CHAPTERS
- 0:00 – 5:07
Carnegie's Letter and Frick's Grudge
Senra opens with an excerpt from the book: an aging Carnegie sends a letter proposing a meeting with Frick, and Frick answers that he will see him in hell. Senra explains why he is covering Les Standiford's book right after the Carnegie autobiography episode.
- •Carnegie, 83 and ill, sends his secretary to Frick with a letter asking to meet
- •The two had not spoken in nearly 20 years
- •Frick built a mansion and a skyscraper meant to overshadow Carnegie
- •Frick's reply: he will see Carnegie in hell, where they are both going
- •Senra thinks the book is an easier way to learn Carnegie's life than the autobiography
- 5:07 – 9:24
Why Steel Mattered: Railroads and the Age of Titans
Senra sets the scene of the technological revolutions of the late 1800s, arguing that steel was the leading technology riding on railroad expansion. He notes that Frick got into steel through his dominance of coke.
- •Technology is defined as a better way to do something
- •Railroad track grew from under 30,000 miles to about 163,000 miles and was standardized
- •The US came to out-produce Britain, France and Germany combined in steel
- •The age of the Founding Fathers gave way to the age of titans and the first billion-dollar corporation
- •Coke, baked bituminous coal, fuels steel production
- 9:24 – 13:36
Carnegie's Rise: Telegraph, Railroad and Early Investments
Senra reads the book's overview of Carnegie's early career, from bobbin boy to telegraph messenger to Thomas Scott's protégé at the Pennsylvania Railroad. He highlights Carnegie's early investments in oil and bridges.
- •Carnegie starts at $1.20 a week as a bobbin boy, then moves to telegraph work
- •Thomas Scott introduces him to the wider world of business
- •His Columbia Oil investment pays nearly $18,000 a year in dividends
- •The Keystone Bridge Company is what he called the parent of all other works
- •Investment income far outstrips his $2,400 railroad salary
- 13:36 – 18:10
Going All In on Steel and the Panic of 1873
Carnegie quits the railroad, moves to New York, and meets Bessemer and Junius Morgan in England. He decides to build a steel mill and starts it during the Financial Panic of 1873, which lowers his costs.
- •Carnegie decides to put all his eggs in one basket and watch that basket
- •The Bessemer process cuts steel production from two weeks to 15 minutes
- •He meets Junius Morgan, J.P. Morgan's father, on the same trip
- •The panic closes the NYSE for 10 days and many businesses fail
- •The downturn saves him about 25% on projected costs; the best time to expand is when no one else dares
- 18:10 – 24:16
Carnegie's Cost Obsession and Business Philosophy
Senra covers Carnegie's habits: paying top dollar for the best people, meticulous cost accounting, and relentless cost-cutting and price-cutting. He compares these to Bezos and Gates and describes Carnegie refusing to join a steel cartel.
- •There is no labor so cheap as the dearest in the mechanical field
- •Cost accounting let him bid with confidence
- •His maxim: cut the prices, scoop the market, watch the costs
- •Carnegie acted as principal salesman, not plant operator
- •He balked at a cartel offer of 9% of the pool
- 24:16 – 27:35
Frick's Coke Empire and the Mellon Loans
Carnegie's cost-cutting leads him to Frick, who produces the best coke cheaply. Senra recounts how Frick borrowed from Judge Thomas Mellon and bought failing competitors during the downturn to build a coke empire.
- •Carnegie sells his own ovens and sends his brother Tom to see Frick
- •Frick, 21, partners with his cousin and borrows from Thomas Mellon
- •A mining engineer's report says Frick knows his business down to the ground
- •Frick buys failed rivals and owns about a quarter of the area's ovens by 1882
- •He is a millionaire by 30
- 27:35 – 33:13
Frick Becomes a Partner and the Ironclad Agreement
Carnegie takes a large stake in Frick's coke company while Frick pursues his real goal of steel. Tom Carnegie's death lets Frick in, and the partners draw up the Ironclad Agreement, which will later fuel their war.
