In 1906, Peter Blume and his family emigrated from Russia to New York City. As a teenager he studied art at the Educational Alliance and at the Art Students League in New York. By age nineteen his work was being shown by Charles Daniel, one of the few art dealers handling modern art at that time. During the 1930s and 1940s the popularity of Blume's dreamlike paintings, filled with obsessive detail, made him one of America's best-known artists.

"South of Scranton" gathers scenes that the artist encountered during an extended car trip in spring 1930. Beginning in March, Blume drove through the coal fields of Scranton, Pennsylvania, in his Model T Ford, then headed south toward the steel mills of Bethlehem. The industrial machinery, coal piles, deep quarries, and smoking locomotive at the left side of the painting represent these locales. Blume then traveled to Charleston, South Carolina, where he remained for several weeks. The unexpected sight of three men in gym shorts performing acrobatic feats aboard the deck of a ship was also based on an actual incident. The men were sailors in the navy on the German cruiser "Emden" that had pulled into Charleston harbor during Blume's visit.

By the time Blume started home to Connecticut in June, he had made five preparatory drawings for this large painting which was completed in October 1931. The artist stated: "As I tried to weld my impressions into the picture, they lost all their logical connections. I moved Scranton into Charleston, and Bethlehem into Scranton, as people do in a dream. The German sailors appeared to lose the purpose of exercising and became, in a sense, like birds soaring through space."

In 1934 "South of Scranton" was included in the Thirty-second Carnegie International exhibition in Pittsburgh. The twenty-seven-year-old artist was thrust into national attention when the painting was awarded first prize by a distinguished panel of judges: Elizabeth Luther Cary of the "New York Times," the American artist Gifford Beal, and Alfred H. Barr, Jr., director of the Museum of Modern Art. Public outcry at the Surrealist nature of the painting, however, prevented the Carnegie Institute from purchasing it for their collection. In 1942 it was acquired by The Metropolitan Museum of Art after it won a prize in the major exhibition "Artists for Victory."