To Avoid a Potential Price War With Cambria Iron Co., Andrew Carnegie Appeals to Owner Edward Townsend’s Wife to Get Him to See Reason
In a virtual case study of Carnegie's strategic style, he cajoles Mrs. Townsend with a carrot and a stick, saying "He will hear no sermon from the pulpit half so valuable as this if he is wise enough to take its counsels to heart." .
To avoid the disastrous consequences of pricing wars, the Pennsylvania steel firms met every year in Philadelphia to set minimum prices for their products. When in the spring of 1882, Carnegie was informed that Edward Townsend of Cambria Iron had secretly accepted a large contract by bidding $5 a ton under the...
To avoid the disastrous consequences of pricing wars, the Pennsylvania steel firms met every year in Philadelphia to set minimum prices for their products. When in the spring of 1882, Carnegie was informed that Edward Townsend of Cambria Iron had secretly accepted a large contract by bidding $5 a ton under the minimum price he had previously agreed upon, Carnegie was incensed and demanded, by letter, that Townsend divide the order with Carnegie's Edgar Thomson steelworks. Carnegie's letter was a small masterpiece of controlled invective. He charged Townsend not only was breaking a business agreement but with betraying the trust of a longtime colleague who had done nothing to deserve such treatment. He hoped that Townsend would accept his proposal to divide the order. If he did not, Carnegie asked that the matter be submitted to arbitration. Townsend responded briefly and to the point that he was surprised and pained by Carnegie's angry eloquence, believed his language had been unwarranted, and begged him to withdraw such offensive expressions so that they could rationally discuss their differences.
Carnegie knew that it would be a mistake to destroy a mutually beneficial pooling agreement and enter into a needless price competition, so he sought a way to back off from his angry tone (though not his substance). This he did so in two letters. One was to Townsend himself, in which he agreed to withdraw his charges if Townsend would split the contract 50-50. That letter is in the Library of Congress. The other was to Townsend's wife, asking her to get her husband to listen to reason, whole making a religious analogy that Edward was a good man (there was nothing wrong with his soul – Carnegie could easily guarantee that), but there was with his business decisions, and he must repent of those. That letter descended through the Townsend family, from whom we recently acquired it. It is unpublished and has never been offered for sale.
"I'd guarantee this for one tenth part of his Cambria shares. His body & brain no man would guarantee unless he repents, even for the entire amount of his Cambria."
Autograph Letter Signed, on his letterhead, July 13, 1882, to Mrs. Edward Y. Townsend, wife of the owner of the Cambria Iron Company. "I think you know a certain man in your circle to whom this can be read with great profit. He will hear no sermon from the pulpit half so valuable as this if he is wise enough to take its counsels to heart. His sins are in neglecting the body, not the soul; his soul is well enough & will be sure to come out all right. I'd guarantee this for one tenth part of his Cambria shares. His body & brain no man would guarantee unless he repents, even for the entire amount of his Cambria. There's a valuable man next door [George Roberts, president of the Pennsylvania Railroad] & to whose wife a copy might be given. He is not a good insurance risk either as to the body."
Apparently Carnegie felt that Roberts had sympathy with Townsend's position, but that he, like Townsend himself, could be got to through his wife. For whatever reason or combination of reasons, Townsend agreed and the breech was mended.
This letter provides a deeply fascinating look at Carnegie, his strategic style, and his way of approaching issues and people. That he thought it a potentially successful tactic to influence these two very powerful men (Townsend and Roberts) by appealing to their wives is a study in itself.
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