God’s Gold
Part Six: Gathering Storms
AT THE end of six years of incessant and relentless war, with rivals and enemies on all sides, Mr. Rockefeller found himself at 39, the master of the nation’s greatest industry, but also the target for its bitterest shafts of criticism. Since 1872 he had been a mark for criticism, but it was such as a man hears little of, that goes from mouth to mouth, and was directed chiefly at his business battles. Now he was to see gather around him those clouds of personal abuse—endless denunciations, attacks upon his character and his integrity, his religious sincerity, his family; attacks by courts, criminal and civil, legislatures, congress, grand juries, and the press, which now began to recognize him as one of our performing celebrities.
To these attacks he opposed one weapon only—silence. There is little doubt that John D. Rockefeller looked with complete approval upon his whole plan up to this point. He had done nothing for which his conscience irked him. If he had sinned it was to be ruthless in carrying out his plans. Like every great commander in history he had not shrunk from his purposes because here and there they involved human suffering on the part of those who lagged behind in the march of progress. Mr. Rockefeller, who found no time for reading books, was an industrious reader of his Bible. There he found plenty to comfort him. Was not Jehovah himself ruthless in pursuing his righteous plans? Did not the Lord turn a river into blood and cover the land with frogs? Did not Moses turn the dust into lice and flies, and cover men and beasts with boils? Did he shrink from these necessary stratagems because weak men suffered? Rockefeller’s soul was more shocked and appalled by the inefficiency and waste of business than by the plight of the occasional struggler who fell by the wayside as his juggernaut moved forward.
As he read his Bible one wonders if he ever paused on the story of Moses, whose wisdom was lost upon the Pharaoh because he was slow of speech and slow of tongue. And the Lord sent him Aaron and said, “Thus shalt thou put words into his mouth; and I will be with thy mouth . . . and will teach you what you shall do. And he shall be thy spokesman unto the people; and he shall be unto thee instead of a mouth” (Exodus 4:15).
The subject of public relations hardly occurred to Rockefeller at all. He had marched forward in the mechanics of business. But he lagged hopelessly behind many other men in his understanding of the new human elements which entered the problem. Public Opinion and its might he understood not at all. He went on believing that the oil business, even though he should get it all in his grasp, was his own private business and was none of the public’s business at all. He withdrew behind his righteousness and let his enemies howl. The mistake he made was in failing to see the importance of selling, not merely his oil to the public, but his company as well as himself in the bargain.
This was not because publicity was unknown. It must not be supposed that publicity and propaganda is the invention of the last score of years. The art was well understood at that time and there were business men, too, who knew well enough the importance and power of Public Opinion. The great banker, Jay Cooke, knew it and kept a score of newspaper men and editors on his pay roll. Politicians had already understood its importance. Boss Tweed knew it well enough and when he fell some eighty newspapers in New York collapsed. The newspapers, in fact, were for the most part like their European contemporaries, subsidized by politicians. Business interests did the same thing. The method was crude. They handed out money to editors and reporters and in some cases bought newspapers or actually financed them. Tom Scott owned the New York World and when he unloaded it, it passed into the hands of Jay Gould. Tilden’s advisers recommended distributing from $3,000 to $10,000 a month among thirty newspaper men in New York. The United States Bank at an earlier day had dispensed its thousands among countless editors. The Standard itself was charged with the use of money to defeat the pipe line scheme of Henry Harley and General Haupt. In this case, however, it was not so much Public Opinion Rockefeller dealt with. He used the papers as the readiest means of reaching a definite group of people whose lands were sought by General Haupt and Henry Harley. Rockefeller sought to block their plan of securing rights of way over these lands by throwing suspicion on the credit of Haupt and Harley.
What Rockefeller did not know anything at all about was the modern art of ballyhoo. That art too was already understood. J. Cooke in selling the stock and bonds of the Northern Pacific did things little different from the real estate boosters of California and Florida. Newspapers, lecturers, pamphlets, books, exhibitions, told the story of the gay and tropic luxuriance of what came to be called his Banana Belt in the Northwest and J. Proctor Knott rendered himself famous by his satirical speech in Congress on Duluth, “The Zenith City of the Unsalted Seas.”
If he remained silent it was not, however, because he did not often wince under the lashings of public denunciation and scorn. Many years later, speaking to William Hoster, an American reporter in France, of these early troubles, Mrs. Rockefeller sighed: “Those were days of worry.”
“I don’t know how we came through them,” said Rockefeller. “You know how often I had not an unbroken night’s sleep, worrying about how it was all coming out. All the fortune I have made has not served to compensate for the anxiety of that period. Work by day and worry by night, week in and week out, month after month. If I had foreseen the future I doubt whether I would have had the courage to go on. . . . I had no ambition to make a fortune. Mere money making has never been my goal. I saw a marvelous future for our country, and I wanted to participate in the work of making our country great. I had an ambition to build.”
Very little has happened in Rockefeller’s life save by plan, certainly none of the important events. We may be reasonably sure that the amassing of the great fortune was something more than a mere incident.
II
THUS while scandal and gossip loaded Rockefeller’s name with infamy he did nothing. Every man who failed in the oil business had a tale to tell of how John D. Rockefeller had crushed him. Men who sold out to him whispered around how they had been squeezed; how the screws had been turned; how Rockefeller had forced them to sell their plants at a mere fraction of what they had put into them.
One such story which poured over his name a peculiarly bitter sauce was the tale of Mrs. Backus, “the lone widow of fatherless children,” who, the story ran, was duped by Rockefeller into selling a business worth $200,000 for $79,000. Twenty years later Lloyd told it and thirty years later Ida Tarbell repeated it in her brilliant indictment of Standard Oil.
The story as told made an ugly one. F. M. Backus, a lubricating oil pioneer of Cleveland, died in 1874. After his death his widow for four years operated the business, making profits of more than $25,000 a year. After 1877, when the Standard Oil went into the lubricating business, Mrs. Backus saw that continuance of her company was hopeless. She wished to sell but refused to treat with any one save Rockefeller personally. She appealed to him “as the mother of fatherless children” to deal fairly with her. “He promised,” she said, “with tears in his eyes, that he would stand by me,” and added that “all he wanted was a controlling interest in the stock of her company.” She asked $200,000, “much below what the stock was worth.” The Standard offered her $79,000 and at this figure she sold. She asked to retain $15,000 worth of the stock. The answer was a rude “no!” Later, when she threatened to make the whole transaction public, Rockefeller wrote offering to return the plant or give what stock she wanted. The circumstances made a strong appeal to public sympathy—the defenseless widow, the helpless orphans, the command to “get out or be crushed,” the confiscation of her property at a third of its value.
The chief gravamen of the charge against Rockefeller was that he took a valuable business at a third of its value and duped the helpless victim into submission. Looking over all the evidence now it is clear that there is not one iota of evidence to support Mrs. Backus’ valuation of $200,000. Two years before, when the business was prosperous, she was willing to sell to a Mr. Rose for “considerably less.” Rockefeller declared he could duplicate the entire plant for $20,000. Miss Ida Tarbell, pressing this charge against Rockefeller, conceded that the physical reconstruction of the plant might well have been possible at one-third the price at which it sold. But what, she asks, of the good will of a business that was yielding $25,000 to $35,000 a year? One may ask what is the good will of business which is threatened with ruin? If the physical plant was worth only $20,000, then the good will must have been valued at $40,000. This is nothing less than defending a capitalization at three times the actual value and this is precisely what Jay Gould and Daniel Drew and other freebooters were doing with the railroads and what other predatory promoters did later with industry. This became infamous under the picturesque name of “watering stock.” Among the charges brought against Rockefeller this one has never been included. When the Steel Corporation was formed men got three and four times the value of their plants in watered stock. Rockefeller always refused to engage in this indefensible policy.
