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The Founding of U.S. Steel and the Power of Public Opinion: Header

The Founding of U.S. Steel and the Power of Public Opinion

 

The Founding of U.S. Steel and the Power of Public Opinion: Intro

By the late 1800s, the steel industry in the United States had surpassed the capacity of Britain’s steel production. In 1901, through the merger of several steel companies, financier J. P. Morgan formed the United States Steel Corporation, then the largest company in the world. The merger included Andrew Carnegie’s Carnegie Steel Company, Elbert H. Gary’s Federal Steel Company, and William Henry Moore’s National Steel Company, as well as National Tube Works, American Steel & Wire, American Sheet Steel, American Steel Hoop, American Tin Plate, American Bridge, and the Lake Superior Consolidated Iron Mines. In the following decades other companies came into the corporation’s fold. Some of the nation’s most influential leaders of finance served on U.S. Steel’s Finance Committee, including J. P. Morgan and George F. Baker.1

 

 

U.S. Steel Corporation Finance Committee, featuring George F. Baker (third from left) and J.P. Morgan (fifth from left), 1926. Baker Family Papers, Baker Library, Harvard Business School (olvwork642542).

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The staggering size of U.S. Steel, with a total capitalization of $1.4 billion, inspired the Wall Street Journal to write of its “uneasiness over the magnitude of the affair.”2 Through its combined subsidiaries, U.S. Steel’s integrated system held control over the mines and materials that produced steel, the processes by which steel was made, and the finished steel products. In the early twentieth century, steel provided the foundation for the construction of infrastructure and new cities in the West, the increased use of the automobile, and the production of materials for World War I. Like today’s technology kings, the corporation had an international presence in the world economy. “U.S. Steel was a giant—or a monster, depending on one’s perspective,” B. Mark Smith writes in Toward Rational Exuberance: The Evolution of the Modern Stock Market.3 At Harvard Business School, a number of case studies examined ways in which U.S. Steel in its first decades exercised its corporate power given its size within the industry.4

With the founding of the company, the journal The Iron Age observed that the “managers of the United States Steel Corporation . . . have before them the delicate task of so shaping values that they break the force of popular antagonism, that they keep outside competition within bounds and that yet they earn an adequate return on the securities in the hands of investors.”5 Elbert H. Gary, president and chairman of the board of U.S. Steel from 1901 to 1927, recognized the value of public relations. “No businessman in the public eye was ever more approachable than was Gary,” observed Arundel Cotter, author of several corporate histories. “He often told his newspaper visitors candidly that he wanted to gain their good will both for himself and for the corporation, as it was through them that he reached the American public.”6 Early on, U.S. Steel began to employ a variety of PR strategies intended to create a positive image of the industry. These efforts served to address negative public perceptions concerning harsh working conditions, large profits margins, and an image of the giant enterprise as a “soulless” corporation. For example, United States Steel, a corporate history written by Cotter in cooperation with Gary and U.S. Steel, leveraged text and photographs illustrating the process of steel production to portray the company as A Corporation with a Soul, as the publication's subtitle asserted.7

The Founding of U.S. Steel and the Power of Public Opinion: Slider

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The Rockford Daily Register-Gazette, February 25, 1901.

Arundel Cotter. United States Steel: A Corporation with a Soul. Garden City, NY: Doubleday, Page & Company, 1921.

Arundel Cotter. United States Steel: A Corporation with a Soul. Garden City, NY: Doubleday, Page & Company, 1921.

American Iron and Steel Institute. The Men Who Make Steel. New York: American Iron and Steel Institute, 1936.

American Iron and Steel Institute. The Men Who Make Steel. New York: American Iron and Steel Institute, 1936.

Blast Furnace. View from Middle Platform over West Track of #1 Ore Bridge, April 30, 1913. Calumet Regional Archives, Indiana University Northwest.

