Herbert N. Casson, "The Carnegie Company Under Frick," 1907.
The year before Andrew Carnegie entered the iron business, a shy fourteen-year-old boy got his first job as errand-boy in a village store at Mount Pleasant, forty miles from Pittsburgh. It was the year in which Vicksburg surrendered to General Grant, a time of tremendous excitement and anxiety. There were not as many people in Mount Pleasant as there are to-day in the Frick Building, Pittsburgh; but it seemed like a populous place to the boy who had been brought up on a lonely little farm half a mile from the nearest neighbour. His parents were quiet, plodding Swiss-Germans, who made the least possible amount of money by doing the greatest possible amount of work. In the winters he had learned to read and write at the schoolhouse. In the summers he had carried buttermilk to the pigs and oatmeal-water to his father. He seemed in every way an ordinary, barefooted little youngster, with nothing in his favour except, that he had been born in the United States.
The boy's name was Henry Clay Frick.
( . . . )
FRICK AS THE KING OF COKE
In two years more [after Frick bought out his partners during an economic depression] the pendulum had swung back to prosperity. Coke leaped to three dollars a ton, then four, then five. Frick and Company made a hundred per cent. in 1875, and every dollar of profit was spent in buying more land and building more ovens. By 1889 Henry Clay Frick was the coke king, with eleven thousand workmen obeying his orders. His twenty thousand dollars of borrowed capital had grown to five millions, mostly his own. There were fifteen thousand coke ovens in the entire Connellsville region, and ten thousand of them belonged to the resolute, masterful man who had not only dared to dream of millions in a coal-miner's cottage, but had made that dream come true.
Frick brought order out of chaos in the coke business. He invited his ablest competitors - such men as E. M. Ferguson and S. L. Schoonmaker - into partnership, and forced out or bought out the others. This prevented the cutthroat competition which had kept the coke-makers poor. Next came the question of labour. Frick tried making contracts with the trade unions, and failed. Then he took a step which entirely changed the whole labour situation in western Pennsylvania - he brought in the Huns and the Slavs. For a time this meant a race war, but with the aid of. Pinkertons Frick utterly destroyed the unions.
It was not so much a question of wages as of authority. Frick was not a labour crusher; but he abhorred revolt and disorder. On the whole, he has raised wages, abolished abuses, and improved the mines and villages since his word became law. His first trouble with the Huns and Slavs was, in fact, to prevent them from compelling their wives, mothers, and sisters to work at the scorching ovens. A State law had been passed forbidding female labour at the ovens, and the newcomers declared a strike when Frick enforced it.
Whatever Mr. Frick touched he improved. He found two dozen coke ovens in the Connellsville region, and left twelve thousand belonging to his own company. He found shanties and left comfortable cottages. He found a few hundred labourers, with irregular work and small pay, and left eighteen thousand workmen with steady jobs and fair wages. He found crude little plants, operating on a small scale at high cost, and left a ten-million-dollar corporation. In his childhood village of Mount Pleasant, where he worked for sixty cents a day, there stands to-day the largest coke plant in the world, operating nine hundred and eight ovens and filling one hundred and twenty-five cars every twenty-four hours.
THE REGION OF THE "H.C.F.C. CO."
This province of Connellsville, over which Mr. Frick had become the industrial governor, contains about a hundred and fifty square miles. Underneath its grassy slopes lies buried an immense field of coal, peculiarly suitable for coke-making. To most people, all coal looks alike; but to the " coal sharp," there are as many kinds of coal as there are of breakfast food. And it is generally agreed that Connellsville coal makes the highest grade coke. It has a harder fibre, carries the burden of a furnace better, and gives a hotter fire, than the coke made from other coals. At the Chicago World's Fair, Mr. Frick called attention to Connellsville by giving an eighty-thousand-dollar exhibition of its coke.
To-day the Connellsville region is from end to end the Land of Frick. On every hand you see the symbol of his ownership, "H.C.F.C. Co.," although his company is now only one of the counters of the Steel Trust's department store. It is a land of flame and smoke, of rusty rivers, green hills cleft by winding railroads, checkerboard villages, and sullen, swarthy Huns and Slavs. Here muscle still holds the fort against machinery. Workmen dash like salamanders from fire to fire. A stranger from Mars might easily imagine that it was a region of little walled towns, with fires built in the walls to repel invaders.
