Tennessee Coal, Iron and Railroad Company
Encyclopedia
The Tennessee Coal, Iron and Railroad Company (1852–1952), also known as TCI and the Tennessee Company, was a major American steel manufacturer with interests in coal
and iron ore mining and railroad operations. Originally based entirely within Tennessee
, it relocated most of its business to Alabama
in the late nineteenth century. With a sizable real estate portfolio, the company owned several Birmingham satellite towns, including Ensley
, Fairfield
, Docena, Edgewater
and Bayview
.
At one time the second largest steel producer in the USA, TCI was listed on the first Dow Jones Industrial Average
in 1896. However, in 1907, the company was merged with its principal rival, the United States Steel Corporation. The Tennessee Coal, Iron and Railroad Company was subsequently operated as a subsidiary
of U. S. Steel for 45 years until it became a division of its parent company in 1952.
the following year saw the fleeting company repossessed by local creditors. It became Tennessee's leading coal extractor over the next decade, mining and transporting coal around the towns of Cowan
and Tracy City in the Cumberland Mountains
, and soon branched out into coke manufacture. This practice of both extracting and moving coal to market by building private rail tracks was not unusual at the time, as by owning the tracks that served their mines, businesses could undercut rivals at market by saving money on transportation. A Thomas O'Connor purchased the company in 1876 and expanded the business into iron manufacture in order to stimulate coke sales, building a blast furnace near Cowan. The business was subsequently renamed the Tennessee Coal, Iron, and Railroad Company. TCI never again changed its name, despite a later expansion into Alabama following the 1886 purchase of the Birmingham-based Pratt Coal and Iron Company. Such was the industrial importance of Alabama to TCI that in 1895, the company relocated its offices to Birmingham, relegating its native state to relative unimportance.
Canny investments and the purchase of major competitors in 1888 and 1892 under the direction of financier Hiram Bond, TCI Corporate General Superintendent, saw the firm grow rapidly. The corporation was for several decades one of the few major heavy industries based in the largely agricultural Southern United States
, by a wide margin the largest blast furnace operator in the South and at one time the second largest steel producer on the continent. Its 1900 asset sheet listed 17 blast furnaces, 3256 beehive coke ovens, 120 Solvay
coke ovens, 15 red ore mines, as well an extensive network of railroads, although following the panic of 1893
the company shifted its primary interests from railroads to steel. TCI's largest industrial plant was located in Ensley, a company town founded in 1886 on the outskirts of Birmingham, Alabama, by company president Enoch Ensley. Ensley (map of) was served by the sizable Birmingham Southern Railroad
, one of TCI's early acquisitions, and from 1899 contained four 200-ton blast furnace
s. In 1906 two more furnaces were constructed, and 40,000 tonnes of steel were produced that year, feeding Ensley's integrated rail, wire and plate mills. The company was fiercely competitive with the larger Pittsburgh steel businesses to the north, owing to the remarkable fact that all the natural resources required to produce steel were located in abundance within a relatively small radius of the Birmingham mills.
The Tennessee Coal, Iron and Railroad Company was one of the largest users of convict leasing for coal mining labor in Alabama following Reconstruction. The number of convicts employed increased after U.S. Steel
acquired TCI in 1907, as did the brutality of the conditions in which they labored. In 1908, the first full year of U. S. Steel's ownership of TCI, almost 60 convict workers died from workplace-related accidents.
In the 1910s, TCI undertook a comprehensive program to stabilize its labor force by developing rigorously-planned "model villages", thereby improving worker health, welfare and loyalty. This paternalistic
approach carried with it obvious benefits for workers and their families, but also drew criticism for limiting the free movement and organization of labor.
The Tennessee Coal, Iron and Railroad Company's status was bolstered when it became one of the first 12 companies to be listed on the inaugural Dow Jones Industrial Average
, compiled in May 1896. However, it was not long before TCI was eclipsed by its principle competitor, the United States Steel Corporation, a huge conglomerate formed in 1901 out of the enormous Carnegie
and Federal steel empires. By the time of the Panic of 1907
, U. S. Steel felt confident enough to launch a takeover bid of its Southern rival. On the morning of Saturday November 2, banker and tycoon J. P. Morgan, one of the founders of U. S. Steel, convened a meeting in his library and there suggested that U. S. Steel purchase the stock of an insolvent Wall Street brokerage firm, Moore and Schley, which had secured huge loans against 6 million TCI shares. This was not an entirely selfish gesture, as Morgan recognised that the failure of Moore and Schley would send investor confidence in the markets into a nose-dive. E. H. Gary
, president of U. S. Steel, agreed in principle to this transaction, yet argued that without careful political maneuvering the deal would be seen by Congress
as an effort to create a monopoly and thereby encounter troublesome federal anti-trust
litigation. Morgan himself had been burnt by crusading Washington trust-busters in 1902 when his Northern Securities Company
had been forcibly broken up by the government in a landmark test case.
