Random Reminiscences of Men and Events

nces in the

of Messrs. James and Richard Clark, Mr. Samuel Andrews, and the firm of Clark & Rockefeller, who were the company. It was my first direct connection with the oil trade. As the new concern grew the firm of Clark

dder among ourselves. This seemed a just settlement to me, and the question came up as to when the sale should be held and who would conduct it. My partners had a lawyer in the room to represent them, though I had not considered h

efining oil, and did not realize at that time that the whole oil industry would soon be swamped by so many men rushing into it. But I was full of hope, and I had already arranged to get financial accommodation to an

the amount gradually rose until it reached $50,000, which was much more than we supposed the concern to be worth. Finally, it advanced to $60,000, and by slow stages to $70,000,

er, John; the bu

a check for it n

glad to trust you for it; s

really my start in the oil trade. It was my most important business f

er began to refine oil, and it was only a short time before more of the finished product was put on the market than could possibly be consumed. The price went down and down until the trade was threatened with ruin. It seemed absolutely necessary to extend the market for oil by exporting to fo

ng some order out of what was rapidly becoming a state of chaos. To accomplish all these tasks of enlarging the market and improving the methods of manufacture in a large way was b

concerns and centralize the administration of them with a view to securing gr

we suffered from some severe fires; and the supply of crude oil was most uncertain. Our plans were constantly changed by changed conditions. We developed great facilities in an oil centre, erected storage tanks, and connected

GN MA

we been dependent solely upon local business, we should have failed long since. We were forced to extend our markets into every part of the world. This made the sea-board cities a necessary place of business, and we soon discovered

ontents, and the forests of the country were not sufficient to supply cheaply the necessary material for an extended time. Hence we devoted attention t

te state charters. To perfect the pipe-line system of transportation required many millions of capital. The entire oil business is dependent upon the pipe-line. Without it every well would be less valuable and every

cars upon railroads, and finally the tank-steamer. Capital had to be

only through such successive steps and by a great aggregation of capital is America to-day

THE STANDAR

ler & Andrews, Rockefeller & Co., and S.V. Harkness and H.M. Flag

rent, we found further capital to be necessary; then we interested others and organized the Standard Oil Company, with a capital of $1,000,000. Later we saw that more money could be utilized, found persons who were willing to invest with us, and increased our capital to $2,500,000, in 1872, and afterwar

has placed its manufactories at the points where they could supply markets at the least expense. It has not only sought markets for its principal products, but for all possible by-products, sparing no expense in introducing them to the public in every nook and corner of the world. It has not hesitated to invest millions of dollars in methods for cheapening the gathering and distribution of oils by pipe-lines, special cars

SURANC

e unit of risk and possible loss was minimized. No one fire could ruin us, and we were able thus to establish a system of insuring ourselves. Our reserve fund which provided for this insurance could not be wiped out all at once, as might be the case with a concern

ffected the profits, not only in refining, but touched many other associated enterpris

o keep them loyal by providing them full scope for their ability; they were given opportunities to buy stock, and the company itself helped them to finance their purchases. Not only here in America, but all over the world, our young men were given chances t

ld be gladly given. But the fact is that since I retired it has been very little required. I am still a large stock

DARD PAYS LA

later, at about evenly divided periods. Now, these dividends run up to 40 per cent. on the capital stock of $100,000,000, but that does not mean that the profit is 40 per cent. on the capital invested. As a matter of fact, it represents the results of the savings and surplus gained through all the thirty-

MAL G

be of little value, but which the company hoped eventually to utilize, were greatly increased in value by inventions for refining it and for using the residues formerly considered almost worthless. Dock property was secured at low prices and made valuable by buildings and development. Large unimproved tracts of land near the important business centres were acquired. We brought our industries to these places, made the land useful, a

zation correspondingly. They have escaped the criticism which has been directed against us, who with

all done through this natural law of trade development. I

percentage of his actual profits only on the original $1,000 with which he started. Here, again, I think the managers of the Standard should be praised, and not blamed. They have set an example for upbuilding on the most conservative lines, and in a business which has al

GEMENT O

art of the actual property owned by the company. If we had increased the capitalization to bring it up to the real value, and listed the shares on the Exchange, we might have been criticized then for promoting a project to induce the public to invest. As I have indicated, the foundations of the company were so thoroughly established, and its affairs so conservatively managed, that, after the earlier period of struggle to secure adequate capital and in view of the trying experiences through which we then passed, we decided to pursue the policy of relying upon our own resources. Since then we have never been obliged to l

facturing affairs as are legitimately connected therewith. It has plants for the making of barrels and tanks; and building pumps for pumping oil; it owns vessels for carrying oil, tank-cars, pipes fo

tion that the stockholders make of their dividends. The Standard Oil Company does not own or control "a chain of banks," nor has it any interest directly or indirectly in any bank. Its relations are confined to

THE ESSE

ether of the men who had the combined brain power to do the work, which was the actual starting-point. Perhaps it is worth while to emphasize again the fact that it is not merely capital and "plant

wanted to sell the option of taking cash or stock in the company. We very much preferred to have them take the stock, because a dollar in those days looked as large as a cart-wheel, but as a matter of business policy we found it desirable to offer them the

ompany. Some of the smaller concerns, however, continued in the business for many years, although they had the same opportunity as others to sell.

