswell P. Flower, however, and
the forced liquidation of the many industrial securities that he
had been supporting, brought on a panic that was as disastrous
as it was unexpected. Occupied in protecting existing obliga-
tions, bankers and capitalists had little disposition to engage
in fresh ventures; and realizing the impossibility of safely
launching a great enterprise in such troubled waters, Messrs.
Frick and Phipps went to Scotland to try to get an extension of
their option. At Skibo Castle Mr. Carnegie refused to extend
the option, and the negotiations came to an abrupt end.
An interesting document was drawn up at this time which
is worth including here, presenting as it does at a glance the
imposing magnitude of the business whose growth we have
traced from the little Kloman forge in the basement at Girty's
Run. It is the draft of a prospectus prepared by the Moore
Syndicate, but never published. It marks the zenith of the
Carnegie Steel Company's prosperity. Supplementing it is a
letter from Mr. C. M. Schwab, of considerable interest.
THE MOORE PROSPECTUS 307
(PROSPECTUS)
A limited amount of the stock of the "CARNEGIE
STEEL COMPANY" is now offered to the public, on the
following basis :
The corporation which it is planned to form with the name
" Carnegie Steel Company," will have, through a charter to be
obtained under the laws of Pennsylvania, appropriate powers for
acquiring, producing, manufacturing and dealing in steel, iron,
ore, coal and coke, and all things made of steel or iron, with all
other powers deemed convenient, and will have an authorized
capital of two hundred and fifty million dollars ($250,000,000),
di vided into two million five hundred thousand (2,500,000)
shares of the par value of one hundred dollars ($100) each.
Each subscriber will agree to take and pay for the number
of shares for which he may subscribe, or such smaller propor-
tionate number as may be allotted to him in the event of over-
subscription, of the full-paid stock.
The price is to be one hundred dollars ($100) in cash for
each share of stock, and is to be paid into such depository as
may be designated by the Managers in control of the subscrip-
tion lists, within ten days after notice calling for such payment
shall be delivered or mailed to the subscriber; but ten dollars
out of every one hundred dollars of subscription may be made
payable immediately on allotment, if so stated in the notice
thereof. If the stock certificates cannot be delivered when
payments are completed, receipts will be issued calling for the
stock when ready.
The corporation is to be vested with fifteen million dollars
($15,000,000) in cash and also with the cash and other avail-
able assets of The Carnegie Steel Company, Limited, and the
H. C. Frick Coke Company, and, subject to a Bonded Debt of
one hundred million dollars ($100,000,000) in 50 year 5$ Gold
Bonds, with the properties of The Carnegie Steel Company,
Limited, and the H. C. Frick Coke Company, which include
the following:
The Edgar Thomson Works, at Bessemer, Pa., including:
Edgar Thomson Blast Furnaces,
Edgar Thomson Foundry,
Edgar Thomson Steel Works.
The Duquesne \Vorks, at Duquesne, Pa., including:
Duquesne Blast Furnace,
Duquesne Steel Works.
3 o8 THE ZENITH OF PROSPERITY
The Homestead Steel Works, at Munhall, Pa., including:
Bessemer Steel Department,
Open Hearth Steel Department,
Finishing Mills,
Armor Plate Department.
The Carrie Blast Furnaces, at Rankin, Pa.
The Lucy Blast Furnaces, in Pittsburg, Pa.
The Keystone Bridge Works, in Pittsburg, Pa.
The Upper Union Mills, in Pittsburg, Pa.
The Lower Union Mills, in Pittsburg, Pa.
The H. C. Frick Coke Company's Coal and Coke properties
in Westmoreland and Fayette Counties, Pa., including:
About 40,000 acres of unmined coal,
20,000 acres of surface lands,
1 1 ,000 coke ovens ;
2,500 railroad cars,
3,500 dwellings.
The Larimer Coke Works, at Larimer, Pa.
The Youghiogheny Coke Works, at Douglas, Pa.
All the capital stock of the following Companies :
The Union Railroad Company,
The Slackwater Railroad Company,
The Youghiogheny Northern Railway Company,
The Carnegie Natural Gas Company,
The Youghiogheny Water Company,
The Mount Pleasant Water Company,
The Trotter Water Company,
The Pittsburg and Conneaut Dock Company.
Over one-half the capital stock of the Pittsburg, Bessemer
and Lake Erie Railroad Company.
43.6 per cent, of the capital stock of the Pennsylvania and
Lake Erie Dock Company.
One-fourth of the capital stock of the New York, Pennsyl-
vania and Ohio Dock Company.
Five-sixths of the capital stock of the Oliver Iron Mining
Company, owning :
All the stock of the Metropolitan Iron and Land Company,
All the stock of the Pioneer Iron Company,
Over 68 per cent, of the stock of the Lake Superior Iron
Company,
Over 98 per cent, of the stock of the Security Land and
Exploration Company,
Other ore properties in negotiation which will be included
if acquired.
AN IMPRESSIVE DOCUMENT 309
One-half of the capital stock of the Pewabic Company.
Three-fourths of the capital stock of the Pittsburg Lime-
stone Company, Limited.
Other interests in Ore Mines, Transportation Companies,
Dock Companies, Valuable Patents, and Companies owning
Patents, etc.
These Furnaces, Steel Works, Coke Works, and other prop-
erties are in full operation, their latest complete months' prod-
ucts being as follows :
BLAST FURNACES.
PRODUCT GROSS TONS.
Names. Stacks. Mar., 1899. Apr., 1899.
Edgar Thomson Furnaces 9 90,585 88,937
Duquesne Furnaces 4 70,261 63,012
Carrie Furnaces 2 18,935 I 9,447
Lucy Furnaces *. 2 6,031 9, 100
Total 17 185,812 180,496
STEEL WORKS.
PRODUCT GROSS TONS.
Names. Mar., 1899. Apr., 1899.
Bessemer Steel
Edgar Thomson Steel Works 66,427
Duquesne Steel Works 53,189
Homestead Steel Works 31,282
Total 150,898
Open Hearth Steel
Homestead Steel Works 90,088
Total Steel Ingots 240,986 212,163 .
ROLLING MILLS.
PRODUCT GROSS TONS.
Names. Kind. Mar., 1899. Apr., 1899.
Edgar Thomson Steel Works. . Rails I79> 2 56 159,344
Duquesne Steel Works Billets 29,315 29,223
do Sheet Bars 14,556 n,478
do Splice Bars 4,207 3,409
Homestead Steel Works Blooms and Billets. 95,635 82,977
do Structural 22,043 22,179
do Plates 8,651 8,818
Upper Union Mills Structural 12,106 11,028
do Plates 8,455 7,466
Lower Union Mills Structural 4,374 3,947
do Plates 3,543 3,429
3 io THE ZENITH OF PROSPERITY
COKE WORKS.
SHIPMENTS NET TONS.
Names. Mar., 1899. Apr., 1899.
H. C. Frick Coke Company 506,870 477,640
Larimer Coke Works 5,030 5,090
Youghiogheny Coke Works 2,860 1,850
Total Coke 5*4, 760 484,580
OTHER DEPARTMENTS.
PRODUCT GROSS TONS.
Kind. Mar., 1899. Apr., 1899.
Edgar Thomson Foundry Castings 5,465 5,439
Duquesne Steel Works Finished Splices 4.H4 3,47o
Homestead Steel Works Armor 446 621
do Rivets and Bolts 125 105
do Castings 152 200
do Fitted Work 1,958 1,928
do Columns 635 41 1
Upper Union Mills Rivets and Bolts 21 20
do Fitted Work 346 713
Lower Union Mills Axles 2,629 1,664
do Forgings 108 103
do Spring Steel 638 731
Keystone Bridge Works Bridge Work. 3,394 2,933
do Castings 274 348
do Rivets 116 143
As has been the fixed policy of the " Carnegie " Associa-
tions during the past twenty years, Improvements, Extensions
and Additions are constantly being made. Blowing Engines
are being added at Edgar Thomson, Duquesne and Carrie Blast
Furnaces, which will increase the product of Pig Iron 175,000
tons per annum. Ten Open Hearth Furnaces, a 30 inch Slab-
bing Mill, a 128 inch Plate Mill and a 42 inch Universal Plate
Mill are building at Homestead Steel Works, and will be com-
pleted in June and July next, increasing the product of Steel
Ingots 350,000 tons per annum, and of Plates 300,000 tons per
annum. A Steel Axle Works, at Howard, near the Homestead
Steel Works, will be completed by November next, with a
capacity of 100,000 tons of Car Axles per annum. Many other
minor Improvements are under way, all with a view to increas-
ing product, decreasing cost or expediting shipment.
The present output of these Works is at the annual rate of
2,200,000 gross tons of Pig Iron, Spiegeleisen and Ferro-man-
POSSIBLE PROFITS $4325322 A MONTH 311
ganese; and 2,800,000 gross tons of Steel Ingots, with ade-
quate finishing capacity.
The Improvements now approaching completion will increase
the output to the annual rate of 2,375,000 gross tons of Pig
Iron, Spiegeleisen and Ferro-manganese ; and 3,150,000 gross
tons of Steel Ingots, with sufficient finishing capacity to turn
this Steel into Rails, Billets, Structural Shapes, Plates, Railroad
Forgings and other Merchantable forms.
The Net Earnings of the business which will be transferred
to the " Carnegie Steel Company " were
For March, 1899 ". $1,652,038.75
For April, 1899 1,888,227.72
Owing to the magnitude of the business, and the immense
tonnage of the various products, it is necessary that long time
contracts be made, far in advance of the time of delivery. The
result is that present shipments are at prices far below present
rates, the rates at which contracts are being made for future
delivery. Had current prices been obtained for the shipments
during these two months, the Net Earnings would have been
For March, 1899. $3,182,574.95
For April, 1899 4,325,922.78
and with present market prices and the increased product result-
ing from the Improvements named, an average single month's
Net Profit will largely exceed the above; justifying the expec-
tation that the " Carnegie Steel Company " will pay annually,
under almost any condition of business :
5$ on $100,000,000 Bonds $5,000,000.00
And at least
6% on $250,000,000 Stock 15,000,000.00
$20,000,000.00
and leave an ample surplus for extra Dividends, as well as for
other Improvements and Additions which will still further in-
crease the Net Earnings and the rate of Dividends on the Stock,
besides providing a fund for retiring the Bonds at maturity.
The Carnegie Steel Company has been, is, and will be in an
absolutely independent position, owning the sources of supply :
Ore, Coal, Coke, Limestone and Natural Gas ; the Transporta-
3 i2 THE ZENITH OF PROSPERITY
tion Lines for bringing the raw materials to the Works ; the
Docks for handling Ore; the Coke Works, Blast Furnaces,
Steel Works and Finishing Mills, each advancing the product
to a higher grade, until it is ready for the markets of the World,
with every intermediate profit saved for the benefit of its Stock-
holders.
The efficient Organization which had brought the " Carne-
gie " Associations to their present unassailable position will
remain intact. Nearly all of the former Shareholders in The
Carnegie Steel Company, Limited, and the H. C. Frick Coke
Company, all of whom were actively engaged in the business,
have taken Stock in the " Carnegie Steel Company," and many
other Offkers and Employes, Superintendents, Foremen, Heads
of Departments, Sales Agents, Workmen and Clerks, have sub-
scribed for Stock in the new Company, demonstrating their
faith in its future and ensuring the same bold yet conservative
management which has rendered possible such an aggregation
of capital as this ; making large profits, yet earning them ; con-
trolling the market, yet never abusing its power; encouraging
the wider use of Steel by the reductions made in its Cost, yet
paying the highest wages in the World. Such has been the
past, such is the present and such will be the future of the Car-
negie Steel Company.
PITTSBURG, PA., May i5th, 1899.
MY DEAR MR. FRICK:
You ask me to give my views as to the probable future
earnings of the Carnegie Interests, and as to the proposed reor-
ganization on a basis of $100,000,000 Bonds $250,000,000
preferred stock and $275,000,000 common stock.
Permit me to say that commencing in 1879 as Engineer,
constructing the works, ten years as General Superintendent of
our principal works and over two years as President, I feel that
I know the properties and their possibilities as well, or better
than any one in or out of the concern.
While we have been highly successful in the past, as every
one knows, I believe we are only now getting in shape to be
truly successful and truly profitable. Our April profit and loss
sheet shows earnings slightly over $1,500,000.00 with rails
netting us only $17.50 and billets $16.00. Lowest prices we
ever had on an average were $16.50 for rails and $14. 50 for
billets, so you see we have reaped very little of the advantages
of increased prices. With prices anywhere near to-day's sell-
ing prices we would easily make over $3, 000,000.00 per month,
THE LAST BALANCE SHEET
313
TUB CARMEOIE STEEL COMPACT. LISITZD.
Office of Secretory.
BALAHOE SHEET, UAROB 1, 1900.
ASSETS*
CASHj- Treasury,
Work*,
Sale* Agenaie*.
BILLS RECEIYA3LB,
hORTGAOES RECEIVABLE! Employ**,
ACCOUNTS RECEIVABLE! Current,
Securiti
STOCKSi Finiahed Product,
Material* for Uae,
Or* at Lake Porta,
Ore at Mine*,
AVAILABLE ASSETS,
WRKS and PROPERTIES t-
Edgar Thonaoa Vtorks,
Duquecne Steel Worka,
Duquetme Furna***,
Honostoad Steel Worka,
Carrie Furnace*,
Howard Axle Work*,
Luoy Furnace* t
Keyaton* Bridge Work**
Upper Union Mills,
Lower Union ililla,
Larimer Coke Work*,
Youghioghsny Coke Worto*
City Para Lota,
Yerona Land,
Liberty Pam,
Oliver Land,
Pawdott Land,
1300 E,iraOVE!Ot3-
Ixigor -Thoftaon Parbaoee,
Ed^r Tboaaan Steel Wka.
Edgar fhocwan Foundry,
Daqunen* Pumaces,
Duquoone steel Wbrfc*.
Honeatead Steel Wbrka,
Carrie Furnaces,
Howard Axle Works,
Luoy Furnace*,
Keystone Bridge V.'ork*,
Upper Union Milla,
Lower Union Mill*,
STOCKS & BONDS. Inrertoent*,
UNDIVIDED CAPITAL,
DUE FROM PARTMER3,
TOTAL ASSETS,
LIABILITIES.
