If Cleveland-Cliffs succeeds in its bid to acquire Pittsburgh-headquartered U.S. Steel, we Clevelanders may woof at this triumph over Pittsburgh.
But it wouldn’t be the first business link forged between the two towns. Cleveland’s John D. Rockefeller, best known for starting Standard Oil, also co-founded that signature Pittsburgh company U.S. Steel.
“There’s a long history between the two cities,” says Ven Ochaya, professor of business at Baldwin Wallace University. From Alcoa to Sheetz, from bankers to paint makers, there’s been a lot of competition and cooperation.
Cornering steel
U.S. Steel arose in 1901 from deals among three of the world’s wealthiest men: Rockefeller, Andrew Carnegie, and J.P. Morgan. The new company instantly surpassed Rockefeller’s Standard Oil as the world’s biggest, at least on paper. U.S. Steel was capitalized at $1.4 billion, though it controlled a mere 60% or so of its industry—far below Standard Oil’s peak of 90% or more.
The sexagenarian tycoons were an odd trio. Rockefeller was tall, gaunt, reserved, abstemious, self-made, semi-retired, and philanthropic. Carnegie was short, outgoing, passionate, peace-loving, self-made, semi-retired, and philanthropic. Morgan was massive, purplish-nosed, temperamental, well-born, and high-living, fond of cigars, liquor, and women.
Before the steel deal, there had been contact between the three, but they were hardly friends. Rockefeller and Carnegie disapproved of speculators and philanderers like Morgan. Rockefeller told a biographer that Morgan was “very haughty, very inclined to look down on other men.”
In turn, Morgan seemed to consider Rockefeller an outsider and a prude. At first, the financier reportedly hesitated to seek Rockefeller’s iron empire, saying, “I don’t like him.”
U.S. Steel's Pittsburgh headquarters sit besides an office of Key Bank from Cleveland
Carnegie privately called Rockefeller “Rockafellow” and “Wreckafellow.” He twitted the teetotaler by sending Christmas gifts of fine whiskey. In turn, the frugal Rockefeller sent paper vests—a kind of garment he wore himself.
But Rockefeller’s memoirs praise Morgan for easing a financial panic and laud Carnegie for building thousands of libraries. Carnegie was given a seat on Rockefeller’s charitable General Education Board. And Rockefeller telegraphed congratulations to Henry Frick, who ran Carnegie Steel, for a deadly confrontation with strikers.
U.S. Steel’s founders shared a faith in the efficiency of what critics called monopolies. Rockefeller wrote in his memoirs, “The day of individual competition in large affairs is past and gone.” Morgan put it characteristically: “How in hell is any court going to make a man compete with himself?”
Pennsylvania crude, Minnesota iron, and Cleveland wealth
Rockefeller came from New York’s Finger Lakes region to Cleveland at age 12 and thrived in his 20s and 30s off western Pennsylvania’s newly tapped crude oil.
Carnegie emigrated from Scotland to Pittsburgh at age 12 and clerked for a Pennsylvania railroad boss who led the defeat of an early Rockefeller bid to control refining. But other railroads soon helped the Clevelander prevail.
In the 1880s, Rockefeller moved his business and legal residence to New York City. But he kept visiting Cleveland steadily until 1917, when his mansion at Forest Hill in East Cleveland and Cleveland Heights mysteriously burned down.
To diversify his investments, Rockefeller bought land in Minnesota that turned out to teem with iron ore—vital to the flourishing steel mills in Cleveland, Pittsburgh, and elsewhere. He hired Cleveland’s Samuel Mather to build a fleet and transport the ore.
In the 1890s, he accepted an offer from Carnegie. The steel tycoon started buying all of Rockefeller’s ore, and Rockefeller promised not to make steel.
In 1898, New York’s Morgan merged several businesses to form Federal Steel, which ranked second in the field. In 1901, he bought the top-ranked Carnegie Steel for $480 million. Then he sought Rockefeller’s ore holdings.
Rockefeller hosted the financier for dinner but referred negotiations to John D. Rockefeller, Jr. Later, avoiding the media, The senior Rockefeller secretly worked out final details after dark in the bushes at his rural New York estate with Frick. The price was $88.5 million, mostly in U.S. Steel stock.
The Rockefellers joined the company’s board, but Rockefeller senior never attended a meeting. In 1904, he resigned in protest over what he considered extravagant dividends. By 1911, the Rockefellers sold all their shares.
