Carnegie Sells to J.P. Morgan: U.S. Steel Becomes First Billion-Dollar Corporation

In early 1901, J.P. Morgan, the country’s most powerful banker, purchased Andrew Carnegie’s Carnegie Steel Corporation for $500 million and merged it with nine other steel companies to form the United States Steel Corporation—the world’s largest corporation and first billion-dollar company, capitalized at $1.4 billion. The consolidation created an unprecedented concentration of industrial power, with U.S. Steel controlling vast segments of American steel production, raw materials, and distribution networks. Carnegie, who had built his empire through ruthless vertical integration and systematic destruction of labor unions, walked away with the equivalent of hundreds of billions in today’s dollars.

Carnegie’s rise to dominance exemplified the monopolistic practices that defined Gilded Age capitalism. He pioneered vertical integration by buying suppliers of raw materials including iron ore mines and coal fields, as well as railroads to ship materials and finished products—allowing him to manufacture steel at lower costs than competitors and drive them from the market. Carnegie saved profits during prosperous times and used them to buy out competitors at bargain prices during the economic recessions of the 1870s and 1890s. His general manager Henry Clay Frick helped implement major technological innovations in the 1880s while crushing worker organizing, most notoriously during the 1892 Homestead Strike when Pinkerton detectives and state militia killed 16 workers.

By the 1890s, Carnegie Steel was the largest and most profitable steel company in the world, controlling every aspect of production from mining raw materials to shipping finished products. After selling to Morgan, Carnegie spent his remaining years as a philanthropist, attempting to rehabilitate his reputation through libraries and educational institutions—a pattern of late-life charity that would become common among robber barons seeking to launder their legacies. The creation of U.S. Steel represented the ultimate consolidation of the Gilded Age monopoly model: vertical integration, horizontal consolidation, labor suppression, and technological innovation all concentrated under centralized financial control. The billion-dollar corporation symbolized how thoroughly corporate power had captured American economic life, operating beyond meaningful democratic accountability and setting the template for 20th century corporate consolidation.