The Carnegie Steel Co. had reached a watershed; as far as Frick and the managers were concerned the Amalgamated Association was of no relevance. Homestead was closed down on 30 June 1892. Every employee was disengaged; any worker wishing to return must do so as a non-union man and each applicant would be vetted. Pinkerton’s agents secured the works from any attack and protected the workmen employed by the management to replace the strikers. Outside Homestead workers met, listened to union and anti-capitalist speakers and hung effigies of Frick and Potter from lamp posts. Some caricatures were set on fire.
Striker reaction was swift. They seized the city of Allegheny (population 12,000), the roads of the Monogahela River and assorted Carnegie properties. Mayor John McLuckie, another Carnegie employee, sided with the strikers, as did most of the citizens. An advisory committee was set up to oversee their tactics with worker Hugh O’Donnell as chairman. A cordon of pickets sealed the city, and those with no pressing reason to be there were sent away; even the Sheriff of Allegheny County and his deputies were expelled, his calls for law and order being ignored. The whole countryside was staffed with worker-guards, vigilantes and reconnoitring parties. Frick and his managers were barred from the $6 million Homestead property. By early July 1892 the strikers controlled the Carnegie properties, and anger seethed to the point of anarchy; Carnegie’s company faced destruction.
Frick still believed that his Pinkerton agents could bring the difficulties to an end. Even though the local sheriff had been given short shrift, Frick did not feel it necessary to ask Governor Robert E. Pattison of Pennsylvania to call in the state militia. Yet with the strikers blockading Homestead territory, how would the Pinkerton agents gain access?
The best point of access, Frick decided, was via the riverbank landings, accessible under the cover of darkness. Two armed barges containing 300 agents were to be towed in by the tug-boat Little Bill. The small flotilla left its moorings at Bellevue, some 5 miles south of Pittsburgh, at 2am on 6 July 1892; through a welcome bank of fog they reached their destination unimpeded. Yet from the outset their progress was being monitored by the strikers’ pickets. When they reached their destination the agents, under their leader Captain Heinde, were met by a vociferous crowd of strikers and their families who rushed to the riverbanks near Homestead. The agents were subjected to a barrage of stones, assorted missiles and even revolver fire. The crowds swelled as the agents reached the Homestead wharves, with estimates of 10,000 striking workers facing the 300 Pinkerton agents.11 A shot rang out from the crowd and the agents returned fire with a volley from their Winchester rifles. Captain Heinde was hit in the hip. Indiscriminate firing began and continued for five minutes or so, resulting in three agents mortally wounded, five strikers dead and many more wounded. The agents scattered, taking shelter in the barges and behind piles of goods on the wharves. The crowd, angered by the deaths of their comrades, became a murderous mob; they surged forward and a two-hour battle ensued.
The strikers’ skills with dynamite, burning oil and an ancient artillery piece were so inept that the intended murder of all the Pinkertons was not achieved. Slowly the engagement quietened and the more reasonable leaders of the strikers calmed the mob and raised a flag of truce. The agents were urged to surrender. A truce was agreed on the proviso that the agents would be given a safe passage to Homestead railway station. Even so many had to run the gauntlet of the enraged strikers’ families on the way to the station, while others hid in buildings or made their way to the hospital. In this, the most terrible event of US industrial history, nothing positive was achieved by Frick and the Carnegie property still remained in the hands of the strikers.
With hindsight, commentators agreed that State Governor Pattison could have prevented the riot. By 10 July he had taken action and 8,000 state militiamen under Major-General Snowdon entered Allegheny; without any resistance from the strikers the Homestead mills were handed back to Frick. The House report of the Congressional Committee convened to examine what had happened underlined the great mistake that Frick had made:
If Mr Frick had gone to Governor Pattison in person and laid the case before him, instead of employing the Pinkertons in the first instance, we believe that the Governor would, as he finally did, in the discharge of his plain duty, have sent a sufficient force to enable the sheriff to have taken possession and delivered to the Carnegie company their property, to the end they might have operated their mills in their own way and have avoided a riot.12
An unexpected event would rescue Frick from eternal ignominy. On Saturday 23 July 1892 an appointment was made with Frick for a man who claimed to be an agent for a New York employment agency to discuss supplying a workforce for Homestead to replace the strikers. At 2pm on that day, while Frick and his vice-chairman John G.A. Leishman sat in the office of the Carnegie Steel Co., the man was shown in. Frick sensed danger; he rose from his desk and advanced towards the man – who raised a pistol and shot him in the neck. As Frick fell the man fired again, hitting him in the neck again. Bravely Leishman grappled with the man, knocking his arm as he fired again so that the third bullet hit the ceiling. Frick scrambled to help Leishman, as the man produced a dagger fashioned from a file. He wounded Frick again in the hip, the side and the leg. At length the man was overpowered by clerks from the adjacent offices. After the man had been handed over to the police, and doctors had attended to Frick’s wounds, he resolutely returned to his desk. A telegram was prepared for Carnegie:
Was shot twice but not dangerously.
