#73 Andrew Carnegie and Henry Clay Frick their bitter partnership

In the late 19th century, Andrew Carnegie and Henry Clay Frick's tumultuous partnership embodied the contradictions of capitalism and the Protestant ethic, illustrating America's complex relationship with industrial progress and wealth disparity. Both self-made magnates, Carnegie and Frick's steel enterprise significantly impacted the U.S. economy, akin to the American Revolution's effect on politics a century prior. However, their eventual rift, highlighted by the brutal Homestead Strike and their ruthless cost-cutting measures, revealed the monumental human cost of their achievements. The narrative, as explored in Les Standiford's "Meet You in Hell," delves into the intricacies of their relationship, the ethical struggles of their era, and the enduring legacy of their industrial titan clash, culminating in a bitter legal battle over the value of Carnegie Steel and ending their partnership on a note of greed and betrayal.

• Andrew Carnegie and Henry Clay Frick embody the American ethos of limitless possibility.
• Both men rose from poverty to immense wealth and power.
• Their steel enterprise profoundly impacted the economy, akin to the American Revolution's effect on politics and philosophy.
• The dissolution of Carnegie and Frick's partnership highlights contradictions between capitalism and the protestant ethic.
• Their story is a reminder of the high costs of monumental achievements.
• The narrative illustrates America's belief in progress and self-determination but warns of the potential for tragedy when humans aspire to godlike endeavors.

"Carnegie and Frick represent the american ethos of limitless possibility. Both men were born to poverty and both became wealthy and powerful beyond imagining."

This quote emphasizes the rags-to-riches narrative of Carnegie and Frick, symbolizing the American dream of achieving great success regardless of one's beginnings.

• The two "hallowed pillars" of American thinking are capitalism and the protestant ethic.
• The protestant ethic is defined as the belief that one must achieve success through hard work and thrift, with success being a sign of salvation.
• Carnegie and Frick's relationship and eventual fallout showcase the struggle with these ideals.

"The rupture of their once perfect partnership illuminates the contradictions embodied in those two hallowed pillars of our thinking, capitalism and the protestant ethic."

This quote highlights the tension between the pursuit of wealth (capitalism) and the moral implications of such pursuits (protestant ethic) as demonstrated by Carnegie and Frick's partnership and eventual split.

• The book "Meet You in Hell" by Les Standiford focuses on the relationship between Carnegie and Frick.
• The author aims to provide a fresh perspective by concentrating on the dynamics of their partnership rather than reiterating their individual biographies.
• The Battle for Homestead is a significant event in their relationship, representing a conflict between striking steelworkers and management.

"Instead, I have turned my focus upon the thread of a relationship and have restricted my attention for the most part to matters pertaining thereto."

This quote explains the author's intent to delve into the complexities of Carnegie and Frick's relationship and how their interactions influenced historical events.

• The book's title, "Meet You in Hell," originates from Frick's response to Carnegie's attempt at reconciliation.
• The quote reflects Frick's personality and their contentious relationship.
• The event mentioned is linked to their differing views on America joining the League of Nations.

"Tell him I'll see him in hell, where we are both going."

Frick's blunt refusal to reconcile with Carnegie, as quoted, encapsulates the depth of their estrangement and serves as a poignant title for the book.

• The book begins with the significance of the era surrounding the events of the summer of 1892 in Pittsburgh.
• The author suggests that like the 1890s, the present era will also be viewed as pivotal by future historians.
• The rapid technological and societal changes of the 1890s are paralleled by the changes occurring in the modern era.

"Most citizens of the United States were aware that their world was changing at a rapid pace, technologically and otherwise, though they could not have understood just how pivotal the era in which they lived would be judged by future historians."

This quote draws a parallel between the transformative era of Carnegie and Frick and our current time, suggesting the historical significance of periods of rapid change.

• The American Civil War and the subsequent industrial boom underscored the importance of steel for infrastructure.
• The expansion of the railroad system was closely tied to the steel industry's growth.
• Carnegie's timing in the steel business was impeccable, coinciding with the nation's burgeoning need for steel.

"To build the vast network of tracks and bridges, no supporting industry was more important than iron and steel."

