#75 Henry Clay Frick The Life of the Perfect Capitalist

In this episode, the host delves into the life of Henry Clay Frick, an industrialist whose legacy as a "perfect capitalist" is captured in Quentin R. Scrabeck Jr.'s biography. Frick, often seen as a cold, methodical thinker likened to a comptometer, was also a complex figure who survived assassination attempts, was implicated in the Johnstown flood and the violent Homestead Strike of 1892, yet was a significant philanthropist. The episode explores Frick's business acumen, particularly his role in the growth of Carnegie Steel and the formation of U.S. Steel, highlighting his strategies during the financial panic of 1873 and his belief in education as a source of inspiration rather than mere information. Despite his public image as a ruthless entrepreneur, Frick's private devotion to family and anonymous charity work, especially towards children, is emphasized, painting a multifaceted portrait of a man who proved to be as complex and average as any human.

• Schwab portrayed Frick as an emotionless, methodical thinker likened to a machine.
• Frick was seen as an excellent bargainer with good foresight.
• Rockefeller described Frick as having the soul of a bookkeeper, earning money like others pursue athletic awards.
• Schwab's description emphasizes Frick's methodical nature and his focus on efficiency and results.

"No man on earth could get close to him or fathom him. He seemed more like a machine without emotion or impulses. Absolutely cold blooded. He had good foresight and was an excellent bargainer. His assets were that he was a thinking machine, methodical as a comptometer, accurate, cutting straight to the point, the most methodical thinking machine I have ever known."

The quote from Schwab highlights Frick's calculated and emotionless approach to business, which garnered him respect for his bargaining skills and foresight.

• The comptometer was a key-driven mechanical calculator patented in 1887.
• It was capable of performing various arithmetic operations.
• The term was unfamiliar to the speaker and required looking up, indicating the historical context of the technology.

"The comptometer was the first commercially successful key-driven mechanical calculator patented in the United States by Dore E. Felt in 1887."

This quote explains the comptometer, providing context for Schwab's comparison of Frick to this calculating machine, emphasizing Frick's methodical nature.

• The biography by Quentin R. Skrabec, Jr. explores Frick's complex nature.
• Frick was controversial, involved in the Johnstown Flood and the Homestead Strike, but also a philanthropist.
• The biography aims to avoid idolization, presenting a balanced view of Frick's life.

"Henry Clay Frick, reviled in his own time, infamous in ours, was blamed for the Johnstown flood, as well as the violent homestead strike of 1892. He survived an assassination attempt, yet at the same time, he was an ardent philanthropist, giving away more than $100 million during his lifetime."

The quote provides an overview of Frick's life, highlighting both the negative and positive aspects, and sets the stage for a nuanced exploration of his character.

• Hagography is adulatory writing that idolizes its subject.
• The speaker appreciates the biography's avoidance of hagography.
• The podcast aims to learn from historical figures without idolization, acknowledging their flaws.

"Hagography means adulatory writing about another person, a biography that idolizes its subject."

This definition of hagography clarifies the intent behind the biography and the podcast's goal to learn from historical figures realistically, acknowledging both their achievements and flaws.

• Frick was seen as both saintly and evil, with ethical business dealings.
• He was an introvert, focused on work, contrasting with Carnegie's desire to be liked.
• Frick was straightforward, making him preferred for dealings despite Carnegie's charm.

"Frick was human, not evil. And his life demonstrates many shortcomings found in us all."

The quote acknowledges Frick's humanity and the duality of his character, which included both positive and negative traits.

• Quentin, the author, brings a unique perspective as an operations manager in the steel industry.
• His personal experiences with strikes and managing a steel mill allow him to relate to Frick.
• Quentin's background informs his understanding of Frick's organizational genius and complexity.

"I wanted to see Frick through my eyes as an operations manager in the steel industry."

This quote expresses Quentin's personal connection to Frick's world, providing a unique lens through which to view Frick's life and work.

• Frick viewed making money as an intellectual game, valuing earned money over unearned.
• He was a private individual who valued confidentiality in all dealings.
• Frick's approach to the press was to avoid it, valuing privacy over notoriety.

"In many ways, making money was an intellectual game for him... Money earned without effort, skill and gamenesship had no value to him."

The quote sums up Frick's philosophy on wealth, emphasizing the importance he placed on the process of earning money rather than simply possessing it.

• McCullough notes Frick's aversion to the press and notoriety.
• Frick's only interaction with the press was heavily edited by him.
• Frick's privacy extended to his philanthropy, often giving anonymously.

"He simply did not talk to the press ever at any time. It was his standing policy."

