That Frick and Carnegie had been able to serve the same company for so long was due to two main factors: Carnegie admired Frick’s managerial skills and Frick respected Carnegie’s important financial role in the company. The fact that Carnegie Steel brought in good returns helped keep the peace, for by 1899 the company led the world in steel production. Carnegie’s vacillation over whether or not he would sell his share in the business and retire heightened the tension for Frick. As well as the nameless financier’s idea, there was also a proposal – thrashed out at Carnegie’s New York home between Frick, Phipps, Dod Lauder, Schwab and others, on 5 January 1899 – that the steel company would be ‘reorganised and consolidated’ with the HC Frick Coke Co. to form a new company (Carnegie Co.) which would buy out Carnegie who would then retire. Carnegie would get $75 million for his interests and Frick $35 million for his Coke Co. Carnegie discussed the matter with cousin Dod, who felt that this way meant Carnegie (and he, Dod) did not get the best deal.
The board accepted the deal, but Carnegie (with Dod’s agreement) wanted to wait for a better return. By this time too, Carnegie had found out that the nameless ones included the Moores brothers, William and John, who were ex-bankrupts, and others of public notoriety whom Carnegie abhorred. This added another layer of disaffection between Carnegie and Frick. The ongoing discussion on the deal of ‘reorganisation and consolidation’ was brought to crisis point by the price that Carnegie Steel was paying Frick’s Coke Co. for fuel. In Carnegie’s mind he had agreed with Frick that coke would be bought for $1.35 per ton, but by June 1899 Carnegie Steel was being invoiced for as much as $1.75 per ton. At a meeting of the board on 25 October 1899 the matter of the increase was raised. Dod Lauder emphasised the $1.35 deal. Frick denied any such deal done with Carnegie. The matter rested for a while, and then another deal emerged for Carnegie Steel to buy coke acreage from Frick. The board agreed to the deal, but Carnegie made imprudent remarks suggesting that Frick was deliberately making profit from his partners. Frick was outraged.
Carnegie tried to pour oil on the troubled waters by letter but Frick did not respond. Carnegie then raised the $1.35 coke deal again by letter, remarking how ‘touchy’ Frick was on coke matters and emphasising that in all his dealings with Frick there was no personal animosity. Frick disagreed. The unpleasantness over the coke and coke acreage deals bubbled away and Frick explained his feelings in a memo to the board of managers on 20 November 1899, stating his case succinctly. The board accepted Frick’s version, and Carnegie knew he would have to act. Frick had to go. Carnegie approached Frick asking him to resign; he did so on 5 December 1899, his resignation being accepted by the board. However, unpleasant disagreements went on. Tempers flared and legal proceedings were undertaken to disengage partnership agreements. The press and New York financial cadres were agog. An agreement was made for the ‘reorganisation and consolidation’ deal. This made the new Carnegie Co. into a $350 million consolidation with Carnegie’s interest set at $174.5 million and Frick’s at $31.284 million. At the final parting of the ways Frick could be declared a nominal victor.25
Frick and Carnegie would never meet again, although they lived but a stroll away from each other in New York, and Frick is given scant mention in Carnegie’s autobiography. The estranged pair died within months of each other. A part of the Carnegie-Frick legend tells that as Carnegie was reaching his last years he endeavoured to put the past behind him and seek a reconciliation with Frick. To this end he sent a messenger with his sentiments to Frick, whose terse reply was: ‘Tell Mr Carnegie I’ll meet him in Hell, where we are both going.’26
* * *
As the twentieth century dawned the world was on the brink of another explosion of scientific discoveries; the telephone was expanding, with 1,336,000 in the United States, railroads had transformed mass transportation, and the private traveller would be further encouraged to hit the open road by the Old Company of Detroit beginning the first mass production of automobiles. On 5 February 1900 the United States and Great Britain signed the first Hay–Pauncefote Treaty, giving America the right to construct a canal across the Isthmus of Panama. On 14 March 1900 US Congress passed the Currency Act, placing US dollars on a parity with gold, and on 6 November President McKinley and his Vice-President Theodore Roosevelt defeated Democrat William Jennings Bryan in the elections. With their return to the White House big business seemed secure. (In the event, six months after the inauguration McKinley was fatally shot by an anarchist at the Pan-American Exposition at Buffalo.)
