Founders
Episode 284 #284 Andrew Carnegie and Henry Clay Frick
Founders

Episode 284: #284 Andrew Carnegie and Henry Clay Frick

Founders

Episode 284

#284 Andrew Carnegie and Henry Clay Frick

David Senra is the host of Founders, where he studies history's greatest entrepreneurs. This is what he learned from rereading Meet You in Hell: Andrew Carnegie, Henry Clay Frick, and the Bitter Partnership That Changed America by Les Standiford.

What I learned from rereading Meet You in Hell: Andrew Carnegie, Henry Clay Frick, and the Bitter Partnership That Changed America by Les Standiford.

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[0:01] Frick had been the man Carnegie trusted above all others to manage the affairs of Carnegie Steel.

[2:00] Carnegie had delegated the job of holding the line on wages and other demands to Frick—a Patton to Carnegie's FDR.

[3:00] The Autobiography of Andrew Carnegie by Andrew Carnegie.  (Founders #283)

[5:00] Here's a starter pack of essentials  for Day 1 defense: customer obsession, a skeptical view of proxies, the eager adoption of external trends, and high-velocity decision making. —Jeff Bezos’s Shareholder Letters (Founders #282)

[7:00] In less than half a century the United States had been transformed―from a largely agrarian and underdeveloped federation of competing interests, to a relatively cohesive economic juggernaut. The age of the Founding Fathers was over. The Age of the Titans had begun.

[12:00] By 1863 Carnegie was earning more than $45,000 a year from this and all his other investments, compared with a mere $2,400 from his railroad salary. Yet he understood that it was the contacts he made and the information he derived from his association with the railroad that made everything else possible.

[13:00] More control. Less costs. More profit.

[15:00] Technology is just a better way to do something: As a result of the process for transforming iron to steel that bore his name (Bessemer), a quantity of steel that might formerly have taken as long as two weeks to produce could now be made in fifteen minutes.

[17:00] Carnegie starts his company during a financial panic. The best time to expand is when no one else dares to take the risk.

[20:00] Already the best but still wants to do better: Even his key employees were not spared Carnegie's heavy-handed management style. To almost every positive report Carnegie's response was "Good, but let us do better."

[21:00] Cut the prices, scoop the market, watch the costs, and the profits will take care of themselves.

[21:00] Hard Drive: Bill Gates and the Making of the Microsoft Empire by James Wallace and Jim Erickson (Founders #140)

[22:00] He could make steel more efficiently than any of them.

[24:00] Henry Clay Frick: The Life of the Perfect Capitalist by Quentin Skrabec Jr. (Founders #75)

[24:00] Like Rockefeller, Henry Clay Frick used a lot of borrowed money to get his start in the coke business. There was a line in one of Rockefeller’s biographies where it said “he was the greatest borrower I’ve ever seen.”

[26:00] Frick knew his business down to the ground.

[26:00] LIke Carnegie, Frick expands his business during an economic panic. Frick, who would later recall this as one of the most grueling times in his life, proved as undaunted in the face of adversity as Carnegie had been.

[34:00] Carneige was accustomed to obedience from his subordinates, but if he expected unquestioned subservience from Henry Frick, he had gravely miscalculated.

[36:00] Frick was no puppet, but rather a man willing to take considerable risks in defense of his principles.

[37:00] Frick had ambition, a singleness of purpose, and a lack of self—doubt that even Carneige envied.

[38:00] Carnegie would repeat the mantra time and again: profits and prices were cyclical, subject to any number of transient forces of the marketplace. Costs, however, could be strictly controlled, and in Carnegie’s view, any savings achieved in the costs of goods were permanent.

[39:00] On this issue the two men were of one mind. Frick had made his way in coke by the same reckoning that Carnegie had in rail and steel: if you knew your costs down to the penny, you were always on firm ground.

[39:00] Frick had always understood how essential new technologies were in driving costs down. Cost control became nearly an obsession.

[47:00] [Frick was shot] Only after he was finished with his day’s work did Frick permit himself to be carried from the office to an ambulance.