The long rows of ovens curve around each cluster of cottages, and as the men shout and shovel around the blazing ramparts, their desperate vigour is far more suggestive of war than peace. The men battle with fire and the women with smoke. Everybody works. The superintendents look forward to offices in the steel and marble Frick building, in Pittsburgh; the workmen dream of five thousand dollars apiece and little farms on the Danube. It would be impossible to live in the Connellsville region without hopes and dreams.
FRICK ENTERS THE CARNEGIE COMPANY
Until 1882 the Carnegie company owned no coke ovens. Then it bought control of the Frick company. Mr. Carnegie's keen eye took notice of the unerring judgment of Frick. Here, at last, was a real industrial general, to whom he could entrust the command of his whole army. For seven years he watched Frick, and every year his admiration increased. His growing company needed an organiser. And so, in 1889, he appointed Frick commander-in-chief of all his forces.
Without the investment of a dollar, Frick became a partner in the Carnegie company. Carnegie gave him five per cent. of the stock, for which Frick gave his notes. The stock paid for itself in a few years of big profits. Later, Frick got six per cent. more, on the same terms; but in a year of low profits he sold back five per cent. to Carnegie, who was always a buyer when the others wished to sell.
The Carnegie company moved now from the age of millions to the age of many millions. As the business grew, the number of original partners diminished. Some had died; most of the others had withdrawn willingly, leaving Andrew Carnegie, as they thought, to be the Casabianca of the Pittsburgh steel trade.
All other iron and steel magnates, with the exception of Carnegie, lived in Pittsburgh and were swayed constantly by the local gossip, by the labour troubles, and by the rumours of competition and low prices that floated from office to office. To-day they were elated; to-morrow they were depressed. To-day they bought; to-morrow they sold.
Carnegie, on the other hand, deliberately placed himself where these little ups and downs were unnoticed. As he sat on the deck of a Pacific steamer, or fished for trout in a Highland loch, the news that Coleman had quarrelled with Shinn, or that the coke-drawers wanted five cents a day more, was of small consequence. One thing he knew - that civilisation needed steel and was able to pay for it. All else was not worth troubling about. And so in good times he whipped on his workers to beat every previous record; and in bad times, when prices were low, he bought other plants or built new ones.
IV. THE CARNEGIE COMPANY UNDER FRICK
THE ANNEXATION OF HOMESTEAD
The way in which he came into possession of the great Homestead works is a striking illustration of what his competitors called "Carnegie luck." In 1880 seven of these competitors, all able and wealthy men, raised a quarter of a million and built a steel-mill to get some of the Carnegie company's business. Up to this time Carnegie had been the only maker of steel rails in the Pittsburgh district; but this new plant promised to produce three hundred thousand tons a year. For a while it looked as if the profits would be cut in two; and if the Homestead mill had been ably managed, the history of steel might have had a different set of heroes.
The new plant was running full blast fifteen months after the first spade had been put into the ground - a record-breaking achievement. It began with a blare of trumpets. Two hundred tons of rails a day were squeezed into shape between its whirling rollers. Its equipment was the best that money and brains could make. Advance orders had been booked. Apparently, the new firm had a mortgage on prosperity, when suddenly the whole enterprise was paralysed by a series of labour troubles. The Amalgamated Association of Iron and Steel Workers rose up and dealt the company blow after blow.
The association was not then the fragment that it is to-day. It numbered seventy thousand members. There was scarcely a non-union steel worker in the United States. It was six years old, and flushed with a dozen small victories.
For several months there were lockouts, strikes, riots, and quarrels among the partners. The price of steel began to fall. Trade grew worse daily. More capital was demanded of the stockholders. It was only an eclipse of the sun at noon, but the owners of the new concern believed that night had come. They decided to sell out to Carnegie, but they were afraid that he would get the best of the deal, and held several meetings to rehearse what they would say to him. Then they called him in. It was one of the dramatic moments of the story of steel.
"Gentlemen," said Carnegie, "I am willing to do what you say - and more. I will allow you every dollar that Home stead has cost you, and I will invite you all into our company as partners."
