Carnegie Steel Company

“ Carnegie had already been active in the foundation of a mill for the production of structural iron; for three years the company had stood on the brink of failure; but Carnegie was not a “quitter,” and he hung on to his faith. Now, with his brother and several other partners, he formed the Union Iron Mills. The profits were enormous. Vast railroad development throughout the country required rails and structural iron. Steel rails were worth from $90 to $100 a ton. The manufacture of steel seemed to offer even greater prospects than iron. ”

“ NEWS FROM PITTSBURGH ANNOUNCED THAT trouble had broken out between the Carnegie Steel Company and its employees organized in the Amalgamated Association of Iron and Steel Workers. It was one of the biggest and most efficient labor bodies of the country, consisting mostly of Americans, men of decision and grit, who would assert their rights. The Carnegie Company, on the other hand, was a powerful corporation, known as a hard master. ”

“ The first thought which came to the minds of this finishing group when hard times compelled them to cut down costs was to cheapen their raw material (such as pig iron, steel ingots, billets, etc.) by becoming manufacturers of their own pig iron. The Carnegie Steel Company had already done this and had obtained facilities for transporting the ore to the coal fields of Ohio and Pennsylvania and facilities for transforming the ore into the classes of material which it supplied. ”

“ The Carnegie Steel Company, the Jones-Laughlin Steel Company, the Illinois Steel Company, all grew up under highly competitive conditions, and each attained a gigantic size without passing the point where enlarging the scale of operations continued to make for economy in production. ”

“ There is no way of making a business successful that can vie with the policy of promoting those who render exceptional service. We finally converted the firm of Carnegie, McCandless & Co. into the Edgar Thomson Steel Company, and included my brother and Mr. Phipps, both of whom had declined at first to go into the steel business with their too enterprising senior. But when I showed them the earnings for the first year and told them if they did not get into steel they would find themselves in the wrong boat, they both reconsidered and came with us. ”

“ That so great a company must work in the open, all its actions being able to bear the full glare of daylight.
Up to the time of the Corporation’s organization publicity on the part of big industrial enterprises was almost unknown. Certainly steel makers did not show any desire to take the public, or even the small stockholder, into their confidence in regard to details of their business. The immense profits made by the Carnegie company were not revealed until the234 Carnegie-Frick quarrel caused their revelation. ”

“ Carnegie desperately anxious to sell out, and his methods of accomplishing it stand as a monument to his resourcefulness. About a year before Frick resigned as head of the Carnegie Steel Company, he appointed a committee to report on a project for building a tube works at Conneaut, the Lake Erie terminus of the Bessemer Railroad. There being little freight from Pittsburgh to the Lake port, the ore trains returned for the most part empty ”

“ Carnegie announced that he would build a finishing mill in northern Ohio at the end of his ore railway which would eclipse anything that the world had ever seen and would be in equipment without a rival in the world. The Federal Steel Company increased its holdings of ore and coal, of upper-lake railways, and of lake steamers, and prepared to establish its plants for turning out finished products. ”

“ Until within a few years, however, this direct process, as it has been called, has not been generally used. It is easy to see why this was the case. The fluctuation in the chemical composition of the metal from the blast furnace was too great to allow that degree of uniformity of product in the Bessemer steel produced from it which is absolutely necessary in the case of steel rails, for example, which must be as reliable as human skill can make them, and where no reasonable expense can be spared to make them perfectly safe and trustworthy. ”

“ In his first application the patentee stated that 'the primary object of the invention is to provide means for insuring uniformity in the product of a Bessemer steel works or a similar plant, in which the metal from more than one blast furnace is employed to charge the converters. The product of the different furnaces, or of the same furnace at different times, varies in quality, . . . so that . . . the manufactured steel lacks uniformity in grade. ”

“ On the contrary, the true purport of the patent was this, and this only: The selection of separate portions of molten metal, pouring the same into a reservoir, mixing such aggregated portions of molten metal thoroughly until it, the commingled metal, became uniform, so that the equalized metal might be used, not alone in the making of steel in a converter, but in any other process of making steel, in a foundry, or in any other mode where a uniform product was desired. ”

“ If this proved successful I knew that iron was [Pg 185] destined to give place to steel; that the Iron Age would pass away and the Steel Age take its place. My friend, John A. Wright, president of the Freedom Iron Works at Lewiston, Pennsylvania, had visited England purposely to investigate the new process. He was one of our best and most experienced manufacturers, and his decision was so strongly in its favor that he induced his company to erect Bessemer works. He was quite right, but just a little in advance of his time. The capital required was greater than he estimated. ”

“ Pig iron, which was the original basis for the manufacture of all iron and steel, is made by the reduction of iron ore in large blast furnaces, which are filled with layers of ore, charcoal or coke, and flux. By the agency of this the iron is melted out and falls to the bottom of the furnaces, is drawn out through openings for that purpose into canals, and finally into molds, where it solidifies into what are termed pigs. Prior to the invention of Sir Henry Bessemer, steel was manufactured from a pig-iron base by a tedious and expensive process of refining in furnaces adapted to that purpose. ”

“ It had long been an object of manufacturers that steel should be made directly from the molten metal, as it comes from the blast furnaces, without having to pass through the intermediate or cupola process, which involved the casting of the furnace metal into pigs. These, after becoming cold, were assorted, broken up, recharged and remelted in a cupola furnace, and then placed in a converter for conversion into steel. ”

“ Fortune sometimes hangs upon a glance or nod of kindly recognition as we pass.
[2] An American Murdoch was found in Captain Jones, the best manager of works of his day. He entered the service of the Carnegie Steel Company as a young mechanic at two dollars per day, a perfect copy of Murdoch in many important respects. Reading Murdoch's history, we have found ourselves substituting the "captain," a title well earned on the field in the war for the Union, which he entered as a private. Once he was offered an interest in the firm, which would have made him one of the band of young millionaires. ”

