Such were the circumstances and such were the motives that gave birth to the world's largest corporation. All one night, so the story goes, Charles M. Schwab and John W. Gates discussed the steel situation with J. Pierpont Morgan. There was only one possible solution, they said—Andrew Carnegie must be bought out. By the time the morning sun came through the windows Morgan had been convinced. "Go and ask him what he will sell for," he said to Schwab. In a brief period Schwab came back to Morgan with a letter which contained the following figures—five per cent gold bonds $303,450,000; preferred stock $98,277,100; common stock $90,279,000—a total of over $492,000,000. Carnegie demanded no cash; he preferred to hold a huge first mortgage on a business whose golden opportunities he knew so well. Morgan, who had been accustomed all his life to dictate to other men, had now met a man who was able to dictate to him. And he capitulated. The man who fifty-three years before had started life in a new country as a bobbin-boy at a dollar and twenty cents a week, now at the age of sixty-six retired from business the second richest man in the world. With him retired a miscellaneous assortment of millionaires whose fortunes he had made and whose subsequent careers in the United States and in Europe have given a peculiar significance to the name "Pittsburgh Millionaires." The United States Steel Corporation, the combination that included not only the Carnegie Company but seventy per cent of all the steel concerns in the country, was really a trust made up of trusts. It had a capitalization of a billion and a half, of which about $700,000,000 was composed of the commodity usually known as "water"; but so greatly has its business grown and so capably has it been managed that all this liquid material has since been converted into more solid substance. The disappearance of Andrew Carnegie and his coworkers and the emergence of this gigantic enterprise completed the great business cycle in the steel trade. The age of individual enterprise and competition had passed—that of corporate control had arrived.
CHAPTER IV. THE TELEPHONE: "AMERICA'S MOST POETICAL ACHIEVEMENT"
A distinguished English journalist, who was visiting the United States, in 1917, on an important governmental mission, had an almost sublime illustration of the extent to which the telephone had developed on the North American Continent. Sitting at a desk in a large office building in New York, Lord Northcliffe took up two telephone receivers and placed one at each ear. In the first he heard the surf beating at Coney Island, New York, and in the other he heard, with equal distinctness, the breakers pounding the beach at the Golden Gate, San Francisco. Certainly this demonstration justified the statement made a few years before by another English traveler. "What startles and frightens the backward European in the United States," said Mr. Arnold Bennett, "is the efficiency and fearful universality of the telephone. To me it was the proudest achievement and the most poetical achievement of the American people."
Lord Northcliffe's experience had a certain dramatic justice which probably even he did not appreciate. He is the proprietor of the London Times, a newspaper which, when the telephone was first introduced, denounced it as the "latest American humbug" and declared that it "was far inferior to the well-established system of speaking tubes." The London Times delivered this solemn judgment in 1877. A year before, at the Philadelphia Centennial Exposition, Don Pedro, Emperor of Brazil, picked up, almost accidentally, a queer cone-shaped instrument and put it to his ear, "My God! It talks!" was his exclamation; an incident which, when widely published in the press, first informed the American people that another of the greatest inventions of all times had had its birth on their own soil. Yet the initial judgment of the American people did not differ essentially from the opinion which had been more coarsely expressed by the leading English newspaper. Our fathers did not denounce the telephone as an "American humbug," but they did describe it as a curious electric "toy" and ridiculed the notion that it could ever have any practical value. Even after Alexander Graham Bell and his associates had completely demonstrated its usefulness, the Western Union Telegraph Company refused to purchase all their patent rights for $100,000! Only forty years have passed since the telephone made such an inauspicious beginning. It remains now, as it was then, essentially an American achievement. Other nations have their telephone systems, but it is only in the United States that its possibilities have been even faintly realized. It is not until Americans visit foreign countries that they understand that, imperfect as in certain directions their industrial and social organization may be, in this respect at least their nation is preeminent.