Mrs. Backus was represented in her negotiations by Charles H. Marr, her attorney, and Mr. Maloney, her superintendent. Marr swore later that Mrs. Backus furnished the Standard an itemized estimate of her assets; that the whole statement amounted to $150,000, not $200,000. The item “works, good will and successorship” was put down at $71,000. The rest was made up of oil on hand, cash, accrued dividends, and bills receivable. Rockefeller bought from her only three things—the works and good will and the oil. The former, which she put down at $71,000, he offered $60,000 for. The oil he bought separately for $19,000. The rest Mrs. Backus retained. The real difference between what she asked and what Mr. Rockefeller paid was the difference between $71,000 and $60,000—not so great a discrepancy.
As to duping her, Mr. Marr declared he conferred with her throughout the negotiations and she seemed well pleased with the price. She pictured herself as forced to sell to Rockefeller, yet she was hunting a purchaser for two years. Indeed all the evidence is against the story as told. There is not a shred of support for it save the “re-iterated statements of an embittered woman who feeds her children on the story three times a day,” as her brother-in-law described it. Yet this tale was used with immense effect to tarnish Rockefeller’s name.
III
PATIENCE and ruthlessness and remorseless logic—these were Rockefeller’s resistless weapons in all the negotiations carried on at this time. He made no secret of his intention to monopolize the business. He told more than one man that the Standard Oil Company alone could remain in the refining business. Having set this mark, he was relentless in moving on to it. His method was always the same. He told his competitor he must sell—always in tones of simplicity, directness, and sympathetic benevolence. He looked the man squarely in the eye, with an intentness that was disconcerting, coldly boring into him like steel. But he used words of courteous and gentle kindness. The situation was desperate, he explained. The business could no longer go on as it had. Ruin faced every man in it. No one could carry on successfully but the Standard. He had shown that. He had ways of making the business go. The man had a chance to get out now. He could sell. Mr. Rockefeller would send around appraisers and give him cash or Standard Oil stock for the amount. Take Standard Oil stock, he would urge. If you do the day will come when you will be independent. Take Standard stock and “your family will never know want.” He believed this. But his rivals didn’t. He had boundless confidence in the oil industry. They had none. Most of them took cash. Those who took Standard stock became wealthy. But most of them took cash. They believed the oil business doomed. Yet they insisted on putting enormous valuations on their profitless plants in a doomed business for “good will.” When Rockefeller refused to pay more than the actual value of their refineries they denounced him for his squeeze. But he gave them all their chance to come in with him. When they refused to sell he was adamant. He never permitted circumstances to soften him. He had a plan—he was almost the only man of his day who had. And he had the courage of the great commander who does not shrink back from the sometimes cruel need incident to carrying a great plan forward.
CHAPTER II. SIGNS OF REVOLTIN THE midst of Rockefeller’s grandiose plans James H. Hopkins, a representative from Pittsburgh, introduced into the House of Representatives in April, 1876, a bill “to regulate Commerce and prohibit unjust discriminations by Common Carriers.” America, committed whole-heartedly to the principle of individualism and its hand-maiden laissez faire and the efficacy of the “laws of trade” as regulators of business, found something had gone wrong with those laws. Large scale business had made its appearance everywhere. Men had begun to collect together in corporations. The individualistic public seemed powerless against them. The laws of trade, too, seemed to be impotent to hinder them. Little business men as well as the public demanded protection. Leaders continued to mouth about individualism and to cry out for collectivism.
Thirty years before this New Hampshire had named a railroad commission (1844). Between 1853 and 1858, Connecticut, Vermont, and Maine established commissions. They were merely to protect the public against accidents, fires, and the killing of cows on the track. But in 1867 the National Grange of Husbandry pressed its program and got laws for state regulation passed in Illinois, Iowa, Wisconsin, Missouri, Kansas, Nebraska, and Minnesota. Massachusetts in 1869 named a commission to supervise roads in their relations with shippers. But its only weapon was publicity at a time when the methods of publicity were little known.
Meantime railroad abuses multiplied and shocked the country. The roads were in the hands of crooked promoters. The Erie with assets of $65,000,000 had outstanding $155,000,000 of stocks and $25,000,000 of bonds. Vanderbilt, Drew, Gould, Fiske, and others pressed their audacious and picaresque promotions amid the bribery of lawmakers and editors. One reads a harrowing account of these villainies in an address delivered by John Livingston entitled “The Perils of a Nation.” Curiously enough, it was delivered at Owego, New York, John D. Rockefeller’s old home, September 22nd, 1871. Every public official carried a free pass. Pennsylvania and New York prohibited passes but the Pennsylvania Railroad ignored the law. Tom Scott, when some of his shareholders opposed the further use of these petty bribes, replied, “With passes I could carry out desirable purposes.” Bribery was general. Jay Gould spent a million dollars on the New York legislature to get through a single bill. Railroad barons discriminated in favor of localities in which they were interested. Unfair rates, rebates, price wars, robbed shippers and stockholders. And while the roads lost countless millions their managers grew wealthy. They used the roads as if they owned them outright and without any thought of the public’s right in their services. Slowly the public which had been schooled to believe that government should not attempt to do anything about such matters began to feel that in some way something must be done. In 1872 the Windom Committee was named to investigate railroad abuses. It recommended a limited form of railroad ownership, which merely alarmed the railroad barons a little.
Then in 1876 Hopkins introduced his bill to regulate the roads and added a resolution for an investigating committee. All during April petitions poured into Congress from business men in Pittsburgh for relief. The Pittsburgh Chamber of Commerce added its appeal. Hopkins presented supporting petitions from business men bearing nearly 1,800 signatures. In May Hopkins asked unanimous consent to have his resolution considered. A congressman arose and objected. He was the Honorable Henry B. Payne, father of Col. Oliver Hazzard Payne, treasurer of the Standard Oil Company. Then Payne went to Hopkins and suggested that if he would alter his resolution to have the probe made by the Committee on Commerce instead of a “select committee of five” he would not object. Hopkins agreed, but again his resolution was blocked. Some days later Representative James Wilson, of Iowa, later to become famous as Secretary of Agriculture, offered the resolution. This time it was passed by a substantial majority. Why did Standard Oil want the change made?
The Committee on Commerce met. There at the side of the chairman, Hon. Frank Hereford of West Virginia, sat Mr. J. N. Camden, also of West Virginia, as his adviser. Camden was head of the Camden Oil Company, then owned by Rockefeller. The Committee summoned railroad chiefs and Standard Oil heads. All save two, Benjamin Cassatt and Col. Oliver H. Payne, ignored the Committee’s summons. And they refused to produce their papers. Representative Wilson denounced the Committee for its surrender to this defiance. E. G. Patterson, president of the Producers’ Union, told the shippers his side of the story. And there was one other witness. He was Frank Rockefeller, John D.’s youngest brother, interested at the time in the Pioneer Oil Company. This was the first public act in the feud of these brothers which lasted practically their whole lives. Frank Rockefeller charged there was a pool of rates and a system of discriminatory rebates. He was on solid ground here. But he went further and charged that the rebates were split between the railroad officials and Standard Oil. Tom Scott indignantly denied this in Pittsburgh and Frank was forced to admit that he was expressing just a suspicion. In the end Payne and Camden routed the Hopkins bill into the committee’s pigeonhole.
