Carnegie’s fixation was on the freight rates charged by rail carriers—not surprising, given his background. Since he was aware of every shenanigan a railroad might devise in an attempt to extract the maximum from its customers (and had tried most of them himself), he sought to drive a better bargain on behalf of his steel interests. When he discovered that William Vanderbilt was planning to build a line across the state to Pittsburgh that would compete with his old employer, the Pennsylvania Railroad, Carnegie rounded up a group of partners to invest $5 million, giving their group about a one-third interest in the project.
Things looked good for Carnegie, who didn’t care whether he ended up doing business with Vanderbilt’s new South Pennsylvania Line or with George Roberts, then the president of the Pennsylvania Railroad. With two competitors for his business, he knew he would find a lower rate with one or the other.
Unfortunately for Carnegie, interests even larger than his own took a hand in the matter. Fearful that such impending competition would prove ruinous to both railway interests in which he had placed substantial bond offerings, Wall Street mogul J. P. Morgan, the son of former Carnegie benefactor Junius Morgan, intervened and brokered a compromise between Vanderbilt and Roberts. According to the agreement, Vanderbilt would give up his charter for the South Pennsylvania Line in exchange for the Pennsylvania Railroad’s interest in the West Shore, a New York–to-Buffalo line that, when completed, would have gone into competition with Vanderbilt.
Work on the South Pennsylvania Line, which had cost some two thousand lives and many millions of dollars, ceased immediately. The already completed bridge pilings, graded roadbeds, and tunnels blasted through bedrock would remain unused for almost half a century before engineers for the Pennsylvania Turnpike would put them to use in constructing their roadway. When Carnegie discovered what had happened, he was furious, but with a minority control over the project there was little he could do but vow never again to trust the banking house of Morgan.
Carnegie even went so far as to address the Pennsylvania legislature in the spring of 1889, decrying the lack of meaningful rail competition in the state, and calling for the formation of a governmental commission that would oversee the establishment of a fair rate schedule. It was an amazing speech, coming as it did from a champion of the laissez-faire approach to business regulation, but even the considerable clout that Carnegie wielded in western Pennsylvania was no match for the might of the Pennsylvania Railroad. Legislators listened politely to Carnegie’s impassioned speech, and some supported his efforts, but in the end no legislation was forthcoming.
Even Frick took a dim view of Carnegie’s histrionics over Morgan’s tactics, suggesting that he would have been better off keeping his $5 million in his pocket to defray rail costs than going up against the impregnable Pennsylvania Railroad. As Frick pointed out, railroad companies formed a large part of the customer base for the products of Carnegie Brothers, and it seemed better policy to curry good relations with major customers than to go all-out against them. As he wrote to Carnegie in August 1889, “It is very much pleasanter to agree than differ with you and in most things I would and will defer to your judgment . . . but I always hold to the opinion that your attack on P.R.R. was wrong and I should deprecate its renewal.”
9
TWO STRIKES . . .
THE JUDICIOUS TONE OF FRICK’S note to Carnegie was a clear reflection of how their relationship stood at the time. While Frick did not hesitate to differ with Carnegie, he held his superior in high regard. They were indeed kindred spirits, risen up from the ranks of store clerkdom to become captains of industry and united in their determination to amass great personal wealth. Furthermore, they shared a business philosophy that set them apart from their peers, most of whom were more concerned with net profits and dividends than with the reduction of fixed costs.
There were points of divergence, to be sure. Both Carnegie and Frick agreed on the necessity of containing the costs of labor in the manufacturing process, but each man’s approach to the problem, at least as far as the public could see, was distinct.
As a coke operator, Frick had been a hard-nosed opponent of labor organizing; any mine owner who would toss a striking worker into a creek with his mattress flying after him could hardly be classed otherwise. Despite his storied ruthlessness, however, Frick did not altogether lack a sense of humor. Recently restored home movies show him mugging and clowning at Eagle Rock, the family’s summer retreat on Boston’s North Shore.
