Titan

by Ron Chernow

  Throughout his life, Rockefeller was wounded deeply by accusations that he was a cold, malignant personality. In truth, like many retiring personalities, he provoked varied reactions in people. One cooper who sold him barrels in the early days told Ida Tarbell that “Rockefeller was never a great talker; that he was not liked by his fellows; that everybody was afraid of him; and that he was solitary.”14 But Rockefeller never turned the ferocity that he trained against rivals against his own employees and people who worked for him usually found him a model of propriety and paternalistic concern. As one refinery worker remembered him, “He always had a nod and a kind word for everybody. He never forgot anyone. We had some trying times in the business in those early years, but I’ve never seen Mr. Rockefeller when he was not friendly and kind and unruffled. Nothing excited him.”15 Rockefeller’s sister Mary Ann dismissed as an absurd canard the idea that he was a curmudgeon. “John could always get along so easily with anyone,” she declared.16 Indeed, had he not possessed some charm, or at least cordiality, he could never have accomplished so much in the business world.

  So highly did Rockefeller value personnel that during the first years of Standard Oil he personally attended to routine hiring matters. (After conquering the other refining centers, the payroll ballooned to 3,000 people, and this became impossible.) Taking for granted the growth of his empire, he hired talented people as found, not as needed.

  Far more than a technocrat, Rockefeller was an inspirational leader who exerted a magnetic power over workers and especially prized executives with social skills. “The ability to deal with people is as purchasable a commodity as sugar or coffee,” he once said, “and I pay more for that ability than for any other under the sun.”17

  Employees were invited to send complaints or suggestions directly to him, and he always took an interest in their affairs. His correspondence is replete with inquiries about sick or retired employees. Reasonably generous in wages, salaries, and pensions, he paid somewhat above the industry average. Forty years later, a former subordinate wrote of the firm, with some exaggeration, “It has never had a strike or a dissatisfied workman; and today no business organization cares for its veterans in their old age as does the Standard Oil Company.” 18 It is important to point out that oil refining was a capital-intensive industry without the seething discontents that afflicted the coal mines or steel mills. Even in lean years, Standard Oil was flush with profits, permitting it the luxury of good intentions. One biographer has gone so far as to say of Rockefeller, “He was the best employer of his time, instituting hospitalization and retirement pensions.”19

  He was a fine boss if workers abided by his rules, but if they did something foolish, like show interest in a union, they promptly forfeited his sympathy. Rockefeller never acknowledged the legitimacy of organized labor, nor did he tolerate union organizers on the premises. He also reserved the right to pass judgment on the private lives of employees. Imposing his own prudish standards on his staff, he penalized any executive implicated in an adulterous affair and frowned on divorce. Sabbath observance was de rigueur, and if colleagues wrote to him when they should have been in church, they tended not to put the real dates on their letters.

  The most remarkable instance of Rockefeller participating in an associate’s moral reformation occurred with John D. Archbold, the jovial young protégé whose pranks and infectious laughter so delighted Rockefeller. When Rockefeller initially entreated him to stop drinking, Archbold pretended to abide by the temperance pledge while keeping cloves in his vest pocket to mask telltale smells. By 1881, his drinking binges were too palpable and self-destructive to conceal, and he wrote a contrite letter to Rockefeller, renewing his pledge: “My Dear Mr. Rockefeller—Any words from me seem like a mockery. I give you the promise appreciating its solemnity and importance as I never did before. I will write you the letter every Sunday as long as our relation gives me the privilege, or until you ask me to stop.”20 Thereafter, every Sunday for eight months, Archbold sent Rockefeller a letter confirming his sobriety that week, writing for instance, “Please let this bear witness to the completion of the 5th period.”21 Archbold made a sincere effort, but he had at least one violent relapse four years later and felt mortified at having let his mentor down. “I have never before known him to be so thoroughly cast down and in such abject mental misery,” one Standard Oil executive told Rockefeller. “I do not think any one can fully realize the fight he must make against this unfortunate habit, nor the really heartbroken condition he is in after it has come over him.”22 Aware of Rockefeller’s dismay, other executives tried to make it seem that Archbold had unwittingly swallowed some alcoholic medicine.

