Steel Titan: The Life of Charles M. Schwab
For better or worse, the American system is built on adversary relationships. There is the well-known antipathy between the press and government. There is also the adversary relationship between business and government. Curiously, the press, which is libertarian when it comes to defending its rights under the First Amendment, crosses the line to side with government whenever there is a wave of skirmishes between Washington, D.C., and the productive forces of the country. You would think the libertarians of the media and the laissez faire partisans of business would sometimes combine in a common understanding, but they seldom do.
Every generation or so the libertarian press guardians of the First Amendment choose to cooperate with the politicos in mounting an antibusiness crusade. They did so in the pre-World War I muckrake era. They did so again in the New Deal period, when FDR lashed at the "money-changers in the temple." Now they are enlisted under the banner of Ralph Nader in the third anticapitalist jihad of the century.
Each time the furore swells, the Marxians among us argue for government industrial take-overs, the so-called Progressives call for more regulation, and businessmen cower in their cellars. Then, for one reason or another (maybe it’s a war and industrialists are suddenly needed), the fever passes.
It’s enough to make one believe in Eternal Recurrence. It is the ebb and flow of adversary currents that provide the main story line for Robert Hessen’s fascinating Steel Titan: the Life of Charles M. Schwab (Oxford, $14.95). Schwab, who was Andy Carnegie’s fair-haired boy during the years of the spectacular development of the Carnegie Steel Company, was alternately a hero and a villain, depending on the public’s perception of the need for steel in the ever-shifting life of an often-beleaguered republic.
A Team Man
Schwab was not an originator, he was a builder of integrated teams. His particular genius was in handling people and in doing all the trouble-shooting jobs that were made necessary by the intransigent stands of more rigid men. He "supervised the superintendents" for Carnegie. He loved music, and played the organ for himself, and his natural ebullience recommended him to Carnegie for frequent promotions.
At the age of thirty-five he be- came President of the Carnegie Company. He didn’t believe in unions, but he was a favorite of the men in the mills. After the big Homestead Strike of 1892, whichhad been mishandled by Henry Clay Frick and Carnegie himself, Schwab lived inside the mill for four months to get things going again. He was a hero to Carnegie for "settling Homestead," and he was a great man to the workers for saving their jobs despite the enmity of Frick for any man who had listened to the siren call of the union organizer.
The ability to conciliate did not save Charlie Schwab from the witchhunters who, in depression-ridden years, sought their villains among the industrialists who were transforming America. Schwab, along with Carnegie, was a great competitor in a period when less gifted business organizers put their trust in pools, market-sharing agreements, and price-fixing. The Carnegie formula was to cut prices and expand productive capacity out of retained earnings whenever there was a period of business recession. Believing that profit is something that comes from cutting costs, Carnegie and Schwab kept the Carnegie Company lean and alive where other steel men were losing efficiency by trying to protect themselves by "gentlemen’s agreements."
In the Nineties Schwab was Carnegie’s armor salesman. The government needed heavy plates for its new navy. There was no scandal at the time, and nobody could charge Andy Carnegie with promoting "imperialism" to sell his armor plate. In fact, Carnegie was so vociferous in his denunciation of President McKinley’s decision to annex the Philippines that Schwab had to be sent to Washington to pacify President-maker Mark Hanna and the other prominent McKinley Republicans.
More than a decade later, when it appeared that the U.S. might be embroiled in the struggle that eventuated in World War I, Senators Robert LaFollette and Ben Tillman started up the cry of "militarism" and proceeded to attack Schwab for his armor sales of supposedly defective steel in the Nineties. It was an uncalled for piece of demagogy, particularly as it related to "inferior" armor ; as Schwab said of Carnegie, the pacifistic Andy was in the business of selling steel, not his principles, and the steel was the best that could be had. Naturally, Carnegie wanted to make as much money out of his plate mill as the traffic with government would bear. The mill wasn’t good for anything else.
Throughout his later life, with U.S. Steel and with Bethlehem, Schwab was continually in hot water with the crusaders. He was accused, unjustly as it turned out,of engineering a shady ship-building combination. During World War I he ran the Emergency Fleet Corporation for Woodrow Wilson, performing prodigies that were unmatched until Bethlehem Steel turned out 1,100 ships in World War II. To forestall any possibility of charges of conflict of interest, Schwab took no part in contracting for the government with Bethlehem in 1917 and 1918. This did not save him from being pilloried at a later date. And it was long’ after Bethlehem had ceased to be a "Krupp," dependent of government military orders, that Schwab had to endure the "merchants of death" agitation of the Nineteen Thirties.