McCullough's quote underscores Frick's preference for privacy and his systematic approach to controlling his public image.

• Frick's great-grandfather started a profitable whiskey business, showcasing entrepreneurial spirit.
• The transition from farming to whiskey production was a significant economic move for the family.
• This historical shift in the family business had long-lasting implications.

"To a farmer, grain sold for a few cents a bushel, but whiskey sold for a dollar a gallon, which made turning grain into whiskey very profitable."

The quote illustrates the economic rationale behind the family's shift from farming to whiskey production, hinting at the entrepreneurial roots that may have influenced Frick.

• The Magahala Valley in present-day Pennsylvania was remote and difficult for British tax collectors to access.
• In 1794, President George Washington and Secretary of Treasury Alexander Hamilton imposed an excise tax on whiskey.
• Scotch-Irish General Neville, initially opposed to the tax, was chosen as the tax collector in western Pennsylvania.
• The Scotch-Irish militia reacted by burning General Neville's estate and killing federal leader General James McFarland.
• Hamilton persuaded Washington to send 13,000 troops to put down the rebellion.
• The Scotch-Irish moved to Kentucky and Tennessee to produce whiskey beyond federal tax collectors' reach, forming the bourbon and whiskey families known today.

"President Washington George and secretary of Treasury Alexander Hamilton imposed an excise task on whiskey in 1794." "The valley Scotch Irish mustered a militia and burnt the estate of General Neville." "Alexander Hamilton persuaded George Washington to send 13,000 troops to western Pennsylvania to put down the rebellion." "The Scotch Irish, however, moved into Kentucky and Tennessee to produce their whiskey."

These quotes detail the events of the Whiskey Rebellion and its consequences, including the migration of the Scotch-Irish and the establishment of the bourbon and whiskey industry in Kentucky and Tennessee.

• Frick idolized his wealthier ancestors but saw his father as unambitious, which motivated him.
• Historians describe Frick's parents as hardworking but lacking ambition, influencing Frick's approach to wealth accumulation.
• Frick contracted scarlet fever as a child, leading to lifelong health issues.
• His physical limitations drove him to develop his mental skills and competitive nature.
• Frick dreamed of emulating his grandfather's wealth, excelling in mathematics and reading from an early age.

"He says scarlet fever at the time was a major killer of young children. Henry Clay survived, but with long term consequences, which would plague him for all of his life." "His lack of physical strength restricted him from playing in popular sports, but this only made him more determined to succeed." "Henry excelled in mathematics, and he developed a love for reading early in his life."

These quotes highlight Frick's early life challenges, his determination to overcome physical limitations, and his ambition to achieve wealth and success.

• Frick started working with his uncle at a general emporium, earning $6 a week and later moving in with him.
• He briefly attended the Classical and Scientific Institute, excelling in math and taking over bookkeeping at his uncle's store.
• Frick saw bookkeeping and cost accounting as essential skills for success in capitalism.
• He admired Napoleon, sharing this interest with contemporaries like Andrew Carnegie and Charles Schwab.
• Frick worked in retail, moving to commission-based jobs to increase his earnings.

"Henry started working with his uncle Martin at his general emporium." "Bookkeeping opened the world of cost accounting to Henry, which would be his strength throughout his career." "He was introduced to Napoleon, which led him to read the borrowed copy, a barred copy of the life of Napoleon Bonaparte."

These quotes outline Frick's early career, his introduction to bookkeeping and accounting, and his admiration for Napoleon, which he shared with other capitalists of the time.

• Frick's ambitious work schedule included long hours, night school, and minimal social life.
• He learned from the financial failures of his family, particularly the bankruptcy of his grandfather's estate.
• Frick was frugal and meticulous in business, avoiding the pitfalls that befell others during economic downturns.
• He believed in preparing for inevitable financial panics and managing businesses responsibly.

"His schedule is as ambitious as his dreams. He rose and dressed for breakfast at seven at the boarding house. He had over a mile to walk to reach the store at eight." "Abraham proved not to be a master of personal finance, so his estate was worth about $7 million. But he had a lot of debt and account."

These quotes demonstrate Frick's rigorous work schedule and the influence of his grandfather's financial mismanagement on his own business philosophy.

• Frick got into the coke industry after discussing the market boom with his cousin Tinsman.
• He learned about coal and coke from informal education and interactions with miners like Cochrane.
• The Morgan Mines investment provided Tinsman with a substantial income, which indicated the profitability of the coke market.
• The postwar iron and steel boom made Connorsville the coke capital of the world, with an increase in millionaires and new companies.

