Carnegie
Page 17
Dec. ’68
St. Nicholas Hotel
N York
Thirty three and an income of 50,000$ per annum.
By this two years I can so arrange all my business as to secure at least 50,000 per annum. Beyond this never earn—make no effort to increase fortune, but spend the surplus each year for benevolent purposes. Cast aside business forever except for others.
Settle in Oxford & get a thorough education making the acquaintance of literary men—this will take three years active work—pay especial attention to speaking in public.
Settle then in London & purchase a controlling interest in some newspaper or live review & give the general management of it attention, taking a part in public matters especially those connected with education & improvement of the poorer classes.
Man must have an idol—The amassing of wealth is one of the worst species of idolitary. No idol more debasing than the worship of money. Whatever I engage in I must push inordinately therefore should I be careful to choose that life which will be the most elevating in its character. To continue much longer overwhelmed by business cares and with most of my thoughts wholly upon the way to make more money in the shortest time, must degrade me beyond hope of permanent recovery.
I will resign business at Thirty five, but during the ensuing two years, I wish to spend the afternoons in securing instruction, and in reading systematically.3
Shouted were these words as he reflected, dreamed, coaxed, and berated himself: “spend . . . surplus . . . for benevolent purposes”; “get a thorough education”; “education & improvement of the poorer classes”; “no idol more debasing than the worship of money”; “money . . . must degrade me beyond hope of permanent recovery”; “resign business at Thirty five.”
A simple breakdown of the letter revealed both his internal turmoil and a template for living to purge his self-doubts. In the letter’s opening line was a simple statement of fact: he was rich. But then Carnegie’s thoughts immediately turned to philanthropy—not in the way of a charitable donation here and there, but as a continuous process, like running a business. Philanthropy as a business was a unique, bold, and gratifying concept to him, totally foreign to a world inhabited by the likes of Tom Scott. To complement the enrichment of others, he would further improve himself, too, by seeking a better education, a desire lost in his pursuit of material progress. Then, in the letter, he added the clause on public speaking. Why? So he could effectively take his message, whether it be on benevolence or improvement of the poorer classes, to the people as did his uncle Tom Morrison, a renowned public speaker. Also toward that end, like his hero Horace Greeley, Carnegie dreamed of owning a newspaper to serve as a platform for championing the lower class—only it was to be in London, a city that embodied culture and offered a stronger connection to his Scottish heritage than New York ever could. In this enlightened course of life, words and money would be his weapons.
Ah, money. Carnegie was surrounded by it at the St. Nicholas, yet in the second half of his meditative letter he spurns it, condemns it, and fears it. Not too long ago, however, he himself had worshiped money. He had gloated over his wealth to his friend Tom David. He had told Dod that his cousin’s desire to win fortune was a noble resolution. He had reveled in the pleasures and comforts money brought. He had believed his accumulation of the material reflected America’s grand progress. Not now. Yes, man must have an idol, he knew that, but not mammon. Carnegie’s voice was pleading as he feared money would forever corrupt him, destroy any shred of his radical heritage, and he would become degraded beyond hope. Sadly, he recognized that no matter what course of life he pursued, he was condemned to always push inordinately—he must to avenge his father and to please his mother—so he had to be very careful to choose a dignified path.
Just as his flitting to New York raised so many questions, so did this letter. Why the radical change in perspective? Did Carnegie really mean what he wrote, or was he just being too hard on himself in a year-end fit of melancholy? Was it reactionary and impetuous? J. Pierpont Morgan and John D. Rockefeller were incapable of writing such a note, according to historian Joseph Frazier Wall, “nor would they have understood the man who did.”4 So where did Carnegie’s contemporaries stand in 1868? Rockefeller was on a relentless march to conquer the oil-refining business, and his personal life was well grounded, too. Four years earlier, he had married Laura Celestia “Cettie” Spelman, and, with their relationship mutually supportive, he never hesitated to write her a letter about his latest triumph.5 As for the philanderer Morgan, a refined banker’s son, he was fast becoming a pillar of Wall Street; moreover, in autumn 1868 the Morgan family, which included two children, rented a house on Fourteenth Street for $5,000 a year.6 In contrast to Carnegie, both Morgan and Rockefeller were secure in their respective industries and quite settled at home, and there was no impetus for them to question their purpose.
