… was when he went through the mouth of Hell.”
Not everyone loved Andrew Carnegie. But that’s alright because Carnegie loved himself enough for the rest of the world, combined.There is so much to write about Carnegie and the early American industrialists, it’s hard to know where to start. Carnegie and Frick were the men who built Pittsburgh, and Pittsburgh built the United States. If they hadn’t appeared on the scene, it would have been someone else – but it might not have been so big. America, in those days, was like a supersaturated solution of production and Carnegie, Frick, Morgan, and so forth dropped into it and immediately precipitated vast fortunes around themselves. I’m not trying to dismiss their accomplishments, which were great. But, among the many other reasons Carnegie and Frick might burn in hell is because they were early exploiters of the Pennsylvania oil-fields, and the entire US industrial revolution was fueled with Pennsylvania coal. The industrial growth feedback loop went non-linear when one of Carnegie’s minions came up with a patented variant on Bessemer’s steel production process. That’s a nice way of saying “they figured out a process that was different enough so they didn’t have to pay Bessemer for his 1856 patent.” The US, in those days, played fast and loose with intellectual property rights, like they accuse the Chinese of doing, today.
Carnegie and Frick’s partnership was profitable and antagonistic; the two men screwed each other back and forth using various corporate board-manipulation tricks, buying out rights of first refusal, and (this might sound familiar today) adjusting the value of their companies by telling the government what to place protective duties around, and what not to, and when. Carnegie and Frick were the prototype that every subsequent rapacious capitalist followed – young Andrew, the penniless immigrant from Scotland, starting with $20 in stock in a railroad and parlaying it into a fortune that would be about $500 billion in today’s dollars. At the end of his life he appeared to realize that he was a hateful son of a bitch, so he re-invented himself as a philanthropist by giving away much of his fortune.
Frick, also a penniless immigrant, eventually owned the coke-making process that Carnegie’s steel company used – their relationship was based on an ill-advised agreement in which Frick offered Carnegie coal at a set price/ton ($1.63) in spite of what happened to the market; coal subsequently soared to $3+/ton and Carnegie still made Frick very rich indeed, since his company was gobbling coke at a crazy rate. This was in the 1890s, when coal mining was also in its heyday, and steel production was, too: Pittsburgh, alone, produced more high quality steel than all of the other sources in the world, combined. Its daily output was what Japan produced in a decade – World War II in the Pacific theater was not a foregone conclusion. Carnegie and Frick did not really invent anything new, in business terms – “buy low, sell high” is the obvious one. But “mind the bottom line” is the other: both men realized that if you control the bottom line price, you can survive and flourish by keeping your costs constant and selling your product when the markets spike.
This began the era in which labor got utterly screwed, over and over. Because Carnegie and Frick controlled the means of production (as Marx, who began writing Capital around this time, would say) they could tell laborers “We can only pay you this much per ton or we’ll have to close down the factory.” Laborers were not a mobile work-force and Pittsburgh was where the work was: Carnegie would push down the labor costs and keep selling steel at the top-line cost. He had the preferential agreement with Frick that allowed him to manage the bottom-line cost of coke, too. And, for a while, that was OK with Frick because he could use Carnegie’s fixed price as an excuse to push down the bottom-line cost for labor. That way, Carnegie’s deal really didn’t matter to him – if he could get mine-workers to accept $.04/ton less for coal, that was the same as getting Carnegie to pay $.04/ton more for it.
Labor, naturally, unionized and struck and complained. But it didn’t matter: Carnegie and Frick had the government in their pocket. During the “Battle of Homestead” Carnegie built a huge wall around the steel mill and locked the laborers out, then hired 300 armed Pinkertons’ men to come guard the building. The workers fought, and the Pinkertons’ lost – around a dozen men died on each side – until the Governor brought in the National Guard, who broke the strike. Laborers were charged with assaulting the Pinkertons’ men. All of these shenanigans were the formation of the American industrial system: built on the muscle and sweat of laborers, a few office-workers assembled vast fortunes by manipulating prices just a little bit.
