by Burt Folsom
In light of these disorderly influences, it is startling to discover that, before 1851, Carbondale had no fire or police department. In that year, after an unusually severe fire "laid waste to the greater portion of the city above the public square," Carbondale's shortsighted leaders finally decided to get some "means of protection against fire or outlaws." The dedication of Carbondale's new civil servants seems to have been slim because another fire soon ravaged the city, this time "entailing a considerable loss" to William Richmond's coal-car factory and George L. Dickson's mercantile firm, among other damage. This new city government apparently made no provision for sanitation; as one resident complained in 1875, "Another inconvenience is that citizens have no convenient place to dump their coal ashes, or empty. . .rubbish." Such a perilous environment prevented a stable business climate and may have helped push Richmond, Dickson, and other entrepreneurs out of Carbondale and into Scranton.28
All of this creates the impression that, once the iron works and the railroad were established, and once the city of Scranton was incorporated, the Scranton group had it made. But this was not the case; in fact, most of the Scranton group did not die rich, and two died very poor. William Henry, the original leader of the group, left the city in the 1840s after some bad investments. Henry had energy and vision but little patience and endurance; he died embittered and impoverished in 1878. Sanford Grant, the first owner of the company store, wilted when faced with business competition and industrial risk. Selling his stock, he left for safer business climes in Belvidere, New Jersey, where he lived, without ulcers or wealth, until his death in the 1880s. Displaying greater fortitude than Grant, Selden Scranton became the first president of the Lackawanna Company; five years later, though, he and his brother Charles left to operate a blast furnace in Oxford, New Jersey. Their iron-making talents ultimately failed them; Selden declared bankruptcy in 1884 and died shortly thereafter. George Scranton, the early leader and driving force behind coal and railroad development, had more faith and perseverance than most of the others. He amassed $200,000, built a fine mansion, and served as U.S. Congressman from northeast Pennsylvania. George, however, still lost some of his fortune during the Panic of 1857 and had to sell much of his stock in the Lackawanna Railroad at reduced value. Plagued with health problems from overwork during the rugged days of the 1840s, George died in 1861 at age forty-nine.29
Three other members of the Scranton group never abandoned their vision of manufacturing rails and building a city; they achieved fabulous success and wealth. On top was Joseph Scranton, who said at the start, "I have no fears of the ultimate success [of the iron works],. . .1 have invested in it. Should remain till it is doubled or lost as the case may be." Twenty-seven years later, Scranton was president of the flourishing Lackawanna Iron and Coal Company and was worth $1,100,000, making him the wealthiest man in northeast Pennsylvania. His brother-in-law and next-door neighbor, Joseph C. Platt, was superintendent of the Lackawanna Company and was worth $220,000. Right behind Joseph Scranton with $910,000 was his friend James Blair, who had backed the Scrantons from nails to rails. Blair held lots of stock in both the iron works and the railroad; he then expanded and started Scranton's first trolley company.30
Some people point to such wealth, and the absence of it in other households, and argue that the state should redistribute it, or at least tax it at high rates. It hardly seems fair, they might say, that some people should have so little, while three men—Joseph Scranton, Joseph Platt, and James Blair—should own close to ten percent of all the wealth in the city (according to the data in the 1870 federal manuscript census). As socialist Harold Laski once said, "Less government. . .means liberty only for those who control the sources of economic power." What we need, according to this view, is an active state to transfer income, chop up inheritances, perhaps even to impose equality of condition.
To argue this way is to miss a key point: Scranton's founders, as entrepreneurs, created something out of nothing. They created their assets and created opportunities for others when they successfully bore the risks of making America's first iron rails. Without them, almost everybody else in the region would have been poorer. The amount of wealth in a region (or a country) is not fixed; in 1870, Scranton, Platt, and Blair got the biggest piece of the economic pie, but it was the biggest piece of a much larger pie—made so by what they cooked up when they came to Pennsylvania thirty years earlier.