  His employees tended to revere Rockefeller and vied to please him. As one said, “I have never heard of his equal in getting together a lot of the very best men in one team and inspiring each man to do his best for the enterprise. . . . He was so big, so broad, so patient; I don’t believe a man like him comes to this world oftener than once in five or six hundred years.”23 Rockefeller worked by subtle hints, doling out praise sparingly to employees and nudging them along. At first, he tested them exhaustively, yet once he trusted them, he bestowed enormous power upon them and didn’t intrude unless something radically misfired. “Often the best way to develop workers—when you are sure they have character and think they have ability—is to take them to a deep place, throw them in and make them sink or swim,” he observed, recalling a method that Big Bill had used with his sons on Owasco Lake. “They will not fail.”24 To orchestrate such a gigantic operation, he had to delegate authority, and part of the Standard Oil gospel was to train your subordinate to do your job. As Rockefeller instructed a recruit, “Has anyone given you the law of these offices? No? It is this: nobody does anything if he can get anybody else to do it. . . . As soon as you can, get some one whom you can rely on, train him in the work, sit down, cock up your heels, and think out some way for the Standard Oil to make some money.” 25 True to this policy, Rockefeller tried to extricate himself from the intricate web of administrative details and dedicate more of his time to broad policy decisions.

  Most of all, Rockefeller inspired subordinates with his fanatic perfectionism. He never did anything haphazardly and wrote hundreds of thousands of business letters that were models of concision and balanced phrasing, the products of painstaking revision. Dictating letters to his secretary, he went through five or six drafts until he had eliminated every superfluous word and produced precisely the impression desired before affixing his signature with the best penmanship at his command. As one top aide recalled: “I have seen him sign his name to hundreds of papers at a sitting. He did each signature carefully as if this particular one was to be the only one by which he was to be remembered for all time. Each signature became in his mind a work of art.”26 This passion for excellence originated with Rockefeller and radiated throughout the organization. The ethos of Standard Oil’s operations around the world was John D. Rockefeller’s personality writ large.

  While Rockefeller was responsible for policy questions and formulated the theoretical underpinnings of the trust, he didn’t introduce many technical innovations associated with Standard Oil. Rather, he was a matchless executive, an unerring monitor of the stream of proposals channeled to him daily. He had an extraordinary reactive ability, a first-rate power of judgment when presented with options. Perhaps for this reason, he resembles modern chief executives more than he does his domineering industrial contemporaries.

  Given the primitive communications and record keeping of the late nineteenth century, Rockefeller couldn’t have managed his decentralized empire without masterfully coordinating a vast array of data. The ledger book enabled him to play the puppeteer and manipulate his empire by invisible strings. By mastering numbers, he reduced the most varied systems to a common standard, and he accepted their harsh verdicts without hesitation. “I charted my course by figures, nothing but figures,” he once said.27 Mark Hanna disparaged Rockefeller as “a kind of econo
mic super-clerk, the personification of ledger-keeping.”28 This comment not only overlooks the farsighted nature of Rockefeller’s leadership but discounts the importance of ledger keeping in modern corporations. Numbers gave Rockefeller an objective yardstick to compare his far-flung operations, enabling him to cut through the false claims of subordinates. It was the way that he extended rationality from the top of his organization down to the lowest rung: Every cost in the Standard Oil universe was computed to several decimal places.

