Autobiography of Andrew Carnegie Part 13

The issue was a great success, and the money for the St. Louis Bridge was obtained. I had a considerable margin of profit upon the negotiation. This was my first financial negotiation with the bankers of Europe. Mr. Pullman told me a few days later that Mr. Morgan at a dinner party had told the telegraphic incident and predicted, "That young man will be heard from."

After closing with Mr. Morgan, I visited my native town, Dunfermline, and at that time made the town a gift of public baths. It is notable largely because it was the first considerable gift I had ever made.

Long before that I had, at my Uncle Lauder's suggestion, sent a subscription to the fund for the Wallace Monument on Stirling Heights overlooking Bannockburn. It was not much, but I was then in the telegraph office and it was considerable out of a revenue of thirty dollars per month with family expenses staring us in the face. Mother did not grudge it; on the contrary, she was a very proud woman that her son's name was seen on the list of contributors, and her son felt he was really beginning to be something of a man. Years afterward my mother and I visited Stirling, and there unveiled, in the Wallace Tower, a bust of Sir Walter Scott, which she had presented to the monument committee. We had then made great progress, at least financially, since the early subscription. But distribution had not yet begun.[30] So far with me it had been the age of acc.u.mulation.

[Footnote 30: The ambitions of Mr. Carnegie at this time (1868) are set forth in the following memorandum made by him. It has only recently come to light:

_St. Nicholas Hotel, New York, December, 1868_

Thirty-three and an income of $50,000 per annum! By this time two years I can so arrange all my business as to secure at least $50,000 per annum. Beyond this never earn--make no effort to increase fortune, but spend the surplus each year for benevolent purposes. Cast aside business forever, except for others.

Settle in Oxford and get a thorough education, making the acquaintance of literary men--this will take three years' active work--pay especial attention to speaking in public. Settle then in London and purchase a controlling interest in some newspaper or live review and give the general management of it attention, taking a part in public matters, especially those connected with education and improvement of the poorer cla.s.ses.

Man must have an idol--the ama.s.sing of wealth is one of the worst species of idolatry--no idol more debasing than the worship of money.

Whatever I engage in I must push inordinately; therefore should I be careful to choose that life which will be the most elevating in its character. To continue much longer overwhelmed by business cares and with most of my thoughts wholly upon the way to make more money in the shortest time, must degrade me beyond hope of permanent recovery. I will resign business at thirty-five, but during the ensuing two years I wish to spend the afternoons in receiving instruction and in reading systematically.]

While visiting the Continent of Europe in 1867 and deeply interested in what I saw, it must not be thought that my mind was not upon affairs at home. Frequent letters kept me advised of business matters.

The question of railway communication with the Pacific had been brought to the front by the Civil War, and Congress had pa.s.sed an act to encourage the construction of a line. The first sod had just been cut at Omaha and it was intended that the line should ultimately be pushed through to San Francisco. One day while in Rome it struck me that this might be done much sooner than was then antic.i.p.ated. The nation, having made up its mind that its territory must be bound together, might be trusted to see that no time was lost in accomplishing it. I wrote my friend Mr. Scott, suggesting that we should obtain the contract to place sleeping-cars upon the great California line. His reply contained these words:

"Well, young man, you do take time by the forelock."

Nevertheless, upon my return to America. I pursued the idea. The sleeping-car business, in which I was interested, had gone on increasing so rapidly that it was impossible to obtain cars enough to supply the demand. This very fact led to the forming of the present Pullman Company. The Central Transportation Company was simply unable to cover the territory with sufficient rapidity, and Mr. Pullman beginning at the greatest of all railway centers in the world--Chicago--soon rivaled the parent concern. He had also seen that the Pacific Railroad would be the great sleeping-car line of the world, and I found him working for what I had started after. He was, indeed, a lion in the path. Again, one may learn, from an incident which I had from Mr. Pullman himself, by what trifles important matters are sometimes determined.

The president of the Union Pacific Railway was pa.s.sing through Chicago. Mr. Pullman called upon him and was shown into his room.

Lying upon the table was a telegram addressed to Mr. Scott, saying, "Your proposition for sleeping-cars is accepted." Mr. Pullman read this involuntarily and before he had time to refrain. He could not help seeing it where it lay. When President Durrant entered the room he explained this to him and said:

"I trust you will not decide this matter until I have made a proposition to you."

Mr. Durrant promised to wait. A meeting of the board of directors of the Union Pacific Company was held soon after this in New York. Mr.

Pullman and myself were in attendance, both striving to obtain the prize which neither he nor I undervalued. One evening we began to mount the broad staircase in the St. Nicholas Hotel at the same time.