JSORTQAGES PAYABLEi-
Edgar Tboiason 7,'orkB,
Duqueane Steel Worke,
Duquoane Fornaoos,
Itoneotead Steel Worka,
Carrie Furnaces,
Howard Axle Work*,
Keystone Bridge Work*,
Liberty yarn,
Oliver Land,
BILLS PAYABLSt Current,
Stewart,
Borntraeger,
AOCOUUT3 PAYABLE! Current,
Or*;
SPECIAL DEPOSITS,
LIABILITIES PATABLE,
SPECIAL FUKDSl-
Oontingent Fund,
Contingent * Special,
Relining Fond,
Coal ExtinguiBhnent Fund,
DOE TO FARTHERS,
SURPLUS,
CAPITAL,
10,429,594.T
2,333,406.35
5,626,211.91
-16,644,201.34
1.079.388.69
TIT, 478. 87
1,251,869.99
713,180.11
1,000,000.00
700,000.00
200,000.00
160,000.00
960,664.50
40,000.00
225,000 .dO
310,313.81
25.00
209,945.00
995,000.00
200,000.00
103,250.00
600,000.00
275,275.85
50,000.00
150,000.00
4,560,174.1
375,000.00
27V423. 56
2,49,650.44
240.150.21
557,143.50
711,310.00
211,328.85
15.822.45
6,579,914.19
25,000,000.00
l,287,48t.M
19,285.48
2i.302.SQ. 1,352,023,59
7,174,804.02
239,848.44
16,381,834.06
16,899,208.80
7,087,94.76
1,952,212.91
16.470.00
42, 396,513.74
988,797.31
14. 940. *
8.566.642.2
58,295.716.59
5.663.352.94,
101,416,802.43
2,734,470.8*
5,004,698.29
2,709,780.68
1.496 ,104. 30
, 113, 657. 38
81,579.914.19 101. 416.802. 43
Photographic copy of last balance sbet before consolidation.
314 THE ZENITH OF PROSPERITY
and then our new works to be started in two months will, I
estimate on present prices, bring us an additional profit of
$600,000.00 per month or total of $3,600,000.00 per month.
As to the future even on low prices, I am most sanguine.
I know positively that England cannot produce pig iron at
actual cost for less than $i i. 50 per ton, even allowing no profit
on raw materials, and cannot put pig iron into a rail with their
most efficient works for less than $7.50 per ton. This would
make rails at net cost to them of $19.00. We can sell at this
price and ship abroad so as to net us $16.00 at works for for-
eign business, nearly as good as home business has been.
What is true of rails is equally true of other .steel products.
As a result of this we are going to control the steel business
of the world.
You know we can make rails for less than $12.00 per ton,
leaving a nice margin on foreign business. Besides this, for-
eign costs are going to increase year by year because they have
not the raw materials, while ours is going to decrease. The
result of all this is that we will be able to sell our surplus
abroad, run our works full all the time and get the best practice
and costs in this way.
As to the works, any competitor will tell you that we are
far ahead of any one, and, if the plans which we have for the
future, are carried out we will be farther ahead than ever. I
have no fears for the earnings in the future. I believe they
will much exceed any estimate we have made, provided, how-
ever, that the same methods of organization and operation as
now exist, are fully carried out in the future.
It must not be run as other concerns are run, but as it is
now conducted. This is most important. I believe the earn-
ings will fully justify the capitalization and as a proof of my
belief in this, I am quite willing to take every dollar I own in
the stock of the new concern on the basis proposed.
Very truly yours,
C. M. SCHWAB,
President.
MR. H. C. FRICK, Chairman,
Building.
The third attempt to sell the Carnegie properties to the
public having thus failed, the partners returned to their
schemes of consolidation and reorganization. This time Mr.
Frick and the junior members took up the task; and they made
ANOTHER SCHEME FAILS 315
elaborate plans 'for a new company with a capital of $250,000,-
ooo and no bonds. This company was " to purchase from the
Carnegie Steel Co., Ltd., for $195,312,500 all its properties
real, personal and mixed, excepting its holdings in the stocks
of the H. C. Frick Coke Co. "... and " from the H. C. Frick
Coke Co. and its subsidiary companies named above, for $54,-
687,500 all their properties, real, personal and mixed; the total
consideration, $250,000,000, to be paid in instalments as the
stock subscriptions became due." Provision was made for
"Andrew Carnegie to loan to each ' Debtor Partner ' an amount
sufficient to enable him to pay his indebtedness to either sell-
ing company." "All the stock" was to be "placed in a trust
for ten years, during which time no stock shall be sold except-
ing " from one owner to another, or by authorization of a three-
fourths vote of stock in value and stockholders in number, or
in the event of death of any member. This plan, representing
the " unanimous views of every subscriber hereto, after full dis-
cussions of all suggestions had at meetings held September
n, 19, and 25," was commended to "the favorable considera-
tion of the senior members." "We would not favor any plan
that would contemplate bonding the property," they concluded.
Ten signatures followed.
Of course nothing came of it. It is surprising that any-
thing should have been expected of a plan that did not " con-
template bonding the property." Andrew Carnegie had placed
himself on record with sufficient emphasis to leave no doubt in
any reasonable mind as to the kind of security he wanted. So
this plan joined the other liquid ideas that the corporate mind
had secreted during the preceding years.
CHAPTER XX
CARNEGIE'S ATTEMPT TO DEPOSE FRICK
IN chemical experiments it often happens
that before the process of crystallization
can be started in a saturated solution,
a blow must be given to the vessel
containing it. This was evidently
the condition of the ideas that had
long been floating in and out of
the minds of the partners concern-
ing consolidation and reorganization : it required the shock of a
rupture between Carnegie and Frick to jar the fluid schemes
into solidity. And in conformity with the run of forty years'
uninterrupted Carnegie luck, this shock, which threatened at
first to have a shattering effect, further welded the corporate
interests, doubled the already enormous wealth of the principal
partners, and made the little ones all millionaires.
It was not inconsistent with its previous history that the
Carnegie enterprise should reach its final and perfected form
through strife. Born of a quarrel, it throve on contention.
Each stage of its growth was marked by some dispute; and
that it ever became a Carnegie concern, rather than a Miller,
Coleman, or a Shinn creation, was solely due to the consolidat-
ing effect of timely "ejectures," as Carnegie euphemistically
named the expulsion of partners.
The proposed "ejecture" of Frick, however, was not the
simple matter it had been in previous cases. The man whose
stubborn nature had passed through the annealing process a
dozen times was not the one to accept an arbitrary dismissal ;
and the fight he now made was as notable, and was as keenly
316
INTOLERANCE OF RIVALS 317
watched by the country, as was the contest with labor that
had given him the real headship of the great organization he
managed.
In tracing the causes of this attempted "ejecture," the one
just named was probably the first. Since the earliest days it
had been the basis of Andrew Carnegie's policy to tolerate no
rival. In every previous case the growing prominence of part-
ners had been checked before it had become dangerous. The
genius of Kloman, the strong personality of Coleman, the mas-
terful competency of Shinn, each in turn was forced to yield to
the superior money power of Carnegie, and to find, as one of
the old partners graphically puts it, " a top fence-rail of its own
to crow from." Phipps, willing to stand in the shadow and in-
different even to the honors that were peculiarly his, inspired
neither jealousy nor fear. Lauder was only Carnegie's echo.
Singer conscientiously attended the Board meetings, and his
ambition was more than satisfied with the prerogative of mak-
ing the motion for dividends. Stewart was a good-natured and
most useful treasurer, who could always get money on a pinch.
Abbot, publicly greeted by Carnegie as " that young Napoleon
of business " one day, was exiled almost the next. The busi-
ness genius of T. M. Carnegie might have made him dangerous,
but he died young. Of them all Frick, young, forceful, self-
contained, tenacious, ambitious, and rich, was more than a rival ;
he was an equal from the start. And when he emerged from
the Homestead contest with the admiration of the country,
while Carnegie had only mystified the people, his leadership
was everywhere acknowledged.
The first effort to diminish Prick's prominence was made
in 1895. At this time he was trying to unify the coke- produc-
ing interests in one great company. He had almost succeeded ;
but there remained one third-rate operator who refused to join
the combination on any reasonable terms. The character of
this person was such that he was hardly tolerated amongst hon-
est men, except when they met him at church ; and Frick had
318 ATTEMPT TO DEPOSE FRICK
ceased to seek his co-operation. Then Carnegie secretly took
up the negotiation, and arranged a scheme by which this in-
dividual, with his twelve hundred ovens, should assume the
headship of the coke combination, while Frick with his ten
thousand ovens, should modestly drop into a subordinate place.
The project died with apoplectic suddenness as soon as it was
proposed to the man most interested ; and Carnegie acquired a
new view of his partner. Thereupon the office of president of
the Carnegie Steel Company was created, and Mr. Leishman
was put in with that title, Mr. Frick remaining chairman as
before.
To the outside world it looked as if Mr, Frick had been
deposed from his headship by this proceeding ; but every clerk
in the office and every man in the mills knew that this was not
so. The power that ruled every department, from the highest
to the lowest, was Frick ; and the president had merely such
outside prestige as the chairman did not value.
The cause of disagreement between Carnegie and Frick that
had most influence in producing the final rupture was the
divergent views they held concerning the price the steel com-
pany should pay for coke. While Carnegie controlled a major-
ity of the coke company's stock, through his personal holdings
and those of the firm, there were a few outside shareholders
whose interest it was that the steel company should pay the full
market price for its fuel ; and to protect these minority stock-
holders, Frick always made as good a contract as he could with
the steel company. Carnegie, on the other hand, wishful to
keep all costs down, tried to obtain specially low rates on coke
for his firm. This matter eventually brought about the final
rupture.
Before this happened, however, another source of ill feeling
grew out of the failure of the Moore Syndicate to complete the
purchase of Carnegie's interest at a price of $157,950,000.
For unfortunately the news of this option had been made pub-
lic ; and the newspapers of England and America overwhelmed
ABSURD NOTORIETY
319
Carnegie with their comments and congratulations, just as
though the huge transaction had been completed. When,
through the collapse of the money market, the syndicate found
itself unable to finance a deal calling for a hundred millions in
cash in ninety days, Mr. Carnegie's chagrin was all the greater
because of the premature applause to which he had been treated.
And his annoyance was very natural. With excessive zeal his
friend Stead had rushed a book through the press entitled " Mr.
Carnegie's Conundrum : ,40,000,-
ooo. What shall I do with it?"
and bearing on its title-page the
famous Carnegie dictum: "The
man who dies rich dies dis-
graced ! " Under the circum- "."""
stances it was an anticlimax.
Furthermore, an enterprising
advertiser of soap or some such
detergent placarded England,
where Carnegie was then stay-
ing, with offers of prizes for the
best answer to " Mr. Carnegie's
Conundrum " ; and daily reports
were published in the newspapers
of the thousands of answers re-
ceived. The position in which the millionaire philanthropist
was thus placed was most undignified. He could not take up a
paper without seeing in the form of an advertisement some
idiotic suggestion as to how he ought to spend the forty million
sterling he had failed to receive. He could not take a walk
without the same offensive advice gleaming from a hundred
bill-boards ; and supersensitive as he always was to ridicule, his
displeasure not unnaturally fell upon the partners whom he
regarded as primarily responsible for this absurd notoriety. So
when they came to him for an extension of their all-too-short
option, he not only refused it, but in contravention of his agree-
' Offensive advice gleaming from
bill-boards."
320
ATTEMPT TO DEPOSE FRICK
ment with them, kept the $170,000 which they had contrib-
uted as their share of the $1,170,000 paid him as a bonus for
Photographic copy of letter from Mr. Carnegie in England to his trustees in Pitts-
burg. In his own hand are the words : Of course any part paid by my partners 1
shall refund.
the option. Here is a photographic reproduction of a portion
of the letter in which he made this agreement.
The culmination of these animosities was reached in Octo-
THE ALLEGED COKE CONTRACT 321
her, after Mr. Carnegie's return from Europe. It came about in
this wise.
One day, during the previous spring, Mr. Phipps called on
Mr. Carnegie in New York and was greeted with great effusion.
" Harry," said Carnegie, " Frick has just left; and I've made a
splendid contract for coke. It is a three years' agreement to
give us coke at $1.35 a ton."
"And if the market price drops below $1.35 ? " queried Mr.
Phipps.
Mr. Carnegie was surprised. He had not thought of that.
A day or two later, when Mr. Phipps called again, he said :
"Harry, I've fixed that coke matter. We are to have the
same price as others if it drops below $1.35."
I.t afterwards turned out that the way he had " fixed " it wat
that he had told Lauder to notify Schwab that a clause must be
added to the contract, under which the Carnegie Steel Company
would pay the same price for coke as any other buyer, provided
that price was less than $1.35.
" Is that what Mr. Carnegie demands ? " asked Mr. Frick,
on receiving the message through Mr. Schwab.
" It is," replied the latter.
"Then the arrangement is all off, and must betaken up
anew."
This answer was communicated to Mr. Carnegie ; but he
did not mention the matter to Mr. Frick, although he allowed
others to give him to understand that he considered the agree-
ment as amended by himself binding on the coke company.
During the early summer the price of coke was low, and
there was no disposition shown by the Carnegies to have the
alleged contract enforced; but when prices advanced an at-
tempt was made to settle with the Frick Company at $1.35 a
ton. Insisting that the coke company had no contract with the
steel company, President Lynch had all shipments billed at
market rates ; and when Mr. Lawrence Phipps, on behalf of the
steel company, refused to pay more than $1.35 a ton, he was
21
322 ATTEMPT TO DEPOSE FRICK
notified that no further orders would be filled until payment for
past purchases was made at the rates charged. To remove all
doubt as to where the coke company stood, a meeting of the
Board of Directors was held on October 25th, 1899, and the fol-
lowing resolution was passed :
" Resolved, That the president be authorized and instructed
to notify the Carnegie Steel Company, Limited, that the exist-
ence of any contract is denied and that no claim to settle in
accordance with the terms of the alleged contract for past, pres-
ent or future deliveries of coke to the said Carnegie Steel Com-
pany, Limited, will be recognized or entertained by this Com-
pany."
It was at this critical juncture that a disagreement of a more
personal nature occurred between Messrs. Frick and Carnegie,
and brought down the tottering fabric of their friendship with
a crash that wrought the final trans-
formation of the Carnegie Steel
Company, alienated lifelong friends,
gave the public the secret confi-
dences of the corporation, and Pitts-
burg a new batch of millionaires.
It seemed a little thing to produce
such momentous changes; but then,
it was only Mrs. O'Leary's cow that set the city
At the meeting of the Board of Managers
on December nth, 1899, Mr. Schwab made reference to the con-
templated purchase by the Carnegie Company of a tract of land
situated on the Monongahela River belonging to Mr. Frick; and
he mentioned " a hitch in the negotiations." This tract had
been'acquired by Mr. Frick in partial exchange of other land ; and
Mr. Lawrence Phipps, who was familiar with land values in that
neighborhood, had valued it at $4,000 an acre. The land was
wanted by the company; and Mr. Frick offered it to the firm at
$3,500. As Mr. Schwab remarked at the meeting, "there is
AN INSINUATION MET 323
no doubt about our needing this land before long " ; and Mr.
Frick had shown his habitual foresight in securing it. For
some reason, however, Mr. Carnegie disapproved of the pur-
chase after he had sanctioned it; and insinuated that Mr. Frick
was making a profit on the transaction. This coming to Mr.
Frick's ears, he withdrew his offer. This was the "hitch" to
which Mr. Schwab referred. Later fresh troubles arose ; and
Mr. Frick sold the land to other parties for half a million dol-
lars more than he had asked the Carnegie Steel Company.
The insinuation, with its implications, was indignantly re-
sented by Mr. Frick. He did not meet the covert attack by a
return innuendo, but by an open minute spread upon the rec-
ords of the Carnegie Steel Company. This, dated November
2Oth, was as follows :
In submitting Mr. Moreland's report, I would like to call
attention especially to low prices we are to receive for rails
through the greater part of next year almost $8.00 per ton
below the present market price, and very little above what old
rails for re-melting are selling for. This will seriously affect
our labor at Edgar Thomson, which is based on the price we
receive for rails.
