Lackawanna Steel Company

Infobox Company
company_name = Lackawanna Steel Company
company_
company_type = Public
genre =
foundation = 1840
founder = George W. Scranton, Seldon T. Scranton, William Henry
location_city = Scranton, Pennsylvania (1840-1902)
Lackawanna, New York (1902-1982)
key_people = William Walker Scranton, Joseph H. Scranton, Moses Taylor
area_served = United States
industry = steel manufacturing, railroads, coal mining
products = Steel, coke
services = Rail transport
market c

revenue =
operating_income =
net_income =
assets =
equity =
num_employees =
parent = Bethlehem Steel after 1922
divisions =
subsid = Delaware, Lackawanna and Western Railroad
owner =
company_slogan =
homepage =
dissolved = 1922 purchased; 1982 ceased operation
footnotes = The Lackawanna Steel Company was an American steel manufacturing company which existed as an independent company from 1840 to 1922, and as a subsidiary of the Bethlehem Steel company from 1922 to 1983. Founded by the Scranton family, the location of the company led to the creation of the city of Scranton, Pennsylvania.Federal Writer's Project, "Pennsylvania: A Guide to the Keystone State," 1940.] When the company moved to a suburb of Buffalo, New York, in 1902, its relocation led to the founding of the town of Lackawanna, New York.Goldman, "High Hopes: The Rise and Decline of Buffalo, New York," 1984.] It was once the second-largest steel company in the world (and the largest company outside the U.S. Steel trust)."New Steel Plant Started," "New York Times," December 24, 1902.]

Founding and early years

At the beginning of the 1800s, the Lackawanna Valley in Pennsylvania was rich in anthracite coal and iron deposits. Brothers George W. Scranton and Seldon T. Scranton moved to the Lackawanna Valley in 1840 and settled in the five-house town of Slocum's Hollow (now known as Scranton) to establish an iron forge.Yeomans, "36 Hours: Scranton, Pa.," "New York Times," November 1, 2002.] "The Bitter Battle," "Time," October 19, 1962.] Although Europeans had been making steel for nearly three centuries by this time, the processes for creating blister steel and crucible steel were slow and steel was extremely expensive. The Scrantons focused instead on manufacturing pig iron using a blast furnace. The Scrantons wished to take advantage of a recent technological innovation in iron smelting, the "hot blast." Developed in Scotland in 1828, the hot blast preheats air before it is pumped through molten iron, substantially lowering fuel needs. The Scrantons also wished to experiment with using anthracite coal to make steel, rather than existing methods whihc used charcoal or bituminous coal.Lewis, "The Early History of the Lackawanna Iron and Coal Company: A Study in Technological Adaptation," "Pennsylvania Magazine of History and Biography," October 1972.]

The most likely successful first use of the hot blast technique in the U.S. was carried out in 1835 at Oxford Furnace in Warren County, New Jersey, by William Henry, Seldon Scranton's father-in-law."Lackawanna Iron and Coal Company Furnace," Delaware & Lehigh National Heritage Corridor, National Park Service, U.S. Department of the Interior, no date.] By 1838, Henry had relocated to the Lackawanna Valley, where he was experimenting with using anthracite coal in steelmaking."Lackawanna Iron and Coal Company Furnace," Delaware & Lehigh National Heritage Corridor, National Park Service, U.S. Department of the Interior, no date.]

The Scrantons and Henry formed a partnership in 1840 to develop a hot blast furnace which used anthracite coal in the "charge" (the mixture of iron ore and coal which, when melted, created pig iron)."Directory of Iron and Steel Works of the United States and Canada," 1884.] Two other Pennsylvanians, Sanford Grant (a Belvidere, New Jersey, businessman) and Philipp Mattes (a bank manager from Easton, Pennsylvania), also invested in the new company, named Scranton, Grant, and Co. Henry bought 503 acres near Slocum's Hollow, and began building the furnace. The blast furnace was completed in the early autumn of 1841.

The company's first effort at smelting iron was not successful. A large number of problems plagued the iron mill, including a furnace that was not hot enough, water which ran too low in the nearby creek to turn the waterwheel-powered bellows (and thus did not provide enough air to the furnace), unsuccessful experiments with charge mixtures, clogged tuyeres, and more. George Scranton estimated the company lost between $6,000 and $7,000 in the year ending June 1843, but the total may have been as high as $10,000. George Scranton took control of the works from William Henry, and twice rebuilt the furnace. Near bankruptcy, however, the partners sought new sources of capital. In May 1843, a $20,000 loan was secured from which permitted the company to continue operating.