The partners were speechless. They were loaded to the muzzle against Carnegie, but this square deal disarmed them. They moved to adjourn. Next morning one of them, W. H. Singer, entered Carnegie's office and said:
"Were you in earnest yesterday? Would you really take me for a partner?"
"Of course I would," replied Carnegie. "Shake, pard."
Singer remained a partner of Carnegie to the end, and saw the fifty thousand dollars which he had invested swell into many millions. As for his associates, they were afraid of Carnegie and disgusted with steel. They took their pay in notes, and handed Homestead to Carnegie with the feeling of complacency which a man possesses after having traded a balky horse for a corner lot.
In a short time the labour troubles were smoothed out. Prices rose. Business revived. And in two years the Homestead plant had paid for itself. Practically, the Carnegie company got it for nothing - nothing but pluck and enterprise and faith in the future of steel.
To the further amazement of Pittsburgh, as soon as the company had bought this "gold brick" Homestead plant, hundreds of thousands were spent in improving it. Julian Kennedy was put in charge - a man who, as an all-around steel engineer, has probably never had a superior in any country. Kennedy had equalled even Captain Jones as a steelmaker, and now he set to work to make a steel-mill which was then, and is to-day, the wonder of the engineering world. Instead of making steel ingots and bars, which had to be sold as mere raw material, the Homestead works began to produce beams, girders, and all manner of structural shapes. At that time there was no strong demand for such things, and Pittsburgh once more prophesied failure for Carnegie and Phipps.
As if the very stars in their courses were silent partners of the two comrades who had battled up to greatness from Barefoot Square, the skyscraper age began in the same year that this Homestead mill was finished. The Rookery, in Chicago - first of all the giant steel buildings which give distinctiveness to American cities - was built in 1887, and others followed in quick succession. At the same time came a boom in the building of steel bridges. The Pittsburgh croakers gasped to see the Homestead "failure" running night and day to catch up with its orders. Carnegie had foreseen the coming of a steel-ribbed civilisation, and his company was now the owner of the best steel-works in existence.
Years afterwards, Mr. Carnegie was sitting in the home of his friend, James G. Blaine. Pointing to the ceiling, he said: "There is a steel beam there that was made in our Homestead mill. The mill cost us a million to build, but we made a clear million in profits before anyone else had time to build one like it. We started ahead of them all, and so we were able to hold the cream of the business."
IV. THE CARNEGIE COMPANY UNDER FRICK
THE CONQUEST OF DUQUESNE
Take one more illustration of the "Carnegie luck" and the Frick financiering - the acquisition of the magnificent steelworks at Duquesne without the outlay of a single dollar. Nothing that equals this financial legerdemain has ever been known before or since in the iron and steel trade. Among all the industrial battles fought and won by Carnegie and his captains, the victory of Duquesne will always stand out as the most complete and decisive.
Three years after the capture of Homestead by the Carnegie group, three or four of the seven defeated competitors took their purchase money, added twice as much to it, and began to build a second steel-mill. They had realised their mistake in parting with the Homestead works, and they were determined to "beat Carnegie this time." They bought a tract of land on the Monongahela River, a few miles above Homestead, and in three years had a plant which was a marvel for handiness and speed. It was practically a "continuous" mill - one in which the steel ingots did not require to be reheated, but were sent continuously through the whole process of rail-making. Dozens of new labour-saving devices were introduced. The partners had lost Homestead because of labour troubles, and in the Duquesne works they had as few workmen as possible. In fact, so successful were they in replacing men by machinery that the labour cost of their steel was cut exactly in half.
The Carnegie company at once showed fight. The Duquesne company was kept out of the rail pool. It found itself forced out - ostracized - boycotted. It was compelled to pick up the crumbs from the table at which its competitors were dining. Necessity compelled it to accept undesirable contracts. The steel went out, but the money did not come in.
Then the Duquesne manager repeated the mistake of Homestead, and picked a quarrel with the Amalgamated Association. Offensive signs were nailed up at the gates, announcing that, "No Union Men Are Allowed on These Works." All these difficulties set the partners wrangling, as they had before; and at the psychological moment Frick made an offer of six hundred thousand dollars for the plant. This was about half what it had cost, and the suggestion did not help to put the partners in a more optimistic mood. A year later he raised the price to a million dollars, payable in bonds, not cash.