There is no necessity for you to come home. I am still in shape to fight the battle out.13
And a bulletin was prepared for the press:
This incident will not change the attitude of the Carnegie Steel Company toward the Amalgamated Association. I do not think I shall die, but, if I do or not, the company will pursue the same policy and it will win.14
Frick then collapsed and was stretchered home, but appeared at his desk again three weeks later. As he gave instructions concerning the running of the Carnegie company from his sickbed, the police discovered that his assailant was a 25-year-old Russian national from Vilna called Alexander Berkman. Although he had nothing to do with the Homestead strikers and union men, as a nihilist agitator he had travelled to Pittsburgh to seek out ‘the man who . . . most completely embodied the tyranny of capitalism’.15 Berkman was convicted and received a 21-year penitentiary sentence; he was paroled in 1905 and deported in 1919. For the history books strike-leader Hugh O’Donnell commented: ‘The bullet from Berkman’s pistol went straight through the heart of the Homestead strike.’16 New and old workers flocked to the Homestead mills; the union was disregarded and calm reigned. Writing on 21 July 1932, Carnegie’s biographer Burton J. Hendrick noted: ‘Not a union man has since entered the Carnegie works.’17
At the time of the Homestead riots, on 5–6 July 1892, Carnegie had journeyed from London to Aberdeen to dedicate a new library at Rosemount Viaduct, then set off to holiday at Rannoch Lodge at Kilnoch Rannoch in Perthshire, which he had rented from Sir Robert Menzies because Cluny Castle was being refurbished. Carnegie had planned a restful sojourn exploring the environs of the Black Wood of Rannoch, a relic of the ancient Caledonian Forest, but his peace was regularly interrupted. By letter and telegram he was fed news of the strike and the erupting violence. Greatly disturbed (to the point that Louise worried about his health), Carnegie cabled that he would return on the next available liner. Frick replied in various cables strongly requesting him not to return. Carnegie’s presence would have compromised Frick, as their handling of strikes was different; moreover it would have been likely that Carnegie would have needed to demote or dismiss Frick. In a cable Carnegie supported Frick’s actions:
Cable received. All anxiety gone since you stand firm. Never employ one these rioters. Let grass grow over the works. Must not fail now. You will win easily next trial only stand firm law and order wish I could support you in any form.18
Carnegie had no option but to support Fric
k. Although Frick had gone against the advice given in Carnegie’s Forum articles, the strikers had resorted to violence that Carnegie said should never be tolerated.
The bloody battle with Carnegie’s workers at Homestead made regular front-page news in the American press, with the picture papers like Frank Leslie’s Illustrated Weekly offering graphic pictures of striking families stoning the Pinkerton agents. The St Louis Post-Dispatch declared Carnegie a figure of ‘contempt’, adding for good measure: ‘Say what you will of Carnegie he is a coward.’ The British press also had a field day, with Tory editors relishing the criticism of Carnegie who, they perceived, had cockily boasted of American superiority in all things in his Triumphant Democracy. The London Financial Observer kicked off:
Here we have this Scotch-Yankee plutocrat meandering through Scotland in a four-in-hand, opening public libraries and receiving the freedom of cities [Aberdeen was the latest], while the wretched workmen who sweat themselves in order to supply him with the ways and means of his self-glorification are starving in Pittsburgh.19
The Times also joined the chorus:
Mr Carnegie’s position is singular. The avowed champion of trades-unions now finds himself in almost ruinous conflict with the representatives of his own views. He has probably by this time seen cause to modify his praise of unionism and the sweet reasonableness of its leaders. Or, are we to assume that the doctrine is true in Glasgow but not in the United States, or that it ceases to be applicable the moment Mr Carnegie’s interests are touched?20
Hundreds of articles and volumes have covered the Homestead riots, giving varying opinions on the cause and inevitable outcome. A consensus shows that it was a hollow victory of sorts for the workers, but perhaps more importantly historically was the fact that Carnegie’s reputation as an enlightened employer was destroyed. Homestead cast a shadow over the rest of his life. He was devastated by the events and thereafter endeavoured to create a new image for himself. Going to Scotland during the Homestead difficulties was the most shameful act of his life; indeed, his choice of Rannoch Lodge – arranged through his London agent J. Watson Lyall – was so remote, with Rannoch railway station some 10 miles away and with no other public transport, this left Carnegie open to the accusation that he was hiding. Perhaps the most hurtful outcome was that he was vilified in his homeland. The left-wing Glasgow Trades Council compared him to Judas Iscariot; the Scots socialist MP Keir Hardy was so incensed that he remitted the funds Carnegie had given him to the Homestead strikers; and some of the leftist Liberal Party denizens slammed shut their doors on him. To many Carnegie’s philanthropy was now tainted.