After many failures and two years of low-level and low-quality production of pig iron, the firm began producing significant amounts of pig iron in 1843. The company installed a rolling mill, five reverberatory furnaces, 20 nail manufacturing machines, and one spike manufacturing machine. Needing still more cash, in September 1846 the company was reorganized and adopted the new name of Scrantons and Grant. New partners were brought in, including Joseph H. Scranton (a cousin from Georgia), Erastus C. Scranton (a cousin from Connecticut), and John Howland (a banker and businessman from New York). The Scranton family retained a bare 51.6 percent of the company's stock.

Quality control problems plagued the company and nearly drove it to bankruptcy again. By the summer of 1844, the furnace averaged five to seven tons of pig iron a day. Scrantons and Grant initially used the pig iron to produce nails and iron plates, but the quality of the ore—"red-short" rather than the required close-grained "cold-short"—did not lead to the smelting of highly-quality pig iron. The company's finances spiraled downward. Luckily, railroad networks in the U.S. were tripling in size during the 1840s, and the railroads required large quantities of rails. But until 1844, the United States had no factories capable of manufacturing rails, and all rails had to be imported from Great Britain. Realizing that the "cold-short" ore they used was ideal for manufacturing rail tracks, the Scrantons sought new investors who would recapitalize the company and permit it to build a rail track rolling mill. Benjamin Loder, president of the New York and Erie Railroad; industrialist William E. Dodge; and eight others invested $90,000 in the firm.

Scrantons and Grant reorganized yet again on November 7, 1846, and began calling itself Scrantons and Platt.Warren, "Wealth, Waste, and Alienation: Growth and Decline in the Connellsville Coke Industry," 2001.] Grant was bought out, and Howland asked to have his investment returned. The company quickly began turning out rails for the Erie Railroad, becoming the first company in the United States to mass-produce T rails.Lowman, "Living Our Legacy," "Scranton Times-Tribune," March 30, 2004.] Hillstrom and Hillstrom, "The Industrial Revolution in America: Iron and Steel," 2005.] The firm's decision to manufacture rail tracks changed the fundamental nature of transportation in the United States, accelerated rail use, and eliminated American dependence on England for railroad track. Rail production began in August 1847, and the company soon employed more than 800 mostly Welsh, Irish, and German workers. Shipments of rail track were hauled overland through the snow to the New York and Erie Railroad, arriving just in time to save the line from bankruptcy.

In 1851, the town of Slocum's Hollow changed its name to Scranton in honor of the owners of the iron works. The Scrantons had won approval from the townspeople some years before to rename Slocum's Hollow as the town of Harrison (in honor of President William Henry Harrison). The town was renamed Scrantonia in 1850, and the name shortened in 1851 to Scranton. The swiftly growing iron mill led to similar growth in the town of Scranton, whose population soared from a few hundred in 1850 to 9,000 in 1860 to 35,000 in 1870.Dubofsky and Van Tine, "Labor Leaders in America," 1987.]

Growth years

In 1853, the firm reorganized yet again, doubling its capital investment and adopting the name Lackawanna Iron and Coal Company. Within a year, the company's assets had expanded to include three furnaces, a steel-making puddling mill, a foundry, two blacksmith shops, two carpentry shops, a saw mill, a grist mill, company store, 200 dwellings (to house workers), a boarding house, iron ore mines, coal mines, a tavern, and a hotel.

The company also expanded into the railroad business in 1853. Needing a secure way of getting products to market without having to pay the exorbitant fees charged by the railways, [Stindt, "American Shortline Railway Guide," 1996; Dublin and Licht, "The Face of Decline: The Pennsylvania Anthracite Region in the Twentieth Century," 2005.] the company purchased a controlling interest in the Delaware and Cobb's Gap Railroad and the Lackawanna and Western Railroad, reorganizing the combined subsidiary into the Delaware, Lackawanna and Western Railroad.

A second generation of Scrantons took control of the Lackawanna Iron and Coal Company in the 1860s, bringing new technological innovations to the firm. William Walker Scranton, son of Joseph Scranton, was born in 1844.Kashuba, Miller-Lanning, and Sweeney, "Scranton," 2005.] At the age of 23, William Walker Scranton had already become superintendent of one of the Lackawanna Iron and Coal Company's steel mills.Jensen, "'We Are All Descended From Grandfathers!'," "American Heritage," June 1964.] After Joseph Scranton's death in 1872, William took control of the entire family business empire, which now included (in addition to large numbers of coal and iron mines) a bank and the City of Scranton's gas and water works.