Mr. Carnegie continually referred, while here, to the low
prices obtained under sliding scale contracts, entirely ignoring
the fact that he alone was to blame for creating the atmosphere
in which these sliding scale contracts, and other contracts, were
made, by insisting last fall, against the almost unanimous pro-
test of his partners, on selling rails far into the future at $16.00
and $17.00 per ton. It was fair for Sales Department to as-
sume that if those were his views as to the prices which were
to prevail for rails, they should be well satisfied with the much
better prices they were themselves obtaining for other products
under sliding scale contracts they were then making ; although,
it must be said for Mr. Carnegie, that he gave as his reason for
wanting such low prices for rails, that it was for the purpose of
breaking up eastern Rail Companies.
I learn that Mr. Carnegie, while here, stated that I showed
cowardice in not bringing up question of price of coke as be-
tween Steel and Coke Companies. It was not my business to
bring that question up. He is in possession of the Minutes
324 ATTEMPT TO DEPOSE FRICK
of the Board of Directors of the Frick Coke Company, giving
their views of the attempt, on his part, to force them to take
practically cost for their coke. I will admit that, for the sake
of harmony, I did personally agree to accept a low price for
coke ; but on my return from that interview in New York
(within the next day or two) President Schwab came to me and
said that Mr. Lander said the arrangement should provide that,
in case we sold coke below the price that Mr. Carnegie and I
had discussed, the Steel Company was to have the benefit of
such lower price. I then said to Mr. Schwab to let the matter
rest until Mr. Carnegie came out (he told us he intended to
come), and we would take up the question of a coke contract.
He changed his plans, and did not come out. I saw him in
New York, before he sailed, and told him that Mr. Lauder had
raised that question, and suggested that he write Mr. Schwab,
and let Messrs. Schwab and Lynch take up the question of a
coke contract. Mr. Schwab, I believe, never heard from him
on the subject, and Mr. Lynch, President of the Frick Coke
Company, very properly, has been billing the coke, as there was
no Arrangement closed, at a price that is certainly quite fair and
reasonable as between the two Companies, and at least 20 cents
per ton below the average price received from their other cus-
tomers. We have By-Laws, and they should govern. If not,
why do we have them ? It is the business of the Presidents of
the two Companies to make contracts of all kinds. Mr. Car-
negie has no authority to make a contract that would bind this
Company. Neither have I any authority to make any contract
that would bind the Frick Coke Company ; and, at any rate,
why should he, whose interest is larger in Steel than it is in
Coke, insist on fixing the price which the Steel Company
should pay for their coke? The Frick Coke Company has
always been used as a convenience. The records will show
that its credit has always been largely used for the Steel Com-
pany, and is to-day, to the extent of at least $6,000,000.00.
The value of our coke properties, for over a year, has been, at
every opportunity, depreciated by Mr. Carnegie and Mr. Lau-
der, and I submit that it is not unreasonable that I have con-
siderable feeling on this subject. He also threatened, I am
told, while here, that, if low price did not prevail, or something
was not done, that he would buy 20,000 acres of Washington
Run coal and build coke ovens. That is to say, he threatened,
if the minority stockholders would not give their share of the
coke to the Steel Company, at about cost, he would attempt to
ruin them.
THE FINAL BREAK 325
He also stated, I am told, while here, that he had purchased
that land from me above Peters Creek ; that he had agreed to
pay market price, although he had his doubts as to whether I
had any right, while Chairman of the Board of Managers of the
Carnegie Steel Company, to make such a purchase. He knows
how I became interested in that land, because I told him in
your presence, the other day. Why was he not manly enough
to say to my face what he said behind my back? He knew he
had no right to say what he did. Now, before the Steel Com-
pany becomes the owner of that land, he must apologize for that
statement. I first became interested in that land, as I told
you, through trading a lot in Shady Side that I had owned for
years. The land is six miles away from any land owned by the
Carnegie Steel Company. Steel Company does not need it
now, and will not need it for a long time in the future, if at
all; but, of course, if they owned it, it might keep another
large works from being built, or enable Steel Company to go
into competition with some other large industry.
Harmony is so essential for the success of any organization
that I have stood a great many insults from Mr. Carnegie in
the past, but I will submit to no further insults in the future.
There are many other matters I might refer to, but I have
no desire to quarrel with him, or raise trouble in the organiza-
tion; but, in justice to myself, I could not at this time, say less
than I have.
A copy of this was sent in the usual way to Mr. Carnegie
in New York. He waited in silence to see if the Board of
Managers would approve the minutes at their next meeting;
and when they did so he at once came to Pittsburg, called a
meeting of the members of the Board, and demanded that they
sign a request to Mr. Frick for his resignation. He said he
would not use it unless he had to ; but that he wanted to be
fortified with it. Armed with this he called upon Mr. Frick,
whom he found willing to resign in the interests of harmony.
Accordingly the next day Mr. Frick tendered his resignation
and it was accepted by the Board. Here are the minutes of the
meeting :
" At a meeting of the Board of Managers of The Carnegie
Steel Company, Limited, held at the General Offices of the
326 ATTEMPT TO DEPOSE FRICK
Association, Carnegie Building, Pittsburg, Pa., at 12:30 P.M.,
Tuesday, December 5, 1899, there were present MM. Schwab
(president), Peacock, Phipps, Morrison, Clemson, Gayley and
Lovejoy (secretary) ; also MM. Andrew Carnegie, Henry Phipps,
George Lauder and W. H. Singer.
The following communication was read :
'December 5th, 1899.
GENTLEMEN :
I beg to present my resignation as a member of your Board.
Yours very truly,
H. C. FRICK.
To
THE BOARD OF MANAGERS,
The Carnegie Steel Co., Ltd.,
Pittsburgh, Pa.*
On motion, (MM. Clemson and Peacock), the resignation
was accepted, with the sincere thanks of the Board of Mana-
gers, both as such and as representing the Shareholders ; for
efficient, zealous and faithful service as a member of this Board
from January 14, 1889, to the present day; the vote being
unanimous, and all present concurring."
The difficult position of the junior partners in this crisis is
graphically stated in the following extract from a letter written
by Mr. C. M. Schwab, the day before Mr. Carnegie's arrival in
Pittsburg :
SUNDAY, Dec. 3rd, 1899
... I just returned from New York this morning. Mr.
Carnegie is en-route to Pittsburgh to-day, and will be at the
offices in the morning. Nothing could be done with him look-
ing towards a reconciliation. He seems most determined. I
did my best. So did Mr. Phipps. I feel certain he will give
positive instructions to the Board and Stockholders as to his
wishes in the matter. I have gone into the matter carefully
and am advised by disinterested and good authority that, by
reason of his interest, he can regulate this matter to suit him-
self with much trouble no doubt, but he can ultimately do so.
I believe all the Junior members of the Board and all the Junior
Partners will do as he directs. Any concerted action would be
JUNIOR PARTNERS FACE RUIN 327
ultimately useless, and result in their downfall. Am satisfied
that no action on my part would have any effect in the end. We
must declare ourselves. Under these circumstances, there is
nothing left for us to do but obey, although the situation the
board is thus placed in is most embarrassing.
No one can read this letter without sympathizing with Mr.
Schwab. On the one hand Carnegie, the majority stockholder,
could force him to vote for Frick's expulsion or ruin him if he
resisted. On the other hand, Schwab's obligations to Frick
and their friendship for years made his subservience to Carne-
gie almost impossible. This is undoubtedly what he himself
felt ; for he had always freely admitted his great obligations to
Mr. Frick. Indeed, he had frankly attributed his success to
him. " If I have anything of value in me," he once wrote,
Mr. Frick's "method of treatment will bring it out to its
full extent " ; and he " regarded with more satisfaction than
anything else in life even fortune the consciousness of hav-
ing won" Mr. Frick's friendship and regard. It can be- well
imagined that it was with great reluctance that he afterwards
allowed himself to be forced by Carnegie into active opposi-
tion to his chief.
With Mr. Frick's resignation from the chairmanship of the
Board the dispute seemed ended; Mr. Carnegie returning to
New York apparently satisfied. A month or so later, however,
he returned to Pittsburg with an elaborate scheme for the com-
plete "ejecture" of Mr. Frick. Before describing this, the
further course of the coke controversy should be outlined.
When Mr. Carnegie was in Pittsburg in December he
quietly began to lay his plans for war. His first move was to
try to win over Mr. John Walker.
Mr. Walker was one of the minority stockholders of the
coke company; and as trustee for the minor heirs of his old
partner Wilson, he had kept a large part of their fortune in the
Frick Coke Company. He was, therefore, doubly interested in
the controversy. Mr. Walker's high commercial standing, his
328 ATTEMPT TO DEPOSE FRICK
fine judgment and excellent fighting qualities, made him an ad-
versary to be conciliated if possible ; and Mr. Carnegie, during
this visit, sought to detach him from Mr. Frick.
Some ten years before this, when Mr. Walker was chair-
man of Carnegie, Phipps & Co., a personal difference had
arisen between him and Carnegie, and he withdrew from the
firm. Carnegie now offered him a position on the Board of the
steel company and an interest in it, in exchange for his hold-
ings in the coke company. As this involved abandoning his
friend Frick in a fight which the latter had entered into to safe-
guard the interest of all minority stockholders, including his
own and those of the widow and orphans of Carnegie's old boy
companion for Wilson was one of The Original Six Mr.
Walker declined the offer. He thereby failed to make several
millions of dollars which would otherwise have been his.
It afterwards transpired, however, that Mr. Walker had been
mistaken in supposing that Mr. Carnegie wished to sacrifice
the interests of all the minority stockholders in the coke com-
pany. For at this time Mr. Carnegie told Mr. Schwab to quietly
notify Mr. Walker that if he would withdraw his opposition to
the coke contract, the matter would be so arranged that he and
those he represented should receive the same profits from their
coke investments as they would if the steel company paid full
price for its fuel. Mr. Schwab, however, did not dare himself
to make such an offer to a man like Mr. Walker; and he asked
another member of the Board of Managers to do it. This gen-
tleman also declined, as did every other member of the Board
to whom the matter was submitted ; and Mr. Walker lost the
opportunity of declining the bribe. And if he reads this book
he will probably learn for the first time of Mr. Carnegie's
benevolent intentions.
Failing thus to win Mr. Walker to his side Mr. Carnegie
promptly included him in the fight, which he now carried right
into his adversary's camp.
It will be remembered that the majority a little more than
AN AMAZING CONTRACT 329
half of the coke company's stock belonged to Carnegie and /
the steel company. On the 9th of the following January
(1900) the usual stockholders' meeting was held; and, by the
power afforded by their large holdings, the Carnegies increased
the Board of Directors from five to seven, dropped Messrs. John
Walker and Giles B. Bosworth from the Board, and elected to
the directorate six of the managers of the steel company. Four
of these, Messrs. Gayley, Moreland, Clemson, and Morrison, had
not previously been stockholders ; but to qualify them to serve
as directors, each had now five shares put in his name. The
others were Lauder, Lynch, and Frick.
On January 24th the majority in the new Board voted to the
Carnegie Steel Company a contract for all the coke, at $1.35 a --
ton, that that company could use in its furnaces for five years,
commencing January ist, 1899, amounting approximately to
2,500,000 tons a year, or about one-third of the entire product
of the H. C. Frick Coke Company; and this agreement, pre- -
viously prepared and executed by the Carnegie Steel Company,
was signed by Mr. Lynch, president of the coke company, under '
his own protest and that of Mr. Frick. The market price of
coke was then $3.50 a ton.
This surprising contract, being made retroactive, required <
the coke company to refund to the Carnegies a sum of
$596,000 paid on account of coke sold during the previous
year. The further loss to the coke company at prevailing
prices was $1.65 a ton, or something like $4,000,000 a year.
This is probably the most astonishing thing that ever happened /
in the course of the Carnegie Steel Company's amazing history.
As soon as the minority stockholders heard of these pro-
ceedings they sent the following protest to the president and
Board of Directors of the H. C. Frick Coke Company, and re-
ceived the appended reply :
GENTLEMEN : I have been informed that your Board of Di-
rectors on Jan. 24th, 1900, passed a resolution intended to ratify
an alleged contract with the Carnegie Steel Company, Ltd.,
330 ATTEMPT TO DEPOSE FRICK
whereby your company is to supply to the latter all the coke it
may require for use in its furnaces for five years, commencing
Jan. i, 1899, for $1.35 per ton, delivered on cars at your works,
and that your company has signed a written memorandum of
such contract.
As a stockholder in your company, I protest against any
such contract, and I demand that you do nothing in recognition
thereof, and especially that you do not ship or bill any coke to
the Carnegie Steel Company, Limited, thereunder; and that
you do not settle with said company for coke shipped to it since
Jan. ist, 1899, at the price named in said contract, or at any
price other than the market price at the time of delivery. I
deny that such contract was ever made until you attempted to
do so on Jan. 24th, 1900. This contract is for many reasons
unfair and fraudulent and against the minority stockholders of
the H. C. Frick Coke Company. It is made by those who
represent the majority of stockholders, really in the interest of
such majority, as against the interests of the H. C. Frick Coke
Company and the minority stockholders therein. The market
price of coke on Jan. 24th, 1900, was at least $3.50 per ton, and
yet this contract, covering almost one-third of all coke manufac-
tured by the company, fixes a price of $1.35 per ton. In many
other respects it unfairly and dishonestly favors the majority
stockholders of the coke company to the loss of the minority
stockholders.
The Carnegie Steel Company, Limited, and Andrew Car-
negie (who owns more than one-half of the interest in the steel
company) own together more than one-half of the stock of the
H. C. Frick Coke Company. A majority of the present Board
of Directors of the coke company are managers and partners in
the Carnegie Steel Company. It was this majority who forced
this contract in favor of the Carnegie Steel Company, Limited,
on Jan. 24th, 1900.
I demand that you rescind the said action of your board in
favor of said contract; that you take such further action as
may be necessary to rescind and annul said contract. If you
refuse to act, then I ask that you call a meeting of the stock-
holders of the coke company to take action and pass upon the
questions herein raised, and upon the requests I now make.
Please advise me promptly what your company proposes to
do in the matter, as it is my intention to take proper legal steps
to prevent your so doing, if you intend carrying out such pre-
tended contract. Yours truly,
S. L. SCHOONMAKER.
DISINTERMENT OF THE IRONCLAD 331
PITTSBURGH, Feb. 6th, 1900.
Mr. S. L. Schoonmaker, New York City.
MY DEAR SIR : I beg to advise that I received your com-
munication of i st instant, addressed to the President and Board
of Directors of the H. C. Frick Coke Company, and I sub-
mitted the same to the Board at a meeting held Feb. 6th, 1900,
when the following motion was adopted :
' That the President be instructed to carry out the contract
between the H. C. Frick Coke Company and The Carnegie
Steel Company, Limited, dated January ist, 1899, an d all its
terms and provisions, and that he inform Messrs. Walker and
Schoonmaker that he is so directed by the Board. '
Very Truly Yours,
THOS. LYNCH,
President.