When the Scrantons came to the Lackawanna Valley, it was a poor farming region with no close ties to outside markets. In 1850, according to the federal manuscript census, no one in the Lackawanna Valley was worth more than $10,000. In 1870, after the Scrantons had established their city and their iron works, thirty-three families in Scranton alone were worth at least $100,000; and one was already a millionaire. Thousands of other families were working their way toward better lives. The Scrantons' iron works and railroad were the means to this end.31
Some people look at the results of splendid entrepreneurship and say that someone else might have come along later and done the same thing. We can see how improbable this is in the Scranton case. The wealthy leaders in the older, more prosperous city of Wilkes-Barre, for example, shunned manufacturing for years and often tried to thwart the Scranton's plans. If the Scrantons had not come along, much of the iron ore in central Pennsylvania and New Jersey would probably have been exported to Philadelphia, Pittsburgh, or New York, where more abundant capital would have eventually taken the risks of making manufactured goods. Northeast Pennsylvania would have been left in the dark.32
To be sure, the anthracite in the Lackawanna Valley was already attracting New York investors: but they came only to get coal, not to build cities and make the region prosper. Without dedicated local entrepreneurs, the Lackawanna Valley, like so many mining regions, would have enjoyed only fleeting and limited prosperity. The entrepreneurs in New York would have bought the coal land cheap, then supplied transportation to the region, collected their profits, and left the exporting area full of deserted mines and ghost towns.33
Let's look at the different opportunities the Scrantons, as entrepreneurs, created intentionally and unintentionally for others. First, the people in northeast Pennsylvania, especially those with capital to invest, now had new and better opportunities available. Scranton, in fact, became a magnet for entrepreneurs in nearby towns, except for Wilkes-Barre. Investors in the nearby county seats of Montrose and Towanda came to Scranton and set up the city's first two banks. From nearby Honesdale came Scranton's first large-scale flour miller. From Carbondale came the presidents of both of that city's banks, a locomotive builder, a stove maker, a coal operator, and the mayor. Not all of these men won fortunes, but several did, and their investments helped diversify Scranton's economy and made it one of the fastest growing cities in America in the late 1800s.34
Another group of winners were the many local farmers who held on to their land and sold it later as coal land. All they had to do was watch others do the work of establishing the region's export. After this, they cashed in. The Scrantons bore the risks of making rails from imported ore; then they risked building a railroad to connect the Lackawanna Valley to New York City. All the farmers had to do was hold on to their land and watch it rise in value—from $15 an acre in 1840 to $800 an acre in 1857. In just seventeen years, then, a 160-acre farm increased in worth from $2,400 to $128,000. Some of these locals even ended up richer than the wealthiest of the Scran-tons. Benjamin Throop, for example, was a local physician who watched the Scrantons build their iron works; then he bought up much of the land in the area on the chance that they would succeed. He later wrote a book describing his real estate exploits and expressing his gratitude to the Scrantons. He even named his only son after George Scranton. When Throop died in 1897, at age 86, he left an estate of $10,000,000.35
Even immigrants could sometimes get rich in Scranton. The growth of Scranton from farming hamlet in 1840 to 45,000 people in 1880 brought thousands of immigrants to town. Many of them w
orked in the factories and improved their lives; they saved a little money and bought their own homes. Some of them had the talent and vision to rise to the top. In 1880, of Scranton's forty most prominent businessmen, measured by memberships on boards of directors, nine of them were immigrants. Some of these rags to riches immigrants were clearly among the most successful men in Scranton. Thomas Dickson, for example, came to America from Scotland and began work as a mule driver. Soon he was making engines, boilers, and locomotives for the Scrantons; he ended up as president of the Delaware and Hudson Railroad, a 500-mile line that linked Scranton to markets all over the east. Another immigrant, John Jermyn, came to Scranton in 1847 from England and began working for the Scrantons for 75 cents a day. Soon he was managing coal mines and was putting what little money he earned into coal land and real estate with a knack that amazed everyone. The critical risk in his career came in 1862, when he leased some abandoned mines northeast of Scranton. Defying the skeptics, Jermyn bought new machines and fulfilled a contract for one million tons of coal. He then tripled his contract and was on his way to becoming the largest independent coal operator in the Lackawanna Valley. A local credit agent said that Jermyn was "believed to be unaffected by the times, holding his own versus all contingencies." When he died in 1902, Jermyn left an estate of $7,000,000.36