“ The surprise is that the manufacturers of steel, having felt the want for so many years, should never have discovered from the multiplicity of patents and of processes introduced into this suit, and well known to the manufacturers of steel, that it was but a step from what they already knew to that which they had spent years in endeavoring to find out. It only remains now for the wisdom which comes after the fact to teach us that Jones discovered nothing, invented nothing, accomplished nothing. ”

“ Stevenson, a Scotsman who afterwards made a fine record as a manufacturer, and control of the other to a Mr. Jones. Nothing, I am certain, ever affected the success of the steel company more than the decision which I gave upon that proposal. Upon no account could two men be in the same works with equal authority. An army with two commanders-in-chief, a ship with two captains, could not fare more disastrously than a manufacturing concern with two men in command upon the same ground, even though in two different departments. ”

“ Charles M. Schwab and William Ellis Corey, two former presidents of the Corporation, both started from the very bottom, as did Alvah C. Dinkey, one-time head of the Carnegie company, and a number of others. Even Gary, although he did not become connected with the steel industry until in middle life and after he had made a marked success in the legal field, was not the son of a wealthy man, and won his way to fortune by hard work combined with unusual business ability. There is no open sesame to honor and advancement in the big company, nor for that matter in the steel trade as a whole ”

“ The specifications provide for manufacturing Bessemer steel directly from the smelting furnace by employing gates or channels for molten metal from each furnace, leading to a reservoir, which is placed low enough to give fall for the molten metal to flow from the blast furnace to this reservoir, which forms a receptacle for mixing the molten metal from two or more of the smelting furnaces. From the reservoir the mixed molten metal is tapped, and flows down the swivel trough into the converter. ”

“ Frick was also the owner of extensive coke-fields, where unions were prohibited and the workers were ruled with an iron hand.
The high tariff on imported steel had greatly boomed the American steel industry. The Carnegie Company had practically a monopoly of it and enjoyed unprecedented prosperity. Its largest mills were in Homestead, near Pittsburgh, where thousands of workers were employed, their tasks requiring long training and high skill. Wages were arranged between the company and the union, according to a sliding scale based on the prevailing market price of steel products. ”

“ Having solved the steel-rail problem at the Edgar Thomson Works, we soon proceeded to the next step. The difficulties and uncertainties of obtaining regular supplies of pig iron compelled us to begin the erection of blast furnaces. Three of these were built, one, however, being a reconstructed blast furnace purchased from the Escanaba Iron Company, with which Mr. Kloman had been connected. As is usual in such cases, the furnace cost us as much as a new one, and it never was as good. There is nothing so unsatisfactory as purchases of inferior plants. ”

“ A witness thus testified respecting the extent of use in this country of the receiving ladle as follows:
'Early American steel works, commencing with Troy in 1864, Pennsylvania in 1867, Cleveland in 1868, Cambria and Union in 1871, North Chicago in 1872, Joliet and Bethlehem in 1873, Edgar Thomson and Lackawanna in 1875, and Vulcan in 1876, used receiving ladles, two in number, holding about two heats each, with the exception of Bethlehem, which used a single ladle on a car to mix taps from four cupolas, and Vulcan, which used three receiving ladles, holding two heats each. ”

“ The various works controlled by the Steel Corporation include the Carnegie Steel Co, the Illinois Steel Co., the Universal Portland Cement Co., the Indiana Steel Co., the Minnesota Steel Co., the Lorain Steel Co., the National Tube Co., the American Steel and Wire Co., the American Sheet and Tin Plate Co., the Sharon Tin Plate Co., the American Bridge Co., the Union Steel Co., the Clairton Steel Co., the Clairton By-Product Co., the Canadian Steel Corporation, the Tennessee Coal, Iron & Railroad Co., the Fairfield Steel Co. ”

“ Andrew Carnegie says the United States has not only supplied its own wants, 'but is competing to supply the wants of the world, not only in steel, but in the thousand and one articles of which steel is the chief component part,' and expresses the opinion that the increasing demand from the world at large 'can be met only by the United States.' "The influence of our steel-making capacity," adds Mr. Carnegie, "must be marvelous, for the nation which makes the cheapest steel has the other nations at its feet as far as manufacturing is concerned in most of its branches. ”

“ My experience has been that no partnership of new men gathered promiscuously from various fields can prove a good working organization as at first consti [Pg 202] tuted. Changes are required. Our Edgar Thomson Steel Company was no exception to this rule. Even before we began to make rails, Mr. Coleman became dissatisfied with the management of a railway official who had come to us with a great and deserved reputation for method and ability. I had, therefore, to take over Mr. Coleman's interest. ”

“ When the Carnegie group began operations in the early seventies, American steel, as a British writer remarked, was a "hot-house product"; yet in 1900 the Carnegie partners divided $40,000,000 as the profits of a single year. They had demonstrated that the United States, despite the high prices that prevailed everywhere, could make steel more cheaply than any other country. Foreign observers have offered several explanations for this achievement. American makers had an endless supply of cheap and high-grade ore, cheaper coke, cheaper transportation, and workmen of a superior skill. ”

“ These works had been built originally by a syndicate of manufacturers, with the view of obtaining the necessary supplies of steel which they required in their various concerns, but the steel-rail business, being then in one of its booms, they had been tempted to change plans and construct a steel-rail mill. They had been able to make rails as long as prices remained high, but, as the mills had not been specially designed for this purpose, they were without the indispensable blast furnaces for the supply of pig iron, and had no coke lands for the supply of fuel. ”