The quote underscores the critical role that steel production played in the development of America's infrastructure, particularly the railroad system, which was essential for the country's expansion and economic growth.

• Carnegie immigrated to America as a penniless Scottish immigrant and quickly adapted to his new environment.
• His work ethic and strategic investments propelled him from a factory worker to a wealthy capitalist.
• Carnegie's success was partly due to his ability to leverage technology and his position within the railroad industry.

"Carnegie's father had been a master weaver... His prospects steadily diminished by the advance of mechanization."

This quote highlights the contrast between Carnegie's father's decline due to technological advancement and Carnegie's own rise, which was facilitated by embracing new technologies and opportunities.

• Carnegie's early investments, such as in the Adams Express company, taught him the power of passive income through dividends.
• His experience with the Keystone Bridge Company and other ventures showed him the potential for wealth multiplication through strategic investment and entrepreneurship.

"Here's the goose that lays the golden egg."

Carnegie's realization about the potential of investment income, as expressed in this quote, was a turning point in his approach to wealth accumulation, leading him to focus on investments over salaried work.

• Carnegie's ambition and success in investments led him to resign from his railroad job to pursue business full-time.
• His decision to focus on iron and later steel was influenced by his understanding of the industry and the opportunities it presented.

"Determined to make a fortune, and certain that he could never do so as a salaried man, he tendered his resignation to the Pennsylvania railroad and turned his energies to iron."

This quote captures Carnegie's pivotal decision to leave stable employment and dedicate himself to the pursuit of wealth through business, setting the stage for his future success in the steel industry.

• Carnegie's business acumen was enhanced by insider knowledge and contacts from his railroad days.
• The absence of insider trading laws at the time allowed Carnegie to benefit significantly from his connections.

"Yet he understood that it was the contacts he made and the information he derived from his association with the railroad that made everything else possible."

The quote reveals how Carnegie's network and insider information were instrumental in his business ventures and success, highlighting the importance of relationships in the business world of that era.

• By age 33, Carnegie had amassed a significant fortune through his business ventures.
• Despite his success, Carnegie experienced an internal conflict between his ambition and the values instilled in him by his upbringing.

"Man must have an idol. The amassing of wealth is one of the worst species of idolatry."

Carnegie's self-reflection, as quoted, reveals his awareness of the moral dilemma posed by his pursuit of wealth, indicating a struggle to reconcile his ambition with his ethical beliefs.

• Carnegie focused on accumulating wealth effectively, moving away from diverse investments to a more targeted approach.
• He believed his financial success would benefit society through philanthropy.
• Critics argued he should have paid his workers more instead of amassing and donating vast wealth.
• Carnegie rethought his early retirement plans, aiming to optimize wealth accumulation.

"Bolstered by the notion that his rise in the business arena would pay dividends for society as a whole."

This quote emphasizes Carnegie's belief that his success in business would have positive societal impacts.

"Put all good eggs in one basket and then watch that basket."

Carnegie's strategy was to concentrate his investments and meticulously oversee them.

• Carnegie saw the potential in steel as a superior alternative to iron for railways and construction.
• He recognized the importance of supplying the industry rather than directly participating in construction.
• The analogy with selling pickaxes during a gold rush highlights the strategy of providing essential tools rather than seeking direct profits from the primary activity.

"If there was a cheaper and more durable substance than iron, it would lead to a revolution in the business."

Carnegie foresaw the transformative impact of steel on industry and infrastructure.

• Henry Bessemer's invention significantly reduced the time and improved the quality of steel production.
• Carnegie's partnership with Bessemer was pivotal in his steel business success.
• The discovery of pure iron ore sources in Britain was a key factor in Carnegie's decision to focus on steel production.

"A quantity of steel that might formerly have taken as long as two weeks to produce, could now be made in 15 minutes."

This quote underscores the efficiency gains from Bessemer's process, which facilitated Carnegie's steel production.

• The economic downturn allowed Carnegie to expand and build his steel mill at a lower cost.
• Carnegie learned that economic crises present opportunities for those willing to take risks.
• His frugality and cost-saving measures were crucial during this period.

"The best time to expand was when no one else dared to take the risks."

This quote reflects Carnegie's counterintuitive strategy to invest and expand during economic downturns.