About the same time a free pipe line bill and anti-discrimination bill was being smothered in the Pennsylvania legislature. But the subject was too urgent to be kept down. Two years later a bill prepared by E. G. Patterson, president of the Producers’ Union, and introduced by Louis F. Watson, of Warren County, came finally out of committee, named after Representative John F. Reagan of Texas. The Reagan bill prohibited rebates, drawbacks, discriminations, required publication of rates and equality in rates between localities. “States rights,” cried a few unthinking enemies. But the railroad and the oil lobby remained away. The bill passed November 11th, 1878. The oil regions rejoiced. But Mr. Rockefeller and Mr. Scott were not worried. The bill never reached the floor of the Senate. The Producers’ Committee reported sadly that “our present lawmakers are ignorant, corrupt, and unprincipled and under control of monopolies”—a verdict which history was to vindicate.
CHAPTER III. THE STORM SPREADSOILDOM read in the Derrick September 19th that Rockefeller had whipped the Pennsylvania and gobbled the Empire. Five days later a call went out from the Grand Organizer of the Producers’ Protective Association—“Call a meeting of the unions early next week. Get your canvassers to work. The last crowning infamy of the monopoly has roused up all producers to strike for free trade and equal rights in oil transportation.” The organization of secret lodges was pressed and the Derrick, boldly telling the producers they were themselves to blame, declared their salvation lay in these lodges. But somehow B. D. Armstrong, the Grand Organizer, had to admit a kind of languor hung upon the oil men. However, by November 21st, delegates from the lodges met at Titusville in what they called the Parliament of Petroleum. There were, they proclaimed, 172 delegates of 2,000 producers representing an invested capital of $75,000,000.
They sat in secrecy for three days. Reporters came from many Eastern cities, but were kept out. December 11th they assembled again behind closed doors. Then the editor of the Derrick summarized their plans. They were to form a strong organization; restrict the drill, lease all oil land possible; make an arrangement between refiners and producers. Other plans soon developed. Benson, McKelvey, and Hopkins proposed a pipe line to the sea. Louis J. Emery, Jr., was organizing a new pipe line to Buffalo. The Parliament resolved to support both these plans.
The pipe line to the sea was an old dream. Benson, McKelvey, and Hopkins, who directed Dr. Hostetter’s Columbia Conduit Company, now worked to revive it, and they engaged General Haupt to survey the route from Brady’s Bend to Baltimore. Their organization was complete in January and the Grand Council adopted the project and named B. B. Campbell and C. V. Culver, chiefly famous for his hectic chain bank failure, to represent it on the directorate. To carry it out a free pipe line law was necessary and a bill was introduced into the Pennsylvania legislature supported by a petition with 8,000 signatures. Immediately opposition broke out which was cleverly exploited by the Rockefeller interests. The New York Tribune said the bill and the seaboard pipe line was backed by Belgian and German refiners. Philadelphia was against it. A seaboard pipe line would mean a loss of two million a year to the Pennsylvania Railroad and Philadelphia had millions invested in that road. The Philadelphia Commercial Exchange adopted resolutions opposing the bill. The Pittsburgh Chamber of Commerce adopted a memorial to the legislature to defeat the bill. Region producers instantly countered with a threat to boycott Pittsburgh merchants. Those gentlemen promptly published cards in the oil region papers repudiating the Chamber’s action and then the perplexed Chamber rescinded its resolution. April 17th the free pipe line bill passed the House by a big majority and the oil regions cheered. But too soon. The Standard Oil was busy. Its agents circulated petitions against the bill. The oil industry, they said, employs 260,000 men in Pennsylvania. This project will ruin Pennsylvania’s oil business and hand it over to Europe. May 9th the Pennsylvania Senate killed the bill.
Meantime the seaboard pipe line promoters were busy everywhere. We find Benson in Philadelphia seeking funds and reporting progress. Baltimore papers record the presence of General Haupt buying 300 acres on Curtis Creek for refineries and tanks and announcing that he has secured right of way over 230 miles from Butler to Curtis Creek.
The other project backed by the Parliament of Petroleum was the Equitable Petroleum Company, a pipe line from the Bradford Field to Buffalo, promoted by Louis J. Emery, Jr. The oil piped to Buffalo would then be run to New York by the Erie Canal. Emery was a resourceful organizer and on August 7th, 1878, he sent his first shipment by canal into New York City—nearly 2,000,000 gallons—five boat loads, piped 80 miles from Bradford to Frisbie Station on the Buffalo and McKeon Railroad, then to Larabie on the Buffalo, New York, and Philadelphia. There it was pumped from tanks on flat cars to canal boats. In the Tribune we read that New York City refineries have a fleet of twenty boats and expect to bring in about 1,500 barrels a day. Emery hoped soon to be carrying 6,000 barrels a day. One wonders, if the Standard had such a monopoly, where the refineries were to take this oil? The simple truth is that producers were very much in the dark about the refineries. Rockefeller had far more in his hands than they dreamed.
A few months later the seaboard pipe line organization was completed. It was called the Tidewater Pipe Line Company, Ltd., with B. D. Benson as president and R. E. Hopkins as treasurer and in the first week of 1879 the first construction contracts were let.
II
WHILE these plans were maturing the Producers’ Association, after months of secret meetings, launched the American Petroleum Company on Christmas Eve, 1878. This was a corporation with 200,000 shares at $10 each. They were to be sold twice a week in lots of 100. The managers put one amazing feature into that corporation. It put one-half of the capital “in trust” for the purpose “to secure control of the company and the maintenance of its agreed policy.” This was four years before the Standard Oil Trust was formed. Sales of this American Petroleum Company stock went forward with a good prospect of success.
Here, then, were three definite plans under way. But despite the optimism of many, a rift appeared in the Producers’ Union. In June, 1878, B. D. Armstrong, Grand Organizer, had told the Derrick the outlook was far from bright; that the union had not met its expectations; that the seaboard pipe line had divided the sentiment of the producers; that there were 5,000,000 barrels’ surplus oil and that the time was not far when Chinamen would be working in the regions at fifty cents a day and, above all, if the producers succeeded in driving Rockefeller out, oil would go to fifty cents a barrel. For this exhibition of treasonable pessimism the Grand Council abolished the job of Grand Organizer and detached the gloomy Mr. Armstrong from the service.
But Armstrong was not the only pessimist. The oil towns were full of weak sisters. In middle November the New York Sun reported that the producers were actually in conference with Rockefeller in New York about a compromise. Mr. G. H. Nesbit, of Petrolia, one of the conferees, said to the Tribune: “The persons in conference are large producers but do not pretend to represent the union, though several are members of the general council.” They discussed restraining production, fixing prices, ending freight discriminations. Rates were still the chief grievance, the independents paying $1.40 from Parker’s Landing, the Standard Oil 20 cents. Immediately the Grand Council repudiated the conferees. But the conferring producers went on and after Christmas published a card in the Derrick that they proposed a joint commission of producers and refiners to deal with their troubles and called on producers to instruct their delegates to the Grand Council how to act.
