Bethlehem Steel

Based on Wikipedia: Bethlehem Steel

During World War Two, a company executive made a promise to President Franklin Roosevelt that seemed almost reckless: his factories would build one ship every single day. He delivered more than that—exceeding the commitment by fifteen ships. The company was Bethlehem Steel, and for most of the twentieth century, it was one of the most important corporations in America.

You've probably never heard of it.

That's because Bethlehem Steel no longer exists. It filed for bankruptcy in 2001 and dissolved in 2003, its remaining pieces sold off to other companies. But its ghost is everywhere. The Empire State Building? Bethlehem Steel. The Golden Gate Bridge? Bethlehem Steel. The George Washington Bridge, Rockefeller Center, Madison Square Garden, the Waldorf Astoria hotel—all of them built with steel from Bethlehem, Pennsylvania.

From Iron to Steel

The story begins in 1857, when a man named Augustus Wolle launched an iron works called the Saucona Iron Company in Bethlehem, Pennsylvania. His timing was terrible. That same year, a national financial crisis called the Panic of 1857 swept through America, halting the company before it really got started.

But the idea didn't die. The company reorganized, moved to South Bethlehem, and changed its name to the Bethlehem Rolling Mill and Iron Company. By 1860, it had a board of directors and a president named Alfred Hunt. A year later, construction began on the first blast furnace.

A blast furnace, if you've never seen one, is essentially a giant vertical oven. Iron ore goes in the top, along with coke (which is coal that's been heated to remove impurities) and limestone. Hot air blasts through the bottom—hence the name—and the whole mixture melts together at temperatures exceeding two thousand degrees Fahrenheit. The iron melts and sinks to the bottom, where it can be collected. The limestone combines with impurities to form slag, which floats on top and gets skimmed off.

The timing was better now. Railroads were expanding rapidly across America, and they needed rails. The Bethlehem Iron Company produced them, along with armor plating for the United States Navy.

The Navy Changes Everything

After the American Civil War ended in 1865, the U.S. Navy shrank dramatically. The country's focus shifted to settling the western frontier and rebuilding the devastated South. Almost no new weapons were produced. New technology was ignored.

This neglect caught up with America by 1881, when international incidents made clear just how decrepit the fleet had become. The ships were obsolete—wooden sailing vessels in an age when other nations were building steam-powered warships with steel hulls. If America wanted to protect its trade routes and project power abroad, it needed a modern navy.

This is where the story gets interesting.

In 1883, the Secretary of the Navy appointed a lieutenant named William Jaques to something called the Gun Foundry Board. His job was to tour European weapons manufacturers and learn how they made their armaments. During these trips, Jaques formed business connections with a company called Joseph Whitworth in Manchester, England. He returned to America as Whitworth's agent, essentially moonlighting as an arms dealer while on extended leave from the Navy.

Jaques knew the Navy would soon be looking for American companies to build heavy guns and armor plate. He approached the Bethlehem Iron Company with a proposal: he would serve as an intermediary between them and the Whitworth Company, helping Bethlehem build a heavy forging plant capable of producing military ordnance.

In 1885, a group of Bethlehem Iron directors traveled to Philadelphia to meet with Jaques. Among them was Joseph Wharton, who had founded the Wharton School at the University of Pennsylvania—the first business school in America. Also present was John Fritz, sometimes called the father of the American steel industry. Within a year, Bethlehem Iron had signed a contract with Whitworth.

Building the New Fleet

In spring 1886, Congress passed a naval appropriations bill authorizing the construction of two armored battleships, a cruiser, a torpedo boat, and the complete rebuilding of two Civil War-era monitors. The two battleships—the USS Texas and the USS Maine—would carry massive guns with twelve-inch and ten-inch calibers respectively, protected by heavy armor plating.

Bethlehem won the contracts for both the gun forgings and the armor.

Between 1888 and 1892, the company built America's first heavy-forging plant, designed by John Fritz. By fall 1890, they were delivering gun forgings to the Navy and finishing facilities for armor production. The USS Maine, incidentally, would later explode in Havana Harbor in 1898 under mysterious circumstances, an event that helped trigger the Spanish-American War—but that's another story.

The company was thriving. In 1893, during the Chicago World's Fair, they provided the iron for what was then the largest single steel forging ever constructed: a forty-five-and-a-half-foot axle supporting the world's first Ferris wheel. That wheel stood 264 feet tall, roughly the height of a twenty-six-story building.

