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.
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
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
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
"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."
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
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
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