Cautionary Tales with Tim Harford - Steel and Kindness: Clash of the Skyscrapers

Episode Date: September 13, 2024

Paul Starrett has just won a major building contract. If everything goes according to plan, this will be the tallest building in the world. But will everything go according to plan? This prestigious new project will have Starrett's biggest workforce yet. Everyone will need to pull together, but labour relations in the United States have been rough. There have been tens of thousands of strikes in recent years, many ending in shootings and arbitrary mass arrests. Something else is bothering Starrett too: enormous steel-framed buildings normally take three or four years to complete. The deadline on this one? Just thirteen months. This is the second episode in a four-part series about how to succeed without being a jerk. It's based on David Bodanis' excellent book The Art of Fairness: The Power of Decency in a World Turned Mean. For a full list of sources, see the show notes at timharford.com.See omnystudio.com/listener for privacy information.

Pushkin One late afternoon in June 1928, the 62-year-old man from Kansas, Paul Starrett, was leaving an elegant private office high up in Manhattan's Biltmore Hotel. He ran a construction company with his brothers and had just pitched for their largest contract yet. It was a building on a site just a few blocks away that would make or break their company's fortunes. Starrett was a handsome man, always dressed in the latest trim suits, but he didn't smile much. He'd suffered from periods of depression for years, and on this day was especially acute. That wasn't because he'd lost out on the contract.

It was because he had a sinking feeling he was going to win it. Starrett was embarrassed by his depression, this sadness that came over him in overwhelming waves. What he loved was, as he put it, the practical machinery of architecture, turning drawings and plans into reality. As a young man in Chicago, he'd use his lunch breaks to watch the world's first skyscrapers going up. In the years since then he and his brothers had created their own company building ever larger hotels and office

buildings. This however would surpass them all. If everything went according to plan, it would be the tallest building on the fast-changing Manhattan skyline. And that meant it would be the tallest building in the world, with all the associated money and prestige. But would everything go according to plan? That could hardly be guaranteed. Starrett's new project would have a bigger workforce than any he and his brothers had ever run.

He couldn't know them all, and if the workers were obstreperous, or the foremen weren't committed, he'd be sunk. It wasn't just the complexities of the workforce that were bothering him. There was something else too. Enormous steel-framed buildings generally took three or four years to complete, and they always had to be able to handle last-minute changes. The deadline on this one? Just 13 months.

I'm Tim Harford and you're listening to Cautionary Tales. Paul Starrett was worried by the same thing that would worry any construction manager in the 1920s. Across the United States, labour relations were rough. There had been tens of thousands of strikes in the decades when he was establishing his business in oil, construction, steel, coal. Some ended peacefully, but many did not. Owners hired strikebreakers and often armed thugs. There were shootings and arbitrary mass arrests. In coal mines in Virginia, in Rockefeller's oil fields in Pennsylvania and further west, troops and those armed thugs would use their superior weaponry to fire into crowds.

Tamed governors and judges would support them. Workers, where possible, fought back. The underlying issue was one of fairness. Who got to determine what fairness is and how, if at all, it could be used to help organisations operate. This episode is the second in our four-part series on that topic, following my friend David Badana's excellent book The Art of Fairness, The Power of Decency in a World Turned Mean.

The most important labour struggle Paul Starrett had experienced, the one that seemed to loom largest in memory, had come when he was a young man, still just in his twenties. This was the famous Pullman Strike of 1894. Up until that year, George S. Pullman was revered in high circles across America for building one of the nation's largest corporations. The Pullman Company dominated the market for luxury train compartments in America, and was as powerful as Apple or Google today. It made Pullman one of the wealthiest men in the United States, mansions in Chicago

and elsewhere a regular guest in the United States. Mansions in Chicago and elsewhere, a regular guest at the White House. He'd also created an entire city for his employees on 4,000 acres of land a few miles south of Chicago. His publicists said he'd done this out of benevolence, but he instructed his accountants to squeeze money from the residents. They couldn't buy their homes, only rent, and Pullman was the only landlord in town. Food could only be bought from the company

stores, water and gas from the company pipes at a hefty markup. It was a complete monopoly, which he abused for financial gain as much as possible. The city had street after street of small apartments, designed for social control. Children had to go to the company schools. And when Pullman didn't like the theology of the main local church, he closed it down. No newspapers were allowed, or public speeches, or town meetings of any sort. Company representatives could enter any of these homes Pullman rented at any time to inspect whatever they saw fit. With due modesty, he named this utopia Pullman, Illinois. His own family would never spend time in such a place.

