Stephen Moore at the WSJ has a great interview with Charles Schwab -- I didn't know much about the man, but my respect for him has grown immensely.

Creating wealth is what Mr. Schwab has come to regard as his "life's pursuit." He's accomplished that not just for himself--his stake in the company is estimated at $4 billion--but also for the millions of small investors who first came to be owner-capitalists by opening a Schwab account. So who better to discuss the future of financial markets and investing than the man who revolutionized the brokerage business? ...

I ask him what he means by his favorite term, "democratic capitalism." He replies that the stock market today is "an open tent for anybody to come into." Ever the salesman, he adds: "For as little as a thousand dollars, you can open an account at Schwab. I mean, it's not a big barrier to entry."

Mr. Schwab pioneered the use of the Internet and helped create the concept of the online brokerage firm. This innovation has enabled investors to behave like informed consumers by leisurely shopping around online for mutual funds tailored to their particular financial circumstances.

It wasn't always like this. When Mr. Schwab started his firm after working in insurance, banking and financial consulting, the mutual fund industry was just getting off the ground. "There were a few high-load mutual funds that charged a 9% sales load" (or fee) he recalls, shaking his head. "The investor had a huge cost to get in and out and faced a big spread between the bid and the ask [price]. There were big commissions on the top of that, to boot. There was all kinds of friction in the system to prevent small guys from investing."

Mr. Schwab sweat those transaction costs out of the process so that even small traders could have a go at it. Brokers have become "commoditized" agents, he likes to say. Schwab's fees on its money-market funds are as low as 0.4% and they keep shrinking.

Mr. Schwab and others like him have done more to improve the quality of life around the world than the United Nations could ever dream of. Perhaps only Norman Borlaug stands taller than the financial wizards who make modern prosperity possible.

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