Thereupon suit was brought by Mr. Walker and the other
minority stockholders to enjoin the coke company from selling,
shipping, and delivering any coke to the steel company under
the pretended contract.
In the mean time important events were happening in the
council-chambers of the steel company. The peaceful accept-
ance of Mr. Frick's resignation as chairman of the Board proved
but a lull in the storm. In New York Mr. Carnegie was devis- '
ing a plan for the rehabilitation of an extinct iron-clad agree-
ment, so as to make it applicable to the new situation. Then,
in January, he returned to Pittsburg, called a meeting of the
Managers, and had them go through the ritual he had prepared.
At one of their interviews about this time Mr. Frick had
offered to sell his interest in the company to Mr. Carnegie at a
price to be fixed by arbitrators. This being refused, he offered
to buy Carnegie's on the same terms. Mr. Carnegie gasped
with astonishment. It was the most direct challenge of his
supremacy which he had ever received. The proceedings of
the Managers, under Carnegie's direction, now contemplated
the forcible seizure of the Frick interest at book values. How
332
ATTEMPT TO DEPOSE FRICK
inadequate these were will be seen from the following state-
ment of some of them, side by side with the profits made dur-
ing the previous year :
Book value,
Net profit, 1899- Nov. ist, 1899.
Edgar Thomson Furnaces $3,829,716.68 \
SteelWorks 614,518.51 J- $10,258,703.98
" Foundry 370,866.80)
Duquesne Blast Furnaces 2,983,094. 79 5,089,967. 52
SteelWorks 1,104,728.39 2,057,745.83
Homestead Steel Works 4,564,413.63 11,909,199.55
Carrie Furnaces 820,638.65 829,625.42
Lucy Furnaces 1,303, 524-37 1,251,869.99
Keystone Bridge W T orks 13,682.68 7*7,776.49
Upper Union Mills 1,091,857.88 1,000,000.00
Lower Union Mills 438,052.03 700,000.00
Scotia Ore Mines 1,695-74
Larimer Coke Works 17,276.56
Youghiogheny Coke Works (loss) 35. 73
Sundries including
H. C. Frick Coke Company $1,253,853
Oliver Iron Mining 1,067,000
Carnegie Natural Gas 420,000
Union Railroad 100,000
Etc., etc 3,845,949-36
Borrowed from Contingency Fund 50,570.80
Net earnings for year $21,000,000.00
While the Board was still in session Mr. Carnegie went out
to see Mr. Frick, to demand his stock at these book values.
Mr. Frick, who had remained outwardly unmoved amid all the
horrors of the Homestead battle and cool in presence of the
assassin, felt outraged by the intrusion of Andrew Carnegie on
such a mission; and his anger burst out like a flame. Carne-
gie hastily retreated, and returned to the Board room white with
emotion; and later, when the affair came into the courts, he
made an affidavit charging Mr. Frick with an ungovernable
temper.
The further course of this affair, in which, at the instigation
of Mr. Carnegie, all the partners except Messrs. Hy. Phipps,
Love joy, and Curry joined, is summarized in Appendix A from
Mr. Prick's own narrative, which formed part of a bill in equity
filed in the Court of Common Pleas a month or so later. The
SENSATIONAL REVELATIONS 333
revelations of the stupendous profits of the steel industry con-
tained in this plea set the country agog, so that interest in the
contest itself became almost secondary. Every newspaper in
the land printed long extracts from the pleadings ; and columns
of comments were published on the amazing exhibition of in-
dustrial efficiency thus presented. Had the Moore option been
valid at this time there would have been no difficulty in raising
a hundred million dollars. In other lands the litigation and
the secrets it revealed attracted the same general attention.
Everywhere the hope was expressed that the suit would be
allowed to reach the courts. It was pointed out that " what legis-
lative bodies and committees of inquiry had failed to accomplish
might be reached if the secrets of the great corporation were
passed in review through the courts " ; and it .was not only sensa-
tion-loving and curiosity-seeking people who wanted to know
more, but legislators and publicists of every kind.
The Carnegie answer was filed on March I2th. It claimed
that the plan for forming the limited partnership, which Frick
had declared to be a general one, was devised by Frick himself,
and that he acquired much of his interest through the working
of the so-called iron- clad agreement. It was denied that on
December 3ist, 1899, tne association had assets or property,
which in its legal capacity it could transfer, worth $250,000,-
ooo. While it was admitted that Mr. Frick proved a valuable
member to the company, it was asserted that " notwithstanding
his ability " he " is a man of imperious temper, impatient of
opposition, and disposed to make a personal matter of every
difference of opinion, even on questions of mere business
policy. At times, moreover, he gives way to violent outbursts
of passion, which he is either unwilling or unable to control.
He demands absolute power and without it is not satisfied. "
The answer maintained that the refusal to submit their
differences to arbitration was because the company pro-
posed at all times to maintain the integrity of the iron-clad
contract.
334
ATTEMPT TO DEPOSE FRICK
There were no disclosures, however. The Carnegies had
had more than enough of them ; and even while this answer
was being prepared efforts were made to stop the litigation.
With a studied display of indifference the principal Carnegie
officials absented themselves on alleged vacations; but their
movements were conducted with method. Andrew Carnegie
went golfing in Florida, but stopped in Washington long enough
to transmit through Mr. Lawrence Phipps the first overture for
TRAVELING- IN
tOROPft
HURR.V TO
"RETURN.
THE GREAT SHERIFFS PUZZLE How .to find Carnegie and his forty, partners.
From a Pittsburg paper.
peace. The terms accompanying this were refused and others
suggested; and these in turn were rejected by Carnegie. This
rejection resulted in Mr. Prick's obtaining sixty per cent, more
in the final settlement than he otherwise would have had.
Then Mr. Hy. Phipps took a hand in the negotiations ; and, hav-
ing previously reached an understanding with Mr. Carnegie, he
had little difficulty in winning the adhesion of Messrs. Frick,
Lovejoy, and Walker to a scheme of consolidation and reorgani-
zation that should safeguard the interests of all and restore an
SHOWERS OF GOLD
335
outward semblance of peace to the association. Five days after
the filing of the Carnegie answer a peace conference met at At-
lantic City, when the Carnegie Steel Company underwent the
last metamorphosis before its final absorption in the United
States Steel Corporation, and dollars began to rain down upon
the partners faster than they could count them.
CHAPTER XXI
THE FAILURE OF THE IRON-CLAD
THE settlement of this historic litiation
out of court before any evidence was
taken left the public in doubt as to the
legal value of the document known
as the iron-clad agreement. As
this agreement had an important
influence on the history of the
several Carnegie organizations, some
account of it and its failure to work the
ejecture " of Mr. Frick is called for in
this narrative ; especially as it is not likely
that any frank statement concerning it will ever be made
elsewhere.
In 1884 the practice was inaugurated of rewarding excep-
tional services of employees by crediting them with an interest
in the association; Messrs. Curry, Moore, Borntraeger, and
Abbot being the first to receive this favor. The book value
of the interests thus assigned was charged against recipients ;
and the shares were held by the company as security until the
indebtedness had been paid off. Usually the profits alone
sufficed to liquidate the debt.
During the next three years other employees were similarly
rewarded ; and to meet this new condition of debtor partners a
plan of automatic ejecture was devised, so that no junior part-
ner need be kept in the association any longer than his favor
lasted. This was the iron-clad agreement of 1887. It was an
excellent device; for while serving as an incentive to further
efforts, such a revokable interest also kept the " young geniuses "
336
AN ENGINE OF OPPRESSION 337
in a properly humble frame of mind. But there was no thought
of applying this iron-clad to the other partners, whose interests
were paid up. That was an afterthought.
In 1892, on the consolidation of the several companies, a
new iron-clad agreement was drawn up. Concerning this docu-
ment Mr. Henry Phipps afterwards made the following state-
ment :
" When the consolidation papers were agreed to by Mr.
Carnegie and me, at his place near Windsor, England, in 1892,
it was understood that the ' Iron-clad ' should only apply to
debtor partners, or employees, which was the intent of the
paper of 1887. Of course much was left to the honor of the
Managers, who were then, and in whom it was not unreasonable
for me to impose implicit confidence. Never has it been used,
to my knowledge, and I am confident the agreement would
never have been made an engine of oppression and robbery.
This information was again vouchsafed me when I signed a
paper relating to my death, and Carnegie said this was only to
apply to debtor partners, or employees, which was the intent of
the paper of 1887. ' But,' I replied, ' there are clauses in the
agreement that are unjust/ and he replied, ' Harry, I am ill, and
am going abroad, and fix it to your satisfaction. ' On such a
promise, so clear and explicit, I would have done anything for
my friend, and especially in his condition.
I am very sorry to say that since then he has shown no
willingness to correct the agreement as promised."
In apparent conformity with this understanding, limiting its
application to debtor partners, this iron-clad of 1892 was not
signed by Messrs. Carnegie, Phipps, and Lauder. Most of the
other partners signed it, but not all. Under its terms some
interests of deceased or retiring members were bought by the
company; but no "ejecture" took place.
In 1897 a new and more stringent agreement was drawn
up, intended to reach other than debtor partners ; and this was
signed by Andrew Carnegie and sent from abroad on October
3d, with a letter to the Board of Managers, saying:
" I have signed the paper making these corrections, because
22
338 THE FAILURE OF THE IRON-CLAD
I wished you to have something that will keep the Firm right
so far as my interest is concerned ; but, of course, you will get
all the signatures upon one corrected paper, by and by. "
This, however, was never done. Andrew Carnegie's was
the only signature ever appended to this document. Concern-
ing it Mr. Phipps wrote on October 4th from London :
" Please inform the Chairman, President and Board of Mana-
gers that I refuse to sign the ' Iron-clad ' or any paper of a simi-
lar character, and that I shall resist the buying of the Com-
pany's Stock as the proposed Agreement contemplates, and
thereby creating liabilities of which we have quite sufficient.
Any business man will admit, and no one will deny, that such
debts are foreign to the purpose for which o'ur Company was
formed. Better new capital than no capital, which would be the
position in which we would be in if any such project were con-
summated. Besides the act would be clearly illegal.
For these and other good reasons, I beg that no action in
the matter be taken."
So the attempt to extend the provisions of the iron-clad
failed, and the situation remained as before.
A futile effort was afterwards made to reach a provisional
agreement ; and nothing more was attempted until Mr. Carne-
gie tried to secure the " ejecture " of Mr. Frick. This he sought
to accomplish in an original and ingenious way. Having
secured the resignation of Mr. Frick from the chairmanship of
the company, Mr. Carnegie appeared before the Board of Mana-
gers on January 8th, 1900, and offered and had passed the
following resolution :
" Whereas, as appears by the Minutes of October 19,
1897, a proposed Supplemental Agreement, dated September
i, 1897, to the original Agreement, appearing in the Minutes
of January 18, 1887, was signed by Andrew Carnegie, condi-
tioned upon all members signing the same, but was objected to
by Henry Phipps, who refused to sign the same ; and conse-
quently, that it has not been signed by several other members
of the firm, and is, therefore, of none effect; Now, therefore,
be it
INTERESTING RITUAL 339
Resolved : That the Resolution of October 19, 1897, ap-
proving said Supplemental Agreement, passed in the hope that
Mr. Phipps would upon reflection withdraw his opposition and
all members sign, is hereby rescinded ; and the Board decides
that no further steps be taken with the proposed Supplement,
thus leaving the original Agreements in full force. "
The minutes then relate that
" Without a motion, the Secretary was directed to obtain to
the Supplemental 'Iron-clad Agreement,' dated July i, 1892,
the signatures of the present members of this Association who
have not signed the same, it having not been presented for signa-
ture to the members admitted while the aforesaid Supplemental
Agreement of September i, 1897, was being drawn up, consid-
ered, revised and after its adoption. "
In other words, by expunging a minute on the books of the
Carnegie Steel Company, it was sought to revive an agreement
made thirteen years before by the members of an entirely differ-
ent corporation, Carnegie Brothers & Co. Then an attempt
was made to graft onto this Carnegie Brothers' agreement
"a supplemental iron-clad" of the Carnegie Steel Company
eight years old, which had never been signed by the principal
owners. To make this double-decked instrument effective,
there were now added the signatures of Carnegie himself
and of some members who had no existence at the time the
agreement was signed by Mr. Frick, against whom all this
ingenuity was directed. And it was on these proceedings that
the Carnegie Steel Company rested its case against Henry C.
Frick in the greatest lawsuit ever commenced in the State of
Pennsylvania.
The document itself, called "the Supplemental Iron-clad"
for the first time in the minutes of the meeting of January 8th,
1900, reads as follows :
This agreement, Made this first day of July, A.D., 1892, and
on certain dates thereafter, as shown, between The Carnegie
Steel Company, Limited, party of the first part, and each one
340 THE FAILURE OF THE IRON-CLAD
of the members of that Association who has hereunto affixed his
name, party of the second part, witnesseth :
(I) That the party of the second part, for and in consider-
ation of the execution and delivery of this agreement by each
of the other active members of said Association, The Car-
negie Steel Company, Limited, and in consideration of the sum
of One Dollar in hand paid by the party of the first part, the
receipt whereof, by the signing hereof, is hereby acknowledged,
as well as for other good and valuable considerations, to him
moving, does hereby covenant, promise and agree to and with
the party of the first part, that he, the party of the second part,
at any time hereafter when three-fourths in number of the per-
sons holding interests in said first party, and three-fourths in
value of said interests, shall request him, the said party of the
second part, so to do, will sell, assign and transfer to said first
party, or to such person or persons as it shall designate, all of
his, the said party of the second part, interest in the Limited
partnership of The Carnegie Steel Company, Limited. The
interest shall be assigned freed from all liens and encumbrances
or contracts of any kind, and this transfer shall at once termi-
nate all the interest of said party of the second part in and in
connection with said The Carnegie Steel Company, Limited.
(II) The request of the requisite number of members and
value of interests shall be evidenced by a writing signed by
them or their proper Agents or Attorneys in Fact ; and a copy
thereof shall be either served upon the party whose interest it
is proposed to buy, or mailed to him at his post office address ;
at least five (5) days before the day fixed in said request to make
said transfer and assignment.
(III) The party of the first part covenants and agrees that
it will pay unto the party so selling and assigning, the value of
the interest assigned, as it shall appear to be on the books of
said The Carnegie Steel Company, Limited, on the first day
of the month following said assignment.
Said payment shall be in manner as follows :
If the interest assigned shall not exceed two (2) per centum
of the Capital Stock at par, the same shall be paid for as follows :
One-fourth cash within ninety (90) days of the date of the
assignment, and the balance in two equal annual payments from
the date of the assignment, to be evidenced by the notes of said
first party.
If the interest assigned shall exceed two (2) per centum,
but shall not exceed four (4) per centum of the Capital Stock
at par, then the same shall be paid for as follows : One-fourth
THE DOCUMENT QUOTED 341
cash in six months after the date of the assignment, and the
balance in three equal annual payments from the date of the
assignment, to be evidenced by the notes of the said first party.