For example, there was a bonus that Carnegie agreed to pay the union for steel production over and above a set amount – some number of pennies per ton. Tons matter when you’re talking about steel: this was a lot of money, some years, as America’s appetite for steel increased and increased and increased. So, Carnegie went back to the unions and said, basically, “I am paying you too much in these bonuses. We must re-negotiate because I am not making as much money as I want this way.” Carnegie played games with the unions, too: they would calculate the per-ton bonus based on production demand in December, the least busy month of the year. A few cents per ton made no difference to the workers – they were barely able to make ends meet – but it compounded into a vast fortune for Carnegie. Frick played the same sorts of games on the coal miners.
We don’t know if Marx wrote Capital specifically thinking of the screwing that US steel-workers were getting, or not – but Marx’ entire exploration of the theory of commodity value is intended as an answer to the questions that are raised by Carnegie and Frick’s industrialism: is not the “profit” of a business really the theft of surplus production? How much can the owner of the steel mill claim the mill is worth in terms of the ability for the laborers to turn cheap ore into valuable steel? What is a reasonable amount of profit (rent) for the mill owner to take in return for the workers burning their lives away in a toxic hell? These are serious questions.
They are questions American Capitalism has never tried to answer; all they did was demonize Marx and assert that it was their duty to the shareholders to maximize their profits. That was a maneuver Carnegie would have thoroughly approved of (in fact, he arguably invented it) because he was the biggest shareholder of them all and he quite believed in his duty to extract as much money from the workers and the customers as was possible. Like a modern-day libertarian or a 1950s objectivist, Carnegie promulgated The Gospel of Wealth,[wik] which was a sort of calvinist-style propaganda-piece that could be shortened to “I got mine. I must be pretty special, huh? PS – fuck you.”
He was. He was a rapacious bastard who would have shocked Crassus with his lifestyle and embarrassed Genghis Khan with his greed. Carnegie would look at what is going on, today, where US manufacturing has been exported to the 3rd world and China in order to game the labor market, and drive prices down, and smile. He’d probably appreciate the bullshit artists who say they are going to bring back coal jobs, too. Except, once he was done elevating himself, he never would have been seen in such declassé company.
Here is a bit from Meet You in Hell:
Balanced against the feelings of workers subjected to such rigors and dangers were the positions taken by Carnegie, Frick, and their superintendents. In response to questions posed by a congressional committee of inquiry, John Potter, superintendent of the Homestead works did his best to make management’s case:
Q: You say the workmen at the mill can turn out twice the product by reason of the improved machinery?
A: Yes sir.
Q: Than any other mill in the world?
A: Yes sir; of the same character.
Q: What do you mean by the same character?
A: The same class of mill.
Q: Well, if there is no mill like it in the world there is no other same class?
A: That is right.
Q: The labor cost of turning out that product at that mill would be one-half what it would be anywhere else where they are paying the same wages?
A: I do not know whether that is true or not.
Q: Does that not follow as a necessary result? You stated that with your machinery there the men could turn out twice the product, and I ask the simple question whether, if that is true, the labor cost of that product would not be one-half that of any other mill having the same rate of wages?
A: I do not think it would.
Q: … What kind of machinery is there which increases the facility of labor?
A: Automatic machinery, hydraulic, etc.
Q: Is that the machinery of which there is no mill possessed?
A: We use hydraulic machinery to a greater extent than any other mill.
Q: Then the use of machinery actually reduces the cost of the product, does it not?
A: Well, it should do it; that is what we want it to do.
This discussion was taking place because Carnegie had (through intermediaries) been pushing Congress to put protective trade tariffs in place, to keep foreign steel from being able to enter the market at all.