Cleveland-Cliffs’ origins
Another merger created Cleveland-Cliffs. Back in 1847, Mather’s father had started the Cleveland Iron Mining Co. In 1864, future New York governor Samuel Tilden started Iron Cliffs Mining Co. in Ishpeming, Michigan—with the latter falling under the control of Cleveland’s Jeptha Wade.
Cleveland-Cliffs sprawls across the FlatsIn 1891, the businesses united as Cleveland-Cliffs. They were led for the first 50 years by Mather’s brother, William, namesake of the steamship docked today at North Coast Harbor.
Today, Cleveland-Cliffs is the continent’s biggest maker of flat-rolled steel. It’s Greater Cleveland’s second-wealthiest business, having earned about $23 billion last year. Its Cleveland Works sprawls across the Flats. Its headquarters are in Public Square’s former BP Building, built by the conquerors of Sohio (Standard Oil of Ohio).
U.S. Steel is Greater Pittsburgh’s sixth largest business, earning about $21 billion last year. A takeover would make Cliffs the nation’s biggest steelmaker.
In July, Cliffs made a $7.3 billion offer for U.S. Steel. In August, the offer got an exclusive endorsement from the United Steelworkers, based in Pittsburgh. “Over the years, Cliffs has shown itself to be an outstanding employer.” U.S. Steel responded by saying that it would
create a process for bidders.
Supermarkets, paint, and more
Many other businesses have ties both to Cleveland and Pittsburgh.
In 1886, about the same time as Oberlin College’s Charles Hall invented modern aluminum processing. He got investments to form his new company, Alcoa, from two former Oberlin College schoolmates from Cleveland: lawyer Homer Johnson and industrialist John L. Severance, who later bedecked Severance Hall’s lobby with Hall’s aluminum.
Other investors persuaded Hall to base Alcoa in Pittsburgh. Still, the company built big plants in Cleveland, Cuyahoga Heights, and Newburgh Heights that survive under a Pittsburgh-based spinoff, Howmet Aerospace.
Pittsburgh’s Jones & Laughlin Steel Company long owned the Cleveland Works. Kauffman’s owned our May Company for a while. Pittsburgh-based Giant Eagle, Howard Hanna Realty, PNC, and Dollar Bank abound in Cleveland as well. So does Sheetz, located in outlying Altoona, Pa.
In turn, Northeast Ohio’s Jones Day, Goodyear, Original Mattress Factory, Cohen & Co., Progressive Insurance, Eaton Corp., and Oswald all have operations in Pittsburgh. Cleveland’s own celebrity chef Michael Symon runs Bar Symon at Pittsburgh International Airport.
Gary Previts, professor emeritus with Case Western Reserve University Weatherhead School of Management, says there’s keen competition two paint and coatings businesses that anchor their respective downtowns where they were founded: Pittsburgh Plate Glass (PPG) and Sherwin-Williams. The rivals have plants and stores in each other’s hometowns and around the world.
Downs and ups
PPG's headquarters in downtown Pittsburgh were designed by Cleveland native Philip JohnsonDecades ago, steel’s slump hurt the Steel City more than the Forest City. But analysts say that Pittsburgh has bounced back better.
“In Cleveland, we tripled down on manufacturing,” says BW’s Ochaya. “Pittsburgh saw the handwriting on the wall and decided they’d be focusing more on service-driven industries like
computer science and IT.”
In 2021, Greater Pittsburgh’s gross domestic product was $168 billion. That dwarfed the Cleveland-Elyria region’s $122 billion. Yet Pittsburgh’s edge in population is just 2.4 million, compared to 2.1 million in Cleveland.
Still, Cleveland has some advantages, including a NASA research center and a Federal Reserve bank, while Pittsburgh has just one of the bank’s branches. In the past four years, Cleveland has outgained Pittsburgh in jobs and income.
The world’s supposedly free enterprises keep mushrooming and entwining. The U.S. Supreme Court broke up Standard Oil in 1911, but the resulting Exxon and Mobil remerged in 1999. Ochaya says he expects more cooperation ahead between Pittsburgh and Cleveland, perhaps with the former creating new technology and the latter making machines for it.
The Steelers and Browns fight hard on the field. But James Kahler, who directs Cleveland State University’s sports and entertainment management program, says “Behind the scenes, they share.” The National Football League divvies up lots of revenue equally.
The Cleveland Cavaliers’ jerseys bear the Cleveland-Cliffs logo. Cleveland’s Republic Steel co-owned the “Steelmark” logo and persuaded the Steelers to put it on their helmets. If the former company takes over the latter, would the Steelers’ helmets start to honor Cleveland-Cliffs?