His maternal grandfather, Abraham Overholt, of German descent, had fared better than the rest of the Frick clan, however, and young Henry would eventually enjoy the benefits. He left home at sixteen to live with an Overholt uncle, who in turn sent him off to college, at Otterbein College, near Columbus, Ohio. There Frick received his first inklings of a wider world, including an exposure to literature and painting, in which he began to dabble himself.
He was an indifferent student, though, and in less than three months he returned to Mount Pleasant to work in his uncle’s general store, a step that he saw as the first in pursuit of a career in business. In the fall of 1868 he moved to Pittsburgh, where he worked as a clerk in one of the city’s better department stores for seven dollars a week and where he first honed a talent for sales.
It was not long before his aging grandfather Abraham, struck by Frick’s industry and determination, offered him a position as a bookkeeper in the family distillery business (Old Overholt still survives as a popular brand of rye whiskey) at Broad Ford, Pennsylvania, at the rate of $1,000 per year. Frick readily accepted, but hardly had he returned home than Abraham Overholt died. It was January 1870, and Frick was suddenly in need of another job. It was doubtless a wrenching turn of events for a twenty-year-old who had thought his future secure, but in retrospect fate had done him a favor.
Frick went to work for a cousin, Abraham Tinstman, who had bought several hundred acres of coal-producing land in the area a decade or so before, and was now involved in the manufacture of coke. Tinstman was having a difficult go of it, and was casting about for new partners who might provide an infusion of capital. Sensing an opportunity to cash in on the booming iron and steel activity all about them, young Clay, as he was known, made the rounds of various family members and, aided by his impending inheritance of some $10,000 from his late grandfather’s estate, managed to borrow enough to secure a 20-percent interest in the newly organized firm.
One of the first actions of the company was to purchase an additional 123 acres of coal lands and begin the construction of a new coking plant. It was Clay Frick who traveled to Pittsburgh to seek a loan for these activities, and the banker who considered the matter was a flinty man of fifty-seven named Thomas Mellon, whose background as a judge must have enabled him to discern the potential of a slightly built whippersnapper who stood scarcely more than five feet tall and had little to offer as collateral beyond his confidence in the future of coke.
In later years, business associates and rivals would often comment on the power of Frick’s gray-eyed gaze when it lit upon you. Perhaps it was the strength he saw in Frick’s eyes that convinced Mellon, or perhaps it was his awareness of the Overholt blood that ran in the veins of the quiet but determined young man before him, but in any case he approved the loan.
Before the first new oven had been completed, Frick was back to apply for a loan for a second, though this time one of Mellon’s officers heard the petition and recommended the request be denied. Tom Mellon asked a mining engineer for an independent opinion before making the final decision, however, and the report was soon back: “Manager may be a little too enthusiastic about pictures [a reference to Frick’s budding interest in art] . . . but knows his business down to the ground.” It was enough for Mellon, who approved the loan.
He would approve many more after that. By the end of 1873, Frick and Company, as the firm had become known, owned two hundred coke ovens, selling everything it could produce to the rapidly expanding Bessemer steelmakers in the region.
Then came the economic collapse that nearly destroyed Carnegie and prevented his entrance into the business. As iron and steel declined, so did coke. But Frick (who would later recall it as one of the most grueling times in his life) proved as undaunted in the face of adversity as Carnegie had been. Instead of turning tail, he used the depression and the confidence he had cultivated with Tom Mellon to his advantage, judiciously purchasing the coal lands and coke ovens of his failed and failing competitors. At about the same time, when a local railroad company went under, Frick snapped it up and offered it to the Baltimore & Ohio Railroad in turn. The deal for ten miles of railroad track netted him $50,000.
Again in 1878 he reorganized his business, this time as H. C. Frick and Company, and used the proceeds to lease other idle works and lands. His relentless acquisitions continued until, by 1882, the company owned some three thousand acres of coal lands and operated more than a thousand coke ovens, about a quarter of all those in the area.
