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In 1887 a sudden change occurred in Meyer Guggenheim's career which destined his three younger sons to an apprenticeship in smelting instead of embroideries and caused even the first four ultimately to transfer their allegiance to the new enterprise. Through some friends in Philadelphia who owned two Colorado mines--the "A. Y." and the "Minnie"--and wished to sell them, he grew interested in copper mining. He sent one of his younger sons, Benjamin, to Leadville to investigate the mines and Benjamin reported them to be full of water. Guggenheim then made the trip himself. Although the little man from Philadelphia, with the long whiskers parted in the middle, was ridiculed by the hardened veterans of mining, he decided to venture his money. After that decision he was led by the peculiar logic of one commitment after another to throw his entire fortune into mining ventures. It required but a short time to convince him, however, that although speculative profits might lurk somewhere in a mining bonanza, the field for certain profits and systematic factory organization lay not in the mining but in the processing of metals. Most of the profits of mining, he felt, went to the smelters. He bought $80,000 worth of stock in the Globe Smelter and put his sixth son, Simon, to work at sixty dollars a month as a time-keeper on the slag dumps to learn the business. In 1888 with Edward R. Holden, one of the Globe partners, he formed the Philadelphia Smelting & Refining Company, and built a smelter at Pueblo, Colo., at a cost of $1,250,000. His quick intelligence saw that while competition among smelters for the American ores was severe, the whole product of the Mexican mines, which had to pay heavy freight charges to be shipped to Colorado, could be captured by building a plant in Mexico. In 1891 he sent his son William to Monterey to build the second Guggenheim smelter and the first complete silver-lead smelter in Mexico, and three years later he built another at Aguascalientes, fitting out both plants with a considerable array of welfare devices for the employees. Still dissatisfied because of his dependence on the process of refining, he built a refinery at Perth Amboy, N. J., placing his son Benjamin in charge. He had by this time become so deeply involved in the metallurgical industries that he gave up the importation and merchandising of embroideries and threw all his resources into his new venture. At an age when most men are planning to retire he found himself at the height of his powers. To his abilities must be added, as perhaps his chief resource, the possession of seven sons whom he had trained in business tactics and on whom he could rely--a resource which enabled him to adapt the measure of personal control inherent in individual enterprise to the demands of large-scale enterprise and industrial integration.
The fall in the value of silver in 1893 led to a tightening of conditions in the smelting industry and the formation of the American Smelting & Refining Company. As one of the leaders of the industry Guggenheim had been invited to join the consolidation. He had refused, not so much from public-spirited scruples against a "trust," as from his unwillingness to surrender that direct equivalence between one's business abilities and one's profits that constitutes the psychological basis of individual enterprise. He would not merge his efforts with those of a trust unless he could control it. His demands for control seemed unreasonable, and since they were unconditional the American Smelting & Refining Company, when it was formed in 1899 among eighteen of the largest smelting and refining plants of the country, did not include the Guggenheims. In fact, they were the only company of first importance not included. Guggenheim's decision was crucial, since his defeat in the competitive struggle with the Trust would mean absorption on the conqueror's terms. The struggle that followed brought out every bit of business wisdom that he and his sons possessed. The Guggenheim strategy was to make alliances with the mine-operators, a measure indispensable to a smelting company if it would keep its plants supplied with enough ore for economical processing. The execution of this strategy was considerably aided by the inherent suspicion which the fact of trusthood cast upon the Trust from the very start and which it was not very successful in allaying. Guggenheim capitalized immediately every slip that the Trust made in its relations with the public. When the Trust lowered the price that it paid the mine operators for the gold content of the ore from twenty dollars an ounce to nineteen, Guggenheim offered twenty and eventually forced his competitors to follow suit. When Colorado passed an eight-hour law and the Trust closed down some of its plants as a result, Guggenheim ran his under the new arrangement, although the old conditions were later restored. He helped mine owners over financial difficulties, giving them loans or advances or subscribing to their stock. He managed thus to obtain their friendship and eventually their contracts. Any mine operator disgruntled at the treatment accorded him by the Smelter Trust found the Guggenheims ready to take over his contract. The most important act of the Guggenheims in entrenching themselves permanently in the control of sources of ore supply, however, was the formation in 1899 of the Guggenheim Exploration Company. This new company served a unique function, combining in itself the characteristics of prospector, engineer, promoter, and financial backer. Every new discovery of ore in any part of the world brought a Guggenheim representative to the spot, ready to finish the prospecting, construct the engineering works, or manage a flotation of stock.
Through these means the Guggenheims were so successful in capturing more than their proportionate share of the ore supply for smelting that the Trust finally surrendered in 1901. It offered to absorb the Guggenheim properties under such terms that control by the Guggenheims was assured. It paid them $45,200,000 in stock, which was worth $36,000,000 in market valuation. To effect this it increased its own capital stock from $65,000,000 to $100,000,000. The purchase on the market of additional stock to the nominal value of $6,000,000 gave the Guggenheims control of the company. One of the sons, Daniel [q.v.], became chairman of the executive committee, another a member, and four of them sat on the board of directors. Meyer Guggenheim had accomplished his work and had founded his dynasty securely. His sons, under the leadership of Daniel, carried on in the management of the American Smelting & Refining Company the business strategy they had learned from him, and followed also his example of philanthropy in aiding the hospitals and charities of Philadelphia and New York. His death occurred in his seventy-eighth year, March 15, 1905 at Palm Beach, Fla.
text by Max Lerner, Dictionary of American Biography