The United States contains nearly all the telephones in existence, to be exact, about seventy-five per cent. We have about ten million telephones, while Canada, Central America, South America, Great Britain, Europe, Asia, and Africa all combined have only about four million. In order to make an impressive showing, however, we need not include the backward peoples, for a comparison with the most enlightened nations emphasizes the same point. Thus New York City has more telephones than six European countries taken together—Austria-Hungary, Belgium, Norway, Denmark, Italy, and the Netherlands. Chicago, with a population of 2,000,000, has more telephones than the whole of France, with a population of 40,000,000. Philadelphia, with 1,500,000, has more than the Russian Empire, with 166,000,000. Boston has more telephones than Austria-Hungary, Los Angeles more than the Netherlands, and Kansas City more than Belgium. Several office buildings and hotels in New York City have more instruments than the kingdoms of Greece or Bulgaria. The whole of Great Britain and Ireland has about 650,000 telephones, which is only about 200,000 more, than the city of New York.
Mere numbers, however, tell only half the story. It is when we compare service that American superiority stands most manifest. The London newspapers are constantly filled with letters abusing the English telephone system. If these communications describe things accurately, there is apparently no telephone vexation that the Englishman does not have to endure. Delays in getting connections are apparently chronic. At times it seems impossible to get connections at all, especially from four to five in the afternoon—when the operators are taking tea. Suburban connections, which in New York take about ninety seconds, average half an hour in London, and many of the smaller cities have no night service. An American thinks nothing of putting in a telephone; he notifies his company and in a few days the instrument is installed. We take a thing like this for granted. But there are places where a mere telephone subscription, the privilege of having an instrument installed, is a property right of considerable value and where the telephone service has a "waiting list," like an exclusive club. In Japan one can sell a telephone privilege at a good price, its value being daily quoted on the Stock Exchange. Americans, by constantly using the telephone, have developed what may be called a sixth sense, which enables them to project their personalities over an almost unlimited area. In the United States the telephone has become the one all-prevailing method of communication. The European writes or telegraphs while the American more frequently telephones. In this country the telephone penetrates to places which even the mails never reach. The rural free delivery and other forms of the mail service extend to 58,000 communities, while our 10,000,000 telephones encompass 70,000. We use this instrument for all the varied experiences of life, domestic, social, and commercial. There are residences in New York City that have private branch exchanges, like a bank or a newspaper office. Hostesses are more and more falling into the habit of telephoning invitations for dinner and other diversions. Many people find telephone conversations more convenient than personal interviews, and it is every day displacing the stenographer and the traveling salesman.
Perhaps the most noteworthy achievement of the telephone is its transformation of country life. In Europe, rural telephones are almost unknown, while in the United States one-third of all our telephone stations are in country districts. The farmer no longer depends upon the mails; like the city man, he telephones. This instrument is thus the greatest civilizing force we have, for civilization is very largely a matter of intercommunication. Indeed, the telephone and other similar agencies, such as the parcel post, the rural free delivery, better roads, and the automobile, are rapidly transforming rural life in this country. In several regions, especially in the Mississippi Valley, a farmer who has no telephone is in a class by himself, like one who has no mowing-machine. Thus the latest returns from Iowa, taken by the census as far back as 1907, showed that seventy-three per cent of all the farms—160,000 out of 220,000—had telephones and the proportion is unquestionably greater now. Every other farmhouse from the Atlantic to the Pacific contains at least one instrument. These statistics clearly show that the telephone has removed half the terrors and isolation of rural life. Many a lonely farmer's wife or daughter, on the approach of a suspicious-looking character, has rushed to the telephone and called up the neighbors, so that now tramps notoriously avoid houses that shelter the protecting wires. In remote sections, insanity, especially among women, is frequently the result of loneliness, a calamity which the telephone is doing much to mitigate.
In the United States today there is one telephone to every nine persons. This achievement represents American invention, genius, industrial organization, and business enterprise at their best. The story of American business contains many chapters and episodes which Americans would willingly forget. But the American Telephone and Telegraph Company represents an industry which has made not a single "swollen fortune," whose largest stockholder is the wife of Alexander Graham Bell, the inventor (a woman who, being totally deaf, has never talked over the telephone); which has not corrupted legislatures or courts; which has steadily decreased the prices of its products as business and profits have increased; which has never issued watered stock or declared fictitious dividends; and which has always manifested a high sense of responsibility in its dealings with the public.
Two forces, American science and American business capacity, have accomplished this result. As a mechanism, this American telephone system is the product not of one but of many minds. What most strikes the imagination is the story of Alexander Graham Bell, yet other names—Carty, Scribner, Pupin—play a large part in the story.