The Lackawanna Steel Company was an American steel manufacturing company that 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, 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", The New York Times, December 24, 1902. Scranton, Pennsylvania, developed around the company's original location.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, it stimulated the founding of the city of Lackawanna.Goldman, High Hopes: The Rise and Decline of Buffalo, New York, 1984.
History
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 valley in 1840 and settled in the five-house town of Slocum's Hollow in present-day Scranton, Pennsylvania, to establish an iron forge.Yeomans, "36 Hours: Scranton, Pa.", The New York Times, November 1, 2002."The Bitter Battle", Time, October 19, 1962. Although Europeans had been making steel for nearly three centuries, the processes for creating blister steel and crucible steel were slow and extremely expensive.
The Scrantons focused instead on manufacturing pig iron, using a blast furnace. They wanted 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 intended to experiment with using anthracite coal to make steel, rather than existing methods which 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 moved to the Lackawanna Valley, where he was experimenting with using anthracite coal in steelmaking.
The Scrantons and Henry formed a partnership in 1840 to develop a hot blast furnace that used anthracite coal in the charge. The mixture of iron ore and coal, 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 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. Many problems plagued the iron mill, including a furnace that was not hot enough, water that 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, the partners sought new sources of capital. In May 1843, a $20,000 loan 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 more cash, the company was reorganized in September 1846, taking 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 51.6 percent of the company's stock.
Quality control problems plagued the company and nearly drove it to bankruptcy again. By summer 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"—prevented the smelting of high-quality pig iron. The company's finances spiraled downward. 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 U.S. had no factories capable of manufacturing rails, and all rails had to be imported and shipped by sea from Great Britain.
Realizing that the cold-short ore they used was ideal for manufacturing rail tracks, the Scrantons sought new investors whose money would 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.
The Scrantons and Grant reorganized again on November 7, 1846, and began calling the company 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, 30 March 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, 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 U.S. 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 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, 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. They reorganized the combined subsidiary into the Delaware, Lackawanna and Western Railroad, beginning vertical integration of their industry.
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 began buying track rails again 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. This 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 wanted 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 W.W. 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 and the recession, the Lackawanna Iron and Coal Company 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", The New York Times, February 26, 1871. Scranton helped break the strike by personally 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", The New York Times, April 8, 1871. The state militia was called in to restore order, protect the strikebreakers, and help reopen the mines.