MEN WHO MADE UNITED STATES STEEL
ELBERT H. GARY
A year or so before these words were written the big office buildings
and apartment houses of New York City were tied up by a strike of
elevator operators. The Empire Building, at 71 Broadway, purchased
shortly before the strike by the Steel Corporation, however, was not
affected. Every man was at his post. And it was perhaps the only big
building in the city that showed no sign of the strike.
A newspaper man, visiting the building, asked one of the starters the
reason, and he was told:
“As soon as the Corporation bought this building our wages were raised.
We are getting as much as or more than the unions are demanding. Judge
Gary has treated us white. And you can just bet your life we are going
to stick by him, strike or no strike!”
This is only a little incident. But it serves to illustrate the most
important characteristic of the head of United States Steel: His sense
of justice, the supreme passion of his life. Judge Gary treats everyone
“white.”
Judge Gary is not a “glad hand artist.” He is, if anything, too
reserved, and hence he does not win popularity quickly with chance
acquaintances. But those who know him intimately or have business
dealings with him admire, sometimes even reverence him, for they know
he not only preaches but practises in every relation of his life the
square deal, and when there is any question of what is fair between
himself and another, leans over backward and gives the other the
advantage.
In the pages of this history the Steel Corporation’s policy of “the
square deal” to all has been emphasized time and again. It is the
Corporation’s policy because it was first Gary’s. He impressed it
on the Corporation, sometimes after a hard fight. To-day it is the
foremost policy of the big company as it is the guiding spirit of
Gary’s life.
Elbert H. Gary, chief executive officer of the United States Steel
Corporation, was born on his father’s farm near Wheaton, Illinois.
He was descended from old New England stock on one side, his father,
Erastus Gary, having sprung from the hardy Puritans who settled in
Massachusetts, while his mother, Abiah Vallette Gary, was a descendant
of one of the daring spirits who sailed from France as an officer
in the Army of LaFayette and fought with him for the freedom of the
American colonies.
The future head of the greatest industrial organization in the world
was brought up frugally. He was full of spirits and fond of play, but
his Puritan father was a believer in the discipline of hard work, and
the youthful Elbert had little time except for his lessons and for work
on the farm. “My father didn’t believe much in play,” he once remarked
to the writer; “we boys had our choice of working or studying, and
the time was divided about equally between the two during each year.”
But although Erastus Gary may have been stern and uncompromising he
was obviously also a fond and kindly parent. Asked what had been the
dominating influence of his life, Judge Gary replied: “My parents.
Whatever worth while I may have done I owe to their teaching and
example.”
[Illustration: Bee-hive Coke Ovens]
When Gary was fourteen the Civil War broke out. The story is told that
the news came to the farm one evening that the Union had been attacked
and Erastus Gary and his boys sat around the fire discussing
the situation and what their course of action should be. But their
mother had no such doubts. Walking to the fireplace the old lady took
therefrom a rifle and handed it without a word to her eldest son.
[Illustration: Mouth of Coal Mine--Coke Ovens in Background]
The Judge himself remembers nothing of the incident and it may be a
fabrication pure and simple. However this may be, the fact is that soon
after the young Elbert ran away from home and joined the Union ranks.
He never had the desired opportunity to fight for the Union as his
father discovered his whereabouts--this was probably not difficult as
he knew the boy’s spirit--and got him sent back home.
Among the friends of the elder Gary, and frequent visitors at the
Wheaton farm, were Col. Henry F. Vallette, an uncle, and Judge Hiram
H. Cody, members of the Illinois bar and of the firm of Vallette and
Cody, of Naperville, a neighboring town. They had both noticed Elbert
Gary’s ability and studious habits, and when the boy was about eighteen
years of age Vallette one day asked him: “Elbert, how would you like to
become a lawyer?”
Needless to say Gary did not wait to be asked twice. He entered the
firm’s office in 1865 and while working there began to read law. Later
he took a regular course in a law school at Chicago and was soon
admitted to the bar of his state, where his success was rapid and
pronounced. In course of time he became Judge of Du Page County and was
admitted to the bar of the Supreme Court of the United States.
Meanwhile, he had formed, with his brother Noah and one of his former
chiefs, the firm of Gary, Cody & Gary.
Gary became one of the leaders of the Chicago bar, and his ability in
handling difficult cases soon attracted to him a number of wealthy
clients, among whom were several large corporations, and it was through
his connections with one of these corporations that he eventually
connected himself exclusively with the steel industry, in which he has
since risen to be the most important figure.
