The Cyclopædia of American Biography/Schwab, Charles M.

SCHWAB, Charles M., capitalist, b. Williamsburg, Pa., 18 April, 1862. At the age of five he removed with his parents to Loretta, Pa., where his father kept one of the village stores. Young Schwab was educated at St. Francis College, acquiring the rudiments of engineering. When his studies were not occupying his attention he improved his time by driving the old stage between the village and Cresson station, a distance of five miles. After his graduation at St. Francis College, in 1878, he went to Braddock, Pa., and became a clerk in a dry goods store at $5.00 a week. In 1880, prompted by a slight increase in salary rather than any attraction he may have felt for the steel business, he entered the service of the Edgar Thomson Steel Works of Carnegie Bros, and Company, in the capacity of stake driver, at a salary of $1.00 a day. He soon showed rare aptitude for these more arduous duties, and his advance was rapid.

In six months he became chief assistant engineer; from 1881 till 1887 he was chief of the engineers department; in 1887 he became superintendent of the Homestead Steel Works; in 1889 Frick appointed him general superintendent of the Edgar Thomson Works, and in 1892, upon the consolidation of all the Carnegie interests into the Carnegie Steel Company, Frick, as chairman, appointed him general superintendent of the Homestead works also. Schwab's appointment to this position, superseding Mr. Potter, who was promoted to the position of consulting engineer of all the Carnegie works, was to facilitate matters pertaining to the famous Homestead strike. In this position Schwab, through his ability as a manager and his popularity with the workmen, rendered most important service to the company; and with fine tact and conciliation he soon persuaded the heads of departments and the foremen to return to work, which soon resulted in the general resumption of the business. And the remainder of his tenure of general superintendent of both the Homestead and Edgar Thomson plants was free from further labor troubles and marked by a continuance of his good understanding with the workmen. He held the position of general superintendent of both the Edgar Thomson and the Homestead works until 1897. In that year he was advanced to the presidency of the Board of Managers of the Carnegie companies, having become a member of the association a year before. This was an institution that grew out of Frick's plans of efficiency for the unification of the company. In the same year Carnegie, in an attempt to diminish the importance of Frick, made Schwab president of the Carnegie Steel Company, although Frick, as chairman of the board, remained at the head of affairs. Schwab retained the presidency of the Carnegie company until its absorption by the United States Steel Corporation in 1901. He was then made president of the new corporation. His three-years' tenure of this office, however, was not marked by any notable triumph. In fact, in 1903 the United States Steel Corporation reached a precarious condition, due probably to the adjustment of this mastodonic organization to its normal level. In 1904 Mr. Schwab resigned this position and was succeeded by William E. Corey. He then engaged unsuccessfully in extensive shipbuilding operations, after which he secured an option on the Bethlehem plant. After much difficulty he, succeeded in interesting John D. Ryan, E. H. Harriman, Jacob Schiff, and other equally sagacious financiers, and in 1908 effected the organization of the Bethlehem Steel Corporation and the Bethlehem Steel Company. This was considered a doubtful undertaking, for the Betlilehem works were regarded as mainly a military plant. But Mr. Schwab was influenced by the fact that he controlled the exclusive rights in this country of patents which simplified the process of making steel structural-shapes. The company achieved a measure of success until the outbreak of the European War in 1914, when it attained prosperity hitherto unthought of by its founders. It soon became the largest contributor of weapons, ships, steel, and arms to the Allied governments, and its success was meteoric. Mr. Schwab's rise to eminence in

