1885–1900: Empire of Steel
Carnegie became riche in the steel industry, where he was able to have power over the most widespread integrated iron and steel operations. No person in the United States had ever accomplished such a feat. He had two main innovations: First was the cheap and efficient mass production of steel rails that were used for railroad lines. The second was vertical integration of all suppliers of raw materials. In the late 1880s, Carnegie Steel was the leading manufacturer of pig iron, steel rails, and coke in the world. His factory was able to produce approximately 2,000 tons of pig metal per day. Carnegie bought the rival Homestead Steel Works (1888), which included an extensive plant served by tributary coal and iron fields, a 425-mile long railway, and a line of lake steamships. Carnegie joined in with some of his colleagues and launched Carnegie Steel Company in 1892.
By 1889, the U.S. output of steel exceeded that of the UK, and Carnegie owned a large part of it. Carnegie's domain grew to include the J. Edgar Thomson Steel Works, Pittsburgh Bessemer Steel Works, the Lucy Furnaces, the Union Iron Mills, the Union Mill, the Keystone Bridge Works, the Hartman Steel Works, the Frick Coke Company, and the Scotia ore mines. That’s quite an empire wouldn’t you say? Carnegie, through Keystone, supplied the steel for and owned shares in the landmark Eads Bridge project across the Mississippi River at St. Louis, Missouri. This began the opening of a new steel market.
Andrew Carnegie Facts:
• Andrew Carnegie eventually became the richest man in the world, but he began life in modest circumstances.
• Born in Dunfermline, Scotland in 1835
• “Working for the railroad, Andrew Carnegie learned a great deal about running a gigantic business efficiently and profitably. He also invested in oil and railroads. In 1872 he visited England and gained first-hand information about the production of steel, a lighter, stronger material than iron. Three years later he opened his own steel plant in Pittsburgh then proceeded to buy rival steel mills.”
• Working in the railroads he paved the way for his own success in the steel industry.
• By 1877 the emergence of a national rail system signaled the rise of big business.
Richey- Machinery/Industrial Process:
• “Population growth spurred the growth of industries that exploited nature.”
o Immigrants came from Europe
Between 1880 and 1890 the population grew from 50 million to 63 million
• Six new states entered the union (North and South Dakota, Montana, Washington, Idaho, and Wyoming.
o Increased demand in large-scale commercial mining, logging and fishing
• Mining industry emerged as big business
o Noah Kellogg discovered a lode containing gold, zinc, and lead.
• Other business inventions included: cash registers, stock tickers, and typewriters
• In the 1880’s railroad cars installed steam heat and electric lights
o Made passage more comfortable for passengers.
• Businesses perfected the mass production of interchangeable parts
o Factory workers made many of one particular part, same size and shape, rather than the whole product.
o Enabled products to be cheaper, efficient, and repaired easily.
Example: The bicycle was the craze of the late 19th century
• It was cheap
• Production techniques of the bicycle were later used in the production of automobiles.
• Agriculture benefited
o Pressure-sealed cans, enabled the market of agricultural products in far parts of the country.
o First modern irrigation system
Constructed by Native Americans
o Need for hired hands was no longer an issue.
Many men were put out of jobs by the introduction of new machinery.
• Bessemer Process
o Innovative technique for sheet metal stamping and electric resistance welding transformed industries.
o By 1880, 90 percent of American steel was made by the Bessemer process
Injected air into molten iron to yield steel.
• Technology was a universal language.
o In 1870, Japan began to import American farm implements and inviting U.S. engineers to construct dams and canals for steam- and- water- powered gristmills and sawmills.
• In 1879, the USGS (U.S. Geological Survey) was formed
• By the 1870s Texas had steam-powered lumber mills equipped with saw rigs that produced up to 30,000 board feet a day
o Texas lumbering became a big business
• New means of commercial fishing
o Reduced the supply of salmon in the Northwest
o Dredge boats were becoming more efficient in harvesting oysters
Shellfish reserves began to decline (they could not replenish themselves fast enough)
• Industrial pollution
o In 1884, a federal court issued a permanent injunction against hydraulic mining, in California, because it contributed to soil erosion and water pollution
o Mercury flowing into nearby streams from gold mines poisoned fish, and created a pollution that would affect into the twentieth century.
o The Chicago river was polluted with byproducts of sausage, glue, and fertilizer
• Rail Travel
o Buffalo herds impeded travel so railroads promoted shooting of buffalo from trains, a “sport”
• The U.S. government refrained from owning industries
o Taxed business lightly and did not tax individual incomes until 1913
o J.P. Morgan
• Several enterprises began to conquer local and national markets
o Examples: Bell Telephone, Kroger grocery, Marshall Field Department store, Boston Fruit Company
o By combining, or integrating, their operations, manufactures cut costs and monopolized an entire industry
This caused smaller companies to fold. They couldn’t keep up.
• John D. Rockefeller
o Master innovator in petroleum
o Molded the managerial and technical aspects of business
o Horizontally integrated petroleum by forming Standard Oil Trust
o Standard oil also practiced vertical integration
• Horizontal integration
o Companies producing the same product merge to reduce competition and control prices
• In the 1880s, efficiency experts were being hired by factory managers
o They were to cut labor costs
o Many complained of poor wages and working conditions
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