There was political fall-out too. The defeat of Benjamin Harrison’s Republican administration was blamed in part on the Homestead affair. Carnegie was already closely identified with the Republican party. Certainly the Democrats made some effective propaganda out of Homestead, but the economic times were growing worse for America. Harrison had allowed the country’s gold reserves to be severely depleted and depression escalated. The country turned once more to Democrat Grover Cleveland, who had been President in 1885–9.
Homestead became a slum of desperate men and women living in squalor. The conditions were even worse than those of Carnegie’s childhood home at Dunfermline, and he had contributed to the suffering. Carnegie still provided work, but to make a living wage 12-hour shifts were the norm, with only two days’ holiday a year at Christmas and 4 July. The lowest wage rates started at 14 cents per hour for the unskilled, with an average of $12.50 per week for skilled workers.21 Conditions at Homestead made a mockery of Carnegie’s notion of ‘fair distribution’ advocated in The Gospel of Wealth.
Despite all this Carnegie received support from his friends. Most prominent in their sympathy were Lord Rosebery and John Morley; W.E. Gladstone also chipped in, saying: ‘I am sure that no one who knows you will be prompted by the unfortunate occurrences across the water . . . to qualify in the slightest degree either his confidence in your generous views or his admiration for the good and great works you have already done.’22 Perhaps the most curious understanding of all came from Carnegie’s uncle George Lauder. In a letter of 25 March 1853 he wrote: ‘I am glad your troubles are now all over at Pittsburgh and will remain so for a long time. This working man question is the question of the day. The more you give them the more they will take. I see this every day in little things as well as big.’ Where was the radical scorn and bile Lauder would have heaped on the heads of other capitalists in similar circumstances?
In January 1893 Carnegie returned to New York to be welcomed warmly by many of his colleagues as if nothing had happened at Homestead. Certainly manufacturers believed that Carnegie had stood up for property rights. Others made sure that Carnegie’s philanthropic purse remained open, importuning him for grants of various kinds and adding his name to memorial ventures.
Slowly Carnegie began to put clear water between himself and Homestead. Just as when a little boy he had cleared himself of blame for wrongdoing with the Scots whine ‘It wisna me’, so in speech and writing Carnegie now absolved himself of censure for what had happened at Homestead. In his study at 51st Street, New York, he carefully scoured the press for comments attacking him. Should he try to buy off certain editors? He concluded that this was not a practical policy but with John Leishman he did his best to put in place rules that would lead to the sacking of employees who wrote to or spoke to journalists about Carnegie’s affairs.23 He could not stop the Homestead men talking about or remembering what had happened and among their ranks he had made enemies for life. Nevertheless while in Pittsburgh he was all smiles and bonhomie. In a statement he said:
I have come not to rake up but to bury the past, of which I knew nothing. I am not an officer of the company but only a shareholder. Four years ago I retired from active business. I am selling portions of my interests to such young men in our service as my partners find possessed of exceptional ability.24
While blatantly lying about his role in the Homestead débâcle, Carnegie was telling the truth about the ‘young men’; one such on the scene was Charles Michael Schwab.
SIXTEEN
FRAUD AND FRACTION
Carnegie was the most cruel task-master American industry has ever known.
