by Peter Krass
Frick and Charlie Schwab kept an eye on Homestead for a reaction, particularly when a picnic to mark the first anniversary of the tragedy was organized and rumors of another violent strike circulated, but a large police force presence and lurking spies subjugated Homestead quite nicely. The extensive spy network managed by the company’s Bureau of Information proved extremely potent. When the Amalgamated attempted to penetrate Homestead again by secretly forming a lodge in 1895, the company suddenly fired every man who signed on, taking them completely by surprise. The Amalgamated would eventually come to the conclusion that one out of ten men was a spy.
While the depression deepened that summer and autumn, there was one bright spot for Carnegie: before returning from Scotland in October, the Edison Electric Illuminating Company wired his New York home with electricity.8 The bright lights did little to help Carnegie’s image, however. In the winter of 1893–1894, a new Carnegie scandal erupted.
When Carnegie Steel had signed the contract to supply armor to the U.S. Navy in the autumn of 1890, Carnegie had no idea the toll such an agreement would take on his company. It was as though he had signed a pact with the devil—and perhaps the self-proclaimed pacifist had. The armor-making crews, from Frick right down to the workers in the press shop, were pushed hard to fulfill the company’s first contract, armor for the monitor Monterey. Now, in the wake of the Homestead strike and lost production time, the company had to drive the men harder to meet the scheduled armor deliveries, as well as to please Secretary of the Navy Hilary Abner Herbert, a vigilant southern lawyer who was suspicious of the North’s industrial titans. The continuous pushing of men, haphazard tests, secrecy, and, in particular, a dragging current of ill feelings still running through Homestead made for a volatile situation. From the beginning, questions had been raised about the quality of various batches of armor; those concerns came to the fore in the autumn of 1893, when a Pittsburgh attorney knocked on Frick’s door.
The attorney claimed he represented four Homestead men who had information about fraudulent activities connected to the armor making, and said that for a price, he would divulge that information. Frick considered this offer blackmail and summarily dismissed the lawyer. He also took the threat of irregularities seriously and notified Schwab that enforcing quality control was paramount and to guard against sabotage.9 Inspectors were alerted, too.
Unbeknownst to Frick, the Pittsburgh attorney won an audience with Navy Secretary Herbert and the two came to an understanding: the government would pay the four men 25 percent of any fine levied against Carnegie Steel for fraudulent or criminal behavior. The zealous Herbert created a three-man board of inquiry, which then conducted what has been characterized as a “speedy sub rosa investigation.”10 The board of inquiry relied completely on the testimony of the four informants and did not enlighten Carnegie Steel of the investigation until after it was completed. In early December, Herbert summoned Frick to Washington and leveled a dozen charges against the company, of which the board of inquiry had already found the company guilty. Several, in particular, were serious. As Herbert reviewed the charges, Frick answered each in turn.
The first serious charge involved the company’s practice of filling in blowholes in the surface of the plates. All armor plates had blowholes, Frick explained, and filling them in was considered cosmetic and a common practice, which was true. However, Herbert pointed out, the company failed to follow agreed-upon manufacturing procedures, a breach of contract. This Frick could not deny. From the beginning of the contract, Carnegie Steel had fought the government over strict processes the company considered impractical. As long as quality results were delivered, Frick reasoned, any dispute over methods was negligible. Herbert now leveled a more serious charge: the company had falsified the results of certain ballistic tests. In a demonstration of arrogance on the company’s part, Frick claimed some of the tests were irrelevant to the type of armor being made; moreover, in some cases, the tests were inexact. Such arguments could not dismiss the fact that the tests had been falsified, however, and that fraud had been committed. As for the most devious behavior on Carnegie Steel’s part, Herbert accused the company of secretly removing six plates selected for testing and adding a treatment to strengthen them. Frick claimed his men were merely exploring ways to further strengthen the plates, but his answer reeked of deceit. Herbert did concede that none of the plates were defective. Still, the company was guilty of fraud and breach of contract. Herbert set the fine at 15 percent of the value of all armor plate delivered to date, which amounted to $210,734. The four informants were to receive $52,683, quite a bounty for mill workers.
