|Chronicles of America:The Age of Big Business|
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It was the boast of a Roman Emperor that he had found the Eternal City brick and left it marble. Similarly the present generation of Americans inherited a country which was wood and have transformed it into steel. That which chiefly distinguishes the physical America of today from that of forty years ago is the extensive use of this metal. Our fathers used steel very little in railway transportation; rails and locomotives were usually made of iron, and wood was the prevailing material for railroad bridges. Steel cars, both for passengers and for freight, are now everywhere taking the place of the more flimsy substance. We travel today in steel subways, transact our business in steel buildings, and live in apartments and private houses which are made largely of steel. The steel automobile has long since supplanted the wooden carriage; the steel ship has displaced the iron and wooden vessel. The American farmer now encloses his lands with steel wire, the Southern planter binds his cotton with steel ties, and modern America could never gather her abundant harvests without her mighty agricultural implements, all of which are made of steel. Thus it is steel that shelters us, that transports us, that feeds us, and that even clothes us.
This substance is such a commonplace element in our lives that we take it for granted, like air and water and the soil itself; yet the generation that fought the Civil War knew practically nothing of steel. They were familiar with this metal only as a curiosity or as a material used for the finer kinds of cutlery. How many Americans realize that steel was used even less in 1865 than aluminum is used today? Nearly all the men who have made the American Steel Age--such as Carnegie, Phipps, Frick, and Schwab- -are still living and some of them are even now extremely active. Thirty-five years ago steel manufacture was regarded, even in this country, as an almost exclusively British industry. In 1870 the American steel maker was the parvenu of the trade. American railroads purchased their first steel rails in England, and the early American steel makers went to Sheffield for their expert workmen. Yet, in little more than ten years, American mills were selling agricultural machinery in that same English town, American rails were displacing the English product in all parts of the world, American locomotives were drawing English trains on English railways, and American steel bridges were spanning the Ganges and the Nile. Indeed, the United States soon surpassed England. In the year before the World War the United Kingdom produced 7,500,000 tons of steel a year, while the United States produced 32,000,000 tons. Since the outbreak of the Great War, the United States has probably made more steel than all the rest of the world put together. "The nation that makes the cheapest steel," says Mr. Carnegie, "has the other nations at its feet." When some future Buckle analyzes the fundamental facts in the World War, he may possibly find that steel precipitated it and that steel determined its outcome.
Three circumstances contributed to the rise of this greatest of American industries: a new process for cheaply converting molten pig iron into steel, the discovery of enormous deposits of ore in several sections of the United States, and the entrance into the business of a hardy and adventurous group of manufacturers and business men. Our steel industry is thus another triumph of American inventive skill, made possible by the richness of our mineral resources and the racial energy of our people. An elementary scientific discovery introduced the great steel age. Steel, of course, is merely iron which has been refined--freed from certain impurities, such as carbon, sulphur, and phosphorus. We refine our iron and turn it into steel precisely as we refine our sugar and petroleum. From the days of Tubal Cain the iron worker had known that heat would accomplish this purification; but heat, up to almost 1865, was an exceedingly expensive commodity. For ages iron workers had obtained the finer metal by applying this heat in the form of charcoal, never once realizing that unlimited quantities of another fuel existed on every hand. The man who first suggested that so commonplace a substance as air, blown upon molten pig iron, would produce the intensest heat and destroy its impurities, made possible our steel railroads, our steel ships, and our steel cities. When William Kelly, an owner of iron works near Eddyville, Kentucky, first proposed this method in 1847, he met with the ridicule which usually greets the pioneer inventor. When Henry Bessemer, several years afterward, read a paper before the British Association for the Advancement of Science, in which he advocated the same principle, he was roared down as "a crazy Frenchman," and the savants were so humiliated by the suggestion that they voted to make no record of his "silly paper" in their official minutes. Yet these two men, the American Kelly and the Englishman Bessemer, were the creators of modern steel. The records of the American Patent Office clearly show that Kelly made "Bessemer" steel many years before Bessemer. In 1870 the American Government refused to extend Bessemer's patent in this country on the ground that William Kelly had a prior claim; in spite of this, Bessemer was undoubtedly the man who developed the mechanical details and gave the process a universal standing.