Perhaps, after a year in New York, Carnegie simply missed Pittsburgh and his friends there, which forced emotions to the surface. He readily admitted his defection to New York was not easy: “The change was hard enough for me, but much harder for my mother; but she was still in the prime of life and we could be happy anywhere so long as we were together. . . . For some time the Pittsburgh friends who came to New York were our chief source of happiness, and the Pittsburgh papers seemed necessary to our existence. I made frequent visits there and my mother often accompanied me, so that our connection with the old home was still maintained.”7 Spiritual emptiness was certainly a factor; after all, Tom had married and was starting his own family, while Carnegie remained a bachelor, pampered and bullied by an overbearing mother. The notion of passionately loving a woman remained alien to him, except for the complicated bond with his heroic mother. Mother and son remained inseparable, she a haunting reminder of his father’s failure and the driving force in his metamorphosis from bobbin boy to capitalist. Because he could only equate love to his mother, love was a platonic thing without physical desires. In fact, carnal love was repulsive to him, for as one of his close business associates reflected years later, “Carnegie frowned on anything savoring of the flesh and the devil.”8 Not that the puritan had much spare time for wooing, anyway. Like one of his other heroes, J. Edgar Thomson, who didn’t marry until late in life, Carnegie was continuously traveling and deeply immersed in the man’s world of railroads and iron. Still, having a spouse was a piece of life Carnegie missed and began to explain why he desired the contrary: a semimonastic existence studying at Oxford and becoming acquainted with literary men. But there had to be even more behind the radical letter.
New York City also inspired much of Carnegie’s severe backlash against money. Pittsburgh had its share of corruption and seedy politicians, and Carnegie was aware that his mentor Scott was prone to cross the line of fair business dealings; and yes, Carnegie had dabbled in speculating before the railroad and insider stock trading. But all of this was nothing close to the scale of political corruption and crooked business ventures he discovered in New York. While he was not a churchgoer, the city truly appeared to him not as Gotham, but as Gomorrah, the biblical city of sin upon which the Lord rained brimstone and fire.
With the postwar Reconstruction under way, money poured in from foreign lands as international bankers sought high returns from American industrialists thirsting for capital at any cost; money poured in to feed the steel buffaloes racing across the Great Plains; money poured in to develop the West and spur mining, lumbering, and cattle ranching; and money poured into the burgeoning brokerage houses that after the introduction of the stock ticker, patented in 1867, began to proliferate. Opportunities for spectacular get-rich-quick schemes were also plentiful, especially in railroad stocks. Dirty speculators continuously knocked on Carnegie’s office door. “I was besieged with inquiries from all quarters in regard to the various railway enterprises with which I was connected,” he recalled. “Offers were made to me by persons who were willing to furnish capital for investment and allow
me to manage it—the supposition being that from the inside view which I was enabled to obtain I could invest for them successfully. Invitations were extended to me to join parties who intended quietly to buy up the control of certain properties. In fact the whole speculative field was laid out before me in its most seductive guise.” The stock-market games played in 1867 and 1868 by Daniel Drew, Jim Fisk, and Jay Gould were particularly galling, especially their attempt to seize control of the Erie Railroad from Cornelius Vanderbilt, who was attempting to monopolize New York State railroads. It became known as the Erie War.
And then there was Boss Tweed, who made money both on stock manipulation and from bribes. He epitomized the New York government’s corruption, which embarrassed the city’s elite. In 1868, a prominent lawyer and diarist, George Templeton Strong, noted: “To be a citizen of New York is a disgrace. A domicile on Manhattan Island is a thing to be confessed with apologies and humiliation. The New Yorker belongs to a community worse governed by lower and baser blackguard scum than any city in Western Christendom.”9 New York had once been called the London of America, and that was what Carnegie was naively expecting. Instead, the sin of New York pricked his social conscience, which had been so calloused in Blackstock’s and Hay’s factories, and he was suddenly inspired to lift mankind up.