Then it was learned that all the conferences had been begun at the instigation of Rockefeller. The rift between the compromisors and the die-hards widened. In March, 1879, when things seemed rosiest for the new pipe lines, Oil City producers proposed a conference with the refiners. The Grand Council voted it down, whereupon the Oil City crowd went to New York to the offices of the Standard Oil. Rockefeller asked for time to prepare a plan. Meantime the American Petroleum Company was opening offices all over the oil regions. But the price of crude oil sank lower—a dollar in January; 95 cents in March; 75 cents in May. In June the implacable Derrick called attention to the fact that when the P. P. A. came into existence oil was selling at $2.25 a barrel and is now selling at 70 cents. It intimated that “the producers should take hold of their organization and run it in their interests and not in the interests of pipe lines, oil storers and lawyers.” This was the last blast of the heroic little paper on the side of the independents. Its story must come later.
III
“NEVER since the good times of Pithole and the Creek has there been such activity and life,” said the Derrick in 1876. Oil stocks were being reduced and oil went to four dollars a barrel. Now in 1878 it was down to 70 cents. The higher prices had resulted in furious wild-catting. New fields were opened in McKean County, Pennsylvania, and Cattaraugus, New York. Just as the wheat was ripening in Summit City a wild cat hit oil. The magic cry of “Oil!” sounded as it had at Pithole. In a year a busy wicked city of 12,000 defaced the trampled wheat fields. In two weeks a pasture lane was a street in a town lined with buildings. Land was held at five dollars a front foot and every other door led to a gin mill selling tanglefoot whiskey, with dancing partners for the unregenerate. A young man with $25 bought a farm; $20 down, $5,000 in thirty days, $5,000 in six months. Five days later a well came in on the adjoining land. The young speculator refused $20,000 for the farm. Three weeks later another big well spouted on the other side. The youth sold the farm for $110,000. In a year the oil languished, the walking beams slowed down and quit, the adventurers drifted away and soon Summit City joined Pithole and the other ghost towns of Oildom.
But it was the outpouring in the Bradford Field which wrecked four-dollar oil. Early in 1877 northern McKean County became the center of attention. Drillers flocked there as they did into Venango in ’59. Rockefeller in New York saw his plans menaced. Just as he had completed his capture of the old oil regions, here was a new oil region, where, perhaps, he would have to repeat all over his laborious conquest of the last few years. With what Ida Tarbell called “surpassing intelligence, energy and courage,” Rockefeller rushed the construction of pipes into Bradford. Oil gushed forth in an uncontrolled flood. Producers met at Oil City to consider “a plan to retire oil from the market with a view to keeping up the price”—a plan to circumvent those laws of trade they worshiped so devoutly when they were lashing out at Rockefeller. The Derrick implored the producers to cease drilling. It pointed to one farm which had a single lease and a single derrick, being split into 17 leases and 17 derricks. By December, 1878, the Rockefeller pipe line warned that daily runs of oil exceeded shipments by 22,000 barrels in the oil regions. This seems an exaggeration, yet so I find it recorded. The pipe line managers warned the producers. They met to devise some plan for storing oil. Failures multiplied. That month $50,000 of oil paper went to protest. Oil flowed on the ground. Whose fault was this? The only remedy open to the producers was to restrict production. But this they resolutely refused to do. Sixteen hundred wells pumped petroleum into the mounting deluge and while friends urged curtailment, 500 new wells were being drilled. Pledges for a six months’ shutdown were distributed but never signed. The region papers hammered away. Producers put $21,787 a day into the ground more than they were taking out, cried the Derrick. “Oil covers the ground,” it said two weeks later, “yet the drill bounces merrily on.” “While a writ of Quo Warranto against the pipe lines may do some good,” said a Parker’s Landing daily, “a writ of Quo Shut Down Drilling against every sea-cook in the business would be an act to be commended.” A meeting of producers in June refused to agree to a shutdown. But the leaders railroaded through this resolution:
“Whereas, the shortest way to $2 oil is through 25-cent oil, therefore be it
RESOLVED that we favor pushing the drill as rapidly and diligently as possible until the goal of 25-cent oil is reached.”
In the midst of all this we hear the lash of the landowner’s whip—the royalty owner who, when drillers were willing to curtail, demanded that they go on under the terms of their leases.
Yet the producers had the notion that as long as they chose to go on with this stupid and destructive course the Standard Oil Company ought to go on paying them the best prices for their oil, as if there were no “sacred laws of trade” and, what is more, providing pipe lines in which they might store their worse than useless flood. From this futile illusion they were rudely awakened in July when Jabez Bostwick issued an order that no more oil would be accepted in Bradford pipe lines for storage. Oil would be accepted only for immediate shipment. A kind of demoniacal rage greeted this announcement. The very words “immediate shipment” by which the order was known came to have an evil and sinister significance. It worked a hardship on the producers, to be sure, but this was the fruit of their own fatuous folly. Obviously they had to sell the oil they ran into the pipes at the prevailing distress prices or let it run on the ground or cease production. Of course, the Standard buyers were there in the offices of the United Pipe Lines taking oil at the lowest rates.
The producers evidently believed this order was coldly designed to destroy them. “Why,” they cried, as reported by Miss Tarbell, “force us to compete with each other?” This extraordinary exclamation is worth pondering. These were the men who wanted to strangle monopoly, yet who asked why they should be made to compete with each other. They rushed into the public square at Bradford and denounced the United Pipe Lines. Two days later they met in the square again. Inflammatory speeches lashed them to fury. “Drive this monopoly from the country,” cried one fiery orator and he called on his audience to smash the lines and stations. But they did nothing. They just went on pumping oil and drilling new wells. The newspapers of the day record what looks like the most depressing evidences of human folly. Oil at 69 cents in July—output 11,000 barrels a day higher than in January. In August, oil down to 64 cents—output increased another 5,000 barrels a day—20,000 barrels a day more than the preceding August—7,000, 000 barrels surplus in the pipes, 2,000,000 more than in January. Yet the newspapers record the melancholy story—“Cole Creek comes to the front with more big wells.” “Drilling more active in Byron Center development.” “Bradford Field brings in 18 new wells.”
Disastrous fires added to the losses. But nothing could stop these blinded men from pumping oil that nobody wanted or from denouncing Rockefeller for refusing to take care of it for them. In New York a Tribune reporter asked wise old Charles Pratt what it was all about. “The whole thing is very simple,” he answered. “There has been an overproduction and producers are suffering from the natural consequences. We have large refineries under which fires have not been built for months. We have urged the producers to diminish production, but in vain. A pooling arrangement will force up the price for a time. They will sell what is demanded; the rest they will store. This retired stock will increase until it is as cumbersome as they are willing to stand. Then they will stop or diminish production—simply postpone until next month or next year what had better be done now.” Pratt showed a clipping from an oil region paper urging investment in oil land as a sure road to wealth. He wrote on the margin: “Read this again in 1880.”
In spite of all the storming the “immediate shipment” order remained in force until the situation cleared, which was in December.