All these ‘explosions’ of inventiveness would have thrilled the younger Carnegie; but although he would never tire of reviewing Anglo-American affairs and the international situation, he was now convinced that he wanted to escape the everyday cut and thrust of business. A life of philanthropy beckoned for Carnegie, but two obstacles remained in his path. Apart from men like the nameless financiers of a few months previously, who would buy his interests? Furthermore, although his reason was ready to quit, his emotions would not be as easy to salve. On 12 December 1900 Charles Schwab, president of Carnegie Steel, was honoured by a special dinner for some eighty leading businessmen and financiers at the New York University Club. Beside Schwab at the dinner sat J. Pierpont Morgan. In due course Schwab rose and addressed the diners with a discourse on how the steel industry could be run in the future as a ‘supertrust’, with each steelmaker carrying out interlocking processes. What he had to say was nothing original and it is obvious with hindsight that Schwab was aiming his words at the financier; Morgan duly took the bait and a meeting was arranged to discuss how to proceed.
Consensus of opinion agrees that Schwab and Morgan met without Carnegie’s knowledge, and Morgan indicated that he would be willing to buy out Carnegie. How could Schwab arrange such a deal? He consulted Louise Carnegie, who was keen for her husband to retire from business so that he could give all his energies to his family and his philanthropy. She suggested that Schwab should play golf with Carnegie and broach the subject then.
The golf match took place at St Andrews Club, by Yonkers, New York, and Schwab was diplomatic enough to let Carnegie win. Over lunch Schwab told Carnegie of his meeting with Morgan. It was clear, noted Schwab, that Morgan would pay any figure Carnegie cared to put on his holding in Carnegie Steel, but Carnegie showed no real enthusiasm for a deal. His reason, bolstered by his age and his wish to pursue philanthropy, wanted him to sell up, yet his emotions, linked to his childhood of poverty, made him reluctant to loosen his grip on what he had achieved. He needed 24 hours to think. The following morning he took a sheet of paper and set out in pencil the figure he was willing to sell out for. He detailed it carefully:
Capitalisation for Carnegie Company;
$160m bonds to be exchanged at par for bonds in new company.
$160,000,000
$160m stock to be exchanged at rate of $1000 share of stock in Carnegie Co.
exchanged for $1500 share of new stock in new company:
$240,000,000
Profit of past year and estimated profit for coming year:
$80,000,000
TOTAL PRICE FOR CARNEGIE COMPANY AND ITS HOLDINGS:
$480,000,000.27
This represented £260 million in sterling, and around £5–6 billion in modern currency.
These figures he handed to Charles Schwab for transmission to J. Pierpont Morgan. At his office at 23 Wall Street, Morgan quickly reviewed Carnegie’s figures and said: ‘I accept the price.’ It was the most remarkable sale ever in the history of US finance; figures on a scrap of paper, no haggling, no browbeating. To clinch the deal Morgan invited Carnegie to visit him at his house; but no, Carnegie would see Morgan at his home. They met and conversed for about fifteen minutes and as they shook hands on the deal Morgan is reported to have said to Carnegie: ‘Mr Carnegie, I want to congratulate you on being the richest man in the world.’28
EIGHTEEN
A RICH RECTOR OF ST ANDREWS
Thine own reproach alone dost fear.
Soon after his retirement from ‘active business’, Andrew Carnegie turned his thoughts to writing his autobiography. For some time his friends and family had been encouraging him to do so and thus commit his reflections to print. Other matters pressing on his time meant that he could only address his autobiographical writing when at leisure at the bungalow at Auchnagar. The writing proceeded, off and on, until Germany’s violation of Belgian neutrality caused the First World War to break out on 4 August 1914. Thereafter all writing ceased; as Louise Carnegie noted: ‘Henceforth he was never able to interest himself in private affairs.’1 But back in 1901 there was much to do.
