By Patrick Allitt, Emory University
The iron and steel business was central to American industrialization. The manufacture of metal objects had already been going on for many centuries, and small-scale iron and steel production had been familiar. In the early part of the 19th century, though, British industrialists had begun to accelerate the scale on which that was done.
How Did Iron and Steel Become Industrialized?
The real breakthrough in the steel industry came in 1856 when an English manufacturer called Henry Bessemer worked out the technique for making steel economically and in large quantities. Previously, doing so had been very difficult, and it had to be done from wrought iron.
Following Bessemer’s work, it was American entrepreneurs who enhanced the scale and efficiency of iron and steel production. The most famous of them was Andrew Carnegie.
Andrew Carnegie: A Business Prodigy
Born in 1835 and died in 1919, Carnegie began life as a Scotsman. He emigrated with his family as a teenager. His father had been working in the textile trades in Dunfermline, Scotland, but had been made redundant and thrown out of work because of the mechanization of the textile business. Because of his father’s experience, Carnegie learned the importance of constantly upgrading the equipment.
The family emigrated to Allegheny, Pennsylvania. He was hired by Western Union, the telegraph company. There, he showed enormous initiative and management skills and rose very quickly until he was the local head by the age of 23. Then he went to work for the Pennsylvania Railroad Company, another of the rising industries of the time. Once again, he rose to a managerial position in the early years of the Civil War.
A Capable Business Organizer
Eventually, he decided to set off on his own. He was already involved in investments and speculation and got a shrewd eye for how to get in, in the early stages of a good, rising business. By the end of the Civil War, he decided to specialize in manufacturing steel on a large scale.
Carnegie wasn’t himself a great technologist, but he was a very, very capable business organizer, a great innovator in running the factories, and he knew how to hire the best people to do the detailed technical work for him.
He was thrifty and ingenious, reluctant to use credit. He always tried to maintain plenty of spare cash to buffer himself against hard times. Consequently, he was usually able to expand his business during depressions when prices of everything were low.
This is a transcript from the video series A History of the United States, 2nd Edition. Watch it now, on Wondrium.
Edgar Thompson Works: The Beginning of an Industrialized America
In 1875, Carnegie built the great Edgar Thompson Works, an integrated steel factory. Edgar Thompson, the man he named the factory after, was the head of the Pennsylvania Railroad Company, to which he intended to sell steel rails. Using the Bessemer technique, Carnegie turned Edgar Thompson Works into the biggest and most integrated steel factory in the world.
With his blast furnaces, Carnegie did every manufacturing process right there on the spot. Raw coke and iron ore came in, and finished manufactured steel rails went out at the other end. By 1890, when the factory had been working for 15 years, it was manufacturing 3,000 tons of rails per day. Previously, that had been a year’s supply for the Pittsburgh factories.
Carnegie: An Early Adapter
Before Carnegie, the whole iron and steel industry had been based in eastern Pennsylvania, but Carnegie moved across the Allegheny Mountains to western Pennsylvania, closer to the big iron ore deposits that were then being exploited in Michigan and a little bit like the Mesabi Range in Minnesota.
Carnegie was also a fanatical modernizer. Every time a new technique for improving steel manufacture was developed, he jumped onto it at once and started to adapt his factories to it. For example, the Siemens-Martin open-hearth system was invented in the 1870s, and he switched to it at once, even though it was enormously expensive to convert all the equipment.
How America Surpassed Britain in Manufacturing
By contrast, his British competitors carried on using the old equipment, which is one of the reasons that America very rapidly caught up with—and eventually passed—Britain in its manufacturing efficiency.
When the American railroad network had largely been built by the 1890s, Carnegie was one of the first people to switch to making the steel girders for high-rise skyscrapers, the new kind of building that was beginning to appear on the American urban skyline by the 1890s.
The result of Carnegie’s work was that American steel production rose from about 19,000 tons in 1865, the year the Civil War ended, to 10 million tons in 1900, an immense leap in productivity.
Eventually, Carnegie sold out, and his companies became the core of the U.S. Steel Corporation, which persists right up to the present.
Common Questions about Andrew Carnegie’s Role in American Industrialization
American industrialization was impossible without Carnegie’s steel factory, Edgar Thompson Works, which was founded in 1875. Carnegie followed Bessemer’s technique to reach efficient, large-scale production.
Carnegie was thrifty and very ingenious to use credit. Therefore, he tried to hedge against economic difficulties with ample cash. This enabled him to expand his business in times of recession, when the prices of everything fell, giving him a competitive advantage in the era of American industrialization.
Carnegie’s business instincts enabled him to make revolutionary changes in the industry during the era of American industrialization.