And Pat Barnett, a librarian at the Frick Art Reference Library and the granddaughter of a Frick acquaintance, tells of an epic practical joke he played on his friend Andrew Mellon, who often traveled with his wife on a private railcar attached to a regular Pennsylvania Railroad train. On one occasion a conductor entered and demanded their tickets. Mellon explained who they were and that it was their car, but the conductor announced, “This is my train and if you don’t have tickets, you’re not going anywhere.” The conductor signaled the engineer to brake at the next stop, and they were summarily ejected onto an empty station platform somewhere in the Pennsylvania hinterlands. The dumbfounded Mellons were at a loss—until another train pulled up, and a familiar figure emerged from the train’s stairwell, wreathed in steam. “Andrew!” came the voice of Henry Clay Frick. “Fancy meeting you here!”
Carnegie, on the other hand, had a troublesome need for approval (grandchildren visiting in later years were often bribed by their parents to let “Grandpa Negie” win at cards), a trait that led him to behave in contradictory ways—lauding the efforts of unions even as he sought to undermine them. In fact, it is said that he kept a special file in his desk where any favorable public utterances concerning him were tucked away. In the aftermath of those Forum articles, which so troubled his fellow industrialists, the Brotherhood of Locomotive Engineers had named a division after him and appointed him an honorary member of their union, a gesture to which Carnegie often pointed with pride. Next to the certificate designating him a “union man,” Carnegie kept a copy of his response to Brotherhood officials: “I feel honored by your adopting my name. It is another strong bond, keeping me to performance of the duties of life worthily, so that I may never do anything of which your society may be ashamed.”
One can only imagine Frick’s dismay at hearing of such utterances. In practice, however, Carnegie did things that would have won Frick’s approval as surely as they would have shamed him in the eyes of the Locomotive Engineers. By 1887, some ten years after Captain Jones had led the fight for the institution of the three-shift, eight-hour workday at the Edgar Thomson works, the practice had yet to be adopted at any other steel mill in the country. Carnegie, moreover, had seen that it was more expensive to maintain three distinct workforces than two, and ordered that as of January 1, 1888, workers at Edgar Thomson would return to the two-shift, twelve-hour day.
The moment Carnegie’s decision was announced, workers at the plant went out on strike. After a conference with Jones, Carnegie announced that the plant would close until the men agreed to return, on his terms, and he held fast for four months, until representatives of the Amalgamated Association of Iron and Steel Workers agreed to negotiate. Carnegie then arranged a meeting of all the workers at Edgar Thomson and invited anyone to stand and air a grievance. According to a Carnegie biography written by Burton Hendrick, one workman stood and began to stammer, “Mr. Carnegie, take my job, for instance . . .”
At which point Carnegie interrupted, delivering one of his most inspired lines: “Mr. Carnegie takes no man’s job.”
Almost as one, the workers exploded in laughter and, as they stamped their feet, began to chant the now-famous mantra, “Thou shalt not take thy neighbor’s job.”
After the crowd had calmed, Carnegie went on to describe his proposal for ending the impasse, the implementation of a sliding wage scale tied to the price of steel. Citing a recent downturn in profits, he offered the men a choice: with a full understanding of the difficulties the company faced,
they could return to the eight-hour shift at a reduced wage; or they could agree to the twelve-hour shift with the promise of higher wages to come, once steel prices rose. In essence, Carnegie argued, the latter choice would make them partners in a glorious enterprise sure to benefit them all, if not the world as a whole. Buoyed by Carnegie’s rhetoric, the men, by secret ballot, overwhelmingly chose the latter option. At essentially no cost to himself, then, Carnegie had found a way to skirt the union demands.
During the following summer of 1889, Carnegie faced a similar problem at his Homestead works, an ominous foretaste of things to come. From the day he had taken over operation of the four-thousand-worker plant, most of the skilled workers at Homestead, about one-quarter of the workforce, had maintained their affiliation with the AAISW. The contract negotiated by the union paid these workers on a flat, per-ton basis, and given that production at Homestead had risen dramatically over the past six years, any change to a sliding scale would have meant significant wage cuts to all these “tonnage” men.
