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In the aftermath of this conflict between Frick and Carnegie,
the Carnegie Steel Company was in chaos.
And one man emerged as the new leader of it-- Charles Schwab.
And in 1900, he gave an after dinner talk
at the very exclusive University Club in New York City in which he outlined
the reasons for a new vision for the Carnegie Steel Corporation,
and indeed, for the entire steel industry.
And that vision was consolidation.
Consolidation would eliminate competition.
This is the dream.
After all, competition leads to bankruptcy, especially
in the case of railroads and any other kind
of capital-intensive industry in the 19th century.
There cannot be too much competition within capitalism of this sort,
in order to succeed as an enterprise.
And so Schwab outlined consolidation for the steel industry.
He outlined it to a group of prominent industrialists and financiers
in New York City, including JP Morgan.
And he envisioned Carnegie Steel at the center
of this new consolidation of the steel industry.
It took only a few months.
Carnegie himself sold off all his stock to JP Morgan
in what was then the largest deal of the century.
And JP Morgan brought together Carnegie Steel with a few other steel
corporations to form the very first billion dollar corporation--
in current dollars.
A billion dollars in 1900 was a lot of money.
US Steel, as it was called, formed a perfect representation
of this new kind of American industrial capitalism--
consolidated, almost monopolistic, at enormous scale,
and entirely divorced from the original entrepreneurs who founded it.
US Steel would be controlled by stockholders
and managed by professional managers, not by penniless Scottish immigrants.
It would be the kind of formal organization
that would define 20th century American capitalism,
rather than the entrepreneurial start up ethos
of earlier decades of the mid 19th century.
US Steel would become one of the largest corporations in America and the world.
But US Steel and its eventual decline also
tells us, and will tell us, a lot about the transformations of 20th century
capitalism.
And US Steel was the largest company in world history.
It produced 2/3 of American steel in a year.
It produced 1/3 of the global production of steel.
Its massive size, its incredible economies
of scale-- everyone in the 19th century mindset,
JP Morgan, Andrew Carnegie, Charles Schwab,
all believed that it would no doubt dominate steel production for decades
to come.
But this vision of a particular economies of scale,
a very particular vision of the organization of capital,
would also prove to be limited in the next two decades.