Bethlehem Steel was Schwab’s own personal monument. He had bought control of the company when it was nothing very much as a sort of personal sideline while he headed the larger enterprise of the newly-formed U.S. Steel Corporation. His rather flamboyant life-style got him into hot water in the strait-laced society of the early Nineteen Hundreds. Carnegie himself turned on Schwab when stories of his gambling at Monte Carlo hit the headlines in America.
Eventually Schwab was forced out of U.S. Steel. He at once threw all his energies into building Bethlehem – up to second position among the steel enterprises of a rapidly expanding country. Putting his faith in the so-called "Bethlehem beam," a structural piece that could be produced as a unit where other skyscraper beams depended on costly riveting, Schwab was responsible for transforming the skylines of New York City, Chicago and all the other metropolitan "downtowns" of America.
His life in the semi-retirement of the Nineteen Thirties was sad. He had outlived his friends, his family, and his early associates. He had been a soft touch with his money when it came to backing a score of small business enterprises for various friends and relatives, and Bethlehem Steel stock had such a fall-off in the depression that, when the Schwab will was up for probate, it turned out that he had died a debtor. If he had lived to greet the war orders of 1940 and 1941, he would have died a millionaire
THE HIGHEST VIRTUE, by Alan Stang (Western Islands, Belmont, Mass. 02178, 1974) 497 pp., $10.95.
Reviewed by Bettina Bien Greaves
Russian novels often have many characters, complex plots and several interlocking sub-plots. At times it may be difficult to recognize the characters by their many different Russian names. But the effort may well be worthwhile, for a good Russian novel offers considerable food for thought. Tolstoy’s War and Peace, Dostoyevsky’s The Brothers Karamazov, Pasternak’s Dr. Zhivago, Ayn Rand’s We, the Living – to name a few – all ask profound questions or offer some philosophical or psychological insight. And so it is with Alan Stang’s "Russian novel," The Highest Virtue.
The story is laid in Russia from 1914 to 1920. The characters in the book develop as they cope with the problems of surviving during extremely turbulent times. They encounter a government that was becoming "more and more oppressive, bigger, more and more total. Bureaucrats had multiplied like germs in a wound. And the infection had touched everything private, seizing, regulating, complicating, prying" (p. 138). Food and shelter were scarce. Inflation was rampant – 50,000 paper rubles for a newspaper. Tempers grew short.
Thievery emerged as a way of life. Almost everyone was fearful of expressing a personal view lest he step on the toes of some powerful official or someone who might later become a powerful official and bear a grudge. The system destroyed everyone it touched – even the idealistic Peter Orloff, who had sought to overthrow the Tsar and who had robbed banks and thrown bombs for the Communists. Although he maintained his idealism through many years of imprisonment, confident that the Revolution would solve all problems, he realized in time that "the so-called Revolution was beginning to ‘devour its own!’"
The book illustrates how Communism destroys all who endorse or acquiesce in its authority -everyone from the idealistic Peter Orloff, the shifty opportunist and ne’er-do-well Fyodor Voronov, the factory owning Ivan Danilov who compromised his capitalist principles by helping to finance early Communist ventures, to Ivan Danilov’s son Stepan who concealed his capitalist origin and resurfaced as a prominent and powerful Communist official. Only the star-crossed lovers, Maria Danilova and Michael Voronov, who refused to submit to the Communists, retained their independent spirits and succeeded in overcoming seemingly insurmountable obstacles to escape the system’s destructive influence.
Author Stang is a citizen of this country but he understands the Communist system. He shows how it deceives those who support it for idealistic reasons. He points out how wrong Communist theoreticians are in holding that individuals are simply products of their environment with no free will to make choices or to think for themselves. He shows why there will be no hope for anyone if the whole world goes Communnist – there will then be no lands outside the Communist orbit to which the Marias and the Michaels may escape. He also describes how the worst always get to the top in a totalitarian regime – as economist F. A. Hayek pointed out in his famous Road to Serfdom. By the end of the book, the weak characters have been broken, the ambitious ones destroyed, the compromisers eliminated and the idealistic ones disillusioned, leaving only the most despicable characters in control.
What is "the highest virtue," from which the book takes its name? On page 259, the author writes that after the Revolution, "cooperation" [submission or docile acceptance of the regime] will become "the highest virtue." However, that must have been written tongue in cheek. Judging from the tone of the book, "the highest virtue" must be offering resistance to the Communists and refusing to "cooperate," to buckle under or to compromise one iota with their regime.
The Highest Virtue offers something for many readers. For those who like novels, there is plot, tragedy and excitement. For persons interested in the Russian Revolution, there are descriptions of life during that harrowing period when the economy was deteriorating. There are also graphic descriptions of the Russian labor camps. Judging from other books on the Revolution, the author has accurately described that period. He has caught the flavor of the classical Russian novel and offers the reader ample food for thought. His book serves as a vivid reminder of what to expect if the capitalistic system goes under.