Читать книгу Family Capital - Curtis Gregory - Страница 8

Georgio Titano arrived in America in the late spring of 1854 from Abruzzo, a then-impoverished region in southern Italy. As a third son – and seventh child – Georgio's prospects were not good in the Old World, and Georgio determined to emigrate to the New World.

As it happened, Georgio had a second cousin who'd been in America for several years. Benedetto worked in a coal mine not far from Wheeling, West Virginia, and so that's where Georgio headed. The pay was good in the mines, but Georgio suffered from a touch of claustrophobia and as a result he hated coal mining. When he heard about a bricklayer who needed an assistant, Georgio leaped at the chance.

Somewhat to his own surprise, Georgio was good at laying brick. Mostly, of course, he was simply a laborer, hauling mortar and bricks and doing whatever his boss told him to do. But as time went by, Georgio began laying brick himself, essentially apprenticing under his boss. In no time at all, Georgio's walls were straighter and his mortar more even than the boss's work.

One day in the early fall of 1854, Georgio and his boss were working quickly, trying to finish off a wall before a rainstorm hit. The boss lost his footing and fell from the top of the wall, breaking his neck and dying instantly. Georgio was devastated. He'd liked his boss, despite the man's grumpy ways, and now he'd be unemployed. In fact, the man who'd contracted for the wall asked Georgio if he could finish it himself. Startled but happy, Georgio assured the man it would be no problem. And in fact, it was no problem. The man was so happy with the wall that he promptly hired Georgio to handle the brickwork on a small factory he was building outside Steubenville, Ohio.

After less than 18 months in America, Georgio Titano owned his own bricklaying business. As his business grew, he hired other workers and found that he liked being the boss. He was good with numbers, and when he quoted a job, the owner knew it would come in on time and as-bid.

In 1860, now relatively prosperous by the standards of new immigrants, Georgio decided it was time to become a real American. He changed his name officially from Georgio Titano to George Titan. He liked the sound of that name, and he knew that a “titan” was a person of great importance.

Shortly afterward, now that he considered himself a true American, George Titan determined to marry. He had the girl in mind: a pretty Scots-Irish lass he'd walked out with a few times while on a job in Waynesburg, Pennsylvania. Unfortunately, the girl's parents happened to know that George Titan was really Georgio Titano, and they wanted no part of an Italian son-in-law. These Scots-Irish parents had higher aspirations for their only daughter. But, unfortunately for the parents, the girl was of age and she and George eloped.

Over the course of the next ten years, George and Ellie (as his wife was called), née McCabe, produced five children, though only two of them, George Titan, Jr. and Andrew Titan, lived to adulthood. Meanwhile George was reinvesting nearly every penny into his business, continuing to grow it rapidly.

As the American Civil War dragged on, the economy had collapsed and George, who was already overextended, found himself in deep trouble. He got some work contracting with the Union army, but it didn't begin to replace the civilian work that had disappeared.

In those days men and women occupied different spheres of life, the men working out in the world and the women dominating the home front. That was mostly the way it was in the Titan family, too, but on really important issues, whether they related to business or family, George and Ellie tended to pool their minds and talents. In this case, George advocated closing the business down, finding a job, and waiting out the war. But Ellie had other ideas. She knew her husband to be a good businessman and she wasn't ready to throw in the towel. She suggested that they move to the rapidly growing city of Pittsburgh, about 50 miles to the north, where even during the war commerce went on and there was likely to be work for a talented man like George Titan.

Neither in the Old Country nor in America had George, or, for that matter, Ellie, ever been to a city, much less and to a wild, chaotic, frontier city like Pittsburgh. At first they were simply overwhelmed by the chaos, but gradually George found the energy in the town to be exciting.

Once back on his feet, George began to contemplate the future. He and Ellie would go for long walks along the banks of the Allegheny River, watching the busy river traffic and talking about what the future might hold for America, for Pittsburgh, for the Titan family. The conclusion they came to – a remarkable one – was that despite that the hardships of the war, when it finally ended there was likely to be a major economic expansion. What George needed to do was to position himself to take advantage of it. And so he did. While his competitors were cutting back and keeping their heads down, George not only expanded his bricklaying business, he expanded into related work, including general contracting.

When the war finally ended, Titan Industries, as George now called his firm, was well-positioned, and throughout the 1870s and 1880s the company grew alongside Pittsburgh, which was then the fastest-growing city in America. Between 1870 and 1910, while the population of the United States was more than doubling, Pittsburgh grew six-fold from about 85,000 to over 530,000.1

At the peak of the Industrial Revolution, Pittsburgh was America's Silicon Valley, boasting vast industries in such diversified fields as steel (Carnegie Steel), coal (Consolidation Coal), glass (Pittsburgh Plate Glass), oil and gas (Gulf Oil), electronics (Westinghouse), aluminum (Alcoa), food (Heinz), and so on. During the late nineteenth century and for most of the twentieth century, Pittsburgh boasted more corporate headquarters than any American city except New York and Chicago. And each of these industries had a voracious appetite for brickwork for their factories and for general contractors who could build those factories.

Titan Industries continued to prosper right through the end of the nineteenth century. Of their two sons, only one, George Jr., went permanently into the business. George Sr. died in 1915 and Ellie soon followed – the two really were inseparable. But by that time George Jr. had been CEO for a few years and the firm barely skipped a beat.