Carnegie, who was outraged by the lack of due process, knew that he would be crucified if the allegations were made public. On December 17, he, along with Frick and his assistant Millard Hunsiker, Schwab, and the company’s attorney, Philander Knox, traveled to Washington to meet with Herbert and President Cleveland. In hopes of keeping his visit inconspicuous, Carnegie checked in at the Shoreham Hotel instead of his customary favorite, the Arlington. A vigilant Washington Post reporter discovered Carnegie at the Shoreham and tracked the titan’s movements: “Shortly before 3 o’clock yesterday afternoon Mr. Andrew Carnegie, accompanied by Mr. Millard Hunsiker, of Pittsburgh, and another gentleman, arrived at the White House, and were ushered into the President’s room. A few minutes later Secretary Herbert and Mr. H. C. Frick, superintendent of the Carnegie Works, came over together from the Navy Department and joined the party.”11 While in Washington, Carnegie let it be known that he was feeling ill and not available for interviews. He also claimed he was there to discuss a new tariff bill being proposed, the Wilson Tariff, nothing more—even though he’d met with Herbert.
On the train home, however, the true purpose of the visit was revealed in a letter Carnegie wrote to the president, in which he poured out his feelings on the armor dispute: “We have been accused, tried, found guilty & sentenced without ever having been heard—The vilest criminal has always the right to be heard in his defence—The Secretary of the Navy even condemned us & after notifying Mr. Frick that he had approved the finding of the so called Board (which was not a Board but only one man with two assistants upon whom he might call to aid him if necessary) & then allowing us to say what we had to offer in defence—monstrous this.” He then accused Herbert of overzealousness and threw in some guilt for good measure: “Spent millions, subordinated every other Branch of our business to the Govt’s needs, succeeds—& then upon the testimony of spies we are charged with irregularities & our men with fraud.” Carnegie concluded: “No one, not even Mr. Frick knows of this letter, it is between you & me alone—I keep no copy.”12 (Both Carnegie and Cleveland kept a copy.)
Over the next week, Carnegie armor plates successfully passed more government tests, and on December 27, Carnegie sent a gloating letter to the president: “I told you that fifteen thousand dollars of the Government’s money was to be wasted this week. . . . This is ‘Inspection’ run mad, caused by the hasty, over zeal of an inexperienced Secretary who charges ‘fraud’ upon people (Mr. Schwab & others) quite as incapable of attempting to defraud the Government as the Hon. Sec’y himself.” He asked for an impartial board to be convened for a retrial of the company.13 Cleveland refused the request; unlike Carnegie, the president understood the importance of not disrupting the chain of command and undercutting his navy secretary. Besides, even though Carnegie made valid points, Cleveland could not appear to be pandering to big business. Also, the president was entertaining a somewhat devious idea to boost his agenda that played out in the coming weeks.
Shaken by the armor charges and now taken with a case of the grippe, Carnegie spontaneously planned a vacation in Egypt, where he hoped to regain his health in the arid climate. Departure was set for January 4. As Carnegie shuttled about New York, tying up loose ends and buying a wardrobe suitable for Egypt, the breadlines and destitution were unavoidable. Unemployment was rampant in New York City; in January, when the mayor ordered the polic
e to canvass the city to assess the depression’s impact, it was discovered that approximately seventy thousand were unemployed and twenty thousand homeless. Unionists, socialists, and anarchists protested in the streets. Emma Goldman, who had inspired Alexander Berkman’s assassination attempt on Frick, told those who would listen: “If you are hungry and need bread, go and get it. The shops are plentiful and the doors are open.”14 The New York Times, fearing riots would erupt from the foreign quarters, called for a halt of immigration. Other newspapers promoted food and clothing drives. J. P. Morgan, while snapping up and reorganizing near defunct railroads and making millions in the process, formed the Business Men’s Relief Committee to alleviate the suffering.