CHAPTER IV. AT THE BARABOUT this time the wrath of the oil men broke out in a series of attacks which were to bring home to Rockefeller the bitterness of the feeling against him. As soon as the Equitable Pipe Line began carrying oil to Buffalo, Rockefeller called on the railroads to carry out their agreement with him to protect him against competitors. The representatives of the trunk lines met at Saratoga and reduced the rates on his oil eastward to 80 cents. The spectacle of the railroads in a conspiracy with Rockefeller to crush his rivals aroused the righteous indignation of the regions. The Producers’ Protective Union sent a committee of twenty-five to Governor Hartranft of Pennsylvania to demand action against the conspirators. The Governor directed the Attorney-General to make an investigation and to institute Quo Warranto proceedings against the Pennsylvania and other railroads to compel them to perform their duties as common carriers.
The Attorney-General directed William McCandless, Commissioner of Internal Affairs, to make the investigation, and that gentleman’s representative, James Atwell, appeared in Titusville in September to conduct hearings. After listening to detailed testimony of the union officials reciting a long list of discriminations, McCandless made his report on October 14th, 1878. The report staggered the regions. McCandless found that the complaint filed had not been substantiated “in a way that demands action,” and believed that the facts did not warrant him in reporting a case “that is beyond the ordinary province of individual redress.”
It would be impossible to exaggerate the violence of the anger which this report produced. Crowds gathered in the streets of all the oil towns. In Bradford they gathered outside the United Pipe Line offices. They jeered and threatened violence. The charge ran around that McCandless had gotten $20,000 from the Standard Oil Company to be used in his campaign for Congress. At Parker’s Landing the stuffed figure of a man was found on the morning of the 19th hanging in front of the oil exchange. On one sleeve was a placard reading, “I am Buck. Who are you?” One on the breast read, “The Very Honorable Secretary of State for Internal Affairs of the Empire State of Pennsylvania.” On the forehead was another: “The complaint has not been substantiated in any way that demands action.” Around this figure all day swirled men, shaking angry fists at the hanging effigy. As night came they cut it down, tramped on it, and finally burned it. Another effigy hung in the streets of Bradford and another in the new town of Tarpot. Sticking from the pocket of the Bradford effigy was a huge check for $20,000 signed John D. Rockefeller.
A letter printed in the New York Sun said: “Send a reporter to the oil regions if you have one who cannot be bought like Buck McC.” The Sun did. He found the regions in an uproar. A mysterious secret organization had sprung up. Men marched through the streets at night. Chalked on buildings were curious symbols—the letter K with a numeral surrounded by a coffin. It was whispered about that 4,000 men were under arms and ready to attack or seize the railroads. In Bradford there were 8,000 idle men, mostly vagabonds, lawless fellows who would have jumped at the first spark as a signal for turbulence and riot. The Governor hurried to the regions. The remembrance of the Pittsburgh strike riots were fresh in his mind. He declared that to his dying day he would remember with regret those unhappy events and that while he was governor he would not compromise with any form of violence. But at this critical moment the Producers’ Union took a hand, the leaders moving among the infuriated oil men and counseling peace. Their influence in the end averted an outbreak.
II
THE HOPE of the oil men was now in the legal proceedings started by the Attorney-General. He made an application for a writ of Quo Warranto in Venango County charging the Standard Oil Company with repeated violations of the law. The writ was served on Samuel C. T. Dodd, attorney for the Standard. The redoubtable Derrick cried out: “The Standard is stabbed.” Later the Attorney-General filed a bill against the Pennsylvania Railroad in Pittsburgh praying that it be compelled to do its duty as a common carrier and asking for an injunction. The Standard lawyers, of course, attempted to block these proceedings with demurrers. But in the midst of the McCandless excitement the courts decided to take jurisdiction. In January a commission arrived in Titusville to take testimony in the injunction proceedings against the railroad. The oil leaders in reach—Archbold, Frew, Lockhart, and Vandergrift—were summoned. Benjamin Cassatt, then vice-president of the Pennsylvania Railroad, also testified. For the first time the people began to get direct, uncontrovertible evidence of the truth of the charges of railroad discrimination. And feeling ran high.
III
WHILE the regions rang with denunciations of the railroads and the Standard, B. B. Campbell, president of the Petroleum Producers’ Association, summoned the Union and launched a move to have Rockefeller and his associates indicted for criminal conspiracy. Some members thought this would be an ill-advised move, but the majority favored a strenuous prosecution. A formal complaint was sworn to by B. B. Campbell and the Grand Jury of Clarion County met to consider the charges. The whole proceeding was carried on very secretly. On April 29th, 1879, while the Producers’ Association was in session, news came that the Grand Jury of Clarion County had indicted John D. Rockefeller for criminal conspiracy and along with him Jabez A. Bostwick, William Rockefeller, Daniel O’Day, William G. Warden, Charles Lockhart, Henry M. Flagler, Jacob J. Vandergrift, and George W. Girty, cashier of the Standard. There were eight counts: conspiracy to secure a monopoly of the oil industry, to oppress other refiners, to injure the carrying trade of the Allegheny Valley and the Pennsylvania Railroad, to extort unreasonable rates from the roads and to fraudulently control the prices of crude and refined oil, and several others.
John D. Rockefeller was in New York at this time. Most of his associates were either there or in Cleveland. O’Day, Warden, Lockhart, and Vandergrift were in Pennsylvania. They immediately surrendered and gave bail. But the others, headed by Rockefeller, evaded arrest. In June an application was made to Governor Hartranft to issue a requisition upon the Governor of New York for Rockefeller. But he refused to honor it.
CHAPTER V. THE HEPBURN INVESTIGATIONIN THE first months of 1879, while all this was going on in the oil regions, the Chamber of Commerce of New York City was presenting to the railroad committee of the state legislature evidence of discriminations by the Erie and Central against shippers and localities, of abuses of trust and frauds on stockholders. Among those who sat listening with attention was a young man of stern Presbyterian forebears, able, deeply interested in finance, full of ambition. He lived on his legislator’s salary of $1,500 a year in a small fourth-floor room in a house in Albany. This youth was named Alonzo Barton Hepburn. He was destined to play a great part in succeeding years. When he died, John D. Rockefeller, Jr., pronounced a fulsome eulogy, and among his numerous titles was that of “Trustee of the Rockefeller Foundation.” But now the tale of railroad abuses he heard stirred him to demand an investigation by a special committee of five. The legislature yielded and that committee, with the young reformer at its head, known as the Hepburn Committee, began its investigations in July. It sat at Albany, Rochester, Utica, New York, Saratoga, and other cities until December. For the first time in the history of the new era an authentic light was thrown on the outrageous system of discriminations, graft, and corruption in railroad and industrial affairs. The nation was shocked. For the first time the name of John D. Rockefeller came to have a national currency as the symbol of the new order and its evils.
