Tennessee Coal, Iron and Railroad Company
Furnace of the Tennessee Coal, Iron, and Railroad Company, Ensley, Alabama, 1906.
Former Type	Corporation
Fate	Became division of US Steel Corp.
Successor	Tennessee Coal & Iron Division: United States Steel Corporation
Founded	1852
Defunct	1952
Location	Headquartered Birmingham, AL, operations in Tennessee and Alabama
Industry	Steel Milling Coal and Iron Mining
Products	Steels Integrated Steel Products Rail Transport Real Estate
Former Parent	United States Steel Corporation (From 1907)

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. It was headquartered in Birmingham, Alabama. With a sizable real estate portfolio, it owned the Birmingham satellite towns of Ensley and Fairfield, where it located two large steel milling plants. At one time the second largest steel producer in the USA in terms of assets and output, the company merged with the United States Steel Corporation in 1907, from then onwards operating as a subsidiary of U.S. Steel until it became one of its divisions in 1952.

History

Early history

Tennessee Coal, Iron and Railroad was founded as the Sewanee Furnace Company,^[1] a small mining concern established in 1852 by Nashville entrepreneurs^[1] 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,^[1] but the outbreak of the Civil War the following year and the severing of ties between North and South saw the fleeting company repossessed by local creditors. It became Tennessee's leading coal extractor over the next decade,^[1] mining and transporting coal around the towns of Cowan and Tracy City in the Cumberland Mountains, TN,^[2] and soon branched out into coke manufacture.^[1] 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 mines that their tracks served, railroad companies could undercut rivals with low transportation costs (it is worth noting that it was through this method that the hugely successful Standard Oil Trust gained a near-monopoly in the petroleum industry in the late 19th century, though Rockefeller never owned the rails, he merely extracted concessions from their owners). 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.^[1] The business was subsequently renamed the Tennessee Coal, Iron, and Railroad Company. TCI never again changed its name, despite a later expansion into the Birmingham region of Alabama following the 1886 purchase of the Pratt Coal and Iron Company. Such was the industrial importance of Alabama to TCI that in 1895, in recognition of the ascendancy of the region over Tennessee, the company relocated its offices to Birmingham,^[2] relegating its native state to relative obscurity.

Mines of Pratt Co., TCI's first purchase in Alabama and the catalyst for its ultimate relocation there

Canny investments and purchases of competitors in 1888 and 1892 saw the firm rapidly grow. The corporation was for several decades one of the few major successful heavy industries based in the largely agricultural and textile-dependent postbellum Southern United States,^[3] by a wide margin the largest blast furnace operator in the South and at one time the second largest steel producer in the continent,^[3][2] with 17 blast furnaces, 3256 beehive and 120 Solvay coke ovens, 15 red ore mines (in the Birmingham District - by 1899 the company had successfully researched how to effectively utilize the high-phosphorous Birmingham district ore)^[2] and a network of railroads on its 1900 asset sheet (although following the panic of 1893 the company moved out of railroads and into steel)^[1]. The TCI's largest industrial plant was located in Ensley, a company town founded in 1886 on the outskirts of Birmingham, Alabama, by Memphis entrepreneur and first president of Tennessee Coal, Iron and Rail, Enoch Ensley. Ensley (map of) was served by the company's railroads (TCI had just purchased the sizable Birmingham Southern Railroad) and contained four 200-ton blast furnaces, the largest such cluster in the world upon its opening in 1889.^[4] In 1906 two more furnaces were constructed and a record 40,000 tonnes of steel were produced that year,^[4] feeding Ensley's integrated rail, wire and plate mills. The company was fiercely competitive with the larger Pittsburgh steel companies to the north, owing to the remarkable fact that all the natural resources required to produce steel (namely coke and iron ore) were located in abundance within a relatively small radius of the Birmingham mills.^[5]

Listing on the Dow Jones Index and merger with US Steel

1899 Certificate for 100 Shares in TCI issued to FW Gilley Jr. & Co.

The Tennessee Company's status was bolstered when it was listed on the first Dow Jones Industrial Index,^[6] compiled in 1896. The sheer size of TCI, as well as its privileged position on the exclusive Industrial Average, attracted the attention of banker and tycoon J.P. Morgan and his recently formed conglomerate, the United States Steel Corporation, the USA's leading steel producer and the successor to the enormous Carnegie and Federal steel empires. Morgan made his move in a unique power play by exploiting a sudden financial panic in 1907, a period of intense financial turmoil which saw numerous runs on banks, an economic recession and a halving of the value of the stock market from its 1906 peak.^[7]