CKUS P

perior power. There was one transaction, viz., the purchase of the property of the Backus Oil Company, which has been variously exploited, and I am made to appear as having personally robbed a defenceless widow of an extremely valuable property, paying her therefor only a mere fraction of its worth. The story as told is one which makes the strongest a

this particular case, which I am exceedingly relucta

she spoke of selling the property to our company and requested me to personally conduct the negotiations with her with reference to it. This I was obliged to decline to do, because, as I then explained to her, I was not familiar with the details of the business. In that conversation I advised her not to take any hasty action, and when she expressed fears about the future of the business, stating, for example, that she could not get cars to transport sufficient oil, I said to her that, though we were using our cars and required them in our business, yet we would loan her any number she needed, and do anything else in reason to assist her, and I did not see why she could not successfully prosecute her business in the future as in the past. I told her, howe

d, I received from her a very unkind letter complaining that she had been unju

er 13,

r M

ven in accordance with the facts noted above, but not at all in the spirit in which you refer to the refusal in your note. In regard to the reference that you make as to my permitting the business of the Backus Oil Company to be taken from you, I say that in this as in all else you have written in your letter of the 11th inst., you do me most grievous wrong. It was but of little moment to the interests represented by me whether the business of the Backus Oil Company was purchased or not. I believe that it was for your interest to make the sale, and am entirely candid in this statement, and beg to call your attention to the time, some two years ago, when you consulted Mr. Flagler and myself as to selling out your interests to Mr. Rose, at which time you were desirous of selling at considerably less price, and upon time, than you have now received in cash, and w

for the same, with this addition, that if we keep the property we are under engagement to pay into the treasury of the Backus O

n, I will leave open for three days these propositions for y

very

. Rock

ed with the business and had remained with the company after his death. The letter was written without any solicitation whatever on my part, but I have since received permission from Mr. Backus to print it. It is followed by extracts from affi

g Gree

ber 18

D. Rock

land,

eceased brother's wife, Mrs. F.N. Backus, wrote you the unjust and unreasonable letter in reference to the sale of the property of the old Backus Oil Company, in which I had a small interest, I have wanted to write you and record my disapproval of that letter. I live

nly thing that ever saved her and the oil business generally was the plan of John D. Rockefeller. She thinks that you literally robbed her of millions, and feeds her children on that diet three times a day more or less, principally more, until it has become a mania with her, and no argument that any one else can suggest will have any effect upon her. She is wise and good in many ways, but on that one subject she is one-sided, I think. Of course, if we could have been assured of continued dividends, I would have been opposed to selling the business, but that was out of the question. I know of the ten thousand dollars that was added to the purchase price of the property

Hanafin, Superintendent of the Buckeye Pipe Line Company, a day or two since when I was relating the sale, etc., of the old B.O. Co.'s business, and in

admiration to John D

s tr

Bac

who had been in the employ of the Backus Company for some time, and by Mr. Maloney, who was the superintendent of the company f

by the Backus Company upon the several items of property and assets which it desired to sell. This statement was furnished and was annexed to Mr. Jennings's affidavit. The Standard Oil Company finally decided not to purchase all of the assets of the company, but only the oil o

housand dollars ($150,000), which was to include cash on hand, accrued dividends, accounts, etc., said Jennings requested said company to submit an itemized proposition fixing values upon different articles proposed to be sold, and that he, after full consideration with Mrs. Backus and with her knowledge and

mpany, owning about seven-tenths (7/10) of said company's stock, and she fully approved of said proposition, and accepted the offer of said Jennings to pay sixty thousand dollars ($60,000) for the item works, good-will, and successorship without any opposition, so far as affiant

e widow's representative, refers to the nego

se during their progress could be construed into a threat, nor did anythin

lso

to bring the same to a conclusion as she was anxious to dispose of said business and relieve herself from further care and responsibility therewith. And whe

a stockholder in the company, and had been associated in business with Mr. Backus for many years previous to his death; that he

ship for $71,000. A few days after the proposal was made to her to pay the sum of $60,000 for works and good-wi

3 per cent. less than she received in the sale referred to, and the value of the works and property sold had not increased in the meantime. I was well acquainted with the works of the Backus Oil Company and their value. I could at the time of the sale have buil

d considerate treatment of Mrs. Backus on the part of the Standard Oil Company. I regret that Mrs. B

STION O

give full compensation. The reason for rebates was that such was the railroads' method of business. A public rate was made and collected by the railroad companies, but, so far as my knowledge extends, was seldom retained in full; a portion of it was repaid to the shippers as a rebate. By this method the real rate of freight which any shipper paid

ds for the purpose of reducing the cost of transportation of freight. It offered freights in large quantity, car-loads and train-loads. It furnished loading facilities and discharging facilities at great cost. It provided regular traffic, so that a railroad could conduct its transportation to the best advantage and use its equipmen

ndard Oil Company was far more profitable to the railroad companies tha

pe-lines. All these means of transporting oil cut into the business of the railroads, and they were desperately anxious to successfully meet this competition. As I have stated we provided means for loading and unloading cars expeditiously, agreed to furnish a regular

ES VS. R

hauling in tank-cars in a railroad train the development of the pipe-line was inevitable. The question was simply whether the oil traffic was sufficient in volume to make the

to its final destination. In some instances a railroad had formerly carried the oil the entire distance upon an agreed rate, but now that this oil was partly pumped by pipe-lines and partly carried by rail, the freight payment was divided between the two. But, as a through rate had been pr

affic of the Standard Oil Company, and whatever advantage it received in its constant efforts to reduce rates of freight was only one of the many el

d lower rates than we had been able to secure, notwithstanding the fact that we had made large investments to provide for terminal facilities, regular shipments, and other economies. I well remember a bright man from Boston who had much to say about reba

the whole system of rebates an