If the interest assigned shall exceed four (4) per centum,
but shall not exceed twenty (20) per centum of the Capital
Stock at par, then the same shall be paid for as follows : One-
fourth cash within six months after the date of the assignment,
and ttje balance in five equal annual payments from the date of
the assignment, to be evidenced by the notes of said first party.
If the interest assigned shall exceed twenty (20) per centum
of the Capital Stock at par, then the same shall be paid for as
follows: One-fourth cash within eight months from the date of
the assignment, and the balance in ten equal annual payments
from the date of the assignment, to be evidenced by the notes
of said first party.
All deferred payments shall bear interest at six per centum
per annum, payable semi-annually.
(IV) This agreement, and the option the party of the second
part hereby gives to the party of the first part, is hereby de-
clared to be irrevocable, and that it may be carried out in good
faith, and notwithstanding any effort on the part of the party of
the second part to evade it, the party of the second part does
hereby appoint the person, who, at the time when he is called
upon to act, is Chairman of the party of the first part, the At-
torney in Fact for said party of the second part, for him and in
his name, place and stead to assign and transfer the said inter-
est in said The Carnegie Steel Company, Limited, whenever
under this agreement it would be the duty of said party of the
second part so to do.
This appointment is also irrevocable; is coupled with the
interest of said party of the second part in said The Carnegie
Steel Company, Limited, and will justify and warrant the said
Attorney in Fact to act for the said party of the second part in
the premises just as efficaciously after the death of said party
of the second part, or after said party of the second part has
attempted to revoke this power of attorney or evade his agree-
ment, as if said party of the second part were alive and living
up to it in entire good faith.
(V) Death shall not revoke, alter or impair any of the terms
of this contract, but the first party shall, after the death of the
party of the second part, have the following time to elect to buy
his interest on the terms hereinbefore set out :
If the interest does not exceed four (4) per centum, four
months.
342 THE FAILURE OF THE IRON-CLAD
If the interest exceeds four (4) per centum, but does not ex-
ceed twenty (20) per centum, eight months.
If the interest exceeds twenty (20) per centum, twelve
months, and the said party of the second part to this agreement
does hereby direct his personal representatives, after the death
of him, the said party of the second part, to approve, join in and
perfect any transfer his said Attorney in Fact may make, and
the said Executor or Executors or Administrator or Adminis-
trators of the party of the second part shall carry out this con-
tract, and all its provisions, just as if said representatives had
themselves made this agreement.
(VI) This agreement is hereby declared to be a lien and
encumbrance upon the interest of said party of the second part
in said The Carnegie Steel Company, Limited. No attempt of
the said party of the second part voluntarily to sell, pledge or
mortgage, and no proceedings adversely against the said party
of the second part by execution, process of law, or Equity of
any kind, bankruptcy or insolvency, shall in any way, shape or
form affect, impair or alter this agreement, or any part of it,
or take from under its operation the respective interest of said
party of the second part from the clog hereof.
Both the parties hereto agree and declare that it is the set-
tled policy of The Carnegie Steel Company, Limited, and of
the party of the second part, in entire good faith, and with all
effort on our part to carry out its true spirit and meaning, this
agreement ; being satisfied that if we do so, it will be greatly
to the benefit of The Carnegie Steel Company, Limited, and to
the party of the second part as a member thereof; and that any
effort on the part of said party of the second part to evade any of
the provisions of the same will most properly prove his unfitness
to be connected with said The Carnegie Steel Company, Limited.
In witness whereof, the party of the first part has hereunto
set its common seal, attested by the signatures of its Chairman
and Secretary, and approved by two of its Managers; and the
party of the second part has hereunto set his hand and seal the
day and year first above given.
THE CARNEGIE COMPANY, LIMITED,
By H. C. FRICK,
Chairman.
Attest : Approved :
(SEAL) F. T. F. LOVEJOY, J. G. A. LEISHMAN,
Secretary. Manager.
F. T. F. LOVEJOY,
Manager.
THE NOTICE OF " EJECTURE " 343
Then follow a number of signatures, some made " on the
day and year first above given," namely, July ist, 1892, and
others, including Andrew Carnegie's, nearly eight years later.
On the strength of this agreement the following notice was
now served on Mr. Frick, Mr. Schwab having been delegated
by Mr. Carnegie to obtain signatures to it :
" Under the provisions of a certain Agreement between The
Carnegie Steel Company, Limited, and the partners composing
it, known as and generally referred to as the 'Iron Clad'
Agreement, we, the undersigned, being three-fourths in num-
ber of the persons holding interests in said Association, and
three-fourths in value of said interests, do now hereby request
Henry C. Frick to sell, assign and transfer to The Carnegie
Steel Company, Limited, all of his interest in the capital of
The Carnegie Steel Company, Limited, said transfer to be
made as at the close of business January 31, 1900, and to be
paid for as provided in said Agreement.
Done at Pittsburg, Pa., this loth and I ith days of January,
1900.
C. M. SCHWAB. ANDREW CARNEGIE.
GIBSON D. PACKER. GEO. LAUDER.
D. G. KERR. A. M. MORELAND.
H. E. TENER, JR. JAMES GAYLEY.
A. C. CASE. D. M. CLEMSON.
JNO. McLEOD. THOS. MORRISON.
LEWIS T. BROWN. L. C. PHIPPS.
GEO. E. McCAGUE. CHAS. L. TAYLOR.
W. B. DJCKSON. JNO. C. FLEMING.
E. F. WOOD. W. W. BLACKBURN.
GEO. MEGREW. H. P. BOPE.
J. E. SCHWAB. JAMES SCOTT.
HOMER J. LINDSAY. W. H. SINGER.
ALEXR. R. PEACOCK. W. E. COREY.
MlLLARD HUNSIKER, GEO. H. WlGHTMAN.
per C. M. SCHWAB, J. OGDEN HOFFMAN.
(Power Attorney). CHAS. W. BAKER.
I hereby certify that the foregoing is a true and correct
copy of the Original now in file in this office.
This 1 5th day of January, 1900.
F. T. F. LOVEJOY,
Secretary."
344 THE FAILURE OF THE I RON- CLAD
It will be noticed that Mr. Lovejoy simply signed it in his
official character as secretary of the company. Mr. Curry was on
his death-bed ; but he was asked to sign it and refused. " Mr.
Frick is my friend," said Mr. Curry. " And am I not also your
friend? " Mr. Carnegie asked. "Yes; but Mr. Frick has never
humiliated me," was the pathetic answer of the dying man.
Mr. Henry Phipps not only refused to sign the demand, but
joined Mr. Frick in protesting against the action of the Board.
These protests are as follows :
To THE CARNEGIE STEEL COMPANY, LIMITED :
I have read a copy of the minutes of the Board of Managers
of the Carnegie Steel Company, Limited, dated January 8th,
1900, handed to me Friday afternoon, January I2th, 1900, and
I desire particularly to call your attention to certain actions of
the Board regarding the so-called agreements as to partners'
interests, dated 1887, 1892 and 1897;
I dissent from some of the statements of alleged facts therein
contained, and I, certainly, do not agree, but object to and deny,
that the said action of the Board of Managers on January 8th,
1900, and, indeed, any action of the Board of Managers, could
or did re-instate the so-called agreement of 1887.
As I have heretofore stated, I am opposed and object to any
attempt not only to force from any partner his interest in our
Company, but, also, to the right of our Company to use its
capital in the purchase of any such interest.
HENRY PHIPPS, JR.
PITTSBURGH, January 15, 1900.
To THE CARNEGIE STEEL COMPANY, LIMITED.
On Friday evening, January I2th, 1900, for the first time I
learned that the Board of Managers of your Company secretly
and without notice to me, at a meeting on Monday, January
8th, 1900, passed a resolution offered by Andrew Carnegie,
rescinding a former resolution of October igth, 1897, touching
the agreement of September 1st, 1897, and at the same time
your Secretary was directed to procure the signatures of the
present members of the association who had not signed the same
to what is now for the first time in your minutes called " the
Supplemental Iron Clad agreement dated July ist, 1892."
SEIZURE OF THE PRICK INTEREST 345
This is to notify you that all the said action on January 8th,
1900, was taken without my knowledge or consent and I do
hereby protest against and object to the same. In some re-
spects the recitals or statements therein contained are untrue
in fact. The action did not and could not as the resolution as-
serts, re-instate the so-called agreement of 1887. At the in-
stigation of Andrew Carnegie you now speciously seek without
my knowledge or consent and after a serious personal disagree-
ment between Mr. Carnegie and myself, and by proceedings
purposely kept secret from me to make a contract for me under
which Mr. Carnegie thinks he can unfairly take from me my
interest in The Carnegie Steel Company, Limited. Such pro-
ceedings are illegal and fraudulent as against me, and I now
give you formal notice that I will hold all persons pretending
to act thereunder liable for the same.
H. C. FRTCK.
PITTSBURGH, January I3th, 1900.
No attention was paid to these protests, and on February 1st
the following letter was sent to Mr. Frick :
THE CARNEGIE STEEL COMPANY, LIMITED,
General Offices; Carnegie Building,
PITTSBURG, PA., February 1st, 1900.
Mr. H. C. Frick,
Bid I ding.
DEAR SIR : I beg to advise you that pursuant to the terms
of the so called " Iron Clad Agreement " and at the request of
the Board of Managers, I have to-day acting as your attorney
in fact executed and delivered to The Carnegie Steel Company,
Limited, a transfer of your interest in the capital of said Com-
pany.
Yours truly,
C. M. SCHWAB.
Such is the interesting story of the famous iron-clad agree-
ment, and Mr. Carnegie's attempt to use it for the "ejecture"
of Mr. Frick.
CHAPTER XXII
THE ATLANTIC CITY COMPROMISE
,!***** ONE of the junior members of the
Carnegie Steel Company, recently
speaking of these events, un-
consciously adopted the circus
simile used by one of a former
generation of partners, else-
where quoted, in explanation
of the apparent willingness
with which he and his col-
leagues joined Carnegie in the
effort to depose Frick. " We
were simply a band of circus
horses," he said, "and we all jumped as the
ring-master cracked his whip."
Although several of the junior partners protested at a secret
meeting, only one of the well-trained band, besides Curry, openly
shied and refused to jump at the crack of the ring-master's
whip. This was Secretary Lovejoy. Entering the Carnegie
employ in 1881 as a telegraph operator, he had won his partner-
ship through his unusual ability as an accountant; and for
many years he had filled the responsible office of secretary to
the entire satisfaction of his seniors. In particular he had won
the confidence of Mr. Frick ; and during the Homestead strike
had ably served as the chairman's chief assistant. Frankly ad-
mitting his obligations to Mr. Frick, he took a unique position
in the fight; and refused to be cajoled or threatened away from
the side of his chief. He and Curry were the only ones of the
thirty odd "young geniuses " to openly deny that a majority of
shares necessarily carried with it a surplus of wisdom and
6
FRANCIS T. F. LOVEJOY
LOVEJOY'S INDEPENDENCE 347
equity. He also accentuated his isolation by filing a separate
answer in the Equity Suit, in which he advanced in terse phrase-
ology an original argument against the validity of his colleagues'
acts.
The independence thus shown by Mr. Lovejoy greatly facili-
tated an amicable adjustment of the difficulty; for Andrew
Carnegie refused to treat with Frick in any way, and it be-
came necessary for the latter to find some one to represent him
who had the ability to cope with the combined forces of his
opponents. From this difficult position Lovejoy emerged with
credit.
The first peace conference was held at Andrew Carnegie's
residence in New York on Saturday, March i/th, 1900. It
was attended by Messrs. Carnegie, Henry Phipps, Schwab, and
Lovejoy. The long-talked-of consolidation of the Carnegie
and Frick companies was now finally agreed upon; and the pre-
liminaries settled for a compromise of the personal differences
of the leading partners. Fearing that the newspapers would
suspect what was going on if the whole Board of Managers sud-
denly appeared in New York, it was arranged to continue the
conference on Monday at Atlantic City; and Carnegie tele-
graphed to Pittsburg, telling the members of the Board to leave
on Sunday night for the New Jersey resort. To disarm sus-
picion they were instructed to take their wives with them.
Mr. Frick had remained in Pittsburg; but he was kept in-
formed of the progress of the negotiations over the telephone
by Mr. Lovejoy. He was satisfied with the plans outlined,
provided no details inimical to his interests were introduced;
and Lovejoy spent most of the night drafting the agreement.
On Monday this agreement was read to the assembled board
at Atlantic City. In general it was acceptable to Carnegie and
his adherents ; but one clause provoked bitter opposition and
jeopardized the whole plan. It appeared that Carnegie had
registered a vow never to recognize Frick as a partner; and to
maintain his consistency he demanded that Frick's interest
343 THE ATLANTIC CITY COMPROMISE
should not be given direct to him, but through the hands of a
trustee. This was the only thing in the agreement that was
productive of discord; and concerning it Carnegie displayed
such heat ancl persistence that Lovejoy, rather than imperil the
settlement, conceded the point.
The next day the amended agreement was adopted; and just
as the last signatures were being affixed Mr. James B. Dill
arrived by special train from New York to draw up the new
company's charter. The same afternoon the conference ended ;
and Schwab celebrated the conclusion of peace by a banquet
at the Bellevue Hotel, Philadelphia, which he had ordered by
telegraph.
The agreement thus reached reads as follows :
MM. Schwab, Carnegie, L. C. Phipps, Morrison, Clemson,
Gayley and Moreland, representing The Carnegie Steel Com-
pany, Limited, and Henry Phipps, representing John Walker
and others of the H. C. Frick Coke Company, agree as follows :
All the business of The Carnegie Steel Company, Limited,
and the H. C. Frick Coke Company to be merged substantially
as shown in paper "A " of June 3rd, 1899, attached hereto, ad-
justments to be made up to April 1st, 1900, which will bring
the two concerns into the same relative positions as to book-
values as they occupied April 1st, 1899.
In the matter of the dispute between the two companies as
to prices of coke, neither party shall be held to be right or
wrong, both shall be considered equally so, therefore the differ-
ence will be split in two, each party yielding one-half of its
claim.
ANDREW CARNEGIE.
HENRY PHIPPS.
F. T. F. LOVEJOY. C. M. SCHWAB.
Witness: JAS. BERTRAM. L. C. PHIPPS.
THOS. MORRISON.
JAMES GAYLEY.
D. M. CLEMSON.
A. M. MORELAND.
The same parties representing The Carnegie Steel Com-
pany, Limited, and F. T. F. Lovejoy representing H. C. Frick,
under full authority so to do, agree as follows :
TREATY OF PEACE
349
The Carnegie Steel Company, Limited, will hand over to
said Lovejoy Six per cent of the Stocks and Securities it ob-
tains under this merger, said Lovejoy to receipt for the same in
full of all claims of said Frick against the Company or any of
its members. To this receipt the signature of H.-C. Frick will
also be appended, and H. C. Frick will thereupon withdraw his
suit against the Company. Meanwhile all legal proceedings to
remain in statu quo.
The Committee to carry out the details of this Agreement
is to consist of C. M. Schwab, G. D. Packer, F. T. F. Lovejoy
and A. M. Moreland, who shall act by unanimous consent, but
that failing, all differences if any will be referred to Judge J.