During the height of the crisis, concern arose regarding a wealthy Wall Street investment banking firm, Moore and Schley. The company was heavily involved in a large speculative pool operation in Tennessee Coal, Iron and Railroad, and had secured huge loans from the major Wall Street banks against 6 million TCI shares.^[8] As the nervous banks began to call these loans in, the firm found that the tumbling price of their shares had made them insolvent.^[9] Morgan recognized that if Moore and Schley failed and confidence in the nation's economy took a further dive, the consequences would be catastrophic. Morgan resolved to aid the company and hastily requested that U.S. Steel purchase Moore's $30 million worth of Tennessee Company stock.^[8] Besides, TCI was U.S. Steel's largest competitor^[10] and controlled lucrative coal and ore deposits, and so its sale to U.S. Steel would be to Morgan's personal advantage.E. H. Gary, president of U.S. Steel, agreed in principle to the acquisition, yet argued that without careful political maneuvering, the deal would encounter troublesome federal anti-trust litigation.^[8] His corporation dominated the American steel industry at the time, regardless of any further expansion, and had always maneuvered with care to avoid the Sherman Anti-Trust Act. Morgan himself knew all too well the power of the act - one of his earlier combinations, the Northern Securities Company, had met its fate at its hands in a landmark test case.^[10] In response to his concerns, Morgan sent Gary to negotiate the deal with President Theodore Roosevelt himself,^[8] encouraging his colleague to lie extensively about the nature of the merger^[10] (which he euphemistically called a 'public service')^[2] in order to allay the fears of the president, a notorious 'trust buster'. Roosevelt was convinced to grant the transaction antitrust immunity, a decision which later attracted extreme concern and saw Roosevelt heavily criticized for.^[9] Indeed, in 1911 the federal government sought to undo what it perceived to be Roosevelt's mistake and (without success) attempted break U.S. Steel up. In the mean time, Moore and Schley was saved from collapse, the panic immediately subsided^[8] and Morgan was rewarded with a valuable prize - a controlling majority in TCI. U.S. Steel immediately replaced Tennessee Coal, Iron and Rail on the Dow Jones Index, where it remained until 1991.^[11]

As a subsidiary of U.S.S. Corp.

Ensley iron furnaces, 1908

TCI was not fully incorporated into the U.S.S Corp., and continued to operate as an extremely profitable^[10] 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,^[2] 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. Notable developments included^[2] the completion of several rolling mills in 1917, producing ship materials for nearby shipbuilding plants in Chickasaw, Alabama, in support of America's sudden entry into WWI. 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', connecting the Red Mountain (aptly named for its rust-stained facade and rich seams of hematite iron ore) and the Fairfield works. Trains literally rolled down hill from mine to mill. In 1923 a merchant steel mill was completed, followed by the opening of a sheet products mill in 1926.

Whilst the new plant was located sufficiently close to Ensley not to necessitate workers from the old town having to relocate, the shift of capital from Ensley to Fairfield stifled the town's development and led to somewhat of a stagnation.^[4] Fairfield on the other hand enjoyed frantic population growth and development, with new schools, shops and churches being regularly constructed by the company in line with the scores of new mills and production facilities being opened in the plant.

TCI proved to be so efficient at milling cheap steel that a post-merger internal tariff (the 'Pittsburgh Tariff') was levied by U.S. Steel in 1909 against all steel coming out of the Birmingham region.^[5] The charge was implemented to negate the competitive edge of Birmingham steel over U.S. Steel's own Pittsburgh product, but intentionally or not the move destroyed a serious competitive advantage that the company held over the overall steel market.

As Tennessee Coal & Iron Division: United States Steel Corporation

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.^[2] The memory of the historic importance of TCI was not lost when, in 1960, a short book to celebrate the Tennessee Company's centenary was published by U.S.S. Corp.: Biography of a Business.^[2] Decline began in 1962 when a majority of the mines in the Birmingham region were closed^[2] as cheap Venezuelan ores and foreign coal began to be favored by the steel business. The 1970s and 80s brought about a downsizing and eventual consolidation of the Fairfield and Ensley works,^[2] mirroring the general decline of heavy industry in the USA throughout those decades.

Current operations

Three furnaces of the Fairfield Plant since superseded by the currently-used No. 8 Furnace. Photo of unknown early date

The last relic of the Tennessee Coal, Iron and Railroad Company, the Fairfield Plant, continues to be operated by U.S. Steel to this day (April 2008) as one of its five integrated steel mills in the United States. It is the largest steel-making plant in Alabama,^[12] employing 2000^[13] workers as of September 2006, down from a peak of 45000 during WWII. With a single blast furnace and three basic oxygen process furnaces,^[14] amongst other various mills and production facilities, the plant produces 2.4 million tonnes of raw steel per annum^[14] (compare to the 1906 yield of 40,000 tonnes) and 640,000 tonnes of seamless tubular and sheet products, mainly for purchase by the oil industry in the region.^[14]

References

Further Reading

• http://www.bhamrails.info Birmingham Rails: Yesterday and Today
• Brogan, Hugh (1999). The Penguin History of the USA. Penguin. ISBN 13 978-0-140-25255-2. 
• (1960) Biography of a Business. United States Steel Corporation. ISBN B000R2Q8CU.