But first he was resigned to working for two more years to ensure his financial independence. Then what? Would he be able to adhere to his proclamations? Would there still be a need? After all, New York did have a pleasant upside that might entice him and compromise his resolutions. As he and his mother strolled through the streets, they encountered all the luxuries affluence could buy. A. T. Stewart’s new department store at Broadway and Ninth Street was the coup de grâce for shoppers. The five-story structure, built with cast iron and painted white, boasted two thousand panes of French glass windows and Venetian-style arches, and it served customers with an army of five hundred clerks and cash boys. R. H. Macy was busily expanding his four-story shop at Fourteenth and Sixth; toys could be had at F. A. O. Schwarz; suits at Brooks Brothers; and books at Brentano’s, including Horatio Alger’s first rags-to-riches novel, Ragged Dick, published in 1867.
The American Museum of Natural History would open in 1869 and the Metropolitan Museum of Art in 1870, providing Carnegie with some of the culture he craved. A favorite pastime he could indulge in for now was horseback riding in scenic 843-acre Central Park, which, after the Civil War, had become the fashionable place to walk, ride, and drive. To reach the park, he was able to take a public omnibus from Wall Street, passing by the square, squat, fortresslike Croton Reservoir on Fifth Avenue and Forty-second Street, the future site of the magnificent public library. At the park, he was introduced to many strong-willed, independent women who relished riding and would suit Carnegie perfectly as a wife. Perhaps prior to his self-imposed exile to a monklike existence in Britain, he would find a fine woman there among the throngs.
Two years to retire. In that time Carnegie would “push inordinately” to achieve complete financial independence and he would focus his efforts on the two firms in which he held a sizable interest: the Piper and Shiffler bridge-building concern and Union Mills. His second-biggest earner in 1868, after Union Mills, was Piper and Shiffler, which brought in $15,000, and he had grand visions for the operation. From New York, he tracked proposals to build bridges across the mighty Mississippi—at St. Louis and other points—which had yet to be breeched by the railroad, and eagerly anticipated bidding on each. Much of the multimillion-dollar financing of these projects originated in New York, and Carnegie diligently sought out the men involved and ingratiated himself before the bids were requested. After all, winning the contracts to build such bridges would not only be lucrative, but would represent monuments to man’s ingenuity, to the progress of America, and to the river itself, eulogized by Mark Twain in Life on the Mississippi.
Carnegie dreamed of the Piper and Shiffler Company building glorious structures spanning America’s mighty rivers and canyons, intertwining himself with the land as well as conquering it. Beginning to fully assert himself in the everyday management of the firm, two years prior he had insisted on a reorganization to boost its capital to support expansion and proudly renamed it the Keystone Bridge Company—after Pennsylvania, the Keystone State. It was incorporated on May 16, 1865, and capitalized at $200,000. Tom Scott bought one-half of Carnegie’s $80,000 allocation but kept it in his protégé’s name, while Thomson held about 5 percent of the stock in his wife’s name.10 By securing relatively independent financial strength through investors like Thomson and Scott, Carnegie enjoyed a freer hand in managing his companies than men indebted to banks or Wall Street. He was free to make quick decisions and take sweeping action without answering to anyone first, which often gave him the upper hand on competitors; he could lowball a bid or make costly capital improvements without reprisals.