This was the year Carnegie set up the Home Trust Company at Hoboken, New Jersey, to house $300 million of bonds which he realised from the sale of his company. This private bank would handle his financial interests and become executors of his estate, all in the day-to-day care, since 1883, of his financial secretary Robert Franks. The bank also supervised his major future endowments.
One of his first financial provisions was the setting up of a fund worth $4 million, to pay out retirement, injury and destitute family pensions for Carnegie Steel workers; this was called the Carnegie Relief Fund.2 Another $4.25 million was allocated for pensions and annuities for many of Carnegie’s one-time associates and subordinates, including several who had been with him from the early days when he was Superintendent of the Western Division of the Pennsylvania Railroad. His list of worthies included relations and friends as well as Dunfermline acquaintances. Carnegie anecdotes also reveal that he once paid the mortgage of a Dunfermline woman, because she looked like his mother. As time passed a list of 409 recipients was drawn up, who received sums ranging from $300 to $10,000 a year. The Home Trust Company also administered a fund of $6.78 million to pay annuities to forty-five parties designated in his will. Carnegie’s aim was to help those who faced daily anxiety about cash flow, just as his own family had suffered in his Dunfermline childhood and in the early days at Allegheny.
Public announcements about the opening of Carnegie’s purse brought mailbags full of begging letters for disbursements of all kinds. His friend, writer Samuel Langhorne Clemens (better known as Mark Twain), sent him a humorous ‘begging letter’:
You seem to be prosperous these days. Could you lend an admirer a dollar and a half to buy a hymn-book with? God will bless you if you do; I feel it, I know it. So will I. If there should be other applications this one not to count. . . . P.S. Don’t send the hymn-book, send the money. I want to make the selection myself.3
Mark Twain dubbed Carnegie ‘Saint Andrew’, but Carnegie took seriously the question of just how he was to spend his money. He received suggestions from all quarters. The UK company Mother Seigel’s Syrup promoted a competition with the theme ‘How Mr Carnegie Should Get Rid of His Wealth’. Each suggestion – if taken up by Carnegie – would win a sovereign (£1); some 45,000 entries were received. By far the majority plumped for money for themselves, while only 237 altruistically suggested that the money should be used to pay off the British National Debt.4
Already Carnegie’s investment of $2 million was in place for Carnegie Hall, New York (opened 1891), the Carnegie Institute (Library and Music Hall, 1895) and the Carnegie Library at Pittsburgh (1895). Carnegie Free Public Libraries were to be a cornerstone of his philanthropy and he sponsored over 2,500 in the United States, the United Kingdom and the Commonwealth, at a total cost of $56 million.5 By 1900 a foundation was set up to sponsor technical schools at Pittsburgh, which would develop into the Carnegie Institute of Technology (1912) and the Carnegie-Mellon University in 1967.6 But first, before the purse opened wider, there would be a period of rest.
For some time Louise was busy with the new house at No. 2 East 91st Street to the point of exhaustion, interviewing architects, making plans with decorators and assessing furniture catalogues. More than this, she was upset by the press attention following the sale of the Carnegie Company. Personal publicity was anathema to her and gave her much emotional stress. So on 16 March 1901 the Carnegies left the city aboard the German liner Kaiseren Theresa to spend six weeks at Antibes on the French Riviera and at the spa of Aix-en-Provence, Bouches-du-Rhône. Importantly too, Carnegie was fleeing from reporters desperate to interview the world’s ‘richest man’. Slowly Louise began to relax as she realised that her lifelong rivalry with Carnegie’s business career was at an end. She had never liked Carnegie’s commercial life or his pursuit of wealth. Their childhoods had been very different, but now wealth would bring them together in several joint ventures.
