Hall of Fame Inaugural Class

Charles Schwab

Within two years of the dawn of the 20th Century, Charles M. Schwab served as president of both U.S. Steel Corp. and Bethlehem Steel Co., the two-largest integrated steelmakers of the Century of Steel.

Born in 1862 in Williamsburg, Pa., Schwab attended St. Francis College in Loretto, Pa., but left after two years to work in the booming community of Pittsburgh. He started his career in 1878 working in Andrew Carnegie’s Edgar Thomson Works, and came to the attention of Carnegie and Henry Clay Frick. A half-century later, he told an interviewer that his wages working as a stake driver for Carnegie were so low that he taught piano in the evenings for $1 a lesson.

Schwab’s rise up the ranks at the Carnegie operations was meteoric. At the age of 21, he was chief engineer at the Thomson Works. Four years later, at age 25, he was named superintendent of the Homestead Steel Works and in 1897, at the age of 35, Schwab was appointed president of Carnegie Steel Co.

When J.P. Morgan bought Carnegie out in 1901, he tapped Schwab as the first president of U.S. Steel. Schwab, however, found himself unable to work with Elbert H. Gary, the Steel Trust’s chairman, and in 1903 left U.S. Steel to take the helm at Bethlehem Steel Co. in Pennsylvania’s Lehigh Valley. The company merged with U.S. Shipbuilding Co. in 1904 to become Bethlehem Steel Corp.

“With Mr. Carnegie, I was a Czar,” Schwab said. “With the Steel Corporation, I had too many bosses, and one of them was Wall Street.” It was a lament that steel executives would find all too familiar from that time forward.

Bethlehem Steel was founded to produce steel for shipbuilding. Schwab applied the management techniques that had served him so well at Carnegie Steel and U.S. Steel, and during the ensuing 15 years Bethlehem Steel grew to be the largest independent steel producer in the world.

Bethlehem Steel’s fortunes were tied to the development of the H beam, a precursor to the I beam, and when production of the beam proved profitable after 1908, Bethlehem became the major supplier of beams to the growing building construction industry. During the 1910s, skyscrapers went up all over America, many of them built with beams from Bethlehem Steel.

Schwab created a company town in Bethlehem,Pa., and maintained tight control over the company’s work force. In 1910, Schwab broke a strike against the company by calling out the newly formed Pennsylvania State Police; Bethlehem wasn’t unionized until World War II, several years after his death.

By concentrating on producing beams for construction, steel rails, and plate for shipbuilding, Bethlehem quickly became one of the most profitable steelmakers in America; by 1912, the company’s annual net earnings were approaching $10 million, an immense sum for the day.

Soon after arriving at Bethlehem Steel, Schwab began encouraging the Pennsylvania steelmaker to export overseas. In the years before the outbreak of the Great War, Bethlehem signed a huge contract to supply steel rails to the Russian government for the completion of the Trans-Siberian Railroad.

When war did break out in the summer of 1914, Schwab positioned Bethlehem Steel to profit handsomely. The company made plate for shipbuilding, which was in strong demand by the world’s navies. And Schwab began converting plate mills to the manufacture of armor plate as soon as hostilities broke out. As a result, Bethlehem virtually controlled the supply of munitions steel to the Allied combatants throughout the war; until the United States entered the war in April 1917, much of Bethlehem’s supply of steel to Britain and France went through Canada.

Bethlehem Steel produced several million tons of armored plate for ships and munitions for the war effort, and Schwab was appointed director general of the U.S. Emergency Fleet Corp. in April 1918, overseeing all U.S. shipbuilding for the final seven months of the war.

Bethlehem Steel continued to enjoy strong sales during the 1920s. It bought Lackawanna Steel Co. in Buffalo, N.Y., and Midvale Steel Co. in Philadelphia, and it expanded to the West Coast with small mills in California and Washington.

Schwab, who abdicated active management of the company in the 1920s but who remained board chairman, was one of the richest men in America during the decade, and he built a palatial mansion on Central Park West in New York City and an estate in Loretto, Pa. But the collapse on Wall Street in October 1929 and the resulting Great Depression devastated Bethlehem’s business and all but impoverished Schwab.

In the late 1930s, Schwab battled diabetes and heart disease and lost both his New York mansion and Pennsylvania estate. Schwab’s wife died in January 1939, and he followed in late September. By that time, Great Britain and Germany were once again at war, a second global conflict that would reverse Bethlehem’s fortunes and again make the Pennsylvania steelmaker one of the nation’s richest companies.

 Andrew Carnegie
Elbert Gary
Henry Bessemer
Willy Korf
Ken Iverson
Park Tae-Joon
Yoshihiro Inayama