Autobiography of Andrew Carnegie
It was advantageous for us to purchase these works. I felt there was
only one way we could deal with their owners, and that was to propose
a consolidation with Carnegie Brothers & Co. We offered to do so on
equal terms, every dollar they had invested to rank against our
dollars. Upon this basis the negotiation was promptly concluded. We,
however, gave to all parties the option to take cash, and most
fortunately for us, all elected to do so except Mr. George Singer, who
continued with us to his and our entire satisfaction. Mr. Singer told
us afterwards that his associates had been greatly exercised as to how
they could meet the proposition I was to lay before them. They were
much afraid of being overreached but when I proposed equality all
around, dollar for dollar, they were speechless.
This purchase led to the reconstruction of all our firms. The new firm
of Carnegie, Phipps & Co. was organized in 1886 to run the Homestead
Mills. The firm of Wilson, Walker & Co. was embraced in the firm of
Carnegie, Phipps & Co., Mr. Walker being elected chairman. My brother
was chairman of Carnegie Brothers & Co. and at the head of all. A
further extension of our business was the establishing of the Hartman
Steel Works at Beaver Falls, designed to work into a hundred various
forms the product of the Homestead Mills. So now we made almost
everything in steel from a wire nail up to a twenty-inch steel girder,
and it was then not thought probable that we should enter into any new
field.
It may be interesting here to note the progress of our works during
the decade 1888 to 1897. In 1888 we had twenty millions of dollars
invested; in 1897 more than double or over forty-five millions. The
600,000 tons of pig iron we made per annum in 1888 was trebled; we
made nearly 2,000,000. Our product of iron and steel was in 1888, say,
2000 tons per day; it grew to exceed 6000 tons. Our coke works then
embraced about 5000 ovens; they were trebled in number, and our
capacity, then 6000 tons, became 18,000 tons per day. Our Frick Coke
Company in 1897 had 42,000 acres of coal land, more than two thirds of
the true Connellsville vein. Ten years hence increased production may
be found to have been equally rapid. It may be accepted as an axiom
that a manufacturing concern in a growing country like ours begins to
decay when it stops extending.
To make a ton of steel one and a half tons of iron stone has to be
mined, transported by rail a hundred miles to the Lakes, carried by
boat hundreds of miles, transferred to cars, transported by rail one
hundred and fifty miles to Pittsburgh; one and a half tons of coal
must be mined and manufactured into coke and carried fifty-odd miles
by rail; and one ton of limestone mined and carried one hundred and
fifty miles to Pittsburgh. How then could steel be manufactured and
sold without loss at three pounds for two cents? This, I confess,
seemed to me incredible, and little less than miraculous, but it was
so.
America is soon to change from being the dearest steel manufacturing
country to the cheapest. Already the shipyards of Belfast are our
customers. This is but the beginning. Under present conditions America
can produce steel as cheaply as any other land, notwithstanding its
higher-priced labor. There is no labor so cheap as the dearest in the
mechanical field, provided it is free, contented, zealous, and reaping
reward as it renders service. And here America leads.
One great advantage which America will have in competing in the
markets of the world is that her manufacturers will have the best home
market. Upon this they can depend for a return upon capital, and the
surplus product can be exported with advantage, even when the prices
received for it do not more than cover actual cost, provided the
exports be charged with their proportion of all expenses. The nation
that has the best home market, especially if products are
standardized, as ours are, can soon outsell the foreign producer. The
phrase I used in Britain in this connection was: "The Law of the
Surplus." It afterward came into general use in commercial
discussions.
CHAPTER XVII
THE HOMESTEAD STRIKE
While upon the subject of our manufacturing interests, I may record
that on July 1, 1892, during my absence in the Highlands of Scotland,
there occurred the one really serious quarrel with our workmen in our
whole history. For twenty-six years I had been actively in charge of
the relations between ourselves and our men, and it was the pride of
my life to think how delightfully satisfactory these had been and
were. I hope I fully deserved what my chief partner, Mr. Phipps, said
in his letter to the "New York Herald," January 30, 1904, in reply to
one who had declared I had remained abroad during the Homestead
strike, instead of flying back to support my partners. It was to the
effect that "I was always disposed to yield to the demands of the men,
however unreasonable"; hence one or two of my partners did not wish me
to return.[42] Taking no account of the reward that comes from
feeling that you and your employees are friends and judging only from
economical results, I believe that higher wages to men who respect
their employers and are happy and contented are a good investment,
yielding, indeed, big dividends.
[Footnote 42: The full statement of Mr. Phipps is as follows:
_Question:_ "It was stated that Mr. Carnegie acted in a cowardly
manner in not returning to America from Scotland and being present
when the strike was in progress at Homestead."