His twin boys, aged 19, showed no signs of any greater social consideration than their father. They were known for mockingly riding around Chicago, in cabs filled with champagne bottles. At one point, one of them nearly killed a newsboy, hurtling along fast when drunk. Paul Starrett was in his twenties then, and living in Chicago, just a few miles up from Pullman, Illinois. He knew about Pullman's twin sons. Everyone did. One person who did live in Pullman City was a young seamstress named Jenny Curtis. Curtis had a friendly look and round face, shortish hair which she tied back in a bun. With her

low income, she could only afford simple, dark cotton blouses, but she liked ones with neat, pintuck folds running down the front. Jenny Curtis would play an important part in the strike that Starrett would still ponder decades later as he tried to reshape the Manhattan skyline. She was the same age as Pullman's boys, just 19. But she had been working full time since 14, trying to pay off debts her father had incurred in his years working for Pullman when forced to buy everything at extortionate rates in Pullman's stores. In 1893, an economic panic began to spread

across the country. There were runs on the banks, and industrial orders slowed. Since the railways were losing traffic, they began to cut down their orders, and now Pullman's own sales began to suffer. George Pullman realised he had to make some savings. Instead of cutting profits, however, he announced he was cutting wages by a third, and he was also going to keep rents and food prices the same. This meant his income stayed as high as ever, and it was his workers who took the hit. He didn't need their goodwill, because he controlled everything they did. For those workers, this, finally, was a step too far.

Her delegation got up the nerve to meet Mr Pullman himself. Jenny Curtis was with them. She was getting a reputation as a great activist, holding impromptu secret meetings among the girls in the stitching workshops. No need for secrecy now. Pullman said he was open to listening, that anyone who spoke up would be safe. Curtis used that opportunity. Later she recalled what she'd told Mr Pullman. We worked as hard as we possibly could, but the most experienced of us could only make 80 cents a day. Many a time I've drawn $9 or $10 for two weeks' work, paid $7 for board, and given

the company the remaining two or three on the rent. Whenever I didn't, I was insulted and almost put out by the clerk. That, she explained, is what was so unjust. He was giving them less, but still paying full dividends to shareholders." Pullman listened quietly, and again promised the group they'd be safe. Then immediately after they'd left, he had a quiet word with his foreman. The three most senior workers, along with Miss Curtis, were to be fired the next day. With that done, he got on the train to New York, confident that everything would return

to normal soon. But nothing went as he assumed. Instead of giving in, the rest of his factory hands went on strike. Jenny Curtis, still just 19, became their leader. Pullman still wasn't too worried. He was rich and his workers were poor. He could simply wait and starve them out. Curtis and the others knew they had to get the strike to spread for other workers across the country to back them. She told the story to journalists and visiting politicians, and then a few weeks later had her biggest opportunity. The American Railway Union was having its

convention and she was invited to speak. Get them on her side and the Pullman workers would have a chance. But how to pull this off? She was a teenager, she'd had little schooling, she was physically slight and her voice wasn't loud at all. Soon though, it was time to get up on the wooden platform. A crowd of hundreds was before her, almost all men, almost all older. She knew they didn't know much about her and just saw an unexpected, diminutive figure on their stage. This would be daunting even for an experienced speaker. Yet, everything depended on this moment, on getting the nationwide railway union on her side.

There was only one thing to do. Cautionary Tales will return. Alone on stage, in front of hundreds of men, young Jenny Curtis had a powerful weapon. The truth. She started by describing how Pullman ran the factories she'd worked in since she was 14. Cotton thread handles best when moist, so windows in their work rooms were nailed shut to raise the humidity. In the 100 degree Fahrenheit Chicago summers, it was awful. When there were a lot of orders, Pullman pumped in extra steam. Girl workers had been receiving 17 cents an hour in the sewing units. Now it was down to 11 cents.

