EBBW VALE

A momentous journey -- Interview with Mr. David Chadwick -- Ultimatum offered to the Ebbw Vale Company -- Agreement with the Ebbw Vale Company -- End of Operation

In the preceding Chapter I have referred to Mr. George Parry, who was furnace manager at the Ebbw Vale Works in 1857. In that year he applied for a patent having for its object the decarburation of crude iron, by blowing forcibly down upon it in a closed chamber without fuel, instead of blowing up through it, as in my process; this patent, however, was not completed. In 1861, as already stated, Mr. Parry took another patent for making carburet of iron in a small blast furnace, the iron so produced containing some portion of all the ordinary constituents of pig iron, but differing in their proportions; in consequence of this difference it was proposed to convert this iron into steel by blowing air up through the fluid in a closed vessel, and to make it into ingots precisely in the manner directed in my patents. I think it was quite natural that efforts at competition on these and other lines should be made persistently; my process was advancing with rapid strides in every State in Europe, and immense profits were being realised in this country by the proprietors of ironworks who had taken licenses under my patents; in fact, thousands of tons of Bessemer steel rails had been sold at £18 to £20 per ton. Some two or three years had glided away after the date of Mr. Parry's second patent, which had been quite forgotten by me. I had at this time (about 1864) occasion to go to Birmingham on business, and had left Euston at 9 P.M. I was quietly reading my newspaper in the snug corner of a first-class compartment, containing only two other occupants beside myself. These were two young gentlemen, who appeared much elated at some success, or contemplated success -- it might be a race, a Stock Exchange bargain, or any other matter of ordinary interest. Being quite young men they were naturally very enthusiastic, and somewhat loud in their conversation, which rather disturbed my reading. After some remarks by one of them, the other exclaimed, in a very loud tone, "I wonder what the devil Bessemer will say?" There could be no mistake as to this plain reference to me, since, with the exception of the members of my family, I alone answered to that name. It then occurred to me for the first time that all this excited language and jubilation had some reference to me; I had not the remotest idea as to what had previously been said, or to what it referred. By this time we had reached Watford, and as the train went on I kept my paper before me, but could not prevent my attention being directed to the lively sallies of these young men. Little by little, I became conscious that the exciting cause of this boisterous hilarity was some new joint-stock company that was to be floated in two or three days. It might be a gas company, a brewery, or anything else, for up to this point I had no indication of its nature, and only wondered why they should question as to how Bessemer would receive the news. But one at a time words were dropped that startled me not a little, and riveted my attention to their conversation, which was very much veiled, as though the scheme, whatever it might be, were to be kept a profound secret at present from the outer world. But here and there some casual word or two was dropped, about mines and works, and a journey up from Wales, and what David Chadwick had said about all the shares being taken up in two days for certain. Thus I soon began to grasp the meaning of the fragments I had heard, and to fit these disjointed sentences together; but there was no absolute certainty that I had guessed the true meaning.

We had by this time arrived at Leighton, and my fellow-travellers got out, as I supposed, to take some refreshment, but the train went on without them, and I was left alone to think over this curious incident. Then I remembered that Mr. Joseph Robinson, the manager of the Ebbw Vale Company's London offices, lived at Leighton. These young men might probably be his sons; and this formed another startling confirmation of the theory I had arrived at, viz., that the Ebbw Vale Iron Works were going, in a few days, to be formed into a joint-stock company, to take over the works and mines and the other property of the present owners, and that Mr. David Chadwick, whose name I distinctly heard, was the financial agent employed to form the company. I was not long in realising all that this meant to me, and I saw that it was necessary to take immediate steps to protect myself. Hence I became very impatient to arrive at the next station, which was Blisworth, and there I got out. It was now about 11 P.M., and the next up train was nearly due. I had by this time worked myself into a considerable state of excitement, and paced the station platform so rapidly as to attract the attention of the stationmaster, who asked me if anything were wrong, or if he could do anything for me. I said, "No; I have heard some news on my way down which renders my immediate return to London advisable." The up train soon arrived, and conveyed me back to Euston. I took a cab to Denmark Hill, where I arrived about 2 A.M., and somewhat alarmed my wife by my return home at such an unseemly hour. Sleep did not come readily that night, my mind was too much disturbed; but in the quiet hours of the early morning I calmly reviewed the whole situation, and rehearsed every detail of the plan of campaign. Then I got a couple of hours' sleep, and by the time breakfast was over I felt sufficiently refreshed, and fully nerved, to carry out the plan which, after renewed consideration, I had determined to follow. I now fully realised the disadvantageous position I should be placed in if this company, with a couple of millions capital, was formed and I was left to fight them single-handed. Even now, after the lapse of so many years, this marvellous revelation, coming as it did at the precise moment necessary to be effective, seems more like an act of eternal justice than one of the ordinary affairs of life. I was startled by it at the time, and, momentous as were the interests involved, I was not unnerved, but, on the contrary, felt greatly encouraged; for though not possessed of that very great physical courage natural to more robust men, I have ever stood firmer in the face of a great, an appalling danger, than when encountering some of the smaller risks we all have to run at times.

