HISTORY OF BETHLEHEM STEEL - DOC - DOC

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					HISTORY OF BETHLEHEM STEEL
          By Bill Barry
          Community College of Baltimore County

        In 1907, Charles Schwab proclaimed ―I’ve thought the whole thing over, and if
we are going to go bust, we will go bust big.‖ Although Schwab—according to this
anecdote repeated often by his successor as president of Bethlehem Steel, Eugene
Grace—was referring to his commitment to build the I-beam, Schwab prophetically
predicted the history of a corporation which grew from a small iron works in the Lehigh
Valley of Pennsylvania to become the second-largest steel producer in the world, but
indeed went bust big--becoming the largest bankruptcy of modern times on December 31,
2003.
        Originally called the Saucona Iron Company, for a nearby creek which was its
source of iron ore, the company was founded in 1857 as a blast furnace to produce rails
for the Lehigh Valley Railroad. Renamed Bethlehem Iron Company in 1861, it
converted to the Bessemer process in 1873, but became a major corporation in 1904,
when Schwab bought control of the company and created a holding company which
eventually became—after U.S. Steel—the second-largest steel producer in the world.
        In 1905, Schwab considered an I-beam developed in 1897 by Henry Grey, as a
structural component for new buildings to replace the separate pieces that were riveted
together. Despite The Panic of 1907 which made raising capital difficult, Bethlehem Steel
built a new mill and created a market for the beam, which became the company’s
trademark and which was used for such prestigious projects as Gimbel’s headquarters in
New York City and the Empire State Building.
        Bethlehem developed into a major armaments supplier as well. After producing
armor plate in 1886, the company moved into artillery gun production in 1900 and
developed a new type of heated tungsten-chromium steel, developed by Frederick
Winslow Taylor, who worked for Bethlehem from 1896-1901. In October, 1914,
Schwab met secretly about submarine contracts with British officials including Winston
Churchill, to circumvent US neutrality agreements. By the end of World War I,
Bethlehem had become a major weapons supplier and Schwab, despite working as a ―$1
a year man,‖ had become enormously wealthy.
        Bethlehem Steel’s purchase in 1916 of the Pennsylvania Steel Company not only
doubled the company’s capacity but also brought a subsidiary of particular interest to
residents of Maryland: the Maryland Steel Company owned a steel mill and shipyard at
Sparrows Point, located on a peninsula jutting into Chesapeake Bay, in eastern
Baltimore County. By 1957, this mill was the largest in the world, employing 35,000
workers and providing Bethlehem with a monopoly in the eastern United States.
        Throughout the next decades, Bethlehem maintained its position as the second
largest steel producer, but was mired in Schwab’s vision of heavy capital investment, and
higher productivity rather than investments in new technology, following Andrew
Carnegie’s admonition of ―pioneering don’t pay.‖ As a result, new products—like
aluminum cans—began to erode the company’s power in the late 1950s, although
officials, from Schwab to the present day, have loudly blamed the company’s problem
only on imported steel.
       Bethlehem also participated eagerly in the anti-unionism which pervaded the steel
industry. After breaking a steelworkers strikes in 1910, Schwab established a company
union, called The Employee Representation Plan, but on September 26, 1941, The
Steelworkers Organizing Committee won a National Labor Relations Board election
and have represented the workers ever since.
       The decline of the steel industry after 1957—for reasons too complicated for this
short article—brought the collapse of Bethlehem Steel. Its death rattle was heard in
October, 2001, when it filed for bankruptcy, and its death watch began in December,
2002, when it dumped its pension liabilities on to the federal government. Bethlehem
Steel formally dissolved, with its 131 million shares reduced to waste paper, on
December 31, 2003. The assets were sold in May, 2003, to International Steel Group
(ISG) and were resold in late 2004 to Mittal Steel, Inc.

Further Reading
Katie Flanagan. The Rise and Fall of Bethlehem Steel: A Case Study (Loyola College.
2004)
Robert Hessen. Steel Titan: The Life of Charles Schwab (1975)
Mark Reutter. Sparrows Point. Making Steel: The Rise and Ruin of American Industrial
Might (2nd. ed 2004)
John Strohmeyer. Crisis in Bethlehem: Big Steel’s Struggle to Survive (1986)
Linda Zeidman. ―Sparrows Point, Dundalk, Highlandtown, Old West Baltimore: Home of
Gold Dust and the Union Card.‖ In The Baltimore Book (1991)

Further Web Sites

http://www.bethlehempaonline.com/bethsteel.html-- comprehensive history of the
corporation
http://www.sparrowspointsteelworkers.com –a local site describing the workers at
Sparrows Point

Further videos
Bethlehem Steel: The People Who Built America (produced by WLVT-TV, Lehigh
Valley PBS. 2004)
PBS. 2004)

				
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