Lackawanna Steel Company - Move To New York State

Move To New York State

At the turn of the century, the Lackawanna Iron and Steel Company began to consider moving out of the Scranton area.

The company's economic condition was deteriorating; in September 1899, Andrew Carnegie wrote, "My view is that sooner or later Harrisburg, Sparrows Point, and Scranton will cease to make rails, like Bethlehem. The autumn of last year seemed as good a time to force them out of business as any other."

Labor costs were rising. In 1897, the United Mine Workers had mostly organized workers at the coal and iron mines, who successfully struck in 1900 for a 10 percent wage hike. The union struck again from May 11, 1902, to October 23, 1902, and won a second wage increase as well as better working conditions. A second factor was the increasing cost of shipping iron ore to Scranton and a lack of rail lines from Scranton to the company's newly emerging markets.

The Lackawanna Iron and Steel Company decided to move its iron and steelmaking facilities to West Seneca, New York, in 1899, drawn by the area's easy access to Great Lakes shipping and the numerous rail lines in the area. William Walker Scranton made the decision to move to the Buffalo suburb. To avoid speculation in land, the Lackawanna Steel Company employed John J. Albright, president of the Ontario Power Company, to purchase land on its behalf. Scranton, Albright and several others met in Buffalo on March 23, 1899, to discuss the purchase of land. The group explored several nearby sites on March 24, and chose an undeveloped shoreline area on Lake Erie in what was then the western part of the Town of West Seneca that same day. Albright began purchasing land on April 1, 1899, and by the end of the month had obtained nearly all the required property for the extremely low price of $1.1 million. Albright was often accompanied on his purchasing visits by John G. Milburn, President of the Pan-American Exposition, and many property owners assumed the land purchases were for the Exposition.

Construction of the massive new steel mill began on July 14, 1900, and nine months later equipment was arriving from Scranton. The company dredged a ship canal and built miles of track to link the plant with the railroads which would bring iron ore and coke to the plant. Lackawanna Iron and Steel began building a company town in 1901, but it lacked most services and the housing stood empty for many years.

On February 14, 1902, the company was reorganized into the Lackawanna Steel Company. It was the largest independent steel company in the world at the time. Stock worth $60 million was issued, with $20 million of the newly-raised capital paying off the construction of the new mill. The mill received its first shipment of iron ore on December 23, 1902. The plant's 6,000 workers (2,000 of whom came from Scranton) blew the first steel in early 1903. The company's property in Scranton was sold to the Lackawanna and Wyoming Valley Railroad, which scrapped all the remaining equipment and tore down all the buildings except for the oldest stone blast furnaces.

The economic coup which William Walker Stanton had engineered did not please the board of directors, however, who replaced him in late 1904 with Edward A. Clarke. The company continued to expand, and in 1906 bought the large Pennsylvania coal mining firm of J.W. Ellsworth Company.

Lackawanna Steel Co. had a rocky relationship with the town of West Seneca. The company demanded large investments in sewer, water, gas and road improvements but refused to pay for them itself (even though the company was much wealthier than the town). The large influx of workers from the company's old Pennsylvania site swelled the Town's population, leading to the creation of extensive tracts of extremely substandard housing and very bad public health problems (including outbreaks of cholera, typhoid and influenza). To save the town, West Senecans proposed separating the area around the steel mill as its own incorporated municipality. Lackawanna Steel opposed the incorporation of the proposed municipality (to be named Lackawanna), but it relented in 1909 after the two-year-long Panic of 1907 nearly bankrupted the Town of West Seneca and imperiled the company's operations.