  Having always shown an aptitude for math, Rockefeller valued this quality in underlings. When he hired his young secretary, George D. Rogers, Rockefeller drew forth a watch to see how fast Rogers could total up a sheet of figures. At the end, Rockefeller said, “Well, you have completed it in the required time,” and then promptly hired the young man, who served him ably for many years. Rogers left some interesting recollections of his boss’s attention to detail and punctilious regard for money. When leaving the office one day, Rockefeller fished in his pockets and realized that he had forgotten his change purse. When he asked to borrow a nickel from Rogers, his assistant volunteered to make a gift of it, but Rockefeller protested. “No, Rogers,” he said, “don’t forget this transaction. This is a whole year’s interest on a dollar.”29

  Rockefeller attributed much of his success to his quick head for figures. While he was negotiating to buy the long-sought million-dollar Columbia Conduit Company from Dr. David Hostetter, he purposely kept his interlocutor talking for half an hour as he computed the ways the interest could be paid. “When we ended the talk,” Rockefeller said, “he agreed to the terms I offered—and I had saved $30,000 on the interest by my mental calculations that had never ceased while we were talking.”30 This episode brought out a subtle vein of anti-Semitism that is intermittently threaded through Rockefeller’s papers. Of his mathematical prowess in outwitting Dr. Hostetter, he boasted, “How well I remember when it helped me to beat a Jew!”31

  As time went on, Rockefeller had little physical contact with the actual refining, transportation, or marketing of oil—activities that unfolded in dusty outposts of the Standard Oil kingdom—but stayed sequestered in the executive suite, concentrating on finance, personnel, administration, and general policy matters. He downplayed the significance of technical knowledge in business. “I never felt the need of scientific knowledge, have never felt it. A young man who wants to succeed in business does not require chemistry or physics. He can always hire scientists.”32

  Nevertheless, in the first years of Standard Oil, Rockefeller regularly toured his facilities and was extremely inquisitive and observant, soaking up information and assiduously quizzing plant superintendents. In his pocket, he carried a little red notebook in which he jotted suggestions for improvements and always followed up on them. He knew the terror inspired by that red book. “More than once I have gone to luncheon with a number of our heads of departments and have seen the sweat start out on the foreheads of some of them when that little red notebook was pulled out,” Rockefeller admitted with relish. 33

  With a talent for seeing things anew, Rockefeller could study an operation, break it down into component parts, and devise ways to improve it. In many ways, he anticipated the efficiency studies of engineer Frederick Winslow Taylor. Regarding each plant as infinitely perfectible, he created an atmosphere of ceaseless improvement. Paradoxically, the mammoth scale of operations encouraged close attention to minute detail, for a penny saved in one place might then be multiplied a thousandfold throughout the empire. In the early 1870s, Rockefeller inspected a Standard plant in New York City that filled and sealed five-gallon tin cans of kerosene for export. After watching a machine solder caps to the cans, he asked the resident expert: “How many drops of solder do you use on each can?” “Forty,” the man replied. “Have you ever tried thirty-eight?” Rockefeller asked. “No? Would you mind having some sealed with thirty-eight and let me know?”34 When thirty-eight drops were applied, a small percentage of cans leaked—but none at thirty-nine. Hence, thirty-nine drops of solder became the new standard instituted at all Standard Oil refineries. “That one drop of solder,” said Rockefeller, still smiling in retirement, “saved $2,500 the first year; but the export business kept on increasing after that and doubled, quadrupled—became immensely greater than it was then; and the saving has gone steadily along, one drop on each can, and has amounted since to many hundreds of thousands of dollars.”35

  Rockefeller performed many similar feats, fractionally reducing the length of staves or the width of iron hoops without weakening a barrel’s strength. He was never a foolish penny-pincher, however; for example, he saved on repairs by insisting that Standard build only solid, substantial plants, even if that meant higher start-up costs. He also tried to use all of the fractions refined from the crude oil. During its first two years, Standard Oil had dealt largely in kerosene and naphtha. Then, in 1874, the company branched out into petroleum by-products, selling paraffin wax for chewing gum and residual oil tar and asphalt for road building. Before long, the company was manufacturing lubricants for railroads and machine shops, as well as candles, dyes, paints, and industrial acids. In 1880, Standard Oil took over the Chesebrough Manufacturing Company in New Jersey in order to strengthen its sales of petroleum jelly.

  Ever since his first foray into refining, Rockefeller had relied for technical advice on the ruddy Sam Andrews, who first transmitted to him the technique for cleansing crude oil with sulfuric acid. In 1874, a stiff new competitor to Andrews emerged when Ambrose McGregor was named superintendent of the Standard Oil refineries in Cleveland. Rockefeller was beginning to think Andrews a mediocre man who couldn’t keep up with new developments in the field and felt threatened by the more able McGregor.