Carnegie’s superb instinct of attaching himself to talented men—Kloman and Piper, among others—also served him well, but he knew he was the spirit that brought them together and gave them direction. It was his vision, optimism, determination, and resourcefulness that attracted these men like moths to a light, and through good-natured cajoling and ferocious demands he brought out the best in them. Carnegie’s Keystone partners, however, were overwhelmed with work and were not so enthusiastic about pursuing large, complicated projects. With no patience for those unable to keep the pace, Carnegie wrote a blistering letter to President J. H. Linville, whom he thought spent too much time in Philadelphia as opposed to Pittsburgh: “The truth is Mr. Linville that you are wanted here to organize the concern, make it capable of doing an extensive business, divide the duties among competent heads & require each to attend to his own department. . . . It is proposed to have a meeting of the board Thursday week to discuss matters fully & determine upon a course of policy to be pursued.—I trust you will be present.”11
Five days after his pointed critique, he sent a long letter to Linville and the directors, demanding investment in plant and equipment to expand their bridge-building capacity and to prevent any potential competitors from gaining a foothold. “Should we be unable to bid upon any of the several large bridges soon to be contracted for,” Carnegie thundered, “we will give one of them the desired opportunity & hereafter may calculate upon a rival to cut down future profits.”12 As for upcoming bids, Carnegie had the Mississippi bridges in mind, and he concluded his letter with an exhortation in favor of expansion, pointing out that their industry was still in its infancy and that a mere $40,000 investment could double their firm’s revenue to $600,000. There laid another dimension to Carnegie’s genius: never taking a narrow view and pushing an idea to its full potential.
Carnegie’s drive paid off less than a year later when on December 10, 1868, he signed the coveted contract with the Keokuk and Hamilton Bridge Company to supply a superstructure to span the Mississippi River, connecting Illinois with Iowa. When Carnegie later said that this was his most important project since moving to New York, he was not exaggerating; he was involved at all levels.13
To begin, Carnegie was compensated for his personal services in overseeing the project with sizeable chunks of stock in the Keokuk and Hamilton Bridge Company, and he would eventually become the company’s president. The bridge company, of course, had signed with Keystone, which in turn subcontracted work to Union Mills, where Andrew Kloman’s mechanical genius greatly aided developments in shaping beams and cutting precise pieces for bridges. But now, in yet another dimension, not only was Carnegie responsible for building the bridge, but he took on the added responsibility of managing the construction of the railroad that would cross it. He was like an octopus, wrapping each arm around a tasty morsel as each new project offered new opportunities.
Backed by Scott and Thomson, Carnegie organized the Iowa Contracting Company to build a railroad from Keokuk through southern Iowa to Nebraska City, where it would connect with a line being built from Lincoln, all of these lines par
tly owned by the Pennsylvania Railroad, now a gorged behemoth. Naturally, Carnegie’s Iowa Contracting Company would also subcontract to Union Mills for the iron rails, stakes, and sundry needs. Completely engrossed in his industrious and industrial web, Carnegie neglected to inform brother Tom of all his actions, so when Tom received an order for iron rails from some unknown outfit called the Iowa Contracting Company, he balked at filling the order until he knew if the company’s credit was good. To ascertain more on the firm, he wrote to his brother’s personal secretary, Gardner McCandless. Humored by the inquiry, McCandless responded, “We consider the company good. . . . We would add that such men as Messrs. J. Edgar Thomson, Thos. A. Scott & c & c are interested in the building of the road, and the Treasurer of the Company is a reliable New York gentleman, a Mr. Andrew Carnegie with whose name you are perhaps not unfamiliar.”14
Keystone, having just completed a 320-foot span across the Ohio River as well as winning the Keokuk contract, now enjoyed national prominence— precisely what Carnegie desired for himself.
Although the Keokuk Bridge was 2,300 feet long, it didn’t require the engineering ingenuity required for the St. Louis Bridge, making the latter the prize Carnegie would continue to pursue for the next two years. A bridge across the Mississippi at St. Louis required an unparalleled engineering feat of sinking two piers in the middle of the river, which measured 1,500 feet wide at this point, with 225,000 cubic feet of water rushing by every second.15 To finance the construction, St. Louis–area businessmen eager to encourage local trade formed the St. Louis and Illinois Bridge Company and hired Colonel James B. Eads as their chief engineer. The Civil War veteran, a slight figure but with great physical strength like a lithe jungle cat, designed a colossal bridge that was to be a 54-foot-wide two-deck roadway—a highway above and two rail lines below—with a spectacular center arch 515 feet long resting on two piers, and two additional spans of 497 feet that would connect with each shore.16 The crucial ingredient was high-quality steel.