''We will build the plant,'' Director Elisha P. Wilbur told Fritz, who then sailed to Europe to study the technology and secure the patent rights. Fritz also got the go-ahead to build an open-hearth plant, another component Bethlehem needed to accommodate the Navy.
An open-hearth furnace looked like a huge oven, with refractory brick making up the roof and side walls. While fires raged first on one end of the hearth and then on the other, hot air was forced from beneath the furnace, up and through ports at either end, spreading flames across the hearth and above the metal in the ''bath.'' The process burned out the metal's impurities. When workers tapped the furnace, they added the spiegeleisen that made steel in the ladle.
The new technology was better than Bessemer for several reasons. Unlike a Bessemer converter, which fed only on molten iron, open hearths could make steel from cold pig iron and scrap as well, and even from a combination of all three.
Open hearths gave steelmakers the power of precision and the ability to make steel with a wider range of qualities. After charging the furnace, workers could pull out samples at intervals and add ingredients, if necessary, to get the exact chemical properties required for whatever kind of steel they were making. When they tapped the furnace, the steel flowed out through a brick-lined chute into a ladle. Then, as in the Bessemer process, it was poured into iron molds and became solidified as ingots. The ingots were then removed from the molds and reheated so they were malleable enough to be shaped.
The process took much longer than Bessemer eight to 10 hours instead of 20 minutes but closer control meant higher-quality steel with greater strength, which was what the Navy demanded. Another advantage was that an open hearth could produce 20 tons of liquid steel in a ''heat,'' compared to 8 tons in a Bessemer blast.
Armed with the knowledge Fritz gleaned in Steelton and Europe, Bethlehem Iron was ready when the government sought proposals and won a $4 million defense contract in 1887. It spent the next four years building up operations to make gun forgings and armor for the Navy. Designed by Fritz, the heavy-forging plant became America's first.
Meanwhile, South Bethlehem was booming. In 1865, when its residents numbered about 2,000, it was incorporated as a borough, separate from its neighbor across the river, the borough of Bethlehem. By 1890, South Bethlehem's population had rocketed to 10,300.
Real estate speculators, who first came to town when they heard the railroads would go through it, continued to buy property and start businesses in hopes of making lots of money fast, and would do so for decades. Local contractors, employing hundreds of carpenters, were busy building houses for the iron company's workers, who in the mid-1880s numbered more than 3,000. Including their families, about 7,000 people depended on the company.
Bethlehem Iron thrived, becoming the company the U.S. government turned to for propeller shafts, steam engine parts, armor plate, guns and shells.
Though Carnegie Steel Co. began making armor plate after Bethlehem Iron fell behind in its output, Carnegie didn't make guns. On the advice of his top executive, Charles M. Schwab, Carnegie chose not to sink $2 million into a new plant because Schwab didn't think gun-making would be profitable. Besides, Carnegie was a pacifist.
Bethlehem Iron grew into a leader in the heavy forgings market partly because Sayre, Fritz and Fritz's assistant, metallurgist Russell W. Davenport, practiced a sensible business philosophy. They would pay steep prices, if necessary, to import cutting-edge methods and machinery from Europe, then make them better and more cost-effective than what the Europeans had. For example, Bethlehem Iron had a 14,000-ton press, the biggest forging press in the world.
Even the buildings were gigantic. Fritz built No. 2 Machine Shop, which housed lathes and other machine tools, 1,779 feet long, almost a third of a mile. At 300,000 square feet, it was the world's largest machine shop. It would turn out battleship guns 60 to 70 feet long, and on some days, 20 to 30 naval guns. The cavernous shop was still standing at the end of 2003. But its future was in doubt, because a developer seeking to build on the site was considering tearing it down.
In 1891, Bethlehem Iron scored with the Army, getting a $4 million contract to make big guns. It made the armor and cannons for the Navy's first two steel battleships, one of which suffered a fate that propelled America into war with Spain.
''Heard this morning of the blowing up of the U.S. battleship Maine in the harbor of Havana,'' Sayre wrote in his diary for Feb. 16, 1898. ''Great excitement all over the country. Reports that it was done by the Spaniards, but generally thought to be accidental.''
The ships that won the Spanish-American War's battles at Santiago, Cuba, and Manila Bay in the Philippines had Bethlehem armor, Bethlehem engines and propulsion parts, and fired Bethlehem guns and Bethlehem shells.
The company's critical role in the war effort has passed into the realm of myth. According to an often-told tale, when the triumphant American fleet steamed up the Hudson River in August 1898, Sayre stood with President William McKinley on the reviewing platform in New York.
But the truth is that McKinley did not attend the ceremony, and though Sayre did, he was in the crowd, not among the officials on the stand.
Though Bethlehem's forging plant was best known for powering the Navy, it also served other purposes. It developed parts for electric power plants, especially heavy steel rotors to generate electricity, and built the center shaft of the first Ferris wheel, introduced in 1893 at the Columbian Exposition in Chicago.
The workers responsible for this prodigious output were generally treated better than those at plants that were larger and not as specialized, such as Andrew Carnegie's mammoth Homestead Works in Allegheny County.
Forging America: The History of Bethlehem Steel - Chapter 2
Bethlehem Steel Graphic Banner: Chapter 2