H. Reed, whose decision shall be final.
The plans for carrying out this Agreement are more fully
set forth in paper marked " B " herewith appended and made
part of this Agreement.
We, the undersigned, pledge ourselves to carry out the spirit
of this agreement in good faith and with every desire to bring
it to a successful conclusion.
L. C. PHIPPS.
THOS. MORRISON.
JAMES GAYLEY.
D. M. CLEMSON.
Witness : JAS. BERTRAM.
F. T. F. LOVEJOY.
A. M. MORELAND.
ANDREW CARNEGIE.
H. PHIPPS.
C. M. SCHWAB.
STATEMENT "A," SHOWING ACCOUNTS OF STOCKHOLDERS
IN THE CARNEGIE STEEL COMPANY, LIMITED, AND THE
H. C. FRICK COKE COMPANY, AFTER THE ACCEPTANCE OF
CERTAIN OPTIONS ON THE STOCKS, GIVEN APRIL 24, 1899.
Stockholders Personal Account.
Value of C. S. Co.,
Value of H. C. F. C.
C. S. Co., Ltd.
Ltd. Stock.
Co. Stock.
Andrew Carnegie, Cr. $4,025,055.76
$146,250,000.00
$30,039,898.09
Henry Phipps, Cr. 151,092.98
27,500,000.00
7,652,354.74
H. C. Frick, Cr. 50,911.89
15,000,000.00
16,604,529.50
George Lauder, Cr. 107,487.38
IO,OOO,OOO.OO
1,187,237.97
C. M. Schwab, Dr. 1,168,024.90
7,500,000.00
618,575.66
\V. H. Singer, Cr. 358,916.61
5,000,000.00
773,031.18
H. M. Curry, Dr. 81,486.59
5,000,000.00
771,183.88
L. C. Phipps, Dr. 656,173.70
5,000,000.00
412,627.36
A. R. Peacock, Dr. 726,017.98
5,000,000.00
412,259.46
F. T. F. Lovejoy, Dr. 110,593.76
1,666,666.67
138,029.63
Thos. Morrison, Dr. 185,067.94
1,666,666.67
137,843.16
Ceo. IT. Wightman, Dr. 248,119.44
1,666,666.67
137,661.73
350
THE ATLANTIC CITY COMPROMISE
Stockholders.
D. M. Clemson,
James Gayley,
A. M. Moreland.
Chas. L. Taylor,
A. R. Whitney,
W. W. Blackburn,
Jno. C. Fleming,
J. Ogden Hoffman,
Milld. Hunsiker,
Geo. E. McCague,
James Scott,
H. P. Bope,
W. E. Corey,
Jos. E. Schwab,
L. T. Brown,
D. G. Kerr,
H. J. Lindsay,
E. F. Wood,
H. E. Tener, Jr.,
Geo. Megrew,
G. D. Packer,
W. B. Dickson,
A. C. Case,
John McLeod,
Chas. W. Baker,
Undivided,
Mrs. L. C. Carnegie
John Walker
Thomas Lynch
Vandervort Estate. . ,
Borntraeger Estate . .
G. B. Bosworth
J. G. A. Leishman. ,
Robt. Ramsay ,
John Pontefract
S. L. Schoonmaker . .
Mrs. C. A. Wilson . .
Miss H. R. Wilson .
John Walker, Gdn. . .
Miss C. B. Wilson . .
JohnT. Wilson
Miss E. C. Wilson. ,
Dr.
Dr.
Dr.
Dr.
Personal Account.
C. S. Co.. Ltd.
$258,754.79
186,619.70
233,044.75
96,982.26
Dr.
Dr.
Dr.
Dr.
Dr.
Dr.
Cr.
Dr.
Dr.
Dr.
Dr.
Dr.
Dr.
Dr.
Dr.
Dr.
Dr.
Dr.
Dr.
Dr.
Dr.
29,091.29
23,510.01
62,231.06
94,791.77
108,797.58
106,888.16
13,285.95
MO.577.43
176,301.22
107,002.79
43,197.23
43,197.23
48,690.11
48,690.11
48,690.11
48,690.11
63,805.55
63,805.55
63,805.55
63,805.55
271,731.30
Value of C.S. Co.,
Ltd. Stock.
$1,666,666.6;
1,527,777.78
1,527,777.78
I,25O,OOO.OO
1,250,000.00
833,333.33
833,333.33
833,333.33
833,333.33
833,333-33
833,333.33
277,777.78
833,333.33
833,333.33
555,555-55
277,777.78
277,777.78
277,777.78
277,777.78
277,777.78
277,777.78
277,777.78
277,777.78
277,777.78
277,777.77
I,25O,OOO.OO
Value of H. C. F. C.
Co. Stock.
$137,661.73
126,401.58
126,220.15
103,337-01
102,974.15
69,012.29
69,012.29
69,012.29
69,012 29
69,012.29
69,012.29
22,883.14
68,649.43
68,649.43
45,766.29
22,883.14
22,883.14
22,883.14
22,883.14
22,883.14
22,883.14
22,883.14
22,883.14
22,883.14
22,883.14
102,974.24
5,0l8,026.8l
1,434,398.29
640,794.18
521,794.83
360,103.45
355,497.51
360,085.87
194,355.37
194,355.37
194,355.37
92,631.07
40,166.20
40,161.36
40,110.99
40,082.89
39>425.79
Totals . . . . Dr.
$901,434.95 $250,000,000.00 $70,000,000.00
Interest adjusted to June i, 1899.
Pittsburg, June 3, 1899.
CONSOLIDATION AT LAST 351
MEMORANDUM " B," covering details agreed upon at Atlantic
City this iQth March, 1900, by each and every of the persons
whose names are attached hereto; each agreeing with the others
that he will do all in his power in good faith to carry out this
agreement and to induce every other Stockholder in the Com-
panies named to join in this agreement, being convinced that it
will be for the best interests of all concerned :
The business of The Carnegie Steel Company, Limited, the
H. C. Frick Coke Company, and all the Companies subsidiary
to each, cr either, to be consolidated, thus :
All of the lands, works and other properties now owned and
operated by The Carnegie Steel Company, Limited, to be sold
and transferred to the Carnegie Steel Company, an existing
Pennsylvania Corporation, saving and excepting the Stocks held
by it in certain other Corporations, to wit, the H. C. Frick
Coke Company, with all its subsidiary Companies, the Oliver
Iron Mining Company, the Union Railroad Co., the Pittsburg,
Bessemer & Lake Erie R. R. Co., and all Stocks in other Com-
panies, now held by The Carnegie Steel Company, Limited,
which are considered permanent investments and not merely
securities ; payment therefor to be made in Stock of the Car-
negie Steel Company, the Capital whereof shall be increased to
($50,000,000) Fifty Million Dollars.
The Stock now held by The Carnegie Steel Company, Lim-
ited, in the H. C. Frick Coke Company, the Youghiogheny
Northern Railway Co., the Youghiogheny Water Co., the Mt.
Pleasant Water Co., and the Trotter Water Co., to be distrib-
uted among the Shareholders of The Carnegie Steel Company,
Limited, in proportion to their several interests, said Share-
holders to be charged for said Stocks at their respective book
values as at April ist, 1900.
ANDREW CARNEGIE.
F. T. F. LOVEJOY. HENRY PHIPPS.
CHARLES M. SCHWAB.
LAWRENCE C. PHIPPS.
THOMAS MORRISON.
JAMES GAYLEY.
DAVID M. CLEMSON.
ANDREW M. MORELAND.
A Corporation to be formed under the laws of New Jersey,
having the name and title The Carnegie Company, with $160,-
000,000 Capital Stock, which Company shall acquire all the
stock of the Carnegie Steel Company, the H. C. Frick Coke
352 THE ATLANTIC CITY COMPROMISE
Co., all their subsidiary Companies, and the Stocks of all other
Companies now held by The Carnegie Steel Company, Limited,
which are held as investments; by purchase, paying to the
Stockholders therefor as follows :
For all of the Stock in the Carnegie Steel Company, and for
all of the Stocks now held by The Carnegie Steel Company,
Limited, saving and excepting the Stocks held by it in the H.
C. Frick Coke Co., the Youghiogheny Northern Rly. Co., the
Youghiogheny Water Co., the Mt. Pleasant Water Co., and the
Trotter Water Co., One hundred and twenty-five million dollars
in Stock of The Carnegie Company and a like amount in Bonds
of said Company, as hereinafter described :
For all of the Stock in the H. C. Frick Coke Co., the
Youghiogheny Northern Rly. Co., the Youghiogheny Water
Co., the Mt. Pleasant Water Co., the Trotter Water Co., and
the Union Supply Co., Limited; Thirty-five million dollars in
Stock of The Carnegie Company, and a like amount in Bonds
of said Company, as hereinafter described.
Preliminary to the foregoing, adjustments shall be made as
follows :
A Dividend shall be declared by The Carnegie Steel Com-
pany, Limited, of such amount as shall be necessary to make
the " Book Values " of the Stocks of The Carnegie Steel Com-
pany, Limited, (exclusive of its holdings in the H. C. Frick
Coke Co. and its subsidiary Companies) on the one hand, and
of the H. C. Frick Coke Company and all its subsidiary Com-
panies on the other, relatively the same on April ist, 1900, as
they were on April ist, 1899, when the values of $250,000,000
and $70,000,000, respectively, were first established.
After The Carnegie Steel Company, Limited, shall have
distributed among its shareholders its holdings of Stock in the
H. C. Frick Coke Co. and its subsidiary Companies, adjust-
ments shall be made between all the Stockholders in the H. C.
Frick Coke Co., so that each shall hold his proper and propor-
tionate amount of Stock in the subsidiary Companies; such
adjustments to be made at the respective " Book-values," April
ist, 1900, of the said Stocks.
The Bonds to be issuea by The Carnegie Company shall be
in such form as shall be agreed upon by the Committee herein-
after named, under the directions of the General Counsel, and
shall embody the following :
Bonds payable in One hundred years; interest payable in
New York, semi-annually, at five per cent per annum, free of
all Tax; to be in such amounts, $1,000, $5,000 and $10,000,
THE CARNEGIE COMPANY 353
as may be found best; to be divided into four series of $40,-
000,000 each so as to make interest fall due February 1st and
August ist; March ist and September ist, May ist and No-
vember ist, June ist and December ist of each year; secured
by a Mortgage or Deed of Trust covering all the Stocks held
by The Carnegie Company in all the subsidiary or operating
Companies ; after Five years a Sinking Fund of one-half of one
per cent, on said Bonds to be established ; Bonds to be subject
to be drawn for redemption out of Sinking Fund at any time at
1.05 after five years. In case of default in the payment of
interest, the principal may become due and payable. No per-
sonal liability on Bonds; to be registered or not, at holder's
option; with such other provisions as are usual or advised by
counsel for the proper protection of the Bondholders.
Each Stockholder in The Carnegie Company whose interest
has not been fully paid up shall have the right and privilege at
his option, of selling to The Carnegie Company, at par, suffi-
cient of his Bonds to liquidate his indebtedness, or of deposit-
ing as collateral security for such indebtedness, Bonds or Stock
of The Carnegie Company in proportion to his indebtedness;
three times in Stock or one and one-half times in Bonds, at his
option.
Stock in The Carnegie Company shall be reserved to the
amount of $3,200,000 for the purpose of selling interests in
said Company to deserving officials and employees, carrying out
the plan heretofore established by Carnegie Brothers and Co.,
Ltd., which is declared to be an essential feature of the new
Company.
Signed in duplicate; one copy being intrusted to A. M.
Moreland, Secretary of The Carnegie Steel Company, Limited,
and the other copy to F. T. F. Love joy.
ANDREW CARNEGIE.
HENRY PHIPPS.
C. M. SCHWAB.
L. C. PHIPPS.
THOS. MORRISON.
JAMES GAYLEY.
D. M. CLEMSON.
A. M. MORELAND.
F. T. F. LOVEJOY.
Witness: JAS. BERTRAM.
We, the undersigned, Shareholders in The Carnegie Steel
Company, Limited, having read the foregoing Agreement, do
23
354 THE ATLANTIC CITY COMPROMISE
now hereby, by the signing hereof, fully approve the arrange-
ment and join in the same as to our interest.
GEORGE LAUDER,
pr. ANDREW CARNEGIE.
GIBSON D. PACKER.
We, the undersigned, Stockholders in the H. C. Frick Coke
Company, having read the foregoing Agreement, do now here-
by, by the signing hereof, fully approve the arrangement and
join in the same as to our interest.
MRS. LUCY C. CARNEGIE, Ex.
by ANDREW CARNEGIE.
Five days after the signing of this agreement a charter was
' obtained of the State of New Jersey, incorporating the Carne-
i gie Company for the purpose of acquiring all the stock of the
Carnegie Steel Company, the H. C. Frick Coke Company, all
their subsidiary companies, and the stocks of all companies
hitherto held by the Carnegie Steel Company. It is worth
noticing that the committee charged with the carrying out of
the agreement ignored that part of it which, at the instance of
Mr. Carnegie, excluded Mr. Frick ; and his name appeared third
on the list of incorporators of the new company, as a subscriber
for 15,484 shares.
On March 3Oth the committee made its report concerning
the adjustment of the relative book values of the two merging
companies as follows :
PITTSBURG, PA., March 30, 1900.
To THE BOARD OF MANAGERS OF
THE CARNEGIE STEEL COMPANY, LIMITED.
The Committee appointed by the Shareholders of The Car-
negie Steel Company, Limited, and the H. C. Frick Coke Com-
pany, for the purpose of carrying out the plans of Re- Organiza-
tion of the Carnegie Interests, beg leave to report :
In the matter of the adjustment of the relative Book Values
of The Carnegie Steel Company, Limited, and the H. C. Frick
Coke Company with its subsidiary Companies :
AN 88 PER CENT. DIVIDEND 355
At April ist, 1899, the relative Book Values were as fol-
lows :
The Carnegie Steel Company, Limited .... 3.27986
H. C. Frick Coke Company and Allies. ... I.
Based on careful estimates of March Profits
of all the Companies whose Stock is included,
the same relative Book Values, at April i, 1900,
show a surplus for distribution to Shareholders
of The Carnegie Steel Company, Limited, of. .$16,277,464.69
To this should be added the holdings of The
Carnegie Steel Company, Limited, in the Stock
of the H. C. Frick Coke Company and its sub-
sidiary Companies, carried on the Steel Com-
pany's books at 5*585,174.39
Total for distribution $21,862,639.08
This Committee would, therefore, recommend the declaring
by The Carnegie Steel Company, Limited, of a final Dividend
of 88% or $22,000,000.00, payable as follows :
To cover the Value of the Stock of the H.
C. Frick Coke Company and its subsidiary Com-
panies charged to Partners in accordance with
the Re- Organization Agreement $5,5^5> I 74-39
3/>> payable in Cash on demand by either
" Paid-up " Partners or " Debtor " Partners whose
interests were purchased not later than January
i, 1899 750,000.00
Balance payable at such times and in such in-
stalments as this Committee shall decide after
consultation with the principal Partners and the
Treasurer 1 5,664,825.61
Total $22,000,000.00
Respectfully submitted,
C. M. SCHWAB. .
G. D. PACKER.
F. T. F. LOVEJOY.
A. M. MOREL AND.
356
THE ATLANTIC CITY COMPROMISE
The following is a correct list of stockholders and bond-
holders of the Carnegie Company, as formed or organized after
the Frick- Carnegie suit :
Capital $160,000,000.00
Bonds $160,000,000.00
Par Value of Stock, $1,000.00 per Share.