During the 1870s, American railroads once more began buying track rails from Europe. The reason was the high quality of steel rail produced in Europe, thanks to the invention in 1855 of the Bessemer process for steelmaking—which drastically reduced the fuel costs and amount of time needed to make steel as well as significantly improving the quality of the steel produced. [Bodsworth, "Sir Henry Bessemer: Father of the Steel Industry," 1998.] Scranton took a leave of absence from the firm and secretly went to Britain and then Germany, where he became a puddler and learned the secrets of making "Bessemer steel." But Scranton could not convince his business partners to adopt the Bessemer process. Meanwhile, industrialist Moses Taylor, a protégé of John Howland's, had organized the Franklin Iron Company to supply pig iron for rail tracks to the Midland Railroad and the Sussex Railroad (of which he was part-owner).Hodas, "The Business Career of Moses Taylor: Merchant, Finance Capitalist and Industrialist," 1976.] Taylor wished to link his railroads with the Scranton-owned Delaware & Lackawanna, and believed the Lackawanna Iron and Coal Co. could turn his pig iron into finished steel—but only if the company adopted the Bessemer process. Together, Moses Taylor and William Walker Scranton convinced the company's other investors to adopt the Bessemer process in 1875 and to merge the Taylor and Scranton railways in 1881. [Taber, "The Delaware, Lackawanna & Western Railroad," 1977.] The first "blow" (or pouring of molten steel from the Bessemer furnace into molds) occurred on October 23, 1875, and the first Bessemer steel rolled in the mill on December 29, 1875.

During the 1870s, the Lackawanna Iron and Coal Company also suffered from significant labor problems. The company was one of many which cut wages in its coal mines 30 percent in 1870. The Delaware & Lackawanna, the company railroad, also sharply cut wages for its workers. The first week of January 1871, a nascent mine workers union, the Workingmen's Benevolent Association, went on strike for higher wages.Hitchcock, "History of Scranton and Its People," 1914; "The Coal Panic," "New York Times," February 26, 1871.] William Walker Scranton personally helped break the strike by leading strikebreaking miners to and from the mines each day. While escorting a body of miners from the mines one afternoon, he was attacked by a mob and in the ensuing fight two of the rioting strikers were killed."Mob Law in Pennsylvania," "New York Times," April 8, 1871.] The state militia was called in to restore order, protect the strikebreakers, and help reopen the mines. The strike began to collapse in April 1871 as strikebreakers opened more mines and the strikers and their families began to starve. ["The Coal Mines," "New York Times," April 25, 1871; "Probability of the Present Strike Continuing," "New York Times," April 25, 1871; "The Resumption Question," "New York Times," April 26, 1871.] Violence flared again in early May, and state troops were once more called to restore order. ["The Coal War," "New York Times," May 4, 1871.] Within a few days, the strike had largely been broken and most miners returned to work. ["The Coal Regions," "New York Times," May 7, 1871; "The Coal Bubble," "New York Times," May 8, 1871.] William Scranton was arrested twice for his role in leading the strikebreakers, but acquitted at trial each time.

A second large strike hit the company in 1877. The Long Depression began with the Panic of 1873 and did not end until 1896. By 1877, thousands of miners, steel workers, and railroad employees were out of work and wages had been slashed repeatedly. On July 23, 1877, workers in the iron and steel mills owned by the Lackawanna Iron and Coal Co. struck, seeking a 25 percent wage increase.Hollister, "History of the Lackawanna Valley," 1885.] The strike spread to rail workers the next day, and on July 25 the company's mine workers also walked out and demanded a similar wage increase. The company asked Scranton Mayor Robert McKune for police protection the same day, and McKune asked Governor John F. Hartranft for troops. On July 26, Governor Hartranft asked President Rutherford B. Hayes for federal troops, and (with the Great Railroad Strike of 1877 already raging) Hayes agreed to send them at the governor's request. Violence broke out on July 29: The head house of the Penn Coal Co.'s short-line railroad was firebombed, a local bridge was burned, and many of the coal mines owned by the Lackawanna Iron and Coal Co. were flooded. The next day McKune threatened to call out the federal troops, but also offered his own services as an arbitrator. The two sides met throughout the day, and to everyone's surprise a tentative agreement was reached that evening. Although a majority of the steel workers appeared ready to accept the tentative agreement, a mob of 6,000 men formed on August 1 in downtown Scranton and resolved to reject it. When McKune appeared outside the mayor's office to try to calm the mob, shots were fired. McKune was clubbed and then stoned. His lower jaw broken and his upper jaw fractured, McKune tried to flee but was knocked unconscious when a member of the mob hit him in the head with a hammer. A few minutes later, the county sheriff and a hastily-assembled posse arrived and fired shots over the heads of the crowd to try to disperse the mob. Several people in the crowd returned fire, wounding the sheriff and a member of the posse. The posse then fired volley after volley into the crowd, killing four and wounding hundreds. Many of those killed and injured were shot in the back as they tried to flee. Mayor McKune, although badly injured, helped restore order around 2 p.m. The following day, 3,000 federal troops arrived from Pittsburgh and invested the city. Martial law was imposed, and the strike ended several uneventfully weeks later with no agreement. The sheriff and several posse members were arrested and tried on the charge of manslaughter, but were acquitted.

