I think batting average is a horrible stat to zero in on for Schmidt. He hit for power and had over 1500 walks. That means he was getting on base plenty, enough to lead the league three times in OBP. He has a higher OBP(just barely) than Nap Lajoie, who hit .338 career.
So despite the low average, he still got on base at a high clip, he is the best power hitting third baseman and he was top rated defensively. He is the best third baseman.
Pie Traynor might get knocked down by modern stats, but when they named the all-time team for the first century of baseball(1869-1969) he was the third baseman and Jimmy Collins was second, both ahead of Eddie Mathews right near the end of his career.
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