Autobiography of Andrew Carnegie

"No," he said.

My rejoinder was:

"You will have to excuse me from entering upon that subject; I said I never would discuss it until they voted by a two-thirds majority to start the mills. Gentlemen, you have never seen New York. Let me take you out and show you Fifth Avenue and the Park, and we shall come back here to lunch at half-past one."

This we did, talking about everything except the one thing that they wished to talk about. We had a good time, and I know they enjoyed their lunch. There is one great difference between the American working-man and the foreigner. The American is a man; he sits down at lunch with people as if he were (as he generally is) a gentleman born. It is splendid.

They returned to Pittsburgh, not another word having been said about the works. But the men soon voted (there were very few votes against starting) and I went again to Pittsburgh. I laid before the committee the scale under which they were to work. It was a sliding scale based on the price of the product. Such a scale really makes capital and labor partners, sharing prosperous and disastrous times together. Of course it has a minimum, so that the men are always sure of living wages. As the men had seen these scales, it was unnecessary to go over them. The chairman said:

"Mr. Carnegie, we will agree to everything. And now," he said hesitatingly, "we have one favor to ask of you, and we hope you will not refuse it."

"Well, gentlemen, if it be reasonable I shall surely grant it."

"Well, it is this: That you permit the officers of the union to sign these papers for the men."

"Why, certainly, gentlemen! With the greatest pleasure! And then I have a small favor to ask of you, which I hope you will not refuse, as I have granted yours. Just to please me, after the officers have signed, let every workman sign also for himself. You see, Mr. Bennett, this scale lasts for three years, and some man, or body of men, might dispute whether your president of the union had authority to bind them for so long, but if we have his signature also, there cannot be any misunderstanding."

There was a pause; then one man at his side whispered to Mr. Bennett (but I heard him perfectly):

"By golly, the jig's up!"

So it was, but it was not by direct attack, but by a flank movement. Had I not allowed the union officers to sign, they would have had a grievance and an excuse for war. As it was, having allowed them to do so, how could they refuse so simple a request as mine, that each free and independent American citizen should also sign for himself. My recollection is that as a matter of fact the officers of the union never signed, but they may have done so. Why should they, if every man's signature was required? Besides this, the workmen, knowing that the union could do nothing for them when the scale was adopted, neglected to pay dues and the union was deserted. We never heard of it again. [That was in 1889, now twenty-seven years ago. The scale has never been changed. The men would not change it if they could; it works for their benefit, as I told them it would.]

Of all my services rendered to labor the introduction of the sliding scale is chief. It is the solution of the capital and labor problem, because it really makes them partners—alike in prosperity and adversity. There was a yearly scale in operation in the Pittsburgh district in the early years, but it is not a good plan because men and employers at once begin preparing for a struggle which is almost certain to come. It is far better for both employers and employed to set no date for an agreed-upon scale to end. It should be subject to six months' or a year's notice on either side, and in that way might and probably would run on for years.

To show upon what trifles a contest between capital and labor may turn, let me tell of two instances which were amicably settled by mere incidents of seemingly little consequence. Once when I went out to meet a men's committee, which had in our opinion made unfair demands, I was informed that they were influenced by a man who secretly owned a drinking saloon, although working in the mills. He was a great bully. The sober, quiet workmen were afraid of him, and the drinking men were his debtors. He was the real instigator of the movement.

We met in the usual friendly fashion. I was glad to see the men, many of whom I had long known and could call by name. When we sat down at the table the leader's seat was at one end and mine at the other. We therefore faced each other. After I had laid our proposition before the meeting, I saw the leader pick up his hat from the floor and slowly put it on his head, intimating that he was about to depart. Here was my chance.

"Sir, you are in the presence of gentlemen! Please be so good as to take your hat off or leave the room!"

My eyes were kept full upon him. There was a silence that could be felt. The great bully hesitated, but I knew whatever he did, he was beaten. If he left it was because he had treated the meeting discourteously by keeping his hat on, he was no gentleman; if he remained and took off his hat, he had been crushed by the rebuke. I didn't care which course he took. He had only two and either of them was fatal. He had delivered himself into my hands. He very slowly took off the hat and put it on the floor. Not a word did he speak thereafter in that conference. I was told afterward that he had to leave the place. The men rejoiced in the episode and a settlement was harmoniously effected.

When the three years' scale was proposed to the men, a committee of sixteen was chosen by them to confer with us. Little progress was made at first, and I announced my engagements compelled me to return the next day to New York. Inquiry was made as to whether we would meet a committee of thirty-two, as the men wished others added to the committee—a sure sign of division in their ranks. Of course we agreed. The committee came from the works to meet me at the office in Pittsburgh. The proceedings were opened by one of our best men, Billy Edwards (I remember him well; he rose to high position afterwards), who thought that the total offered was fair, but that the scale was not equable. Some departments were all right, others were not fairly dealt with. Most of the men were naturally of this opinion, but when they came to indicate the underpaid, there was a difference, as was to be expected. No two men in the different departments could agree. Billy began:

"Mr. Carnegie, we agree that the total sum per ton to be paid is fair, but we think it is not properly distributed among us. Now, Mr. Carnegie, you take my job—"

"Order, order!" I cried. "None of that, Billy. Mr. Carnegie 'takes no man's job.' Taking another's job is an unpardonable offense among high-classed workmen."

