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Wednesday, July 10, 2024

BREAKING THE BANK IN MONTE CARLO

 

As I walk along the Bois Boolong, With an independent air 
You can hear the girls declare, "He must be a Millionaire." 
You can hear them sigh and wish to die, You can see them wink the other eye 
At the man who broke the bank at Monte Carlo.
I hasten to point out that no one has ever actually broken the bank in Monte Carlo. Should you be lucky enough to clean out the cash drawer of a croupier - which is what the term actually refers to -  his table is covered in mourning cloth until a new employee arrives with more chips. This is referred to as "Faire sauter le banque", or blowing up the bank. And it happens, occasionally.  
Listen, should the original casino in Monte Carlo actually go broke, the residents would have to start paying taxes again, which they haven't done since 1869. I point this out so you can put Charles Schwab's behavior in context.

Thomas Edison (above, left) called his friend Charlie M. Schwab (above, center) a "Master Hustler". One of Charlie's public school teachers in the working class town of Loretto, Pennsylvania where he grew up described Charles as "...a boy who...went on the principle of pretend that you know and...find out mighty quick.” 
Later in his life Charlie attempted to explain himself this way; "Here I am, a not over-good businessman, a second rate engineer. I can make poor mechanical drawings. I can play the piano after a fashion. In fact I am one of those proverbial-jack-of-all-trades, who are usually failures. Why I am not, I can't tell you."
It was Charlie's (above, left) boundless self-confidence which quickly brought him to the attention of his prudish boss, Andrew Carnegie (above, right). Charlie ran one of Carnegie's mills, and became the old man's business advisor.
But, in February of 1901, J.P. Morgan bought all of Mr. Carnegie's steel mills and then combined them with those of nine other companies he had bought earlier and formed U.S. Steel. This gave Morgan -
with 231 steel mills, 78 blast furnaces, some 60 iron and coal mines, a fleet of ore barges, 1,000 miles of railroad track - a near complete monopoly, 79% of all steel sold in America.  
But Carnegie was had grown so fond of the 39 year old Charlie Schwab that, as part of the deal, he required that Charlie get $25 million in U.S. Steel stock, and be made President of the new company. It made sense. Except...even if Charlie was well qualified for the job, (and he was) Morgan did not like hiring anyone whose first loyalty was not to him. 
An intuitive judge of men, John Pierpont Morgan (above) knew who Charlie Schwab really was; a gambler. He enjoyed fast cars, fast women and roulette. While J.P. Morgan knew that Charlie had never lied to Carnegie, he also knew that Carnegie assumed that every person he liked was a Puritan, just like himself. And just a year after Charlie had overseen the formation of U.S. Steel, Morgan used Carnegie's myopia to defeat Charlie.
I, to Monte Carlo went, just to raise my winter's rent.
Dame Fortune smiled upon me as she'd never done before,
And I've now such lots of money, I'm a gent. Yes, I've now such lots of money, I'm a gent.
I'm the man who broke the bank at Monte Carlo
Charlie arrived in France in January of 1902, for a "working vacation". He was accompanied by his wife Eurania, his doctor, and a fellow steel magnet. Stopping in Paris, he bought a roadster, and then drove the 430 miles south to Nice (in just 18 hours), where he met up with (amongst others) Henri Rothschild. According to Charlie, they "made a jolly party … racing all over the Riviera”. Their diversions included, said Charlie, four visits to the casino (above) 10 miles up the coast Azure at Monte Carlo.
In fact Charlie was having such a good time that he failed to notice the presence in the Hôtel de Paris (above) in Monte Carlo, where he was staying,  of several American newspaper reporters.
The story of his visits to the casino appeared in half a dozen newspapers on Monday, 13 January, 1902. The New York Sun trumpeted from Monte Carlo, " Charles M. Schwab is here and the lion of the day. (He) has been playing roulette...broke the bank this afternoon. He has had an extraordinary luck and repeatedly staked the maximum. ...the coupler pushed over to him $200,000, his winnings for the day....Mr. Schwab sauntered from table to table playing the maximums...." 
The New York Times editorialized, "A man who is at the head of a corporation with more than a billion dollars of capital stock...is under obligation to take some thought of his responsibilities...(and yet Charlie (above) had joined) the intellectual and social dregs of Europe around the gaming tables of Monte Carlo, and there (made)..a prolonged effort to ‘beat’ a game which to a mathematical certainty cannot be beaten” 
Reading all of this in his West Fifty-first Street mansion (above), Andrew Carnegie immediately cabled Charlie in Nice, "Public sentiment shocked...Probably have to resign. Serves you right." Then he sent a letter to J.P. Morgan, " I feel...as if a son had disgraced the family...He is unfit to be the head of the United States Steel Co.—brilliant as his talents are...Never did he show any tendency to gambling when under me, or I should not have recommended him...He shows a sad lack of...good sense...I have had nothing wound me so deeply for many a long day, if ever. Sincerely Yours, Andrew Carnegie."
I patronized the tables at the Monte Carlo, Till they hadn't got a sou for a Christian or a Jew;
So I quickly went to Paris for the charms of mad'moiselle,
Who's the loadstone of my heart - what can I do, When with twenty tongues that she swears that she'll be true.
I'm the man who broke the bank at Monte Carlo.
Realizing he had some how made a mistake, Charlie issued the obligatory press statement. “I have been on an automobile trip through the south of France with a party of friends. ..I did visit the Casino at Monte Carlo, but the statements of sensational gambling are false.” He insisted he had won no more than $36 on any occasion. But it did not matter whether he had won at the tables or not.
Charlie returned home on 16 February, 1902 (that's him, smiling), and now refused to even comment on the affair. That did not matter, either. Carnegie would never support him again. Morgan, never said a word in public about the affair. He did not have to. Now that Charlie was isolated from his mentor, he was easy prey for Morgan.
The next year, 1903, Charlie was forced to resign from U.S. Steel. And without his dynamic leadership, Morgan's monopoly lost half of its market share by 1911. Charlie went on to buy Bethlehem Steel (above), which he ran until shortly before his death, in 1939. Like all gamblers, he died broke. As Charlie himself said, "I have probably purchased fifty 'hot tips' in my career, maybe even more. When I put them all together, I know I am a net loser."
But what Charlie never did, as least publicly, was he never asked what all those New York reporters were doing at the Casino in Monte Carlo, on that particular winter weekend in 1902. If he had it might have occurred to Charlie that the man who actually broke the bank in Monte Carlo had been John Pierppoint Morgan (below). And he wasn't even there.
I stay indoors till after lunch, and then my daily walk
To the great Triumphal Arch is one grand triumphal march,
Observed by each observer with the keenness of a hawk,
I'm a mass of money, linen, silk and starch - I'm a mass of money, linen, silk and starch.
I'm the man who broke the bank of Monte Carlo
- 30 -

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