STORY OF ONE THOUSAND MILLIONAIRES.

New Zealand Herald, Volume XLV, Issue 13722, 11 April 1908, Page 5

STORY OF ONE THOUSAND MILLIONAIRES.

i BUSINESS SOLD FOR £90,000,000. It would appear that Mr. Herbert N. Casson, in describing his new book, the "Romance of Steel" (Grant Richards}, as being "the story of 1000 millionaires," has not been guilty of much exaggeration, if. indeed, of any. Except in a vague way, few people tealise what tremendous fortunes have been built up in America and elsewhere since the advent of the Bessemer process. Mr. Casson'.* is the first popular history of what is now the greatest American industry. It is an American story of self-help— story of the miraculous expansion of a business from bankruptcy ; to billions of dollars. Fifty years ago the most pressing need of the civilised world was a new metal — something as strong as steel and as cheap as iron. The railroads then were " using iron rails which wore out in less than two years. At this juncture an answer to the universal demand was voiced by 'the inventive genius of two men—William Kelly, a Pittsburg American, and Sir Henry Bessemer, of England. They devised a new way to refine iron which has since been known as the Bessemer process. Their discovery was an entirely new idea, and one which at first seemed absurd to every other steel-maker. A FLASH OF GENIUS. " Kelly was an iron-maker, and needed charcoal. In time ail the wood near his furnaces was burned, and the nearest available source of supply was seven miles distant. To cart this charcoal seven miles meant bankruptcy, unless he could invent a way to save fuel. " One day he was sitting in front of the ' finery tire' when lie suddenly sprang to his feet with a shout, and rushed to the furnace. At one edge he saw a whitehot spot in the yellow mass of molten metal. The. iron at this spot, was incandescent. It was almost gaseous. Yet •there was no charcoal —nothing but the steady blast of air. Why didn't the air ! chill the metal? Every iron-makVr since ! Tubal Cain had believed that cold air 1 would chill hot iron. "But Kelly was more than an ironmaker. He was a student of metallurgy, and he knew that carbon and oxygen had an affinity for each other. He knew what air was and what iron was, and like a flash the idea leaped into his excited brainthere is no need of charcoal. Air alone is fuel." Like all great inventors, lie was derided at first, in spite of public experiments that showed his idea practical. " Surely, the thing was too absurd. Seeing was not believing. ' Some crank '11 be burning ice next,' said one spectator." The world outside would not believe. Kelly's father-in-law, who had advanced him 'capital from the iron business, fold him to " quit this foolishness or repay ray money." He had to surrender. Out- ; wardly he became once more a practical ironmaker, but alone in the depths of the | woods he went on with his experiments. "STOLEN BY THE BRITISH GOVERNMENT." " As a matter of history, the names of Bessemer and Kelly should be linked together" in the invention of cheap steel. " The original idea first came from the brain of Kelly, but, the commercial success of the new process was due to Bessemer's machinery, perfected for him by Galloway and Co., of Sheffield. " Bessemer was one of England's greatest inventors, having one hundred and twenty patents to his credit. He was the son of an inventor Frenchman who had been driven to London by a social explosion in Paris. His first, invention, a method of stamping public documents, was, so he considered, stolen from him by the British Government. He was very poor at the time, and this real or supposed injustice made an indelible mark upon his character. Henceforward he was bitterly aggressive in the protection of his rights. " Seven years after Kelly's success at Eddyville, Bessemer invented the Bessc met "process, as the result of a conversation with Napoleon 111., who wanted better metal for his cannon. " The new process was perfected by a third inventor, Robert F. Mushet, a Scotsman He sol- ; ved a problem which had baffled both I Kelly and Bessemer—how to leave just ! enough carbon in the molten metal to | harden it into the required quantity of i steel. Instead of frantically endeavouring to stop the process at the right moment, Mushet asked : ' Why not first burn j out all the carbon, and then pour back the, exact quantity that you need?' " Henrv Bessemer, who was second in the race," received £2,000,000, world-wide fame, and knighthood as his reward ; William Kelly, £100,000 and comparative obi livion. " Mushet fared even worse than Kelly. For him there was neither fame nor money. He lost his patent by tailing to i pay the necessary fees. In his later years ■ he received a pension of three hundred pounds annually from Bessemer. To-day there are more than a hundred Bessemer i converters in the United States, breathing iron into steel at the rate of eighteen billion pounds a year. "LIKE A VOLCANO IN ACTION'.'' " To describe it in a few words, a converter is a huge iron pot twice as high as a man. Although it weighs as much as a battalion of five hundred men, it can be handled by a boy. _ About thirty thousand pounds of molten iron are poured into it, and then, from two hundred littles holes in the bottom, a strong blast ; of air is turned on, rushing like a tornado through the metal. Millions of red and i yellow sparks, fly a hundred feet into the > air. | " The converter roars like a volcano in I eruption. it is the fiercest and most ; strenuous of all the inventions of man. The impurities of the iron— phosphorus, sulphur, silicon, and carbonare being hurled out of the metal in this paroxysm of fury. The sparks change from red to yellow; then suddenly they be- , come white. "'All right,,' shouts the gamy workman in charge. ! " The great pot is tilted sideways, gasping and coughing like a monster in pain. A workman feeds it with several hundred pounds of carbon mixture to restore a necessary element that is blown out. "Then it is tilted still farther; it i.- a lake of white fire, and is poured into a swinging ladle and slopped from the ladle into a train of huge clay pots, pushed into place by a, little locomotive. The converter then swings up and receives another fifteen tons of molten metal, the whole process having taken only a quarter of an hour." When Mr. Carnegie "went into steel" he was an ironmaker. Mr. Carnegie was not a practical steelmaker. The man that gave the Carnegie company its first uplift from a mob of competitors in the steel industry was Captain William R. Jones—"Bill" Jones— i who took the invention of Kelly and Bessemer into his strong hands and developed it into one of the wonders of the world. £100,000 ON THE SCRAP-HEAP. " Among all the partners and employees of the Carnegie Company, Jones earned the most and received the least. This was largely his own fault, as he refused to be a shareholder. "'No, Mr. Carnegie, I'm much obliged.' said he when he was offered a partnership, ' I don't know anything about the business, and I don't want to be bothered with it. I've got trouble enough here in these works. I'll tell you what you can do' —these were his exact words—' you can give me a of a big salary.' " ' After this, captain,' replied Carnegie, 'you shall have the salary of the President of the United States—twentyfive thousand dollars.' This sounded well, but in a short time the President's salary was scarcely pin-money compared to the amounts that were yearly shovelled into each shareholder's pocket. The famous scrap-heap policy was originated by Junes. He did not believe in waiting until his machinery was worn out.. The moment that an improvement

was invented old machinery waa 'diragj;*d to the scrap-heap, and the latest device* put in its place. "He made the shareholders gasp on several occasion* by asking permission to smash tip £100,000 worth of rn»chin«Ty that was as good as new but outgrown. " Jones died, as he had lived, in the midst of an industrial battle at the head of his men. He was killed in an accident in the company's work. ..." Carnegie, looking upon poor Jones as ho lay in the hospital, sobbed like a child." A SCRAP-HEAP lOit MEN. " Mr. Carnegie *** the first steel-maker who introdnced department-store principles into the iron and steel business. His corporation was a large e.-tablishmetit run by a few highly skilled superintendents m& by a crowd of young clerks, who were taught to do one thing fairly well. "Partnerships were dangled before the eyes of these young clerks until they were fevered with ambition. !t was a system of make or break. Every young officer who served under General Carnegie was either a millionaire or a physical wreck in a few years. " Every superintendent was pitted again* 4 each other. The heaven of a partnership and the hell <>£ dismissal goaded the bosses and sub-bosses into a furious activity that put the Carnegie Company far in advance of all it* competitors. No matter how mucin the sweltering iurnacemen toiled, no matter how amazing was the achievement of to-day, to-morrow the same order came from the terrible general, ' More !' " Every man had his work, and he held his place just as long as he could do the work better than anyone else. Tho moment a man showed signs of weakness or inefficiency he was immediately transferred, or pigeon-holed into some political office. There a scrap-heap for men as well as for machinery."' One of the partners