_Answer:_ "When Mr. Carnegie heard of the trouble at Homestead he
immediately wired that he would take the first ship for America, but
his partners begged him not to appear, as they were of the opinion
that the welfare of the Company required that he should not be in this
country at the time. They knew of his extreme disposition to always
grant the demands of labor, however unreasonable.
"I have never known of any one interested in the business to make any
complaint about Mr. Carnegie's absence at that time, but all the
partners rejoiced that they were permitted to manage the affair in
their own way." (Henry Phipps in the _New York Herald_, January 30,
1904.)]
The manufacture of steel was revolutionized by the Bessemer
open-hearth and basic inventions. The machinery hitherto employed had
become obsolete, and our firm, recognizing this, spent several
millions at Homestead reconstructing and enlarging the works. The new
machinery made about sixty per cent more steel than the old. Two
hundred and eighteen tonnage men (that is, men who were paid by the
ton of steel produced) were working under a three years' contract,
part of the last year being with the new machinery. Thus their
earnings had increased almost sixty per cent before the end of the
contract.
The firm offered to divide this sixty per cent with them in the new
scale to be made thereafter. That is to say, the earnings of the men
would have been thirty per cent greater than under the old scale and
the other thirty per cent would have gone to the firm to recompense it
for its outlay. The work of the men would not have been much harder
than it had been hitherto, as the improved machinery did the work.
This was not only fair and liberal, it was generous, and under
ordinary circumstances would have been accepted by the men with
thanks. But the firm was then engaged in making armor for the United
States Government, which we had declined twice to manufacture and
which was urgently needed. It had also the contract to furnish
material for the Chicago Exhibition. Some of the leaders of the men,
knowing these conditions, insisted upon demanding the whole sixty per
cent, thinking the firm would be compelled to give it. The firm could
not agree, nor should it have agreed to such an attempt as this to
take it by the throat and say, "Stand and deliver." It very rightly
declined. Had I been at home nothing would have induced me to yield to
this unfair attempt to extort.
Up to this point all had been right enough. The policy I had pursued
in cases of difference with our men was that of patiently waiting,
reasoning with them, and showing them that their demands were unfair;
but never attempting to employ new men in their places--never. The
superintendent of Homestead, however, was assured by the three
thousand men who were not concerned in the dispute that they could run
the works, and were anxious to rid themselves of the two hundred and
eighteen men who had banded themselves into a union and into which
they had hitherto refused to admit those in other departments--only
the "heaters" and "rollers" of steel being eligible.
My partners were misled by this superintendent, who was himself
misled. He had not had great experience in such affairs, having
recently been promoted from a subordinate position. The unjust demands
of the few union men, and the opinion of the three thousand non-union
men that they were unjust, very naturally led him into thinking there
would be no trouble and that the workmen would do as they had
promised. There were many men among the three thousand who could take,
and wished to take, the places of the two hundred and eighteen--at
least so it was reported to me.
It is easy to look back and say that the vital step of opening the
works should never have been taken. All the firm had to do was to say
to the men: "There is a labor dispute here and you must settle it
between yourselves. The firm has made you a most liberal offer. The
works will run when the dispute is adjusted, and not till then.
Meanwhile your places remain open to you." Or, it might have been well
if the superintendent had said to the three thousand men, "All right,
if you will come and run the works without protection," thus throwing
upon them the responsibility of protecting themselves--three thousand
men as against two hundred and eighteen. Instead of this it was
thought advisable (as an additional precaution by the state officials,
I understand) to have the sheriff with guards to protect the thousands
against the hundreds. The leaders of the latter were violent and
aggressive men; they had guns and pistols, and, as was soon proved,
were able to intimidate the thousands.
I quote what I once laid down in writing as our rule: "My idea is that
the Company should be known as determined to let the men at any works
stop work; that it will confer freely with them and wait patiently
until they decide to return to work, never thinking of trying new
men--never." The best men as men, and the best workmen, are not
walking the streets looking for work. Only the inferior class as a
rule is idle. The kind of men we desired are rarely allowed to lose
their jobs, even in dull times. It is impossible to get new men to run
successfully the complicated machinery of a modern steel plant. The
attempt to put in new men converted the thousands of old men who
desired to work, into lukewarm supporters of our policy, for workmen
can always be relied upon to resent the employment of new men. Who can
blame them?
If I had been at home, however, I might have been persuaded to open
the works, as the superintendent desired, to test whether our old men
would go to work as they had promised. But it should be noted that
the works were not opened at first by my partners for new men. On the
contrary, it was, as I was informed upon my return, at the wish of the
thousands of our old men that they were opened. This is a vital point.
My partners were in no way blamable for making the trial so
recommended by the superintendent. Our rule never to employ new men,
but to wait for the old to return, had not been violated so far. In
regard to the second opening of the works, after the strikers had shot
the sheriff's officers, it is also easy to look back and say, "How