Unlike other well-known centers of industry, such as Pittsburgh or Detroit, where the cities significantly predated the beginning of industrial development in those areas, Gary’s history as a city begins with US Steel. In the early twentieth century, US Steel Corporation needed a plant in the Midwest so that it could better meet the demand for steel of customers in that region. The steel industry had boomed in the U.S. in the decades following the Civil War. The U.S. steel industry produced 10 million tons of steel in 1900 and 24 million tons in 1910. Steel was used for railroads, bridges, buildings, household appliances, and automobiles.
US Steel used what were known as “scientific location of industry” principles to select the Gary location. The site was roughly equidistant from where the key materials for the manufacture of steel would be coming from: iron ore from the mines of Northeast Minnesota, limestone from mines in Michigan, and coal from the mines of the Appalachian Mountains. The Gary site was also close to Chicago, which could provide a source for workers as well as access to the Chicago railroad system, making it cheaper to move goods. The State of Indiana also offered lower property taxes than Waukegan, Illinois, which was another location the company considered. US Steel paid $7.2 million to purchase 9,000 acres (the equivalent of over $207 million in 2019). The mill and city then had to be built from the ground up including roads and other infrastructure.
The area where the town was to be built was also covered in sand dunes, dense grasses, trees and enormous swamps. The sand dunes had to be drained and leveled. This was an area that was home to prehistoric glaciers that formed the dunes and sunken landscapes that remain today on the city’s west side. The high ridge landscape, several miles south, is a reminder that the lake level 5,500 years ago stood twenty-three feet higher than today, according to the Indiana Geological & Water Survey website.
In order to build the city, the sand dunes in the area had to be leveled and the swamps drained. The Grand Calumet River also had to be moved 1,000 feet south of its previous route. Builders also had to contend with Lake Michigan. A significant portion of the lake abutting the proposed city had to be filled in. Once that was completed they also had to build two parallel piers, almost a mile long, that projected almost half a mile out into the lake to create a harbor for arriving ships with raw materials. The harbor alone cost almost $2.5 million in 1908 (the equivalent of around $72 million in 2019). The cost of the entire Gary project, including the town as well as the mill, was almost $43 million in 1908. In 2019, it would cost a corporation over $1.2 billion to build similar facilities and a surrounding city.
Construction for the mill itself was done by men using teams of horses and mules. Workers were housed in tents or in “McFadden’s Flats,” a bunkhouse with sixty cots and no indoor bathroom. The construction of the mill took two years. The completed mill was the largest steel mill in the world.