Shares of Stock. Bonds.
Andrew Carnegie 86,382 $88,147,000
Henry Phipps 17,227 17,577,000
Henry C. Frick 15,484 15,800,000
George Lauder 5,482 5,593,ooo
Charles M. Schwab 3,980 4,061,000
Henry M. Curry 2,829 2,886,000
William H. Singer 2,830 2,886,000
Lawrence C. Phipps 2,654 2,707,000
Alexander R. Peacock 2,653 2,707,000
Lucy C. Carnegie 2,459 2,510,000
Francis T. F. Lovejoy 884 902,000
James Gayley 885 902,000
Thomas Morrison 885 902,000
Andrew M. Moreland 885 902,000
Daniel M. Clemson 885 902,000
George H. Wightman 884 902,000
John Walker 722 737,ooo
Charles L. Taylor 663 677,000
Alfred R. Whitney 663 677,000
John C. Fleming 442 451,000
William W. Blackburn :.. 442 451,000
J. Ogden Hoffman 442 451,000
Millard Hunsiker 442 451,000
George E. McCague 442 451,000
James Scott 442 451,000
William E. Corey 442 451,000
Joseph E. Schwab 442 451,000
Thomas Lynch 317 323,000
Henry P. Bope 295 301,000
Lewis T. Brown 295 301,000
Robert T. Vandervort 255 260,000
John B. Jackson 176 179,000
John G. A. Leishman 176 179,000
Giles B. Bos worth 176 179,000
David G. Kerr 147 150,000
Homer J. Lindsay 147 150,000
Ezra F. Wood 147 150,000
Hampden E. Tener, Jr 147 150,000
George Megrew 147 150,000
Gibson D. Packer 147 150,000
William B. Dickson 147 150,000
THE CARNEGIE VETERANS
357
Shares of Stock.
Albert C. Case 147
John McLeod 147
Charles W. Baker 147
Janet E. Ramsay 95
John Pontefract 95
Sylvanus L. Schoonmaker 95
Azor R. Hunt 74
Alva C. Dinkey 74
P. Toesten Berg 74
Charles McCreery 74
Caroline A. Wilson . 45
Helen R. Wilson 19
Clara B. Wilson 19
John T. Wilson 19
Edna C. Wilson 19
James G. Hunter 19
Emil Swenson 19
James J. Campbell 19
Frederic H. Kindl 19
James B. Dill I
Andrew M. Moreland, Trustee 3, l %9
Bonds.
$150,000
150,000
150,000
97,000
97,000
97,000
75,000
75,000
75,000
75,000
46,000
20,000
2O,OOO
20,000
2O,OOO
19,000
I9,OOO
19,000
Ig.OOO
Total 160,000
$160,000,000
Thus was reached the final metamorphosis of the Carnegie
Steel Company. In the new organization Mr. Frick was
omitted from the directorate, as was also Mr. Carnegie. Mr.
Lovejoy was also dropped. But outwardly peace prevailed;
and the only remaining trace of a past conflict is the Society
of Carnegie Veterans, formed of the loyal band of Carnegie
adherents. No former partner is eligible for membership
in this association who did not take part in the attempt to de-
pose Mr. Frick. Once a year these young geniuses hold a ban-
quet ; and, amid palms and electric mottoes to the glory of him
who made them rich, recount their battles and congratulate each
other on the outcome of their victory. And the dear departed
shades of Kloman, Shinn, Coleman, T. M. Carnegie, Stewart^
Curry, and others long forgotten, would listen in vain for a word
of recognition of their share in these triumphs.
CHAPTER XXIII
THE BILLION-DOLLAR FINALE
THE absorption of the Carnegie Company by
the United States Steel Corporation has been
invested with much dignity and lofty cir-
cumstance by numerous writers in reviews
and magazines ; and owing to its magnitude,
running into hundreds of millions, the
transaction has struck the popular imagina-
tion and acquired a world-wide interest. To those who watched
the incident from the inside, who saw the framework of the
scenery and the elaborate mechanism of the stage effects, who
attended the rehearsals and heard the subdued tones of the
prompter, there was a certain grim humor in a performance
which those in front watched with bated breath. But despite
its lack of spontaneity, the proceeding had the dignity con-
ferred by magnitude; and its brilliant success made it impres-
sive even to those who heard the creaking of the machinery.
The time is not yet ripe for a full and frank description of
the events leading up to this important consolidation ; but a
rough outline of them may be given.
About a year before Mr. Frick resigned the headship of the
Carnegie Steel Company he appointed a committee, with Mr.
Clemson as chairman, to report on a project he had formed of
building a tube works at Conneaut, the Lake Erie terminus of
the Bessemer Railroad. There being little freight from Pitts-
burg to the Lake port, the ore trains returned for the most part
empty ; and to utilize this profitless haul, various plans had
been discussed by Mr. Frick and his colleagues for the build-
ing of blast-furnaces and other works at Conneaut that would
358
PICKWICKIAN HUMOR 359
call for Pittsburg coal and coke. One of these schemes is out-
lined in the minutes of the meeting of the Board of Managers
held on January i6th, 1899, previously quoted; and at the same
meeting Mr. Clemson made a remark which showed that, after
making the investigation authorized by Mr. Frick, he was in
favor of also starting the tube works.
It is probable that these works would have been built by the
Carnegie managers but for the attempt made the same year to
sell out to the Moore Syndicate ; it being thought undesirable
to antagonize, while such a deal was pending, the important finan-
ciers who were interested in the National Tube Company, with
which the new works would have come into competition. But
there was no idea, at this time, of holding the tube project as a
threat over anybody. It was a simple business plan growing
out of the need for filling the empty ore-cars on their return to
Conneaut.
After the reorganization of the steel company consequent
on the withdrawal of Mr. Frick, it was seen by Mr. Carnegie
that this tube project might be revived and utilized to force
the purchase of at least his own holdings in the Carnegie
Company, and perhaps of the whole concern. So the plan was
gone over afresh, amplified and made definite, and then given
to the newspapers by the Carnegie press agent and by Carnegie
interviews. Thus it was published the length and breadth of
the country as the settled purpose of the steel company. Here
are two of these statements : the first as furnished by the Car-
negie press agent, and the second in a characteristic interview
with Andrew Carnegie. The Pickwickian humor of the latter
will not be lost on the reader who recalls the discussion of the
Carnegie managers in 1899 concerning the Conneaut project,
quoted in the eighteenth chapter of this book.
" It has been determined by the Carnegie Company, in order
to utilize this now profitless haul, to establish at the lake ter-
minal, where it already owns great docks and has ample facilities
for handling ore and for the lake shipment of the finished prod-
3 6o THE BILLION-DOLLAR FINALE
uct, an extensive pipe and tube manufacturing plant, represent-
ing an investment of $12,000,000. The projected works will
stretch over a mile along the lake front, and will be the most
extensive and complete plant of the kind in existence. Electric
power will be mainly used for driving the machinery, and the
system of operation will be continuous, the ore being unloaded
from vessels at one end and worked through successive stages
of iron and steel-making in a direct line to the finished pipe
and tube at the other end." World's Work.
" Immediately following the Carnegie Company announce-
ment of the location of a tube plant at Conneaut Harlpor, Ohio,
rumors were set afloat throwing some doubt on the sincerity of
the company's intention to carry out the announced plans. In
the iron trade there was an attempt to find a reason for the loca-
tion of the plant at Conneaut rather than in the Pittsburg dis-
trict. Regarding the reasons for going outside of the Pittsburg
district Andrew Carnegie was quoted last week as follows: 'In
fhe first place I am bound to say that Conneaut was not con-
sidered until the Pennsylvania Railroad, without consulting,
doubled our export rates . . . which led our people to take up
the question : How can we escape from the grasp of this arbi-
trary railroad combination? A study of the subject convinced
every one that we could do so by taking to water. When I re-
turned from Europe it was to find all agreed that this was the
method of relief. . . . Our establishment at Conneaut will
benefit Pittsburg, because we shall give the Pittsburg railroads
an object lesson. A very small proportion of our freight will
go by rail from these works. We are already in the shipping
business, and have only to add half a dozen small steamers to
our fleet to ply to the important lake cities, distributing steel
and loading up with scrap, of which we shall use an enormous
quantity. ' . . .
Asked whether the proposed plant was supposed to be a
blow at the National Tube Co., Mr. Carnegie replied that at
one time the original National Company purchased billets from
his company, but later decided to work its own blast furnaces
and make its own billets. Continuing he said : ' As I under-
stand the policy of the Carnegie Steel Co., it is to co-operate in
every way with its fellow manufacturers in the industrial world,
and not to push itself into any new field save in self-defence.
We did not leave the National Tube Co. They left us, which
they had a perfect right to do, of course. Now we are ready to
shake hands and co-operate with them in the most friendly
CONVERTING THE FINANCIERS
361
"In the conversion of the heathen.'
spirit. We are better for them than a dozen small concerns,
conducted in a small, jealous way. We believe there is room
enough for the two concerns,"
etc. Iron Trade Review, Janu-
ary I /th, 1901.
In the conversion of the
heathen, missionaries have
found it useful to describe
the condition of the
damned before presenting
a picture of the joys of the
blessed. It was on some
such principle that the
threat of industrial war was
thus made by the Carnegies
before the blessings of co-
operation and consolidation
were set out before the vision
of the alarmed financiers of the country. The panic produced
by the double threat of the Carnegies to build a rival tube works
and to enter into competition with the great Pennsylvania Rail-
road has been graphically described by a recent magazine writer :
" Either project as a threat would have been alarming. The
two together as imminent and assured accomplishments pro-
duced a panic. And a panic among millionaires, while hard to
produce is, when once under way, just as much of a panic as is
a panic among geese. They ran this way and that; they hid
one behind another; they filled the newspapers with their
squawkings ; they reproached, implored, accused each other.
At last they ran to their master Morgan. And he negotiated
with Carnegie."
But the negotiations came later. They were preceded by a
bankers' dinner, at which were preached the joys of industrial
peace. This famous dinner also grew out of a previous inci-
dent connected with Mr. Frick.
Somewhere about the time of the purchase of the Moore
362 THE BILLION-DOLLAR FINALE
option, Mr. Frick invited a number of prominent bankers to
Pittsburg, to show them the armor-plate vault that had just
been built for the Union Trust Company. Incidentally they
were given an opportunity of seeing the extent of the iron and
steel works at Pittsburg. Up to that time the resources of the
Iron City were but imperfectly known in Wall Street. This
visit showed that it was the busiest place in the world, and the
centre of its greatest industry. Duly impressed, the bankers re-
turned to New York ; and the courtesies they had received as
Mr. Prick's guests were now treated as an outstanding asset of
the Carnegie Steel Company. Through the influence of Mr.
Albert C. Case, credit agent of the Carnegie Company, and that
of Mr. Charles Stewart Smith, an intimate friend of Andrew
Carnegie, arrangements were made with a prominent banker of
New York, who had been among those entertained by Mr.
Frick, to give a return dinner, ostensibly in honor of Mr.
Schwab. This dinner was duly given ; and, as a spontaneous
outburst of enthusiasm for Mr. Prick's earlier protege, it has
been much written about and discussed.
Mr. Morgan attended the dinner, and listened with great
interest to Mr. Schwab's views on industrial combinations
" views apparently so large, so wise, and so interesting that Mr.
Morgan was strongly impressed by the speech and the speaker.
Then there began a series of interviews which eventually led
to the founding of the United States Steel Corporation, to the
realization of Mr. Carnegie's desire to retire from the control
of the business,"* and to the sale and absorption of the Carne-
gie Company. It was the most masterly piece of diplomacy in
the history of American industry, and formed a fitting climax
to Andrew Carnegie's romantic business career.
The further story of the merger has been told a hundred
times and need not be repeated here. The part of the Carne-
gies in it is indicated in the following letter to stockholders,
now first published :
* Prof. Henry Loomis Nelson.
STORY OF THE MERGER 363
THE CARNEGIE COMPANY
Offices; Carnegie Building,
Pittsburg, Pa., qth March, iqoi.
Personal and Confidential.
DEAR SIR:
To facilitate the exchange of the Stock of The Carnegie
Company for Stock of the United States Steel Corporation, the
undersigned, at the request of a majority of the Stockholders,
have agreed to act as a Committee, on behalf of their Fellow
Stockholders, to receive Certificates of Stock of The Carnegie
Company, and to make the exchange for shares of Preferred and
Common Stock of the new Company.
You are therefore requested, if you desire to exchange your
stock and to have this Committee act for you, to deliver the
Certificates of Stock of The Carnegie Company held by you, to
W. W. Blackburn, who will deliver to you the receipt of the
Committee therefor. Such Certificates must be endorsed in
blank (or may be accompanied by separate powers of attorney),
with the names of the undersigned inserted as attorneys in fact,
with power to them or any two of them to transfer the sait!
Shares upon the books of the Company ; proper revenue stamps
to be attached. The receipt appended hereto will then be
signed.
The basis of exchange is as follows :
One share of the Carnegie Company stock (par value
$1,000) to receive of the United States Steel Corporation
Stock 15.3558 Shares of Seven Per Cent. Cumulative Pre-
ferred, par value $100 $1,535.58; 14.1061 Shares Common,
par value $100 $1,410.61. No scrip will be issued for frac-
tional Shares, but exchange will be arranged at the rate of $100
per Share for Preferred and $50 per Share for Common, viz. :
Where a depositor is entitled to less than one-half of one
Share of Preferred or Common Stock, he will receive cash for
same ; and where entitled to more than one-half of one Share
of Preferred or Common Stock, he will be allotted and required
to pay for the fractional Share at the above rate.
A deposit of Stock with the Committee will constitute an
acceptance of the above terms by the depositor.
Yours respectfully,
C. M. SCHWAB, )
L. C. PHIPPS, v Committee.
W. W. BLACKBURN
v
, )
364 THE BILLION-DOLLAR FINALE
Had all the stockholders been subject to these terms it
would have meant that the $160,000,000 of the Carnegie Com-
pany's stock would have been exchanged for the United States
Steel Company's stock as follows :
Seven per cent, cumulative preferred $240,569,280
Common stock 225,697,760
$466,267,040
Add $160,000,000 bonds exchanged for the same
amount of Carnegie bonds 160,000,000
Total $626,267,040
As a matter of fact, however, Andrew Carnegie, Mrs. Lucy
C. Carnegie, and George Lauder were paid entirely in United
States Steel Company bonds, at the rate of $1,500 per share.
Thus for 96,000 shares of stock in the Carnegie Company they
received $144,000,000 in bonds of the United States Steel Cor-
poration. The balance of the $304,000,000 bond issue of the
latter, or $160,000,000, was exchanged at par for the $160,000, -
ooo bond issue of the Carnegie Company.
For the balance of the stock of the Carnegie Company, i.e.,
64,000 shares, was issued $98,277,120 in preferred stock and
$90,279,040 in the common stock of the United States Steel
Corporation.
