Schwab CM
ACHIEVEMENTS: Pioneer developer of the American steel industry.
DATE/PLACE OF BIRTH: 18th February 1862, in Williamsburg, PA.
DATE/PLACE OF DEATH/AGE AT DEATH: 18th September 1939, in New York, NY. Aged 87.
DISCIPLINE: Steel maker.
FIELD: Business.
LANGUAGE: English.
EDUCATION: Convent education, St Francis' College, Loretto.
MAJOR WORK: None.
LIFE AND TIMES:
Schwab took his first job at Carnegie's* Edgar Thomson Steel Works where, by the time he was only nineteen, he had become assistant manager. In this job, he was responsible for reporting to Carnegie about production at the works and he impressed his employer with his enthusiasm and knowledge. In 1886, Carnegie, who believed in promoting from within the ranks, sent Schwab to Europe, where he visited the leading steel manufacturing centres, including the Krupp* Iron Works in Essen, Germany and the Schneider Works at le Creusot, France. The trip also included some time for play, and Schwab was introduced to the game of roulette in Monte Carlo.
After returning to the USA, Schwab successfully managed the Homestead Steel Works until 1889, when he became manager at the Braddock works, following the death of the previous manager. At the age of just twenty-seven, Schwab was now the manager of the largest steel works in America. Schwab’s style of management included incentives and bonuses and he rewarded good work with promotion, instead of the more normal fines and punishments for poor work. His method soon sorted out the problem of substandard steel that had been one of the company's biggest worries.
In 1892, Homestead Works experienced a serious strike, so Carnegie sent Schwab to sort it out. One of the most powerful unions in America, the Amalgamated Association of Iron, Steel and Tin Workers, had established a hold at Homestead. When Carnegie employed Pinkerton's detective agency to guard the works, violence broke out and workers were killed. Schwab managed to establish good industrial relations, won the confidence of the workers and eventually improved production.
Schwab sailed to Britain, four months later, to visit Carnegie, who was on holiday in Scotland, and managed to get Carnegie to agree to spend a vast sum on a new plant and equipment. In 1897, Carnegie made him President of the Carnegie Steel Company. The depression of the previous four years was coming to an end and Schwab faced less opposition to his modernizing plans. The industry had moved more towards mergers and consolidations and the major players were all customers of the three primary steel producers, Carnegie Steel, the companies run by J P Morgan* and those owned by the Moore brothers of Chicago.
In December 1900, a dinner was held at the University Club in New York, honoring Schwab. Morgan attended the dinner and was impressed with a speech that Schwab made, which set out his vision of a huge firm, with many different plants specialising in different products. Over the following months, the two men met to discuss the list of companies that Schwab had targeted for the giant steel consolidation and how much it would cost to take them over. Morgan agreed details of a consolidation and Schwab was left to convince Carnegie to sell up. Carnegie's wife was keen for him to retire so she suggested that Schwab invite him to play golf at St Andrews in Yonkers, New York. Following a round of golf and dinner, Carnegie agreed. The result was the sale of Carnegie Steel to Morgan and the formation of the United States Steel Corporation in 1901, with Schwab as President.
The United States Steel Corporation was a holding company which controlled over two hundred steel mills and transport companies, a thousand miles of railroad tracks and over fifty thousand acres of coal mining land in Pennsylvania. Overnight, Schwab became a national celebrity, his income rocketed and he began to live an extravagant life, surrounding himself with other prominent people, like Twain*,Edison* andO. Henry*.
In 1901, he booked the whole promenade deck of a luxury French liner and took a large group of friends on vacation in Europe. News of his gambling exploits in Monte Carlo (he "broke the bank" at one point) reached the American press and friends back home sent telegrams warning him that he was ruining his reputation. Ignoring all advice, Schwab went on to Vienna, where he met the Emperor Franz Josef*, before hiring a train to Budapest and returning, via Berlin, where he was received by the Kaiser.
Schwab was ambitious and enjoyed personal publicity and the trappings of wealth. He soon became irritated by his more serious colleagues, particularly by the Chairman of the company’s Executive Committee, Gary*, a respectable and conservative lawyer with the lifestyle of a puritanical minister.
In 1903, the year after he visited Aix-les-Bain, Paris and Italy, Schwab resigned as president of the US Steel Corporation and became Chairman of the Bethlehem Steel Company*. In 1904, he merged it with the US Shipbuilding Company to form the Bethlehem Steel Corporation, moving there in 1906 to take over active management and, by 1909, Bethlehem was a direct rival of the US Steel Corporation.
At the start of the 1914 to 1918 war, Bethlehem produced submarines for the British Navy, so successfully that, in 1915, a German offered him a million dollars for his controlling interest in the company, which he refused. In 1918, he was enlisted by the U S Government to head the country's shipbuilding program and, within a few months, production had increased to the level that government contracts were, at last, being met on schedule. In 1921, he was accused of being a "merchant of death", with allegations of war profiteering, but these accusations were dismissed in the courts.
From 1927 to 1932, Schwab was president of the American Iron and Steel Institute and the leading figurehead of the U S steel industry. In the last ten years of his life, depression and his extravagant lifestyle diminished his health and wealth to such an extent that in 1939, when he died, he was virtually bankrupt.
ASSESSMENT: Schwab was one of the great pioneers of the steel industry in the United States. His "H" beam, precursor to today's "I" beam, was key in skyscraper construction.
EXTRA CONNECTIONS: His commission for a work was turned down by Mucha*
He raised money for Chicago Expo 1893*
ONELINER: CM Schwab, pioneer in American steel.
BIBLIOGRAPHY:
Hessen, Robert, Steel Titan, The Life of Charles M Schwab, Oxford University Press, New York, 1975.
PARENTS: John Schwab and Pauline Farabaugh.
SIBLINGS: Joseph, Edward, Mary Jane and Gertrude.
SPOUSE: Emma Eurania Dinkey.
CHILDREN: None.