In response to his concerns, Morgan sent Gary on an urgent mission to Washington that Sunday so that the deal might be vetted by President Theodore Roosevelt
himself before the stock exchange opened the next day. Convinced by Gary that U. S. Steel only wished to purchase Moore and Schley's stock in order to inject liquidity into the firm and thereby shore up investor confidence in the wider economy, Roosevelt granted the transaction antitrust immunity in November 1907, a decision for which he was later derided by critics as a hypocrite. Indeed, in 1911 the federal government sought to undo what it perceived to be Roosevelt's mistake and (without success) sued U. S. Steel. In the mean time, Moore and Schley was saved from collapse, the panic soon subsided and U. S. Steel was rewarded with a valuable prize - a controlling stake in TCI. U. S. Steel immediately replaced the Tennessee Coal, Iron and Railroad Company on the Dow Jones Index, where it remained until 1991.
TCI was not fully incorporated into U. S. Steel, and continued to operate as an extremely profitable subsidiary of its parent company well into the 20th century. Immediately following the merger, a venture was launched to create a new, larger TCI plant to the west of Ensley and at the center of a new company town, and so in 1910 work on the planned community of Corey, Alabama began. Named after an executive who later committed suicide, Corey was soon renamed Fairfield, and the steel works there opened in 1917. With the discovery of new coking coal and ore deposits in the region, and with the aid of U. S. Steel's enormous capital, the Fairfield works were quickly expanded with the construction of new steel mills and rail links. Several rolling mills were completed in 1917, which produced ship materials for the nearby shipbuilding plants in Chickasaw, Alabama
, in support of America's sudden entry into World War I
. In 1920 a direct rail line between Fairfield and Birmingport, the new port of Birmingham on the Warrior River was opened. This was followed by the completion of the 'High Ore Line Railroad', which connected the Red Mountain and the Fairfield works; trains literally rolled down the hill from mine to mill. In 1923 a merchant steel mill was completed, followed by the opening of a sheet products mill in 1926.
TCI proved to be so efficient at making cheap steel that a post-merger internal tariff (the 'Pittsburgh Tariff') was levied by U. S. Steel from 1909 on all steel coming out of the Birmingham region. This was an effort to negate the competitive edge of Birmingham steel over U.S. Steel's own Pittsburgh product.
TCI's independence as a separate legal entity from its parent corporation ended in 1952, a century after the founding of the Sewanee Furnace Company, when the it became the Tennessee Coal & Iron Division of U. S. Steel. The memory of the historic importance of TCI was not lost when a short book to celebrate the Tennessee Company's centenary was published by U. S. Steel in 1960: Biography of a Business. Stagnation and decline began in 1962 when a majority of the mines in the Birmingham region were closed as domestic ores and coal were superseded by cheaper foreign products, especially from Venezuela. The 1970s and 80s brought about a downsizing and eventual consolidation of the Fairfield and Ensley works, mirroring the general decline of heavy industry in the USA throughout those decades.
The last relic of the Tennessee Coal, Iron and Railroad Company, the Fairfield Plant, continues to be operated by U. S. Steel as one of its five integrated steel mills in the USA. It is the largest steel-making plant in Alabama, employing 2000 workers as of September 2006, down from a peak of 45000 during World War II. With a single blast furnace and three basic oxygen process furnaces
, amongst other various mills and production facilities, the plant produces 2.4 million tons of raw steel per annum and 640,000 tons of seamless tubular and sheet products, mainly for purchase by the booming oil industry in the region.
Coal mining
The goal of coal mining is to obtain coal from the ground. Coal is valued for its energy content, and since the 1880s has been widely used to generate electricity. Steel and cement industries use coal as a fuel for extraction of iron from iron ore and for cement production. In the United States,...
and iron ore mining and railroad operations. Originally based entirely within Tennessee
Tennessee
Tennessee is a U.S. state located in the Southeastern United States. It has a population of 6,346,105, making it the nation's 17th-largest state by population, and covers , making it the 36th-largest by total land area...