At the time of purchase the bonds and the preferred stock
were considered worth par and the common stock 50 ; making
the total amount paid at that time $447,416,640. Add to this
the $22,000,000 dividend paid to Carnegie stockholders the
previous year in adjustment of values in the consolidation of
the coke and steel properties, and we reach the total cash
value of the business to which Kloman's little forge had grown
in forty years.
THE END.
APPENDIX
THE E Q^U I T Y SUIT
So me extracts from the pleadings of Henry C. Frick
ON the 1 4th day of January, 1889, your orator was elected chairman
of Carnegie Brothers & Co., Limited, and continued to act as such chairman
until the new association of the Carnegie Steel Company, Limited, was
formed. He was then elected chairman of the latter, and continued to act
as such until December 5th, 1899.
On January nth, 1895, with the assent of those interested and with a
view to enable your orator to perform duties which were believed to be of
more value to the firm than those then imposed upon said chairman, the
office of president was created. Upon said officer was placed the details
of the duties your orator had theretofore performed as chairman.
Your orator continued as chairman with general supervisory power
until December 5th, 1899. About that date Carnegie without reason, and
actuated by malevolent motives, demanded his resignation of said position.
Recognizing Carnegie's paramount influence as the holder of a majority
interest, and desiring to prevent the evil which might result from discord,
your orator acquiesced in the demand and gave his resignation.
As chairman of said companies your orator had participated largely in
and directed the business conducted by them and, until the time of his
enforced resignation, said business was conducted to a large extent under
his personal supervision, management, and direction. Carnegie lived in
New York City. He spent much of his time abroad, remaining there con-
tinually, at one time, for over eighteen months. Of course he was con-
sulted about important matters, but he rarely participated in the current
management of the business.
For various reasons, none just, not necessary now to be stated, but
which will appear hereafter in the taking of testimony, Carnegie
has recently conceived a personal animosity towards your orator.
This partly arose from the failure of you orator, in connection with
others, to avail of an option given by Carnegie in consideration of the
sum of one million, one hundred and seventy thousand dollars ($1,170,000),
to Carnegie paid, and now retained by him, as a forfeit to purchase his
(Carnegie's) interest in said Steel Company, Limited, for the sum of about
one hundred and fifty-seven million, nine hundred and fifty thousand dollars
($157,950,000), which sum Carnegie insisted should be so preferred and
secured that he would virtually have a first mortgage on all the partnership
assets and thus gain a preference over all his partners.
As has been heretofore said, on the 4th day of December, 1899, with-
out good reason, and from malevolent motives towards me, Carnegie de-
manded the resignation by your orator of his office of chairman of said
company. This resignation, in the interest of harmony, was tendered.
Since that time Carnegie has secured control of the whole association and
of its affairs, and has compelled the co-partners, other than Henry Phipps,
Jr., F. T. F. Lovejoy, and Henry M. Curry, and perhaps others, who refused
to carry out his orders and desires, to pass such resolutions and do such
acts as he dictated, without regard to their conformity to their real wishes,
365
3 66 APPENDIX
or to their judgment, as to the true policy of the association. Many of the
partners were unable or unwilling to incur his animosity, lest he might at-
tempt to forfeit their interests in the association. Some of them were prac-
tically unable to resist his will because of their large indebtedness thereto.
In order that he might injure your orator, whilst benefiting himself,
Carnegie conceived a scheme to forfeit the interest of your orator in the
association, worth upwards of fifteen million dollars ($15,000,000), in such
way as would not oblige him to pay therefor one-half of its real value and
would enable him to make payment therefor in small instalments at very
long intervals of time.
As part of this fraudulent scheme, Carnegie, who had rarely attended
the meetings of the Board of Managers of the Steel Company, Limited,
theretofore held, presented himself at a meeting of the said board, held on
the 8th day of January, 1900, after the resignation by your orator of his
chairmanship, and when he was not present. Carnegie then presented to
said Board of Managers resolutions by him previously prepared, which he
caused to be adopted. Many of the statements in said resolutions were
false. The whole of the resolutions were misleading. In them he referred
to a certain so-called iron-clad agreement. Carnegie followed up his action
in this respect by obliging the Board of Managers to instruct the secretary
to receive signatures to this so-called iron-clad agreement, which, for the
first time, he called a supplemental iron-clad agreement, of July ist, 1892.
No such agreement had ever been executed by Carnegie. Many other
members of the firm had never executed the same. This so-called agree-
ment was inoperative and void. Carnegie knew that it was void and in-
operative. He knew that neither he nor the Carnegie Steel Company had
any power to compel any person to sell his interest in the firm in pursuance
thereof ; yet, knowing this, without your orator's knowledge, secretly, after
said resolutions had been passed, he signed for the first time said so-called
iron-clad agreement of July ist, 1892. At the same time, or shortly after,
he caused, directly or indirectly, other persons to sign the same, with a
fraudulent intent thereby, and without your orator's knowledge or consent,
to make a contract for him under which he, Carnegie, could seize your
orator's interest in said firm. All these acts he carefully concealed from
your orator, his partner. Subsequently, in person, Carnegie threatened
your orator when he called upon him, that unless he would do what he,
Carnegie, desired, he would deprive your orator of his interest in the firm.
In pursuance of his fraudulent intent and in furtherance of his said scheme
of fraud, Carnegie caused to be served on your orator on the I5th day of
January, 1900, a notice purporting to be given under and in pursuance of
said so-called iron-clad agreement. In this demand was made, in the name
of Carnegie and in that of other persons who had been forced by him to
sign the same, that your orator should transfer his interest in said Carnegie
Steel Company, Limited. Having failed to secure this transfer, Carnegie
persuaded Schwab, one of the defendants, who was acting as president of
said association, to transfer, on the first day of February, 1900, on the
books of the company, your orator's interest in said Steel Company, Lim-
ited, as if he were entitled to make said transfer as attorney in fact of your
orator. After Schwab had made this pretended transfer, Carnegie pre-
tended, now pretends, and many of the partners under his compulsion
pretend, that the Carnegie Steel Company, Limited, owns all your orator's
interest in said firm. Carnegie, being the owner of 58 J per centum of the
entire capital thereof, is now pretending to be the owner of over 60 per cen-
tum of your orator's said interest, thus pretended to have been acquired.
Carnegie further pretends that he need not and will not pay for your
THE EQUITY SUIT 367
orator's interest what it is fairly worth, but that he can only be compelled
to pay a price which will be determined by himself, and by the partners he
controls. This price, he contends, can only be demanded by your orator
in such small instalment during a term of years of such duration as will,
probably, not only enable the company to entirely pay for your orator's
interests by using the share of the profits applicable to them, but have a
surplus left to the company. Thus, it is part of Carnegie's scheme not
only to seize your orator's interest, but to make it pay for itself out of the
profits, and thereafter leave Carnegie, in large part, the owner of said
interests, with a large surplus of money besides. Though Carnegie pre-
tends that he had thus secured a large part of your orator's interest in a
way which will inure to his benefit, he denies all individual liability what-
ever for its payment, and claims that the only party who will be obliged to
pay the price he will determine to give will be the Carnegie Steel Company,
Limited, which he will use for that purpose.
The exact manner in which Carnegie will seek to depreciate the value
to be paid for your orator's interest cannot be stated by your orator in de-
tail with certainty; but he believes and therefore avers that although
Carnegie's attention and that of the defendants have been called by him to
the fact that the values of the company assets on its books were wholly in-
adequate, and although he and the defendants have been requested to
make said values conform with the truth, he, the said Carnegie, will use
figures put upon the books years ago, which are obsolete, and are not by
any of the defendants pretended to be correct ; will fail to put any valuation
upon assets of immense value ; and will resort to other illegal and unfair
devices.
Your orator shows to your Honors that this attempt of Carnegie to
expel him from the firm and seize his interest therein at but a mere fraction
of its real value, is not made by him in good faith and for the best interests
of the Carnegie Steel Company, Limited. It is not actuated by honorable
motives on his part, nor for the future good of the firm, but is a determina-
tion to punish your orator, principally, because of the failure of the scheme
by which Carnegie was to realize over $157,000,000 for his interest, and,
also, in part, to make gain for himself by seizing your orator's interest at
very far below its real and fair value.
In order that the business of the firm of the Carnegie Steel Company,
Limited, might not be jeopardized by inharmonious relations between the
partners and that its enormous business might be carried on by united and
harmonious action, your orator was willing, upon ascertaining the animosity
of Carnegie towards himself, and his determination to drive him from the
firm, to dispose of his interest therein at a fair value. This fact was stated
by your orator to Carnegie when the latter called, in January, 1900, at his
office, in an endeavor to coerce the making of a sale by your orator at a
price below what was fair. An offer was then made by your orator to
Carnegie that in case a fair price could not be agreed upon for his interest,
which the latter insisted upon securing, that your orator would agree to
refer to the arbitration of three disinterested men, the determination and
fixing of a fair value. This offer Carnegie refused, doubtless because he
hoped to acquire such interest at much less than the fair value thereof by
means of his fraudulent scheme hereinbefore set out, which scheme he was
then, though without any intimation of that fact to your orator, secretly
perfecting and determined to carry into effect.
Your orator still is willing, in order that harmony may be preserved
and that the great interests involved may not be subjected to jeopardy, to
sell his interest in the Carnegie Steel Company, Limited, at a fair value, to
368 APPENDIX
be ascertained by three disinterested business men. He now tenders his
willingness so to do.
Notwithstanding the fraudulent actions of Carnegie, your orator also is
willing, in order that the enormous business interests of the Carnegie Steel
Company, Limited, may be protected, without injury to any of its partners,
to continue the business of the said firm in accordance with the true spirit
of the articles of agreement of July ist, 1892, creating the same.
If, as your orator is advised and believes, the said articles created a
general, and not a limited, partnership, he is willing, and now tenders such
willingness, to have such action taken by the firm and by the partners
thereof as will make the said firm strictly a limited partnership, as origi-
nally intended. Your orator is further willing, and now tenders such
willingness, to continue the Carnegie Steel Company, Limited, as a general
partnership, if he is allowed, as one of the partners, to participate in the
management thereof, claiming no other or further right than that of a
general partner in a general partnership.
Your orator is not willing, however, to continue the general partnership
under the sole control of Carnegie, without being allowed to have any par-
ticipation therein, Carnegie is so engaged in other occupations and diver-
sions that, were he otherwise able so to do, he cannot properly manage
and carry on said business. Your orator believes and avers that the
financial prosperity of the firm will be impaired by the exclusive manage-
ment and control of the same by Carnegie.
All of the defendants excepting Henry Phipps, F. T. F. Lovejoy and
Henry M. Curry, and possibly others, at the instance of Carnegie, now
claim that your orator has no interest in the Carnegie Steel Company,
Limited, and that his only right is to demand from said company, at long
postponed periods, such amount in compensation as Carnegie shall be
willing to concede him.
Your orator thus by the fraudulent acts of Carnegie and the acqui-
escence therein of the defendants, other than those above named has been
ejected from the Carnegie Steel Company, Limited, and has been and is
now denied any participation in its business. Your orator's interest therein
has been taken possession of by the defendants, and they at the instance and
under the domination of Carnegie, are now carrying on the said business,
alleging that they will continue to carry it on as if your orator had no in-
terest therein.
Your orator alleges that the whole effort v-hich has been made, and
which the defendants are now seeking to make effectual, is in pursuance of
said fraudulent scheme of Carnegie to practically seize your orator's interest
in said firm. This attempt is being made, although Carnegie knows, and
all the defendants know, that the prosperity of the firm, in considerable
partj is the result of your orator's continuous and close personal manage-
ment of the same, from the time of its organization.
Your orator denies that there is or was when said notice was given any
contract under which the defendants have acquired, or lawfully can acquire,
his interest in said firm.
He avers that the attempt to acquire the same and said pretended
transfer thereof by said Schwab, are illegal and void. Schwab was not the
attorney in fact of your orator to make said transfer nor did he have any
lawful authority so to do.
Wherefore your orator needs equitable relief, and prays as follows :
First. A decree that the pretended transfer of your orator's interests
in the Carnegie Steel Company, Limited, was and is null and void. . . .
Second. An injunction, now special, hereafter to be made final, re-
THE EQUITY SUIT 369
straining the defendants from any interference with your orator's interest
in said Carnegie Steel Company, Limited, and from excluding him from
a participation in the care and management of the assets and business.
Third. An injunction, special until hearing, and perpetual thereafter,
enjoining and restraining the defendants from conducting the business
operations of the firm called the Carnegie Steel Company, Limited, without
permitting your orator to participate therein.
Fourth. An injunction, special until hearing, and perpetual thereafter,
enjoining and restraining the defendants from tranf erring to the Carnegie
Steel Company, Limited, or to any person or persons, or corporation, your
orator's interest in the said Carnegie Steel Company, Limited.
Fifth. A decree ordering the defendants to cancel upon the books of
the said firm, any assignment or transfer heretofore made, or pretended to
be made, to said association, of your orator's interest in said firm, and all fur-
ther assignments, if any, to any other persons, of your orator's said interests.
Sixth. A decree ordering the defendants to join with your orator in
conducting and managing the affairs and business and properties of the
Carnegie Steel Company, Limited.
Seventh. A decree ordering the defendants to cancel and erase all
entries upon the books of the firm of the Carnegie Steel Company, Limited,
of insufficient, unfair, and improper valuations of its assets and of your
orator's interest therein, and to cause the said books so to be kept as to
fairly and fully show the real value of the Carnegie Steel Company, Limited,
as a going concern and your orator's interest therein.
Eighth. In case the defendants shall refuse the offers hereinbefore
by your orator made, . . . that your Honorable Court will thereupon
allow your orator to declare the said firm of the Carnegie Steel Company,
Limited, dissolved, and that you will thereupon appoint a receiver to take
charge of all the business and assets of the said firm, permitting said
receiver to fulfil unperformed contracts and to do whatever shall be
necessary in and about the proper liquidation of its affairs, and that, after the
conversion of the entire assets of the company into money and the payment
of the debts of the said company, your Honorable Court will then distribute
the balance thereof among the partners in proportion to their interests.
Ninth. That an account be taken between Carnegie and your orator,
whereby Carnegie shall be charged with all the losses, expenses, and dam-
age he has caused your orator by his illegal and fraudulent conduct
hereinbefore stated; and hat if Carnegie persists in his said fraudulent
scheme and refuses the offers hereinbefore made, and thus causes the
actual dissolution of the firm, all losses incurred by your orator by reason
of the said dissolution and forced winding up of the firm shall be charged
against him, and that he shall be decreed to make good and pay to your
orator the difference between what his interest was fairly worth on or
about February ist, 1900, and the amount he shall receive through the
decree of this court in final liquidation and settlement of the said firm.
Tenth. That all entries Carnegie or any other person has caused to
be made on the books of the Carnegie Steel Company, Limited, in pursu-
ance of said fraudulent scheme of said Carnegie, shall be erased and
cancelled under the decree of this Honorable Court.
Eleventh. General relief.
JOHN G. JOHNSON,
D. T. WATSON,
WILLIS F. McCooK,
Solicitors for Plainti^
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