United States Steel Corporation - History of Business in the U.S.Identification: Major steel producer that was the largest corporation in the world during the early twentieth century
Date: Founded on February 25, 1901
Significance: The United States Steel Corporation was perhaps the most heralded American company throughout much of the twentieth century and had a major impact on the world’s economy. The sheer size of the organization led to innovations in accountancy because the merged entity was simply too big to be understood with conventional financial statements.
Under the leadership of J. P. Morgan, the steel holdings of Andrew Carnegie, located primarily in Pittsburgh, Pennsylvania, were merged in 1901 with those of Elbert H. Gary, located primarily in northern Indiana, to formthe United States Steel Corporation (U.S. Steel). Six smaller companies were also a part of the merger, and four others joined later in 1901. The total capitalization was over $1.4 billion, which made it the first billion-dollar corporation and the largest company in the world. At its start, the company produced two-thirds of the nation’s steel. By 1911, the share of the nation’s steel produced by the company had decreased to about 50 percent, and by the twenty-first century, that share has declined to around 10 percent. Nevertheless, in 2008, the company had nearly 50,000 employees, down from its peak of 340,000 in 1943.
Because the total entity was a conglomeration of a dozen formerly independent companies, the accountants, PriceWaterhouse, had to figure out how to report the corporation’s results in a manner that would be understandable to stock market investors. The solution was the invention of consolidated financial statements. The first full-year annual report for U.S. Steel was a classic of industrial reporting. Detailed data were provided for production levels, inventories, debt, acquisitions, employees, and stockholders. Photos of factories were provided, which was a first for annual company reports. In later years, particularly the 1940’s and 1950’s, the company remained innovative in its financial reporting, but the focus changed to emphasize methods that would enhance reported income, whereas during the early years, the accounting methods were innovative in that they produced conservative income numbers.
U.S. Steel’s business dominance began to decline after 1950, partially because of the actions of the U.S. government, but it remained a venerable institution. In 1952, during the Korean War, President Harry S. Truman tried to take over the company’s production facilities to resolve a labor union crisis, but the U.S. Supreme Court blocked the takeover. A later president, John F. Kennedy, was slightly more successful in 1962, when he got the company to reverse a price increase that the president thought would be harmful to the nation’s economy. The government intervened again in 1984, when a takeover of National Steel Company was prevented. Despite setbacks, U.S. Steel has remained the largest steel company in the United States, although it is far from being the largest corporation.
Dale L. Flesher
Cotter, Arundel. The Authentic History of the United States Steel Corporation. New York: Moody Magazine and Book Company, 1916.
Vangermeersch, Richard G. Financial Accounting Milestones in the Annual Reports of United States Steel Corporation: The First Seven Decades. New York: Garland Publishing, 1986.
Warren, Kenneth. Big Steel: The First Century of the United States Steel Corporation, 1901-2001. Pittsburgh: University of Pittsburgh Press, 2001.
See also: accounting industry; Gilded Age; Homestead strike; labor strikes; mineral resources; steel industry; Steel mill seizure of 1952.