We had met before, but were not well acquainted. I said, however, as we walked up the stairs:

"Good-evening, Mr. Pullman! Here we are together, and are we not making a nice couple of fools of ourselves?" He was not disposed to admit anything and said:

"What do you mean?"

I explained the situation to him. We were destroying by our rival propositions the very advantages we desired to obtain.

"Well," he said, "what do you propose to do about it?"

"Unite," I said. "Make a joint proposition to the Union Pacific, your party and mine, and organize a company."

"What would you call it?" he asked.

"The Pullman Palace Car Company," I replied.

This suited him exactly; and it suited me equally well.

"Come into my room and talk it over," said the great sleeping-car man.

I did so, and the result was that we obtained the contract jointly.

Our company was subsequently merged in the general Pullman Company and we took stock in that company for our Pacific interests. Until compelled to sell my shares during the subsequent financial panic of 1873 to protect our iron and steel interests, I was, I believe, the largest shareholder in the Pullman Company.

This man Pullman and his career are so thoroughly American that a few words about him will not be out of place. Mr. Pullman was at first a working carpenter, but when Chicago had to be elevated he took a contract on his own account to move or elevate houses for a stipulated sum. Of course he was successful, and from this small beginning he became one of the princ.i.p.al and best-known contractors in that line. If a great hotel was to be raised ten feet without disturbing its hundreds of guests or interfering in any way with its business, Mr. Pullman was the man. He was one of those rare characters who can see the drift of things, and was always to be found, so to speak, swimming in the main current where movement was the fastest. He soon saw, as I did, that the sleeping-car was a positive necessity upon the American continent. He began to construct a few cars at Chicago and to obtain contracts upon the lines centering there.

The Eastern concern was in no condition to cope with that of an extraordinary man like Mr. Pullman. I soon recognized this, and although the original patents were with the Eastern company and Mr.

Woodruff himself, the original patentee, was a large shareholder, and although we might have obtained damages for infringement of patent after some years of litigation, yet the time lost before this could be done would have been sufficient to make Pullman's the great company of the country. I therefore earnestly advocated that we should unite with Mr. Pullman, as I had united with him before in the Union Pacific contract. As the personal relations between Mr. Pullman and some members of the Eastern company were unsatisfactory, it was deemed best that I should undertake the negotiations, being upon friendly footing with both parties. We soon agreed that the Pullman Company should absorb our company, the Central Transportation Company, and by this means Mr. Pullman, instead of being confined to the West, obtained control of the rights on the great Pennsylvania trunk line to the Atlantic seaboard. This placed his company beyond all possible rivals.

Mr. Pullman was one of the ablest men of affairs I have ever known, and I am indebted to him, among other things, for one story which carried a moral.

Mr. Pullman, like every other man, had his difficulties and disappointments, and did not hit the mark every time. No one does.

Indeed, I do not know any one but himself who could have surmounted the difficulties surrounding the business of running sleeping-cars in a satisfactory manner and still retained some rights which the railway companies were bound to respect. Railway companies should, of course, operate their own sleeping-cars. On one occasion when we were comparing notes he told me that he always found comfort in this story.

An old man in a Western county having suffered from all the ills that flesh is heir to, and a great many more than it usually encounters, and being commiserated by his neighbors, replied:

"Yes, my friends, all that you say is true. I have had a long, long life full of troubles, but there is one curious fact about them--nine tenths of them never happened."

True indeed; most of the troubles of humanity are imaginary and should be laughed out of court. It is folly to cross a bridge until you come to it, or to bid the Devil good-morning until you meet him--perfect folly. All is well until the stroke falls, and even then nine times out of ten it is not so bad as antic.i.p.ated. A wise man is the confirmed optimist.

Success in these various negotiations had brought me into some notice in New York, and my next large operation was in connection with the Union Pacific Railway in 1871. One of its directors came to me saying that they must raise in some way a sum of six hundred thousand dollars (equal to many millions to-day) to carry them through a crisis; and some friends who knew me and were on the executive committee of that road had suggested that I might be able to obtain the money and at the same time get for the Pennsylvania Railroad Company virtual control of that important Western line. I believe Mr. Pullman came with the director, or perhaps it was Mr. Pullman himself who first came to me on the subject.

I took up the matter, and it occurred to me that if the directors of the Union Pacific Railway would be willing to elect to its board of directors a few such men as the Pennsylvania Railroad would nominate, the traffic to be thus obtained for the Pennsylvania would justify that company in helping the Union Pacific. I went to Philadelphia and laid the subject before President Thomson. I suggested that if the Pennsylvania Railroad Company would trust me with securities upon which the Union Pacific could borrow money in New York, we could control the Union Pacific in the interests of the Pennsylvania. Among many marks of Mr. Thomson's confidence this was up to that time the greatest. He was much more conservative when handling the money of the railroad company than his own, but the prize offered was too great to be missed. Even if the six hundred thousand dollars had been lost, it would not have been a losing investment for his company, and there was little danger of this because we were ready to hand over to him the securities which we obtained in return for the loan to the Union Pacific.