Though the Bessemer process made possible the production of steel by tons instead of by pounds, it would never in itself have given the nation its present preeminence in the steel industry. Iron had been mined in the United States for two centuries on a small scale, the main deposits being located in the Lake Champlain region of New York and in western Pennsylvania. But these, and a hundred other places located along the Atlantic coast, could not have produced ore in quantities sufficient to satisfy the yawning jaws of the Bessemer converters. As this new method poured out the liquid in thousands of tons, and as the commercial demand extended in a dozen different directions, the cry went up from the furnace's for more ore. And again Nature, which has favored America in so many directions, came to her assistance. Manufacturers in the steel regions began to recall strange stories which had been floating down for many years from the wilderness surrounding Lake Superior. The recollection of a famous voyage made in this region by Philo M. Everett, as far back as 1845, now laid siege to the imagination of the new generation of ironmasters. For years the Indians had told Everett of the "mountains of iron" that lay on the Minnesota shore of Lake Superior and had described their wonders in words that finally impelled this hardy adventurer to make a voyage of exploration. For six weeks, in company with two Indian guides, Everett had navigated a small boat along the shores of the Lake, covering a distance that now takes only a few hours. The Indians had long regarded this silent, red iron region with a superstitious reverence, and now, as the little party approached, they refused to complete the journey. "Iron Mountain!" they said, pointing northward along the trail--"Indian not go near; white man go!" The sight which presently met Everett's eyes repaid him well for his solitary tramp in the forest. He found himself face to face with a "mountain a hundred and fifty feet high, of solid ore, which looked as bright as a bar of iron just broken." Other explorations subsequently laid open the whole of the Minnesota fields, including the Mesaba, which developed into the world's greatest iron range. America has other regions rich in ore, particularly in Alabama, located alongside the coal and limestone so necessary in steel production; yet it has drawn two-thirds of its whole supply from these Lake Superior fields. Not only the quantity, which is apparently limitless, but the quality explains America's leadership in steel making.
Mining in Minnesota has a character which is not duplicated elsewhere. When we think of an iron mine, we naturally picture subterranean caverns and galleries, and strange, gnome-like creatures prowling about with pick and shovel and drill. But mining in this section is a much simpler proceeding. The precious mineral does not lie concealed deep within the earth; it lies practically upon the surface. Removing it is not a question of blasting with dynamite; it is merely a matter of lifting it from the surface of the earth with a huge steam shovel. "Miners" in Minnesota have none of the conventional aspects of their trade. They operate precisely as did those who dug the Panama Canal. The railroad cars run closely to the gigantic red pit. A huge steam shovel opens its jaws, descends into an open amphitheater, licks up five tons at each mouthful, and, swinging sideways over the open cars, neatly deposits its booty. It is not surprising that ore can be produced at lower cost in the United States than even in those countries where the most wretched wages are paid. Evidently this one iron field, to say nothing of others already worked, gives a permanence to our steel industry.
Not only did America have the material resources; what is even more important, she had also the men. American industrial history presents few groups more brilliant, more resourceful, and more picturesque than that which, in the early seventies, started to turn these Minnesota ore fields into steel--and into gold. These men had all the dash, all the venturesomeness, all the speculative and even the gambling instinct, needed for one of the greatest industrial adventures in our annals. All had sprung from the simplest and humblest origins. They had served their business apprenticeships as grocery clerks, errand boys, telegraph messengers, and newspaper gamins. For the most part they had spent their boyhood together, had played with each other as children, had attended the same Sunday schools, had sung in the same church choirs, and, as young men, had quarreled with each other over their sweethearts. The Pittsburgh group comprised about forty men, most of whom retired as millionaires, though their names for the most part signify little to the present-day American. Kloman, Coleman, McCandless, Shinn, Stewart, Jones, Vandervoort--are all important men in the history of American steel. Thomas A. Scott and J. Edgar Thompson, men associated chiefly with the creation of the Pennsylvania Railroad, also made their contributions. But three or four men towered so preeminently above their associates that today when we think of the human agencies that constructed this mighty edifice, the names that insistently come to mind are those of Carnegie, Phipps, Frick, and Schwab.