Because the Scrantons did what they did, thousands of Americans had new opportunities in life. If they could just capture the Scrantons' vision, they had a chance to succeed. One life that was made anew was that of Joseph J. Albright, the uncle of Selden Scranton. Albright was in business near Nazareth, Pennsylvania, and went bankrupt in 1850, when he was nearly forty years old. He had to sell all his furniture at a sheriff's sale and deal with creditors from two states. He wrote Selden that "it is hard at my age to be thrown upon the world pennyless [sic]," and hoped that Selden's wife "wouldn't be ashamed of her poor friend." He even seems to have contemplated suicide and wrote that "death would have been a relief" to him.37
The Scranton group came to Albright's rescue and gave him a job as coal agent for their railroad. Soon Albright caught the Scrantons' vision. He was patient and invested wisely: he bought stock in the Scrantons' iron and coal company; he then joined them in building the city's gas and water system. On his own, he invested in a company to mill flour and in a firm to make locomotives. By 1872, he was worth half a million dollars and was elected president of the largest bank in the city. He had become a believer in Scranton and wanted to help the city that had given him a chance; when he died, he deeded his home to the city and gave $125,000 to build a major public library to help educate future generations in Scranton.38
Not everyone joined the Scranton team. Albright did, but another relative, Phillip Walter, also of Nazareth, resisted an elaborate courtship from the Scrantons in 1852. He told them he was reluctant "to pull [up] stakes and move" from "my long cherished home" because "I might fail." After a visit to Scranton, in which Walter sold hundreds of dollars worth of merchandise to an expanding population, he confessed that "I was quite enchanted with your place and the great, though undeserved, esteem in which I was held by many of the inhabitants." Walter also admitted, "I certainly could not find a place anywhere where I would rather go than to Scranton." He further acknowledged, "My sons. . .would likely find openings for business in such a thriving place as Scranton appears to be and will yet become." Other men of means saw these advantages and settled in Scranton. But Walter avoided getting "carried away by the admiration of your thriving place" by his reluctance to uproot and his haunting fear that "still I might fail." Winnowing out the conservative and the weak at heart, Scranton seems to have attracted a select set of venturesome leaders to guide its industrial growth.39
In building their city, the Scrantons consciously promoted entrepreneur ship. The securing of wide city limits was part of this effort. They believed their city would grow, and they diligently planned its expansion. Along these lines, the Scrantons and their allies established a board of trade in 1867 to promote the industrial development of their city. They installed an innovative Welsh immigrant as the board's first president. The board actively recruited industry and even secured a law granting all new corporations tax-free status for their first ten years in Scranton.40
In this open environment, Scranton grew as a manufacturing center and attracted many capitalists who were willing to take different types of risks. This made for a combination of inventiveness and creative entrepreneurship. For example, Henry Boies came to Scranton from New York in 1865 and founded the successful Moosic Powder Company; then he perfected a gunpowder cartridge that reduced the death and injury resulting from carelessness in mining explosions. Boies seemed to court risky ventures and had failed twice before coming to Scranton. Once he had made his fortune in powder, the credit lines were open, and he went to work inventing a flexible steel wheel for locomotives. He started the Boies Steel Wheel Company in 1888 to manufacture his patented invention.41