My interview with Mr. Thomson took place at his house in Philadelphia, and as I rose to go he laid his hand upon my shoulder, saying:

"Remember, Andy, I look to you in this matter. It is you I trust, and I depend on your holding all the securities you obtain and seeing that the Pennsylvania Railroad is never in a position where it can lose a dollar."

I accepted the responsibility, and the result was a triumphant success. The Union Pacific Company was exceedingly anxious that Mr.

Thomson himself should take the presidency, but this he said was out of the question. He nominated Mr. Thomas A. Scott, vice-president of the Pennsylvania Railroad, for the position. Mr. Scott, Mr. Pullman, and myself were accordingly elected directors of the Union Pacific Railway Company in 1871.

The securities obtained for the loan consisted of three millions of the shares of the Union Pacific, which were locked in my safe, with the option of taking them at a price. As was to be expected, the accession of the Pennsylvania Railroad party rendered the stock of the Union Pacific infinitely more valuable. The shares advanced enormously. At this time I undertook to negotiate bonds in London for a bridge to cross the Missouri at Omaha, and while I was absent upon this business Mr. Scott decided to sell our Union Pacific shares. I had left instructions with my secretary that Mr. Scott, as one of the partners in the venture, should have access to the vault, as it might be necessary in my absence that the securities should be within reach of some one; but the idea that these should be sold, or that our party should lose the splendid position we had acquired in connection with the Union Pacific, never entered my brain.

I returned to find that, instead of being a trusted colleague of the Union Pacific directors, I was regarded as having used them for speculative purposes. No quartet of men ever had a finer opportunity for identifying themselves with a great work than we had; and never was an opportunity more recklessly thrown away. Mr. Pullman was ignorant of the matter and as indignant as myself, and I believe that he at once re-invested his profits in the shares of the Union Pacific.

I felt that much as I wished to do this and to repudiate what had been done, it would be unbecoming and perhaps ungrateful in me to separate myself so distinctly from my first of friends, Mr. Scott.

At the first opportunity we were ignominiously but deservedly expelled from the Union Pacific board. It was a bitter dose for a young man to swallow. And the transaction marked my first serious difference with a man who up to that time had the greatest influence with me, the kind and affectionate employer of my boyhood, Thomas A. Scott. Mr. Thomson regretted the matter, but, as he said, having paid no attention to it and having left the whole control of it in the hands of Mr. Scott and myself, he presumed that I had thought best to sell out. For a time I feared I had lost a valued friend in Levi P. Morton, of Morton, Bliss & Co., who was interested in Union Pacific, but at last he found out that I was innocent.

The negotiations concerning two and a half millions of bonds for the construction of the Omaha Bridge were successful, and as these bonds had been purchased by persons connected with the Union Pacific before I had anything to do with the company, it was for them and not for the Union Pacific Company that the negotiations were conducted. This was not explained to me by the director who talked with me before I left for London. Unfortunately, when I returned to New York I found that the entire proceeds of the bonds, including my profit, had been appropriated by the parties to pay their own debts, and I was thus beaten out of a handsome sum, and had to credit to profit and loss my expenses and time. I had never before been cheated and found it out so positively and so clearly. I saw that I was still young and had a good deal to learn. Many men can be trusted, but a few need watching.

CHAPTER XII

BUSINESS NEGOTIATIONS

Complete success attended a negotiation which I conducted about this time for Colonel William Phillips, president of the Allegheny Valley Railway at Pittsburgh. One day the Colonel entered my New York office and told me that he needed money badly, but that he could get no house in America to entertain the idea of purchasing five millions of bonds of his company although they were to be guaranteed by the Pennsylvania Railroad Company. The old gentleman felt sure that he was being driven from pillar to post by the bankers because they had agreed among themselves to purchase the bonds only upon their own terms. He asked ninety cents on the dollar for them, but this the bankers considered preposterously high. Those were the days when Western railway bonds were often sold to the bankers at eighty cents on the dollar.

Colonel Phillips said he had come to see whether I could not suggest some way out of his difficulty. He had pressing need for two hundred and fifty thousand dollars, and this Mr. Thomson, of the Pennsylvania Railroad, could not give him. The Allegheny bonds were seven per cents, but they were payable, not in gold, but in currency, in America. They were therefore wholly unsuited for the foreign market.

But I knew that the Pennsylvania Railroad Company had a large amount of Philadelphia and Erie Railroad six per cent gold bonds in its treasury. It would be a most desirable exchange on its part, I thought, to give these bonds for the seven per cent Allegheny bonds which bore its guarantee.