- •Carnegie comes to own more of Frick Coke than Frick does
- •Frick uses coke as a path into steel
- •Tom Carnegie's death opens the door for Frick
- •The Ironclad Agreement lets partners' shares be bought at book value, including by a three-quarters vote
- •Book value would later be artificially depressed
- 33:13 – 39:55
Frick's Resignation and a Closer Partnership
Senra introduces the conflict between ownership and labor and Frick's hardline stance. When Carnegie demands a settlement with strikers, Frick resigns, yet the result is a closer partnership and a bigger stake for Frick.
- •Frick had once flung a striker off an embankment during an 1877 strike
- •Carnegie insists on settling and Frick submits his resignation
- •Carnegie cannot replace him and sees his strength of will as useful
- •Frick becomes chairman and holds 11% of the company
- •Both men obsessed over costs and invested in new technology
- 39:55 – 45:01
The Homestead Massacre
Senra recounts the Homestead Strike: Frick hires Pinkertons, who are met by thousands of workers on the riverbank, and the fighting turns deadly. He reflects on how accumulated slights and lost perspective lead to senseless deaths.
- •Frick brings in about 300 armed Pinkerton detectives by boat
- •Union leader O'Donnell pleads with them not to land
- •Fighting kills many on both sides, and surrendering Pinkertons are beaten
- •Frick vows never to rehire anyone who raised a weapon or claimed union membership
- •Senra stresses the value of detachment and perspective
- 45:01 – 49:02
Assassination Attempt and Frick's Resolve
Alexander Berkman shoots Frick in his office. Frick refuses anesthetic, finishes his work, and issues a defiant statement. Senra adds that he lost two children around that time and returned to work 13 days after the shooting.
- •Berkman enters the office intending to kill Frick, and Frick is shot in the neck
- •Leishman and a company carpenter stop Berkman
- •Frick has the wounds sewn up in his office and completes his letter
- •His statement says the company will pursue the same policy and win
- •He returns to work 13 days after being shot, after losing two children
- 49:02 – 56:50
The Slow Fracture: Resignations and the Secret Buyer
After Homestead, accumulated fights lead Frick to resign in 1894 with a scathing letter. The partnership later breaks over Frick and Phipps trying to sell the company to a buyer they will not name to Carnegie.
- •Frick's resignation letter criticizes Carnegie's methods, newspaper interviews and interference
- •They repair the relationship for about three years
- •Frick and Phipps broker a $250 million sale to speculators without naming them
- •Carnegie sees the buyers as dishonorable speculators who lacked the money
- •Book value stuck at $50 million against true value of $200–250 million
- 56:50 – 1:01:04
Carnegie Ousts Frick and Pays $1.5 Million
Carnegie has Schwab warn Frick, abolishes the chairman's office, and invokes the Ironclad Agreement to buy Frick out at book value. Frick calls him a thief and lunges at him in their last meeting.
- •Schwab tells Frick in person that his position will be abolished
- •Carnegie stacks the Frick Co. board and removes Frick there too
- •Carnegie offers $1.5 million for stock worth at least ten times that
- •Senra calls the move emotional and ego-driven, not logical
- •Frick shouts that Carnegie is a thief and advances with raised fists; they never meet again
- 1:01:04 – 1:07:17
Frick's Lawsuit, the $480 Million Sale to Morgan, and the Aftermath
Frick sues, threatening to expose Carnegie's finances, and Carnegie settles with a merger valuing the companies at $250 million and $70 million. Morgan then buys Carnegie Steel for $480 million via Schwab, and Frick ends up on the U.S. Steel board.
- •Phipps finds flaws in the Ironclad Agreement and Frick files suit
- •Documents show Carnegie privately valued the company at $500 million
- •George Westinghouse and others urge Carnegie to settle; Frick receives $31 million
- •Morgan accepts Carnegie's $480 million price through Schwab and calls him the richest man in the world
- •Frick's U.S. Steel stake is $61 million; Schwab resigns and Elbert Gary leads for 26 years, advised by Frick