, it relocated most of its business to Alabama
Alabama
Alabama is a state located in the southeastern region of the United States. It is bordered by Tennessee to the north, Georgia to the east, Florida and the Gulf of Mexico to the south, and Mississippi to the west. Alabama ranks 30th in total land area and ranks second in the size of its inland...
in the late nineteenth century. With a sizable real estate portfolio, the company owned several Birmingham satellite towns, including Ensley
Ensley, Birmingham, Alabama
Ensley is a large city neighborhood in Jefferson County, Alabama, United States. It was once a separate and thriving industrial city. It is part of the Birmingham–Hoover Metropolitan Area.-History:...
, Fairfield
Fairfield, Alabama
Fairfield is a city in Jefferson County, Alabama, United States. It is part of the Birmingham–Hoover Metropolitan Area. The population was 12,381 at the 2000 census. As of 2006, the Census estimates the population to be 11,547.-History:...
, Docena, Edgewater
Edgewater, Alabama
Edgewater is a census-designated place in Birmingham, Alabama, United States northeast of Pleasant Grove. Its population was 730 at the 2000 census. This area was damaged by tornadoes on April 15, 1956 and April 8, 1998. The 1998 tornado was rated an F5 on the Fujita scale. -Geography:Edgewater is...
and Bayview
Bayview, Alabama
Bayview is a community in Birmingham, Alabama, United States. The community is built around Bayview Lake. It is part of the Birmingham–Hoover–Cullman Combined Statistical Area. Bayview voted to be annexed by its nearest town of Mulga. However, Bayview today retains its own community identity.-...
.
At one time the second largest steel producer in the USA, TCI was listed on the first Dow Jones Industrial Average
Dow Jones Industrial Average
The Dow Jones Industrial Average , also called the Industrial Average, the Dow Jones, the Dow 30, or simply the Dow, is a stock market index, and one of several indices created by Wall Street Journal editor and Dow Jones & Company co-founder Charles Dow...
in 1896. However, in 1907, the company was merged with its principal rival, the United States Steel Corporation. The Tennessee Coal, Iron and Railroad Company was subsequently operated as a subsidiary
Subsidiary
A subsidiary company, subsidiary, or daughter company is a company that is completely or partly owned and wholly controlled by another company that owns more than half of the subsidiary's stock. The subsidiary can be a company, corporation, or limited liability company. In some cases it is a...
of U. S. Steel for 45 years until it became a division of its parent company in 1952.
Early history
The Tennessee Coal, Iron and Railroad Company was founded as the Sewanee Furnace Company, a small mining concern established in 1852 by Nashville entrepreneurs seeking to exploit Tennessee's rich coal reserves and the 19th century railroad boom. After losing money, the business was sold to New York investors in 1859 and reorganized as the Tennessee Coal and Rail Company, but the outbreak of the Civil WarAmerican Civil War
The American Civil War was a civil war fought in the United States of America. In response to the election of Abraham Lincoln as President of the United States, 11 southern slave states declared their secession from the United States and formed the Confederate States of America ; the other 25...
the following year saw the fleeting company repossessed by local creditors. It became Tennessee's leading coal extractor over the next decade, mining and transporting coal around the towns of Cowan
Cowan, Tennessee
Cowan is a city in Franklin County, Tennessee, United States. The population was 1,737 at the 2010 census. It is part of the Tullahoma, Tennessee Micropolitan Statistical Area.- History :...
and Tracy City in the Cumberland Mountains
Cumberland Mountains
The Cumberland Mountains are a mountain range in the southeastern section of the Appalachian Mountains. They are located in southern West Virginia, western Virginia, eastern edges of Kentucky, and eastern middle Tennessee, including the Crab Orchard Mountains...
, and soon branched out into coke manufacture. This practice of both extracting and moving coal to market by building private rail tracks was not unusual at the time, as by owning the tracks that served their mines, businesses could undercut rivals at market by saving money on transportation. A Thomas O'Connor purchased the company in 1876 and expanded the business into iron manufacture in order to stimulate coke sales, building a blast furnace near Cowan. The business was subsequently renamed the Tennessee Coal, Iron, and Railroad Company. TCI never again changed its name, despite a later expansion into Alabama following the 1886 purchase of the Birmingham-based Pratt Coal and Iron Company. Such was the industrial importance of Alabama to TCI that in 1895, the company relocated its offices to Birmingham, relegating its native state to relative unimportance.