There was loud laughter, followed by applause, and then more laughter. I laughed with them. We had scored on Billy. Of course the dispute was soon settled. It is not solely, often it is not chiefly, a matter of dollars with workmen. Appreciation, kind treatment, a fair deal—these are often the potent forces with the American workmen.

Employers can do so many desirable things for their men at little cost. At one meeting when I asked what we could do for them, I remember this same Billy Edwards rose and said that most of the men had to run in debt to the storekeepers because they were paid monthly. Well I remember his words:

"I have a good woman for wife who manages well. We go into Pittsburgh every fourth Saturday afternoon and buy our supplies wholesale for the next month and save one third. Not many of your men can do this. Shopkeepers here charge so much. And another thing, they charge very high for coal. If you paid your men every two weeks, instead of monthly, it would be as good for the careful men as a raise in wages of ten per cent or more."

"Mr. Edwards, that shall be done," I replied.

It involved increased labor and a few more clerks, but that was a small matter. The remark about high prices charged set me to thinking why the men could not open a coöperative store. This was also arranged—the firm agreeing to pay the rent of the building, but insisting that the men themselves take the stock and manage it. Out of that came the Braddock's Coöperative Society, a valuable institution for many reasons, not the least of them that it taught the men that business had its difficulties.

The coal trouble was cured effectively by our agreeing that the company sell all its men coal at the net cost price to us (about half of what had been charged by coal dealers, so I was told) and arranging to deliver it at the men's houses—the buyer paying only actual cost of cartage.

There was another matter. We found that the men's savings caused them anxiety, for little faith have the prudent, saving men in banks and, unfortunately, our Government at that time did not follow the British in having post-office deposit banks. We offered to take the actual savings of each workman, up to two thousand dollars, and pay six per cent interest upon them, to encourage thrift. Their money was kept separate from the business, in a trust fund, and lent to such as wished to build homes for themselves. I consider this one of the best things that can be done for the saving workman.

It was such concessions as these that proved the most profitable investments ever made by the company, even from an economical standpoint. It pays to go beyond the letter of the bond with your men. Two of my partners, as Mr. Phipps has put it, "knew my extreme disposition to always grant the demands of labor, however unreasonable," but looking back upon my failing in this respect, I wish it had been greater—much greater. No expenditure returned such dividends as the friendship of our workmen.

We soon had a body of workmen, I truly believe, wholly unequaled—the best workmen and the best men ever drawn together. Quarrels and strikes became things of the past. Had the Homestead men been our own old men, instead of men we had to pick up, it is scarcely possible that the trouble there in 1892 could have arisen. The scale at the steel-rail mills, introduced in 1889, has been running up to the present time (1914), and I think there never has been a labor grievance at the works since. The men, as I have already stated, dissolved their old union because there was no use paying dues to a union when the men themselves had a three years' contract. Although their labor union is dissolved another and a better one has taken its place—a cordial union between the employers and their men, the best union of all for both parties.

It is for the interest of the employer that his men shall make good earnings and have steady work. The sliding scale enables the company to meet the market; and sometimes to take orders and keep the works running, which is the main thing for the working-men. High wages are well enough, but they are not to be compared with steady employment. The Edgar Thomson Mills are, in my opinion, the ideal works in respect to the relations of capital and labor. I am told the men in our day, and even to this day (1914) prefer two to three turns, but three turns are sure to come. Labor's hours are to be shortened as we progress. Eight hours will be the rule—eight for work, eight for sleep, and eight for rest and recreation.

There have been many incidents in my business life proving that labor troubles are not solely founded upon wages. I believe the best preventive of quarrels to be recognition of, and sincere interest in, the men, satisfying them that you really care for them and that you rejoice in their success. This I can sincerely say—that I always enjoyed my conferences with our workmen, which were not always in regard to wages, and that the better I knew the men the more I liked them. They have usually two virtues to the employer's one, and they are certainly more generous to each other.

Labor is usually helpless against capital. The employer, perhaps, decides to shut up the shops; he ceases to make profits for a short time. There is no change in his habits, food, clothing, pleasures—no agonizing fear of want. Contrast this with his workman whose lessening means of subsistence torment him. He has few comforts, scarcely the necessities for his wife and children in health, and for the sick little ones no proper treatment. It is not capital we need to guard, but helpless labor. If I returned to business to-morrow, fear of labor troubles would not enter my mind, but tenderness for poor and sometimes misguided though well-meaning laborers would fill my heart and soften it; and thereby soften theirs.