The company's labor troubles soon were supplanted by an internal struggle for control within the Lackawanna Iron and Coal Co. By 1880, the company was the second-largest producer of iron in the United States. Nonetheless, William Walker Scranton wanted the company to expand, a proposal which the board of directors rejected in 1881. Scranton quit the company and formed the Scranton Steel Co. with his brother, Walter Scranton, in 1881."Bristol v. Scranton," 57 Fed. 70 (W.D. Penn., 1893).] Within 10 years, the Scranton Steel Co. had become so successful that the Lackawanna Iron and Coal Co. entered into negotiations to merge with the firm. The two companies merged on January 9, 1891, forming the Lackawanna Iron and Steel Company."Bristol v. Scranton," 57 Fed. 70 (W.D. Penn., 1893).] Although the merger created nearly $1.2 million in debt for the new company, Lackawanna Iron & Steel proved to be so financially successful that it paid off the debt within a year. [Lamoreaux, "The Great Merger Movement in American Business, 1895-1904," 1985.]

Move to New York state

At the turn of the century, the Lackawanna Iron and Steel Company began to consider abandoning the Scranton area and relocating. One factor in this decision was the unionization of the company's coal and iron mines, which the United Mine Workers had mostly organized in 1897. The union successfully struck in 1900, winning a 10 percent wage hike. The union struck again from May 11, 1902, to October 23, 1902, and won a second wage increase as well as better working conditions. A second major factor was the increasing cost of shipping iron ore to Scranton and a lack of rail lines from Scranton to the company's newly emerging markets.

The Lackawanna Iron and Steel Company decided to relocate all of its iron and steelmaking facilities to West Seneca, New York, in 1899, drawn by the area's easy access to Great Lakes shipping and the numerous rail lines in the area. William Walker Scranton personally made the decision to move to the Buffalo suburb. In order to avoid speculation in land, the Lackawanna Steel Company employed John J. Albright, president of the Ontario Power Company, to purchase land on its behalf."A History of the City of Buffalo," 1908.] ["J.J. Albright Dead," "New York Times," August 21, 1931.] Scranton, Albright and several others met in Buffalo, New York, on March 23, 1899, to discuss the purchase of land. The group explored several sites around Buffalo on March 24, and chose an undeveloped shoreline area on Lake Erie just west of the town of West Seneca that same day. Albright began purchasing land on April 1, 1899, and by the end of the month had obtained nearly all the required property for the extremely low price of $1.1 million. Albright was often accompanied on his purchasing visits by John G. Milburn, President of the Pan-American Exposition, and many property owners assumed the land purchases were for the Exposition.

Construction of the massive new steel mill began on July 14, 1900, and nine months later equipment was arriving from Scranton.United States Bureau of Corporations, "Report of the Commissioner of Corporations on the Steel Industry," 1911.] The company dredged a ship canal and built miles of track to link the plant with the railroads which would bring iron ore and coke to the plant. Lackawanna Iron and Steel began building a company town in 1901, but it lacked most services and the housing stood empty for many years.

On February 14, 1902, the company was reorganized into the Lackawanna Steel Company."Big Steel Concern Formed," "New York Times," February 15, 1902.] It was the largest independent steel company in the world at the time. [The term "independent" indicated any steel company which had not become part of the massive U.S. Steel trust.] Stock worth $60 million was issued, with $20 million of the newly-raised capital paying off the construction of the new mill. The mill received its first shipment of iron ore on December 23, 1902. The plant's 6,000 workers (2,000 of whom came from Scranton) blew the first steel in early 1903. The company's property in Scranton was sold to the Wyoming Valley Railroad, which scrapped all the remaining equipment and tore down all the buildings except for the oldest stone blast furnaces.