Back in his library, on the eve of his departure, Carnegie penned a shocking letter to the editor of the New York Tribune, which was published on January 8, four days after he left for Egypt. To the astonishment of his fellow Republicans, he urged the passage of a new tariff bill under consideration, the Wilson Tariff Bill, which Cleveland was championing and which would reduce duties. For those who wanted to interrogate Carnegie over his sudden reversal on protection and apparent heretic behavior, they would have to wait; he was aboard the Hamburg-American steamer Columbia bound for Algiers, Naples, and Alexandria.15 The Carnegies were accompanied by a manservant and a maid, as well as their friend Henry Van Dyke.
Egypt had become a popular destination for travelers, its mystique and allure enhanced in the early 1890s by the excavation work of Egyptologist William Matthew Flinders Petrie, who had recently discovered information about the heretic pharaoh Akhenaten, who renounced the old gods and introduced the worship of Aten, the sun god. Akhenaten was a pharaoh after Carnegie’s heart, and by the time his group landed at Alexandria, on the Nile Delta, he was anxious to proceed upriver by boat and visit the magical ruins. Although Carnegie had visited the country some ten years before, he was still impressed by the contrast between the lush Nile valley with its sweet scent of citrus trees and the arid land with its sands sweeping over the ruined temples. “We are tanned like Indians by the hot sun,” he updated Frick. “Nights and mornings and in the shade always cool and truly the Nile trip is a treat in store for you, only you of all men will be bored by it at first such beggars, such dust and squalor I never saw but the temples are great and the blue sky, green crops always the banks and the sunsets are all unequalled elsewhere. We take no interest in anything not at least 3000 years b.c.”16
Meanwhile, in Washington there were some intriguing developments in the armor case. Cleveland decided to reduce the Carnegie fine from 15 percent to 10; moreover, on January 10, he explained to Herbert that while he agreed that a large portion of the armor was substandard, he believed the facts establishing fraudulent activity were murky and considered the company guilty of bad management, but not of criminal behavior. Also, the story of the scandal, so far suppressed, finally broke in the papers in March, courtesy of one of the informants who was displeased with his share of the prize, had a little too much to drink, and did a little too much talking. As news spread of Cleveland’s decision, no one was happy. Democrats considered Cleveland’s actions cowardly, while Republicans like Whitelaw Reid, who still blamed Homestead for Harrison’s loss, called for a full-scale investigation. As the series of events were pieced together, Reid didn’t like what he saw. The president’s mild scolding of Carnegie Steel and reduction of the fine on the heels of Carnegie heretical support of the Wilson Tariff smacked of political shenanigans. On March 2, the New York Tribune reported, “The discovery by the Navy Department early in November of startling irregularities in the execution of the contracts between it and the Carnegie Steel Company for the supply of armor plates may, in a measure, explain Mr. Carnegie’s subsequent attitude of friendliness to a bill that must work serious injury to his own interests and means all but destruction to the interests of his rivals in business.”17 Cleveland’s actions were also questioned: “Indeed, one is rather mystified at the ease with which Mr. Carnegie made his escape. Mr. Cleveland has the reputation of driving pretty hard bargains with Senators and Representatives who exchange their votes for pelf and plunder in the shape of offices. He might perhaps have obtained so much more from Mr. Carnegie than that letter if he had tried.” The Tribune then related the series of events leading up to President Cleveland’s decision.
Foremost, the paper pointed to Carnegie’s suspicious behavior. When he arrived in Washington on December 17, why had he taken a room at the Shoreham Hotel instead of the Arlington, his choice for years? Why did he claim to be talking tariff only with Cleveland while it was known Frick and Herbert were in on the meeting? Why did he claim he was ill, even an invalid, when he was seen bounding up the executive mansion’s stairs? Why did he change his mind on the tariff, as evident in his January 3 letter to the Tribune editor? Was it coincidence that Carnegie left the next day so that he would not to have to explain himself? Was it merely coincidence that two days after Carnegie’s letter appeared in the Tribune, Cleveland reduced the Carnegie Steel fine? And why were the government’s charges never made public? The Tribune surmised that Carnegie’s 180-degree reversal on the tariff bought a reduced fine and the government’s silence. Only a damn drunken knave from Homestead had blown their covert agreement. The Tribune’s claims were circumstantial, but they set many a mind thinking.
