Charles Michael Schwab was a clever American businessman and steel magnate. He was known for his unorthodox management methods and ahead-of-his-time leadership; with Schwab at its helm, Bethlehem Steel became the second largest steel maker in the United States, and one of the most important heavy manufacturers in the world. His ways of dealing with employees and his skills for coming up with creative ways to motivate his staff were mentioned in Dale Carnegie’s book, “How to Win Friends and Influence People”. Charles Michael Schwab was born in Williamsburg, Pennsylvania, to Pauline Farabaugh and John Anthony Schwab in February 18th of 1862. He grew up in Loretto, Pennsylvania where his father worked as a blanket manufacturer.
Schwab abandoned his pursuit for an engineering degree at Saint Francis College after only two years of attending the university in order to find work in Pennsylvania. He began working at Edgar Thomson Steel Works and Furnaces in Braddock, Pennsylvania owned by Andrew Carnegie and in 11 years he went from being a stake-driver to becoming president of the Carnegie Steel Company in 1897. Andrew Carnegie himself, asked Schwab to help restore the relationships between management and workers, after a strike at their Homestead steel plant. Schwab interventions not only restored the order but also greatly improved the plant’s efficiency.
In 1901, Charles Schwab helped negotiate the sale of the Carnegie Steel Company to a New York based financial group lead by J.P. Morgan thus giving birth to the United States Steel Corporation (USS) and becoming the first president of the company.
He left USS after only two years due to differences he had with Morgan and fellow executive Elbert Gary, and took over the management of the Bethlehem Shipbuilding and Steel Company in Bethlehem, Pennsylvania. At this time, they company had acquired shipyards in California, New Jersey and Delaware and was working in the development of the revolutionary wide-flange steel beam also known as H-beam, the precursor of the widely used today, I-beam.
This venture was risky and unproven since the technology was still experimental, but Schwab went ahead and raised capital to build a larger plant to mass-produce the new unknown product.
Bethlehem Steel began producing the beam in 1908 and revolutionized the world of construction, as we know it by making possible the advent of skyscrapers. This innovative move and the uncanny leadership of Charles Schwab helped propel Bethlehem Steel to becoming the second-largest steel company in the world.
During World War I, his company was the sole contractor supplying the allies with a specific type of munitions throughout the European theatre. In 1918, Schwab was appointed Director General of the Emergency Fleet Corporation, the master authority granted by Congress, over all shipbuilding in the United States. In 1928, the Bessemer Gold Medal for “outstanding services to the steel industry” was awarded to Schwab.
Charles Schwab had become extremely wealthy at this point and moved to New York City’s Upper West Side and built Riverside, an extravagant, 75-room mansion located on Riverside Drive between West 73rd and West 74th Streets. The property is considered “the grandest and most ambitious house ever built on the island of Manhattan”. It took four years to build with a cost of around six million dollars.
Schwab also had a huge mansion built in Loretto, Pennsylvania, called “Immergrün”. He refused to tear down his existing mansion so he had it raised and transported 200 meters away on rollers to make room for the construction of the new 44-room estate.
He became notorious for his lavish lifestyle and high-stakes risky gambling that made him the topic of headlines around the world with his outrageous spending habits in Monte Carlo and his opulent parties.
The great depression hit him and his company hard, Bethlehem Steel had to dissolve their champion soccer team after deep financial losses and Schwab had already spent a great deal of him money in 1929. When the stock market crashed, his holdings in Bethlehem Steel became practically worthless and his debt was in the hundreds of thousands.
Charles Schwab died in London, England on October 18, 1939 and was buried in his beloved hometown of Loretto, Pennsylvania next to his late wife Emma Eurania Dinkey. His personal wealth estimated at over US$200 million was depleted by the time of his passing. Sadly he was never able to witness the resurrection of Bethlehem Steel after being bombarded with orders for war material a few short years after his death.
The Immergrun estate in Loretto was sold at an auction in 1942 to the Friends of St. Francis College. Today, the mansion house remains part of Saint Francis College, as the Mount Assisi Friary. His New York mansion remained vacant until the Prudential Insurance Co. purchased it for $1.5 million in 1947. It was later torn down and replaced by apartment buildings.