Cyrus S. Eaton
Time-magazine-cover-cyrus-stephen-eaton.jpg
Cyrus Stephen Eaton (December 27, 1883–May 9, 1979) was a Canadian-American financier, industrialist and philanthropist.
Associated with the Rockefeller family, his many financial interests included organizing the mergers that formed Republic Steel Corporation and the Chessie System.
Born in Pugwash, Nova Scotia, he later made that village famous by giving its name to a series of international conferences he sponsored that ultimately won the Nobel Peace Prize in 1995. His 1950s efforts at rapprochement with the Soviet Union won him the 1960 Lenin Peace Prize. He was dubbed "the Kremlin's favorite capitalist".
Education, "Gospel of Wealth"
Cyrus Eaton's first tentative ambition in life was to be a preacher. Though feeling doubts, which the heavy pressure coming from his parents did little to overcome, about the true efficacy of faith, he enrolled in 1901 at McMaster University, a Baptist institution then located in Toronto, Ontario, where he took an arts degree, with concentration in philosophy and economics. He had a vague intention to go on to the study of theology. However, in the summer of 1902, an uncle, Dr. Charles Eaton, who came from the same corner of Nova Scotia as he did, and had become a well known Baptist preacher and the leader of the congregation of the Euclid Avenue Baptist Church in Cleveland, Ohio, invited him to visit. Knowing the young man's interest in business, he introduced him to one of his parishioners, the famous John D. Rockefeller. This meeting with a man who though extremely pious had nevertheless excelled in the world of American business provided Eaton with the example he needed to help him resolve his doubts and change the direction of his life.
By 1901, Rockefeller was virtually retired from business. Though still heavily invested, he left the management of his interests to others and busied himself with the monumental task assigned him by Providence, or so he thought, of spending what he had earned wisely. Among other things, he was engaged in planning the massive philanthropic foundations that would occupy some of his heirs for generations and bring great benefit to mankind, while incidentally refurbishing the family name, a name that had been brought into great disrepute by writers such as Ida Tarbell, whose History of Standard Oil exposed Rockefeller's ruthless business tactics. During this period Rockefeller's chief residence was in New York City, but to please his wife, each summer he moved the household from New York to the Cleveland residence which she preferred, Forest Hill, a country estate situated on a slope overlooking Lake Erie. Eaton was invited there for dinner with his Uncle Charles' family, and when they met, the restrained, aloof Rockefeller, who had good reason to be proud of his judgment of men, was impressed by the studious young Canadian, just as he had been taken with his Uncle Charles. During dinner conversation Rockefeller's wife Cettie learned that Eaton, who was unable to rely on others for student financing, was employed while he visited his Uncle for the summer as a night clerk in a Cleveland hotel, to earn his tuition for the coming semester. Convinced that the social atmosphere in a working man's hotel in a busy industrial port city, full of foreigners and others who had been displaced and disadvantaged by the growth of industrial America, would contain elements to place a young man like Cyrus in moral danger, she immediately persuaded her husband to offer him employment. As it happened, each summer Rockefeller took on several young "apprentices" to help with his business affairs while he was in Cleveland, and thus it occurred that over the course of several summers, while he worked at Forest Hill as Rockefeller's secretary, Eaton got an insider's view of America's greatest capitalist in action. He also heard him preach the "gospel of wealth," a philosophy of philanthropy espoused by Rockefeller's own favorite capitalist, Andrew Carnegie. Like Carnegie, Rockefeller felt his financial success proved he was one of God's elect, marked out by Him for a special role. And he believed that this success in turn imposed a responsibility: to use wealth to find out pathways leading mankind to a higher and better condition. Undoubtedly Cyrus Eaton had been moved, as had Charles Eaton, by the plight of workers in the new industrial society. For Eaton, perhaps the Gospel of Wealth balanced the obvious negative effects that he could see all around him of industrialization in a system of capitalist competition, and thus made acquisitiveness easier to rationalize. It is not hard to imagine that the encouragement of two such famous and successful men as Rockefeller and his Uncle Charles, coming as it were from men at opposite ends of the social spectrum, helped persuade him to the thought that he could possibly do far more good in the world by using his abilities to create wealth and opportunities for employment for his fellow man, than by living the humble, unremunerative life of a preacher of the Gospel. Therefore, in 1905, after graduation from university, Eaton decided to follow his natural inclination and go into business.