John K. Winkler, Biographer, 1931
Charles Michael Schwab was born at Williamsburg in Pennsylvania of North American–German stock. After working in his father’s livery stables and in a grocery store, he was employed by Captain William Jones at Carnegie’s Braddock mill as a $1-a-day stake driver. His promotion as a steel man was rapid; his enthusiasm for any job he undertook saw him promoted to assistant engineer in the Edgar Thomson Steel Works after only six months; by the time he was 20 Schwab was chief engineer and assistant supervisor to Jones. More importantly, he became Jones’s ‘messenger’ link with Carnegie.1 Carnegie soon marked him out as a devotee, a role in which Schwab shone, playing to Carnegie’s weaknesses of vanity and a need for attention. Then there was humour. More than any other person Schwab could make Carnegie laugh until the tears flowed.
In 1887 Schwab became superintendent at Homestead; when Jones died after an industrial accident in 1889 Schwab returned to Braddock, but after the Homestead difficulties in 1892 Carnegie moved him back to Homestead to sort out the unrest. Schwab was part of the management team that helped to keep the Amalgamated Association at bay in their attempts to win a foothold once more at Homestead. Schwab’s success in this made him even more popular with Carnegie, who promoted him to general superintendent of Braddock and Homestead, with money and stocks and shares rewards. Schwab was to be tested, though, in what one Carnegie biographer described as Carnegie’s ‘shifty business standards’.2
Six months after Democrat Grover Cleveland assumed office as President for the second time in 1893, Secretary of the Navy Hilary A. Herbert was approached by Pittsburgh lawyer James H. Smith with a serious charge. ‘Squealers’ at Homestead had reported that the US government was being defrauded by the C
arnegie Steel Company. The malfeasance was in the manufacture of armour plate for the US Navy. After hearing the accusations Herbert agreed to pay the informants – all subordinate colleagues of Schwab – a percentage of the penalties the government would extract from Carnegie Steel. Herbert’s report to Congress showed how the fraud had been carried out:
The allegations were that the company’s employees had failed to temper armour evenly and properly, had plugged and concealed blow-holes, which would probably have caused a rejection of plates by the government inspectors, and had re-treated, without the knowledge of the inspectors, plates which had been selected for ballistic test, so as to make these plates better and tougher than the group of plates represented by them.3
The informants showed too, that documentation for the armour plates was falsified and identified Schwab, William Corey and another superintendent called Cline as the perpetrators of the fraud.
Herbert assigned the Chief of the Bureau of Ordnance, Captain William Thomas Sampson, and his staff to investigate. After weeks of examinations the charges were sustained and damages of $288,000 were fixed.4 Consequently the Carnegie Steel Co. chairman Henry Clay Frick was summoned to Washington and he took with him his aide Millard Hunsicker. A few days after the initial meeting Frick returned with statements on the company’s actions, including one from Schwab. This time Carnegie joined the group with his lawyer Philander Knox in tow.
In a report dated 16 December 1893 Captain Sampson noted that Schwab admitted the plates had been tampered with but denied deliberate fraud. To this Sampson added his own opinion that the fraud was deliberate. Carnegie now took a hand.
Carnegie was back at the White House on 20 December 1893. He let it be known publicly that he was discussing tariff measures with the President. In reality Carnegie was endeavouring to get his company off the hook, or at least to reduce the damages. He seems to have done it in this way. At the time America was suffering economic difficulties and President Cleveland had a personal measure he wished to bring to fruition, which would be called the Wilson-Gorman Tariff Bill. Carnegie now made a public appeal to his Republican cronies, and to manufacturers all over America, asking them to support Cleveland’s proposals which would reverse the high protectionism that they supported. On 10 January 1894 Cleveland wrote to Secretary Herbert. He spoke of the ‘alleged irregularities’ by Carnegie Steel as a ‘default’ rather than fraud. He reduced the company fine from 15 to 10 per cent. This amounted to a ‘placid disposal of the scandal’ and a ‘mild rebuke’ for Carnegie Steel.5 In reality, no politician could ignore Carnegie’s influence. His Edgar Thomson Steel Works was now worth $25 million, with earnings of $4 million per annum. Carnegie and his colleagues owned the largest and most lucrative steelworks in the world, and ran four major steel plants, two iron mills, a handful of blast furnaces all with private railway networks, and the best coke company in America. Soon they would also be iron-ore producers. Nevertheless Cleveland’s actions aroused indignation among naval officers, the press and the public alike. Back in Pittsburgh Frick, Schwab and the managers continued their work and the company did its best through the Carnegie-friendly Pittsburgh Times to boost its image. The armour scandal dented Carnegie’s reputation further; many thought that once again he had prostituted his principles (as a high market protectionist) to get off the hook. As the controversy bubbled away Carnegie went abroad once more.
Carnegie Page 18