There was a constant danger from the massive industrial sewing machines used for the heavy carpets and drapes in the Pullman cars. Supervisors had complete control over how they spoke to the young girls, or threatened them, or punished them. The working day was 11 hours. She ended, Pullman owns the houses, the schoolhouse, and the churches of God in the town he gave his once humble name.

This merry war goes on and it will go on forever unless you stop it. End it. Crush it. The convention delegates voted to back Jenny Curtis's Pullman workers. Almost immediately after her speech, all rail traffic out of Chicago stopped. A few days more, and over 100,000 rail workers nationwide had stopped work as well. It was the largest strike America had seen. In this era before lorries and airplanes, it almost closed the country down.

Paul Starrett had a junior role in an architect's office then, watching the catastrophic impact of harsh labour practices on the world around him. Years later, as he pondered his skyscraper, he wouldn't forget. George Pullman was watching too, monitoring everything from his New York office. He didn't have popular opinion on his side, nor the local government, but he had friends in high places, specifically the Supreme Court and the Justice Department. Under Pullman's guidance, the Attorney General delivered injunctions that declared the strikes

illegal. 7,000 troops were sent to Chicago, along with 3,000 private enforcers from the rail companies. Several dozen workers were shot dead there and at the other supporting strikes. No one could resist that, and the strike quickly ended. Everyone had to go back to work, with the conditions he had decided on before. Their salaries would stay low, while their rents would be kept high.

George Pullman had won. But the city of Pullman, Illinois, full of sullen, aggrieved workers, was never quite the same. All that had happened when Paul Starrett was a young man in Chicago. His father had been a farmer and carpenter, when young Paul had worked on a ranch and as a stock boy in a hardware store. His empathy was with Jenny Curtis, not Pullman. He founded a construction company with his brothers, always keeping in mind the lesson of the strikes. Human beings shouldn't be treated as slaves. Others had drawn a different conclusion.

Business leaders in steel and coal and other fields, even now in 1928, had concluded from that huge strike that they had to be even harder than Pullman, stifling unions, keeping workers too humiliated or poorly paid to rise up. And with the task at hand, building a big skyscraper, how else could the Starrett brothers meet their tight deadline? There were big loans to be paid off and penalty clauses for failure. It was a lot of pressure. Starrett wrote that he felt lost and unhappy, detached from the activities that satisfy me. And yet none of the Starrett brothers wanted to go about the challenge the Pullman way.

Paul took the lead. He was gruff and short-tempered on the outside, but there was more to him than that. Paul Starrett and his brothers spent a lot of time working out how to go forward, and what they finally resolved to do was what's called providing efficiency wages. The idea is that if you pay more and treat your workers better, then you'll get better, more motivated staff. And if they were going to get everything done in 13 months, they'd need motivated staff. Other construction sites in New York tended to treat their workers awfully.

Lots of high-rise buildings were being constructed, and workers were hundreds of feet up from the ground, hours on end. Yet there were almost no safety laws and sudden gusting winds were fatal. Workers were blown off or skidded on slippery wet beams in the rain. There were dozens, hundreds of deaths. Yet if workers refused to go up, they were fired. Wages throughout were low. And if anyone wanted a hot meal, they'd have to climb all the way down, find a diner, then climb all the way up again.

Starrett was going to be different. He knew his wealth now gave him power over others, but he also knew it wasn't fair to treat them badly. His doctors had never been able to cure his depression, but his decency was one thing he could hold onto. So long as a project like this one was underway, it would help keep his inner darkness from getting worse. He and his brothers set out their new approach from the beginning.

There'd be at least one restaurant inside the structure as it was getting started, with schnitzels and tangy sauerkraut and fresh french fries and other good things. There were also smaller, subsidised food stands every few floors higher up. Sandwiches and hot coffee, this being the Prohibition era, a pretty gruesome liquid called near beer. For gaps in the floor where lifts or hoists were being built, Starrett had dedicated safety teams to keep barriers up to date.