The economic coup which William Walker Stanton had engineered did not please the board of directors, however, who replaced him in late 1904 with Edward A. Clarke. ["E.A.S. Clarke Dies," "New York Times," May 16, 1931.] The company continued to expand, and in 1906 bought the large Pennsylvania coal mining firm of J.W. Ellsworth Company. ["$7,000,000 for Coalfields," "New York Times," December 28, 1906.]

Lackawanna Steel Co. had a rocky relationship with the town of West Seneca. The company demanded large investments in sewer, water, gas and road improvements but refused to pay for them itself (even though the company was much wealthier than the city). The large influx of workers from the company's old Pennsylvania site swelled the city's population, leading to the creation of extensive tracts of extremely substandard housing and very bad public health problems (including outbreaks of cholera, typhoid and influenza). To save the city, West Senecans proposed spinning off the area around the steel mill as its own incorporated community. Lackawanna Steel opposed the incorporation of the proposed town (to be named Lackawanna), but it relented in 1909 after the two-year-long Panic of 1907 nearly bankrupted West Seneca and imperiled the company's operations."82 Years of History in Lackawanna," "New York Times," December 28, 1982.]

The creation of U.S. Steel in 1901 supplanted Lackawanna Steel as the country's largest steel manufacturer. A number of the so-called "independent" steel companies considered merger over the next two decades as a response to U.S. Steel's formation. In late 1915, Lackawanna Steel nearly consummated a merger with the Cambria Steel Company, Newport News Shipbuilding and Drydock Company, Youngstown Sheet and Tube, and Inland Steel. ["Announces Plans of New Steel Merger," "New York Times," December 9, 1915.] But despite the agreement of the steel companies, federal regulators, and others, the banks carrying the debt for these companies refused to approve the merger and the plan was dropped. ["Bankers Abandon Steel Co. Merger," "New York Times," February 6, 1916.] The company's financial status varied considerably in the late 1910s. The stock set new highs and the company doubled its profits in 1917 and the first half of 1918, ["Steel Rules as King," "New York Times," May 25, 1917; "Lackawanna Steel Profits Double," "New York Times," October 11, 1917; "Lackawanna Steel Nets $16,106,976," "New York Times," March 2, 1918; "Lackawanna Steel Gains," "New York Times," May 24, 1918.] but in late 1918 and throughout 1919 the company fell on hard financial times. ["$3,442,782 Less Profit in Lackawanna Steel," "New York Times," July 11, 1918; "Lackawanna Steel Report," "New York Times," February 28, 1919; "Lackawanna Steel Profits Drop," "New York Times," April 10, 1919; "Lackawanna Steel Reports a Deficit," "New York Times," July 10, 1919.]