The Birth of Bethlehem Steel

Iron and steel are not the same thing, though people often confuse them. Iron is an element—a pure metal extracted from ore. Steel is an alloy, meaning it's iron mixed with other elements, primarily carbon. This small addition of carbon makes steel dramatically stronger and more flexible than pure iron. Too little carbon and the metal is too soft; too much and it becomes brittle. Getting the balance right is the art of steelmaking.

By the late 1890s, the owners of Bethlehem Iron Company realized they could be more profitable by switching their focus to steel production. In 1899, they established the Bethlehem Steel Company, which took over all the liabilities of the iron company. For a time, both companies operated simultaneously under the same ownership, with Bethlehem Steel leasing properties from Bethlehem Iron.

Then came Charles Schwab.

Not the stockbroker—that's Charles R. Schwab, a different person entirely. This was Charles M. Schwab, who had previously served as president of U.S. Steel Corporation. In 1901, he purchased Bethlehem Steel Company. What followed was a dizzying series of corporate maneuvers.

Schwab transferred his ownership to U.S. Steel, then repurchased it, then sold it to the United States Shipbuilding Company. That company was in turmoil. Plans were drawn up to reorganize it as something called Bethlehem Steel and Shipbuilding Company, but those plans fell through. Instead, in 1904, a new corporate parent was formed: Bethlehem Steel Corporation.

From 1906 until 2002, this corporation traded on the New York Stock Exchange under the ticker symbol "BS"—an abbreviation that would later seem darkly prophetic to workers who lost their pensions.

Building America

Bethlehem Steel Corporation installed something called a Gray rolling mill and began producing wide-flange structural shapes—essentially steel beams with a distinctive H-shaped cross section. These beams could bear enormous loads while using less material than traditional solid beams. They helped usher in the age of the skyscraper.

Consider the physics for a moment. A skyscraper's weight has to go somewhere. Every floor is essentially hanging from the structure above it while simultaneously supporting the floors below. Traditional stone and brick construction can only go so high before the lower walls would need to be impossibly thick to bear the weight. Steel frames changed everything. The skeleton carries the load, and the walls become mere curtains—hence the term "curtain wall" for the glass facades of modern buildings.

Bethlehem Steel became the leading supplier to the construction industry. The list of buildings constructed with their steel reads like a tour of American landmarks: 28 Liberty Street, the Empire State Building, Madison Square Garden, Rockefeller Center, and the Waldorf Astoria in New York City; the Merchandise Mart in Chicago, which was the largest building in the world when it opened in 1930.

Their bridges are equally iconic. The George Washington Bridge, connecting New York and New Jersey, was the longest suspension bridge in the world when it opened in 1931. The Verrazzano-Narrows Bridge, connecting Staten Island to Brooklyn, held that record when it opened in 1964. The Golden Gate Bridge in San Francisco, perhaps the most photographed bridge on Earth, opened in 1937. The Peace Bridge between Buffalo and Fort Erie, Ontario.

Beyond steel, the company diversified. They managed iron mines in Cuba and shipyards across the country. In 1913, they acquired a shipbuilding company in Quincy, Massachusetts, becoming one of the world's major shipbuilders. In 1922, they purchased the Lackawanna Steel Company, which came with a railroad and extensive coal holdings.

The Arsenal of Democracy

When World War One erupted in 1914, and when the United States eventually entered in 1917, Bethlehem Steel was ready. They supplied armor plate and ordnance to the military—the same products they'd been perfecting since the 1880s. Their large-caliber naval guns helped the United States and its allies achieve victory.

But it was World War Two that truly demonstrated the company's importance.

During that conflict, Bethlehem Steel produced as much as seventy percent of airplane cylinder forgings, a quarter of all armor plate for warships, and a third of the large cannon forgings used by American forces. Their fifteen shipyards built 1,121 ships—more than any other builder during the war, nearly one-fifth of the entire two-ocean fleet the Navy assembled.

"Bethlehem Steel was the most important to America's national defense of any company in the past century," historian Lance Metz told The Washington Post in 2003. "We wouldn't have won World War One and World War Two without it."

The man who orchestrated the World War Two effort was Eugene Grace, who served as president from 1916 to 1945 and then as chairman until his retirement in 1957. It was Grace who made that promise to President Roosevelt about building one ship per day.

The shipbuilding operations alone employed 180,000 people at their peak, out of a total company workforce of 300,000. But the war drained the company of its male workers, who were deployed overseas. Women were hired to guard the factories, work the production lines, and staff the offices. After the war ended, they were promptly fired to make room for returning men.

Liberty Ships

On September 27, 1941—before America had even entered the war—President Roosevelt attended the launching of the first Liberty ship at Bethlehem Steel's Fairfield shipyard in Baltimore.