In 1898 Gary, as general counsel for and a director of the Illinois
Steel Co., was called on to take charge of the organization of the
Federal Steel Co., a merger of the Illinois and other companies. It was
he who first suggested this amalgamation. Here he was for the first
time brought in touch with the late J. Pierpont Morgan, whose financial
assistance in the formation of the new company was being sought. The
business ability of the lawyer so impressed the New York banker that
he and others interested with him insisted that Gary should head
Federal Steel. The future head of United States Steel hesitated, for
his practice was lucrative and he had become financially independent,
but he finally yielded and gave up his legal business, then located at
Chicago, and moved to New York, devoting himself thenceforward entirely
to steel.
Speaking of the reasons for Morgan’s choice in this matter an old
business associate of the Judge’s said: “Legal judgment and business
acumen are seldom found in combination. Gary had both these qualities
and a higher degree than any man I have ever known. And it was this
happy combination that impressed the great banker.”
But more than this, Gary was, and is, a statesman in business. He
has the broad vision that distinguishes the statesman from the mere
politician and the really great business leader from the average run of
executives. He saw beyond immediate effects into the distant future and
based his course on this vision.
In writing of the vast majority of men who have achieved success in
one line or another it is easy to select some prominent characteristic
which particularly distinguishes them. But there are a few who owe
their eminence to a variety of well-blended attributes, and Gary is one
of these chosen few. This renders it difficult for the chronicler to
decide where the heaviest stress should be laid.
A prominent Chicago lawyer who in his youth had worked for years under
Gary was appealed to in this regard. And this is what he said:
“Judge Gary had the ability and courage to, whenever necessary, abandon
the old precedents which, by reason of changed times and conditions,
had been relegated to the scrap heap of progress. He was one of the few
attorneys who could, with almost prophetic vision, see the positions
which the courts of appeal must eventually be obliged to take with
reference to questions of public policy and the great industrial
organizations just then in their infancy.”
The lawyer then went on to tell an anecdote illustrating the fact that
the Judge though a member of the legal profession did not believe in
recourse to litigation when it could be avoided. He said:
“I recall that on one occasion a client called on the Judge in an irate
mood and asserted his intention of prosecuting a neighbor for slander.
He told Gary what the neighbor had said and asked his opinion and
advice. And this was the reply he received: ‘If you are guilty of what
he charges perhaps you had better sue; but if you are not--why, go home
and forget it.’”
Nor did Gary’s prophetic vision “extend only as regards the position
which the courts must take” but to the trend of human events generally.
There is nothing uncanny about this foresight or sixth sense. It is due
entirely to the fact that its possessor has a mind peculiarly capable
of estimating and sizing up the relative values of known causes and
deducting from them the natural, in fact, the inevitable results.
No better exemplification of this can be given than is afforded
by the policies which he advocated for the Corporation, and which
were gradually adopted and put into practice. He saw plainly, long
before any one else did, how subject to criticism was the gigantic
organization which he had helped to form, and of which he was the
head; he realized that its very size contained an element of weakness
in that it attracted enmity, and made it the subject of attack.
And in the face of powerful opposition, not only from some of his
fellow directors at first--an opposition that gradually diminished
and eventually vanished, or was converted into admiration and hearty
coöperation--but from subordinate executives of the subsidiary
companies who could not accustom themselves immediately to new business
methods, he insisted that the big company should so deal with all with
whom it came in contact, its competitors, its customers, its workmen,
as to make all of these its friends.
Such a consummation was regarded in the beginning as an impracticable
dream by nearly everyone of his colleagues, who could not realize that
a new industrial era was dawning, but Gary persisted and won out.
The good will he gained for the Corporation from those who otherwise
would have been its enemies proved a strong bulwark of defence in the
Government’s suit for the dissolution of the “Steel Trust.” Had Gary’s
early recommendations on questions of policy been overruled by his
associates it is a moral certainty that the Corporation would have been
dissolved instead of emerging victorious from the suit. It is difficult
to see how any one who had the opportunity to listen to or read the
evidence presented in this litigation could fail to have been impressed
with the fact that Gary seemed to have anticipated every possible
point of attack and to have taken steps to eliminate, or at least to
minimize, the danger therefrom. Whatever may have been the differences
of opinion in the beginning, for many years the policies advocated by
Judge Gary have been endorsed by all of his fellow-directors on the
Steel Corporation’s Board; particularly by the members of the Finance
Committee, who were more closely associated with him, had a better
opportunity of absorbing his viewpoint, and who stood behind him
solidly in carrying out his ideas. Gary himself was emphatic on this
point in his testimony in the Government suit.
The part played by Gary in bringing about the formation of the U. S.
Steel Corporation and in guiding its policies was clearly brought out
by the late Robert Bacon, one of the partners in the firm of J. P.
Morgan & Co., in his testimony in the suit in question. Mr. Bacon,
speaking of the organization of the big company, said: “Judge Gary, of
course, directed it all.” And later, in discussing the policies of the
Corporation:
“The facts are that the policy of the company from the beginning has
been to change the old methods of dealing with competitors. Judge Gary,
who has done more for the U. S. Steel Corporation in its development
and the benefits it has brought all hands than any one man since its
formation, has made it a cardinal point of his policy, and has tried
his best to inculcate it upon all the sub-companies, that there was
a new order of things come, that there were new rules of the game
dealing with competitors, as well as in other human relations. Judge
Gary has talked from the very first and has tried to compel the
actions of all the others in the Corporation toward dealing fairly and
decently with competitors, as being the only way in which any kind
of stability of prices or of conditions could be maintained. He has
from the beginning preached and practised the fairest kind of dealing
with his competitors, keeping them informed, as far as he legitimately
could, of all the conditions of the Steel Corporation, and by doing
so has gradually acquired a degree of confidence that, in my opinion,
has never existed before amongst competitors. The old conditions have
changed; the old destructive and ruinous and ruthless warfare of the
early days of the iron and steel industry has disappeared, and in its
place, by reason of the attitude of Judge Gary, more than any one else,
a condition has been produced among competitors in the iron and steel
business, and I believe in many other industries, that never before
existed.”
Judge Gary’s intense desire for doing justice to all, and his sincere
interest in the well-being of the worker, have already been referred
to. He is not a reformer in the ordinarily accepted sense of the term.
He does not prate about helping the working man, but in guiding the
big Corporation he has always seen to it that the man who labors shall
be given an opportunity for clean living and self-respect. And it is
significant that in arranging wage increases the Corporation has always
provided more generously for the lower-paid employee. As a mass, the
men who work for the Corporation recognize Judge Gary’s attitude and
appreciate it fully. And he sets a higher valuation on this recognition
and appreciation than on all the honors that have come to him.
Some years ago Gary, in urging on the subsidiary companies the
promotion of safety and welfare work for the Corporation’s employees,
said to the casualty managers of the different subsidiary companies:
“We (the Finance Committee) shall not hesitate to make the necessary
appropriations of money to carry into effect every suggestion that
seems to be practicable for the improvement of conditions at our
mills.” Later he wrote, repeating his former promise that all needed
money would be forthcoming and saying: “The safety and welfare of the
workmen is of the greatest concern.”
This promise has been kept sacredly. The writer has visited at one
time or another practically all the Corporation’s plants--some of
them several times. At each one he has always asked those who devote
themselves to welfare work this question: “Have you any difficulty
in getting appropriations from the Corporation for welfare work you
consider advisable?” And the reply has invariably been the same: “We
are never refused.”
In the vast organization that is the United States Steel Corporation
there are perhaps hundreds of thousands of men who have never set eyes
upon its head, who have no idea what he is like to look upon. But there
is probably hardly a man who does not feel his influence, and there are
few who do not look up to him with respect and often with something
like reverence. His personality has permeated this huge mass of men.
Another attribute of this great business leader is a broad and real
tolerance of the opinions of those who do not agree with him. He has
built up a vast and wonderfully efficient organization founded on what
he conceives to be principles of justice and fair dealing, but his
attitude toward those who criticize the structure he has erected is not
one of irritation, as might be expected, or of impatience. Rather he
endeavors, sincerely and patiently, to disarm criticism by a policy of
open dealing.
On one occasion, when certain acts of his had been criticized as
constituting a possible violation of the law, he, although believing
implicitly that he had not offended, forthwith abandoned the
continuance of these acts, so as to leave no shadow of doubt of his
intent to obey the law. He explained at the time that though every
citizen had the right to criticize legislation, and should seek to have
changed such laws as he deemed unjust or uneconomic, he was bound to
obey these laws so long as they remained on the statute books.
In physical stature Judge Gary is of medium height. He carries his
years well and appears yet in his prime. The impression he gives the
observer is that of a statesman rather than a man of affairs, an
impression heightened by his deliberate speech and his appreciation
of the finer meanings of words. Most of his portraits represent him
sitting straight up, just a little stiffly, but when interested in a
conversation, the Judge invariably stands, or rather paces deliberately
back and forth, his hands stuck in the waistband of his trousers, and
his head bent forward at an angle of deep thought. And as he warms to
his subject, he now and then gesticulates slightly, or, turning to his
listener, drives home some argument with pointed forefinger. At the
remembrance of some amusing incident his twinkling eyes light up what
is usually a decidedly serious countenance.
All those who during the World War were in touch with what was being
done by the Government to meet the enormous new manufacturing needs
created by the war know that the Steel Corporation, in the great
emergency, invariably put patriotism above profits and that its hearty
coöperation helped materially in bringing about the desired end. Judge
Gary was responsible for the Corporation’s attitude in this as in other
matters.
Honors have been showered upon the head of the Steel Corporation by
universities and colleges, and the American, French, Belgian, and
Italian governments, and the late Pope Pius X presented a gold medal
containing his profile portrait to Judge Gary in recognition of his
efforts for improving working conditions. But beyond all these honors
he values the esteem of the men under him, and the good will of his
competitors.
It would be hard to find a more suitable ending for this brief study of
the leading figure in the industrial world than the quotation applied
to him by the principal steel makers of the United States and Canada
on the occasion of a dinner given in his honor in October, 1909. Here
were men who had fought with him and against him, who had had every
opportunity to estimate him both as friend and foe, and who, after the
trying times of the 1907 panic, declared that he had “played the game
and played it fair”:
“Moderate, resolute, whole in himself, a common good.”
JOHN PIERPONT MORGAN
“The greatest banker the world has ever seen.” Thus the head of the
Deutsche Bank called the late J. P. Morgan during his lifetime, and as
the years pass students of finance are becoming more and more satisfied
that the German, himself a banker of no mean repute or ability, spoke
truly.
Without J. Pierpont Morgan the organization of the United States Steel
Corporation would, in all probability, have been an impossibility.
The carrying through of so vast a project required a financier of his
prestige and of his financial courage. There was no other banker big
enough or bold enough to undertake such a task, and no history of the
Corporation would be complete unless it contained a résumé of the work
of the former money wizard.
So large did Morgan loom in the public eye during his lifetime and so
much has been said and written of him since that it would be difficult
to say anything of him with which the reader is not already familiar.
But it has perhaps not been generally realized that Morgan was a
patriot of the right type. He was, to use a financial term, “a bull on
America.” His confidence in his country’s future was unbounded, and he
had the courage of his convictions to put his great fortune into the
development of American enterprises.
John Pierpont Morgan was the son of Junius Spencer and Juliet Morgan.
He was born on April 17, 1837, and educated at the English High School
of Boston and the University of Gottingen. He entered the banking
business at the age of twenty, with the firm of Duncan, Sherman & Co.,
and later, from 1864 to 1871, was a member of the banking house of
Dabney, Morgan & Co. Still later he helped to form the firm of Morgan,
Drexel & Co., which afterward became J. P. Morgan & Co. He died in Rome
within a few weeks of the close of his 76th year, on March 31, 1913.
Having a peculiar genius for financial organization and arriving at the
heyday of his power at the period when vast consolidations of capital
and industry were the order of the day it was natural that he should
have figured prominently in the carrying through of many of these.
Among the large concerns with the organization of which he was closely
identified was the International Harvester Co., and he took a prominent
part in the reorganization and refinancing of several large railroad
enterprises, notably the Erie, Reading, Santa Fe, and Northern Pacific.
He has generally been blamed for the New Haven débâcle and there is no
doubt that he occupied an important position in managing its affairs;
in fact, according to the former president of that system, he dictated
its policies and actions.
But the financing of the United States Steel Corporation was beyond all
question his _magnum opus_.
So great was Morgan’s influence in the management of most of the
companies with which he was connected that it was said of him, as of
the McGregor, that “where he sat was the head of the table.”
But so far as the Steel Corporation was concerned at least, it seems
to be fairly well established that, keen as was his interest and great
as was his pride in the big company, he never assumed an attitude in
the least dictatorial. He was the Corporation’s banker--nothing more.
Questions of operation and policy he left entirely to those having
direct charge of them. This was particularly true in the last six
or eight years of his life, by which time, other directors of the
Corporation have stated, he had come to place such implicit reliance on
the judgment of Judge Gary that he always accepted the latter’s ideas
upon all matters connected with the welfare of the great enterprise.
Morgan himself regarded the amalgamation of many of the country’s
leading steel concerns into United States Steel as the crowning
achievement of his career. He took a personal pride in his connection
with the Corporation’s organization--and who shall say it was not a
worthy pride? He lived to see it firmly established and exerting an
influence for good on the steel trade and on industry generally; to
see it gain the confidence of the public as evidenced by the growth
that was, even before his death, taking place in the number of its
stockholders, many of whom held only a share or two and regarded them
almost as gold bonds; to see it earn the good will of its competitors
and the loyalty of its--at the time--two hundred thousand odd employees.
But unfortunately he also lived to see it attacked by the Government.
No doubt this was a sore grief to the great financier. And its
vindication did not come until several years after his death.
To those who knew him by sight only Morgan appeared a solitary, stern
figure, perhaps a little too much inclined toward impressing his own
will on others. Those who enjoyed intimacy with him declare that under
his cold exterior beat a heart as tender as a woman’s, that he took the
keenest interest in all things human and that, while never figuring
publicly as a philanthropist, the list of his private benefactions was
enormous.
Newspaper men, who perforce had often to seek an interview with the
great banker, found him rather unapproachable. But when he consented
to talk his statements could be relied on absolutely. And he was not
without a subtle sense of humor. On one occasion a financial writer who
had been assigned to get Morgan to talk by hook or by crook invaded
his private yacht and was only saved from being ejected by the banker
himself who invited his visitor to the saloon and treated him like an
honored guest.
He discussed in the fullest detail the subject on which the writer
wished to interview him but--at the end, when his self-invited guest
was taking his leave, Morgan said with a shadow of a smile:
“Of course, you understand all I have told you is in confidence. You
have been my guest and I rely on you not to violate that confidence.”
Needless to say the interview was never printed. The scribe reported
to his office that the banker refused to be interviewed.
When Morgan died the leading business men of the country united in
testifying to his ability and character. Judge Gary, who had been
closely associated with him for years, said:
“As a constructive force in financial matters he had no equal. With
keenest perception, with indomitable courage, and with unbounded
confidence in the future he was a natural leader and as such was called
upon in times of financial stress to lend his influence to avert a
threatened storm or to overcome an existing difficulty. And he never
failed. His character was such that the greatest men of this country
and of other countries trusted him and followed his lead.”
Shortly before he last sailed from his home shores Morgan remarked
to a friend that his work was done. The utterance was prophetic. And
posterity is beginning to realize how great that work was. In these
difficult days of world reconstruction, more than ever before, is his
financial genius and particularly his faith and courage missed.
CHARLES M. SCHWAB
Perhaps of no other man in industry are as many anecdotes related as
of Charles M. Schwab, the first president of the United States Steel
Corporation, and now head of the Bethlehem Steel Corporation, the
second largest steel organization in America.
Schwab is the Peter Pan of American industry. His is the spirit of
perennial youth, his the philosophy of laughter.
“I try,” he says, “to be like Schulz. He was a foreman under me during
the Homestead strike. He stuck by the company and one day came into my
office dripping mud and water. To my inquiries he replied that some
strikers had thrown him into the creek.
“‘What did you do then, Schulz?’ I asked.
“‘Oh, I shust laff.’”
One of the old Carnegie “boys,” Schwab is like the former iron master
in his wonderful ability to infuse into those who work with him some of
the enthusiasm with which he is so richly endowed, and to get from them
loyalty and devotion. To this attribute, as much as to anything else,
Schwab owes his great success.
It is impossible to get an accurate concept of Schwab’s personality
without coming directly into contact with him. Many men have declared
that “C. M.,” as he is known to his friends, is “the best salesman
that ever stepped in shoe leather.” And this is not an exaggeration.
There is something about him--fascination, personal magnetism, call
it what you will--that captivates almost everyone with whom he comes
in contact. His infectious laugh disarms hostility and criticism. His
great ability compels admiration.
Numerous anecdotes illustrating Schwab’s magnetism are told in the
steel trade; the following is typical:
Several years ago, when Bethlehem Steel was a little known company, its
head visited a prominent New York banker to seek his aid in putting out
a bond issue. He told the banker all about the great future in store
for Bethlehem as he saw it--prophetically, as it has turned out--and
his hearer was fired with enthusiasm regarding the proposed issue. He
asked Schwab to go back to his office and dictate to a stenographer the
statements he had made regarding the security behind the bonds and the
future of Bethlehem Steel for the purpose of making up a prospectus.
With that, he declared, the bonds would sell like hot cakes.
When the banker received the typewritten prospectus he was dissatisfied
and rang Schwab up on the ’phone. The steel man’s arguments were not
nearly so convincing in black and white as when given in his inimitable
style, and the money magnate declared that the other had not included
in the written statement the facts related in the conversation. So
Schwab paid him another visit and went all over the matter again. The
banker said:
“Yes. You’ve got it all down here. But it doesn’t sound the same. I
tell you what we’ll do. You talk the bonds into a phonograph and we’ll
use the records to sell them.”
And here is another Schwab anecdote told by himself:
“On one occasion, when Bethlehem was still a struggling company, I
went to see a Philadelphia banker whom I knew very well and told him I
needed a great deal of money. He said:
“‘I can let you have half a million.’
“‘Why,’ I replied, ‘I can get at least a million from bankers in New
York who don’t even know me!’
“‘That’s the reason they lend you,’ he gravely returned.”
Charles M. Schwab was born at Williamsburg, Pa., on February 18, 1862,
and educated at St. Francis College at Loretto in the same state. His
father owned a livery stable at Cresson Springs, where Carnegie had a
summer bungalow.
One day the little Scotsman, who loved music, heard the boy singing,
and told Schwab, Senior, to bring the lad to him when he was ready to
go to work. At the age of eighteen Schwab entered the employment of the
Carnegie Company as a junior in the drafting room.
Schwab attributes his success largely to the interest which Carnegie
took in him. Carnegie, on the other hand, declared that Schwab was one
of the two men to whom he owed the bulk of his fortune, the other being
Captain William R. Jones, who was superintendent of the big Braddock
plant when Schwab enlisted in the steel army.
At the age of twenty-four Schwab was appointed superintendent of the
Homestead plant, which had just been acquired by Carnegie. When he
arrived there, the organization was in a terrible condition. The long
series of strikes which the original owners had had to contend with had
not only caused them to give up the plant in despair and to accept
Carnegie’s offer, but had resulted in bitter feeling on the part of the
workmen. But Schwab’s smile and good nature soon won them over, and
in a few months the organization had been restored and Homestead was
making money for Carnegie.
In 1889 Schwab returned to Braddock on the death of Captain Jones,
as his successor. Three years later occurred the bloody strike at
Homestead, and Schwab was again sent back there to take charge. When
the strike was over he was put in charge of both plants. He was the
only man that ever managed two plants for Carnegie.
One day Carnegie told Schwab that it had been decided to make him
vice-president of the Carnegie Company. But the young man replied:
“No, Mr. Carnegie, I am no good at carrying out another man’s orders,
and that’s about all a vice-president has to do. As superintendent I am
boss of the plants I manage; I prefer to remain that way.”
Next day Carnegie again sought out his superintendent. “Well, if you
won’t be vice-president, I suppose we’ll have to make you president,”
he said, and so he did.
Like Gary, Schwab was satisfied that the next step in steel making, one
that must come sooner or later, was the integration of the different
departments of steel making into one big, harmonious whole. How he
assisted in making this possible we have already seen. In 1901, on the
organization of the United States Steel Corporation, Schwab became its
president, with a salary of $100,000 a year and about $15,000,000 of
its stock.
After the Corporation had taken over Carnegie Steel, Morgan, the story
goes, found a contract among its papers pledging Schwab a salary of
$1,000,000 a year. He had not been aware of the existence of this
contract and asked Schwab what could be arranged on the matter. Schwab
replied: “Let me have that paper a second, Mr. Morgan,” and taking it
from the banker, he tore it into small pieces and threw them into the
wastebasket.
But Schwab did not long remain president of the great steel merger.
Long accustomed to being “boss” he found the new conditions
disagreeable. Bred in the old steel school he was out of sympathy with
the policies of the Corporation as inaugurated by Gary. There was no
open breach between them, but the situation was obviously galling to
the younger man and so he resigned, his resignation probably being
hastened by the fact that he had been for some time in poor health, a
victim of neuritis.
It was in 1903 that Schwab severed his connection with the Steel
Corporation and sailed for Europe intending, at the time, to give up
business permanently. But this was not to be.
Although he returned from Europe in 1904 Schwab did not actively
engage in business again until 1907. He was, in a sense, pitchforked
back into the manufacturing arena by the failure of the United States
Shipbuilding Co. a year or two before and its reorganization as the
Bethlehem Steel Corporation. Schwab, who had been the principal
bondholder of the shipbuilding company, became the controlling interest
in the reorganization and eventually assumed personal charge of its
activities to protect his own investment as well as that of others.
Once in harness again Schwab threw himself heart and soul into the
steel battle. He found Bethlehem Steel in a rundown condition and for
years he poured into it his personal fortune and all the money he
could borrow. Although himself the largest stockholder he steadfastly
refused to consider dividends until the company was firmly established
financially and the result was that, before the European war broke out,
Bethlehem was solidly on its feet and showing large earnings. These
were enormously enhanced during the war years, when the stock sold
as high as $700 a share. To-day Bethlehem is the second biggest steel
company in the world, its plants having a capacity of 3,250,000 tons of
steel annually.
Although for many years a competitor of the Corporation of which he was
once president Schwab is still a firm believer in the future of United
States Steel and the value of its securities. On one occasion he told
the writer:
“It is a wonderful concern. There isn’t anything like it in the world,
nor could its plants and organization be duplicated at any cost. The
future will show how well, how securely, its foundations were laid.”
GEORGE W. PERKINS
George Walbridge Perkins, chairman of the Finance Committee of the
United States Steel Corporation from November, 1901, to February,
1907, and an active member of that committee and of the Corporation’s
directorate till the day of his death, June 18, 1920, was an unusual
figure in American business--a man who, working his way from the bottom
of the ladder to an eminent position while still comparatively young,
gave up active money making while still under fifty and devoted his
life to the betterment of social conditions.
The world does not know how to judge Perkins. There are many
who believed that his withdrawal from active business and his
self-submergence in social work was a cloak, and this belief was
undoubtedly strengthened by the fact that Perkins, in appearance, was
a typical, cold-blooded financier. His was neither the look nor the
manner of an idealist, a reformer. But the record of his life from
1911, when he resigned from a partnership in the great House of Morgan,
is ample answer to all doubts of his sincerity. Perkins’ friends and
admirers can point with confidence to this record in the impartial
court of history.
Perkins was born at Chicago in January, 1862. He began his business
career in the humblest capacity, that of office boy, in the branch
of the New York Life Insurance Co. in his home town. Later he became
bookkeeper, then solicitor, manager of agencies and, still later,
vice-president. Finally, when only thirty-eight, he was elected
chairman of the Finance Committee of the company.
Perkins was one of the first exponents of corporate publicity. He saw
its virtues when publicity to most corporation men was anathema. When
vice-president of New York Life he urged that the best way to earn the
confidence of the public was to give it your own, and he prevailed upon
the trustees of the New York Life to publish annually a full list of
the securities in which the policyholders’ money was invested. This
innovation was heralded with a storm of ridicule by the managements of
competing concerns. But so powerful a means of getting new business
did these security lists prove, so great was the increase of insurance
written by the agents armed with them, that other insurance companies
were soon forced to follow, and the practice became general in the
insurance world.
Perkins’ next step was to extend the business of his company to
European fields previously closed to all American insurance concerns,
which, in fact, were not permitted to operate in many European
countries because of the unenviable reputation they bore. Perkins was
determined that New York Life should lift these legislative handicaps
and do business anywhere and everywhere it wanted to and so he made
one trip after the other to Europe, each time extending his company’s
field of operations. What he said in effect to the various European
governments was: “The New York Life is ready to meet any reasonable
demand for the safeguarding of the interests of its policyholders,” and
he backed up his assertion. The result was not only to give the company
a bigger field abroad but to strengthen the arguments of its agents at
home.
This achievement and the fact that he was instrumental in bringing
to America the first Russian loan ever placed here, brought Perkins
to the notice of New York financiers. Early in 1901 he called on the
elder Morgan seeking a subscription to the Palisades Park project, one
of Perkins’ pet hobbies until the day of his death and a project that
has enabled thousands of poor children from the New York slums to get
a chance for fresh air and outdoor enjoyment. Morgan, on his second
meeting with the insurance man, pointed in his usual abrupt manner to a
desk near his own:
“How would you like to occupy that?” he asked.
At first Perkins refused, but later accepted, and he became a partner
in Morgan’s in 1901, continuing with the great banking house until 1911.
Soon after the Steel Corporation was organized Perkins was elected a
member of the Board of Directors, and later, on the resignation of
Robert Bacon, became chairman of the Finance Committee. His experience
with the New York Life had peculiarly fitted him for the position he
now held, for Perkins was first and last an organizer--a worker with
men, not with money. Although a member of the largest private banking
house of the country he was not a banker. “In the ten years I was
with Morgan’s I never went behind the counter or examined into the
bookkeeping end of the business,” he declared; “my job was to assist in
the physical organization of the great industrial combines which Mr.
