Business & Finance: Schwab Elected

When the American Iron & Steel Institute met in Manhattan last week there was no Judge Gary to conclude his ritual lecture by saying: “Gentlemen, the meeting is now in your hands. Whom do you want to hear from?” The answer was always the roar: “Charlie!” The judge and all others present knew that the “Charlie” was for Charles Michael Schwab, Chairman of the Board of the Bethlehem Steel Corp. But Judge Gary was dead two months (TIME, Aug. 22). He could not prime the iron & steel men’s cheers for “Charlie.” There was no need. In Judge Gary’s old chair sat Mr. Schwab himself, elected last week President of the American Iron & Steel Institute.

The Institute is a trailer to the late John Pierpont Morgan’s decision that competing iron and steel manufacturers cease cut-throat competition. To gain ,that end he persuaded Judge Gary to create the U.S., Steel Corp. The judge fashioned an industrial juggernaut. But the wheels lacked a few spokes. All iron & steel men would not go into the assembly. In 1901 the great machine began to move. Then the whiffletree flew off. “Charlie” Schwab, long the Corporation’s first president, resigned in 1903. He, shrewd, hard and forthright, would not swing with the shrewd, hard and subtle Judge Gary. Mr. Schwab bought the broken down Bethlehem Steel Corp., and made it U. S. Steel’s greatest competitor.

The judge devised another vehicle of cooperation. If all iron and steel men would not truckle to Mr. Morgan’s idea of a single steel corporation for the U. S., they might truck with him. In 1909 the judge organized the American Iron & Steel Institute where all rivals could meet on unrestricted terms to discuss common problems and follow similar programs, notably as to the costs and sale of steel. The judge was until his death its first and only president.

Mr. Schwab of course joined the Institute. Its members respected the judge; they liked Mr. Schwab. He often outwitted them in business. But he did so according to the rough & tumble rules they knew. He, himself, was a practical steel man; he told them boisterous stories; and he beat them at whist. The judge treated Mr. Schwab, as he did all men, with careful geniality. The two never were harmonious in spirit. One year Mr. Schwab refused to attend the Institute meetings. Friends urged him to be big-hearted and return. He did.

In spite of this antithesis of men, last week’s Institute meeting resembled those under Judge Gary. Mr. Schwab made a careful speech in which he stressed the necessity of a “proper and economic distribution and selling” of steel products. That was a formula that meant that steel prices must be changed. Iron and steel companies have not been making ordinary profits recently. President Eugene Figgord Grace of Bethlehem Steel suggested to the Institute that because producers have done everything they know to reduce manufacturing costs they might have to reduce wages. U. S. Steel Corp. men there opposed any wage lowerings.