by H. W. Brands
Carnegie obsessed over cost because it was the one part of his business he could control. “Carnegie never wanted to know the profits,” an associate said. “He always wanted to know the cost.” Carnegie himself explained: “Show me your cost sheets. It is more interesting to know how well and how cheaply you have done this thing than how much money you have made, because the one is a temporary result, due possibly to special conditions of trade, but the other means a permanency that will go on with the works as long as they last.”46
As he wrung the excess costs out of his own facilities, he sought savings elsewhere. He acquired coke ovens to control the source of his carbon and bought iron mines to ensure his ore. He purchased railroads and lake steamers lest he suffer from the inefficiencies of his transporters. And he set prices wherever he had to in order to keep the entire system running at full capacity, which maximized his economies of scale.
By the 1880s he was the undisputed champion of the steel industry, with production costs that broke the back of the competition. In a pinch he was willing to let his rivals set his prices for him. “The Union Pacific had advertised for 70,000 tons of rails, the biggest order that had been given,” he explained to a congressional committee investigating the steel industry. “It was to be decided at Omaha, and all my competitors, all these agents of corporations, were out at Omaha, and those bids were to be opened. I walked over to Sidney Dillon”—the president of Union Pacific. “I was able to do the Union Pacific a favor once and I did it. I said, ‘Mr. Dillon, you have had some Carnegie rails. What is the report?’ ‘Oh, first class; splendid rails, Mr. Carnegie.’ ‘I want you to do this for me: your people are out there bidding on 70,000 tons of rails. I ask you to give me those rails, and I promise to take the lowest price that is bid.’ ” Dillon agreed. Carnegie made a nice profit on the deal, and his competitors made nothing.47
As much as Carnegie learned about the manufacture of steel, and as expert as he became in the craft, he never lost a sense of wonder as to what it all entailed. In a reflective moment he summarized his life’s work:
Two pounds of iron-stone purchased on the shores of Lake Superior and transported to Pittsburgh;
Two pounds of coal mined in Connellsville and manufactured into coke and brought to Pittsburgh;
One-half pound of limestone mined east of the Alleghenies and brought to Pittsburgh;
A little manganese ore mined in Virginia and brought to Pittsburgh;
And these four and one half pounds of material manufactured into one pound of solid steel and sold for one cent.
That’s all that need be said about the steel business.48
Chapter 4
TOIL AND TROUBLE
Carnegie’s recipe for steel made the metal’s manufacture sound easier than it was. Carnegie’s genius—for the steel master’s gift was nothing less than that—was his talent for organization. Those chunks of iron ore and coal and limestone and manganese didn’t migrate to Pittsburgh on their own; they were gathered by the legions Carnegie employed for the purpose. He trained his legions; he drilled them; he rewarded those officers and men who performed to his standard and dismissed those who didn’t. Carnegie was no inventor; not a single technique for steelmaking was his original idea. And he was an innovator only in adopting and adapting other men’s discoveries. But he was nonetheless creative, in the way Alexander and Napoleon were creative. They created political empires; Carnegie created a ferrous empire.
Rockefeller’s achievement was comparable. The empire of Standard Oil reflected Rockefeller’s relentless pursuit of efficiency and his ability to motivate those who worked for him to strive as hard as he did. The alchemy of oil was less impressive than that of steel; the kerosene that emerged from Standard’s refineries was more obvious kin to the crude that entered the intake pipes than Carnegie’s gleaming steel rails were to the rusty rock from which they sprang. Yet the magic of Standard’s organization—the transforming power of monopoly—cast even Carnegie’s operation in the shade. Rockefeller’s regiments didn’t march in lockstep; the armies of capitalism appear chaotic by comparison with regular armies. But the efforts of Standard’s constituents meshed in a manner to inspire the envy of the sternest Prussian general. And they crushed the competition with an implacability that would have made Wellington proud.
For such reasons it was the more striking that Carnegie’s recipe for steel included nothing about labor. He didn’t mention the men who dug the iron and coal from the ground and loaded it on the ships and railcars that carried it to Pittsburgh, nor did he acknowledge those who fired the furnaces and poured the molten metal into ingots and operated the rest of the machinery that made his steelworks the most productive in the world. Carnegie’s failure to acknowledge his debt to labor wasn’t unusual for capitalists of his day; indeed, until the 1890s he was considered more aware of his workers and sensitive to their needs than most other employers. On this account it was especially significant that he ignored one of the most portentous aspects of the capitalist revolution of the late nineteenth century: the emergence of an American working class.
Of workers, America had always had many, of course—although never enough to meet the demand for labor. In fact, the historic dearth of labor was perhaps the central feature of the American economy in the seventeenth and eighteenth centuries. In Europe land was scarce but labor plentiful; in America the balance tipped the other way. This explained much of why Americans resorted to slavery (while Europe, for most domestic purposes, did not). It was also why labor was better rewarded in America (except for those slaves) than in Europe, which in turn explained much of the attraction of America to immigrants.
