Charles M. Schwab
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- For the founder and CEO of the Charles Schwab Corporation brokerage firm, see Charles R. Schwab.
Charles Michael Schwab (February 18, 1862 in Williamsburg, Pennsylvania - October 18, 1939 in London, England) was an American industrialist who became a multimillionaire in the steel industry but died bankrupt.
Schwab was born into a German Catholic family in Williamsburg, Pennsylvania and grew up in Loretto, Pennsylvania, which he would always consider his "home town". He attended Saint Francis College, now Saint Francis University, but left after two years to find work in Pittsburgh.
He started as a stake driver in Andrew Carnegie's steelworks and in 1897 rose to become president of the Carnegie Steel Company at the age of 35. In 1901, he negotiated the secret buyout of Carnegie Steel to a group of New York-based financiers led by J.P. Morgan. After the buyout, Schwab became the first president of the U.S. Steel Corporation, the company formed out of Carnegie's former holdings.
However Schwab found U.S. Steel to be unwieldy and inefficient. After several clashes with Morgan and company executive Elbert Gary, he resigned in 1903. He left the company to run the Bethlehem Steel Company, which under his direction became the largest independent steel producer in the field.
Part of Bethlehem Steel's success was the development of the H-beam, a precursor of today's ubiquitous I-beam. Charlie Schwab was interested in producing such a wideflange steel beam, a risky venture that required capitalization and new plant construction to make an unproven product.
"I've thought the whole thing over," Schwab told his secretary, "and if we are going bust, we will go bust big." It is his most famous remark.
In 1908, Bethlehem Steel began producing the beam, which revolutionized building construction and made possible the age of the skyscraper. Its success helped make Bethlehem Steel the second-largest steel company in the world. Bethlehem, Pennsylvania was incorporated, virtually as a company town, by uniting four previous villages.
In 1910, Schwab broke the Bethlehem Steel strike by calling out the newly-formed Pennsylvania State Police. Schwab kept labor unions out of Bethlehem Steel, which was not organized until 1941, two years after his death.
Schwab eventually moved to New York City, specifically the Upper West Side, which at the time was considered the "wrong" side of Central Park, and where he built "Riverside", the most ambitious private house ever built in New York. The US$7 million 75 room house combined details from three French chateaux on a full city block. After Schwab's death, New York mayor Fiorello La Guardia turned down a proposal to make the mansion the official mayoral residence, considering it to be too grandiose. It was eventually torn down and replaced by a drab apartment block.
He also owned a 44 room summer estate on 1,000 acres (4 km²) in Loretto called "Immergrün" (German for "evergreen"). The house featured opulent gardens and a nine hole golf course. Rather than tear down the existing house, Schwab had the mansion raised on rollers and moved 200 feet to a new location to make room for the new mansion. Schwab's estate sold Immergrün after his death and it is now Mount Assisi Friary on the grounds of Saint Francis University.
Schwab was considered to be a risk taker and was highly controversial. He circumvented American neutrality laws during the early years of World War I by funneling goods through Canada. After America's entry into the war, he was accused of profiteering but was later acquitted. His lucrative contract providing steel to the Trans-Siberian Railroad came after he provided a US$200,000 "gift" to the mistress of the Grand Duke Alexis Aleksandrovich. Thomas Edison once famously called him the "master hustler".
Schwab was notorious for his "fast lane" lifestyle including opulent parties, high stakes gambling, and a string of extramarital affairs producing at least one illegitimate child. He became an international celebrity when he "broke the bank" at Monte Carlo and traveled in a US$100,000 private rail car named "Loretto".[1] Even before the Great Depression, he had already spent most of his fortune estimated at between $25 million and US$40 million. Adjusted for inflation, that equates to between $275 million and US$440 million in modern terms. The affairs and the illegitimate child soured his relationship with his wife.
The stock market crash of 1929 finished off what years of wanton spending had started. He spent his last years in a small apartment. He could no longer afford the taxes on "Riverside" and it was seized by creditors. He had offered to sell the mansion at a huge loss but there were no takers.
At his death ten years later, his holdings in Bethlehem Steel were virtually worthless due to the company's bankruptcy. He was over US$ 300,000 in debt. Had he lived a few more years, he probably would have seen his fortunes restored when Bethlehem Steel was flooded with orders for war material. He was buried in Loretto.
A fine bust-length portrait of Schwab painted in 1903 by the Swiss-born American artist Adolfo Müller-Ury (1862-1947) was formerly in the Jessica Dragonette Collection at the American Heritage Center at the University of Wyoming at Laramie, but has recently been donated to the American National Portrait Gallery in Washington DC. Müller-Ury also painted his nephew as a boy in a sailor-suit around the same date.
He was not related to Charles R. Schwab, founder of the Charles Schwab Corporation. However, according to John Rothchild's The Bear Book - Survive and Profit in Ferocious Markets, this Charles Schwab is the grandfather of Charles R. Schwab the discount broker. [THIS NEEDS TO BE SETTLED]
[edit] References
- Hessen, Robert, Steel titan: the life of Charles M. Schwab, Pittsburgh, Pa.: University of Pittsburgh Press (1990).
- James H. Bridge, The Inside History of the Carnegie Steel Company (1903)
- Ida M. Tarbell, The Life of Elbert H. Gary (1925)
- Arundel Cotter, The Story of Bethlehem Steel (1916) and United States Steel: A Corporation with a Soul (1921)
- Burton J. Hendrick, The Life of Andrew Carnegie (2 vols., 1932; new introduction, 1969)
- Stewart H. Holbrook, Age of the Moguls (1953)
- Joseph Frazier Wall, Andrew Carnegie (1970) and Louis M. Hacker, The World of Andrew Carnegie (1968).
- Burton W. Folsom, Jr., The Myth of the Robber Barons, Young America.
- Hill, Napoleon, Think and Grow Rich (1937)
- John Rothchild, The Bear Book - Survive and Profit in Ferocious Markets (1998). P.250