Upon my return to Pittsburgh in 1892, after the Homestead trouble, I went to the works and met many of the old men who had not been concerned in the riot. They expressed the opinion that if I had been at home the strike would never have happened. I told them that the company had offered generous terms and beyond its offer I should not have gone; that before their cable reached me in Scotland, the Governor of the State had appeared on the scene with troops and wished the law vindicated; that the question had then passed out of my partners' hands. I added:

"You were badly advised. My partners' offer should have been accepted. It was very generous. I don't know that I would have offered so much."

To this one of the rollers said to me:

"Oh, Mr. Carnegie, it wasn't a question of dollars. The boys would have let you kick 'em, but they wouldn't let that other man stroke their hair."

So much does sentiment count for in the practical affairs of life, even with the laboring classes. This is not generally believed by those who do not know them, but I am certain that disputes about wages do not account for one half the disagreements between capital and labor. There is lack of due appreciation and of kind treatment of employees upon the part of the employers.

Suits had been entered against many of the strikers, but upon my return these were promptly dismissed. All the old men who remained, and had not been guilty of violence, were taken back. I had cabled from Scotland urging that Mr. Schwab be sent back to Homestead. He had been only recently promoted to the Edgar Thomson Works. He went back, and "Charlie," as he was affectionately called, soon restored order, peace, and harmony. Had he remained at the Homestead Works, in all probability no serious trouble would have arisen. "Charlie" liked his workmen and they liked him; but there still remained at Homestead an unsatisfactory element in the men who had previously been discarded from our various works for good reasons and had found employment at the new works before we purchased them.

CHAPTER XIX

THE "GOSPEL OF WEALTH"

AFTER my book, "The Gospel of Wealth,"[44 - The Gospel of Wealth (Century Company, New York, 1900) contains various magazine articles written between 1886 and 1899 and published in the Youth's Companion, the Century Magazine, the North American Review, the Forum, the Contemporary Review, the Fortnightly Review, the Nineteenth Century, and the Scottish Leader. Gladstone asked that the article in the North American Review be printed in England. It was published in the Pall Mall Budget and christened the "Gospel of Wealth." Gladstone, Cardinal Manning, Rev. Hugh Price, and Rev. Dr. Hermann Adler answered it, and Mr. Carnegie replied to them.] was published, it was inevitable that I should live up to its teachings by ceasing to struggle for more wealth. I resolved to stop accumulating and begin the infinitely more serious and difficult task of wise distribution. Our profits had reached forty millions of dollars per year and the prospect of increased earnings before us was amazing. Our successors, the United States Steel Corporation, soon after the purchase, netted sixty millions in one year. Had our company continued in business and adhered to our plans of extension, we figured that seventy millions in that year might have been earned.

Steel had ascended the throne and was driving away all inferior material. It was clearly seen that there was a great future ahead; but so far as I was concerned I knew the task of distribution before me would tax me in my old age to the utmost. As usual, Shakespeare had placed his talismanic touch upon the thought and framed the sentence—

"So distribution should undo excess,
And each man have enough."

At this juncture—that is March, 1901—Mr. Schwab told me Mr. Morgan had said to him he should really like to know if I wished to retire from business; if so he thought he could arrange it. He also said he had consulted our partners and that they were disposed to sell, being attracted by the terms Mr. Morgan had offered. I told Mr. Schwab that if my partners were desirous to sell I would concur, and we finally sold.

There had been so much deception by speculators buying old iron and steel mills and foisting them upon innocent purchasers at inflated values—hundred-dollar shares in some cases selling for a trifle—that I declined to take anything for the common stock. Had I done so, it would have given me just about one hundred millions more of five per cent bonds, which Mr. Morgan said afterwards I could have obtained. Such was the prosperity and such the money value of our steel business. Events proved I should have been quite justified in asking the additional sum named, for the common stock has paid five per cent continuously since.[45 - The Carnegie Steel Company was bought by Mr. Morgan at Mr. Carnegie's own price. There was some talk at the time of his holding out for a higher price than he received, but testifying before a committee of the House of Representatives in January, 1912, Mr. Carnegie said: "I considered what was fair: and that is the option Morgan got. Schwab went down and arranged it. I never saw Morgan on the subject or any man connected with him. Never a word passed between him and me. I gave my memorandum and Morgan saw it was eminently fair. I have been told many times since by insiders that I should have asked $100,000,000 more and could have got it easily. Once for all, I want to put a stop to all this talk about Mr. Carnegie 'forcing high prices for anything.'"] But I had enough, as has been proved, to keep me busier than ever before, trying to distribute it.

My first distribution was to the men in the mills. The following letters and papers will explain the gift:

    New York, N.Y., March 12, 1901

I make this first use of surplus wealth, four millions of first mortgage 5% Bonds, upon retiring from business, as an acknowledgment of the deep debt which I owe to the workmen who have contributed so greatly to my success. It is designed to relieve those who may suffer from accidents, and provide small pensions for those needing help in old age.

In addition I give one million dollars of such bonds, the proceeds thereof to be used to maintain the libraries and halls I have built for our workmen.

In return, the Homestead workmen presented the following address: