Chapter Ten, Part One

THE IRON WORKS

The Keystone Works have always been my pet as being the parent of all the other works. But they had not been long in existence before the advantage of wrought- over cast-iron became manifest. Accordingly, to insure uniform quality, and also to make certain shapes which were not then to be obtained, we determined to embark in the manufacture of iron. My brother and I became interested with Thomas N. Miller, Henry Phipps, and Andrew Kloman in a small iron mill. Miller was the first to embark with Kloman and he brought Phipps in, lending him eight hundred dollars to buy a one-sixth interest, in November, 1861.

I must not fail to record that Mr. Miller was the pioneer of our iron manufacturing projects. We were all indebted to Tom, who still lives (July 20, 1911) and sheds upon us the sweetness and light of a most lovable nature, a friend who grows more precious as the years roll by. He has softened by age, and even his outbursts against theology as antagonistic to true religion are in his fine old age much less alarming. We are all prone to grow philosophic in age, and perhaps this is well. [In re-reading this--July 19, 1912--in our retreat upon the high moors at Aultnagar, I drop a tear for my bosom friend, dear Tom Miller, who died in Pittsburgh last winter. Mrs. Carnegie and I attended his funeral. Henceforth life lacks something, lacks much--my first partner in early years, my dearest friend in old age. May I go where he is, wherever that may be.]

Andrew Kloman had a small steel-hammer in Allegheny City. As a superintendent of the Pennsylvania Railroad I had found that he made the best axles. He was a great mechanic--one who had discovered, what was then unknown in Pittsburgh, that whatever was worth doing with machinery was worth doing well. His German mind made him thorough. What he constructed cost enormously, but when once started it did the work it was intended to do from year's end to year's end. In those early days it was a question with axles generally whether they would run any specified time or break. There was no analysis of material, no scientific treatment of it.

How much this German created! He was the first man to introduce the cold saw that cut cold iron the exact lengths. He invented upsetting machines to make bridge links, and also built the first "universal" mill in America. All these were erected at our works. When Captain Eads could not obtain the couplings for the St. Louis Bridge arches (the contractors failing to make them) and matters were at a standstill, Kloman told us that he could make them and why the others had failed. He succeeded in making them. Up to that date they were the largest semicircles that had ever been rolled. Our confidence in Mr. Kloman may be judged from the fact that when he said he could make them we unhesitatingly contracted to furnish them.

I have already spoken of the intimacy between our family and that of the Phippses. In the early days my chief companion was the elder brother, John. Henry was several years my junior, but had not failed to attract my attention as a bright, clever lad. One day he asked his brother John to lend him a quarter of a dollar. John saw that he had important use for it and handed him the shining quarter without inquiry. Next morning an advertisement appeared in the "Pittsburgh Dispatch":

"A willing boy wishes work."

This was the use the energetic and willing Harry had made of his quarter, probably the first quarter he had ever spent at one time in his life. A response came from the well-known firm of Dilworth and Bidwell. They asked the "willing boy" to call. Harry went and obtained a position as errand boy, and as was then the custom, his first duty every morning was to sweep the office. He went to his parents and obtained their consent, and in this way the young lad launched himself upon the sea of business. There was no holding back a boy like that. It was the old story. He soon became indispensable to his employers, obtained a small interest in a collateral branch of their business; and then, ever on the alert, it was not many years before he attracted the attention of Mr. Miller, who made a small investment for him with Andrew Kloman. That finally resulted in the building of the iron mill in Twenty-Ninth Street. He had been a schoolmate and great crony of my brother Tom. As children they had played together, and throughout life, until my brother's death in 1886, these two formed, as it were, a partnership within a partnership. They invariably held equal interests in the various firms with which they were connected. What one did the other did.

The errand boy is now one of the richest men in the United States and has begun to prove that he knows how to expend his surplus. Years ago he gave beautiful conservatories to the public parks of Allegheny and Pittsburgh. That he specified "that these should be open upon Sunday" shows that he is a man of his time. This clause in the gift created much excitement. Ministers denounced him from the pulpit and assemblies of the church passed resolutions declaring against the desecration of the Lord's Day. But the people rose, en masse, against this narrow-minded contention and the Council of the city accepted the gift with acclamation. The sound common sense of my partner was well expressed when he said in reply to a remonstrance by ministers:

"It is all very well for you, gentlemen, who work one day in the week and are masters of your time the other six during which you can view the beauties of Nature--all very well for you--but I think it shameful that you should endeavor to shut out from the toiling masses all that is calculated to entertain and instruct them during the only day which you well know they have at their disposal."

These same ministers have recently been quarreling in their convention at Pittsburgh upon the subject of instrumental music in churches. But while they are debating whether it is right to have organs in churches, intelligent people are opening museums, conservatories, and libraries upon the Sabbath; and unless the pulpit soon learns how to meet the real wants of the people in this life (where alone men's duties lie) much better than it is doing at present, these rival claimants for popular favor may soon empty their churches.

Unfortunately Kloman and Phipps soon differed with Miller about the business and forced him out. Being convinced that Miller was unfairly treated, I united with him in building new works. These were the Cyclops Mills of 1864. After they were set running it became possible, and therefore advisable, to unite the old and the new works, and the Union Iron Mills were formed by their consolidation in 1867. I did not believe that Mr. Miller's reluctance to associate again with his former partners, Phipps and Kloman, could not be overcome, because they would not control the Union Works. Mr. Miller, my brother, and I would hold the controlling interest. But Mr. Miller proved obdurate and begged me to buy his interest, which I reluctantly did after all efforts had failed to induce him to let bygones be bygones. He was Irish, and the Irish blood when aroused is uncontrollable. Mr. Miller has since regretted (to me) his refusal of my earnest request, which would have enabled the pioneer of all of us to reap what was only his rightful reward--millionairedom for himself and his followers.

We were young in manufacturing then and obtained for the Cyclops Mills what was considered at the time an enormous extent of land--seven acres. For some years we offered to lease a portion of the ground to others. It soon became a question whether we could continue the manufacture of iron within so small an area. Mr. Kloman succeeded in making iron beams and for many years our mill was far in advance of any other in that respect. We began at the new mill by making all shapes which were required, and especially such as no other concern would undertake, depending upon an increasing demand in our growing country for things that were only rarely needed at first. What others could not or would not do we would attempt, and this was a rule of our business which was strictly adhered to. Also we would make nothing except of excellent quality. We always accommodated our customers, even although at some expense to ourselves, and in cases of dispute we gave the other party the benefit of the doubt and settled. These were our rules. We had no lawsuits.

As I became acquainted with the manufacture of iron I was greatly surprised to find that the cost of each of the various processes was unknown. Inquiries made of the leading manufacturers of Pittsburgh proved this. It was a lump business, and until stock was taken and the books balanced at the end of the year, the manufacturers were in total ignorance of results. I heard of men who thought their business at the end of the year would show a loss and had found a profit, and vice-versa. I felt as if we were moles burrowing in the dark, and this to me was intolerable. I insisted upon such a system of weighing and accounting being introduced throughout our works as would enable us to know what our cost was for each process and especially what each man was doing, who saved material, who wasted it, and who produced the best results.

To arrive at this was a much more difficult task than one would imagine. Every manager in the mills was naturally against the new system. Years were required before an accurate system was obtained, but eventually, by the aid of many clerks and the introduction of weighing scales at various points in the mill, we began to know not only what every department was doing, but what each one of the many men working at the furnaces was doing, and thus to compare one with another. One of the chief sources of success in manufacturing is the introduction and strict maintenance of a perfect system of accounting so that responsibility for money or materials can be brought home to every man. Owners who, in the office, would not trust a clerk with five dollars without having a check upon him, were supplying tons of material daily to men in the mills without exacting an account of their stewardship by weighing what each returned in the finished form.

The Siemens Gas Furnace had been used to some extent in Great Britain for heating steel and iron, but it was supposed to be too expensive. I well remember the criticisms made by older heads among the Pittsburgh manufacturers about the extravagant expenditure we were making upon these new-fangled furnaces. But in the heating of great masses of material, almost half the waste could sometimes be saved by using the new furnaces. The expenditure would have been justified, even if it had been doubled. Yet it was many years before we were followed in this new departure; and in some of those years the margin of profit was so small that the most of it was made up from the savings derived from the adoption of the improved furnaces.

Our strict system of accounting enabled us to detect the great waste possible in heating large masses of iron. This improvement revealed to us a valuable man in a clerk, William Borntraeger, a distant relative of Mr. Kloman, who came from Germany. He surprised us one day by presenting a detailed statement showing results for a period, which seemed incredible. All the needed labor in preparing this statement he had performed at night unasked and unknown to us. The form adapted was uniquely original. Needless to say, William soon became superintendent of the works and later a partner, and the poor German lad died a millionaire. He well deserved his fortune.

It was in 1862 that the great oil wells of Pennsylvania attracted attention. My friend Mr. William Coleman, whose daughter became, at a later date, my sister-in-law, was deeply interested in the discovery, and nothing would do but that I should take a trip with him to the oil regions. It was a most interesting excursion. There had been a rush to the oil fields and the influx was so great that it was impossible for all to obtain shelter. This, however, to the class of men who flocked thither, was but a slight drawback. A few hours sufficed to knock up a shanty, and it was surprising in how short a time they were able to surround themselves with many of the comforts of life. They were men above the average, men who had saved considerable sums and were able to venture something in the search for fortune.

What surprised me was the good humor which prevailed everywhere. It was a vast picnic, full of amusing incidents. Everybody was in high glee; fortunes were supposedly within reach; everything was booming. On the tops of the derricks floated flags on which strange mottoes were displayed. I remember looking down toward the river and seeing two men working their treadles boring for oil upon the banks of the stream, and inscribed upon their flag was "Hell or China." They were going down, no matter how far.

The adaptability of the American was never better displayed than in this region. Order was soon evolved out of chaos. When we visited the place not long after we were serenaded by a brass band the players of which were made up of the new inhabitants along the creek. It would be safe to wager that a thousand Americans in a new land would organize themselves, establish schools, churches, newspapers, and brass bands--in short, provide themselves with all the appliances of civilization--and go ahead developing their country before an equal number of British would have discovered who among them was the highest in hereditary rank and had the best claims to leadership owing to his grandfather. There is but one rule among Americans--the tools to those who can use them.

To-day Oil Creek is a town of many thousand inhabitants, as is also Titusville at the other end of the creek. The district which began by furnishing a few barrels of oil every season, gathered with blankets from the surface of the creek by the Seneca Indians, has now several towns and refineries, with millions of dollars of capital. In those early days all the arrangements were of the crudest character. When the oil was obtained it was run into flat-bottomed boats which leaked badly. Water ran into the boats and the oil overflowed into the river. The creek was dammed at various places, and upon a stipulated day and hour the dams were opened and upon the flood the oil boats floated to the Allegheny River, and thence to Pittsburgh.

In this way not only the creek, but the Allegheny River, became literally covered with oil. The loss involved in transportation to Pittsburgh was estimated at fully a third of the total quantity, and before the oil boats started it is safe to say that another third was lost by leakage. The oil gathered by the Indians in the early days was bottled in Pittsburgh and sold at high prices as medicine--a dollar for a small vial. It had general reputation as a sure cure for rheumatic tendencies. As it became plentiful and cheap its virtues vanished. What fools we mortals be!

The most celebrated wells were upon the Storey farm. Upon these we obtained an option of purchase for forty thousand dollars. We bought them. Mr. Coleman, ever ready at suggestion, proposed to make a lake of oil by excavating a pool sufficient to hold a hundred thousand barrels (the waste to be made good every day by running streams of oil into it), and to hold it for the not far distant day when, as we then expected, the oil supply would cease. This was promptly acted upon, but after losing many thousands of barrels waiting for the expected day (which has not yet arrived) we abandoned the reserve. Coleman predicted that when the supply stopped, oil would bring ten dollars a barrel and therefore we would have a million dollars worth in the lake. We did not think then of Nature's storehouse below which still keeps on yielding many thousands of barrels per day without apparent exhaustion.

This forty-thousand-dollar investment proved for us the best of all so far. The revenues from it came at the most opportune time.[28] The building of the new mill in Pittsburgh required not only all the capital we could gather, but the use of our credit, which I consider, looking backward, was remarkably good for young men.