At the lowest ebb of the coke business, prices had fallen to ninety cents per ton, about what it cost to produce, even with wages at rock bottom. By 1878, however, prices had begun to recover: first to two dollars, then to three dollars, and finally to five dollars per ton, at which point profits were three dollars of the total. By the end of 1879, at age thirty (and some three years sooner than Carnegie), Frick reckoned himself a millionaire and was fielding more demand for his coke than he could possibly handle.
Though prices in coke typically waxed and waned, the size of Frick’s operation insulated him through the lean times. In the early 1880s, he would produce and sell almost a million tons of coke in a year, netting nearly $400,000 annually in the process.
Frick had also devised another way of bolstering profits: because the mines and the ovens in which his laborers worked were often located far from towns where food and other necessities could be easily purchased, the company began to open and stock its own stores. Workers could not use cash in the company stores and were often required to “charge” a certain percentage of their wages as a condition of employment, or take some of their pay in company scrip that could only be redeemed in a Frick store, where prices were generally inflated.
Though company officials would defend the practice as an expensive amenity maintained for the convenience of their labor force, the bottom line suggested otherwise. Profits in store sales (for the same period that earned Frick nearly $400,000 in coke) netted the company another $33,000, at a profit margin of nearly 17 percent. Suggest to the owner of a contemporary supermarket (where a profit margin of 2 to 3 percent is considered generous) that he could do as well, and he would likely explode in laughter.
For Frick, as for Carnegie, labor had become an impersonal aspect of the business equation, not an assembly of flesh-and-blood individuals furthering a common enterprise. Through the lens of Darwin’s social relativism, the owner who failed to squeeze the last wasted dollar out of labor costs was as wasteful and negligent as the one who spent too much on grease or whale oil. Survival as a businessman was determined in the same way as was survival among all species—compete successfully or die.
It was an attitude that Frick would take to new heights in the coke industry and a trait that Carnegie would eventually try to exploit to his own advantage. For now, however, he wanted only to interest the “King of Coke” in taking the Carnegie coke ovens off his hands, a matter that he surmised would take little effort, given Frick’s well-known interest in acquisition.
It also seemed that Carnegie had done his homework on Frick and was impressed with what he found. In his autobiography, Carnegie wrote that Frick’s company not only owned the best coal lands in the Connellsville area and produced the best coke from it, but also “had in Mr. Frick himself a man with a positive genius for its management. He had proved his ability by starting as a poor railway clerk and succeeding.”
Although Carnegie had gotten some of the particulars wrong, Frick’s rise from humble beginnings was obviously intriguing to him. If nothing else, it would have signaled to Carnegie that Frick was another of the fellow “fittest,” and those were the individuals with whom Carnegie sought to align himself, especially when seeking business advantage.
In any case, Tom Carnegie followed through on his brother’s charge, sending word to Frick in November 1881 that they would like to sell him their Monastery Coke Works near Latrobe, or at least seek some arrangement by which Frick would take over the purchase and sales of the co
ke from the hundred or so ovens located there.
Because the works were located some thirty miles to the northwest, on the fringes of the prime Connellsville vein, Frick wrote back that he would have to have a firsthand look at their operations before he could respond. There were other reasons why Frick delayed immediate action. In June of that year he had attended a society function in Pittsburgh, along with Andrew Mellon, the son of Thomas, with whom Frick had struck up a friendship. At the party, Frick’s eye had fallen upon a dark-haired young beauty he judged to be the most attractive woman in the room. Mellon, who had once courted her himself, told Frick that she was Adelaide Childs, the daughter of a well-to-do Pittsburgh shoe manufacturer, Asa P. Childs.
As Frick’s great-granddaughter and biographer, Martha Frick Symington Sanger, tells the story in Henry Clay Frick: An Intimate Portrait, Frick begged Mellon for an introduction. Mellon, in turn, began searching the room for an older intermediary to perform such duties, as etiquette required. Frick, however, was no time-waster. While Mellon dithered, Frick approached Adelaide on his own and struck up a conversation. In short order, Frick had secured permission to call upon Adelaide, then twenty-five, and three months later they were engaged.