American and Canadian business career
After he graduated from McMaster, Eaton went to work as a trouble shooter for one of Rockefeller's utility companies, Eastern Ohio Gas and Power. Calling upon his considerable personal charm and tact, he started his career in business, in his own words, "by mollifying natural gas customers in the Cleveland area who were upset by the ditches cut in their lawns for the gas mains." He was learning the business from the ground up. Later in life Eaton would remark, in his self confident way, that if he had stayed with this employment and moved to New York when Rockefeller asked him, he would inevitably have eventually become president of Standard Oil. Even then, however, the young, independent Eaton was bent on taking his own path. In 1906, Rockefeller interests were looking for further opportunities to market natural gas, which they had in abundance as a byproduct from oil wells throughout the Appalachian basin, and they planned to build an extensive network of pipelines to move this cheaper, safer substitute for coal gas into outlying areas. Eaton was learning the business so quickly that within a year he was travelling widely, negotiating for urban utility franchises on behalf of a syndicate of investors associated with Rockefeller interests. Because of his Canadian background, Cyrus was sent to Canada, and in 1907 one of his meetings was with the City of Brandon, Manitoba, Canada, which needed a year round source of power for street lighting because the current supply from a hydroelectric facility stalled each winter when the river froze over. On the day he finalized his negotiations with the mayor of Brandon for a franchise to supply the town with el4ectric power from a new steam generated power plant, the Financial Panic of 1907 struck. For a brief period, until the combined efforts of Morgan, Rockefeller, Judge Gary and others had stabilized the supply of American bank credit, money for investment was in extremely short supply. The situation temporarily deprived the syndicate Eaton represented of their borrowing power, and consequently shook their confidence in the future viability of this venture. Eaton seized the opportunity to obtain the now questionable franchise for himself as a consolation prize for his efforts, and he quickly organized meetings with Canadian bankers. They were largely untouched by the panic, and readily lent Eaton and a partner named George Abbott the capital they needed to build a steam generating plant. They secured a dependable supply of coal from Saskatchewan, to be transported it on the new instrument of Canadian unity, the Canadian Pacific Railway, and soon the new company, The Brandon Gas and Power Company, was generating both power to light Brandon's streets and profits to finance new deals. Shortly thereafter, Eaton resigned his position with East Ohio. Though his relations with the Rockefellers, both business and personal, remained good, from then on he was on his own.
By 1912, using profits from his first operation and investment finances attracted to him by his dynamic leadership, he had expanded his interests in utilities to include a multitude of holdings in several Canadian provinces and northwestern American states. But for him this was only the beginning. He believed that based on the power and importance of the Great Lakes region as a source of raw materials, as a transportation hub, and as a center of the country's industrial and manufacturing capability, cities such as Cleveland, Ohio, and Chicago, Illinois, could also soon challenge eastern preeminence in the financial services sector. He believed he had experienced how the dominance of Wall Street often frustrated local and regional ambitions. Decentralizing the control of the sources of investment would better serve the growth of regions. Therefore, in 1921, mounting his own bid for more regional control of investment capital, he purchased a partnership in Otis and Co., an established securities and investment banking firm with headquarters in Cleveland, and branches across the country. This company would be the center of his financial life for over thirty years, and it would provide a base for his ambitions to consolidate a portfolio of regionally integrated industrial and financial holdings that would rival the largest in the United States.
Eaton went a long way toward realizing his ambitions, for by approximately 1927, through a holding company he and a group of other investors formed in 1921 called Continental Shares, he held, along with a major position in the large utility-traction conglomerate United Light and Power, dominant stock market positions in a number of industries related to the flourishing automobile industry. Sherwin Williams Paint, the major American supplier of auto coatings, and Goodyear and Firestone, among the world's largest tire manufacturers, both located in Ohio, were virtually under the control of his syndicate of investors. By 1928 he had begun to carry out the final stage in a campaign to become a dominant player in each important segment, including energy, of the chain of supply for the auto industry. The final target was steel. Specifically, he was interested in the light steel used, among other things, in auto manufacture. His plans led to a series of rapid purchases and mergers of small and medium sized steel companies that would culminate in the founding of Republic Steel, a company that would eventually prove a worthy rival of the largest in the country.
The stock market crash of the 1930's caused Eaton a major, though temporary, setback, and the conditions that prevailed during the slow recovery of his and America's fortunes forced him to scale back his financial and industrial ambitions permanently. As well, it was during this period of the late 20's and early 30's that Eaton first gained a broad and well deserved reputation in the English speaking world for financial daring and for controversial decision making. In later years he would skillfully turn this reputation from celebrity to notoriety, and use it to assist him in focusing public attention on important issues, such as détente with Russia, nuclear disarmament and the dangers inherent in American militarism. Not for nothing had he studied philosophy and cultivated the classics, and at various times in his later life he strode confidently into alien arenas of public debate where he displayed courage, conviction, knowledge of important issues and talents for leadership, on an impressive scale.
Eaton's many financial interests included organizing the mergers that formed Republic Steel Corporation and the Chessie System. He assumed the helm of the Chesapeake & Ohio Railway (C&O) in the mid-1950s when his colleague Robert Ralph Young of the Alleghany Corporation had to step down from the C&O to make a bid for the New York Central Railroad. Once the C&O had obtained control of the Baltimore & Ohio, and the Chessie System had been created, he largely retired to take care of his philanthropic interests.
He died in the Chessie's headquarters city of Cleveland, Ohio.