Beyond Rust. Allen Dieterich-Ward
expansion of the region’s industrial capacity between 1850 and 1870 was largely an extension of previous patterns of production. The foundries and mills that made Wheeling “Nail City” in the 1860s, for example, had been established in 1832. The area’s iron, glass, pottery, and other industries also had their roots in the older riverine economy. However, government contracts during the Civil War brought “unprecedented activity and wealth” to local manufacturers. “Vast armies had been mustered out and adventurous young Americans were scattering themselves out over the face of their half-developed country, following the railroads West across the prairies, building new homes by the million,” explained one historian. “Nails were in demand and the black smoke rolled in clouds from the chimneys of Wheeling’s mills.” Around 1860, Wheeling manufacturers began developing the capacity to create their own pig iron, a raw material that they formerly had to have shipped from Pittsburgh. By 1885, the Wheeling district hosted over two hundred puddling furnaces, 1,400 nail machines, and an annual capacity of approximately 140,000 tons of nails.14
The most successful iron producer in the Upper Ohio Valley through the 1870s was Jones and Laughlin (J&L), a Pittsburgh firm founded in 1851 by two merchants and a skilled iron maker. Manufacturing facilities remained generally small affairs with the stages of production taking place in separate, often independently owned operations. Iron ore was first smelted into pig iron in an open-air furnace, generally near the source of the mine and the large amounts of wood needed to make the charcoal used as fuel. This was then shipped to forges and rolling mills, where it was converted into bars and slabs that formed the raw material for rails, nails, plates, and sheets. Still other factories produced the finished goods and tools that finally made their way to consumers. In order to address the inefficiencies in the iron production system, J&L founders B. F. Jones and James Laughlin began to introduce new labor saving technologies and to combine various parts of the production process within one firm. In 1860, J&L began work on blast furnaces on the north bank of the Monongahela that could use coking coal from nearby Connellsville to produce pig iron for existing rolling mills across the river.15
Jones and Laughlin’s construction of the Eliza Furnaces was part of a larger trend whereby industrialists in Pittsburgh and Wheeling slowly expanded and integrated their facilities. By 1870 innovations in management structure at the nation’s major railroads and radical advances in information technology began to be carried over into iron and steel production with dramatic repercussions. A new generation of managers and engineers spurred by an expansionist national policy and the political power to unite the two left an indelible mark on the social and physical landscape of the late nineteenth century. Railroads, especially the Pennsylvania Railroad, pioneered the use of new technologies, such as the telegraph, as well as a massively expanded corporate bureaucracy, because they had to. In terms of infrastructure, complexity of operation and technology, number of employees, and finances, the railroads quickly dwarfed their industrial predecessors, the New England textile mills. Unlike even the textile mills, the nature of long-distance transportation meant that railroad executives could not hope to personally observe all the workings of their company in a single day. Consequently, corporate managers had to develop systematic methods to run trains safely and on time, to ensure proper and timely maintenance, to track the thousands of shipments and millions of dollars that passed through the hands of countless employees.16
Perhaps no one was more responsible for transferring the management techniques of the railroads to manufacturing than Pittsburgh’s Andrew Carnegie. After rising to senior management at the Pennsylvania Railroad, Carnegie left in 1872 and formed his own company to manufacture steel using the new Bessemer process, facilitating the mass production of steel from molten pig iron. While Pittsburgh had solidified its position as the Iron City by 1850, this notoriously backward industry, with its primitive accounting and segmented production system, seemed an unlikely candidate for the type of managerial and technological innovation seen at the Pennsylvania Railroad. Indeed, of the thirty-eight iron and steel plants in and around Pittsburgh, not one used the more advanced Bessemer process. The largest of these, J&L’s American Iron Works, consisted of seventy-five smaller puddling furnaces and had an output of 50,000 tons of iron annually, an amount that would be dwarfed by a new generation of mills in less than a decade. Carnegie designed the firm that would form the nucleus of Carnegie Steel to take advantage of two opportunities for enormous profits he perceived while at the railroad—the vast market for steel rails and the ability to control costs by applying new financial accounting and management techniques.17
Vertical integration, the combination of various stages of the production process in one facility, grew out the desire to lower unit costs by producing more goods per investment dollar and cutting labor expenses. While J&L, Wheeling’s LaBelle Company, and other manufacturers had begun this process in a piecemeal fashion, Carnegie used systematic analysis to lower expenditures both within manufacturing components and in the intervals between parts of the overall process. Carnegie’s first fully integrated steel mill, the Edgar Thomson Works (ET), was a key example of this process in action. Located twelve miles south of Pittsburgh along the Monongahela River and designed by Andrew Holley, one of the foremost experts on the Bessemer process, ET was the most modern steel mill in the world at the time. As opposed to the traditional separation of processes in the existing iron industry, the plans for ET combined the making of steel using the Bessemer process with the fabrication of steel rails in an integrated method based on cost-data analysis. When it opened in 1875, ET featured a plant with two 5-ton Bessemer converters and a mill capable of producing 225 tons of steel rails daily, an amount that increased to three thousand tons later in the century. The mill was initially supplied with pig iron from Carnegie’s nearby Lucy and Isabella Furnaces, but a blast furnace was added in 1880 that made it possible to transform raw iron ore and coke (processed coal) into finished steel rails all at one facility.18
Between 1872 and 1901, when he sold the company to financier J.P. Morgan, Carnegie created a vast steel empire, centered in Pittsburgh, with an enormous array of iron and coal mines, railroad links, furnaces and rolling mills that allowed for the transformation of raw materials into finished products by all Carnegie-controlled companies. The secret to his success was high volume/low cost manufacturing—the application of the Pennsy’s formula of “big trains, loaded full, and run fast” to the mass production of steel. The purchase of the Homestead Works (1883) and Duquesne Works (1891), following capital shortages and labor strife among the previous owners, allowed Carnegie the capacity to dominate the manufacture of steel rails and he also began moving into rolled steel and other goods. Through precise accounting and careful analysis of costs, Carnegie was able to drive down dramatically the price per ton of steel produced forcing his rivals to consolidate, move into niche markets, or fold altogether. Shrewd deal making, political intrigue and his increasing economies of scale also allowed Carnegie to negotiate shipping costs and access to natural resources at advantageous rates. By the end of the century, Carnegie Steel controlled the largest and richest deposits of coking coal and iron ore then known. Its Pittsburgh area plants were the most modern in the world, with an annual output 700,000 tons more than that of Great Britain and a profit in 1900 of $40 million.19
In addition to the purely economic explanation for Carnegie’s success in transforming American manufacturing in the late nineteenth century, it is essential to consider the epistemological shifts in the relationship between humans and nature underpinning this transition. By 1870, as manufacturing—once perceived as an art, controlled, at least in part, by its practitioners on the foundry floor—evolved into an applied science, manipulated and overseen by professional managers, engineers, and scientists, business leaders increasingly saw the economic potential of applying chemistry and metallurgy to the production process. Carnegie looked for profits at every stage of steel-making and inculcated in his managers the need for constantly updating equipment that might be out-of-date though not outworn. Soon after the opening of ET, for example, its Bessemer converters became outdated when Sidney Gilchrist-Thomas discovered a new way to use iron ore with a higher phosphorous content. Carnegie immediately recognized the value of this discovery and obtained the rights to the process, which proved to be more effective in open-hearth furnaces. With substantial gains to be made at high volumes, he was prepared to scrap all his Bessemer converters despite the hundreds of thousands of dollars invested in them. Responding to objections from British iron workers