Liberty ships were a particular marvel of industrial efficiency. They were cargo ships designed to be built quickly and cheaply. Earlier cargo ships took months to construct; Liberty ships could be assembled in weeks. The design was intentionally simple, using welding instead of riveting wherever possible, with standardized parts that could be manufactured separately and then bolted together.

The ship launched that day was the SS Patrick Henry, named after the American revolutionary famous for declaring "Give me liberty or give me death." That same day, Bethlehem launched two more ships at other yards: the SS James McKay at Sparrows Point in Maryland and the SS Sinclair Superflame at the Fore River Shipyard in Massachusetts.

By the end of the war, American shipyards had produced over 2,700 Liberty ships. They weren't elegant or fast, but they could carry troops and supplies across the Atlantic faster than German submarines could sink them. That was enough.

The Latin American Connection

Making steel requires more than just iron. Various minerals get added to create different properties. Manganese, for instance, increases tensile strength—how much pulling force the metal can withstand before breaking.

By the twentieth century, sourcing these minerals domestically had become significantly more expensive than importing them. Bethlehem Steel, like other American companies, turned to Latin America.

The company maintained a presence in the region for roughly a century, from the 1880s to the 1980s. They profited enormously from American economic influence in the region. In 1960 alone, Bethlehem Steel and U.S. Steel together realized greater than thirty percent profit on their Venezuelan iron investments—and that profit equaled all the taxes paid to the Venezuelan government in the entire decade since 1950.

They also relied on Brazilian manganese. During the presidency of Eurico Dutra from 1946 to 1951, Bethlehem Steel received forty million tons of manganese for just four percent of the income from exporting it. These arrangements reflected the broader pattern of American corporations extracting resources from Latin America at terms highly favorable to the companies and less so to the host countries.

The Decline

After World War Two, Bethlehem Steel remained the second-largest steel producer in America. The company seemed unassailable. But the seeds of decline had already been planted.

The problem, in retrospect, was success itself. American steel companies had emerged from the war with their factories intact while their competitors in Europe and Japan had been bombed into rubble. This temporary advantage bred complacency. Why invest in new technology when you're already dominant?

Meanwhile, those bombed-out competitors rebuilt from scratch with newer, more efficient equipment. By the 1970s, foreign steel was becoming cheaper than American steel. At the same time, labor costs and pension obligations were rising. The industry that had built modern America was starting to rust.

Bethlehem Steel survived the earliest waves of decline. Other companies folded; Bethlehem kept going. But in 1982, the company suspended most of its steelmaking operations after posting a staggering loss of $1.5 billion. Foreign competition, rising labor costs, pension obligations, and decades of underinvestment had finally caught up.

The company limped along for another two decades, shrinking steadily. In 2001, it filed for bankruptcy. In 2003, it dissolved entirely, its remaining assets sold to International Steel Group.

What Remains

The headquarters in Bethlehem, Pennsylvania, still stand. The old blast furnaces—rusted monuments to industrial ambition—have been preserved as part of a complex that now includes a casino, shops, and an arts center. You can walk among the structures that once glowed with molten metal and feel the strange silence of a place designed for noise and heat.

The buildings that Bethlehem Steel built still stand too. The Empire State Building still towers over Manhattan. The Golden Gate Bridge still spans the bay. These structures will outlast the memory of the company that made them possible.

There's something melancholy about this. For over a century, Bethlehem Steel was America. It armed the nation, built its cities, connected its shores. The company's rise tracked the country's rise; its fall tracked something harder to name. Not quite America's fall—the country remains wealthy and powerful—but perhaps the fall of a certain idea about what America was. A country that made things. A country where a man could work in a steel mill, earn a good wage, retire with a pension, and know that his labor had built something that would last.

The pensions, of course, were largely wiped out in the bankruptcy. Tens of thousands of retirees saw their benefits slashed. The company that had built bridges and battleships couldn't build a bridge to its own workers' futures.

But the steel endures. That's something. The Golden Gate Bridge will still be there when everyone who worked at Bethlehem Steel is gone. The Empire State Building will still catch the light at sunset. The structures built to last a century have already outlasted the company that built them, and they'll keep standing long after the last person who remembers that company has passed.

In the end, Bethlehem Steel's greatest achievement might be that it made itself obsolete. It built the infrastructure of modern America so well that we no longer notice the company is gone. We walk across their bridges, work in their buildings, and never think about the furnaces and the workers and the molten metal that made it all possible.

Perhaps that's the fate of all truly essential industries. When they succeed completely, they disappear into the background of ordinary life. We only notice them when they fail.