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A D V A N C E D M A T E R I A L S & P R O C E S S E S | A P R I L 2 0 1 6
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METALLURGY LANE
Metallurgy Lane, authored by ASM life member Charles R. Simcoe, is a continuing series dedicated to the early history of the U.S.
metals and materials industries along with key milestones and developments.
THE INTEGRATED STEEL INDUSTRY—PART I
THE BEGINNING OF THE BIG INTEGRATED STEEL INDUSTRY BEGAN WITH
THE FORMATION OF THE UNITED STATES STEEL CORPORATION IN 1901.
U
nited States Steel Corporation,
known simply as “The Corpora-
tion” for the century that followed
its debut, was initially composed of the
Carnegie Steel Co. as its biggest produc-
er and the Federal Steel Co. as number
two. Carnegie Steel was well known as
the leading steel company in the Besse-
mer steel age from 1875 to 1900. Federal
Steel was an unknown company assem-
bled by a lawyer and judge named Elbert
H. Gary from Illinois who had combined
nearly 40 plants making wire. This group
was financed by J.P. Morgan who would
eventually lead the financing of General
Electric Co., International Harvester, and
United States Steel (USS). Judge Gary
was the first chairman of USS in 1902
and Charles Schwab of Carnegie Steel
was the first president.
The new USS owned plants and fa-
cilities of iron ore, coke, wire, plate, and
tube, in addition to the American Bridge
Co. They had 213 steel mills, 41 iron
mines, 112 ore boats, and 57,000 acres
of coal mines. The company was capi-
talized at $1.4 billion and shares were
offered for sale to the public. In the first
full year of operations, revenues were
$560 million and earnings were $34 mil-
lion. After a year as president, Schwab
was forced out of the company over dif-
ferences with Gary. Schwab was used
to having free rein at Carnegie Steel
and did not fit in with the corporate
image under Gary. Schwab would later
become president of Bethlehem Steel,
which he would lead to be a major com-
petitor of USS.
EARLY 1900s
In the early 1900s, most steel
mills were still located in the east. In
1906, Judge Gary decided that The
Corporation would build a big new mill
in Indiana, bordering on Lake Michigan.
This isolated location required building
all the infrastructure needed for an inte-
grated steel mill with railroads, a harbor
for receiving raw materials, and a new
town for workers and service person-
nel. The project was enormous for the
time and this steel mill would be among
the largest in the world. By 1911, the
city—named Gary in honor of the chair-
man—had a hotel, hospital, churches,
and homes for a population of nearly
20,000. The steel plant housed eight
blast furnaces, 47 open hearth furnac-
es, hundreds of coke ovens, and rolling
mills to produce railroad rails, axles,
and bars. Later, sheet and plate mills
would be installed for the new auto and
home appliance industries.
As The Corporation grew, it relied
on immigrants for labor, just as Andrew
Carnegie had in the 1880s and 90s. In
1910, half theworkers were fromPoland
or the Slavic countries. This kept labor
costs to a minimum, but would lead to
problems in the future. In WWI, the new
supply of immigrants was closed and
recruits of African Americans from the
south filled the labor needs. There were
3000 in Gary and 4000 in Pittsburgh
by 1919. With the war over, wages and
working conditions led to strikes in
many plants. At Gary, the Indiana State
Guard was called to restore order.
ROARING TWENTIES AND THE
GREAT DEPRESSION
The Corporation enjoyed success-
ful years during the 1920s. With the
booming auto industry’s need for steel,
they built sheet mills in Gary, as well as
Pennsylvania, Ohio, and Alabama. They
also built pipe mills to supply the ever
John Pierpont (J.P.) Morgan, the financier
who assembledmany companies to form
United States Steel Corp. Circa 1918.
increasing oil production. During this
10-year period, total earnings reached
$1 billion with two-thirds of that paid
in dividends. All of this success was ac-
complished under Judge Gary who con-
tinued to work until he was 80 years old.
With the depression of the 1930s,
steel demand plummeted. The Corpo-
ration produced 14 million tons of steel
during the peak year of 1929. In 1933,
they only produced 3.8 million. The loss
that year was $91 million with 80,000
workers compared with 240,000 during
the 1920s. At the lowest point in 1933,
plants were operating at 9% capacity.
Production increased as government
programs began construction under
the Works Progress Administration
(WPA) and auto sales increased during
the 1930s. USS appointed Myron Taylor
as its new chairman in 1932 to replace
Judge Gary. Taylor would lead the com-
pany through the difficult times and
build five million tons of new capacity
while eliminating the same amount of
obsolete production.