Philadelphia and Reading Coal and Iron Company

The Philadelphia and Reading Coal and Iron Company, a subsidiary of the Philadelphia and Reading Rail Road, was founded in 1871 to allow its parent corporation to control the transportation of anthracite coal mined in eastern Pennsylvania. The coal company operated mines and coal processing plants, and the finished product was shipped via the railroad's lines. The Philadelphia and Reading Iron and Coal Company became a separate corporation in 1923 after the U.S. government initiated an anti-trust lawsuit against its parent company.

From the description of Philadelphia and Reading Coal and Iron Company Photograph albums, ca. 1930. (Harvard Business School). WorldCat record id: 52625051

The Philadelphia and Reading Coal and Iron Company was the country's largest producer of anthracite coal from 1871 through the 1920s. At one time it controlled over 40 per cent of the country's anthracite reserves.

Prior to 1870, the Philadelphia and Reading Railroad Company simply transported coal mined by independent operators in the Schuylkill and Mahanoy Coal Fields. Rival coal-hauling railroads in the Wyoming or Northern Field had the power to own and operate their own mines, and this, combined with superior management, enabled them to outperform the Reading. When Franklin B. Gowen became president of the Reading in 1869, he soon resolved to secure firmer control over coal tonnage by purchasing the mines.

The existing operators in Schuylkill County strongly opposed the creation of a giant competitor in their midst, and it was necessary to use subterfuge (with allegations of bribery) to secure a charter from the legislature. The Laurel Run Improvement Company was incorporated on May 18, 1871, with very broad powers. The Reading purchased its entire capital stock and changed its name to the Philadelphia and Reading Coal and Iron Company in December 1871. Gowen proceeded to buy coal lands indiscriminately and with few qualms about price. He succeeded in acquiring about 100,000 acres but at grossly inflated prices at the peak of a speculative boom and with no thought as to whether the reserves could be economically recovered. The debts incurred in this process bankrupted the Reading in 1880, 1884 and 1893. The final reorganization of 1896 scaled back some of the debt and vested control of both the railroad and the Coal and Iron Company in a new holding company, the Reading Company.

Gowen also involved the company in the mining of iron ore and the manufacture of iron. The Coal and Iron Company acquried the railroad's rail-rolling mill at Reading and maintained a central foundry and repair shop at Pottsville. However, most of the iron properties purchased (small mines and furnaces) were also non-competitive. Some were sold and the remainder transferred to the subsidiary Reading Iron Company in 1889.

The Reading's control of such a large share of the country's anthracite reserves and the cartels formed by the anthracite railroads were an early target for federal antitrust actions. Proceedings were initiated under the Sherman Act in 1913, and segregation of the two companies was finally ordered by the Supreme Court on April 26, 1920. The divestiture plan was accepted on June 28, 1923, and implemented at the end of the year. The Reading Company sold all its interest in the Coal and Iron Company to a new holding company, the Philadelphia and Reading Coal and Iron Corporation, incorporated on December 19, 1923.

The anthracite industry began to decline in the 1920s under increasing competition from oil and natural gas. The Coal and Iron Company filed for bankruptcy on February 26, 1937. A number of the less productive mines and properties were sold during 1938-39, and the Pottsville Shops were closed in 1939. Most of the property of the Reading Iron Company was sold off between 1938 and 1940. The holding corporation was dissolved on April 1, 1941, and the company's reorganization plan was approved by the courts on July 10, 1944. The Coal and Iron Company was reincorporated on January 1, 1945, at which time the Reading Iron Company was absorbed by merger.

The anthracite industry completely collapsed in the mid-1950s, and the firm reorganized to shift its assets out of the coal business. It was renamed the Philadelphia and Reading Corporation on September 1, 1955, at which time it purchased the Union Underwear Company, makers of the famous "union suit." On January 1, 1956, the coal properties and operations were transferred to a new subsidiary, the Reading Anthracite Company. The Philadelphia and Reading Corporation was reincorporated in New York in March 1960, and the old Pennsylvania corporation was dissolved. The New York corporation continued as a diversified holding company. Reading Anthracite was sold to local owners in February 1961 and remains in business as of 1991.

From the description of Records, 1873-1938. (Hagley Museum & Library). WorldCat record id: 86119127