Books have been written to discredit Carnegie's work and to picture him as the man who has stolen success from the labor of greater men. Yet Carnegie is the one member of a brilliant company who had the indispensable quality of genius. He had none of the plodding, painstaking qualities of a Rockefeller; he had the fire, the restlessness, the keen relish for adventure, and the imagination that leaped far in advance of his competitors which we find so conspicuous in the older Vanderbilt. Carnegie showed these qualities from his earliest days. Driven as a child from his Scottish home by hunger, never having gone to school after twelve, he found himself, at the age of thirteen, living in a miserable hut in Allegheny, earning a dollar and twenty cents a week as bobbin-boy in a cotton mill, while his mother augmented the family income by taking in washing. Half a dozen years later Thomas Scott, President of the Pennsylvania Railroad, made Carnegie his private secretary. How well the young man used his opportunities in this occupation appeared afterward when he turned his wide acquaintanceship among railroad men to practical use in the steel business. It was this personal adaptability, indeed, that explains Carnegie's success. In the narrow, methodical sense he was not a business man at all; he knew and cared nothing for its dull routine and its labyrinthine details. As a practical steel man his position is a negligible one. Though he was profoundly impressed by his first sight of a Bessemer converter, he had little interest in the every-day process of making steel. He had also many personal weaknesses: his egotism was marked, he loved applause, he was always seeking opportunities for self-exploitation, and he even aspired to fame as an author and philosopher. The staid business men of Pittsburgh early regarded Carnegie with disfavor; his daring impressed them as rashness and his bold adventures as the plunging of the speculator. Yet in all its aspects Carnegie's triumph was a personal one. He was perhaps the greatest commercial traveler this country has ever known. While his more methodical associates plodded along making steel, Carnegie went out upon the highway, bringing in orders by the millions. He showed this same personal quality in the organization of his force. As a young man, entirely new to the steel industry, he selected as the first manager of his works Captain Bill Jones; his amazing judgment was justified when Jones developed into America's greatest practical genius in making steel. "Here lies the man"--Carnegie once suggested this line for his epitaph--"who knew how to get around him men who were cleverer than himself." Carnegie inspired these men with his own energy and restlessness; the spirit of the whole establishment automatically became that of the pushing spirit of its head. This little giant became the most remorseless pace-maker in the steel regions. However astounding might be the results obtained by the Carnegie works the captain at the head was never satisfied. As each month's output surpassed that which had gone before, Carnegie always came back with the same cry of "More." "We broke all records for making steel last week!" a delighted superintendent once wired him and immediately he received his answer, "Congratulations. Why not do it every week?" This spirit explains the success of the Carnegie Company in outdistancing all its competitors and gaining a worldwide preeminence for the Pittsburgh district. But Carnegie did not make the mistake of capitalizing all this prosperity for himself; his real greatness as an American business man consists in the fact that he liberally shared the profits with his associates. Ruthless he might be in appropriating their last ounce of energy, yet he rewarded the successful men with golden partnerships. Nothing delighted Carnegie more than to see the man whom he had lifted from a puddler's furnace develop into a millionaire.
Henry Phipps, still living at the age of seventy-eight, was the only one of Carnegie's early associates who remained with him to the end. Like many of the others, Phipps had been Carnegie's playmate as a boy, so far as any of them, in those early days, had opportunity to play; like all his contemporaries also, Phipps had been wretchedly poor, his earliest business opening having been as messenger boy for a jeweler. Phipps had none of the dash and sparkle of Carnegie. He was the plodder, the bookkeeper, the economizer, the man who had an eye for microscopic details. "What we most admired in young Phipps," a Pittsburgh banker once remarked, "is the way in which he could keep a check in the air for three or four days." His abilities consisted mainly in keeping the bankers complaisant, in smoothing the ruffled feelings of creditors, in cutting out unnecessary expenditures, and in shaving prices.
Carnegie's other two more celebrated associates, Henry C. Frick and Charles M. Schwab, were younger men. Frick was cold and masterful, as hard, unyielding, and effective as the steel that formed the staple of his existence. Schwab was enthusiastic, warm-hearted, and happy-go-lucky; a man who ruled his employees and obtained his results by appealing to their sympathies. The men of the steel yards feared Frick as much as they loved "Charlie" Schwab. The earliest glimpses which we get of these remarkable men suggest certain permanent characteristics: Frick is pictured as the sober, industrious bookkeeper in his grandfather's distillery; Schwab as the rollicking, whistling driver of a stage between Loretto and Cresson. Frick came into the steel business as a matter of deliberate choice, whereas Schwab became associated with the Pittsburgh group more or less by accident.