[49:00] You must not allow anything to discourage you in the least. Even if things do not go well for some time to come, or even if they should get much worse. Just keep at it, doing the best you can. Do not allow the fact that you are not getting along as well as you would like to lead you to put yourself in a compromising position.

[1:03:00] Empires of Light: Edison, Tesla, Westinghouse, and the Race to Electrify the World by Jill Jonnes. (Founders #83)

[1:04:00] J.P. Morgan understood the folly of a long-term battle with the Carnegie Company, a firm that controlled its own sources of raw materials, transport, and manufacture, and that was far more deeply capitalized than his or any other of the upstarts. They might stay in the game for a while, and they might put a dent in Carnegie's armor, but in the end, Carnegie would run them into the ground, every one.

 

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#284 Andrew Carnegie and Henry Clay Frick

Introduction

One of America's wealthiest men, his holdings valued at more than $100 billion in today's dollars, sat up in his sick bed in his Manhattan home and called to one of his caregivers for a pen and paper. Andrew Carnegie, 83, once the mightiest industrialist in all the world was now an influenza-ravaged man. He took up his pen and began to write as if possessed. When he was finished, he summoned to his chambers his longtime personal secretary, James Bridge.

"Take this to Frick," Carnegie said, as he handed the letter to his old confidant. It would have been enough to snap Bridge upright. Surprised enough to hear Carnegie mention that name, much less hand over a letter to that person. True, Henry Clay Frick was a fellow giant of industry, and he and Andrew Carnegie had been partners once. Frick had been the man Carnegie trusted, above all others, to manage the affairs of Carnegie Steel, but the 2 men had not exchanged a word in nearly 20 years. Not since Carnegie drove Frick out of the business and Frick successfully pressed a monumental lawsuit against his former partner, the first in a long string of vengeful acts.

Had Carnegie divulged the contents of this letter, the secretary's expression would have likely turned to outright astonishment. Bridge left Carnegie and made his way down Fifth Avenue from the awe-inspiring 64-room mansion across from Central Park to an even more imposing structure, some 20 blocks south. Bridge arrived at the Frick mansion, a modern-day palace that its owner had vowed would make Carnegie's place look like a hovel. Though Frick, like Carnegie, was white bearded by now as well, he would have never been mistaken for Santa Claus.

Frick's countenance was intimidating. "You see that his head is there, placed on that body for his triumph and your defeat," one of his contemporaries observed. This way Carnegie had gone to great pains to portray himself as a benevolent friend to his workers. He had delegated the job of holding the line on wages and other demands to Frick. This is a fantastic metaphor. A Patton to Carnegie's FDR as it were. Frick tore open the envelope and scanned its contents. Frick glanced up. So Carnegie wants to meet me, does he? A meeting was precisely what Carnegie had called for.

Carnegie had reason that both he and Frick were growing old and that past grievances were beneath their dignity. They were first among equals. Surely, it was time to meet and patch up the wounds they had inflicted upon each other. The words might have touched a chord in almost any other man, but Henry Clay Frick, still the ranking Board Member of U.S. Steel, showed no sign of gratitude or relief.

By this time, Bridge might have been edging to the door. Frick's ire was legendary. He had gone toe-to-toe with strikers, assassins and even Carnegie himself and he had rarely met a grudge he could not hold. Long before Frick had constructed the mansion that would dwarf Carnegie's up the street, he had gone out of his way to purchase a part of land in downtown Pittsburgh. Then he built a skyscraper tall enough to cast Carnegie's own office building next door in perpetual shadow. "Yes, you can tell Carnegie I'll will meet him," Frick said finally, wadding the letter and tossing it back at Bridge. "Tell him, I'll see him in hell, where we're both going."

That was an excerpt from the book that I'm going to talk to you about today, which is Meet You in Hell, Andrew Carnegie, Henry Clay Frick, and the Bitter Partnership That Transformed America and is written by Les Standiford. So the last 7 to 10 days, I've done something that I don't normally do. I was traveling for the holidays, and I usually read one book at a time. I was actually reading three books at the same time.

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