STEELINDUSTRY

The Steel Industry

The Gospel of Wealth, or sometimes the Gospel of Success, was the name of a movement by many successful businessmen that their large wealth was a social benefit for all. The Gospel of Wealth was a softer and more easy version of Social Darwinism. The activist linked wealth with responsibility, arguing that those with great material possessions had equally great obligations to society. No formal organization existed to move this viewpoint, but the man named Andrew Carnegie represents the greatness of the industry.

Andrew Carnegie arrived to the USA as a penniless immigrant from Scotland in his teens and worked as a clerk. Through hard work, thrift, and intelligence Andrew Carnegie ran a very effecient network of steel mills (economies of scale) and outproduced his competition at cheaper prices. Andrew Carnegie provided thousands of jobs and careers for Americans, and helped out the nation with his philanthropy with libraries, museums, and endowments. He was not a robber baron by any means of the word.


 * [[image:http://www.ohwy.com/history%20pictures/andrewcarnegie.gif align="left" caption="Andrew Carnegie"]]A ndrew Carnegie (1835-1919), one of the great financial giants of his era, published an essay titled The Gospel of Wealth in 1889, in which he argued that the gaining of wealth was beneficial to society and the government shouldn't try to impede it. Carnegie believed the rich were trustees of their money, holding it until proper public uses could be discovered. Unlike many of his contemporaries, Carnegie practiced what he preached and spent his last years giving away his vast fortune. One of his many charitable ventures was the funding of more than 2,800 public libraries. Carnegie wrote, “The man who dies rich dies disgraced.” Andrew Carnegie made his fortune in steel, turning the industrial world on its ear in the process. He was possessed by technology and efficiency in a way no businessman before him had ever been. His relentless efforts to drive down costs and undersell the competition made his steel mills the most modern in the world, the models for the entire industry**.** ||

The Homestead Strike of 1892

The setting The 1800’s were a time of many labor problems and an uncertain economy. Many labor problems ended in violence as employees tried to make their voices heard by both their employers and the general public. The city of Homestead, on the Monongahela River just east of Pittsburgh, wanted to remain unionized with favorable working terms and conditions. Even though Homestead depended on the steel industry for its livelihood, the employees were willing to fight to the death for their union. The Amalgamated Association of Iron and Steel Workers had about 750 members out of the 3,800 steel mill workers, but when Frick insisted that he negotiate independent contracts with the employees, about 3,000 of the steel members voted to strike. The large number of employees kept strikebreakers from protecting the steel mill.

What happened? The steel workers’ contract tied to a declining wage in 1892. At the same time, Andrew Carnegie was on vacation in Loch Rannoch, Scotland, where he kept in contact only with Henry Clay Frick. Frick first offered the employees a pay cut and later said that he would not negotiate with the union. Instead he would negotiate with employees. The employees refused to negotiate without the union and Frick responded by surrounding the steel mill property with a solid board fence with rifle ports with barbwire. The steel mill compound was called "Fort Frick". Frick began to shutdown operations on June 28, 1892. Although deputy sheriffs were sworn in to guard the property, they were ordered out of town by the workers. The employees felt that they had a right to work and started guarding the steel mill. Frick then called the Pinkerton’s National Detective Agency of New York and made 300 strikebreakers protect the company property and equipment. The workers were told by employees stationed at the river and quickly rushed to prevent the Pinkertons from coming ashore. The workers exchanged gunfire with the Pinkertons, rolled freight train cars on fire at the barges of Pinkertons, tossed dynamite, and pumped oil onto the Monongahela River. For about 14 hours, the workers tried to set fire to the river. The death toll rose as the fight went on, and the Pinkertons eventually gave up. The Pinkertons were forced to run through a gauntlet formed by the workers and their families. Three Pinkertons and seven employees were killed during the fight. Six days later 8,500 members of the Pennsylvania National Guard were ordered into Homestead under the orders of Governor Robert E. Patterson. A very small percentage of employees returned to work after the union called off the strike, but by this time most of the employees and all of the strike leaders had been black-listed.

Why The Violence? During the 1800’s workers had limited mobility and limited employment opportunities. Because employees could not migrate to jobs with better terms of employment, they were forced to make the most of the jobs that they had -- even if this meant fighting to the death over the terms and conditions of employment. The employees took pride in their work and even though they did not own the company, they felt that they had a right to work there. When Frick refused to negotiate with the union and closed down the mill the employees were willing to fight to the death for this right.

What were the outcomes? After the Homestead strike, Andrew Carnegie was viewed as being responsible and he was never able to recover from the public hating him. Carnegie, who publicly expressed his pro-labor thoery, was well aware of Frick’s anti-union theory. However, Carnegie left Frick in charge of the contract negotiations and remained off limits to the employees and media during negotiations. Carnegie’s support of Frick began in the spring of 1892 when Carnegie ordered maximum production of armor plate before the union’s contract expiration date in June. Carnegie further told Frick to close the steel mill until the employees gave in to management’s demands during contract negotiations. While in England, Carnegie instructed Frick to do anything necessary to break the strike. In a letter Carnegie also wrote that this was Frick’s chance to change things for management’s benefit because too many workers were required under the union’s rules. Because the violence of the Homestead Strike was viewed as management's fault, the view of unions in the United States improved. The public thought the employees had reasonable requests (the employees were willing to give into all of Frick’s demands, except for eliminating the union) and the employees were peacefully demonstrating until strikebreakers entered the picture.

John Pierpont (JP) Morgan was born on April 17, 1837 in Hartford, Connecticut to parents Juniet Spencer Morgan and Juliet (Pierpont) Morgan. His father was a partner of the firm George Peabody & Co. so by no means was JP Morgan born into a poor family. After he finished school at the English school in Boston, he went to the University of Gottingen in Germany. When he returned to the US in 1857 he got a job working for the private banking house Duncan, Sherman and Company. In 1860 he was appointed as the American agent and attorney for George Peabody & Company in which his father was a business partner. This later became J.S. Morgan & Co and when his father passed away in 1890 he left it to JP Morgan giving him important European connections and enabling him to run a large foreign reserve business. It was after the Civil War that he started buying distressed businesses and especially railroad companies. Some of these railroads include the West Shore, Philadelphia and Reading, Richmond Terminal, the Erie and the New England railroads. His process of buying and consolidation of railroads came to be known as "Morganization". The biggest deal he was ever involved in was the forming of the US Steel Corporation, the first billion-dollar corporation. He had bought some mills from Andrew Carnegie and together with some other steel assets formed US Steel - worth approximately $1.2 billion. He was also involved with several other companies and sat on quite a few boards. A few of the better known companies include Western Union Telegraph Company and General Electric.