"Frick had seen the boom of the iron and steel mills firsthand, and Tinsman's main source of income was from his small coke operations and his investment in Morgan Mines." "By the 1890s, Connisville would have more millionaires per capita than any other place in the country. And maybe the world."

These quotes describe how Frick entered the coke industry and the economic boom that led to Connorsville's prominence, setting the stage for Frick's eventual success in the coke business.

• Tinsman was overextended in his business endeavors, leading to bankruptcy.
• Frick was financially savvy and not over-leveraged, allowing him to capitalize on downturns.
• Frick acquired Morgan mines at a fraction of the cost due to his financial prudence.
• Frick's strategy involved waiting for downturns and being prepared financially to take advantage of opportunities.

Tinsman wanted to expand, but he was personally overextended in numerous business endeavors. He winds up going bankrupt.

This quote highlights Tinsman's financial overextension and subsequent bankruptcy, which contrasts with Frick's more cautious approach to finance.

• Frick formed a partnership to invest in coke operations, taking advantage of his partners' full-time engagements elsewhere.
• He managed the mine and continued as chief bookkeeper, showcasing his multitasking abilities.
• Frick believed coke to be the most profitable product, prompting him to focus on expanding in this area.
• He bought coal lands from farmers using personal loans backed by the Overholt name, leveraging local goodwill.
• Frick's reputation and financial skills made him a trusted treasurer and bookkeeper in various organizations.

Frick would manage the mine while remaining the chief bookkeeper with a year salary.

This quote illustrates Frick's dual role in managing the mine and handling the books, reflecting his dedication and work ethic.

• Frick approached Judge Mellon for financing to expand his coke ovens.
• Mellon viewed Frick as determined, persuasive, and audacious.
• Frick's request for additional funds was audited by Mellon's associate Corey, who gave a glowing report of Frick's operation.
• Frick's work ethic and business acumen were evident at the young age of 21.

Corey would give Mellon a glowing report. And this is the direct quote from Corey's report describing Frick's operation: "Lands good ovens, well built manager, on the job all day. Keeps books in the evenings."

Corey's report confirms Frick's effective management and diligent work habits, which impressed Mellon and secured additional funding.

• Carnegie was focused on vertical integration to control all aspects of production.
• He aimed to control his own sources of coal and coke as part of this strategy.
• Carnegie and Frick's interests aligned, with Frick's coke operations becoming integral to Carnegie's steel business.
• The demand for coke exceeded Frick's optimistic forecasts, and he was well-positioned to profit from the market.

Carnegie was determined to control his own sources of coal and coke, which was part of his overall strategy of vertical integration.

This quote underlines Carnegie's strategy to control the supply chain, which eventually led to his collaboration with Frick.

• The financial panic of 1873 provided Frick with opportunities to expand at low costs.
• Frick brokered deals between railroads, earning significant commissions.
• He paid off debts and acquired coal lands at depressed prices.
• Frick's cost-efficient operations allowed him to profit during economic downturns, while others struggled.

Frick, for his part, received a $50,000 commission, which is over $750,000 in today's money.

This quote demonstrates Frick's financial gain from brokering a deal between railroads, highlighting his business acumen during the panic.

• Frick was described as careful, exact, reliable, energetic, industrious, and self-confident.
• He was seen as having great promise but was cautioned against overreaching.
• Frick's vision recognized the importance of steel as a transformative technology.

The young man has great promise. He is very careful in making statements, always exact and wholly reliable.

This quote from Judge Mellon's son reflects Frick's personal qualities that contributed to his success and the high regard in which he was held.

• By age 30, Frick had become a millionaire through aggressive building and investment during the recession.
• His poor health forced him to learn the science of organization, which became key to his success.
• Frick's ability to delegate and find good managers multiplied his efforts significantly.

Frick had learned the secret that Carnegie had found years earlier, that good managers could multiply his efforts many times.

This quote highlights the importance of effective management in expanding business operations, a principle both Frick and Carnegie utilized.

• Frick's coke and coal interests were numerous but lacked specialization.
• Carnegie drew Frick into more financial interests in Carnegie brothers to align their goals.
• Frick's knowledge and managerial skills were invaluable to Carnegie's operations.
• Frick began studying steelmaking, recognizing its potential and aligning with Carnegie's vision of vertical integration.

Frick started a personal quest to study and understand steelmaking.

This quote signifies Frick's dedication to mastering the steel industry, which was critical to his partnership with Carnegie.

• Frick was a devoted family man, spending evenings with his family and showing love for children.
• His public image contrasted with his private generosity, including anonymous donations to children's charities.

