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.