Although Lackawanna Steel had moved to New York in part to avoid unionization, the unions followed the company. An attempt to unionize the company was made in 1919 by the Amalgamated Association of Iron and Steel Workers."Organize Buffalo Workers," "New York Times," September 19, 1919.] Brody, "Labor in Crisis: The Steel Strike of 1919," 1987; Brody, "Steelworkers in America: The Nonunion Era," 1969.] Lackawanna's Democratic mayor, John Toomey, was supported financially by the Lackawanna Steel Co., and Toomey initiated a vicious red-baiting campaign to smear the union organizing effort as communist-inspired and led.Foner, "History of the Labor Movement in the United States. Vol. 8: Postwar Struggles, 1918-1920," 1988.] [Laurie and Cole, "The Role of Federal Military Forces in Domestic Disorders, 1877-1945," 1999.] The company also fired hundreds of workers in the summer and fall of 1919 for being union members or union sympathizers. Nonetheless, by 1919 more than 18,000 steelworkers at Lackawanna Steel and five other, smaller metallurgical firms in the area were organized by the American Federation of Labor (although Lackawanna officials estimated there were far fewer union members). [Lackawanna Steel employed 9,000 workers at its Lackawanna plant. Although no one knew for sure how many where union members, union officials believed that 70 percent of the plant's workers supported the union. See: Goldman, "High Hopes: The Rise and Decline of Buffalo, New York," 1984; "Won't Delay Steel Strike," "New York Times," September 18, 1919; "Lackawanna Fears Violence," "New York Times," September 22, 1919.] Lackawanna Steel officials, fearing that immigrant union members would become violence, asked for and received protection from the New York State Police. [Kurek, "The Troopers Are Coming: New York State Troopers, 1917-1943," 2007.] ["Lackawanna Fears Violence," "New York Times," September 22, 1919.] The Lackawanna Steel organizing drive was part of a nationwide organizing effort by the union, and the union resolved to launch a nationwide strike in the fall of 1919 to organize the entire steel industry. The strike began on September 22, with the union claiming 8,000 of the plant's 9,000 workers had struck and the company asserting only half the workers had walked out. ["Close 2 Plants At Buffalo," "New York Times," September 23, 1919.] The same day, three riots broke out in the city."Two Hurt at Lackawanna," "New York Times," September 23, 1919.] Late in the afternoon, during the shift change, a crowd of 7,000 pro-union strikers and supporters began throwing rocks, bottles and debris at the company's guards, and city police were called in to break up the disturbance. At 7:20 p.m., a crowd of 3,000 unionists and their supporters intercepted a group of 200 strikebreakers leaving the plant, and chased them through the surrounding neighborhood before police intervened and stopped them. Later in the evening, a small crowd of men beat a man who announced he would work for the company's private police force, and city police once more were called in. On September 23, 1919, company police clashed twice late in the afternoon with a crowd of about 3,000 striking workers."2 Shot Dead," "New York Times," September 24, 1919.] At 5:50 p.m., after being pelted with rocks and glass bottles, company police fired more than 50 12-gauge shotguns blasts into the crowd. " [F] rantic signals to cease firing" by the Lackawanna Police, who were in the middle of the crowd trying to restore order, "were disregarded by the plant guards". The company guards killed two and injured three. The plant remained closed through September 28, with only 500 employees reporting for work. ["Bethlehem Is Apathetic," "New York Times," September 30, 1919.] Lackawanna Steel, which had employed only 72 African Americans prior to the strike, hired several thousand black strikebreakers and brought them to the city to maintain operations. [Stein, "Running Steel, Running America: Race, Economic Policy and the Decline of Liberalism," 1998.] Press, "Absolute Convictions: My Father, a City, and the Conflict that Divided America," 2006.] Widick, "Detroit: City of Race and Class Violence," 1989.] Outraged, union workers turned to political activity. Toomey lost re-election in the city's regularly scheduled mayoral race on November 4, 1919, and John H. Gibbons, a Socialist, was elected. Although the national organizing committee called off the strike on January 8, 1920, Gibbons' election reinvigorated the strike and some workers stayed out until June 1920. Nearly all the black strikebreakers were fired after the strike when the company took back its striking workers. The organizing campaign failed, but the company was eventually organized by the Steel Workers Organizing Committee in the late 1930s after passage of the National Labor Relations Act in 1935.

In the two years after the organizing drive, the company continued to see wide swings in profitability. In 1920, the company's profits fell again, and a merger was rumored. ["Lackawanna Steel Earnings Decrease," "New York Times," February 27, 1920; "Independent Steel Merger Denied," "New York Times," April 17, 1920.] The company declared itself profitable in late 1920, and then reported large deficits in 1921. ["Lackawanna Steel Gains," "New York Times." July 15, 1920; "Lackawanna Steel Profits," "New York Times," October 14, 1920; "Lackawanna Steel Gains," "New York Times," April 14, 1921; "Dividend Passed," "New York Times," May 26, 1921; "Lackawanna Steel Deficit Is $983,127," "New York Times," July 14, 1921; "Lackawanna Steel Deficit," "New York Times," October 12, 1921.] Rumors that the company might sell itself emerged in mid-October 1921, but in fact the firm went on a buying spree and snapped up a pig iron manufacturer and bridge steel maker. ["See Steel Merger By Independents," "New York Times," October 14, 1921; "Takes Over 2 Companies," "New York Times," November 19, 1921.]

Over the next several years, the Lackawanna plant continued to expand physically, its works now rambling over more than two miles of shoreline and spilling over into the nearby town of Hamburg.Kilborn, "The Twilight of Smokestack America," "New York Times," May 8, 1983.] Lackawanna Steel paid about 75 percent of the taxes in the city of Lackawanna, effectively controlling city government.

In 1922, Lackawanna Steel reported very large deficits, driven primarily by the huge New York steel mill's aging equipment. ["Lackawanna Steel Report," "New York Times," February 22, 1922; "Lackawanna Steel Shows Large Loss," "New York Times," March 5, 1922; "Lackawanna Steel Report," "New York Times," April 13, 1922.]