The region of Connellsville contains almost 150 square miles underlaid with coal that has a particular heat value when submitted to the process known as coking. As early as the late eighties certain operators had discovered this fact and were coking this coal on a small scale. It is the highest tribute to Frick's intelligence that he alone foresaw the part which this Connellsville coal was to play in building up the Pittsburgh steel district. The panic of 1873, which laid low most of the Connellsville operators, proved Frick's opportunity. Though he was only twenty-four years old he succeeded, by his intelligence and earnestness, in borrowing money to purchase certain Connellsville mines, then much depreciated in price. From that moment, coke became Frick's obsession, as steel had been Carnegie's. With his early profits he purchased more coal lands until, by 1889, he owned ten thousand coke ovens and was the undisputed "coke king" of Connellsville. Several years before this, Carnegie had made Frick one of his marshals, coke having become indispensable to the manufacture of steel, and in 1889 the former distiller's accountant became Carnegie's commander-in-chief. Probably the popular mind associates Frick chiefly with the importation of Slavs as workmen, with the terrible strikes that followed in consequence at Homestead, with the murderous attack made upon him by Berkman, the anarchist, and with his bitter, longdrawn-out quarrel with Andrew Carnegie. Frick's stormy career was naturally the product of his character.
On the other hand, temperamental pliability and lovableness were the directing traits of the man who, in his way, made contributions quite as solid to the extension of the Pittsburgh steel industry. Schwab worked with the human material quite as successfully as other men worked with iron ore, Bessemer furnaces, and coal. He handled successfully what was perhaps the greatest task in management ever presented to a manufacturer when to him fell the job of reorganizing the Homestead Works after the strike of 1892 and of transforming thousands of riotous workmen into orderly and interested producers of steel. In three or four years practically every man on the premises had become "Charlie" Schwab's personal friend, and the Homestead property which, until the day he took charge, had been a colossal failure, had developed into one of the most profitable holdings of the Carnegie Company. As his reward Schwab, at the age of thirty- four, was made President of the Carnegie corporation. Only sixteen years before he had entered the steel works as a stake driver at a dollar a day.
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. We must give due consideration to the fact that their organization was more flexible than those of older countries, and that it regulated promotion exclusively by merit and gave exceptional opportunities to young men. American steel makers also had scrap heaps whose size astounded the foreign observers; they never hesitated to discard the most expensive plants if by so doing they could reduce the cost of steel rails by a dollar a ton. Machinery for steel making had a more extensive development in this country than in England or Germany. Mr. Carnegie also enjoyed the advantages of a high protective tariff, though about 1900 he discovered that his extremely healthy infant no longer demanded this form of coddling. But probably the Carnegie Company's greatest achievement was the abolition of the middleman. In a few years it assembled all the essential elements of steel making in its own hands. Frick's entrance into the combination gave the concern an unlimited supply of the highest grade of coking coal. In a few years, the Carnegie interests had acquired great holdings in the Minnesota ore regions.
At first glance, the Pittsburgh region seems hardly the ideal place for the making of steel. Fortune first placed the industry there because all the raw materials, especially iron ore and coal, seemed to exist in abundance. But the discovery of the Minnesota ore field, which alone could supply this essential product in the amounts which the furnaces demanded, immediately deprived the Pittsburgh region of its chief advantage. As a result of this sudden development, the manufacturers of Pittsburgh awoke one morning and discovered that their ore was located a thousand miles away. To bring it to their converters necessitated a long voyage by water and rail, with several reloadings. They overcame these obstacles by developing machinery for handling ore and by acquiring the raw materials and the connecting links of transportation. Ore which had been lying in the wilds of Minnesota on Monday morning was thus brought to Pittsburgh and made into steel rails or bridges or structural shapes by Saturday night. The Carnegie Company first acquired sufficient mineral lands to furnish ore for several generations and organized an ore fleet which transported the products of the mines through the lakes to ports on Lake Erie, particularly Ashtabula and Conneaut. The purchase of the Bessemer and Lake Erie Railroad, which extended from Conneaut to Pittsburgh, made this great transportation route complete. Besides freeing their business from uncertainty, this elimination of middlemen naturally produced great economies.
Probably Andrew Carnegie's shrewdness in naming his first plant the J. Edgar Thompson Steel Works, after the powerful President of the Pennsylvania Railroad, and in making Thompson and his associate Scott partners, had much to do with his early success. These two gentlemen conferred two priceless favors upon the struggling enterprise. They became large purchasers of steel rails and their influence in this direction extended far beyond the Pennsylvania Railroad. What was perhaps even more important, they gave the Carnegie concerns railroad rebates. The use of rebates, as a method of stifling competition and building up a great industrial prosperity, is an offense which the popular mind associates almost exclusively with the Standard Oil Company, yet the Carnegie fortune, as well as that of John D. Rockefeller, received an artificial stimulation of this kind.