From the summer of 1901 to the summer of 1902 the Carnegies set about alterations at Skibo with a will, damming rivers to make lochs and pools, creating a nine-hole golf course, and building barns, coach houses, a workshop and workers’ cottages. By persuading the Duke of Sutherland to sell him some land, Carnegie now had the waterfall he had long wanted, and he diligently set about improving his golf. To this end he later employed John Henry Taylor, the first English golf professional to win the Open (1894), but his plan was thwarted when he developed the golfer’s condition known as bad-loser-itis.
Carnegie often mentioned to guests what a delight it was for him to have peaches, apricots and figs from his own walled garden and to have the house full of flowers from the terraced garden (constructed by Thomas Mawson in 1904); he also enjoyed refreshing walks in the woodland gardens which he refurbished with new specimens. The estate’s new buildings included the dairy and dairy house, the electricity house, the coach house and the principal gate lodge designed by Ross & Macbeth in 1900. Further from the castle lay the summer house, the ice house, the boatshed and the kennels. At one time Carnegie had his own (now demolished) pier for his yacht Sea-breeze.7
Each day brought new ideas and ventures inside and out of Skibo which was now firmly stamped with Carnegie’s seal. Even the new stained glass for the castle illustrated not only the history of the place but Carnegie’s story too, with coloured glass showing the cottage at Moodie Street, Dunfermline, and the ship Wiscasset in which they had gone to America. At Skibo Carnegie would charge his batteries for at least five months of the year to find the strength to tackle his new philanthropic ventures.
On 22 January 1901 Queen Victoria died at Osborne House on the Isle of Wight, aged 82; she had given her name, image and values to most of the past century and was now succeeded by her 59-year-old son as Edward VII. Skibo now reflected the style of the new Edwardian society without the decadence of certain aspects of the king’s new court. But the pacifist Carnegie was still saddened by the ongoing Second Boer War, which would drag on until the Peace of Vereeniging, signed on 31 May 1902. Carnegie’s old friend Herbert Spencer had suggested that Carnegie should give money to assist the ‘widows and orphans of [the Boers] who have been killed’. Carnegie for once showed some political maturity and thought it best not to interfere, lest his actions be ‘resented’ and thought ‘impertinent’.8
On their way back from their French holiday the Carnegies had called in at London as usual and Carnegie met up with J. Pierpont Morgan. They dined at Henry C. Boyes’s newly designed Grocer’s Hall in Princes Street, where the members of the London Chamber of Commerce were honouring their New York counterparts. Carnegie was ebullient, full of his latest philanthropic scheme.
For many decades in the nineteenth century in particular, Scotland’s upper-middle class and the aristocracy had looked to England for the best further education for their children and had sent them to university mainly at Oxford and Cambridge. Consequently, as far as recruitment and funding were concerned, the four Scottish universities of St Andrews (1411), Glasgow (1451), Aberdeen (1495) and Edinburgh (1583) were neglected. This problem was not solved by the constitutional reforms of the Universities (Scotland) Act of 1889. In the December 1900 issue of the influential and respected Fortnightly Review (1865) was an article on ‘The Scotland University Crisis’, which pointed out the great n
eed for funds to modernise the campuses and offered this warning: ‘[The universities] may drag on for many years of inglorious life, giving second-rate degrees to second-rate students. But they will have lost their place in British education and the national life of Scotland.’
A supporter of this point of view, and a strong advocate for better funding, was the lawyer and politician Thomas Shaw (later 1st Baron Craigmyle), erstwhile Solicitor-General for Scotland and Liberal MP for Hawick District. A Dunfermline lad like Carnegie, Shaw had written an essay on the subject of Scottish education in the January 1897 issue of the Nineteenth Century magazine, which Carnegie had read with interest. When the subject came up again in 1901 Carnegie acted. ‘How much money do you need?’ he asked Shaw. ‘Five million dollars,’ came the prompt reply.9 Carnegie offered the amount in US Steel Bonds, but an underestimation soon had this offer doubled.
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