the busineas world was marked by more than one notable achievement. He is supposed to have devised the scheme in 1901 which enabled Carnegie to accomplish his utmost desire &mdash; the sale of the Carnegie Company. During the preceding twelve years Carnegie had made several unsuccessful attempts to sell out, and it now had become a passion with him; so Frick's plan of operating a tube works at Conneaut was resurrected and utilized by Schwab and Carnegie to compel the purchase of the Carnegie company by the millionaires interested in the National Tube Company, the Standard Oil Company, and the Pennsylvania Railroad, all of which it threatened with serious competition. The scheme was gloriously effective. Schwab, conducting negotiations for the steel company, persuaded J. P. Morgan and other equally astute financiers to purchase the Carnegie Steel Company for $500,000,000, double the amount that Carnegie tried to sell at three years before. This is generally recognized as the most monumental of business transactions. Aptitude and opportunity furnish the keynote to Mr. Schwab's success. From 1880 to 1889 he received his mechanical training under Capt. William R. Jones, and from 1880 to 1900 he was under the guidance of the greatest of all steel men, Henry C. Frick. Mr. Schwab has gratefully acknowledged his appreciation of Captain Jones, who was a mechanical genius. But to the experience he received under Frick during this steel master's revolutionizing of the steel industry, Schwab gratefully attributes his present enviable position. &ldquo;If I have anything of value in me,&rdquo; he once wrote, Mr. Frick's &ldquo;method of treatment will bring it out to its full extent&rdquo;; and he &ldquo;regarded with more satisfaction than anything else in life &mdash; even fortune &mdash; the consciousness of having won&rdquo; Mr. Frick's &ldquo;friendship and regard.&rdquo; In 1900, however, upon the culmination of the personal and business differences between Carnegie and Frick in a bitter altercation, Schwab was heartily reproached for his activities in opposition to Frick. In fact, his part as Carnegie's agent in the latter's sensational attempt to seize Frick's interest in the Carnegie Steel Company furnished a sharp contrast to the many positive achievements of Schwab's career. This event arrested nation-wide attention, and contemplated, by means that will not bear the closest scrutiny, the expulsion of Frick from the Carnegie Steel Company and the confiscation of upward of $11,000,000 of his interest therein. But in extenuation of Schwab's compliance with Carnegie's demands, it may be said that he strove earnestly, as did Henry Phipps, to effect a reconciliation. Upon the failure of this, he wrote: &ldquo;I just returned from New York this morning. Mr. Carnegie is en route to Pittsburgh today, and will be at the office in the morning. Nothing could be done with him looking toward a reconciliation. He seems most determined. I did my best. So did Mr. Phipps. I feel certain he will give positive instructions to the Board and Stockholders as to his wishes in the matter. . . . Under these circumstances, there is nothing left for us to do but obey, although the situation the board is thus placed in is most embarrassing.&rdquo; So, with a full appreciation of the eloquent power of Carnegie's holdings in the company, Schwab

reluctantly yielded to his domination and secured the names to the famous &ldquo;Iron Clad&rdquo; Agreement. This was a process for eliminating debtor partners, such as Schwab and about thirty other junior partners &mdash; &ldquo;young geniuses&rdquo; &mdash; but it was not applicable to Frick or Phipps, who were paid-up partners. Carnegie, though, by expunging minutes on the books of the company and other acts of doubtful validity, hoped to adapt it to his scheme of including paid-up partners. Schwab, under Carnegie's domination, assumed the functions of Frick's attorney in the pretended transfer of Frick's interest to the company for $5,000,000 and payable on terms that approximated confiscation. However, the attempt proved abortive. Frick sought justice in the courts, and five days later he received an interest which about a year later brought him $28,000,000. Contrasted with the submission of Mr. Schwab and many junior members of the company was the attitude of F. T. F. Lovejoy, its secretary, who, with Henry M. Curry, were the only two of the thirty-one junior partners who withstood Carnegie's pressure. Lovejoy not only refused to sign the agreement, but questioned the validity of his colleague's acts in a separate answer which he filed in the Equity Suit brought by Frick. Henry C. Phipps in self-protection also strongly opposed the scheme and filed a separate answer. The settlement of the dispute necessitated reorganization of the company, and in 1900 it was incorporated as the Carnegie Company. Carnegie rewarded Schwab with the presidency of the company, while Lovejoy, who had refused to comply with Carnegie's demands, was dropped from the directorate. Among Mr. Schwab's known public benefactions are an industrial school at Homestead, Pa.; an auditorium to State College, Pennsylvania; a school at Weatherly, Pa.; a convent at Creston, Pa.; a Catholic church at Braddock, Pa.; a $150,000 Catholic cathedral at Loretta, Pa.; and a $1,000,000 home for sick and crippled children at Staten Island, N. Y. Besides being president and chairman of the board of both the Bethlehem Steel Corporation and the Bethlehem Steel Company, Mr. Schwab is director in other iron, steel, coal, and coke corporations, including the Carnegie Steel Company; H. C. Frick Coke Company; Minnesota Iron Company; National Tube Works Company; Pneumatic Tool Company; American Universal Mill Company, and the Fore River Shipbuilding Company. He is president of the Silver Company; trustee of the New York Trust Company, and director also in the United States Realty and Improvement Company; Carnegie Trust Company, Chicago; Lehigh Valley Transit Company; Empire Trust Company, and managing director of Chase National Bank, Washington, D. C. As his immense Bethlehem enterprises require his constant personal attention, Mr. Schwab removed to Bethlehem, and foregoes the pleasures of the magnificent $7,000,000 New York home which he built on Riverside Drive. He married Eurania Dinkey, of Loretta, Pa., 1883.