Homestead: Geography is Destiny

Still making my way through David Nasaw's biography of Andrew Carnegie, I'm perched just now at the pivot point--the infamous Homestead strike of 1892, by any measure one of the nastiest of 19th Century labor conflicts, and the one that pretty much put paid to any claim by Carnegie to special status as an above-the-battle Friend of Humankind (though like others after him, he spent the rest of his life trying to recover his entrepreneurial virginity).  Though never a Disney movie, Homestead is a well-known story and I can't say it comes as entirely new to me, but here's something right before my eyes that I never noticed before.  Specifically: a dominant reason why Carnegie was so eager to keep a cap on wages is that the center of gravity in the steel industry was shifting--from Pennsylvania to the environs of Chicago--and the Carnegie crowd was simply finding it harder and harder to compete.  Flipping the point around, Carnegie's earlier success surely arises at least in part from the fact that he caught the perfect wave: the right place at the right time, as the demand for steel exploded.  Whether he was also "the right man"--or just lucky--is a more complicated question that I leave, perhaps for another time.

Two other points about Homestead.  One, it's fascinating how much turns on a momentary tactical error: the undertaking to unload the Pinkertons at a point along the river where the strikers had a pretty good chance to obstruct them.  The strikers didn't exactly win the round--they counted more dead--but it robbed management of the initiative, something they never really regained through the whole long dreary aftermath.

And another: I love it when some reporter asks the Great Man why he didn't just bend a little and stump up a bit more.  Why, it is the fault of the unions. Carnegie responded. The unions? How the unions? Wny, it is their fault that they didn't insist on higher wages from our competitors.  I don't suppose anything shows more clearly how well Carnegie understood the concept of economic rents (even if he had never heard the term) and that the unions are, indeed, whatever else you may say, a vast conspiracy in restraint of trade.  It's going to take a few years more for management to figure out that the road to labor peace is to cut the workers into their own--i.e., the manager's--conspiracy in restraint of the trade, and so allow them to them to enjoy their chokehold on the consumer surplus together.