Bethlehem Steel years

In 1922, Lackawanna Steel Co. was acquired by the Bethlehem Steel Company, ending the company's 62-year independence. Merger rumors had plagued the company for several years by then. Rumors of an impending merger among two or more of the "Little Steel" companies—the seven steel companies largest in size next to U.S. Steel—continued in November and December of 1921 and into 1922. ["Big Independents Out of Steel Merger," "New York Times," November 3, 1921; "Meet to Arrange Big Steel Merger," "New York Times," December 1, 1921; "Pittsburgh Skeptical Over Steel Merger," "New York Times," January 29, 1922; "No Hitch in Steel Merger," "New York Times," February 7, 1922; "Lackawanna Steel Meeting Delayed," "New York Times," February 9, 1922.] In late April 1922, the seven "Little Steel" firms began to openly discuss the merger of two or more of the companies as a means of challenging U.S. Steel. ["Renew Parleys on Steel Merger," "New York Times," April 22, 1922.] The chief executives and creditors of these firms visited one another's plants in order to appraise them and assess the financial viability of each company."View Lackawanna Plant," "New York Times," May 2, 1922.] "Bethlehem Steel to Buy Lackawanna, in $60,000,000 Deal," "New York Times," May 12, 1922.] Among those visited was the Lackawanna Steel Company plant in upstate New York.

On May 11, 1922, Lackawanna Steel announced it had agreed to be purchased by Bethlehem Steel in a merger which would create a billion-dollar company. Bethlehem Steel said it would spend $10 million improving the Lackawanna mills, which were described as "obsolete" due to a lack of investment."Bethlehem Merger Approved," "New York Times," May 17, 1922.] The combined company controlled about 10 percent of the steel output of the United States, while U.S. Steel controlled about 45 percent.

A lengthy antitrust investigation followed. The United States Senate asked the Federal Trade Commission (FTC) and the Justice Department to investigate the merger the day after it was announced, ["Senate Asks Inquiry Into Steel Merger," "New York Times," May 13, 1922.] which the FTC did on May 14. ["Trade Commission Queries Steel Men," "New York Times." May 14, 1922.] As the merger was approved by the two companies in mid-May, the Senate and FTC each conducted separate investigations. ["Lockwood Inquiry for Steel Mergers," "New York Times," May 16, 1922; "Delay Steel Merger for Federal Inquiry," "New York Times," May 23, 1922.] On June 5, 1922, the FTC issued a report concluding that the merger was in violation of the Sherman Antitrust Act. ["Files Complaint of Steel Merger," "New York Times," June 6, 1922; "Bethlehem Denies Merger Breaks Law," "New York Times," June 9, 1922.] However, United States Attorney General Harry M. Daugherty overruled the FTC on June 22. ["Daugherty Upholds Big Steel Mergers," "New York Times," July 22, 1922.] The merger finally took effect on October 10, 1922. ["Steel Merger Put Into Legal Effect," "New York Times," October 11, 1922.] Six decades later, financial analysts observed that Bethlehem Steel probably purchased Lackawanna Steel for less than half what the company was worth. Over the next decade, Bethlehem Steel spent more than $40 million modernizing the Lackawanna site.

Lackawanna continued to be a center for the manufacture of steel throughout most of the 20th century. In the 1940s, the Lackawanna steel mill employed over 20,000 people, and was the world’s largest steel factory. [Prashad, "The Case of the Lackawanna Six," "CounterPunch," May 2, 2008.]

Closure and aftermath

In the 1970s and 1980s, Bethlehem Steel allowed the Lackawanna Steel plant to become obsolete. Foreign competition made it financially impossible to continue to manufacture most of the products produced at Lackawanna. Bethlehem Steel also disliked the high tax rates of the state of New York, and did not want to spend the millions of dollars in air and water pollution abatement which were required by state and federal authorities. The company built a new facility in Burns Harbor, Indiana, and stopped investing in new steel production methods at Lackawanna.

In 1982, Bethlehem Steel announced the closing of nearly all production at the Lackawanna Steel plant in New York. Bethlehem Steel, like many American steel companies, was encountering significant financial problems. [Tiffany, "The Decline of American Steel: How Management, Labor, and Government Went Wrong," 1988.] Although the company made several public attempts to reassess the plant' viability and keep the plant open in the late 1970s, closure was a foregone conclusion for many. [Serrin, "Economic Scene," "New York Times," December 22, 1981.] On June 25, 1982, Bethlehem Steel announced it would close the Lackawanna facility and lay off its remaining 10,000 workers in six weeks. ["6-Week Closing Set at Bethlehem Plant," "New York Times," June 26, 1982; "Bethlehem Steel to Recall 1,600," "Associated Press," August 19, 1982; "Business Digest," "New York Times," December 28, 1982.] The news meant the laying off of an additional 8,000 workers in the cities of Lackawanna, West Seneca and Buffalo. ["Closing Imperils 8,000 Employed in Related Work," "United Press International," December 29, 1982.] An attempt was made to interest the Buffalo-based Gibraltar Steel Corporation in the plant, but this effort failed. ["Lackawanna Bid Said to Fail," "Associated Press," August 16, 1983.]