And most importantly, no one, ever, would have to go out when the wind was too high. Instead, they'd get the day off on full pay. And full pay was twice what it was at other sites. Everyone would see that the Starrett's kept their word. But there was one big problem. Efficiency wages sound so sensible, so kind. Progressive business schools talk about them all the time. But it's worth remembering what the physicist Enrico Fermi said when he was told there were likely to be hundreds of complex civilizations existing across our galaxy.

Well, where is everybody? he asked. The same question applies to efficiency wages. If they were such a good idea in theory, why didn't everyone pay efficiency wages to their staff? After all, Pullman did the opposite, and he was one of the richest men in America. Sheer force can work. At least for a while. If efficiency wages and kindness to all were the only things Starrett knew, it wouldn't have worked. He had enough experience to recognise that. Along with the carrot, the efficiency wages, Along with the carrot, the efficiency wages, Starrett also needed a stick. Enter John Bowser, a world-weary engineer, originally from Canada.

Bowser had left home when he was young, travelled and worked around the world. He'd been on construction sites in Japan and across the United States. He knew every scam imaginable. And while he could be patient and tactful, he also had, as one historian delicately put it, a forceful personality. That's the mix you need to make generosity work on a complex new project. It's always tempting for a foreman to say they have a hundred people working away, while in fact they've only brought in 90.

They get to pocket the extra salary. To thwart such scams, Bowser hired staff to physically visit each man on the site twice in the morning and twice in the afternoon. And since many of the workers were on beams dangling high above the ground, that was not an easy job. To keep inventory from walking away, Bowser created another department of accountants who'd also clamber through the building, keeping track of all the equipment that was scooting around the site on monorails, trolley cars and steam engines. With all these inspections, cheating seemed unlikely

to succeed. The workers realised this, but they also saw that they were still being treated respectfully, with nourishing food, safety aids and high pay. With Bowser's help, Starrett had created a site where it didn't pay to cheat. And importantly, where it did pay to put in an honest day's work. Thus, reciprocity, the idea at the heart of paying efficiency wages, began to flourish. Everyone was with Starrett, not against him. The first positive result was simple efficiency. When four men didn't fudge their numbers, you had more workers on site. And when inventory didn't get pilfered and stayed on site,

no one had to wait around for the tools and materials they needed. Even better was the creativity. If you hate your boss, you're going to be sullen and resentful. But if you know you're trusted and treated with respect. On most other sites, bricks were stacked on wheelbarrows, then pushed along wobbling wooden gangplanks to where they were needed. Workers on Starrett's site came up with a creative solution. They spontaneously suggested building a miniature railway line to the site instead,

and then smaller railway lines on the actual floors under construction, because thousands of bricks arrived in a single eight-hour shift. This miniature railway sped construction along considerably. Building sites also tended to have high turnover rates, and as a result, they incurred hefty retraining costs too. But on Starrett's site, the workers didn't want to walk out, not with these wages, and with the respect they felt from their employers. At its peak, the Starrett Brothers building was rising up at four and a half floors each week. Five hundred trucks were arriving with materials at the site each day.

Some of the steel beams that arrived were still warm, having been fabricated just days before. One innovation was especially noticeable from afar. In most big construction projects, when large stones were placed on the outside for an attractive surface, expert craftsmen had to spend a long time smoothing the edges. Starrett's teams came up with a new idea. Why not just bolt thin metal panels over the joins? Then you could use stones still rough from the quarries. The result was an attractive exterior of shining stainless steel strips standing out from the grey limestone around them. But while the project seemed to be going well, Starrett was gazing watchfully across town to 42nd Street,

where a rival skyscraper was rising over the Manhattan skyline. Starrett, remember, was aiming to build Manhattan's tallest skyscraper, with all the prestige and money that meant for his clients. As far as he knew, his rival's building was going to be smaller than his. Nothing to worry about there. Or was there? The competing skyscraper on 42nd Street was nearly complete, while Starritz was still underway. He'd assumed he'd surpass it, just like all the others when he was finally finished. But then something