To conclude the bargain, William Park went with Frick to Carnegie's house. Frick was inclined to beat Park's price down still lower; but as the three men were walking downstairs to luncheon, Carnegie whispered to Frick - "We get the turkey; don't grudge Park a few feathers." Frick yielded his point, and the deal was made. Park got the feathers.
The Carnegie company took possession, speeded up the steel-mill to a Captain Jones gait, and in less than one year cleared a million dollars' profit. Carnegie had captured the Port Arthur of his competitors, and it had not cost him a drop of blood nor an ounce of powder. In twelve months there was not a nickel less in the Carnegie treasury, and he was the master of a steel city which to-day makes more than three per cent. of all the steel in the world. By the time the bonds came due, the Duquesne plant had paid for itself six times over. And so, in 1890, Carnegie, Phipps, and Frick secured another province in the steel world for nothing - nothing except the skilful use of those business methods which our generals of industry have either practised or permitted.
Thomas Morrison, a distant relation of Andrew Carnegie, was put in charge of Duquesne. He was young and inexperienced; but the responsibility ripened him at once into an able manager. He made peace with the workmen and started the immense plant on its record-breaking career. For four years the Duquesne furnaces held the world's record. In one month they made more iron than all the furnaces in the United States had produced during President Monroe's first term of office. An output of twenty-six hundred and fifty tons of iron a day from four furnaces was an achievement that would have seemed absolutely incredible not long before.
IV. THE CARNEGIE COMPANY UNDER FRICK
Captain Jones - who, strangely enough, was more responsible for the dawn of the era of machinery than any other one man - came into close personal touch with his workmen, and tolerated the unions. "I have always found it best to treat men well," he said. " They should be made to feel that the company is interested in their welfare. Make the works a pleasant place for them. All haughty and disdainful treatment of men has a decidedly bad effect on them."
In his day the question of labour was of first importance. Success or failure depended upon whether the workmen were willing or unruly. Captain Jones went so far as to draw up a labour formula, which he gave to the Carnegie company.
"We must steer clear of the West," he said, "where men are accustomed to infernally high wages. We must steer clear, as far as we can, of Englishmen, who are great sticklers for high wages, small production, and strikes. My experience has shown that Germans, Irish, Swedes, and what I denominate Buckwheats - young American country boys - judiciously mixed, make the most effective and tractable force you can find. Scotchmen do very well, are honest and faithful. Welsh can be used in limited numbers. But mark me, Englishmen have been the worst class of men I have had anything to do with."
To an old-timer like David Thomas, an iron-works was a school as well as a money-making enterprise. Men, as well as iron, were to be refined. It was even more important to get a high grade of men than to dig a high grade of ore. Every workman was studied and trained so far as his natural ability would permit. He was regarded by his employer, not as a mere automatic unit of energy, but as a human being with likes, dislikes, and possibilities.
When John Fritz first took charge of the Bethlehem works, for instance, the sub-bosses said to him:
"Now, the first thing to do is to fire Parry."
"What's the matter with Parry?" inquired Fritz.
"Oh, he's one of our best furnacemen," replied the subbosses, "but he keeps the whole works in a state of turmoil. No living man can get along with him."
"Well, we'll see later about Parry," said Fritz. "At present I've neither friends to reward nor enemies to punish."
In a couple of days, Parry, an able but crotchety fellow, strode into Mr. Fritz's office. "See here, Mr. Fritz," he said, "I've got a new idea for the furnace."
"Good, Parry," replied Fritz; "take this sheet of paper and show me what it is." Parry made a clumsy drawing, but Fritz saw at once that while the idea was crude, it was new, and could be improved.
"It looks like a fine idea, Parry," he said; "give me a couple of days to think it over."
Parry went back to his furnace highly pleased with the new superintendent, and Fritz altered the original suggestion until it became workable.
"I find your invention is a good thing," reported Fritz. "You can go ahead and have it done."
After this the aggressive Parry became one of the most tractable men in the works. The incident illustrates the close personal relation that existed between master and man before machinery came between them.
Credit: Herbert N. Casson, The Romance of Steel: The Story of a Thousand Millionaires (New York: A. S. Barnes & Company, 1907), 104, 107-15, 132-34.