At the time that Tom Carnegie approached Frick on the sale of the coke works, Frick was in the midst of plans for his wedding, which was to take place on December 15. Business would simply have to wait.
It did not have to wait long, however. Since their six-week honeymoon began in New York City, Andrew Carnegie invited Frick and his bride to have lunch with him and his mother, Margaret, at his hotel, at which he hoped to consummate the proposed partnership.
Frick, as it turned out, was not uninterested in an arrangement with Carnegie, for he had run up considerable debt in his relentless pursuit of competitors’ holdings as well as in his involvement with a venture known as the South Fork Fishing and Hunting Club, a private resort he’d formed with partners on a former canal reservoir in the mountains northwest of Pittsburgh. While accounts vary as to whose idea it was, Carnegie’s or Frick’s, the result that was toasted at the meeting produced benefits for both. The H. C. Frick Coke Company was to become the exclusive supplier of coke for all of Carnegie’s iron and steel works. Frick would take a half-interest in the Carnegie coke works at Monastery, and though Carnegie would brag to competitors that he now controlled half of the King of Coke’s holdings, he would actually receive little more than a 10-percent interest in Frick’s company.
While it was reported that the meeting of the Fricks and the Carnegies was lengthy and voluble (though Carnegie would have been the one to carry the conversation without much help from the more taciturn Frick), the most memorable line was delivered by Margaret Carnegie. After listening to her son toast the formation of the new partnership, it is reported, she responded in classical Scots fashion, “Ah, Andra, that’s a verra good thing for Mr. Freek, but what do we get out of it?”
Doubtless Carnegie explained to her later what they got out of it: the assurance of a steady supply of coke at a price that would be influenced, if not controlled, by their new association with Frick. The price to be paid would be settled on by Tom Carnegie and Frick each January 1, and would remain in effect for the year that followed.
From Carnegie’s point of view the partnership seemed a success for other reasons as well. In December 1882, Carnegie wrote to Frick to express his delight at how well their partnership was working: “I am much pleased with the statement sent me—I think we can live in any kind of weather,” he concluded. And in April 1883, Frick sent a report to Tom Carnegie showing that over the previous fourteen months, H. C. Frick had sold almost 950,000 tons of coke at a profit of $378,000, a net return of nearly 23 percent.
Frick followed up on this good news by urging Carnegie to invest in the acquisition of more land and ovens in the Connellsville area. When Carnegie wavered, Frick wrote him a testy letter that acknowledged Carnegie’s genius in general, but reasserted Frick’s confidence in his own judgment when it came to matters of coke and coal.
“I have great admiration for your acknowledged abilities and your general good judgment, and would much prefer to defer to your views,” Frick wrote Carnegie in August 1883, “[but] in the matter of the values of the properties in question and the propriety of increasing our stock, I shall have to differ from you and I think the future will bear me out.” Whatever Carnegie may have thought of this obstreperousness, he gave his approval, and the capacity of Frick Coke was doubled.
Frick continued to pursue acquisitions vigorously, bankrolling some of his purchases with sales of his stock to Carnegie. In addition, the Carnegies also set about buying up the stock of H. C. Frick owned by partners with whom Frick had been involved with early on. The process continued until the fall of 1883, by which time Carnegie’s original boast had proven true.
He now owned 50 percent of the H. C. Frick Coke Company, with original Frick associates holding 33 percent, and Frick holding the remaining 16 percent. The company still bore Frick’s name, and he was still regarded as the leading figure in the world of coal and coke, but as a monarch, he was decidedly less powerful. Furthermore, the benefits to Carnegie’s iron and steel works were considerable. On the average, his plants paid about eighteen cents less per ton for their coke than did competitors. The result was a savings of some $50,000 for a year’s operations ending in 1885, about 4 percent of net profits. By 1888, dividends from H. C. Frick operations would total almost $2 million, which were slightly higher than the total of those from the Carnegie iron and steel works themselves.