Though incomparably the greatest of the American steel companies, the Carnegie Steel Company by no means monopolized the field. In forty years, indeed, an enormous steel area had grown up, including western Pennsylvania, Ohio, Indiana, and Illinois, practically all of it drawing its raw materials from those same teeming ore lands in the Lake Superior region. Johnstown, Youngstown, Cleveland, Lorain, Chicago, and Joliet, became headquarters of steel production almost as important as Pittsburgh itself. Two entirely new steel kingdoms, each with its own natural reservoirs of ore, grew up in Colorado and Alabama. The Colorado Fuel and Iron Company, which possessed apparently inexhaustible mineral lands in Colorado, Wyoming, Utah, New Mexico, and California, itself produces not far from three million tons a year, almost half the present production of Great Britain. The Alabama steel country has developed in even more spectacular fashion. Birmingham, a hive of southern industry placed almost as if by magic in the leisurely cotton lands of the South, had no existence in 1870, when the Pittsburgh prosperity began. In the Civil War, the present site of a city with a population of 140,000 was merely a blacksmith shop in the fork of the roads. Yet this district has advantages for the manufacture of steel that have no parallel elsewhere. The steel companies which are located here do not have to bring their materials laboriously from a distance but possess, immediately at hand, apparently endless store of the three things needful for making steel--iron ore, coal, and limestone. All these territories have their personal romances and their heroes, many of them quite as picturesque as those of the Pittsburgh group.
It is doubtful indeed if American industry presents any figure quite as astonishing and variegated as that of John W. Gates, the man who educated farmers all over the world to the use of wire fencing. Half charlatan, half enthusiast, speculator, gambler, a man who created great enterprises and who also destroyed them, at times an upbuilding force and at other times a sinister influence, Gates completely typified a period in American history that, along with much that was heroic and splendid, had much also that was grotesque and sordid. The opera-bouffe performance that laid the foundations of Gates's great industry was in every way characteristic of this period. In 1871 Gates, then a clerk in a hardware store at twenty-five dollars a week, made his first attempt to sell barbed wire in the great cattle countries of the southwestern States. When the cattle men in Texas first saw this barbed wire, they ridiculed the idea that it could ever hold their steers. Gates selected a plaza in San Antonio, fenced it in with his new product, and invited the enemies to bring along their wildest specimens About thirty of Texas' most ferocious cattle, placed within the enclosure, spent a whole afternoon plunging at the barbs in a useless and tormenting attempt to escape. This spectacular demonstration of efficiency launched Gates fairly upon his career. He immediately began to sell his new fencing on an enormous scale; in a few years the whole world was demanding it, and it has become, as recent events have disclosed, a particularly formidable munition of war. The American Steel and Wire Company, one of the greatest of American corporations, was the ultimate outgrowth of that lively afternoon in San Antonio.
In 1900 the Carnegie Steel Company was making one-quarter of all the Bessemer steel produced in the United States. It owned in abundance all the properties which were essential to its completed output--coal, limestone, steel ships, railroads, and steel mills. In twenty-five years, from 1875 to 1900, this manufacturing enterprise had paid the Carnegie group profits aggregating $133,000,000, profits which, in the closing years of the century, had increased at a stupendous rate. In 1898 Carnegie and his associates had divided $11,500,000, in 1899 their earnings had grown to $25,000,000, and in 1900 the aggregate had suddenly jumped to $40,000,000. Of this latter sum Carnegie received $25,000,000, Phipps $5,500,000, Frick $2,600,000, and Schwab $1,300,000. And Carnegie's little group could see no limit to the growth of their business and the expansion of their personal fortunes. Yet at that very moment Carnegie was planning to play the part of a Charles V with the large empire which he had pieced together--to abdicate his throne, retire from business life, and spend his remaining days in quiet.
