GOLDEN  DAYS

 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."  In the decades that followed, Grace's apocryphal remark would prove to be an understatement. Bethlehem Steel didn't just make a lot of money, it supplied armies, built cities and employed generations.

Apart from the home plant in Bethlehem, the company owned plants in Johnstown, Pottstown, Steelton, Lebanon, Williamsport, Baltimore, Buffalo, Los Angeles, San Francisco and Seattle. And Bethlehem Steel, with its fleet of 26 ships, was the Panama Canal's second-best customer in 1940, having paid more than $1 million in tolls.

Much of Bethlehem Steel's production came from its enormous contribution to the World War II effort. As much as 70 percent of all airplane cylinder forgings, one-quarter of the armor plate for warships, and one-third of the big cannon forgings for the U.S armed forces were turned out by Bethlehem Steel. And the company was responsible for building nearly one-fifth of the U.S. Navy's two-ocean fleet.

In the late 1940s and '50s the company picked up where it left off in the 1920s, playing a huge role in the post-World War II economic boom. Bethlehem Steel is responsible for building the skeletons of many of the most famous bridges and skyscrapers in the country, including the George Washington Bridge and Chrysler Building in New York, and the Ben Franklin Bridge in Philadelphia.

The patriarch leading the charge during this golden era was Eugene Grace. If Charles Schwab's vision created Bethlehem Steel, it was Grace's genius for production and organization that built the company into the nation's second-largest steel producer, behind U.S. Steel Co.   Grace joined the company in 1899 after graduating from Lehigh University. In 17 years he went from electric crane operator making $1.80 a day to company president making more than $1 million a year. He was 36 when named president. The man who once told a reporter to "let it be your guiding, impelling aim to take the boss's job away from him," was described by many as charming on the outside, but someone you didn't dare cross.

In and around Bethlehem he was nobility. Ellie Zsitek of Bethlehem, who worked as an "elevator girl" at the company's administration building from 1954 to 1958, talked about the daily ritual at the main office when Grace arrived for work. "We had a spotter who would let us know when Mr. Grace's limousine was driving up," Zsitek said. "Then we cleared all the elevators so he would have a nonstop ride to the sixth floor."

Grace's stature and influence went well beyond the company walls. His golfing partners told stories about how the course simply "opened up" when Eugene Grace was in a foursome.  Or how a "suggestion" from Grace would lead to new sand traps being installed or trees planted on doglegs at Saucon Valley Country Club.

A popular Grace anecdote took place during the construction of the Golden Gate Bridge in the late 1930s. Standing next to a foreman, Grace was admiring the work in progress, noting how proud he was that the Golden Gate was a Bethlehem Steel project. The foreman took issue with the chairman's comment, telling him that Pottstown based McClintic-Marshall built the bridge. As evidence, he pointed to all the trucks with McClintic-Marshall signs.

The next day, McClintic-Marshall, which was owned by Bethlehem Steel, had its name changed to Fabricated Steel Construction Division of Bethlehem Steel Corp.

In the years following his death in 1960, many criticized Grace for the rigid, inbred organization he created. But when the company was employing more than 100,000 and earning profits of more than $100 million annually, few had reason to question him.

The bonus system that Grace and Schwab had designed before World War I was paying huge dividends for upper management in the 1940s and '50s. In 1959, Bethlehem Steel had six names in Business Week magazine's list of highest-paid executives, starting with chairman Arthur B. Homer, who was the highest-paid corporate executive office in the United States. His salary and bonuses totaled $511,249, more than $2 million in today's dollars.

In his book "Crisis in Bethlehem," former Bethlehem Globe-Times editor John Strohmeyer illustrated life at the top with a quote from a member of the Bethlehem Steel legal staff: "Bethlehem at that time had the reputation that its hallways were lined with gold, and when you became employed there they gave you a pick to mine it."


 The company had a police force larger than the city of Bethlehem's and a full-service kitchen in its main office building with a staff of more than 60. It had a host of landscapers, electricians and carpenters at the executives' beck and call. No expense seemed to be spared, even when it came to training for the female elevator operators, whose primary duties were to operate the elevators and escort visitors to executives' offices.