 

The Founding of U.S. Steel and the Power of Public Opinion: Body

“Conservative businessmen in the twentieth century never doubted that the locus of power lay with public opinion,” Richard S. Tedlow, professor at Harvard Business School, writes in Keeping the Corporate Image: Public Relations and Business, 1900–1950.8 The American Iron and Steel Institute (AISI) represented the industry’s trade association that collected and distributed data about steel production.9 AISI was a client of the preeminent PR firm Hill & Knowlton. The institute’s public relations efforts focused not only on increased consumption of steel, but also on the public’s engagement in steel as a matter of interest for the greater good. John W. Hill, co-founder of Hill & Knowlton, wrote, “The corporate balance sheet is nowadays affected not only by conditions within the business—but also by the rules and regulations of government bureaus, the probings and acts of Congress, and the strategy of powerful labor unions. And, looking over the shoulders of management in its every important move, is Public Opinion.”10 Hill argued that “the highest purpose of public relations is to foster and promote understanding among people. For this reason, the art of communication assumes great importance in public relations.”11

Within this art of communication, AISI leadership increasingly turned to photography as a PR tool to win favor with their industry. In the 1930s and 1940s, the institute’s public relations campaigns included the publication of Steelways, a magazine with a wide readership that incorporated text and photographs focusing on the financial as well as human aspects of the steel industry. In 1936, AISI distributed The Men Who Make Steel, an illustrated book intended to showcase management and labor harmoniously partnering in a mighty enterprise in which “each group seeks to get out of industry a suitable return for what it puts into industry.”12 Published in 1936, approximately three hundred thousand copies of the volume were distributed. The book featured images by noted photographers Margaret Bourke-White and John P. Mudd and the pioneering news photography studio Underwood & Underwood.

In the same spirit as AISI, U.S. Steel encouraged the idea that advancement of the industry represented a national concern. Author Marvin N. Olasky writes that the “goal was to treat members of the public not as consumers of steel products but ‘participants’ in the industry; steel companies henceforth would have not only stockholders, but ‘stakeholders,’ those who had been encouraged to see that they had a stake in industry success.”13 U.S. Steel would find that investment in PR provided multiple benefits including interest from current and future investors, employees, and customers, as well as an impact on voting citizens and representatives of government. Photography would come to play a pivotal role in the corporation’s PR campaigns.

The Founding of U.S. Steel and the Power of Public Opinion: Footnotes

1 George F. Baker was director of the First National Bank, director of more than 40 corporations, and a major benefactor to the Harvard Business School. Baker was the largest individual owner of U.S. Steel stock.

2 Wall Street Journal, February 27, 1901.

3 B. Mark Smith, Toward Rational Exuberance: The Evolution of the Modern Stock Market (New York: Farrar, Straus and Giroux, 2001), 15.

4 See Dr. Jack Blicksilver, “United States Steel Corporation, Exercising Industrial Leadership, 1901–1941,” HBS No. 362-004 (Boston: Harvard Business School, 1963). Also “United States v. United States Steel Corporation,” Govt. Reg. 133 (Boston: Harvard Business School, 1947).

5 The Iron Age, February 28, 1901, 28c.

6 Arundel Cotter, The Gary I Knew (Boston: The Stratford Company, 1928), 25.

7 The first printing of The Authentic History of United States Steel Corporation was in 1916. The 1921 edition was titled United States Steel: A Corporation with a Soul.

8 Richard S. Tedlow, Keeping the Corporate Image: Public Relations and Business, 1900–1950. Industrial Development and the Social Fabric, vol. 3 (Greenwich: JAI Press, 1979), xvi.

9 AISI was founded in 1908, and Elbert H. Gary served as its first chief executive.

10 John W. Hill, Corporate Public Relations, Arm of Modern Management (New York: Harper, 1958), vii.

11 Ibid., 170.

12 American Iron and Steel Institute, The Men Who Make Steel (New York: American Iron and Steel Institute, 1936), 7.

13 Marvin N. Olasky, Corporate Public Relations: A New Historical Perspective (Hillsdale, NJ: Lawrence Erlbaum Associates, 1987), 104.

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