The situation was not always comfortable for Frick. During the inevitable periods of slack demand for coke, he was invariably called upon to lend his support to various coalitions of coke manufacturers formed in order to avert price wars as well as the outright collapse of coke interests. On one such occasion in 1884, recounted by Kenneth Warren in Triumphant Capitalism, at a time when nearly half the coke ovens in the Connellsville area sat idle, a group of producers known as the “Coke Syndicate” met and agreed to fix the price of coke at $1.50 per ton.
Having got wind of this, Carnegie sent an emissary, John Walker, to the coke producers’ meeting to inquire what the price would be for him. Without hesitation, Frick told Walker, “A dollar-fifty a ton.”
Walker shook his head. Whatever price Frick and his fellow coke makers might be able to squeeze out of his other customers was of little consequence: Carnegie would pay H. C. Frick $1.15 per ton and there would be no further discussion of the matter.
Frick was stunned, but he also realized how the power had shifted. “Gentlemen,” he said to his fellow coke producers, “you have just heard what the worthy representative of the majority stockholders in the H. C. Frick Coke Company said.” In the next breath, he resigned his position in the Coke Syndicate, then left the room to embark upon a voyage to Europe, returning only when Carnegie cabled an apology through a mutual friend.
It might have been a warning to Carnegie that Frick was not easily “managed,” but when his old friend and partner Henry Phipps reminded Carnegie of the public blow that Frick’s pride had taken, Carnegie set the matter aside, for by and large the association between Frick and Carnegie worked to the benefit of both.
Frick’s talent for spotting acquisitions at a bargain was as infallible as his knack for managing his properties efficiently. And Carnegie, while recognizing the need to be more discreet in revealing the details of his arrangements with Frick, enjoyed increased profits from his iron and steel operations as well as a significant return of dividends from his investments in coke. By 1889, Carnegie’s company had received over $500,000 in dividends from H. C. Frick Coke, and he himself had received nearly $500,000 more.
In addition, Frick had proven himself quite useful to Carnegie in other ways. In one instance he was able to intercede on behalf of Carnegie, who was involved in a dispute with the Philadelphia Company over the price of natural gas. When an impasse loomed, it was Frick who suggested t
hat the case be arbitrated by the son of the eminent former Pennsylvania jurist, none other than Andrew Mellon. On another occasion he helped Carnegie obtain favorable freight rates from the Pennsylvania Railroad.
There were other, less tangible advantages to the association with Frick as well. Some found the generally reserved Swiss-German the possessor of a more refined temperament than Carnegie, who sometimes seemed to try too hard to project the enthusiasm and bonhomie he deemed essential to business relations. James Bridge, the Englishman who would become Carnegie’s literary assistant, later wrote in Millionaires and Grub Street that for all his legendary toughness, Frick normally maintained an “extremely courteous, almost deferential manner. . . . He seemed more polished, more refined than the Carnegie brothers, who . . . had the rough friendliness of Western men who do big things.”
For his part, Frick not only relished the access to Carnegie’s capital but saw in their continued association an avenue to his own extravagant dreams. Coke was important, yes, but ultimately it was a secondary element in a much grander scheme. From the first days of his association with Carnegie, what Henry Clay Frick longed for was an entry into steel.
6
GOOD FOR THE GOOSE . . .
THOUGH FRICK WAS JUSTIFIABLY PROUD of his accomplishments, and continued his energetic stewardship of H. C. Frick Coke through the first half of the 1880s as zealously as if he were still a sole proprietor, it took no particular genius for an ambitious man to see where the future lay. Andrew Carnegie had become immensely successful as one of the leaders of the emerging steel industry, and Frick was determined to grow beyond his role as mere purveyor to the mighty, no matter how lucrative and secure that post might be. Furthermore, he was willing to divest himself almost completely of his holdings in coal and coke if that was what it would take to accomplish his goal.
Meet You in Hell Page 6
