U.S. Steel Corporation Formed - First Billion-Dollar Corporation in History

On February 25, 1901, J.P. Morgan incorporated the United States Steel Corporation with an authorized capitalization of $1.4 billion, creating the first billion-dollar corporation in history by purchasing Andrew Carnegie’s steel empire for approximately $480 million and consolidating it with other major steel producers into a single monopoly controlling 67% of American steel production. Negotiations had begun in December 1900 at Manhattan’s University Club, with Morgan convening an all-night meeting at his Madison Avenue home in early January 1901 with Charles Schwab and other steel executives. Carnegie signed the agreement to sell on February 26, 1901. Public announcement of U.S. Steel’s creation came on March 2, 1901. The consolidation combined Carnegie Steel Company—the world’s most efficient steel producer with complete vertical integration from ore mines to finished products—with Federal Steel Company, National Steel Company, American Steel and Wire Company, National Tube Company, American Bridge Company, and other major producers. U.S. Steel initially controlled nearly 67% of American steel production, approximately 213,000 employees, and assets including iron ore reserves, coal mines, limestone quarries, coke ovens, blast furnaces, steel mills, railroads, and steamship fleets spanning the Great Lakes and inland waterways. The merger made Carnegie incomprehensibly wealthy: his $480 million payment (some sources cite $492 million in bonds and stock) would be worth over $15 billion today. Morgan’s banking house made enormous fees from the transaction while gaining control of the American steel industry through board seats and financial control. U.S. Steel represented the culmination of Gilded Age consolidation—the merger of horizontal monopoly (controlling competing companies) with vertical integration (controlling entire supply chains) under centralized financial control by banking interests. This was industrial capitalism evolving into finance capitalism: not industrialists but bankers controlling American industry. The creation of U.S. Steel demonstrated that even supposedly competitive capitalism naturally tends toward monopolistic consolidation when unconstrained by aggressive antitrust enforcement—a lesson systematically forgotten or suppressed over the following century as each generation witnessed reconsolidation of corporate power after brief periods of Progressive Era and New Deal trustbusting, culminating in today’s unprecedented concentration of corporate power across technology, pharmaceuticals, agriculture, media, and nearly every sector of the economy.