Many influences were impelling him to this decision. His triumph, stupendous as it had been, also had had its alloy of sorrow. Indeed this little Scotsman, now at the crowning of his glory, was one of the loneliest figures in the world. Practically all the forty men with whom he had been closely associated had vanished from the scene. He had quarreled with his playmate and lifelong partner, Henry Phipps, and was in the worst possible business and personal relations with Frick. He had no son to carry on his work. He had become greatly interested in his philanthropies, and he had declared that the man who died rich died disgraced. Moreover, new influences were rising in the steel trade with which Carnegie had little sympathy. Its national capital seemed to be shifting from Pittsburgh to Wall Street. New men who knew nothing about steel but who possessed an intimate acquaintance with stocks and bonds--J. Pierpont Morgan, George W. Perkins, and their associates--were branching out as controllers of large steel interests. Carnegie had no interest in Wall Street; he has declared that he never speculated in his life and that he would immediately dissociate himself from any partner who would do so. This Wall Street coterie, in the years from 1898 to 1900, had made several large combinations in the steel trade. That was the era when the trust mania had gained possession of the American mind and when its worst features displayed themselves. The Federal Steel Company, the American Bridge Company, the American Steel and Wire, the National Tube Company, all representing the assembling of large works which had been engaged as rivals in similar enterprises, were launched, with the usual accompaniments of "underwriting syndicates," watered stock, and Wall Street speculation. This sort of thing made no appeal to Andrew Carnegie. His huge enterprise had always remained essentially a copartnership, and he had frequently expressed his abhorrence of trusts. Yet, in spite of his wish to retire from business and in spite of his avowed intention to die poor, Carnegie now adopted the policy of the Sibylline leaves to all prospective purchasers. Moore and Reid would have purchased his interest for $157,000,000; when Rockefeller came along the price had risen to $250,000,000; when the oil man shook his head and retired, Carnegie immediately raised his price to $500,000,000. It is doubtful whether he would have sold at all had not his Wall Street competitors begun to encroach on a field which the little Scotsman understood quite as well as they--the production and merchandising of steel. The newly organized combinations were completing elaborate plans to go after Carnegie's business. Then Carnegie, who had practically retired from active life, again arrayed himself in his shirt-sleeves, abandoned his career of authorship, and resumed his early trade. His first attacks produced an immense reverberation in the House of Morgan. He purchased a huge tract at Conneaut and began building a gigantic plant for the manufacture of steel tubes, a business in which he had not hitherto engaged. This was a blow aimed at one of Morgan's pet new creations, the National Tube Company. Should Carnegie finish his works, there was no doubt the Morgan enterprise would be ruined, for the new plant would be far more modern and so could manufacture the product at a much lower price; and, with Charles M. Schwab as active manager, what possible chance would the older corporation have? But Carnegie struck his enemy at an even more vulnerable point. The Pennsylvania Railroad had a practical monopoly of traffic in and out of Pittsburgh, and Pittsburgh "created" more freight business than any other city in the world. Carnegie lent his powerful support to George J. Gould, who was then extending his railroad system into the preempted field and was also making surveys and had financed a company to build an entirely new railroad from Pittsburgh to the Atlantic Coast. As Carnegie himself controlled the larger part of the freight that made Pittsburgh such an essential feeder to railroads, his new enterprise caused the greatest alarm. At the same time Carnegie equipped a new and splendid fleet of ore ships, his purpose being to enter a field of transportation which John D. Rockefeller had found extremely profitable.
Such were the circumstances and such were the motives that gave birth to the world's largest corporation. All one night, so the story goes, Charles M. Schwab and John W. Gates discussed the steel situation with J. Pierpont Morgan. There was only one possible solution, they said--Andrew Carnegie must be bought out. By the time the morning sun came through the windows Morgan had been convinced. "Go and ask him what he will sell for," he said to Schwab. In a brief period Schwab came back to Morgan with a letter which contained the following figures--five per cent gold bonds $303,450,000; preferred stock $98,277,100; common stock $90,279,000--a total of over $492,000,000. Carnegie demanded no cash; he preferred to hold a huge first mortgage on a business whose golden opportunities he knew so well. Morgan, who had been accustomed all his life to dictate to other men, had now met a man who was able to dictate to him. And he capitulated. The man who fifty-three years before had started life in a new country as a bobbin-boy at a dollar and twenty cents a week, now at the age of sixty-six retired from business the second richest man in the world. With him retired a miscellaneous assortment of millionaires whose fortunes he had made and whose subsequent careers in the United States and in Europe have given a peculiar significance to the name "Pittsburgh Millionaires." The United States Steel Corporation, the combination that included not only the Carnegie Company but seventy per cent of all the steel concerns in the country, was really a trust made up of trusts. It had a capitalization of a billion and a half, of which about $700,000,000 was composed of the commodity usually known as "water"; but so greatly has its business grown and so capably has it been managed that all this liquid material has since been converted into more solid substance. The disappearance of Andrew Carnegie and his coworkers and the emergence of this gigantic enterprise completed the great business cycle in the steel trade. The age of individual enterprise and competition had passed--that of corporate control had arrived.