Southern United States
The Southern United States—commonly referred to as the American South, Dixie, or simply the South—constitutes a large distinctive area in the southeastern and south-central United States...
, by a wide margin the largest blast furnace operator in the South and at one time the second largest steel producer on the continent. Its 1900 asset sheet listed 17 blast furnaces, 3256 beehive coke ovens, 120 Solvay
Solvay Process Company
The Solvay Process Company was a pioneer chemical industry of the United States in the manufacture of soda ash and a major employer in Central New York...
coke ovens, 15 red ore mines, as well an extensive network of railroads, although following the panic of 1893
Panic of 1893
The Panic of 1893 was a serious economic depression in the United States that began in 1893. Similar to the Panic of 1873, this panic was marked by the collapse of railroad overbuilding and shaky railroad financing which set off a series of bank failures...
the company shifted its primary interests from railroads to steel. TCI's largest industrial plant was located in Ensley, a company town founded in 1886 on the outskirts of Birmingham, Alabama, by company president Enoch Ensley. Ensley (map of) was served by the sizable Birmingham Southern Railroad
Birmingham Southern Railroad
Birmingham Southern Railroad is a subsidiary of Transtar, operator of several short-line railroad companies. The BS operates on 84 miles of track, providing switching services in the Birmingham, Alabama area.-History:...
, one of TCI's early acquisitions, and from 1899 contained four 200-ton blast furnace
Blast furnace
A blast furnace is a type of metallurgical furnace used for smelting to produce industrial metals, generally iron.In a blast furnace, fuel and ore and flux are continuously supplied through the top of the furnace, while air is blown into the bottom of the chamber, so that the chemical reactions...
s. In 1906 two more furnaces were constructed, and 40,000 tonnes of steel were produced that year, feeding Ensley's integrated rail, wire and plate mills. The company was fiercely competitive with the larger Pittsburgh steel businesses to the north, owing to the remarkable fact that all the natural resources required to produce steel were located in abundance within a relatively small radius of the Birmingham mills.
From forced labor to paternalism
U.S. Steel
The United States Steel Corporation , more commonly known as U.S. Steel, is an integrated steel producer with major production operations in the United States, Canada, and Central Europe. The company is the world's tenth largest steel producer ranked by sales...
acquired TCI in 1907, as did the brutality of the conditions in which they labored. In 1908, the first full year of U. S. Steel's ownership of TCI, almost 60 convict workers died from workplace-related accidents.
In the 1910s, TCI undertook a comprehensive program to stabilize its labor force by developing rigorously-planned "model villages", thereby improving worker health, welfare and loyalty. This paternalistic
Paternalism
Paternalism refers to attitudes or states of affairs that exemplify a traditional relationship between father and child. Two conditions of paternalism are usually identified: interference with liberty and a beneficent intention towards those whose liberty is interfered with...
approach carried with it obvious benefits for workers and their families, but also drew criticism for limiting the free movement and organization of labor.
Listing on the Dow Jones Index and merger with U. S. Steel
Dow Jones Industrial Average
The Dow Jones Industrial Average , also called the Industrial Average, the Dow Jones, the Dow 30, or simply the Dow, is a stock market index, and one of several indices created by Wall Street Journal editor and Dow Jones & Company co-founder Charles Dow...
, compiled in May 1896. However, it was not long before TCI was eclipsed by its principle competitor, the United States Steel Corporation, a huge conglomerate formed in 1901 out of the enormous Carnegie
Carnegie Steel Company
Carnegie Steel Company was a steel producing company created by Andrew Carnegie to manage business at his steel mills in the Pittsburgh, Pennsylvania area in the late 19th century.-Creation:...
and Federal steel empires. By the time of the Panic of 1907
Panic of 1907
The Panic of 1907, also known as the 1907 Bankers' Panic, was a financial crisis that occurred in the United States when the New York Stock Exchange fell almost 50% from its peak the previous year. Panic occurred, as this was during a time of economic recession, and there were numerous runs on...
, U. S. Steel felt confident enough to launch a takeover bid of its Southern rival. On the morning of Saturday November 2, banker and tycoon J. P. Morgan, one of the founders of U. S. Steel, convened a meeting in his library and there suggested that U. S. Steel purchase the stock of an insolvent Wall Street brokerage firm, Moore and Schley, which had secured huge loans against 6 million TCI shares. This was not an entirely selfish gesture, as Morgan recognised that the failure of Moore and Schley would send investor confidence in the markets into a nose-dive. E. H. Gary
Elbert Henry Gary
Elbert Henry Gary was an American lawyer, county judge and corporate officer. He was a key founder of U.S. Steel in 1901, bringing together partners J. P. Morgan, Andrew Carnegie, and Charles M. Schwab. The city of Gary, Indiana, a steel town, was named for him when it was founded in 1906...