• Carnegie prioritized cost control over profit monitoring.
• His focus on cost accounting and continuous improvement was influenced by evolutionary theory.
• Reinventing technology and reducing costs were key to his business model.

"Cut the prices, scoop the market, watch the costs, and the profits will take care of themselves."

Carnegie's philosophy was that by focusing on cost reduction, profits would naturally follow.

• By 1880, Carnegie's steel companies were highly profitable.
• He practiced vertical integration by controlling the supply chain, particularly coke production.
• Carnegie's approach to business was dynamic, seeking constant cost reductions and efficiency improvements.

"Carnegie's success can be attributed to another lesson that he had learned on the way up, the value of meticulous cost accounting."

This quote highlights the importance of detailed cost management in Carnegie's business success.

• Frick's success in the coke industry paralleled Carnegie's in steel.
• He capitalized on the economic downturn to acquire competitors' assets.
• Frick's management skills and attention to detail were highly regarded.

"By the end of 1873, Frick and company owned 200 coke ovens, selling everything it could produce to the rapidly expanding Bessemer steelmakers in the region."

The quote illustrates Frick's aggressive expansion and the demand for his product from steelmakers like Carnegie.

• Frick's business strategies resonated with Carnegie, leading to their partnership.
• Both men shared a belief in the "survival of the fittest" philosophy.
• Frick sold a significant portion of his coke business to Carnegie, which was a strategic move to reduce debt and focus on his goals.

"Frick's company not only owned the best coal lands in the area and produced the best coke from it, but also had in Mr. Frick himself, a man with a positive genius for its management."

This quote captures Frick's expertise and the value he brought to the partnership with Carnegie.

• Understanding of market potential is crucial for strategic business decisions.
• Aligning with industry leaders can provide leverage and opportunities for growth.
• Equity ownership is a key factor in business partnerships and decision-making.

"He thought the market, the profit on steel for a well run steel company was going to be much higher than the best run coke company winds up being correct." This quote emphasizes the foresight in recognizing the potential profitability of the steel industry over the coke industry, which informed strategic business alignment.

• The advice to concentrate rather than scatter efforts is pivotal for business success.
• Mentorship can play a role in guiding business decisions and focusing on core competencies.

"I believe you'll make more millions by concentrating than by scattering." The quote illustrates the advice given by Carnegie to Frick, promoting the idea of focusing efforts on one major venture for greater success.

• Death or departure of key personnel can lead to significant changes in company leadership.
• Adaptability and seizing opportunities are essential in times of transition.
• Personality traits and leadership styles can significantly impact company dynamics.

"While the death of his brother, who was the principal firm manager, had been a severe blow, Carnegie saw advantages in promoting Frick to fill the void at Carnegie Brothers." This quote highlights how unexpected events can lead to strategic leadership changes, with Carnegie seeing Frick's potential to fill the leadership gap left by his brother.

• Strong personalities can both benefit and challenge business partnerships.
• Conflicts often arise from differing management styles and visions for the company.
• Labor relations and handling of strikes can be a major point of contention between partners.

"Carnegie was accustomed to obedience from his subordinates. But if he expected unquestioned subservience from Henry Frick, he had gravely miscalculated." The quote reveals the tension between Carnegie's expectations for obedience and Frick's independent and assertive personality, foreshadowing conflict in their partnership.

• A focus on cost control is a common trait among successful businesses.
• Technological advancements are crucial for reducing costs and maintaining competitive advantage.
• Understanding and managing every aspect of costs is vital for business operations.

"Profits and prices were cyclical, subject to any number of transient forces of the marketplace. Cost, however, could be strictly controlled." Carnegie's quote underscores his belief in the importance of cost control over focusing on profits or revenues, as costs are within the company's control.

• Ambitious individuals often seek to consolidate power and control within a company.
• Demonstrated success can lead to increased responsibility and influence.
• The balance of power in a partnership can shift based on individual contributions and company performance.

"Frick had managed to beat the odds... Rising from the apex of one industry to become the chief operating officer of the largest and most powerful steel making company on earth, all in the space of a decade." The quote illustrates Frick's rapid rise to power within Carnegie Steel Company, highlighting his ambition and managerial talent.