  A man of blinkered vision, Andrews was distressed by Rockefeller’s soaring ambition, his constant borrowing and spending. The split between them worsened in August 1878 when Standard declared a 50 percent dividend on its stock. As Andrews later grumbled, “There was plenty of money made to throw that dividend out twice over and make a profit.” 36 Though Rockefeller tried to avert clashes with colleagues, nothing nettled him more than directors who preferred fatter dividends to earnings plowed back into the business. One day, Andrews snapped at Rockefeller, “I wish I was out of this business.” Calling his bluff, Rockefeller replied, “Sam, you don’t seem to have faith in the way this company is operating. What will you take for your holdings?” “I will take one million dollars,” Andrews shot back. “Let me have an option on it for twenty-four hours,” said Rockefeller, “and we will discuss it tomorrow.” When Andrews stopped by the next morning, Rockefeller had a check made out for one million dollars.37 In truth, Rockefeller was petrified at the thought of Andrews’s large stake being sold on the open market, which might have depressed the share price and harmed Standard Oil’s credit at a time when he was borrowing heavily against those shares.

  At first, Andrews exulted over the sale and was convinced that he had unloaded the stock at a premium. Then Rockefeller turned around and sold the same shares to William H. Vanderbilt for a quick $300,000 profit. 38 When Andrews loudly cried foul, Rockefeller sent an emissary to tell Andrews that he could buy back his stock at the original sale price. Embittered, Andrews spurned this fair offer and opted to keep the money. Had he kept the stock, it would have been worth $900 million by the early 1930s, by one estimate.39 This rash decision, motivated by pure pique and a bruised ego, kept him from becoming one of America’s richest men.

  Irate at Andrews’s behavior, Rockefeller lost whatever residual gratitude he felt for his founding partner and ridiculed his business abilities. Whenever he feuded with someone, he tended to turn that person into a reprobate, and he later said of Andrews, “He was ignorant, conceited, lost his head . . . governed by the same wicked sort of prejudice accompanying the egotism so characteristic of that type of ignorant Englishman.” 40 It was one of many times that Rockefeller singled out the English for special abuse. As for Andrews, he not
only squandered a chance to make a colossal fortune but later poured the money into an ugly, ornate house on Euclid Avenue where he dreamed of someday entertaining Queen Victoria. Once described as “the most pretentious residence ever built in Cleveland,” this five-story monstrosity, with one hundred rooms and as many servants, won the well-deserved nickname of “Andrews’s Folly.”41 For the rest of his life, Andrews lambasted Rockefeller in long-winded diatribes to anyone who would listen. Maurice Clark probably caught the truth about Sam Andrews when he said, “Before selling he was sore at John. After selling he was sore at himself.”42 Standard Oil was never kind to skeptics who doubted its bright future.

  CHAPTER 11

  The Holy Family

  At a time when America’s brand-new millionaires reveled in garish houses that paid queer homage to everything from medieval romance to the Arabian Nights, Rockefeller preferred to own raw land. In 1873, he invested in seventy-nine scenic acres at Forest Hill, a lovely, thickly wooded spot, crisscrossed by steep ravines and gulleys, just four miles east of his Euclid Avenue home. Two years later, he assembled a team of investors who bought the land from him to construct a sanatorium that would specialize in homeopathic medicine and water cures. As part of the deal, Rockefeller and Stephen Harkness set up a short railroad to whisk people out to this suburban resort. When both ventures fell victim to the depression of the 1870s, Rockefeller repurchased the land, now crowned with an enormous rambling building. Starting in 1877, he began to use it as a summer home, perhaps with some therapeutic intention in mind, for the previous year doctors had diagnosed Cettie as consumptive. At the doctors’ urging, Rockefeller and his family vacationed in the dry, fresh air of Colorado in the summer of 1876. Perhaps he believed his wife would find relief from the lake breezes at Forest Hill.