BREAKING NEWS

James Hickey pleads guilty in pay-to-play scheme - more >>

Lehigh Valley

History's Headlines: Charles M. Schwab: Steel titan at twilight

VIDEO: History's headlines - Charles...

There was not much good news in the newspapers of the world in the middle of September 1939. Unless of course you were a Nazi.

The German army was busy chewing up Poland while their erstwhile allies England and France stood by, acting as if the whole thing did not concern them. But when the British aircraft carrier, Courageous, was sent to the bottom of the ocean by a German U-Boat sending 500 sailors to their deaths on Sept. 17, it showed what was to come.

But when they opened their newspapers on the morning of Sept. 19, readers across America and in the Lehigh Valley, in particular, saw big news that was not war related. “Chas. M. Schwab Dies at His Home in New York City,” read the front-page article in the Morning Call.

The United Press story datelined Sept. 18 began simply. “Charles M. Schwab, 77, whose career as “king of steel” covered the long period in which this American industry grew from small beginnings to an international colossus, died tonight at his Park Avenue apartment.”

The article went on to note that time of death was at 9:30 p.m. and its cause was a coronary thrombosis, aka a heart attack. The next day flags fluttered to half-staff at Bethlehem Steel and a moment of silence was called for on Sept. 20. Eugene Grace, CEO at Bethlehem Steel who had stood beside Schwab since before World War I and someone who regarded him as his mentor, expressed deep feelings about his passing.

“In paying tribute to Charles M. Schwab, I speak of one of my dearest friendships. Everyone will mourn his loss. In the many years of association with him I have had the chance to know thoroughly the generosity and warmth of his character. His honesty, his friendliness and his gift for inspiring others. Mr. Schwab was a pioneer in realizing the importance of the human element in industry, believing in encouragement and opportunity for every employee. He proved by experience that praise brings out the best in men, and he discarded the slave-driving tradition once prevalent in industry, in favor of a policy of commendation and reward for work well done. Mr. Schwab was always a solid and enthusiastic believer in the future of America. His early predictions on the growth of the steel industry were thought fantastic and yet he lived to see most come true. He stood for American principles, for the American way of life and continuously affirmed that if America retains her tradition of enterprise the progress of the country will be assured. Mr. Schwab was a man of faith. He was tower of strength to his age and an inspiration for future generations.”

The Morning Call hailed him.

“From a very tiny corporation and business that he brought to Bethlehem he developed the great steel independent that is the Bethlehem Steel Co. of today with its nation-wide ramifications as to plants and its world-wide importance in the world’s basic industry. Bethlehem and the entire Lehigh Valley owes much industrially to the polished and personable man whose great knowledge, whose capacity leadership and organization made Bethlehem Steel what it is today.”

Of course, not everyone shared all aspects of this view of Schwab. A man who said, “I will not be in a position of having labor dictate to management” could hardly be expected to have many followers among those who wanted to unionize Bethlehem Steel’s work force. And someone who sent in the state police to break up the 1910 strike, leaving one worker who happened to get in the way dead, could hardly be a hero to them.

But unlike Grace, whose demeanor toward the average worker was usually icy imperiousness, Schwab at least gave the impression that he cared for and understood the average worker. Although he did not smoke himself, he always carried several cigars around in his pocket to give out to workers. Having everybody call him Charlie was good public relations. And he didn’t need a highly paid publicist like Ivy Lee, the man who got John D. Rockefeller Sr. to change his image by giving out dimes and also tried to humanize Grace, to tell him so.

If he had died in 1929, Schwab would have been remembered as being at “the top of his game.” Unfortunately, he, like a lot of other people, could not have understood that the Great Depression of the 1930s was unlike any the world had ever gone through. Thinking he could always make that one big killing that would bring him back, Schwab gambled on stock tips.

But even his $40 million fortune (estimated in one source as between $700 million and $800 million in today’s money) could not take those kind of hits. Even as his debts piled up, Schwab could not stop living in the lifestyle he had led for so many years. He continued to pay opera singers to sing at parties he gave at Riverside, his French chateau-style mansion that ate up a ton of coal a month in winter. He continued to employ Archer Gipson as his private organist to play the classics at $10,000 a year.

Even though Ivy Lee may have put together Grace’s laudatory words about Schwab, he genuinely regarded him as a friend and mentor. In 1936 when a small but loud group of Bethlehem Steel stockholders demanded that Schwab be removed from his position as head of the corporation and his $250,000 a year paycheck, Grace blocked it. According to one source, he came close to punching a dissident stock holder in the nose on the subject.

Schwab also had some personal tragedies that aged him. In the middle of the decade, his mother to whom he was extremely close died. Arriving shortly after her death, he asked family members if he could briefly be alone with her body. For the next hour he wept loudly beside her bed.

In January 1939, when his wife, Rana, died he was stricken again. Although his infidelities with numerous women and the birth of a child out of wedlock had led to strains in their relationship, Schwab still loved her in the same way he did his mother. On the day of her funeral, he slumped in a chair crying. “I won’t see you a year from now," he told a fellow mourner. "I’ll be dead.”

With his wife’s death, Schwab left Riverside and moved into a small apartment at 290 Park Avenue. In the summer of 1939 as Europe headed for a war that would eventually restore the value of his Bethlehem Steel stock and would have made him a rich man again, Schwab set sail for Europe.

He said he wanted to take one last look at the places he loved in England and France. On a flight from Paris to London, Schwab had a mild heart attack. Fearful that he might be trapped in Europe at the outbreak of war, Schwab appealed to U.S. Ambassador Joseph P. Kennedy for help.

Kennedy got Schwab a passage on the over-crowded SS Washington. On Aug. 31, 1939, Schwab arrived in New York. The next day Hitler invaded Poland.

Doctors were convinced at first that he might make a recovery. But on Sept. 18 he died in bed. His obituary in the Morning Call had at least one thing wrong. It stated that Schwab would be buried in the Gates of Heaven Cemetery in Pleasantville N.Y.

In fact, he rests not far from his country home at Loretto. Schwab was laid to rest in, as his biographer Robert Hessen puts it “a stark mausoleum at the crest of the Alleghenies; its sole identifying mark, the word SCHWAB, is barely noticeable.”


DISCLAIMER FOR COMMENTS: The views expressed by public comments are not those of this company or its affiliated companies. Please note by clicking on "Post" you acknowledge that you have read the TERMS OF USE  and the comment you are posting is in compliance with such terms. Your comments may be used on air. Be polite. Inappropriate posts or posts containing offsite links may be removed by the moderator.

This Week's Circulars

Lehigh Valley News

Latest From The Newsroom