On the morning following my unexpected return to London, I paid a visit to Mr. David Chadwick, at 11 A.M; I said I had called to discuss an important question in relation to the great iron and steel company that was to be formed to purchase and take over the Ebbw Vale Ironworks and Mines. He started with surprise, but I had so directly assumed the fact that he made no effort to conceal it. I said: "I wish to call your attention to some facts with which you are probably wholly unacquainted, but which most nearly concern your personal interest, as well as that of myself and of your Ebbw Vale clients." I then told him, as briefly as I could, of the attempts that had been made to destroy the value of my invention by cornering manganese, and thus to force me to sell my patents for less money than they were worth. I also referred to Mr. George Parry's patents, neither of which could be worked without directly infringing mine; therefore that the proposed company could not manufacture cheap cast steel without a license from me, and, what was of still greater importance to him and to them, was the fact that the New Ebbw Vale Steel and Iron Company could not even be formed at all without my consent and permission.

Mr. Chadwick, not unnaturally, doubted this confident expression, and said: "That's got to be proved." I said: "You must excuse my plain speaking, and allow me to call a spade a spade; I have but to express what is my determination, unless my terms of surrender are accepted. Do not suppose me weak enough to calculate on gaining a single point by mere bluff; I know, by reputation, that you are a very unlikely person to be led away by such means. I also know, on the other hand, that you might readily enough in your own mind come to this conclusion: 'Well, let Bessemer do what he likes in law; it will take him some months, but we shall have got our capital in a few days, and shall be in good fighting trim, with £2,000,000 to back us, and can thus afford to laugh at any threat from him.' Now this is just the very thing I have set myself to frustrate. I can fight the question now with £100, and obtain a victory in two or three days, but if I once let you get your capital, it might cost me £10,000, and a couple of years' struggle in the Law Courts; so you see I must choose this very day to fire the first shot, unless your clients make an immediate and unconditional surrender; or unless you hold out a flag of truce for two days to enable you to communicate with your clients."

"Now there are two ways of carrying on such a war. If I were bent on fighting, I should mask my batteries, and so fall upon you unawares, you thinking that my armament was very small; but I have no desire to fight unless I am driven to do so, in which case I should know how to defend myself. There is a great disadvantage in some cases in allowing your enemy to underrate your strength and to rush headlong into war, hence it is my policy just now to show you how completely I have you in my power. What I want, and must have, is the giving up by the Company of all obstructive patents in their possession, and the immediate taking out of a license from me to use my patents instead."

"If this is refused, what is my inevitable course? I go from here direct to my solicitor, who can readily, in two hours, make a formal written application for an injunction in the Court of Chancery to restrain the company owning these patents, or any new company formed for that purpose, from using them. Meanwhile, I get a thousand blue and red posters printed, announcing the fact that I, Henry Bessemer, have applied for four separate injunctions in the Court of Chancery to restrain the Ebbw Vale Companies using certain patents for making steel, which they are in possession of; and, further, that I have absolutely refused to give a license to the present -- or any future -- Ebbw Vale Company to use any of my patent processes for the manufacture of cast steel. These facts I can legally publish; I could, before the day was out, cover every hoarding in the City with these staring placards, and before the members of the Stock Exchange arrive at their offices to-morrow morning, I could have fifty cabs perambulating Cornhill and the principal City thoroughfares with similar placards posted on them, as practised at election times, and distributing handbills by the thousand; if you are of opinion that under these conditions you can get £2,000,000 capital subscribed for a New Ebbw Vale Steel Company, you may try and do so.

"On the other hand your clients, if this altered state of things is communicated to them in a quiet, businesslike way by their own financial agent, will never be mad enough to lose such a chance of realising so vast a sum in ready cash for their old works and plant.