first came to Mr. Carnegie's notice as a clerk in a linen store. Mrs. Carnegie wanted a certain make of linen, which was not in the market. "I can have it made to order for you, madam,'' said the obliging clerk. Mrs. Carnegie was pleased. "I see you are « Scotchman," she said. "Yes, madam," he replied. "I was born in Dunfermline." Dunfermline was Carnegie's birthplace— his Mecca—his Holy City; _ and tho young clerk at once found' favour in his eyes. .V place was made for the quick-witted young man in the sales department, and before long he was neck deep in the stream of gold. • The most brilliant of all the Carnegie partners was Charles M. Schwab. His was the most meteoric career ever known in the steel business. He had risen step by step —but such steps! Step No. driving stakes for a dollar a day at the Edgar Thomson works. Step No, 2. six months later—superintendent of the Eugar Thomson works, the foremost (steel-making plant in the world. Step No. 3—at 30 years of age superintendent of both tne Edgar Thomson and Homestead plants, managing 8000 workmen. This was the only instance in which Mr. Carnegie permitted one mxw to operate two plants. Step No. —president of the Carnegie Slsel Company, with a White House salary and three per cent, stock. £8,000,000 IN" ONK YEAR. Step No. s—president of the United States Steel Corporation, with £5,600,000 worth (par value) of its stock, and a salary of £20.000 a year. In 1901 lie sat on tho apex of the towering steel pyramid—the victor among 200,000 competitors — 39 years of age. "The first time I saw Schwab," said! Mr. Long, a former president of the Pittsburg Stock Exchange, ■* he was a bare-footed hoy at Loretto, a mountain hamlet near Altoona. The next time I saw him tie was in his £20,000 private car." The Carnegie Company at the end of 1900 had £8,000.000 to divide, Mr. Carnegie taking £5,000,000, and tho others the ba.la.ice. From 1880 onwards the company, we are told, had never cleared less than a million a year. It was a harvest of gold in which other i American millionaires wanted to partici- I pate. Various offers wen., made for the Carnegie business. " Every day Mr. Carnegie's vision of,millions grew more radiant. His brain whirled with the details of a selling campaign, the like of n 7 !ich had never been known before. " He set on foot a series of operations which, if concluded, would have driven his compel irors out of business, and marie him the absolute dictator of the steel world. "To light .Rockefeller, he ordered seven ciglt-thousand-ton ore-carrying steamships. To fight the Pennsylvania railroad lie set a corps of surveyors at work mapping out a railway from Pittsburg to the ocean. "To fight the National Tube Company he announced that five thousand acres of land had been bought at Conneaut, and that he had decided to build a twelve million dollar tuba works. He frightened manufacturers and financiers everywhere. "We must get "rid of Carnegie,'' was the cry. "Jib all cost we must buy him out. . . Where is Morgan? No one but Morgan can get us out of this fix!" And Mr. Morgan, after an eight hours" talk with Mr. John W. Gates and Mr. Schwab, .sent an emissary to M'r. Carnegie to ask "How touch?" Ninetyseven million four hundred find eighty-three thousand pounds was the reply. The sale was put through. The great Steel Trust came into being. "As for Carnegie's 40 young partner*, many of them were for a time money mad. A few have never recovered. Their good fortune came to them as suddenly as a flash of beneficent lightning. A MONTY-MAD JIiU.IOX.UKK. "One of the 40 young partners developed the habit of entertaining his guests bygiving them an inventory of his household ■ goods. ' See that painting?' he would say, i ' Cost me 22,000 dollars - but I could get 28,000 dollars for it. Have a cigar. Fine ! brand. Seventy-five cent« apiece wholesale. Notice tliat chair you're on? Dealer wanted 300 dollars for it, but J beat him down : to 250. What do you think of my wife's necklace? Had to give up a quarter of a million to get it." This same exuberant Croesus, writing a note of introduction for a friend, said, 'I'll back this man for millions.' Money became his passion —his theme by day and his dream by night." , A few, but only a few, of the self-made steel kings are allowing their chddren to be as hardy as themselves. One, however, is trying to induce his son to climb the railroad ladder by making him a freight clerk in a small town. The boy gets £10 a month and no allowance. In this review we have dealt chiefly with the Carnegie Company,' but Mr. Casson's book is a history of steel and touches on' the fortunes and misfortunes of many men and many companies. It is a fascinating work—certain to be widely rend.