"Tell me about the steel industry in America..." (Part I)

Last weekend's homework for the kids was to "research the steel industry in America" and be ready to report out on Monday. Monday rolled around, and we spent the class period developing a list of "factoids" (thank you, USA Today) about steel. Some of them are dead-on, some are funny, and some are amazingly wrong. Some examples:

• Henry Bessemer developed the Bessemer Convertor in 1857.
• In the 1900s, the United States was the largest producer of steel in the world.
• John Surma is the CEO of US Steel.
• To make steel you need iron ore.
• Andrew Carnegie began Carnegie Steel.
• Carnegie Steel was the largest producer of pig iron, steel rails, and coke in the 1880s.
  
• Carnegie sold Carnegie Steel the US Steel in 1901. It was the largest steel producer for decades.
• The first steel mill was built in Pittsburgh, Pennsylvania and is the only one left operating. (But what about Gary, Indiana and Fairless, Pennsylvania?)
  
• The Pittsburgh Steelers use elements of the US Steel logo as their logo.
• Braddock's single largest employer was a steel mill.
• Steel is basic to the world's industrialized economies.
• After 1970, the United States could no longer compete effectively against low-wage foreign producers.
  
• In 1999, the United States was the second largest producer of steel in the world, with 12% of the market.
• In 2008, US Steel opened the Mon Valley Works Training Facility to train steel workers. (not exactly)

Once the very long lists of factoids were compiled, we had basic knowledge, but still no clear understanding of what happened to the American steel industry and its collapse. We began exploring this aspects of economics on Tuesday.

During much of America's history we made things. Many Americans don't know or have forgotten that, from the end of the War of 1812 in 1815 to the start of the Spanish-American War in 1898, the United States did not face east, toward Europe, but faced west toward its own interior. During the second half of the 19th century, America found itself at an economic nexus of resources, labor, capital, and new technology that produced the perfect conditions for large-scale industrialization. America began stitching the ends of the country together with steel railroad tracks, building up into the sky with steel-framed buildings, and opening factories producing everything from buttons to water bottles. At the beginning of the 20th century, Pittsburgh and its outlying boroughs and communities represented one of the greatest concentrations of wealth in the world. The Allegheny, Monongahela, and Ohio river valleys were dotted with steel mills, glass works, aluminum smelting plants and factories, all in need of labor both skilled and unskilled. A few people, such as Andrew Carnegie, Henry Clay Frick, and George Westinghouse, made huge piles of money; other people--the "middle class"--made some money, and a lot of people made a little money, but a lot of people were working and supporting themselves and their families. With the money they made, they bought things--groceries, furniture, clothing, shoes, books and toys--and supported local businesses, which in turn were able to buy the things made in the factories and mills. Like some great Victorian engine, all the cogs and gears of the American economy meshed and turned. This engine worked well: well enough for the United States to declare war on Spain after the USS Maine blew up in Havana Harbor; well enough for the United States to eventually involve itself in the "war to end all war." And then it stopped.

Some parts of economies work in predictable ways. A portion of the economy slows down, so demand other things drops. When demand drops, prices have to drop. When prices drop, supply drops. Since supply drops, less workers are needed for production, so they are laid off. The laid-off workers have less income to spend, so they participate less in the product market, and the process begins anew. The effect spreads outward, like ripples in a pond.

Eventually though, just as the ripples in a pond eventually disappear, the troubles of the Depression waned and American heavy industry went back to work. World War II, as difficult as it was for so many American families, was also a prosperous time: mills and factories ran at maximum capacity, producing everything needed for the war effort. At the end of World War II, America was the undisputed industrial giant of the world.

**To Be Continued**