Saturday, February 23, 2008

The Guggenheim Fortune Historically

(The following article about the Guggenheim Dynasty that has historically owned a portion of the Tribune Company’s Times-Mirror-Newsday division was written before the 2000 merger between the Tribune Company and Times-Mirror-Newsday. It first appeared in the March 6, 1991 issue of the now-defunct Lower East Side alternative weekly Downtown.)

The Guggenheim family obtained its wealth in the late 1800s and early 1900s by owning mines and smelters, utilizing cheap labor and making windfall profits from the lifting, refining and marketing of metals during World War I.

In 1881, Meyer Guggenheim had bought a one-third interest for $5,000 in two lead and silver mines in Colorado. Within a year, there was a rich strike of silver and $17,000 per month was now being earned from the labor of the miners who spent 12 hours a day digging up the Guggenheim family’s silver.

Throughout the 1880s, armed state militias and hired thugs were used as needed by the Guggenheim family to break the frequent strikes of miners in its Colorado mines. But by 1888, Meyer Guggenheim was earning $750,000 per year from his two lead and silver mines. Eventually, the Guggenheim family earned $15 million from its initial $5,000 investment before the two mines were exhausted of their silver deposits.

To increase family profits, Meyer Guggenheim formed the Philadelphia Smelting & Refining Company and built a smelter in Pueblo, Colorado to refine the silver from his mines. After armed strikebreakers were used by Meyer to crush a strike of smelter workers, the Guggenheim family moved from Philadelphia to New York City in 1889. Armed force was also used to evict miners who squatted on claims owned by the Guggenheims in Colorado.

In the 1890s, the Guggenheim family began to do business in Mexico. After agreement was reached with a pliant Mexican government, the Guggenheims built a smelter in Monterrey, Mexico in which “thugs” were “employed to herd the peons into the blazing smelter at gunpoint,” according to the book The Guggenheims 1848-1988: An American Epic by John Davis. Because Mexican labor was even cheaper than Colorado labor in the 1890s, the Guggenheim family’s Monterrey, Mexico smelter was much more profitable than its Pueblo, Colorado smelter.

Another Mexican subsidiary company was formed by the Guggenheim family to operate its Tepezala copper mines and its Aguascalientes smelter in Mexico. By 1895, from its Colorado and Mexican smelters alone, the Guggenheim family was earning a net profit exceeding $1 million a year and had become economically and politically powerful in Mexico. Another new family company, “Guggenex,” was the nickname for the Guggenheim Exploration Company, which was formed to explore the whole globe for potentially lucrative mines from which to lift minerals.

In the 1890s, Meyer Guggenheim also began to play the stock market and his family began to buy stock in the Rockefeller-owned American Smelting & Refining Company [ASARCO]. ASARCO was a trust of 23 smelter operators, developed to give Rockefeller interests control of all U.S. underground mineral resources. As a result of its ASARCO stock purchases and crafty maneuvering, the Guggenheim family was able to gain a 51-percent-controlling interest in what was originally intended to be just another Rockefeller-controlled monopoly.

By the early 1900s, the Guggenheim family controlled the mining and the smelting industry in the United States. In 1905, Meyer Guggenheim died, leaving an estate of $2.3 million. But prior to his death, Meyer Guggenheim had already transferred most of his wealth to the next generation of seven Guggenheim sons, so that each one could be a multi-millionaire before Meyer Guggenheim died.

(Downtown 3/6/91)

Next: Daniel Guggenheim And Alaska’s Natural Resources

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