Charles M. Schwab – Steel & Mining Magnate
Charles Michael Schwab, a name synonymous with the rise of American industry, carved his legacy as a titan of steel and mining. His strategic acumen and relentless drive propelled Bethlehem Steel to become the second-largest steel producer in the United States and a globally influential heavy manufacturer. This is the story of Charles M. Schwab, a man who embodied the ambition and excesses of the Gilded Age.
Born on February 18, 1862, in Williamsburg, Pennsylvania, Charles was the son of John and Pauline Farabaugh Schwab. His early life was rooted in the small-town atmosphere of Pennsylvania, a stark contrast to the opulent lifestyle he would later embrace. He attended Saint Francis College, now Saint Francis University, in Loretto, Pennsylvania, but his academic pursuits were cut short after two years. Driven by a desire to make his mark, he left college to seek employment in the bustling industrial hub of Pittsburgh.
His entry into the steel industry began with a modest position at Andrew Carnegie’s steelworks. Displaying an exceptional aptitude for the business, Charles M. Schwab quickly absorbed the intricacies of steel production and management. His dedication and keen intellect earned him rapid promotions, marking the beginning of his meteoric rise. At the young age of 21, he married Emma Eurania "Rana" Dinkey in May 1883, a union that reportedly faced initial disapproval from his mother due to Rana’s religious affiliation.
By 1897, at the remarkably young age of 35, Charles M. Schwab had ascended to the presidency of the Carnegie Steel Company, a testament to his exceptional abilities and unwavering ambition. His leadership during this period was marked by innovation and efficiency, further solidifying Carnegie Steel’s position as a dominant force in the industry.
The year 1901 marked a pivotal moment in Schwab’s career. He played a crucial role in orchestrating the clandestine sale of Carnegie Steel to a consortium of New York-based financiers led by the powerful J.P. Morgan. This transaction resulted in the formation of the U.S. Steel Corporation, the first billion-dollar corporation in the world. Charles M. Schwab became its first president, ushering in a new era of large-scale industrial organization.
However, the dynamics within U.S. Steel proved challenging for Schwab. Disagreements with J.P. Morgan and other executives ultimately led to his departure in 1903. Undeterred, he seized the opportunity to helm the Bethlehem Steel Company in Bethlehem, Pennsylvania. Under his leadership, Bethlehem Steel experienced unprecedented growth, surpassing its competitors and becoming the largest independent steel producer globally. This achievement solidified Charles M. Schwab’s reputation as a visionary leader and a master of the steel industry.
Having amassed considerable wealth, Schwab sought to establish himself within New York City’s elite circles. He acquired the grounds of the New York Orphan Asylum, an entire city block bounded by Riverside Drive, 73rd and 74th Streets, and West End Avenue. This location, on the "Upper West Side," was considered less desirable by the city’s wealthiest residents.
Charles M. Schwab envisioned transforming the Upper West Side into a fashionable enclave, attracting the city’s elite from their established east-side residences. To achieve this, he embarked on the construction of an extravagant private mansion, one of the most ambitious residential projects ever undertaken in New York City.
"Riverside," as Schwab named his mansion, was designed by the French architect Maurice Hebert in the opulent French Renaissance chateau style. Construction commenced in 1901 and spanned six years, reflecting the sheer scale and complexity of the project.
The 75-room mansion was set within its own meticulously landscaped park, a sanctuary of greenery amidst the urban landscape. Inside, the mansion boasted a Roman bath-style swimming pool, a bowling alley, and a Grand Court featuring two levels of balconies overlooking a central staircase. A card room provided a space for high-stakes gambling among millionaires. The exterior was equally impressive, adorned with a belfry, towering 116-foot-high pinnacles, a four-car garage, and a service tunnel concealed beneath the garden terraces. The initial construction cost amounted to a staggering seven million dollars, a testament to Schwab’s wealth and ambition.
Around the turn of the century, Schwab diversified his interests, venturing into the mining industries of Death Valley. In 1905, he invested in the Lee-Echo District of California, and in his honor, a town was named Schwab. The following year, he acquired several claims in the Greenwater Mining District and established the Greenwater Death Valley Copper Company. In the same year, he bought out Bob Montgomery’s interest in the Montgomery Shoshone Mine in Rhyolite, Nevada, for a multi-million dollar sum.
However, Schwab’s foray into mining proved less successful than his steel ventures. His investments in Death Valley failed to yield the expected returns, and the financial panic of 1907 further impacted the struggling mines. This experience highlighted the risks inherent in speculative ventures, even for seasoned industrialists.
Despite the setbacks in mining, Schwab remained a man of considerable means. In 1919, he commissioned the construction of a summer retreat in his hometown of Loretto, Pennsylvania. This opulent estate, named "Immergrün," German for "evergreen," cost three million dollars to build. The 44-room mansion was nestled on nearly 1,000 acres of land, featuring elaborate gardens and a nine-hole golf course, providing a luxurious escape from the pressures of his business empire.
Schwab’s personal life was characterized by a lavish lifestyle, extravagant parties, and high-stakes gambling. He also engaged in extramarital affairs, one of which resulted in a child born out of wedlock. His behavior placed a strain on his marriage. He gained international notoriety for "breaking the bank" at Monte Carlo and traveled in a luxurious $100,000 private rail car named "Loretto." Despite his personal excesses, Schwab was also a philanthropist and a patron of the arts, contributing to various charitable causes.
The stock market crash of 1929 had a devastating impact on Schwab’s wealth. By this time, he had already spent a significant portion of his fortune, estimated at between $25 and $40 million, equivalent to $500 to $800 million in the early 21st century.
By 1933, Schwab was unable to meet the property tax obligations on his Riverside Mansion in New York City. Despite having invested $7 million in its construction, he attempted to sell it in 1936 for only $4 million, but found no buyers. Following his wife’s death, he lost his Riverside home and relocated to a smaller apartment on Park Avenue.
Charles M. Schwab passed away on September 19, 1939, at the age of 77, succumbing to a heart attack. He was buried in Loretto, Pennsylvania, at Saint Michael’s Cemetery in a private mausoleum alongside his wife. The couple had no children.
At the time of his death, Schwab was burdened by over $300,000 in debt, and his holdings in Bethlehem Steel had diminished in value. Ironically, had he lived a few years longer, he would have witnessed a resurgence in his fortunes as Bethlehem Steel received a surge of orders for war materials during World War II.
In the years following his death, Schwab’s assets were liquidated. The Immergrun estate in Loretto was sold at auction in 1942 to the Friends of St. Francis College for $32,500. The mansion now serves as the Mount Assisi Friary, part of the Saint Francis College campus. The New York Riverside Mansion was initially offered to New York Mayor Fiorello La Guardia as an official mayoral residence, but the mayor declined, deeming it too extravagant. The property remained vacant until the Prudential Insurance Co. acquired it for $1.5 million in 1947. The mansion was subsequently demolished and replaced by a pair of uninspired apartment buildings.
It is important to note that Charles M. Schwab was not related to Charles R. Schwab, the founder of the Charles Schwab Corporation, a prominent financial services firm.