Until the nineteenth century, many laborers could hope to earn and save enough to become their own employers. In the countryside farm laborers could look to buy land; in the cities and towns apprentices and journeymen could anticipate becoming masters. By no means did reality always match the hopes of the laborers, but it did so sufficiently often that little in the way of class consciousness developed among workers. Wage labor was a stop on life’s journey, not life’s destination. Nothing intrinsic or permanent separated those who hired from those who hired out.
Things changed as the country industrialized. Many of the early textile mills favored young women, for whom the water-powered looms and spindles were a prelude to marriage and motherhood; but the heavy lifting in the coal mines and ironworks that characterized the age of steam was done by men who increasingly expected to grow old on the job. This expectation—novel for America—contributed to a sense among workers that they were a class apart from those they worked for.
“THE ENTRANCE TO the mines is from the top of a precipitous hill, which, covered with the black refuse of scores of years, bears the semblance of a mountain of coal dust,” a visitor to the anthracite district of Pennsylvania wrote.
From the doors and open windows of the colliery buildings a great cloud of dust is ever streaming, settling on everything.… The interior of the building is a cloud of hazy blackness, and the black silent men, as they appear and disappear in the dust, seem like so many evil genii floating in the dark storm clouds.
This mine employed three hundred workers.
Each one had his routine to go through, and he went through it just as a steam engine or a clock. And when quitting time came each one went back to his home in the regular groove, just as the steam goes out of the boiler when its work is done, and then dropped off into sleep, his only pleasure. I have seen far more cheerful bodies of men in prison. It may be their black and dreary surroundings; it may be their knowledge of constant and terrible danger; it may be the strain of great physical labor—I know not what it is, but something there is about these mines that wears the life and soul out of the men, leaving only the weary, blackened shell.1
The miners indeed faced danger. In the early days of American steam power, wood and coal competed as fuels for the boilers that produced the steam. Wood had the advantage of being ubiquitous—available, fo
r instance, along the rivers plied by steamboats, which could refuel at their convenience. But wood had the disadvantage of containing less carbon per pound than coal, which had been compressed during eons by the weight of the rocks that overlay it and effected the conversion from dead vegetation to fossil fuel. Thus in any application where fuel had to be transported more than a short distance, coal won out. And the best coal—that with the densest energy—was anthracite, the hard, black, combustible rock found most conspicuously in Schuylkill and neighboring counties in east-central and northeastern Pennsylvania.
The first mines were mere pits, holes sunk where the coal seams came to the surface of the earth. But as the miners dug into the seams, the pits and holes became shafts and tunnels. Miners worked with picks, hammers, and shovels. They broke the rock free from the face of the seam and loaded it into wheelbarrows and buckets, with which they rolled or windlassed the coal to the surface. As the mines developed, narrow-gauge tracks were laid in the drifts—horizontal tunnels—and small railcars of coal were pulled by men or mules.
During the initial decades of mining, till the middle of the nineteenth century, operations tended to be small and relatively inexpensive. Individuals and partnerships could generate the capital to develop the mines, and the mining industry was characterized by hundreds of separate enterprises. But as the easy pickings—those near the surface—were taken, mining grew more difficult, expensive, and exclusive. The first barrier was the water table. As long as they lacked the technology to delve below the natural level of underground water, many miners convinced themselves that the seams ended just below the water table. (This wishful thinking reflected not simply technological incapacity but the prevailing ignorance of how coal was produced in the first place.) But a few bold spirits thought otherwise, and those with access to sufficient capital installed pumps to depress the water table in the vicinity of their shafts. The expense of the pumps culled the ranks of the operators, and the success of the pumps required additional expenditures, to make the most of the seams now rendered accessible. Shafts drove deeper into the earth, and elaborate techniques evolved to scrape as much coal as possible from the seams. Miners excavated large “rooms” from the coal seams, leaving “pillars” of coal to support the roof (and the hundreds of feet of rock and dirt above it). But because the pillars contained marketable material, the miners, on second pass, began to excavate the pillars. This required a careful weighing of costs against benefits: the costs in danger of cave-ins against the benefits of selling more coal. Under the best of circumstances, the technique demanded the expertise of men who had learned to detect the signs of strain in the pillars and the overburden; under the worst, it claimed the lives of men crushed when insufficient pillars collapsed.2
Cave-ins weren’t the only danger. Floods were a constant threat, should the pumps fail or a miner unknowingly break through to an underground stream. Suffocation could come from nonaqueous sources as well. Miners had names for the several gases that crept into mine shafts and displaced the oxygen that kept them alive. “Firedamp” was methane, “stinkdamp” hydrogen sulfide, “blackdamp” carbon dioxide, “whitedamp” carbon monoxide. All could kill, often without warning. Paradoxically, the most dangerous gas was oxygen, which fed the fires that were the greatest hazard of all. The engines that powered the mines ran hot, and sparks could ignite timbers or especially the coal dust that suffused the atmosphere in and around the mines. In 1869 at Avondale in Luzerne County, sparks from a furnace that drove ventilation equipment set the structure on fire. The fire spread to the timbers supporting the equipment, which crashed down the shaft even as it sealed the only exit. In minutes the fire exhausted the oxygen in the mine and spread deadly carbon monoxide among the 110 men trapped below. Everyone died.3