, president of U. S. Steel, agreed in principle to this transaction, yet argued that without careful political maneuvering the deal would be seen by Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
as an effort to create a monopoly and thereby encounter troublesome federal anti-trust
Sherman Antitrust Act
The Sherman Antitrust Act requires the United States federal government to investigate and pursue trusts, companies, and organizations suspected of violating the Act. It was the first Federal statute to limit cartels and monopolies, and today still forms the basis for most antitrust litigation by...
litigation. Morgan himself had been burnt by crusading Washington trust-busters in 1902 when his Northern Securities Company
Northern Securities Company
The Northern Securities Company was an important United States railroad trust formed in 1902 by E. H. Harriman, James J. Hill, J.P. Morgan, J. D. Rockefeller, and their associates. The company controlled the Northern Pacific Railway, Great Northern Railway, Chicago, Burlington and Quincy Railroad,...
had been forcibly broken up by the government in a landmark test case.
In response to his concerns, Morgan sent Gary on an urgent mission to Washington that Sunday so that the deal might be vetted by President Theodore Roosevelt
Theodore Roosevelt
Theodore "Teddy" Roosevelt was the 26th President of the United States . He is noted for his exuberant personality, range of interests and achievements, and his leadership of the Progressive Movement, as well as his "cowboy" persona and robust masculinity...
himself before the stock exchange opened the next day. Convinced by Gary that U. S. Steel only wished to purchase Moore and Schley's stock in order to inject liquidity into the firm and thereby shore up investor confidence in the wider economy, Roosevelt granted the transaction antitrust immunity in November 1907, a decision for which he was later derided by critics as a hypocrite. Indeed, in 1911 the federal government sought to undo what it perceived to be Roosevelt's mistake and (without success) sued U. S. Steel. In the mean time, Moore and Schley was saved from collapse, the panic soon subsided and U. S. Steel was rewarded with a valuable prize - a controlling stake in TCI. U. S. Steel immediately replaced the Tennessee Coal, Iron and Railroad Company on the Dow Jones Index, where it remained until 1991.
U. S. Steel
Chickasaw, Alabama
Chickasaw is a city in Mobile County, Alabama, United States. As of July 2007, the population was 5,979. It is included in the Mobile metropolitan statistical area.-Geography:Chickasaw is located at . According to the U.S...
, in support of America's sudden entry into World War I
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...
. In 1920 a direct rail line between Fairfield and Birmingport, the new port of Birmingham on the Warrior River was opened. This was followed by the completion of the 'High Ore Line Railroad', which connected the Red Mountain and the Fairfield works; trains literally rolled down the hill from mine to mill. In 1923 a merchant steel mill was completed, followed by the opening of a sheet products mill in 1926.
TCI proved to be so efficient at making cheap steel that a post-merger internal tariff (the 'Pittsburgh Tariff') was levied by U. S. Steel from 1909 on all steel coming out of the Birmingham region. This was an effort to negate the competitive edge of Birmingham steel over U.S. Steel's own Pittsburgh product.
TCI's independence as a separate legal entity from its parent corporation ended in 1952, a century after the founding of the Sewanee Furnace Company, when the it became the Tennessee Coal & Iron Division of U. S. Steel. The memory of the historic importance of TCI was not lost when a short book to celebrate the Tennessee Company's centenary was published by U. S. Steel in 1960: Biography of a Business. Stagnation and decline began in 1962 when a majority of the mines in the Birmingham region were closed as domestic ores and coal were superseded by cheaper foreign products, especially from Venezuela. The 1970s and 80s brought about a downsizing and eventual consolidation of the Fairfield and Ensley works, mirroring the general decline of heavy industry in the USA throughout those decades.
Current operations
Basic oxygen steelmaking
Basic oxygen steelmaking , also known as Linz-Donawitz-Verfahren steelmaking or the oxygen converter process is a method of primary steelmaking in which carbon-rich molten pig iron is made into steel. Blowing oxygen through molten pig iron lowers the carbon content of the alloy and changes it into...
, amongst other various mills and production facilities, the plant produces 2.4 million tons of raw steel per annum and 640,000 tons of seamless tubular and sheet products, mainly for purchase by the booming oil industry in the region.