Charles Schwab was born in Williamsburg, Pennsylvania in 1862 and got his first job as a grocery clerk in Braddock. From there, he became the head of some of the world's largest steel companies before dying almost penniless. It's a rags-to-riches-to-rags story that Homestead itself - or any number of 1990s stock speculators - could identify with.
As a grocery store clerk in 1879, Schwab found a job in Andrew Carnegie's steel works after befriending the superintendent of Braddock's massive Edgar Thomson plant. (Liberal arts majors take note - he got the job in part because of his ability to play and teach piano.) Schwab quickly rose through the company's ranks, thanks in no small part to a charisma that allowed him to charm working people even while screwing them over - a skill not unlike the one George W. Bush has parlayed into power.
Schwab was the kind of boss who never pays overtime but buys you Chinese take-out when you stay late at the office. To increase production in his mills, he began playing departments off against each other in a spirit of friendly competition, but he was a foe of organized labor. He hired scabs and crushed strikes because, as he once put it, "I will not be in the position of having management dictated to by labor."
Such attitudes didn't exactly hurt Schwab in the Carnegie Steel Company, and he became one of Carnegie's top lieutenants. In fact, he was instrumental in creating the U.S. Steel Corporation itself.
At a New York City dinner held on December 12, 1900, Schwab gave a speech extolling the advantages of creating a steel monopoly. As Robert Hessen summarizes Schwab's remarks in his biography Steel Titan, Schwab argued before a group of business leaders that if the steel industry were consolidated, "an ever-widening market for steel could be created. & Both the producers and the consumers would benefit: Producers would make greater profits & while consumers would pay less for them, all because of increased efficiency and specialization."
In other words, monopolies are our friends.
One man in that audience, J.P. Morgan, heard the speech and saw a vision for a company that combined his own steel holdings with those of Carnegie - a vision that became the U.S. Steel Corporation. Thanks to Schwab's negotiations, Morgan and Carnegie formed the new firm, making Schwab its president and making instant millionaires out of its top executives. "Increased efficiency" took a little longer to create, as thousands of steelworkers laid off in the 1980s can attest.
Schwab himself was laid off much sooner than that, largely due to his own recklessness.
Schwab is no relation to Charles R. Schwab, who founded the discount brokerage most people associate the Schwab name with. (Charles M. had no children of his own, in fact - at least none that Schwab, a notorious philanderer, would admit to). But he certainly was no stranger to stock speculation: He was all but wiped out during the Great Depression, and died almost penniless 10 years later. He once uttered a maxim - "If we are going bust, we will go bust big" - that could easily have been the motto for any number of 1990s dotcoms.
Schwab nearly lost his job as president of U.S. Steel for gambling - a winning streak in Monte Carlo made headlines - and had to resign not long afterward, when he was caught up in some self-interested financial dealings in the shipbuilding industry that seemed equally speculative. As one editorial writer put it, investors could never be sure that Schwab wouldn't "ostentatiously stake thousands on the red & transferring the scenes of his gambling operations from Monte Carlo to Wall Street."
Such scandals and numerous other questionable deals - he once sold steel for the Siberian railroad by bribing a member of the Russian royalty with a $200,000 necklace - made Schwab a controversial figure. While at Carnegie Steel, he was snared by allegations that the company had sold defective armor plating to the Navy. But Schwab did establish musical groups and trade schools in his factory towns, and after leaving U.S. Steel, he paid Carnegie back by turning the once-sleepy Bethlehem Steel into one of U.S. Steel's toughest competitors. During World War I, he presided over shipbuilding for the U.S. military for the princely sum of a dollar a year. As Hessen notes, he left behind a "living testament to his memory" consisting of "the steel mills and shipyards, the blast furnaces and the bellowing smoke stacks which mark the skyline of America" - a skyline that includes skyscrapers built with Bethlehem Steel.
And he never recommended tech stocks.