Andrew Kloman’s Sad Story

Today’s installment concludes The Age of Steel Begins,
our selection from Autobiography by Andrew Carnegie published in 1920.

If you have journeyed through the installments of this series so far, just one more to go and you will have completed a selection from the great works of five thousand words. Congratulations! For works benefiting from the latest research see the “More information” section at the bottom of these pages.

Previously in The Age of Steel Begins.

Time: 1872
Place: Braddock, Pennsylvania

In addition to the embarrassment of my friends Mr. Scott, Mr. Thomson, and others, there came upon us later an even severer trial in the discovery that our partner, Mr. Andrew Kloman, had been led by a party of speculative people into the Escanaba Iron Company. He was assured that the concern was to be made a stock company, but before this was done his colleagues had succeeded in creating an enormous amount of liabilities — about seven hundred thousand dollars. There was nothing but bankruptcy as a means of reinstating Mr. Kloman.

This gave us more of a shock than all that had preceded, because Mr. Kloman, being a partner, had no right to invest in another iron company, or in any other company involving personal debt, without informing his partners. There is one imperative rule for men in business — no secrets from partners. Disregard of this rule involved not only Mr. Kloman himself, but our company, in peril, coming, as it did, atop of the difficulties of my Texas Pacific friends with whom I had been intimately associated. The question for a time was whether there was anything really sound. Where could we find bedrock upon which we could stand?

Had Mr. Kloman been a business man it would have been impossible ever to allow him to be a partner with us again after this discovery. He was not such, however, but the ablest of practical mechanics with some business ability. Mr. Kloman’s ambition had been to be in the office, where he was worse than useless, rather than in the mill devising and running new machinery, where he was without a peer. We had some difficulty in placing him in his proper position and keeping him there, which may have led him to seek an outlet elsewhere. He was perhaps flattered by men who were well known in the community; and in this case he was led by persons who knew how to reach him by extolling his wonderful business abilities in addition to his mechanical genius — abilities which his own partners, as already suggested, but faintly recognized.

After Mr. Kloman had passed through the bankruptcy court and was again free, we offered him a ten per cent interest in our business, charging for it only the actual capital invested, with nothing whatever for goodwill. This we were to carry for him until the profits paid for it. We were to charge interest only on the cost, and he was to assume no responsibility. The offer was accompanied by the condition that he should not enter into any other business or endorse for others, but give his whole time and attention to the mechanical and not the business management of the mills. Could he have been persuaded to accept this, he would have been a multimillionaire; but his pride, and more particularly that of his family, perhaps, would not permit this. He would go into business on his own account, and, notwithstanding the most urgent appeals on my part, and that of my colleagues, he persisted in the determination to start a new rival concern with his sons as business managers. The result was failure and premature death.

How foolish we are not to recognize what we are best fitted for and can perform, not only with ease but with pleasure, as masters of the craft. More than one able man I have known has persisted in blundering in an office when he had great talent for the mill, and has worn himself out, oppressed with cares and anxieties, his life a continual round of misery, and the result at last failure. I never regretted parting with any man so much as Mr. Kloman. His was a good heart, a great mechanical brain, and had he been left to himself I believe he would have been glad to remain with us. Offers of capital from others — offers which failed when needed — turned his head, and the great mechanic soon proved the poor man of affairs.

[Long after the circumstances here recited, Mr. Isidor Straus called upon Mr. Henry Phipps and asked him if two statements which had been publicly made about Mr. Carnegie and his partners in the steel company were true. Mr. Phipps replied they were not. Then said Mr. Straus:

“Mr. Phipps, you owe it to yourself and also to Mr. Carnegie to say so publicly.”

This Mr. Phipps did in the New York Herald, January 30, 1904, in the following handsome manner and without Mr. Carnegie’s knowledge:

Question: “In a recent publication mention was made of Mr. Carnegie’s not having treated Mr. Miller, Mr. Kloman, and yourself properly during your early partnership, and at its termination. Can you tell me anything about this?”

Answer: “Mr. Miller has already spoken for himself in this matter, and I can say that the treatment received from Mr. Carnegie during our partnership, so far as I was concerned, was always fair and liberal.

“My association with Mr. Kloman in business goes back forty-three years. Everything in connection with Mr. Carnegie’s partnership with Mr. Kloman was of a pleasant nature.

“At a much more recent date, when the firm of Carnegie, Kloman and Company was formed, the partners were Andrew Carnegie, Thomas M. Carnegie, Andrew Kloman, and myself. The Carnegies held the controlling interest.

“After the partnership agreement was signed, Mr. Kloman said to me that the Carnegies, owning the larger interest, might be too enterprising in making improvements, which might lead us into serious trouble; and he thought that they should consent to an article in the partnership agreement requiring the consent of three partners to make effective any vote for improvements. I told him that we could not exact what he asked, as their larger interest assured them control, but I would speak to them. When the subject was broached, Mr. Carnegie promptly said that if he could not carry Mr. Kloman or myself with his brother in any improvements he would not wish them made. Other matters were arranged by courtesy during our partnership in the same manner.”

Question: “What you have told me suggests the question, why did Mr. Kloman leave the firm?”

Answer: “During the great depression which followed the panic of 1873, Mr. Kloman, through an unfortunate partnership in the Escanaba Furnace Company, lost his means, and his interest in our firm had to be disposed of. We bought it at book value at a time when manufacturing properties were selling at ruinous prices, often as low as one third or one half their cost.

“After the settlement had been made with the creditors of the Escanaba Company, Mr. Kloman was offered an interest by Mr. Carnegie of $100,000 in our firm, to be paid only from future profits. This Mr. Kloman declined, as he did not feel like taking an interest which formerly had been much larger. Mr. Carnegie gave him $40,000 from the firm to make a new start. This amount was invested in a rival concern, which soon closed.

“I knew of no disagreement during this early period with Mr. Carnegie, and their relations continued pleasant as long as Mr. Kloman lived. Harmony always marked their intercourse, and they had the kindliest feeling one for the other.”]

This ends our series of passages on The Age of Steel Begins by Andrew Carnegie from his book Autobiography published in 1920. This blog features short and lengthy pieces on all aspects of our shared past. Here are selections from the great historians who may be forgotten (and whose work have fallen into public domain) as well as links to the most up-to-date developments in the field of history and of course, original material from yours truly, Jack Le Moine. – A little bit of everything historical is here.

More information on The Age of Steel Begins here and here and below.