Morgan was then engaged in financing.”
Like Gary, head of the Steel Corporation, Perkins looked rather to
the ultimate results of an action or a policy than to its immediate
effects. Like Gary, moreover, he was a believer in corporation
publicity and in the square deal to the worker, so it was natural that
he should have favored these ideas in the Corporation. Perkins at the
beginning, it is true, did not fully endorse all Gary’s policies but
he early became an ardent supporter of them, and his assistance in the
turbulent early years was a great help to the Judge in his efforts to
have his policies endorsed by the Corporation’s board.
Perkins was particularly identified with the Corporation’s bond
conversion plan, explained in an earlier chapter. It was largely his
idea. When the subject of raising more working capital came up after
the organization of the big company it was he who suggested the scheme
by which the cost of securing the new capital needed would be paid
back in a few years by savings in interest charges, one which would
also eventually reduce the Corporation’s fixed charges materially. He
believed that the Corporation should build for the future and that
it was a matter of small moment if the immediate cost of a course of
action was high if the ultimate results were toward economy. And when
the plan was opposed in the courts by some of the stockholders it was
an affidavit presented by Perkins that did more than anything else to
induce a favorable decision and to make it possible to proceed with the
conversion.
In 1911 Perkins retired from the Morgan firm, at the same time retiring
from all active business except his directorship in various companies,
chief among which were the Steel Corporation and the International
Harvester Co., of which latter he was chairman of the Finance
Committee. After that time he devoted his energies until his death to
semi-public work.
Especially did he devote himself to the solution of the problems
growing out of the relationship between capital and labor. He was
prominent in the profit-sharing plan which is now in vogue in the
Steel Corporation and which has been so largely followed by many other
industrial concerns in the past seventeen years. He also gave much
of his time to spreading the gospel of coöperation in the business
world. As long ago as February, 1908, he began making public addresses
on the necessity for such coöperation, claiming that the many modern
improvements in inter-communication and the enlightenment of the
people through our broad system of education had brought us to a point
where the old destructive, competitive methods in business had to be
abandoned and a more humane and enlightened order of things take their
place. He delivered many addresses throughout the country on these two
favorite themes, profit-sharing and coöperation.
As already suggested Perkins’ course in breaking off his business
career apparently at its zenith and devoting the prime of his life to
the betterment of the lot of the worker with his hands and the general
welfare of the community was regarded with suspicion by many, and his
motives were questioned. Of the influence that guided his course let
him speak for himself.
“My father,” he said, “was deeply interested in social service and
settlement work, and, as a boy, my Sundays were spent not in merely
going to Sunday-school but in rounding up the poor boys of the
neighborhood for classes, etc. Later, my experience selling life
insurance brought me closely in touch with the needs of the people,
and even when I became affiliated with the Morgan firm my work as an
organizer was the human end of the job. My inheritance from my father
and my own life work both kept me in touch with “all things human.”
Isn’t it only natural that I should take a deep interest in what you
might call human work?
“I don’t claim credit for this. In fact, I don’t see how, with my
experience, it could have been otherwise. It became, if you will, my
hobby which I gratified as soon as I was able to.
“When a man approaches fifty years of age and finds he has enough money
to meet his wants for the rest of his life and to take care of those
for whom he should naturally provide, the question that presents itself
is: what am I going to do with the remainder of my life? Whatever I do
in the way of work will have to be left behind me in the world. Shall
I work to accumulate more money and leave that, or shall I work for
certain definite objects that I believe are worth while, and leave the
results of that work behind me? I simply chose the latter course.”
OTHER “MEN OF THE CORPORATION”
Many other men, of course, have done their share in making the
Corporation what it is to-day. In the success of the great company
men like Richard Trimble, its secretary, and William J. Filbert, its
comptroller, who have been with it since incorporation and seem almost
as integral parts of its structure as Judge Gary himself, have done
their part, as have the presidents of the various subsidiary companies.
All these are men of unusually high ability, nearly all of whom have
worked their way to their present positions from the bottom of the
ladder. They have for years devoted all their energies to building up,
each in his own sphere, the business and resources of the big company
and may justly and proudly claim the right to be reckoned with Gary,
Morgan, and the others, as “Men who made United States Steel.”