Nonetheless, from a European vacation spot, Carnegie cabled company president William Abbott with orders to issue the announcement: workers would be forced to sign an agreement indicating their acceptance of such a change, if they wanted to continue their employment.
Meanwhile, calamity of a different sort had been brewing in the Carnegie orbit. The spring of 1889 had been an unusually wet one in western Pennsylvania, and the last week of May had seen heavy rainstorms in the area nearly every day. Late on May 30, a pleasant enough Memorial Day was punctuated by yet another torrential downpour.
The members of the South Fork Fishing and Hunting Club, enjoying their sailing and fishing and paddle boating on Lake Conemaugh, the main feature of the exclusive enclave near Johnstown, some sixty miles east of Pittsburgh, hastily took shelter, and the more sagacious of them might have glanced with some concern toward the earthen dam that held back the vast, swollen waters of the lake. At one mile wide by three and a half miles long, and more than seventy feet deep in spots, Lake Conemaugh was said to be the largest artificial body of water in the world at the time, and its many delights had attracted the crème de la crème of Pittsburgh society. But the dam itself had long been a sore spot for the thirty thousand largely working-class citizens of Johnstown who lived fourteen miles—and 450 feet of vertical drop—downstream, along the banks of the flood-prone Little Conemaugh River.
Even before Henry Clay Frick, Benjamin Ruff, and fourteen other prominent Pittsburgh area residents had pooled their resources to buy the old canal reservoir from the Pennsylvania Railroad ten years earlier, engineers had pointed to various defects in the earthen barrier known as the South Fork Dam. The spillway was inadequate and choked by fencing meant to keep expensive stocked fish from escaping the lake, auxiliary discharge pipes had long ago deteriorated and been welded over, and leaks were routinely spotted at the base of the dam, even in the driest of times.
Such observations did not, however, galvanize the club or its membership—which had grown to include Carnegie, Andrew Mellon, Philander C. Knox, and a number of other prominent Pittsburghers—into any meaningful action. In fact, several feet had been shaved off the top of the dam to permit the construction of a road that would allow easier access from the rail station to cottages on the far side of the lake. There had always been complaints about the dam, the reasoning seemed, but the dam had always held.
And so it did, until 4:07 p.m. on the afternoon of May 31, 1889, when, following a night and day of steady rain, a sudden “roar like thunder” reverberated through the canyon below the dam. The sodden earthworks had split like the rind of a rotted melon, and 20 million tons of water exploded down the narrow gorge toward Johnstown.
The wall of water, sixty feet high, tore down the canyon at more than forty miles an hour, obliterating everything in its path. It took out the huge stone viaduct used by the Pennsylvania Railroad to cross the river canyon, then plowed on into Woodvale, the company town maintained by the Cambria Iron Works, one of Carnegie’s oldest rivals. In seconds, a population of one thousand was reduced to none. The wave, now a deadly froth of boulders, steel rails, and shattered houses, hit the grounds of the Gautier wire works next, fracturing red-hot furnaces, drowning its workers, and sweeping up miles and miles of newly fabricated barbed wire into the mass.
In less than twenty-five minutes the wave hit Johnstown, sweeping up what structures it did not immediately flatten, then slamming finally to a halt against the mighty stone arches of another Pennsylvania Railroad bridge at the junction of the Little Conemaugh and Stony Creek Rivers. Those still alive, clinging or wrapped by wire to shards of wood and roof, or caught inside bobbing houses, might have thought themselves saved when the rush of waters suddenly stopped.
But it was then that several tanks of oil and fuel uprooted by the flood crashed into the splintered pile at the bridge, causing the entire mass to burst into flame. As anguished bystanders watched from the shore, more than eighty people were burned alive in that ghastly coda to the flood. Ultimately, more than 2,200 lost their lives.
Accusations against the South Fork Fishing and Hunting Club and its construction supervisor, Benjamin Ruff, were swift, with scores of lawsuits threatened and filed. Negotiations with Carnegie’s men at Homestead were put on hold as Captain Jones led a contingent of three hundred workers from the Edgar Thomson works to aid the rescue effort.