The picture of Frick carrying and burping his son would not seem to fit his demonic public image.

This quote juxtaposes Frick's harsh public persona with his tender private life, revealing the complexity of his character.

• Bill Gurley emphasizes the importance of being obsessive about learning in one's field.
• He advocates for honing one's craft and understanding it deeply as an obligation.
• Gurley suggests holding oneself accountable and continuously learning over time.
• He highlights the importance of studying history and knowing the pioneers of one's field.
• The goal is to strive to know more than anyone else about one's particular craft.
• Gurley acknowledges that while innate talent varies, information gathering is a leveler.
• He points out the accessibility of information on the Internet, leaving no excuse for not being knowledgeable.

"Be obsessive about learning in your field. Hone your craft constantly. Understand everything you possibly can about your craft. Consider it an obligation. What an interesting use of words right there, right? Hold yourself accountable. Keep learning over time, study the history. Know the pioneers."

This quote encapsulates Gurley's advice on the relentless pursuit of knowledge and mastery in one's chosen career, highlighting learning as a continuous and accountable process.

• Frick's approach to business included setting up company stores, which were criticized for exploiting workers.
• A study in 1884 showed company stores accounted for 20% of coal company profits.
• Frick's practices are noted as an example of how being capable of something doesn't justify unethical actions.
• The transcript discusses the moral implications of business decisions and the importance of ethical considerations.

"A mining industry study in 1884 showed how much the company stores were really a company abuse."

This quote indicates the exploitative nature of company stores set up by Frick, highlighting a significant source of profit that was ethically questionable.

• The transcript discusses the changing nature of labor due to technological advancements.
• It notes the shift from skilled to unskilled labor in the mining industry, driven by technology.
• The amalgamated union's structure did not reflect the new reality of unskilled immigrant labor.
• Both management and unions failed to recognize that technology, not their conflict, was changing the industry.

"Both sides didn't even realize what they were really fighting over. They both were approaching the same problem and blaming, one's blaming unions, one's blaming management, but it's neither. It's the technology has fundamentally changed this aspect of this trade, this work, and they're trying to hold on a system, both sides, that no longer exist."

This quote highlights the misunderstanding between unions and management, where both failed to see that technological progress was the real driver of change in labor dynamics, not their internal disputes.

• The transcript describes the contrasting personalities of Henry Clay Frick and Andrew Carnegie.
• Frick is portrayed as a straight shooter, while Carnegie is seen as a sidestepper with an unpredictable persona.
• The differences in their personalities were such that conflict between them seemed inevitable.

"Frick would never again, however, trust Carnegie fully."

This quote reflects the deep-seated mistrust and personality clash between Frick and Carnegie, foreshadowing their eventual conflict.

• Frick is credited with significant contributions to the formation and growth of United States Steel.
• His corporate vision unified Carnegie's operations into a cohesive unit, achieving unprecedented productivity and profits.
• Frick's role in the formation of U.S. Steel is often understated by history.
• He is recognized for his influence on modern corporate structure and management philosophy.

"Frick's corporate review brought Carnegie's various plants and operations together as a corporate operating unit. He tied plants together via a corporate railroad."

This quote demonstrates Frick's strategic vision in integrating various operations of Carnegie's enterprise, significantly boosting efficiency and output.

• Frick believed in the role of entrepreneurs in advancing technology, not large corporations.
• He preferred to buy proven technology rather than developing it within his corporation.
• His approach suggests that large corporations are often inefficient at developing technology compared to entrepreneurs.

"Frick saw advancing technology as the role of entrepreneurs, not large corporations."

This quote summarizes Frick's perspective on technological innovation and the distinct roles of entrepreneurs versus large corporations in driving advancements.

• Frick strongly believed in the need for inspirational education, not just the imparting of facts.
• He donated primarily to educational causes and critiqued the college system for its focus on information over inspiration.
• Frick's views on education reflect a desire to ignite passion and interest in learners rather than rote memorization.

"With education, Frick believed it should be inspirational versus merely steeped in facts."

This quote captures Frick's philosophy on education, emphasizing the importance of inspiring students rather than just filling their heads with information.

• The transcript concludes with a reflection on Frick's legacy as one of America's great builders.
• His dreams and labor resulted in significant contributions to the nation's industrial development.
• The obituary described in the transcript paints Frick as a visionary whose impact on America's material development will endure.

"The name of Henry Clay Frick stands very near the top of the list of builders of America."

This quote from the obituary serves as a testament to Frick's lasting legacy as a key figure in America's industrial history.