Two Companies, One Empire

The Scrantons built their fortune on iron, but coal made the fortune last. When the DL&W Railroad organized its Coal Department in 1851, the same year the first section of track opened from Scranton to Great Bend, the railroad entered the mining business directly. The Lackawanna Iron and Coal Company dug anthracite to fuel its own blast furnaces. The DL&W Coal Department dug anthracite for commercial sale. Both enterprises answered to the same controlling interests: the Scranton family and, after 1857, the New York banker Moses Taylor.

This dual structure gave the Scranton empire a competitive advantage that few rivals could match. The iron company consumed coal; the railroad sold it. The railroad carried the iron company’s product to market; the iron company generated freight for the railroad. Ownership of mines meant the DL&W profited as both producer and transporter, collecting revenue at every step from mineshaft to tidewater.

Opening the Route to Market

Coal was worthless without a way to move it. George W. Scranton understood this as well as anyone. He had surveyed and built the predecessor lines that became the DL&W precisely because his iron works needed access to customers in New York and beyond. When the railroad consolidated in 1853, it inherited both a transportation network and a growing mining operation.

That first year, the DL&W shipped roughly 97,000 tons of anthracite. The tonnage was modest compared to what competitors like the Delaware and Hudson Canal Company already moved, but the trajectory was steep. Completion of the southern division on May 27, 1856, connected Scranton to the Delaware River, where coal transferred to the Central Railroad of New Jersey for the final leg to New York. The full route gave the DL&W a continuous corridor from the mines of the Lackawanna Valley to the largest fuel market in the country.

Taylor’s Consolidation

The Panic of 1857 nearly destroyed both companies. Moses Taylor, president of the National City Bank of New York, saw the crisis differently. He purchased DL&W shares at $5 apiece. Within seven years, those shares were worth $240 each. By the end of the Civil War, Taylor held 20,000 shares of DL&W stock and controlled both the railroad and the Lackawanna Iron and Coal Company.

Taylor’s consolidation transformed the coal business. Under his direction, the DL&W aggressively expanded its land holdings. In April 1864, the railroad acquired the Nanticoke Coal & Iron Company and its 5,000 acres of coal lands. Four years later, in June 1868, Nanticoke absorbed the Steuben Coal Company and the Granby Coal Company, further concentrating production under one roof.

Coal land prices told the story of the region’s transformation. An acre of coal land that sold for $15 in 1840 commanded $800 by 1857. The men who had bought early, Taylor chief among them, controlled the resource that heated American cities and powered American industry.

Wartime Demand

The Civil War turned the Lackawanna Valley’s coal into a strategic resource. Anthracite fueled Union Navy steamships and fed the blast furnaces that produced iron for cannons, rails, and machinery. The real price of anthracite rose 30 percent between 1860 and 1863, then climbed to 45 percent above 1860 levels by 1864.

The DL&W’s integrated model paid off during these years. While independent coal operators scrambled to find railcars and negotiate shipping rates, the DL&W mined its own coal, loaded it onto its own cars, and hauled it over its own tracks. The iron company, meanwhile, had reached the largest iron production capacity in the United States by 1865, consuming coal from mines that shared the same corporate parentage.

George W. Scranton did not live to see this peak. He died on March 24, 1861, at age 49, just as the war that would enrich his companies was beginning. His cousin Joseph Hand Scranton took over the iron company. The railroad and its Coal Department continued under separate management, but Taylor’s financial control kept the enterprises aligned.

New Leadership for the Coal Department

The mid-1860s brought a turnover in the men who ran the DL&W’s coal operations. Joseph Albright, the railroad’s first General Coal Agent, departed in 1866 to join the Delaware and Hudson Canal Company. William Read Storrs replaced him and would manage the Coal Department for the next 33 years.

Samuel Sloan became DL&W president in 1867, bringing a conservative management style that prioritized steady dividends over speculative expansion. Under Sloan and Storrs, the Coal Department operated as a disciplined business. Production climbed without the reckless borrowing that sank other anthracite operators.

The same year, Joseph Hand Scranton’s son William Walker Scranton, just 23 years old, became superintendent of the Lackawanna Iron and Coal Company. The younger generation was taking the reins across both enterprises.

Two Million Tons

By 1868, the DL&W’s cumulative coal output crossed two million tons. In that single year alone, the railroad carried 1,728,785 tons of anthracite over its lines. The figure placed the DL&W among the region’s largest producers, though the Delaware and Hudson Canal Company transported nearly two million tons over its own route in 1868 alone.

The DL&W ranked fourth or fifth among anthracite producers in the 1870s. But the growth curve was accelerating. Annual tonnage reached 2.5 million by 1870. By the late 1880s and 1890s, the railroad’s Coal Department shipped between 6 and 6.7 million tons per year. The company would climb to the second-ranked anthracite producer by 1907.

On December 10, 1868, the DL&W leased the Morris & Essex Railroad, gaining direct access to New York Harbor. The lease eliminated the transfer at the Delaware River and gave the railroad an unbroken line from the coal fields to tidewater. Anthracite could now move from a Lackawanna Valley mine to a New York dock without leaving DL&W control.

The Price of Coal

The two million ton milestone measured more than tonnage. It measured the reach of an industrial system that the Scranton family and Moses Taylor had assembled piece by piece over three decades. They built the furnaces, laid the railroad, sank the mines, and bought the land. Each element fed the others.

Joseph Hand Scranton’s personal wealth reached $1.1 million by 1870, and his fortune was far from the largest in the empire. Taylor, who had purchased his controlling stakes during the Panic of 1857, held investments in both companies worth many times that figure. When Taylor died in 1882, he left $250,000 to build a hospital in Scranton for the workers of his iron and coal enterprises.

The coal kept flowing long after the men who built the system were gone. The two million tons that had seemed like a milestone in 1868 amounted to less than a third of what the DL&W would ship in a single year by the 1890s.