Book Reviews

Each time the furore swells, the Marxians among us argue for gov ernment industrial takeovers, the so-called Progressives call for more regulation, and businessmen cower in their cellars. Then, for one reason or another (maybe it's 123 124 THE FREEMAN February a war and industrialists are sud denly 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 percep tionof 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 in transigent stands of more rigid men. He "supervised the super intendents" 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, which had 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-shar ing agreements, and price-fixing.

The Carnegie formula was to cut prices and expand productive ca pacity 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 Com pany lean and alive where other steel men were losing efficiency by trying to protect themselves by "gentlemen's agreements." Political Harassment In the Nineties Schwab was Carnegie's armor salesman. The government needed heavy plates 1976 STEEL TITAN 125 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 denuncia~ tionof President McKinley's deci sion to annex the Philippines that Schwab had to be sent to Wash ington to pacify President.;.maker Mark Hanna and the other prom inent 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, Sen ators Robert LaF'ollette and Ben Tillman started up the cry of "militarism" and proceeded to at tack Schwab, for his armor sales of supposedly defective steel in the Nineties. It was an uncalled for piece of demagogy, particu-, larly as it related to "inferior" armor; as Schwab said of Car negie, the pacifistic Andy was in the business of selling steel, not his principles, and the steel was the best that could be had. Na turally, 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-build ing 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. Toforestall any possibility of charges of conflict of interest, Schwab took no part in contracting for the government with Bethle hem 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 govern ment military orders, that Schwab had to endure the "merchants of death" agitation of the Nineteen Thirties.

Bethlehem Steel 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 Cor poration. His rather flamboyant lifestyle got him into hot water in the strait-laeedsociety of the early Nineteen Hundreds. Carne gie 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 126 THE FREEMAN February all his energies into building Beth lehem - up to second position among the steel enterprises of a rapidly expanding country. Put ting 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 trans forming 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 sev eral interlocking sub-plots. At times it may be difficult to recog nize the characters by their many different Russian names. But the effort may well be worthwhile, for a good Russian novel offers con siderable food for thought. Tol stoy's War and Peace, Dostoyev sky'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 psy chological 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 oppres sive, bigger, more and more total. Bureaucrats had multiplied like germs in a wound. And the infec tion had touched everything pri vate, seizing, regulating, compli cating, prying" (p. 138). Food and shelter were scarce. Inflation was rampant - 50,000 paper rubles for a newspaper. Tempers grew short.

1976 OTHER BOOKS 127 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. Al though he maintained his idealism through many years of imprison ment, confident that the Revolu tion would solve all problems, he realized in time that "the so-called Revolution was beginning to 'de vour its own!'" The book illustrates how Com munism 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 princi ples by helping to finance early Communist ventures, to Ivan Dan ilov's son Stepan who concealed his capitalist origin and re surfaced as a prominent and pow erful Communist official. Only the star-crossed lovers, Maria Dani lova and Michael Voronov, who refused to submit to the Commu nists, retained their independent spirits and succeeded in overcom ing seemingly insurmountable obstacles to escape the system's destructive influence.

Author Stang isa citizen of this country but he understands the Communist system. He shows how it deceives t!hose who support it for idealistic reasons. He points out how wrong Communist theore ticians are in holding that indi viduals 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 Commun nist - 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 econo mist 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, leav ing only the most despicable char acters 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 doc ile acceptance of the regime] will become "the highest virtue." How ever, that must have been written tongue in cheek. Judging from the 128 THE FREEMAN February tone of the book, "the highest virtue" must be offering resist ance to the Communists and re fusing to "cooperate," to buckle under or to compromise one iota with their regime. The Highest Virtue offers some thing for many readers. For those ~ho like novels, there is plot, tragedy and excitement. For per sons interested in the Russian Revolution, there are descriptions of life during that harrowing period when the economy was de teriorating. 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 re minder of what to expect if the capitalistic system goes under. I) HANDSOME BLUE LEATHERLEX FREEMAN BINDERS $2.50 each ORDER FROM: THE FOUNDATION FOR ECONOMIC EDUCATION IRVINGTON-ON-HUDSON, NEW YORK 10533 the Freeman VOL. 26, NO.3· MARCH 1976 Instea.d of Wh'at? Henry Hazlitt 131 Government can't give us anything without depriving us of something else. The Age of the Technicality Clarence B. Carson 138 The tyranny of the technicality will end when the legislation authorizing it is revoked. An Ancient Fable Retold Concerning the basics of an introductory course in economics. W. A. Paton 150 Threats to Freedom in Higher Education Charles M. Hepburn 155 Resort to coercion in place of self-responsibility is death to freedom and education. The Postal Monopoly Brian Summers 162 " ... the most outrageous tyranny ever imposed on a free people."