Who was Charles M. Schwab?
Charles M. Schwab was a famous American steel magnate and businessman. He headed as the president of Bethlehem Steel, which became the second largest steel maker company in the world and also was one of the biggest heavy manufacturers in the world. He brought revolution to the infrastructure sector by his development of wideflange steel beam for massive steel production. Known for his manipulative skills and risk taking habit, he was called, “Master Hustler” by Thomas Edison. Schwab brought about significant changes in steel production, which made the company hold a monopoly during World War I. He was also known for his luxurious habits and lavish spending and owned the most extravagant houses of his time. He had great management skills and knew how to handle workforce. His modern ways of dealing with staff were mentioned in Dale Carnegie's most famous work, “How to Win Friends and Influence People”, published in 1936. He was inducted into the Junior Achievement U.S. Business Hall of Fame in 1982.
Charles M. Schwab Childhood & Early Life
Charles Michael Schwab was born in Williamsburg; Pennsylvania on February 18, 1862 to John Anthony was Pauline Farabaugh Schwab. His paternal and maternal grandparents were Catholic immigrants from Germany. Schwab was raised in Loretto, Pennsylvania and attended the Saint Francis College, which is now Saint Francis University. After studying in college for two years, he left for Pittsburgh to get a job. Schwab began his career as a stake driver in a company named Edgar Thompson Steel Works, which was owned by steel tycoon, Andrew Carnegie. He gradually climbed the ranks, becoming the assistant manager in early 1880s and the manager in 1887. Five years later, he was asked by Andrew Carnegie to restore the relationships between the management and the labor, after a serious strike at the Homestead steel plant. Schwab with his genius management skills not only restored the association between the labors and the management, but also brought dramatic improvement to the plant’s efficiency. Following his meteoric rise, at the age of 35, Schwab became the president of Carnegie Steel Company in 1897. Four years later in 1901, he helped in the negotiation of the sale of Carnegie Steel to a group of New York-based financiers led by J.P Morgan. A new company was formed by combining the Andrew Carnegie's Carnegie Steel Company with Gary's Federal Steel Company and William Henry "Judge" Moore's National Steel Company and was named U.S. Steel (USS) Corporation. Schwab became the first president of the company.
Schwab left USS in 1903, after fallout with Morgan and fellow US Steel executive, Elbert Gary. He, then, joined the Bethlehem Shipbuilding and Steel Company in Bethlehem, Pennsylvania. Due to its solvent presence in United States Shipbuilding Company, this company was already famous for its shipyards in California, Delaware, and New Jersey. In the leadership of Schwab, it became the largest independent steel producer in the world. The main contributor to the success of Bethlehem Steel was the development of H-beam. Schwab’s risking nature was evident from the fact that he wanted mass production of wideflange steel beam, which was a very risky venture. It required huge capital and building up of a new plant. What’s more, the end product’s ability to sell was uncertain. But when Bethlehem Steel started making the beam in 1908, it totally changed the face of building construction and brought the age of skyscraper. This success propelled Bethlehem Steel to become the second largest steel maker in the world.
The next year in 1911, Bethlehem Steel formed a company soccer team known as Bethlehem Steel F.C. In 1914, Schwab made the team professional and in the subsequent years, the team won 8 league championships, 6 American Cups and 5 National Challenge Cups. It became one of the greatest soccer team in the US history. The World War I brought Bethlehem Steel to have monopoly over the contracts to supply certain kinds of munitions to Allies. During this period, Schwab made many visits to Europe to ensure the manufacture and supplies of munitions to the Allied parties. He even manipulated the American neutrality laws to move goods through Canada. On April 16, 1918, Schwab was made the Director General of the Emergency Fleet Corporation; he had replaced Charles Piez who was the former General Manager of the corporation. This board was granted by Congress with authority over all shipbuilding in United States. He abandoned the prevalent cost plus profit contracting system and started issuing fixed-price contracts. After the entry of America in the war, Schwab was accused of profiteering, but was later acquitted.
Schwab was always known as a great risk taker. He was fondly known as “Master Hustler” by Thomas Edison. In one of the incidents from his life, Schwab is known to give a staggering amount of $200,000 as ‘gift’ to the mistress of the Grand Duke Alexis Aleksandrovich to get contract from the Trans-Siberian Railroad. In 1928, he received the Bessemer Gold Medal for his “outstanding services to the steel industry". He eventually earned lot of wealth and owned some of the most extravagant and luxurious houses. Schwab built “Riverside” in New York for astounding US$7 million which was the most ambitious private house ever built in New York. He also had a lavish 44 room summer estate named “Immergrün”. Schwab also gained notoriety for his spending habits, extra marital affairs, and high stake gambling. Before the Great Depression could hit him, Schwab had already spent at between $25 million and $40 million. His company, Bethlehem Steel had to dissolve their champion soccer team following the financial losses during the internecine 1928-1929 ‘Soccer Wars’. The Great Depression in 1929 crashed the stock market and washed off all the wealth of Schwab. His holdings in Bethlehem Company’s stock became worthless and he was over US$ 300,000 in debt.
Schwab was married to Emma Eurania Dinkey. However, he was quite infamous for his number of extra-marital affairs. He had no children with his wife Emma, but had a daughter with his mistress.
By 1920s, Schwab had an estimated personal wealth of $200 million. But he lost his enormous wealth to his notorious spending habits and the Great Depression of 1929. As such, the last five years of his life, Schwab spent borrowing money from friends. He lived in a small apartment. Schwab breathed his last on October 18, 1939 in London, England due to heart failure. He was buried in Loretto at Saint Michael's Cemetery, beside his wife.