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  • A Short History of Big Steel and Bethlehem
  • Sara Brady

The story of “Big Steel” in the U.S. begins to a great degree in Bethlehem, PA. In 1860, Asa Packer and Robert Heysham Sayre joined entrepreneur Augustus Wolle in an iron-making venture, Bethlehem Rolling Mill and Iron Co. The company, whose name was subsequently changed to Bethlehem Iron Co., provided “a source of strong iron rails for the railroad” (Whelan 1995a:5). With improvements on the process made by John Fritz, the company equipped “the Lehigh Valley Railroad with something other lines did not have, a regular supply of high quality rails” (5). Eager to improve and expand the potential of the company, Sayre sent Fritz to Europe to investigate the groundbreaking work of Sir Henry Bessemer, whose converter made mass production of steel possible for the first time. In 1873, Bethlehem Iron began making steel. By 1882, the company secured all government contracts—beating out all potential competition—for an initial sum of $4.5 million (Whelan 1995a:7). After the U.S. fleet returned in victory from the Spanish-American War, Bethlehem’s business increased—and the company began rebuilding foreign navies (7). By 1899, Bethlehem Iron Co. had become Bethlehem Steel Co.

With the turn of the 20th century, Steel’s leadership entered a second generation. Under Charles Michael Schwab, Bethlehem Steel rejected a German offer of $100 million to buy the company, and instead “produced more munitions for England, France, and America than any other single source” (Whelan 1995b:7). Bethlehem Steel expanded operations and facilities through the depression, when its millionaire executives had to trim their extravagant lifestyles.

Like the rest of the U.S.’s major economic players, it took another world war to boost business.

Legend has it that in September 1939 Bethlehem Steel Corp. Chairman Eugene Grace was teeing off at the Saucon Valley Country Club’s Old Course when a caddie ran up to his foursome and announced that World War II had just begun. Upon hearing the news, Grace turned to his golfing partners, who were also his vice presidents, and said, “Gentlemen, we are going to make a lot of money.”

(Washburn 1995a:8)

By 1940, Bethlehem was one of the nation’s largest steel producers, second only to Pittsburgh’s U.S. Steel. During the same year, Bethlehem was the Panama Canal’s second-best customer, with a toll bill of over $1 million (Washburn 1995a:9). Of the 29,000 people employed at the mill in 1944, 2,200 were women, who received “10 to 12 cents an hour less than their male counterparts” (Whelan 1995c:15).

When WWII ended and the women were sent back home, Bethlehem continued to grow in the postwar boom. Because the devastation of WWII had dissolved most non-U.S. steel companies, Bethlehem’s (and U.S. Steel’s) potential seemed exponential. By 1958, six out of the ten highest-paid executives in the U.S. were employees of Bethlehem Steel (9). But in the postwar era foreign governments also began rebuilding their industrial strength, and this renewal finally caught up with “Big Steel.”

On 30 September 1977, “Black Friday” descended, the day when “2,500 white-collar workers across the company lost their jobs. [...] That year, the company, bombarded by foreign competition, lost $448 million, its first losing year since 1933” (Washburn 1995b:10). Former employee LeRon Dreyser offered to the local newspaper the Morning Call: “I think the Steel was self-destructive. Who in the hell needed 12 vice presidents making half a million bucks a year?” (in Washburn 1995b:11). Local historian Lance Metz attributed some of the company’s downfall to the progress made by the United Steelworkers Union strike in 1959, which led to increased pay and even a $500 per-year bonus to workers “just for not striking” (Washburn 1995b:11).

Outside competition that threatened even the “other” monster of steel, U.S. Steel, came around 1964, and it came not from a new giant, but smaller entities. Designers of the World Trade Center broke with tradition and hired a group of builders using foreign steel. “By 1984, imported steel [End Page 56...

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