The railroads were represented by an array of distinguished counsel headed by Chauncey Depew, then in the full flight of his sparkling oratorical powers. Hepburn declared later that the roads had interposed every obstacle to the success of the inquiry, had refused to produce their books and to answer questions. As for Rockefeller and his Standard Oil comrades, they made a spectacle on the witness stand which produced a great deal of amusement mingled with ridicule and indignation. For the first time they hid behind the phrase which was to become famous in court and committee rooms—“I refuse to answer on the advice of counsel.” It seemed impossible to get direct answers to the simplest questions. Here is a sample from the examination of Henry H. Rogers:
Q. You are a member of the firm of Charles Pratt and Company, are you not? A. Yes, sir.
Q. That firm is one of the Standard Oil’s affiliated firms, is it not? A. I don’t know that I understand your question.
Q. You ship under the Standard Oil’s rates, do you not? A. I really don’t know whether we do or not.
Q. Are you a member of the Standard Oil Company? A. If I was, I think that is a personal question.
Archbold denied the Acme was controlled by the Standard or was affiliated with it (which was a cold-blooded falsehood). He was president of the Acme; a director of the Standard. William Rockefeller and Henry H. Rogers were among the organizers of the Acme but Archbold didn’t know if Standard Oil stockholders owned a controlling interest in his company. He didn’t know if the Standard controlled the United Pipe Lines. He refused to answer about rates. Finally Simon Sterne, counsel of the committee, asked him in astonishment:
“Well, Mr. Archbold, what function do you play in the Standard Oil now as a director?”
“I am a clamorer for dividends. That is the only function I have in connection with the Standard Oil Company.” John D. Rockefeller chuckled when he read that answer in the papers.
When Jabez Bostwick went on the stand and was asked his name he refused to answer on the ground that it might tend to incriminate him. This refusal was based on the Clarion County indictment. This indictment now operated as a most convenient trench for the Standard leaders and seriously hampered Hepburn’s inquiry. But the shrewd investigator did succeed in bringing out facts which shocked the country. For instance, he showed that just a month before the inquiry opened representatives of the four trunk roads met at Niagara with Rockefeller’s agents. The latter said: “These independents have now got a new pipe line started—the Tidewater. And we are bound to crush it and we want a rate that will do it.” Whereupon, while the published rate was one dollar, the Standard was given a rate of twenty cents, which was later reduced to fifteen cents. When this got out the public rate was reduced to thirty cents. It was also shown that while the Standard had a nominal capital of only $3,500,000, it was actually worth $80,000,000. These were new and impressive figures in the America of that day.
The Standard was not the only concern getting rebates. For instance, it was shown that the New York Central had an agreement with Schoelkopf and Matthews to carry the product of their mill 47 per cent under the published rate. During 1877 two firms—Jesse Hoyt and Company and David Dow and Company, had control of the grain market through their rates. Chauncey Depew, the mouthpiece and handy man of the Vanderbilts, defending the roads and turning in anger on the manufacturers, exploded: “Every manufacturer in the state of New York existed by violence and lived by discrimination,” and it was “secret rates and by deceiving their competitors as to what their rates were and by evading all laws of trade these manufacturers exist.”
Hepburn, future Rockefeller Foundation trustee, denounced the Standard. He called it “a mysterious organization whose business and transactions are of such a character that its members decline giving its history lest their testimony be used to convict them of crime.”
He recommended to the legislature a group of acts creating a railroad commission, regulation of railway rates and accounts, all of which ultimately became law.
CHAPTER VI. ROCKEFELLER TRIUMPHSTRAPPED in his New York office in Pearl Street by the Pennsylvania indictment—he dared not go to Pennsylvania, where the authorities clamored for him—Mr. Rockefeller looked out upon a troubled world. There was the indictment in Pennsylvania, the two civil proceedings in that state, the New York investigation. More important, there were the Tidewater Pipe Line and the Equitable pushing on to success, and finally the nation-wide agitation against him and his system.
This latter he understood very little. He had not yet learned that he was making a change in anything more than the method of business operation. That he was compelling profound social changes he never dreamed. He supposed that he was substituting one form of individual action for another; highly organized, concentrated, private, individual operation for widespread, scattered, individual action. That the business had a social element, that the public had any rights in the matter did not occur to him. The public was important as a buyer of his products. It could refuse to buy from him. Therefore he proceeded from the very outset to recognize the customer character of the public and to cater to it. There was in his nature a sense of order and proportion which amounted to a kind of justness, a form of honesty. It was important to give the customer the best oil and the best service. But how he accomplished this and what other rights of the public as members of society and as citizens he might violate in this was something he did not consider. He had regard for his competitor not at all. This was not wholly selfishness or ruthlessness. It was the result of a definite philosophy of business. Rockefeller was definitely convinced that the competitive system under which the world had operated was a mistake. It was a crime against order, efficiency, economy. It could be eliminated only by abolishing all rivals. His plan therefore took a solid form. He would bring all his rivals in with him. The strong ones he would bring in as partners. The others would come in as stockholders. His primary aim was to eliminate them. He would eliminate them by bringing them in. Those who would not come in would be crushed. He would bring them in by making it impossible to remain outside his organization. Hence he got from railroads, legislatures, producers, every advantage he could. Those who joined him would get the benefit of these advantages. Those who remained outside would be crushed by them. That the men he crushed had any rights did not seem to enter his mind. Therefore when legislatures and politicians rose against him he looked upon it as an insolent truckling to the inefficient and moss-backs. His plan of dealing with these attacks was to withdraw deeper into his silence. Tell nobody anything. Ignore summonses and subpoenas and warrants if possible. That there was a powerful public opinion behind all this which he would one day have to deal with never entered the head of John D. Rockefeller. The only thing he was genuinely afraid of was the oil regions.
And now the regions had two powerful attacks—one in the courts through an indictment and civil suits, the other through the formation of the Tidewater Pipe Line. The latter he knew how to fight. It was competition. And his lines of battle for that were already laid. But to push them successfully it was necessary that the Pennsylvania court proceedings should be gotten out of the way.
Rockefeller decided to get rid of these suits rather than try them. His lawyers had informed him that there was no chance of conviction. But lawyers might make mistakes. Besides, he had no intention of treating his enemies in the oil regions to the spectacle of John D. Rockefeller led into Clarion County in chains. They were hot on his trail. They kept up a ceaseless clamor upon the Governor for the bodies of Rockefeller and Rogers. But Governor Hoyt evaded and backed water until the state began to be aware of his shifting. Newspapers criticized him. B. B. Campbell asked for a requisition in June. State officials agreed but managed to make postponement after postponement. July 29th Campbell wrote the Governor that unless he acted at once, he, Campbell, would call on him publicly through the papers. Hoyt shillyshallied again. He said the Attorney-General was sick. Campbell carried out his threat of a public demand. But Hoyt still held back. The producers said Rockefeller had killed the Interstate Commerce bill in Congress with Payne and Camden, that he killed the free pipe line bill with purchased legislators, that he had bribed McCandless and now he must have reached Hoyt.
In the midst of this the indomitable man, patiently making his plans in Pearl Street, acted. The trial of Archbold, Vandergrift, and those arrested was fixed for August. He got an adjournment and sent word to Roger Sherman, attorney for the producers. One morning Sherman, ponderous, able, looking like Grover Cleveland, looked up to see a Standard Oil emissary. Mr. Rockefeller would like to talk with him in New York. Sherman was troubled. He sent for Campbell. Campbell suggested that they go. “We will see how badly scared he is.” Thereupon Sherman and Campbell went to New York and went into conference with Rockefeller, Flagler, and their counsel.
These conferences, begun November 29th, lasted six weeks. At the time the Standard offices were near the end of Wall Street and reporters for the Tribune, Herald, and Sun were numerous in the section. Hence the meetings were held at the Fifth Avenue Hotel. Why Campbell and Sherman were not recognized there is not known. But the meetings proceeded in absolute secrecy. No mention was made of them until February 20th, when Campbell and Sherman had secured an agreement and called a meeting of the Producers’ Association to consider it.