The creation of U.S. Steel in 1901 supplanted Lackawanna Steel as the country's largest steel manufacturer. A number of the so-called "independent" steel companies considered merger over the next two decades as a response to U.S. Steel's formation. In late 1915, Lackawanna Steel nearly consummated a merger with the Cambria Steel Company, Newport News Shipbuilding and Drydock Company, Youngstown Sheet and Tube, and Inland Steel. But despite the agreement of the steel companies, federal regulators, and others, the banks carrying the debt for these companies refused to approve the merger and the plan was dropped. The company's financial status varied considerably in the late 1910s. The stock set new highs and the company doubled its profits in 1917 and the first half of 1918, but in late 1918 and throughout 1919 the company fell on hard financial times.

Although Lackawanna Steel had moved to New York in part to avoid unionization, the unions followed the company. An attempt to unionize the company was made in 1919 by the Amalgamated Association of Iron and Steel Workers. Lackawanna's Democratic mayor, John Toomey, was supported financially by the Lackawanna Steel Co., and Toomey initiated a vicious red-baiting campaign to smear the union organizing effort as communist-inspired and led. The company also fired hundreds of workers in the summer and fall of 1919 for being union members or union sympathizers. Nonetheless, by 1919 more than 18,000 steelworkers at Lackawanna Steel and five other, smaller metallurgical firms in the area were organized by the American Federation of Labor (although Lackawanna officials estimated there were far fewer union members). Lackawanna Steel officials, fearing that immigrant union members would become violent, asked for and received protection from the New York State Police. The Lackawanna Steel organizing drive was part of a nationwide organizing effort by the union, and the union resolved to launch a nationwide strike in the fall of 1919 to organize the entire steel industry. The strike began on September 22, with the union claiming 8,000 of the plant's 9,000 workers had struck and the company asserting only half the workers had walked out. The same day, three riots broke out in the city. Late in the afternoon, during the shift change, a crowd of 7,000 pro-union strikers and supporters began throwing rocks, bottles and debris at the company's guards, and city police were called in to break up the disturbance. At 7:20 p.m., a crowd of 3,000 unionists and their supporters intercepted a group of 200 strikebreakers leaving the plant, and chased them through the surrounding neighborhood before police intervened and stopped them. Later in the evening, a small crowd of men beat a man who announced he would work for the company's private police force, and city police once more were called in. On September 23, 1919, company police clashed twice late in the afternoon with a crowd of about 3,000 striking workers. At 5:50 p.m., after being pelted with rocks and glass bottles, company police fired more than 50 12-gauge shotguns blasts into the crowd. "rantic signals to cease firing" by the Lackawanna Police, who were in the middle of the crowd trying to restore order, "were disregarded by the plant guards". The company guards killed two and injured three. The plant remained closed through September 28, with only 500 employees reporting for work. Lackawanna Steel, which had employed only 72 African Americans prior to the strike, hired several thousand black strikebreakers and brought them to the city to maintain operations. Outraged, union workers turned to political activity. Toomey lost re-election in the city's regularly scheduled mayoral race on November 4, 1919, and John H. Gibbons, a Socialist, was elected. Although the national organizing committee called off the strike on January 8, 1920, Gibbons' election reinvigorated the strike and some workers stayed out until June 1920. Nearly all the black strikebreakers were fired after the strike when the company took back its striking workers. The organizing campaign failed, but the company was eventually organized by the Steel Workers Organizing Committee in the late 1930s after passage of the National Labor Relations Act in 1935.

In the two years after the organizing drive, the company continued to see wide swings in profitability. In 1920, the company's profits fell again, and a merger was rumored. The company declared itself profitable in late 1920, and then reported large deficits in 1921. Rumors that the company might sell itself emerged in mid-October 1921, but in fact the firm went on a buying spree and snapped up a pig iron manufacturer and bridge steel maker.

Over the next several years, the Lackawanna plant continued to expand physically, its works now rambling over more than two miles (3 km) of shoreline and spilling over into the nearby town of Hamburg. Lackawanna Steel paid about 75 percent of the taxes in the city of Lackawanna, effectively controlling city government.

In 1922, Lackawanna Steel reported very large deficits, driven primarily by the huge New York steel mill's aging equipment.