History of the modern steel industry
Encyclopedia
The history of the modern steel industry began in the late 1850s
, but since then steel
has been basic to the world's industrial economy. This article is intended only to address the business, economic and social dimensions of the industry, since the bulk production of steel
began as a result of Henry Bessemer
's development of the Bessemer converter in 1857. Previously steel was expensive to produce and only used where nothing else would do.
has become one of the world’s most important steel-producing nations. The "German Steel Federation" was established in 1874.
In the United States the central figure was Andrew Carnegie
, who made Pittsburgh the center of the industry. He sold his operations to US Steel in 1901, which became the dominant steel corporation for decades.
In the late 1880s, Carnegie Steel was the largest manufacturer of pig iron
, steel rails, and coke
in the world, with a capacity to produce approximately 2,000 tons of pig iron per day. In 1888, he bought the rival Homestead Steel Works
, which included an extensive plant served by tributary coal and iron fields, a 425-mile (685 km) long railway, and a line of lake steamships
. A consolidation of Carnegie's assets and those of his associates occurred in 1892 with the launching of the Carnegie Steel Company
.
By 1889, the U.S. output of steel exceeded that of Britain, and Andrew Carnegie owned a large part of it. By 1900, the profits of Carnegie Bros. & Company alone stood at $40,000,000 with $25,000,000 being Carnegie's share.
Carnegie's empire grew to include the J. Edgar Thomson Steel Works
(named for John Edgar Thomson
, Carnegie's former boss and president of the Pennsylvania Railroad
), Pittsburgh Bessemer Steel Works, the Lucy Furnaces, the Union Iron Mills, the Union Mill (Wilson, Walker & County), the Keystone Bridge Works, the Hartman Steel Works, the Frick Coke Company, and the Scotia ore mines. Carnegie, through Keystone, supplied the steel for and owned shares in the landmark Eads Bridge
project across the Mississippi River
in St. Louis, Missouri
(completed 1874). This project was an important proof-of-concept for steel technology which marked the opening of a new steel market.
of Carnegie Steel proposed a solution: consolidation. J. P. Morgan
and Elbert Gary led the team that worked with Carnegie and Schwab to create United States Steel, by far the largest non-railroad corporation in the world in 1901.
US Steel combined finishing firms (American Tin Plate (controlled by William Henry "Judge" Moore
), American Steel and Wire, and National Tube) with two major integrated companies, Carnegie Steel and Federal Steel. It was capitalized at $1.466 billion, and included 213 manufacturing mills, one thousand miles of railroad, and 41 mines. In 1901, it accounted for 66% of America's steel output, and almost 30% of the world's. During World War I, its annual production exceeded the combined output of all German and Austro-Hungarian firms.
After 1970 the company could no longer compete effectively with low-wage producers elsewhere. Imports and mini-mills undercut its sales - see also steel crisis
. It went into oil then was spun off in 2001. Finally US Steel reemerged in 2002 with plants in three American locations (plus one in Slovakia) that employed fewer than one-tenth the 168,000 workers of 1902.
1850s
- Wars :* Crimean war fought between Imperial Russia and an alliance consisting of the United Kingdom of Great Britain and Ireland, the Second French Empire, the Kingdom of Sardinia and the Ottoman Empire...
, but since then steel
Steel
Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten...
has been basic to the world's industrial economy. This article is intended only to address the business, economic and social dimensions of the industry, since the bulk production of steel
Steel
Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten...
began as a result of Henry Bessemer
Henry Bessemer
Sir Henry Bessemer was an English engineer, inventor, and businessman. Bessemer's name is chiefly known in connection with the Bessemer process for the manufacture of steel.-Anthony Bessemer:...
's development of the Bessemer converter in 1857. Previously steel was expensive to produce and only used where nothing else would do.
Germany
GermanyGermany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
has become one of the world’s most important steel-producing nations. The "German Steel Federation" was established in 1874.
Asia: China, Japan, India
The Indian steel industry began expanding into Europe in the 21st century. In January 2007 India's Tata Steel made a successful $11.3 billion offer to buy European steel maker Corus Group PLC. In 2006 Mittal Steel (based in London but with Indian management) acquired Arcelor for $38.3 billion to become the world's biggest steel maker.United States
Andrew Carnegie
Andrew Carnegie was a Scottish-American industrialist, businessman, and entrepreneur who led the enormous expansion of the American steel industry in the late 19th century...
, who made Pittsburgh the center of the industry. He sold his operations to US Steel in 1901, which became the dominant steel corporation for decades.
Carnegie
Carnegie's great innovation was in the cheap and efficient mass production of steel rails for railroad lines. This could not have happened without the prior invention of Bessemer Steel. Thus Carnegie's "innovation" was scale, not anything technical.In the late 1880s, Carnegie Steel was the largest manufacturer of pig iron
Pig iron
Pig iron is the intermediate product of smelting iron ore with a high-carbon fuel such as coke, usually with limestone as a flux. Charcoal and anthracite have also been used as fuel...
, steel rails, and coke
Coke (fuel)
Coke is the solid carbonaceous material derived from destructive distillation of low-ash, low-sulfur bituminous coal. Cokes from coal are grey, hard, and porous. While coke can be formed naturally, the commonly used form is man-made.- History :...
in the world, with a capacity to produce approximately 2,000 tons of pig iron per day. In 1888, he bought the rival Homestead Steel Works
Homestead Steel Works
Homestead Steel Works was a large steel works located on the Monongahela River at Homestead, Pennsylvania in the United States. It developed in the nineteenth century as an extensive plant served by tributary coal and iron fields, a railway long, and a line of lake steamships...