Rockefeller proposed that all the suits be withdrawn. In return, as finally worked out, he made the following concessions:
The Standard agreed to make no opposition to the “entire abrogation of the system of rebates, drawbacks and secret rates of freight in the transportation of petroleum” on the railroads.
Second, it agreed to full publication of all rates.
Third, the Standard agreed that there would be no discriminations by pipe lines in rates and storage; that rates would not be advanced save on thirty days’ notice; that the price of crude would be the same in all districts for the same grade; that the pipes would store all oil offered as long as the production did not exceed 65,000 barrels a day during 15 consecutive days and in any case any immediate shipment oil would be purchased at the going price for certificate oil, provided owners did not sell immediate shipment oil cheaper to other persons.
This agreement, actually reached January 9th, was signed by Campbell and Sherman and the Standard officials. It looked like a perfectly sound arrangement for the producers. But it contained one fatal flaw. The Standard stipulated it would not accept any rate that the roads were not at liberty to give to other shippers. The Agreement with the Pennsylvania Railroad, signed at the same time, provided: “The Pennsylvania Railroad will not pay any shipper of petroleum or its product any rebate, drawback or commission upon shipments different from or greater than that which shall be paid to any other Person shipping or offering to ship like quantity; and that any discrimination which shall be made in favor of shippers of large quantities shall be reasonable and shall, upon demand, be communicated to all persons shipping.”
Here was the old device—rates that would be the same to all persons shipping the same quantity. Of course no one could ship as much as the Standard. There had been a bitter debate on this clause. But Rockefeller insisted on it and out of the negotiations he came with an excellent bargain in spite of the fact that he agreed to pay $40,000 to cover the costs of the Producers’ Union in its fight.
The Producers’ Union which met to consider this agreement was a much humbled affair. In spite of what seemed like progress made against Rockefeller, four-fifths of the lodges organized two years before were dead. Only forty members attended. The Grand Council was not very grand. The report was received in sullen anger. Sherman and Campbell were bitterly denounced. Campbell, big, patriarchal, generous-souled man, sat listening to these reproaches with tears streaming down his cheeks. He had been warned. “I fear,” a fellow producer had written, “you will say I am discouraged. No, not discouraged, but disgusted with the poor, spiritless, and faint-hearted people whom you are laboring so hard to liberate from bondage. . . . Are the producers as a class (nothing but a damned cowardly, disorganized mob as they are) worth the efforts you are putting forth to save them?”
The dying Grand Council, in a kind of expiring gasp, approved the agreement with sullen resignation and passed resolutions denouncing the national government, the state government, the Governor for refusing to grant the requisition for “criminals,” the judges of the Supreme Court, and everybody in general. Then they passed a resolution dissolving the Producers’ Union.
Mr. Rockefeller—organized intelligence against unorganized stupidity—had won again.
CHAPTER VII. CRUSHING THE TIDEWATERROCKEFELLER could now turn to crush the Tidewater. This company involved a serious threat. He had spent years perfecting his control over railroad rates. A pipe line to the sea for crude oil would destroy at a blow all these dearly won advantages. He did not believe the project practicable. But oil was now flowing at Williamstown through the Tidewater’s pipes. It was no longer a matter of speculation.
Back in the fall of 1878, when the project was started, he had first fought the free pipe line bill in the Pennsylvania legislature. He had also moved to battle the Tidewater’s pipes in Pennsylvania. He sent his agents scurrying to buy up exclusive rights for a pipe line from the northern to the southern boundary of the state. If he succeeded in this the right of way would constitute a wall across the state which no other pipe line could cross. Money for this purpose was provided without stint. But in spite of his foresight, the Tidewater managers succeeded in crossing his wall and by April, 1879, the new line was almost ready. The pipe was laid almost the whole way along the ground from Coryville to Williamstown. At Coryville a huge specially built pump was installed to force the oil 28 miles to a level 700 feet higher. A second pump was to drive the oil to the top of the Alleghenies, an additional 1,900-foot level. From that point the oil would run by gravity to Williamsport, where huge tanks were constructed to receive it and where the Reading Railroad had provided 200 tank cars to transport it to New York. The opening of the line was set for May 28th and the occasion was made a festal one. The officers of the line and hundreds of spectators were present. Rockefeller had agents there to observe all that went on. He was quite skeptical of the experiment’s success. Byron D. Benson turned the valve which let the first oil into the pipes. The crowd could hear it as it moved forward and up with a clinking, thumping noise. The crowd moved along with it. Soon only the company representatives, workmen, and Standard observers were left to follow the noisy flow of oil as it moved up over the foothills. In New York, Rockefeller, held there by indictments, got a wire saying the first grade had been made successfully. Later another dispatch announced the second had been reached. June 4th, seven days after the first oil was pumped into the pipes at Coryville, the greenish-black stream poured into the tanks at Williamstown. When Rockefeller got this news, he knew the Tidewater was a success, that a new era in oil transportation had arrived, that he had a new and serious fight on his hands, and that everywhere independent refiners would make their appearance unless he could crush this foe at once. He at once compelled the railroads to grant him new and special rates, as we have seen, and got in touch with Roger Sherman to end the Pennsylvania suits and clear the decks for a determined assault upon the Tidewater.
First he began building a seaboard pipe line of his own from Bradford to Bayonne and others from the oil regions to Philadelphia, Cleveland, Pittsburgh, and Buffalo. Then he went to the Tidewater with a proposition. He would buy from it all the crude oil it could run. “We will guarantee to take 10,000 barrels a day. This will mean 10,000 barrels’ traffic for your pipes—capacity business—and 10,000 barrels a day freight for the Reading.” He also proposed that railroad rates should be advanced, thus giving the Reading a better deal. The proposition was a tempting one. But it was turned down. It would have defeated the prime purpose of the new line, namely, the encouragement of new independent refineries, if Rockefeller got the whole run of the new pipes.
Then he made another drive on the few remaining independent refiners. He offered them such high prices for their plants that they could not resist. All capitulated save one—Ayres, Lombard and Company in New York. Thus deprived of customers for oil, the Tidewater proceeded to build refineries. All through 1879 this battle went on until Rockefeller completed his new treaty with Roger Sherman and B. B. Campbell which quashed the indictments and civil suits and put the Producers’ Union out of business. Then he began his offensive against the Tidewater in sober earnest. And now we find him using methods somewhat more questionable, somewhat less Christianlike and somewhat more difficult to defend. But they were swift, intense, secret, and in the end completely effective.