Those were the glory days of American industrial capitalism. Over 800,000 people we employed by the steel mills. That huge labor investment also pulled an entire supply-chain along with it: coal, then oil. Those jobs are gone, now, because the capitalists kept squeezing more and more profits out of the businesses until it got to the point where it was cheaper to just have the entire business in China, and make the profits at the headquarters-building in New York.
“American jobs” created by Carnegie and Frick in the 1890s were not really “American” anyway. In order to push labor costs down, and have a ready pool of alternate laborers, Carnegie and Frick imported hungry, uneducated, desperate Europeans from Poland, Ukraine, Russia, and elsewhere. The history of labor is the history of immigration. The history of American hatred of immigrants is the hatred of the first victims of Carnegie and Frick having come to terms with their situation, and resenting the people that were brought in to drive their wages down and down. They should have seen that coming, and risen up and killed Carnegie and Frick. One of Emma Goldman’s associates tried: a young anarchist from New York came down and shot Frick. As Frick lay incapacitated the assassin walked over to put a bullet in his brain, but his gun failed to function. He was cocking it for another shot when a loyal man-servant clobbered him from behind with a hammer. I always wondered whether the man-servant would have done otherwise, had he time to think it over.
Now, American Jobs are exported to China, where laborers work for depressed wages in industrial-age conditions. While American capitalists like Apple congratulate themselves for making vast fortunes, they’re just living the path blazed by Carnegie and Frick: gaming the labor-cost and driving the bottom-line down, so they can pocket hugely disproportionate top-line profits. Today, they line up to work at Foxconn, but what’s the difference? Somehow, there is a small percentage of the world’s population who have figured out a way of tricking the vast majority of the population into working every day for their happiness and luxury. What is the next Gospel of Wealth that will be written? I hope they translate it from the Chinese, but it’ll be bullshit anyway.
Bessemer steelmaking was not for the faint of heart, as Sir Henry Bessemer himself made clear: “The poweful jets of air sprint upward through the fluid mass of metal. The air expanding in volume divides itself into globules, or bursts violently upward, carrying with it some hundredweight of fluid metal which again falls into the boiling mass below. Every part of the apparatus trembles under the violent agitation thus produced; a roaring flame rushes from the mouth of the vessel, and as the process advances it changes its violet color to orange, and finally to a voluminous pure white.
During the process the heat has rapidly risen from the comparatively low temperature of melted pig-iron to one vastly greater than the highest known welding-heats; the iron becomes perfectly fluid, and rises so much above the melting-point as to admit of its being poured from the converter into a founder’s ladle, and from thence into successive molds.
Tending to the Bessemer process was an arduous if spectacular endeavour, often leading to fatalities when converters exploded from heat or overflowed; however the open-hearth process could be even more dangerous, requiring considerable endurance and physical dexterity from workers as they braved intense heat to dump additives into the enormous vats of molten metal. More than one worker had tumbled from an overhead catwalk into a pool of red-hot steel, “creating his own mold” as it was said, and countless others were burned and blinded by flying spatters.
Sometimes, we remember the 8-hour workday as being a hard-fought battle that labor struggled to win. Steel mills are expensive to shut down, so they ran constantly; the initial labor shifts were 12 hours on, 12 hours off. Laborers died, literally, of exhaustion. The 8-hour day is simply changing 3 shifts of labor for 2. The companies fought this, naturally, but in the end they just adjusted the pay to be hourly, and preserved their profit-margin by paying the laborers less. When automation and better industrial efficiency began to come online, they reduced the size of the work-force, but kept paying them hourly – so the profit margins soared as the labor costs dropped.
When you look at what happened to the US automotive industry, where labor was slowly backed into a corner by companies that kept shrinking the labor needs with automation, you can see the future of global industrial capitalism: the jobs will move to where there is the least regulation and they can screw the workers as hard as they possibly can. There is nothing we can do prevent it, either, since the capitalists are the government, and nobody can stop them (strikes won’t work since they will just replace people with robots and fire everyone.)
The future looks like the gig economy. Carnegie would smile benevolently from his slag-pit in hell.