United States Steel Corporation, Issued to Andrew Carnegie

United States Steel Corporation, Issued to Andrew Carnegie
Item# 2331

United States Steel Corporation, Issued to Andrew Carnegie

Having financed the creation of the Federal Steel Company in 1898, J.P. Morgan in 1901 joined in merging it with the giant Carnegie Steel Company and other steel companies to form United Stated Steel Corporation, which was the world's first billion-dollar corporation. Elbert Henry Gary (the original President of Federal Steel) was named chairman of the board of directors and was the corporation's chief executive officer. As chairman, Gary helped improve the workers' conditions by promoting stock ownership and profit sharing by the employees, higher wages, and safe, sanitary working conditions. He was a firm advocate of the open shop, however, his unwillingness to negotiate that issue led to the steel strike of 1919-20. The strike forced him to give his support to abolishing the 7-day week and the 12-hour day in the steel mills. The town of Gary, Ind., named in his honor, was laid out in 1906 by U.S. Steel. At the behest Morgan, Myron C. Taylor became the company’s next director, serving as chairman of its finance committee from 1927 to 1934 and as chairman of the board and chief executive officer from 1932 to 1938. The financial reorganization that he implemented helped the corporation to survive the Great Depression. Considered progressive in labor relations, he was the first steel executive to sign a labor contract with the Congress of Industrial Organizations (in 1937). Many smaller steel companies followed U.S. Steel's example, and the nation's steel industry was soon unionized.

This certificate is issued to, but not signed by, Andrew Carnegie. Carnegie made his fortune in the steel industry, controlling the most extensive integrated iron and steel operations ever owned by an individual in the United States. One of his two great innovations was in the cheap and efficient mass production of steel rails for railroad lines. The second was in his integration of all suppliers of raw materials through vertical integration. In the late 1880s, Carnegie Steel was the largest manufacturer of pig iron, steel rails, and coke in the world, with a capacity to produce approximately 2,000 tons of pig metal per day. In 1888, he bought the rival Homestead Steel Works, which included an extensive plant served by tributary coal and iron fields, a 425-mile long railway, and a line of lake steamships. A melding of Carnegie's assets and those of his associates occurred in 1892 with the launching of the Carnegie Steel Company.

By 1889, the U.S. output of steel exceeded that of the UK, and Carnegie owned a large part of it. Carnegie's empire grew to include the J. Edgar Thomson Steel Works, (named for John Edgar Thomson, Carnegie's former boss and president of the Pennsylvania Railroad), Pittsburgh Bessemer Steel Works, the Lucy Furnaces, the Union Iron Mills, the Union Mill (Wilson, Walker & County), the Keystone Bridge Works, the Hartman Steel Works, the Frick Coke Company, and the Scotia ore mines. Carnegie, through Keystone, supplied the steel for and owned shares in the landmark Eads Bridge project across the Mississippi River in St. Louis, Missouri (completed 1874). This project was an important proof-of-concept for steel technology which marked the opening of a new steel market.

In 1901, Carnegie was 66 years old and was considering retirement. He reformed his enterprises into conventional joint stock corporations as preparation to this end. John Pierpont Morgan was a banker and perhaps America's most important financial deal maker. He had observed how efficiently Carnegie produced profit. He envisioned an integrated steel industry that would cut costs, lower prices to consumers and raise wages to workers. To this end, he needed to buy out Carnegie and several other major producers and integrate them into one company, thereby eliminating duplication and waste. Negotiations were concluded on March 2, 1901, with the formation of the United States Steel Corporation. It was the first corporation in the world with a market capitalization in excess of $1 billion.

The buyout, which was negotiated in secret by Charles M. Schwab (no relation to Charles R. Schwab, the brokerage house founder), was the largest such industrial takeover in United States history to date. The holdings were incorporated in the United States Steel Corporation, a trust organized by Morgan, and Carnegie retired from business. His steel enterprises were bought out at a figure equivalent to twelve times their annual earnings—$480 million (approximately $120 billion in 2007 dollars) - which at the time was the largest ever personal commercial transaction. Carnegie's share of this amounted to $225,639,000, which was paid to Carnegie in the form of 5%, 50 year gold bonds - this piece is one of those bonds!!. The letter agreeing to sell his share was signed on February 26, 1901. On March 2, the circular formally filing the organization and capitalization (at $1,400,000,000—4% of U.S. national wealth at the time) of the United States Steel Corporation actually completed the contract. The bonds were to be delivered to the Hudson Trust Company of Hoboken, New Jersey, in trust to Robert A. Franks, Carnegie's business secretary. There, a special vault was built to house the physical bulk of nearly $230,000,000 worth of bonds. It was said that "....Carnegie never wanted to see or touch these bonds that represented the fruition of his business career. It was as if he feared that if he looked upon them they might vanish like the gossamer gold of the leprechaun. Let them lie safe in a vault in New Jersey, safe from the New York tax assessors, until he was ready to dispose of them...."

As they signed the papers of sale, Carnegie remarked, "Well, Pierpont, I am now handing the burden over to you." In return, Carnegie became one of the world's wealthiest men.

Certificate: Registered Fifty-Year Gold Bond, issued in the early 1900’s

Printer: American Bank Note Company

Dimensions: 9 1/2” (h) x 13” (w)

State: NJ-New Jersey

Subject Matter: Famous Companies | Steel Companies

Vignette Topic(s): Train Featured | Train-Freight | Trains-Multiple | Industrial Scene

Condition: This certificate has vertical fold lines, punch hole and stamp cancels in signature areas and body and some toning from age. You will receive the exact piece pictured – only 1 is available!.

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