Sunday 2010-10-03

Meet You In Hell by Les Standiford

Standiford spends most of the book on the events during and around the Homestead Strike. Still, it has other interesting bits as shown below.

Not long afterward, more inside information led to Carnegie's investment in the Central Transportation Company, a firm that would soon begin the production of sleeping cars for the railroad (Pennsylvania Railroad), based on patents for seats and convertible couches secured by inventor T.T. Woodruff. By 1863, Carnegies one-eighth interest in the new company, for which he had originally borrowed about $200, was producing annual dividends of more than $5,000.
-- Chapter 3, By the Bootstraps
"There is no labor so cheap as the dearest in the mechanical field."
For key positions, he hired the best and paid top dollar, though he held all who worked for him strictly accountable, demanding no less dedication and effort from others than from himself.
-- Chapter 4, Convergence of the Twain
"The right of working-men to combine and to form trades-unions is no less sacred than the right of the manufacturer to enter into associations and conferences with his fellows."
-- Chapter 7, A Rock and A Hard Place
So said the would-be monopolist to the would-be monopsonist. ;)
"You come to Washington with these grand ideas, but the truth is that government is so massive and so complex that it is almost impossible for any individual to make a huge difference. It's like being the captain of an enormous ocean liner. It is going to keep on going no matter who is at the wheel."
-- Chapter 8, Firm Hand at the Wheel, attributed to a 'modern American president'. who?
In 1888 another competitor, the Allegheny Bessemer Steel Company, had commenced operations five miles or so upriver from Homestead, featuring "direct-rolling", an innovative method of prcessing steel that eliminated one of the the traditional but costly steps of colling and reheating ingots before tehy were pressed into rails and the like. Carnegie, distraught when he got the news that a competitor had found a leg up on costs, came up with one of his more imaginative responses.
Knowing that he could never match the price of steel produced in this way, he sent a letter to every railroad company in the United States, advising them of the new process known to be in use at Allegheny Bessemer and warning that the elimination of the time-honored second heating of ingots wwould result in a lack of "homogeneity" in the rails, even implying that this could lead to rail failure and fatalities. There was not one scintilla of evidence for Carnegie's claim, scientific or otherwise; he had simply plucked the "homogeneity" concept out of thin air, and he couched his warning in language vague enough to preclude a legal response.
But if the implictations were subtle, the effect was profound and immediate. Orders to Allegheny dried up in an eyeblink. Even the investment partners at the firm began to question their plant managers about the validity of their methods. Intermittent labor disputes slowed production even further, and before long the original partners were desperately seeking a fresh infusion of capital in order to maintain operations. Partners in the enterprise fretted that they would never be able to escape the cloud under which Carnegie's absurd charges had placed them.
And then in stepped Frick to the rescue, offering the major stockholders in Allegheny Bessemer $600,000 for a plant that had cost them more than $1 million to build. Frick's initial offer was rejected, but he had expected as much. When he returned with an offer of $1 million, to be paid in the form of bonds issued by Carnegie Brothers (and not to mature for five years), the anxious partners snapped it up.
By the time the bonds matured, operations at the innovative Duquesne mill -- their supposedly inferior practices having been put immediately into place at all Carnegie plants -- had paid for themselves half a dozen times over.
-- Chapter 8, Firm Hand at the Wheel
As more than one of Carnegie's managers would recall, the owner was always more interested in what it cost to produce goods than in revenues or profits. Carnegie would repeat the mantra time and again: profits and prices were cyclical, subject to any number of transient forces of the marketplace. Costs, however, could be strictly controlled, and in Carnegie's view, any savings achieved in the the cost of goods were permanent. Carnegie rarely balked when his managers suggested improvements to the physical plants of his operations, not if the goal was greater efficiency in production.
-- Chapter 8, Firm Hand at the Wheel
"In our experience as manufacturers, we have found that there is more danger of unnecessary increase in clerks than in any other department."
-- Chapter 10, Strike 3
Net profits rose from $7 million in 1897 to an astounding $11.5 million in 1898. In 1899, the figure was $21 million. By 1900, Carnegie Steel would produce nearly 30 percent of the nation's steel and show net earnings of $40 million.
-- Chapter 24, Gathering Storm