Carnegie Steel countered the accusations with a propaganda campaign of its own. Through the Pittsburgh Times, the company’s mouthpiece, Carnegie Steel claimed that it was the victim of a conspiracy concocted by bitter Homestead men, a position the company never deviated from. But Frick had already admitted to some of the irregularities, so the company’s claims of conspiracy were suspect. The hot issue now was whether Carnegie had indeed changed his position on the tariff to escape the government and public’s wrath, as well as to ensure future lucrative armor contracts? To determine the answer, it was necessary to track his view on the tariff and to discern whether it did suddenly change in January.
In a May 1893 interview, Carnegie had said, “The robber baron has ceased to rob and is now being robbed”; he also claimed no money could be made in steel, so he was certainly for highly protective duties.18 On December 6, Carnegie wrote a friend that steel is in “positive distress. . . . What the United States manufacturer needs most is, to be saved from the foreigner dumping his surplus into this market in times like the present extreme depression.”19 His position couldn’t be clearer: he wanted a high tariff to prevent dumping. The next month was another story. In addition to the Tribune letter, he also wrote on January 2 to Arthur P. Gorman, an influential senator who was working on the Wilson Bill. Instead of unilaterally demanding protection, he made suggestions as to how much of a duty cut might be acceptable, and concluded, “I wish to see the ‘Robber Baron’ completely exterminated.”20 He had turned traitor.
While his management team remained under severe duress in Pittsburgh, Carnegie indulged in Egypt and then traveled to southern England, to Buckhurst Park, a luxurious estate, where Louise and he stayed for three months before moving on to Cluny. (Cluny was not heated, so before proceeding north they always waited until the sun warmed the Highlands.) While at Buckhurst, he contacted his friend Andrew White, who had been president of Cornell and was now the U.S. ambassador to Russia, to gauge if there was any “prospect of being allowed to furnish some armor for Russia.”21 For all the hassles, there were obviously millions in armor.
Frick and Schwab were hardly sanguine about armor, however. Anxiety levels in Pittsburgh were rising as the House of Representatives’ special subcommittee of the Committee of Naval Affairs opened its investigation of the armor scandal. Witnesses included the four informants, William Corey, who was in charge of the armor department, Frick, and Schwab, among others. When Corey took the stand, he said Schwab knew of the irregularities; and when Schwab took the stand, he contradicted Corey. Fingers were pointing in all directions. When the congressional investigation confirmed the navy’s findings in a report pub
lished that summer, asserting “no fine of mere money compensation is an adequate atonement for such wrongs,” Carnegie, Frick, and Schwab all came under fire in the press. It didn’t matter that none of the plates were in fact defective. “In palming off those defective and inadequate armor plates upon the government,” the New York Daily Tribune accused Carnegie and Frick, “they were imperiling the lives of thousands of our seamen and jeopardizing the nation’s honor and welfare, but they were making money. It is an appalling conclusion. One shrinks from believing a thing so monstrous.” The roast continued, “The expenditure of money in ostentatious charity and beneficence will not excuse the shameful means by which that money was acquired.”22 Carnegie was lampooned, depicted by one cartoonist as cowering behind an armor plate, shouting, “Don’t shoot, I made this plate.”
To capitalize on Carnegie Steel’s gaffes and stir up trouble, John McLuckie returned to Homestead. He and onetime fellow Advisory Committee member Elmer Bales attempted to incite the town’s populists to protest against the steel company.23 Enthusiasm was lacking, however. Carnegie Steel had spies everywhere, and with the depression destroying families, no one wanted to risk losing his job.
Carnegie didn’t return to the United States until November 3, later than usual and months after the president signed the new tariff bill, then called the Wilson-Gorman Bill, into law on August 26, 1894. When he arrived at the port in New York, a gaggle of reporters were waiting and pelted him with questions about armor and the tariff. Before being whisked away by carriage, he praised the new tariff, but he had nothing of substance to say on armor. He had spent just two months in the United States in 1894, driven away by scandal and criticism and his traitorous politics. National politics took its toll on Carnegie, who wrote a friend, “Like yourself I grow less and less keen about politics, which are upon the surface of things only. In the United States the ablest people have already discovered that there are matters of much greater importance; therefore, our best men are not politicians.”24