"They had a model come in from New York to teach us how to walk and sit properly. Then we took classes to learn how to apply makeup properly," Zsitek said. "It was a prestige job. I made over $100 a week, which was good money in those days.

Lunch each day for upper management at the headquarters building along Third Street was equivalent to a four-star dining experience. Each department had its own dining room on the fifth floor, and each executive enjoyed a five-course meal. Marie Gawlik, a waitress in the company's executive dining room from 1950 to 1983, described the elegant scene:  
"There were long, beautiful wood tables with linen tablecloths. We served them with silver water pitchers, silver coffee pots and silver salt and pepper shakers. The men paid $1 a day for their food, and they each tipped us 50 cents a week."

"Nothing was brought in from the outside. We had a chef, sous-chefs, a baker who made the rolls and the cinnamon buns and a woman who baked the pies. The only thing that was delivered to the Steel was the sliced bread for the sandwiched."  Gawlik spent some of her time waiting on members of the board, which not only had its own dining room, but a separate menu and kitchen staff.

On weekends, Gawlick said, the executives would raid the company's immense freezers and hold lavish dinner parties a their homes. It was an unwritten rule that company waitresses served at those parties.

One of Gawlick's most memorable experiences was serving at Grace's 50th wedding anniversary: "Everything was gold--serving dishes, chandeliers, everything.  Inside they had Gypsies dancing around the table playing music, and outside they had detectives who made sure nobody walked out with any gold."

Robert C. Wilkins, a former senior vice president at Bethlehem Steel who is now a business administrator for the City of Bethlehem, recalled the privileged life at the top. "The plant patrol would shovel the sidewalks or mow the grass, anything that needed to be done," Wilkins said.  "And say you wanted a piece of furniture refinished--they employed some of the most skilled craftsmen in the world."

Wilkins and others insist that executives paid for a large majority of the services they enjoyed, and stress that everyone, not just upper management, benefitted from the company's generosity.

Up until the 1940s, the company's industrial work force had reasons to dispute an assertion like Wilkins.' Wages and working conditions in the plant had been historically oppressive. And when workers walked out, the company would call in billy-club-swinging mounted state police troopers to quash picketers. John Waldony, one of the union's first organizers, recalls brutal working hours, bribery and favoritism in the 1930s. "We worked six days a week, double shifts and had no vacations," said the 81 year old Wadolny. "And you would see guys bribing the foreman with chickens and pigs for a chance to work."

In 1941, the numbers and determination of Waldony and his fellow workers during a bloody strike finally overcame the company's anti-union policies. In 1942 the new United Steelworkers of American negotiated the first union contract. It was the beginning of the modern era of union-management relations. During that era, Bethlehem Steel and the nearby communities provided a textbook example of trickle-down economics.

According to Strohmeyer's book, when grumblings were heard from the rank and file about the luxurious Saucon Valley Country Club, which was largely subsidized by Bethlehem Steel, the company donated the money for a land swap and underwrote the professional expertise that gave the city the public Bethlehem Municipal Golf Course.

The company also paid for expensive engineering, traffic and urban renewal studies that formed the basis of center-city planning, redevelopment and the Route 378 expressway link to interstate Route 22, according to Strohmeyer's book. Lehigh University, alma mater of Grace and many Steel vice presidents, was a prime beneficiary. The faculty doubled to more than 320 in 1957 from 119 in 1924. The university's endowment reached $13 million in 1957, up from $3 million in 1924. And the company would donate $5,000 for every management trainee the university produced.

Today the campus is dotted with buildings bearing the names of former Bethlehem Steel executives.

More than 50 years after Graces' golf course prediction, Wilkins, sitting in his office at Bethlehem's City Hall, made a similar understatement about his former company. "It was just a hell of a nice place to work."

These pages originally appeared in the Morning Call in 1995



Back to Bethlehem, PA Online!