When Andrew Carnegie died in 1901, he had a legacy of nearly $1.5 billion. Nearly all of this was in the form of cash, stocks, and property. Most of his property and cash have been donated or resold, making it very difficult to determine just how much he had at the time of his death.
In addition to being extremely wealthy at the time of his death, he also held influence as a member of the board of directors for several companies during his lifetime. This is thought to have contributed to his influence over business during his lifetime.
This has made it difficult for future owners to displace him as leader.
Helped to consolidate the steel industry
When Allegheny Steel was purchased by Carnegie, it consolidated the steel industry in Pittsburgh. Prior to this, there had been several small companies that manufactured steel.
These large companies had monopolies on their industries and could charge high prices due to this. With Allegheny Steel being purchased by Carnegie, a monopoly was established on the manufacturing of steel. This helped lower the cost of goods for consumers, making them more willing to buy Allegheny Steel products.
This helped grow its market size and continue to profit off of selling products with a high price point. As previously stated, Allegheny Steel products were known for being budget friendly. This helped maintain its popularity as consumer product s that were affordable but quality came with them.
Helped Carnegie to gain control over the market
While the purchase of Allegheny Steel couldn’t have helped create a monopoly, it did contribute to the formation of his industry.
As mentioned before, iron and steel are expensive commodities. This is because large quantities of them need to be contracted out for manufacturing. This prevents small companies from dominating the market, as they can with other products such as aluminum products.
By owning Allegheny Steel, Carnegie was able to gain a negotiating power over all contracts and ordnance sales. This helped him control how much aluminum and steel his companies supplied, which in turn controlled how much money he made from his products.
This also helped him gain more allies in his battles against other industrialists, who did not share his ideology.
Made it easier for Carnegie to raise prices
Prior to the Great Depression, consumers were able to shop around and find many different products. However, during this period, there was only one seller that sold everything and they charged a premium.
This one-of-a-kind store was the must-have item for the time and it cost a little extra money. This was because this store was known for its quality items that were hard to find outside of that one location.
As time went on, these special stores lost popularity and importance in people’s lives, making it easier for Carnegie to raise prices.
Contributed to the formation of his monopoly
Allegheny Steel was one of the first large corporations to purchase patents. This contributed to the formation of his monopoly as other companies did not want to compete against it because of its high patent rate.
The monopolistic effect that Allegheny Steel had on the steel industry was very noticeable. As president of Carnegie, he helped convince other leaders to join him in buying up patents and businesses. This contributed to the monopolistic effect that gave him control over the steel industry.
This caused many small companies to get bought out or fail, leaving only Allegheny Steel with a patent for steels and mills and all of the supplies needed for them.
Provided him with valuable patents
Allegheny Steel played an important role in the development of the modern steel industry. It provided many of its key patents, especially those related to high-quality mass production techniques.
These patents allowed Allegheny to compete against other steelmakers and establish their reputation as a producer of high quality steel. This helped it grow its monopoly and maintain its market share for years to come.
In addition, Allegheny received significant recognition for its contributions to the industry after the Carnegie Corporation purchased it in 1950. This was part of an effort to preserve and promote industrial sciences in business.
Since then, Allegheny has continued to gain recognition for its scientific research and manufacturing processes, even though other companies have taken over some of their production lines.
Gave him access to valuable raw materials
Allegheny Steel was founded in 1865 by a man named Edward Allegheny. He began producing iron and steel products as a way to make a decent income while he studied law at the University of Pittsburgh.
After law school, he started working as an attorney and helped organize the first iron and steel manufacturers’ association. This association helped coordinate production for market sales, manufacturing standards, and insurance claims.
During this time, Allegheny began donating excess ore that was mined to nearby schools so they could use it for construction projects. This early philanthropy earned him the title “The Father of School Construction in America.”
In 1892, Allegheny married Anna Maria Schulze, who was from Germany. They had four children together.
Enabled consolidation within the industry
The purchase of Allegheny Steel enabled several large steel companies to consolidate their operations in the mid-1890s. This consolidation enabled these companies to increase their market share and pay higher prices for steel.
By consolidating their operations, these companies were able to save money and use it to expand their businesses. This allowed them to stay competitive against other steel companies who gained additional business through the purchase.
This allowed more competition in the industry which led to lower prices for consumers. By paying a higher price for Allegheny Steel, buyers were able to make more money off of their business.
This increased competition caused other players in the industry to lower their prices as well which contributed to further growth of the Monopoly.
Reduced competition among producers
When Allegheny Steel was purchased, it reduced the competition among steel producers in the United States. Before Allegheny Steel was purchased, there were several steel companies in America that produced steel. These companies included:
Duquesne Glass Company
Bendix Robots for Manufacturing Corporation
General Electric Company (since 2001)
These companies were bought out or combined into one company and produced more consistent quality of steel. This increased productivity and quality of steel available to the market. Because of this increased productivity, prices went down which increased the profitability of competing manufacturers.