happened that meant this competitor's building was going to be taller. All Starrett's work, compared to that, would seem a failure. Cautionary Tales will return. Paul Starrett had known a lot about this competitor, the automobile magnate Walter P. Chrysler, who was funding a building in his name. Mr Chrysler was a good Kansas boy like Paul Starrett. After making his fortune in Detroit, he was not used to coming second. When he found out that Starratt's building, which had started construction after his, was going to be taller, he couldn't bear it. And so he concocted a scheme with his architects and construction chiefs. While everyone on the outside thought the Chrysler building was nearly done. Quietly, secretly, inside the empty top floors

of their own building, where no one could see it, Chrysler's team had been constructing an enormous 185-foot-tall glass and metal structure. On one tremendous day, to the city's astonishment, they had it hoisted up through the top of the building to perch on top, making it taller than anything Starrett had planned. That's when Starrett, John Bowser and the rest of their team realised that their rival had stolen a march on them. Walter Chrysler relished his victory. He prepared ad campaigns which showed his majestic Chrysler building

at the end of a long chain of world-dominant buildings. At the start were the Pyramids of Egypt. Then came Europe's great medieval cathedrals. Then Paris's Eiffel Tower, and finally, tallest of them all, his great Chrysler Building in Manhattan. Starrett's work in progress didn't even figure. The world press lapped the Chrysler Building up,

and the fact that Starrett's enlightened management methods had made the project fast and efficient didn't seem to count for much. Starrett and his financiers didn't want to accept defeat. But what to do? You can't really start redesigning a giant skyscraper once everything is underway. The steel had already been ordered.

The detailed construction schedule laid out. Changing one part of the building would mean changing a multitude of other connected parts, from the architects' plans and steel fabricators to truck deliveries and the schedules of thousands of workers. But they also couldn't really settle for being second. Winning in terms of speed meant nothing if they didn't also win in height. If they tried some little trick, the Chrysler building might just add a bigger spire.

What Starrett needed was a modification to their plans that was not only achievable, but was also so huge and so impressive that it would be untouchable. The records don't show who first came up with the answer. It probably emerged when all the top staff were convened in one of their near-frantic planning meetings. But it was an idea of genius. A mooring mast. In the 1920s aviation technology wasn't just propeller driven airplanes, it was also enormous lighter than air drivibles, zeppelins. These behemoths were hundreds

of feet long with elegant gondolas suspended beneath, where passengers could travel in the greatest of comfort. At the time, the zeppelins that arrived in New York had to dock out in Lakehurst, New Jersey, 75 miles from the city. But what if they could be tethered to a majestic structure right in the centre of Manhattan? It would be a boon for mankind.

And very nicely stick it to Chrysler too. Best of all, the architects could design it to be big enough that there was no way any future stunt by Chrysler could outdo them. They settled on two hundred feet. It was here that Starrett and his team reaped the benefits of his workforce's high morale, and there was much to do. Although construction had only just started on the building, and the foundations were still being prepared, all the design and orders and work schedules had been set up. This meant that from the moment of Chrysler's surprise, a very great deal

had to change, even while work continued on getting the site properly cleared and the equipment for the lower floors in place. For the new mast to be fitted, the top of the building needed to be altered, new structural steel had to be ordered, and the mast itself, complete with internal walkways, had to be designed and the parts ordered, delivered and assembled. All of this would start at 1,000 feet in the air and rise ever higher. Imagine if George Pullman had tried such an ambitious swerve in strategy after his oppressive tactics and murderous strike-breaking. His company had lost nearly half a year of output. Skilled workers had quit. Those who remained were sulking at best, mutinous at worst, especially as their working conditions deteriorated.