, which included an extensive plant served by tributary coal and iron fields, a 425-mile (685 km) long railway, and a line of lake steamships
Lake freighter
Lake freighters, or Lakers, are bulk carrier vessels that ply the Great Lakes. The best known was the , the most recent and largest major vessel to be wrecked on the Lakes. These vessels are traditionally called boats, although classified as ships. In the mid-20th century, 300 lakers worked the...
. A consolidation of Carnegie's assets and those of his associates occurred in 1892 with the launching of the Carnegie Steel Company
Carnegie Steel Company
Carnegie Steel Company was a steel producing company created by Andrew Carnegie to manage business at his steel mills in the Pittsburgh, Pennsylvania area in the late 19th century.-Creation:...
.
By 1889, the U.S. output of steel exceeded that of Britain, and Andrew Carnegie owned a large part of it. By 1900, the profits of Carnegie Bros. & Company alone stood at $40,000,000 with $25,000,000 being Carnegie's share.
Carnegie's empire grew to include the J. Edgar Thomson Steel Works
Edgar Thomson Steel Works
The Edgar Thomson Steel Works is a steel mill in North Braddock, Pennsylvania. It is active since 1872.-History :The mill occupies the historic site of Braddock's Field, on the banks of the Monongahela River east of Pittsburgh, Pennsylvania...
(named for John Edgar Thomson
John Edgar Thomson
John Edgar Thomson was an American civil engineer and industrialist. Thomson was an entrepreneur best known for his leadership of the Pennsylvania Railroad from 1852 until his death 1874, making it the largest business enterprise in the world and a world-class model for technological and...
, Carnegie's former boss and president of the Pennsylvania Railroad
Pennsylvania Railroad
The Pennsylvania Railroad was an American Class I railroad, founded in 1846. Commonly referred to as the "Pennsy", the PRR was headquartered in Philadelphia, Pennsylvania....
), Pittsburgh Bessemer Steel Works, the Lucy Furnaces, the Union Iron Mills, the Union Mill (Wilson, Walker & County), the Keystone Bridge Works, the Hartman Steel Works, the Frick Coke Company, and the Scotia ore mines. Carnegie, through Keystone, supplied the steel for and owned shares in the landmark Eads Bridge
Eads Bridge
The Eads Bridge is a combined road and railway bridge over the Mississippi River at St. Louis, connecting St. Louis and East St. Louis, Illinois....
project across the Mississippi River
Mississippi River
The Mississippi River is the largest river system in North America. Flowing entirely in the United States, this river rises in western Minnesota and meanders slowly southwards for to the Mississippi River Delta at the Gulf of Mexico. With its many tributaries, the Mississippi's watershed drains...
in St. Louis, Missouri
St. Louis, Missouri
St. Louis is an independent city on the eastern border of Missouri, United States. With a population of 319,294, it was the 58th-largest U.S. city at the 2010 U.S. Census. The Greater St...
(completed 1874). This project was an important proof-of-concept for steel technology which marked the opening of a new steel market.
US Steel
By 1900 the US was the largest producer and also the lowest cost producer, and demand for steel seemed inexhaustible. Output had tripled since 1890, but customers, not producers, mostly benefitted. Productivity-enhancing technology encouraged faster and faster rates of investment in new plants. However during recessions, demand fell sharply taking down output, prices, and profits. Charles M. SchwabCharles M. Schwab
Charles Michael Schwab was an American steel magnate. Under his leadership, Bethlehem Steel became the second largest steel maker in the United States, and one of the most important heavy manufacturers in the world....
of Carnegie Steel proposed a solution: consolidation. J. P. Morgan
J. P. Morgan
John Pierpont Morgan was an American financier, banker and art collector who dominated corporate finance and industrial consolidation during his time. In 1892 Morgan arranged the merger of Edison General Electric and Thomson-Houston Electric Company to form General Electric...
and Elbert Gary led the team that worked with Carnegie and Schwab to create United States Steel, by far the largest non-railroad corporation in the world in 1901.
US Steel combined finishing firms (American Tin Plate (controlled by William Henry "Judge" Moore
William Henry "Judge" Moore
William Henry Moore was an attorney and financier. He organized and promoted or sat as a director for several steel companies that were merged with among others the Carnegie Steel Company to create United States Steel...
), American Steel and Wire, and National Tube) with two major integrated companies, Carnegie Steel and Federal Steel. It was capitalized at $1.466 billion, and included 213 manufacturing mills, one thousand miles of railroad, and 41 mines. In 1901, it accounted for 66% of America's steel output, and almost 30% of the world's. During World War I, its annual production exceeded the combined output of all German and Austro-Hungarian firms.
After 1970 the company could no longer compete effectively with low-wage producers elsewhere. Imports and mini-mills undercut its sales - see also steel crisis
Steel crisis
The steel crisis was a recession in the global steel market during the 1970s recession, following the end of the post-World War II economic boom and the 1973 oil crisis....
. It went into oil then was spun off in 2001. Finally US Steel reemerged in 2002 with plants in three American locations (plus one in Slovakia) that employed fewer than one-tenth the 168,000 workers of 1902.