"Iron-making, as far as rails are concerned, is played out. The company must make steel or shut up the works, and they have already put it off too long. My process has rendered large buildings filled with long rows of puddling furnaces of little value; and weak old-fashioned rolling-mills, that would do for iron, must all be replaced by stronger and more modern mills for rolling steel. Your clients must be fully aware of these facts, and they will never risk their present chance of selling the works for the mere pleasure of opposing me. I know this as well as they do, and there lies my source of power. Whereas their unconditional surrender would make everything smooth, their own best interests would be secured, you would get your commission for the formation of the company, and I should get my royalty for all the steel they make. Such is the brief outline of the steps I am bound to take if my offer is rejected."

"What, then, do you propose that I should do?" said Mr. Chadwick.

"Simply this. Go and see your clients, show them clearly their altered position, and absolutely refrain from taking one single step in advance until I have been brought face to face with the owners of the property, or their fully-authorised delegates; and if you pledge yourself to this course of action, I will, on my part, remain absolutely quiescent; but, please remember, that a single word in the public press will bring me into full activity."

Mr. Chadwick was much too keen a man of business not to recognise to its fullest extent the imminent peril in which the prosperity of the new company was involved, and said: "I will at once see my clients on the subject, and will wholly abstain from any further steps for the formation of this company until they have consented, or refused, to discuss the matter with you. But I have little doubt that they will come up to London, probably the day after to-morrow." Thus far we were mutually pledged, and at parting, I suggested that it would be far more agreeable to all parties concerned if they would meet me with a plain "Yes" or "No" to my demands, and so avoid a discussion that might easily terminate in many unpleasant words. I was the more anxious to do this, as every member of the then Ebbw Vale Company was wholly unknown to me, even by name, except Mr. Abraham Darby and Mr. Joseph Robinson; and, although very plain speaking had been necessary in the case of Mr. Chadwick, in order to fully impress him with the gravity of the crisis, it was most desirable that the vendors should be put in possession of these facts in a quiet businesslike manner through their own financial agent, and be thus able to calmly review their position from this new standpoint, make up their minds what course they intended to pursue before seeing me, and thereby avoid any heated discussions on the subject.

On the second day after this interview with Mr. Chadwick, I met by appointment at his offices, Mr. Abraham Darby, who was, I believe, the chief proprietor of the Ebbw Vale Iron Works; his partner, Mr. Joseph Robinson, was also present. We met on a friendly business footing; my terms as given to Mr. Chadwick had been accepted, and we had merely to discuss the few details that were necessary. They laid great stress on the large sums of money their patents and their experiments had cost them, setting it down, if I remember correctly, at £40,000. Then this difficulty arose: Mr. George Parry's patent was not in their hands, and £5,000 must be paid to give them an absolute control over it. This I undertook to pay, and on their arranging to go largely into the manufacture of Bessemer steel, I agreed to deduct £25,000 from their first royalties, in lieu of paying money for the purchase of all their patents. After this deduction was made, they were to pay me the same royalties as I charged to other licensees on all the steel they produced.

Thus the two great objects I had in view were accomplished. The signing of my deed of license took the sting out of my opponents, for it contained what lawyers call an "estoppel clause," in which they, under their hands and seals, acknowledged the perfect validity of all my patents: "That they were new and useful," and "were sufficiently described in my specifications," and that "they were all duly specified within the time prescribed by law." This clause deprived them of the possibility of attacking my patents, or refusing to pay the royalties agreed upon in their deed of license.

It was also important that I should get the assignments of all their patents. Not that these patents were in themselves worth the paper they were written on, but so long as they existed and were the property of some other persons, they were fighting material, and could be utilised to keep me in the Law Courts possibly for a couple of years. This might have cost me an amount of money immensely greater than the loss I should sustain by the Ebbw Vale Company's not paying me a royalty on their first year's production of steel; which was, in fact, only the loss of what never would have been mine if I had let them go on their own way unopposed. Under these conditions I withdrew all opposition to the formation of the new steel company, and after a not very long interval I began to receive from the Ebbw Vale Company large sums quarterly in the form of royalty. I cannot, at this distant period, find all the returns of the sums they paid me, but I am under the impression that I received from them altogether in royalties between £50,000 and £60,000; added to this they had given up all the patents which had been held for years suspended over me.

Thus happily was removed the last barrier to the quiet commercial progress of my invention throughout Europe and America -- an invention which from its infancy has steadily grown in extent and importance, until the production of Bessemer steel has reached an annual amount of not less than 10,500,000 tons, equal to an average production of 33,500 tons in every working day of the year, and having a commercial daily value of a quarter of a million sterling.