When Titan Industries was finally sold, fortunately just before the Great Depression, the Titan family members found themselves to be moderately rich. They took stock in the acquiring company – an architectural-engineering firm called Smythson Brothers – for half the value of the sale, and cash for the balance. But the sale also meant that the Titans no longer had jobs. George Jr. was kept on by Smythson for a year, but after that he, too, was unemployed.

It was a strange world for the Titans, being owners of capital rather than owners of an operating business. After two generations of working hard every day to build Titan Industries, suddenly there was little to do. They would wake up in the morning and instinctively begin to think about everything that had to be done that day, only to find that the answer was, “very little.”

After a lost period of groping their way forward, George Jr. asked the family to come together at their estate in Ligonier, in the highlands east of Pittsburgh, to talk about their new lives and how best to move forward. There was a lot of unfocused chatter, but they didn't seem to be getting anywhere. It was all too new, this world they now lived in.

Over dinner, however, they heard from a friend of George Jr.'s named Bill Wilkins, whose family had gone through a similar transition about a decade earlier. Wilkins assured the Titans that the Wilkins family had gone through exactly the same awkward period and that it was all perfectly normal. However, he cautioned them that they needed to pass beyond this phase and begin to take control of their new lives. The Titans, he pointed out, were no longer managers of a business, they were managers of capital, and they needed to get good at it. Specifically, he encouraged the Titans to form what was called a “family office.”

In those days family offices were still a fairly new concept. The Mellons – another, much wealthier, Pittsburgh family – had established a family office called T. Mellon & Sons way back in 1868, and the Rockefellers had followed suit a year later.

At first, Lawburn (as the family office was called, named after Ellie's family's ancestral home in Scotland, which none of the Titans had ever seen), was a modest affair. George Jr. had an office there, from which vantage point he oversaw the family's investment portfolio, but otherwise Lawburn was more a name on the door than anything else.

Before we move forward, we should step back and introduce the other branch of the Titan family. George and Ellie had another child who survived into adulthood, Andrew. Unlike George Jr., Andrew was a sickly boy who grew into a sickly man. He died young, at age 40, but before he did he married and produced a line of remarkable progeny that will be the main focus of the rest of this book.

Andrew's only child, Jack, known as Jake, may not have been a large, robust fellow like his uncle, George Jr., and his cousin, George III (see below), but he was a remarkable fellow nonetheless. Jake took after his mother – light-brown hair, slim figure, and large, thoughtful eyes. Most days, while other boys were outside roughhousing, Jake could be found inside, curled up with a book by the fire.

Like his cousin, Jake joined the family company when he graduated from high school, but unlike his brothers, Jake hated the work. Hauling heavy loads of brick in a wheelbarrow in rotten weather wasn't Jake's idea of fun, and after a few dreary years of this Jake quit and headed off to college.

George Titan Sr., then near the end of his life, was appalled – no one in the Titan family had ever attended college and George didn't see any reason why any of them ever should. There might have been serious trouble between grandfather and grandson, except that Ellie took Jake's side. She'd have loved to attend college when she was young, she told George, and she was proud of Jake for wanting to try it out.

And try it out Jake did. Never in his life had he found anything so compelling. He loved his courses and quickly became a darling of the faculty. But after two years Jake left college to pursue yet another dream – Jake had decided to become an attorney.

Although the Law School at Harvard University had opened its doors back in 1817, most young men (they were virtually all men in those days) entered the profession by reading law under the tutelage of an experienced lawyer. Because of his excellent academic record, Jake was able to attach himself to the already-legendary Pittsburgh firm of Knox & Reed. Knox & Reed represented such luminaries as Andrew Mellon, Andre Carnegie, Charles Schwab, and many other titans of industry in the city.

Most young lawyers who had the opportunity to join a firm as prestigious as Knox & Reed would have leaped at the chance. But no sooner had Jake passed the bar exam with the highest score in the state that year than he left Knox & Reed and hung up his own shingle:

J. Titan & Partners

Business Law Only

There were in fact no partners, but Jake had big plans for the future and didn't wish to have to change his sign as he grew. While at Knox & Reed Jake had realized that the senior partners at the firm hadn't gotten rich charging legal fees – they'd made their money by investing in the companies launched by their wildly successful clients, often taking stock in lieu of legal fees, and otherwise simply buying the stock whenever they could do so.

The clients of Knox & Reed, however, were of an older generation, men who'd built great fortunes in the second half of the nineteenth century. Jake wanted to represent the young men of the coming twentieth century who, he hoped, would soon be building new fortunes.

While Jake didn't resemble his grandfather in many ways, in one way they were very much alike: both were astute judges of character. Jake seemed to know intuitively when a young man had the right stuff to build a company and when he didn't. And if the young man with the wrong stuff nonetheless had a good business idea, Jake considered it part of his legal duty to find men who could take the idea and run with it. Sometimes the young men kept an ownership interest in their ideas, but sometimes they didn't, and Jake rather quickly became known as a man who didn't hesitate to make hard decisions, a man not to be trifled with.

When Jake died of cancer in 1945, he headed a small but very successful law firm. More important for his heirs, he owned important pieces of more than 30 companies, and he had nearly surpassed his grandfather in the accumulation of capital.