The Frick and Carnegie companies donated about $15,000 to a relief fund that swelled to nearly $4 million, with contributions coming from around the nation and the world. The South Fork Fishing and Hunting Club donated $3,000, Andrew Mellon another $2,000, and other members contributed as well. However, inconceivable as it may seem to us in our litigious society, no one was ever held responsible for the catastrophe, and not one of the associated lawsuits ever proved successful.
Flood or no, by June 13, Frick seemed impatient to get back to business as usual, writing Carnegie that in light of the Johnstown tragedy, it had been impossible “to do anything with the railroad men . . . but things are beginning to shape themselves.” Carnegie, fresh from a visit to the World’s Fair in Paris, quickly cabled back, “Glad all is getting back to normal,” and urged Abbott to press the men at Homestead to agree to terms or face a shutdown.
Perhaps distance had addled Carnegie’s sense of the prevailing mood among his workers, or perhaps the result would have been the same even without the pall cast by the events in Johnstown. In any case, this was one time that the have-nots were in no mood to listen to the dictates of their master. And so it was little surprise that the men refused Carnegie’s terms.
Carnegie considered the matter closed, literally. Homestead was not to reopen until the men agreed to work at a figure that he contended would make his steel sufficiently profitable. The strategy had worked before, and he had no doubts that it would work again. Abbott, however, did not prove to be the steadfast general Carnegie had hoped for.
Facing his first strike as a leader of men, Abbott attempted his own means of resolution: he placed ads in local publications offering employment to scab labor. When a group of hopefuls approached the Homestead works, accompanied by a sheriff and 125 deputies, they discovered two thousand striking workers blocking the gates and clearly ready for a fight. In short order, the sheriff and his men and the would-be strikebreakers made a retreat.
Once news of Abbott’s tactics spread, workers at nearby Edgar Thomson threatened a sympathy strike. Though Carnegie had anticipated such a move and had told Captain Jones to try to placate the workers until his return, Abbott panicked at the prospect of a Carnegie-wide shutdown. As a result, he agreed to negotiate with the AAISW, and a compromise was reached. The union agreed to work at the sliding scale, but in return, the AAISW was recognized as the sole and rightful bargaining agent at Homestead. The contract was to extend for three years, until July 1, 1892. It meant that no man could be fired or hired at the Homestead works without the union’s approval.
Although Carnegi
e was pleased to have secured the agreement of the men to work for the sliding scale, he was less happy about the entrenchment of the union’s position. As he said in a letter to Abbott shortly after, “The great objection to the compromise is of course that it was made under intimidation—our men in other works now know that we will ‘confer’ with law breakers.” Carnegie went on to reaffirm his conviction that the most effective response to a strike was simply to close the plant. “Seems to me a curt refusal to have anything to do with these men would have brought matters right in less time. . . . Whenever we are compelled to make a stand we shall have to shut down and wait as at E.T. [Edgar Thomson] until part of the men vote to work, then it is easy.”
Though Carnegie’s method was less confrontational, its effect was no less harsh upon the men thrown out of work. Perhaps something in the tactic appealed to Carnegie’s complex nature—as if he were saying, “See, I am willing to suffer as well, if you persist in such misguided efforts.” But to a man whose family faced eviction and starvation, the degree to which Carnegie “suffered” would have seemed mild indeed.
In any case, hardly had things returned to normal within the Carnegie empire when disaster struck. On the night of September 26, 1890, one of the recently installed basic blast furnaces at the Edgar Thomson works exploded. Captain Jones, who had been standing on a nearby catwalk, was hurled backward by the blast and fell into a red-hot casting pit below. Though his men managed to extract him from the hellish coals, he was terribly burned and had lapsed into a coma. He died two days later, without ever regaining consciousness.
Not only a skilled and beloved manager who had somehow balanced the demands of a taskmaster owner with the rights of his men, Jones was also one of the most innovative technical minds in the industry. In fact, more patents were registered to his name than to any other individual in steel, and those inventions had been an incalculable benefit to Carnegie operations.
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