The Lackawanna Steel Co. plant closed on October 15, 1982. ["Bethlehem to Shut Plant by Oct. 15," "Associated Press," August 25, 1983.] The company laid off workers in waves before the final closure, and transferred many others. On the day the plant closed, more than 6,000 workers lost their jobs (most of them high-paying).Verhovek, "As Prosperity of Steel Fades, A Town Debates Its Future," "New York Times," July 25, 1989.] The city of Lackawanna's 22,700 people faced extremely large tax increases just to maintain basic services, as the amount of taxes paid by Bethlehem Steel fell from 66 percent of the city's revenue to just 8 percent. In addition, the city owed the company more than $5 million in tax overcharges. The United Steelworkers later successfully sued Bethlehem Steel for prematurely terminating the fringe benefits of the laid-off steelworkers. ["Bethlehem Steel Settles Lawsuit Over Benefits," "Associated Press," March 13, 1985.]

The Lackawanna Steel Co, site was declared a Superfund site by the Environmental Protection Agency (EPA) in 1988 after the EPA conducted a Resource Conservation and Recovery Act (RCRA) Facility Assessment of the plant.Tecumseh Redevelopment, Inc. (Other (Former) Names of Site: Seneca Steel, Bethlehem Steel Corporation, International Steel Group). EPA Identification Number: NYD002134880. EPA Region 2. U.S. Environmental Protection Agency. June 12, 2008.] The state of New York subsequently declared it a Class 2 Inactive Hazardous Waste Site, indicating the site poses a significant potential threat to human health and the environment. In August 1990, Bathlehem Steel (operating as Tecumseh Redevelopment, Inc.) and the EPA entered into an administrative consent order requiring Bethlehem Steel to identify the nature and extent of any releases of hazardous waste and mitigate any emergency situations that might be discovered during the course of the investigations. Bethlehem Steel and its successor corporations have been submitting RCRA Facility Investigation (RFI) reports since then. Although the RFI was due to be completed in 2004, it still was not complete as of June 2008. The site was also declared a brownfield in 2003 under the Small Business Liability Relief and Brownfields Revitalization Act of 2002.Brownfields 2006 Grant Fact Sheet: Lackawanna, NY. Solid Waste and Emergency Response. U.S. Environmental Protection Agency. May 2006.] While this made the city of Lackawanna eligible for federal assistance money to redevelop the site, a cooperative agreement had not been signed as of May 2006.

The city of Lackawanna redeveloped some of the former Lackawanna Steel Co. land into small business zones, bringing about 700 jobs back to the town in the late 1980s. In 1993, Veritas Capital, Inc., purchased one of the bar, rod and wire plants on the old Lackawanna site and added another 250 jobs (the workers made automobile steering columns). [Freudenheim, "Bethlehem Is Selling Some Mills," "New York Times," December 28, 1993.] Bethlehem Steel ended coke production at the Lackawanna site in 2001, and as of 2008 only a galvanized steel finishing plant employing about 250 people remained.Staba, "An Old Steel Mill Retools to Produce Clean Energy," "New York Times," May 22, 2007.]

Steel Winds, an eight-windmill wind farm owned by BQ Energy, opened on the old plant's slag heaps in September 2006.

Lackawanna Steel in history and popular culture

The Lackawanna Steel Company's original stone furnaces near Scranton, Pennsylvania, were declared a Registered Historic Place in 1991. [ [http://www.nationalregisterofhistoricplaces.com/pa/Lackawanna/state.html "Lackawanna Iron and Coal Company Furnace." Pennsylvania - Lackawanna County. National Register of Historic Places. National Park Service. U.S. Department of the Interior.] ]

In 2001, the Tony Award-winning actor and playwright Ruben Santiago-Hudson wrote "Lackawanna Blues," a one-man play which depicts a fictionalized version of the playwright's childhood growing up in Lackawanna, New York. [Weber, "Thanks, Miss Rachel, Thanks for Raising Me," "New York Times," April 17, 2001.] The play, which won two OBIE awards, [Simonson, "Lackawanna Blues Sings Its Last at Public Theater, May 27," "Playbill," May 27, 2001.] features a number of characters who work or worked at the Lackawanna Steel Co. plant, and the company's role in the town is discussed several times in the play.

Notes

References

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External links

* [http://www.ci.lackawanna.ny.us/history.htm City History. City of Lackawanna, New York]
* [http://steelpltmuseum.org/ Lackawanna Local History and Steel Plant Museum]