II
THE STANDARD OIL COMPANY had huge refineries at Communipaw and Constable Hook, New Jersey. Crude for these plants was carried to Bayonne by the Pennsylvania and from there to the refineries by the New Jersey Central. Rockefeller decided to take this business from the Jersey Central and to send the crude across Bayonne and to the refineries through pipes. The Standard induced the Common Council of Bayonne to grant a franchise to build its pipes. But the Mayor vetoed it. Rockefeller had the Council, but the Jersey Central had the Mayor. The matter rested until September. By that time the Standard had the Mayor, as well as the Council. However, Rockefeller knew that if the franchise were granted the Jersey Central would block the building of the pipes at once by an injunction. He made his plans accordingly. By September 22nd he was ready to strike. The route of the line was surveyed and marked off. All the material for the job—pipes, joints, tools, materials for repairing the streets—all was assembled in the company’s yards. All this material was loaded into carts. But not a word of this got out to any one. As night fell 300 workmen, marshaled like an army under command of engineers, were mobilized in the yards. Each cart had its instructions as to the precise spot at which its materials would be unloaded. Each squad of men were told off with specific orders where to march. They were armed with picks and shovels. Every detail of the approaching attack was worked out with infinite care. While all this was in progress, the Common Council, in answer to a sudden call, assembled in its chamber. The Mayor, like the shovelmen, engineers, and aldermen, sat at his desk. An ordinance was introduced. A series of hastily carried motions dispensed with various formalities and in a few minutes the ordinance, passed by the Council, was rushed to the Mayor’s desk. The instant that trusted official signed it, word was dispatched to the officer in command at the yards. The gates swung open and the pipe-line army marched out with its wagons, its picks, its shovels, and other impedimenta. In a few hours the necessary trench across the entire city was dug, the pipes lowered and jointed, the trench refilled and the streets repaired. The army worked through the night and when morning dawned and Bayonne citizens went to their work and before the Jersey Central had any inkling of what had been done, oil was flowing under the streets of the city through a pipe line built and completed in a single night. Those who faced John D. Rockefeller in battle soon learned that while he could wait with infinite patience and move unruffled through wise delays, he could strike with the swiftness of a Napoleon.
III
IN APRIL, 1881, W. P. Shell, Auditor General of Pennsylvania, gave Mr. John D. Rockefeller something of a shock by assessing the company with $3,200,000 in unpaid taxes. Pennsylvania was trying to collect taxes on the entire assets of the company, whether in Pennsylvania or not. The Court of Common Pleas sustained the Standard’s pleas in part by holding it could be taxed only on that portion of its capital which it brings into the state. It fixed the tax at $33,277 with penalties. But the Supreme Court cut off the penalties. This suit had a strange and pitiable sequel and it is that sequel which concerns us here. Since 1872, E. G. Patterson had been a bitter opponent of railroad rebates and an implacable enemy of the Standard. When the Auditor General began to harass the Standard for taxes, he employed Patterson to collect evidence about the Standard’s capitalization and assets and profits. However, William Rockefeller supplied this information, and the Auditor declared he owed Patterson nothing. Patterson, angry at the producers for the manner in which they had failed Potts and quit on the indictment, and now embittered by the Auditor’s refusal to pay his fees, fell into a state of misanthropy and poured out the vials of his wrath on his former comrades. Then he sent word to John D. Rockefeller through Archbold that he proposed to attack the Standard further unless he was given the equivalent of his fee in the tax matter. In John D. Archbold Patterson found a ready customer for this sort of business. Whatever arrangement this pair made can only be guessed at. But very soon we find Patterson subscribing to 50 shares of Tidewater stock, and the money for this—$5,000—was supplied by Archbold. With this stock in his possession Patterson then applied to the courts for a receivership for the Tidewater. He alleged gross mismanagement. The Standard Oil Company failed to stand behind him in this fight and the suit was dismissed, Judge Pierson Church strongly intimating that the proceeding looked like blackmail. In this, however, he was wrong. Patterson was consumed with hatred of his old friends and wanted vengeance. And he was a ready tool in the hands of those who wished to destroy the Tidewater.
There is something pathetic in this complicity of Patterson in the Standard intrigues. Indeed, it is strange how, one by one, Rockefeller’s enemies find their way into his camp—first Payne, then Vandergrift, next Archbold, Pratt, Rogers, Warden, Frew, Lockhart, and now poor Patterson and—strangest of all—Roger Sherman, the lawyer who had so heroically carried on the attacks which led to the indictment and civil suits. There were bitter murmurs when Sherman surrendered to Rockefeller in 1880. He was a big man, an able one, and he had fought valiantly without other recompense than abuse at the hands of the producers. But when he surrendered he turned up immediately thereafter as an attorney for the Standard Oil Company, a post he occupied until 1886, when he again attacked them. Now, in 1882, he appeared in a far from lovely rôle, bringing the distraught and maddened Patterson to the Standard for his questionable business.
IV
STILL bolder attacks were to be made on the Tidewater. In January, 1882, the company applied to the First National Bank of New York for a loan of $2,000,000. A group of Tidewater stockholders, owning a third of the stock, called on the bank and warned it that the company was insolvent. The bank ignored the warning and made the loan.
The next election of directors was fixed for January 17th, 1883, but was postponed by the board. However, on that day the gentlemen who had warned the bank put in an appearance at the company’s offices and announced they were ready to vote. These gentlemen were known as the Taylor-Satterfield crowd. And over the protests of the officials, they proceeded to hold an election, to throw out the proxies for two-thirds of the stock held by the protesting officials, and elected themselves directors. Benson, the president, and the old managers barricaded themselves in the office, held on to the books, and instituted injunction proceedings against the rebels. Judge Pierson Church at Meadville, who had dismissed Patterson’s receivership suit, ruled against the Taylor-Satterfield insurgents and branded the whole proceeding as “farcical, fraudulent and void.” Thus another attempt to seize the Tidewater was frustrated. Was Rockefeller behind this attempt? John D. Archbold issued an affidavit denying this. But who, then, did these revolutionists represent? What interest could they, as stockholders, have in wrecking a company in which they held so much stock? However, a little later Mr. John D. Rockefeller appeared with this Taylor-Satterfield stock in his possession and proposed to the Tidewater an agreement to divide the business. The company was weary of the struggle and so it signed a contract with the Standard to divide the pipe line business in its territory—88½ per cent to the Standard and 11½ per cent to the Tidewater. Two agreements were made, one with the Tidewater Pipe Lines and one with the Tidewater refineries. They were signed October 9th, to be effective from October 1st. In effect these contracts ended the independent life of the Tidewater. It became an ally of the Standard, with that company actually owning a third of its stock. And thus this ambitious enterprise, like all others of the independents, came to an end.
V
WHEN this victory was consummated Rockefeller was in possession of a complete system of pipe lines reaching to every section of his refining empire and from his western plants to the sea. Almost all opposition—transportation and refining—was crushed. John D. Rockefeller was the country’s first supreme monopolist.
Immediately he assembled all his pipe lines under the control of one great company—the National Transit Company, of which Henry H. Rogers became the head. But now his relation to the railroad was greatly altered. Instead of being a customer, he was a competitor. But the Pennsylvania Railroad had an ace in its sleeve. To get his pipe line to the seaboard he had to cross the Pennsylvania tracks. To accomplish this he made a traffic agreement with them. He laid his pipes and carried oil to the sea that way. But the Pennsylvania was to get 26 per cent of all the oil traffic. The open rate on this was 40 cents a barrel. But in fact the railroad would carry no oil. Even its 26 per cent of the crude would go in Rockefeller’s pipes. But the road would collect 40 cents on it and pay Rockefeller up to eight cents for carrying it, according to the rise and fall in the open rate. Thus Rockefeller now found himself transporting all the oil—his own three-quarters as well as the Pennsylvania’s one-quarter. The Pennsylvania practically went out of the oil business.
At this moment John D. Rockefeller, forty-four years of age, had accomplished his ambition—he was supreme in the oil industry and the country knew it. He was and continued to be for many years the symbol of the American monopolist.