Imagine if Pullman showed up at work and addressed his workforce, asking for a big, creative, collaborative push together. They would have laughed him out of the factory. Or worse, after the strike, and for the rest of his life, whenever George Pullman ventured out in Chicago, he had to be guarded by detectives armed with shotguns. When he died, his family were so afraid that former employees might desecrate his grave, that his coffin was sealed into a triple-reinforced block of steel and concrete. George Pullman had made a lot of enemies. No such problems for Paul Starrett. His workers were right behind him. He had been fair to

them, there'd be fair to him. Not that Starrett was an angel. There was a slight bending of the truth involved in that airship mast. It was obviously impractical, more ornament than utility. If a mighty airship, filled with champagne and cocktail parties and piano music, had actually tried to dock more than a thousand feet above the streets of Manhattan, there would be a few problems. First of all, the passengers would be a little less welcome than they might have imagined. Airships adjusted their height by letting out water, large volumes of it. Several hundred gallons would have to be splashed onto the Manhattan crowds watching them from below

to get the height exactly right. Attaching the mooring ropes would also be difficult because of the winds at that height, all boosted by the skyscraper canyons across Manhattan. Then, if the bucking airship did get in position, the passengers, once they got off, wouldn't find a convenient lift waiting for them. The mast was too narrow for that. Instead, they'd have to climb down a ladder to get to the main floors of the building, where they could then take an elevator. It was, in fact, never used for passenger airship docking.

At one point a government contact arranged for a smaller airship carrying post to offload a few leather packages of letters that way. But aside from a brief later visit by King Kong, that was it. New Yorkers didn't care. The building site's ethos meant everything got done, and within the 13-month target. The journey from the luxurious offices in the Biltmore Hotel to the roar and welding and bolting on the building site was over. That unprecedented speed was just what their funders had wanted, to get rents coming

in so that the enormous loans for construction could be paid off quickly. This was something Pullman's resentful workers would never have pushed to succeed at. The good wages and conditions, mixed with sensible auditing, had led to energetic work teams, far less cheating, greater innovation and the ability to adapt fast when Mr Chrysler's efforts to outscale were sprung on them, even when they were underway. The result made Starrett famous. Because of his skill, his benevolence and his hard-nosed Canadian construction superintendent, when Starrett declared his vast skyscraper complete, it was, indeed, the tallest building in the world. And it had a name to match – the Empire State Building. Starrett still didn't smile much, and always looked pretty grumpy when he snapped out his decisions. But that didn't matter. You don't have to love someone to respect them. You

don't even have to like them. If someone's fair and you realise they're competent? That's enough. That's how to make efficiency wages work. Be fair. Be generous. But audit. As I mentioned, this episode is based on my friend David Bedarnes' book, The Art of Fairness. That's where I learned about Paul Starrett and the Empire State story. As David himself put it, David Starrett The ancient sage Hillel had a nice insight about all this. He was writing two thousand years ago. What he raised, in essence, were two linked questions. If I am not for myself, who is for me?

But if I am only for myself, what am I? The answer is that neither extreme will do. You will have to stand up for yourself. Otherwise, in the real world, you'll never get far. But if that's the only thing you do, if you're only for yourself, what kind of person are you? Sterrett's Empire State Building shows what the middle path can achieve. You need the smarts to guard against cheats, but when you offer generosity, creative gratitude can come pouring back. Cautionary Tales is written by me, Tim Harford, with Andrew Wright. This mini-series is based on David Bidanas' book The Art of Fairness,

the power of decency in a world turned mean, and it was written with David Bidanas himself. For a full list of our sources, see the show notes at timharford.com. The show is produced by Alice Fiennes with Marilyn Rust. The sound design and original music for the work of Pascal Wise. Sarah Nix edited the scripts. Cautionary Tales features the voice talents of Ben Crow, Melanie Guthridge, Stella Harford, Gemma Saunders and Rufus Wright. The show wouldn't have been possible without the work of Jacob Weisberg, Ryan Dilley, Greta

Cohn, Eric Sandler, Carrie Brody, Christina Sullivan, Keira Posey and Owen Miller. Cautionary Tales is a production of Pushkin Industries. It's recorded at Wardour Studios in London by Tom Berry. If you like the show, please remember to share, rate and review. It does really make a difference to us. And if you want to hear the show ad free, sign up to Pushkin Plus on the show page on Apple Podcasts or at pushkin.fm slash plus.