Charles Schwab

 

Charles Schwab (1862-1939) was an American industrialist. Under his leadership, Bethlehem Steel became the second largest steel maker in the United States, and one of the most important heavy manufacturers in the world. Schwab, who received only a modest education, worked briefly as a grocery clerk before he took a job as a laborer in Andrew Carnegie's steelworks. He soon became the manager of the Thomson works.

In 1892 Andrew Carnegie appointed Schwab to heal the wounds between labor and management and get the Homestead plant back into production after the bloody strike there. So greatly did Schwab improve labour and community relations at Homestead while simultaneously increasing production efficiency through technological advances that in 1897—at the age of 35—Charles M. Schwab became president of the Carnegie Steel Company at an annual compensation in excess of $1,000,000.

In his bestselling book "How to Win Friends and Influence People," Dale Carnegie writes as follows: "One of the first people in American business to be paid a salary of over a million dollars a year was Charles Schwab. He had been picked by Andrew Carnegie to become the first president of the newly formed United States Steel Company in 1921, when Schwab was only thirty-eight years old. Why did Andrew Carnegie pay a million dollars a year to Charles Schwab? Why? Because Schwab was a genius? No. Because he knew more about the manufacture of steel than other people? Nonsense. Charles Schwab told me himself that he had many men working for him who knew more about the manufacture of steel than he did."

"Schwab says that he was paid this salary largely because of his ability to deal with people. I asked him how he did it. Here is his secret set down in his own words - words that children ought to memorize instead of wasting their time memorizing the conjugation of Latin verbs or the amount of the annual rainfall in Brazil - words that will all but transform your life and mine if we will only live them:

"I consider my ability to arouse enthusiasm among my people," said Schwab, "the greatest asset I possess, and the way to develop the best that is in a person is by appreciation and encouragement. There is nothing else that so kills the ambitions of a person as criticism from superiors. I never criticize anyone. I believe in giving a person incentive to work. So I am anxious to praise but loath to find fault. If I like anything, I am hearty in my approbation and lavish in my praise."

Schwab eventually became very rich, but sadly for a human relations genius, he fell into bad days in the last decade of his life. Schwab became notorious for his "fast lane" lifestyle, which included opulent parties and high-stakes gambling. He built "Riverside", the most ambitious private house ever built in New York. Schwab also owned a 44-room summer estate on 1,000 acres in Loretto, Pennsylvania, called "Immergrün". Such unwise investments, and a lifestyle too lavish even for his enormous fortune, finally took their toll. The stock market crash of 1929 finished off what years of wanton spending had started. He could no longer afford the taxes on "Riverside," and it was seized by creditors. He had offered to sell the mansion at a huge loss but there were no buyers. At his death ten years later, Schwab's holdings in Bethlehem Steel were virtually worthless, and he was over US$300,000 in debt. He spent his last years in a small apartment.