Why Was the Steel Industry so Important to the Growth of the U.S.?

During the second half of the 19th century, the Chicago area became one of the world’s largest producers of steel, employing tens of thousands of local people, who worked to convert iron ore into steel and melted steel into various products, including train rails. Since then, steel and iron have been ranked major important economic enterprises in the U.S.

The development of the steel industry was associated with a geographical advantage, where mills could acquire raw materials from the expansive iron ore deposits in the Lake Superior region more easily and relatively cheaply. Initially, most of the iron ore used by the American steel industry was obtained from Minnesota and Michigan. The proliferation of the iron and steel industry in the Chicago area meant that companies could enjoy relatively lower costs than competitors located elsewhere. This was particularly made possible by the removal of “Pittsburgh Plus” regulation, which was the U.S. government's pricing system that had protected Pennsylvania mills against competition.

The steel industry led to the emergence of iron foundries that melted pre-processed iron ingots and cast them into products such as stoves and broilers. The most important development, however, was the establishment of the great iron-shaping enterprises in Chicago, which produced rails for railroads. During this period, the first rail-rolling mill was built in Chicago.