• Tension between labor and management can escalate into violence and strikes.
• Labor disputes often reflect broader social and economic tensions.
• The handling of labor disputes can have long-term impacts on both the company and labor movements.

"It seems inexplicable that Frick and Carnegie would not have surrendered the point... But again, they're approaching it from how they had their own worldview." The quote reflects on the inexplicable decision by Frick and Carnegie not to concede to labor demands, indicating a rigid adherence to their own management philosophies.

• Resilience in the face of adversity is a defining trait of some business leaders.
• Personal determination can influence company policy and direction.
• The consequences of relentless personalities can be both positive and negative for businesses.

"This incident will not change the attitude of Carnegie Steel company towards the amalgamated association... the company will pursue the same policy and it will win." Frick's statement after the assassination attempt demonstrates his unyielding determination to maintain company policy, regardless of personal harm.

• Internal rifts and external pressures can lead to the dissolution of business partnerships.
• Public perception and media coverage can influence the dynamics between business partners.
• The end of a partnership can be as significant as the partnership itself in shaping a company's history.

"If the homestead tobacco set back efforts to organize american industrial labor for some 40 years, as most agree, it also opened up a rift between Andrew Carnegie and Henry Frick." This quote connects the impact of the Homestead Strike on labor organization with the beginning of the end for the partnership between Carnegie and Frick, showing how external events can affect internal relationships.

• Frick advises perseverance and integrity in the face of adversity.
• He emphasizes the importance of not compromising one's position despite challenges.

"You must not allow anything to discourage you in the least, even if things do not go well for some time to come, or even if they should get much worse, just keep at it, doing the best you can. Do not allow the fact that you are not getting along as well as you would like to lead you to put yourself in a compromising position."

This quote highlights the value of resilience and maintaining one's principles, regardless of temporary setbacks or failures.

• Carnegie's actions in meeting with W. J. Rainey, a former competitor and considered a thief by Frick, strained their relationship.
• Frick saw the potential acquisition as a threat to his role in the company and tendered his resignation.

"Carnegie had been interested in acquiring the Coke holdings of W. J. Rainey, who was a former competitor of Frick's."

The quote outlines Carnegie's business interests that conflicted with Frick's perspectives, leading to tension and Frick's resignation.

• Frick's resignation was a reaction to Carnegie's betrayal and an attempt to maintain his dignity and business ethics.
• Frick's memo to Carnegie is a direct confrontation of his business methods and personal conduct.

"Mr. Carnegie, it is high time you should stop this nonsensical talk about me being unwell, overstrained, etc. And treat this matter between us in a rational, business-like way."

Frick's quote is a demand for respect and a call for Carnegie to handle their disputes professionally rather than dismissively.

• The ironclad agreement from 1887 created a major obstacle for Frick's desire to sell his holdings.
• The agreement undervalued the company, leading to a conflict over the true worth of the shares.

"According to its provisions, which were meant to protect the other partners in the event of Carnegie's untimely death, a partner who wished to retire could do so, but his shares would be redeemed at book value and the payment made in installments."

This quote describes the restrictive terms of the agreement that significantly undervalued the company and Frick's shares.

• Frick's hiring of the attorney responsible for the ironclad agreement was a strategic move to contest the undervaluation of his shares.
• The potential public disclosure of Carnegie's profits was a pressure point exploited by Frick.

"Frick filed suit, charging, among other things, that Carnegie had unjustly attempted to force him out of the company and acquire his holdings at a sum far below their value."

The quote illustrates Frick's aggressive legal strategy to ensure fair compensation for his shares and to expose Carnegie's business practices.

• The final compromise valued Carnegie Steel at $250 million and resulted in the merger of the two companies.
• The narrative reflects on the emotional nature of the dispute and the need for reason and fairness in business dealings.

"For once, reason prevailed between these two men and a compromise was laid out."

This quote signifies the eventual resolution achieved through negotiation, despite the prolonged emotional conflict between Carnegie and Frick.

• The speaker emphasizes the importance of treating employees fairly and sharing profits.
• The narrative criticizes the extreme cost-cutting measures that neglected worker welfare.

"If people are helping you make money, you should reward them."

The quote underlines the ethical responsibility of business owners to recognize and compensate the contributions of their employees adequately.