Until the mid-20th century, Pennsylvania was a manufacturing powerhouse, and Bethlehem Steel was one of the companies that dominated the state’s industrial landscape.
In the early 19th century, Bethlehem Steel was the second-largest steel producer in the United States. (Pittsburgh-based U.S. Steel was first.) But it began humbly in 1860 when a group of businessmen from the Lehigh Valley Railroad bought a paper company and turned it into an iron manufacturer. The company’s first manager was John Fritz, well known as a skilled ironmaster and mechanical engineer. It was a good match—Fritz brought with him a patent for mass-producing wrought-iron rails that brought the first big money to Bethlehem Steel (then called the Bethlehem Iron Company). It also brought the first military contract: the company produced rails for the Union to replace supply lines that Confederates destroyed during the Civil War. And Bethlehem produced 65,000 tons of rails for the Trans-Siberian Railroad.
Over the next 40 years, as other companies got into the rail-making business, Bethlehem was forced to evolve. In the 1880s, it started making warships for the U.S. military and built the largest defense manufacturing plant in the world. Then, in 1901, the company’s owners sold the business to Pennsylvania-born businessman Charles M. Schwab (no relation to the Schwab discount brokerage company). At first, Schwab thought he’d concentrate on shipbuilding, but when that failed three years later, Schwab decided to turn Bethlehem into a steel company that would compete with his former employer, U.S. Steel.
The first seven decades of the 20th century were successful for Bethlehem Steel. Under Schwab’s guidance, the company developed especially strong beams that made it possible to build higher buildings and longer bridges, including the Golden Gate Bridge in San Francisco. Bethlehem also got some important military contracts during Word War I; Russia, Great Britain, and France all contracted with Bethlehem Steel long before the United States got involved in the war. Then, during World War II, Bethlehem was the United States’ largest defense contractor, making ships, shells, and other military equipment. Throughout the 1950s, 1960s, and 1970s, Bethlehem continued to prosper, even building a 21-story tower to house the company’s corporate headquarters.
In the 1980s, though, Bethlehem began a slow downturn. The market for American-made steel was diminishing as foreign steel prices dropped, and Bethlehem couldn’t compete. By 2001, the company had filed for bankruptcy, and a year later, the International Steel Group of Ohio bought the company. Bethlehem Steel was no longer an active company, but its effect on Pennsylvania was undeniable. In its heyday, the company had employed more than 200,000 people, produced 23 million tons of steel annually, and helped make Pennsylvania one of America’s most industrialized states.
To read about the Pennsylvania Railroad,
turn to page 209.