DISASTERS LIKE THAT at Avondale angered mine workers, who blamed the mine owners and operators for failing to provide such elementary safeguards as multiple exits. The anger eventually yielded results, and the Pennsylvania legislature ordered the operators to undertake basic reforms. Yet the order wasn’t always enforced, and in any event the complaints of the workers went deeper than mine safety. As the demands of mining technology grew, and with them the need for larger amounts of capital, the individual operators gave way to large corporations. In some cases these corporations confined themselves to mining, but often their portfolios were more diverse. Carnegie Steel owned coal mines, as did Rockefeller’s Standard Oil. During the 1870s the dominant mining company in the Pennsylvania anthracite district was in fact a railroad, the Philadelphia & Reading. The Reading and its president, Franklin B. Gowen, took the idea that started Jay Gould on the path to the gold conspiracy—that railroads could improve their profits by guaranteeing traffic—and applied it differently. The main commodity the Reading transported was coal; to ensure traffic, the Reading purchased coal mines.4
This served the shareholders of the Reading but placed the mine workers at a serious disadvantage. With the smaller operators, whom they typically knew by name and face, they shared certain interests, including a desire that the local economy thrive. And even where the interests of workers and operators diverged—for example, in negotiations over pay—the workers and small operators discussed their differences across a relatively level bargaining table. The operators couldn’t squeeze the workers without worrying they’d go to work elsewhere. But once the Reading took over in the anthracite district, the workers no longer knew the owners, who lived elsewhere and had little attachment to the coal community per se, and they confronted an effective monopolist who left them nowhere else to work. Moreover, because the resources of the Reading transcended the anthracite region, Gowen could, if necessary, close the mines and starve the workers into submission.
Nor was this the extent of the workers’ disadvantage. Since colonial times Pennsylvania had been a melting pot for immigration, but a pot in which the melting often took several generations. Benjamin Franklin, for one, had railed against the refusal of German immigrants to adopt the language and customs of the English majority (although his dissatisfaction didn’t prevent him from publishing books and magazines in German). The German strain in Pennsylvania persisted into the mid-nineteenth century, when it was complemented by the large immigration from Ireland that followed the failure of the potato harvest for several years in the 1840s. The Irish landed in Boston, New York, and Philadelphia (avoiding the South for its embrace of slavery). They formed urban enclaves but also spread to rural districts that needed unskilled workers. They reached the coalfields of Pennsylvania by the 1850s. Some of their new neighbors—employers, for example, and predecessors from Ireland—were happy to see them. Others—existing mine workers, members of other ethnic groups—were not. Previous immigrants from England and Wales formed the largest group of workers in the mines, and on both cultural and economic grounds they eyed the newcomers with suspicion and dislike. They did what they could to distance themselves from the Irish, who found themselves damned as drunken, ignorant papists. Among the workers a class system developed, distinguishing “miners” from “mine workers.” The former, mostly British, were the men who freed the native coal from the seam face; the latter, mostly Irish, were the ones who broke the freed coal into manageable chunks, which they loaded into cars and transported to the surface. The difference in condition between the two groups was described by a Welshman who, though a miner, sympathized with the Irish mine workers: “The miner and laborer go to work at seven o’clock in the morning and probably the miner will cut enough coal by ten or twelve o’clock. Then he will go out, leaving the poor laborer up to his waist in water and he will have to pile the lumps and fill three or four cars with coal after the gentleman has left.… Between five and six, the laborer, poor thing, arrives home wet as a fish.” For his pains the laborer received about a third the wages of the miner.5
One might have expected the consolidation of the coal industry to force the different groups of employees together. (Technically the miners were not employees but independ
ent contractors. In some cases the mine workers worked for them.) Occasionally it did, but at least equally often it intensified the differences between the groups. Miners, for instance, often blamed accidents on the alleged carelessness of the mine workers. After the Avondale fire, Welsh miners accused Irish workers of deliberately setting the fire to retaliate against perceived injuries from the Welsh. The accusation gained credence from the fact that few Irish were working when the disaster struck, most having taken the day off—ironically, to attend a funeral. Of the 110 victims, only six were Irish.6
For all the disadvantages of labor in the coal industry, management wasn’t without its problems. The Reading was a monopolist in the small world of the coalfields, but it was one road among many in the cutthroat rail industry. And when the Panic of 1873 sent the industry reeling, the Reading was forced to reduce costs wherever it could. The alternative was bankruptcy, which would displease shareholders but devastate employees, including the mining men of the anthracite country.
Yet the cost-reduction plan was painful enough. In the autumn of 1874 the Reading announced wage cuts of up to 20 percent, with additional cuts projected in the event coal prices kept falling. Whether Gowen expected the workers to accept the cuts was open to some doubt. For years the Reading had been battling the Workingmen’s Benevolent Association, the largest union in the region; Gowen seems to have been looking for a showdown. If so, he got what he wanted. The WBA rejected management’s terms and called a strike.