Another innovation that succeeded in Scranton was Charles S. Woolworth's five-and-ten-cent store. Born in upstate New York, Woolworth, his brother Frank, and partner, Fred M. Kirby, experimented in the late 1870s with the opening of specialty stores featuring largely five-and-ten-cent merchandise. Shoppers were often skeptical of the first stores opened in Harrisburg, Lancaster, and York, Pennsylvania. In 1880, however, when Charles Woolworth set up a five-and-ten-cent store in Scranton, the idea caught on. The sales in Scranton were a modest $9,000 the first year, but the Woolworths and Kirby had laid the foundation for an empire, and Charles had found himself a new home in Scranton. A decade of brisk sales in Scranton encouraged Woolworth to start branch stores in New York and Maine in the 1890s. Kirby, meanwhile, started a profitable store in Wilkes-Barre. Soon Woolworths was selling nationally, and became a major American corporation. In Scranton, Woolworth joined with other local entrepreneurs in founding the International Textbook Company, which employed thousands of people to sell textbooks throughout the nation.42
The introduction of electricity in the 1880s brought out the best in Scranton's entrepreneurs. They didn't produce Thomas Edison; but they did have Merle J. Wightman, who designed and built one of the first motors to run trolley cars by electricity. Scranton also became one of the first cities in the nation to have an electric trolley system. Sensing opportunity, Wightman started his own company in Scranton to manufacture trolley engines on a large scale. Other Scrantonians tried to adapt electricity to coal mining. In 1894, they founded the Scranton Electric Construction Company, which perfected and manufactured electrical apparatus (e. g., mechanical drills, locomotive hoists, and mining pumps) for use throughout the anthracite coal fields.43
Scranton did not emerge inevitably as a center for manufacturing trolley motors, locomotive wheels, or textbooks. Nor was there any particular reason why Scranton should have become a major headquarters for directing a chain of five-and-ten-cent stores. Other cities throughout America had good enough location and transportation to have been sites for these industries. Even the making and distributing of electrical mining equipment could have been done in Wilkes-Barre or in anthracite towns other than Scranton. A key to Scranton's success seems to have been the presence of aggressive entrepreneurs, who had a philosophy of openness and commitment to growth. As the spiral of growth in industries, services, and population persisted, the city of Scranton, which was founded on a hunch, officially became one of the forty largest cities in the country in 1900.44
A lot can be learned from the story of the Scrantons. The first lesson is that entrepreneurs are needed to create wealth; when they
succeed, others then have the chance to build on what they started. If we look at the later history of Scranton, we can also learn a second lesson: that it is hard for those on top to stay there in the generations that follow. An inheritance can be transferred; but entrepreneurship, talent, and vision cannot be. The industrial city of Scranton saw lots of movement down the ladder of social mobility, as well as up.
This can be seen if we look at what happened to the Scranton economic elite of 1880—those men who made up the first generation of the city's industrial leadership. I collected data on the forty men in Scranton who, by 1880, held the largest number of corporate directorships and major partnerships. These forty men dominated all of Scranton's major industries. Several were millionaires; and all had access to credit and contracts, which seemingly should have insured the success of their children in Scranton, which spiralled in population from 45,000 in 1880 to 137,000 in 1920.45
As founders and developers of the Scrantons' vision, these forty entrepreneurs had much to give their children. Blessed by the luck of the draw, these fortunate offspring could choose almost any career, with the security that only wealth can bring. Raised in Victorian mansions rife with servants, they often had doting parents to give them private-school education, college if they wanted, or specialized training in engineering or industry. If these children did not prosper, they could fall back on hefty inheritances. Also, as they matured, they could take advantage of Scranton's thriving marketplace to make even more money. By 1920, the sons of Scranton's 1880 leaders had ample opportunity to succeed their fathers as the pacesetters of Scranton's business world.46
Yet they did not. Few went hungry, but most could not come close to matching their father's achievements. Only nine of the forty economic leaders in 1880 had even one son, son-in-law, or grandson who forty years later was an officer of even one corporation in Scranton. In short, the fathers and sons provide a stunning contrast.47
The fathers built the city of Scranton, but why the sons did so poorly is complicated. Part of the reason for this startling breakdown lies in the general problem of family continuity. Six families didn't have any sons; seven others had too many—which splintered the family wealth into small pieces. In a very few cases, some sons left Scranton for business ventures elsewhere. Often the sons chose not to go into business: they led lives of brief and precarious leisure.