by Ron Chernow
It took time for Standard Oil to wipe away the stigma of Lima crude, for just enough sulfur remained in the kerosene to clog chimneys and lamps in damp weather. In a confidential letter to Rockefeller, Archbold confessed that for the first time their competitors could justly claim a superior product. The trust was now a victim of its own dirty tricks. After the Ohio oil was discovered but before Rockefeller had won over Pratt, Standard had engineered a propaganda campaign to convince consumers that Lima oil was inferior to Pennsylvania oil. This strategy had now boomeranged on them, Archbold told Rockefeller, “so that it is necessary, until this prejudice is gotten out of the way, that the greatest possible care must be taken to have every shipment from both Lima and Whiting absolutely beyond the possibility of legitimate complaint. ”21 The original slander was refuted with difficulty.
As Standard Oil secured complete control of the oil industry, many ordinary citizens were frightened by its gargantuan size, rapacious methods, and inexorable growth, and it came to symbolize all the disquieting forces reshaping America. It was the “parent of the great monopolies which at present masquerade under the new-found name of ‘Trusts,’ ” said one newspaper, and it served as shorthand for the new agglomerations of economic power. A business system based on individual enterprise was creating combinations of monstrous size that seemed to threaten that individualism. And modern industry not only menaced small-scale commerce but appeared to constitute a sinister despotism that endangered democracy itself as giant corporations overshadowed government as the most dynamic force in American society.
As the leading figure in this consolidation, Rockefeller was the emblematic figure of the Gilded Age and hence a lightning rod for criticism. He closely followed political developments and was keenly alert to any potential threats to his business interests. In his personal campaign contributions, though, he won a well-earned reputation as a stingy giver, and some politicians even felt miffed at his paltry gifts. The clandestine payoffs made by Standard Oil were a different matter, and Rockefeller never stinted in making payments to get the job done.
At the turn of the century, reporters spilled a great deal of ink over charges that Standard Oil had bought Henry B. Payne’s election to the U.S. Senate in 1884. This putative case of political corruption received more attention from critics than any other, although little evidence was ever adduced to substantiate it. With his white hair and wire-rimmed glasses, Henry B. Payne—father of Standard Oil’s treasurer, Oliver Payne—was an affable man with a distinguished air. A Cleveland lawyer and perpetual candidate for public office, he lobbied for mandatory education in Cleveland, worked ardently for the Union cause, and helped to found the Case School of Applied Sciences, while also serving as part owner of two railroads. Unlike his wealthy Euclid Avenue neighbors, Payne was a Democrat who had campaigned for Stephen Douglas in his 1860 presidential bid against Abraham Lincoln. Ironically, in light of later allegations, when he first ran for Congress, Standard Oil supported his opponent and helped to defeat him. Ambitious for his father, the cold, haughty Oliver Payne acted as his perennial campaign manager, starting with his congressional victory in 1874. Two years later, Oliver tried unsuccessfully to capture the Democratic presidential nomination for his father—a presumptuous bid for an elderly freshman congressman. This lost cause earned Oliver a somewhat Machiavellian reputation, and one newspaper observed acidly: “He’s got a purse that is inexhaustible, a silent tongue, and a capacity for the organization and manipulation of men.” 22
In the late 1870s, Henry Payne lost his congressional seat. Approaching seventy, he might have retired gracefully from politics, but he could not seem to shed his daydreams of higher office. When he sought the Democratic presidential nomination in 1880, his opponents cruelly baited him about his age, and one stooped to calling him “an attenuated, dried-up old fossil.”23 To retire these charges, Payne gave a nimble spring to his step, a youthful vigor to his gestures. Possibly more harmful was Payne’s association with Standard Oil, which blemished his reputation among many Democrats. Payne received only eighty-one votes on the first ballot as General Winfield Hancock walked off with the nomination.
At the time, U.S. senators were elected by state legislatures, creating an open season for graft and influence peddling by business interests. When the Ohio legislature elected Henry B. Payne to the Senate in 1884—the legislature would go down in history as the infamous “Coal-oil Legislature” for its obeisance to Standard Oil—it was widely rumored that Oliver had sat behind a desk in a Columbus hotel room and doled out bills to legislators, the final tab reaching $100,000. These bribery allegations, though never proved, shadowed Senator Payne and provoked a firestorm of abuse against Standard Oil. Whether Oliver Payne bought the election is uncertain, but it seems far-fetched that Rockefeller or Standard Oil conspired with him. Henry Payne was a staunch Democrat, and Standard Oil was a Republican stronghold. Rockefeller likely spoke the literal truth when he said, “I was opposed to the election of Senator Payne, as a Republican and never anything else but a Republican. And not one farthing of the money of the Standard Oil Company went to his election; nor were the Standard Oil Company favorable to his election, as a company.”24
Aside from his father, Oliver Payne gave Standard Oil a second important link to the Democratic Party through his brother-in-law, William C. Whitney. Even though Oliver had been two years older and infinitely richer than Whitney at the time, the two were fast friends at Yale. To an extent that some observers found unhealthy, Oliver doted on his lovely, gregarious sister Flora; when he arranged for her to meet Whitney in 1868, he already “knew that if they met, they would fall in love with each other,” he later admitted. 25 When they married a year later, he became their self-appointed benefactor, buying them a five-story Park Avenue brownstone. This was a mere curtain-raiser to his next gift, a showy $700,000 mansion, glistening with gorgeous paintings and Gobelin tapestries, at the corner of Fifth Avenue and Fifty-seventh Street, across from Cornelius Vanderbilt’s residence. One historian said that Oliver insouciantly “presented it to the Whitneys as one might present a poodle,” and with his sublime self-assurance, this lifelong bachelor moved into one of its sumptuous second-floor apartments.26
William C. Whitney was a dashing man with a matchless talent for attracting monied patrons. Though he stayed only one year at Harvard Law School, he became a rich Wall Street lawyer, representing Commodore Vanderbilt and other railroad clients. Active in the Democratic Party, he won the patronage of Samuel J. Tilden, who, as governor, had him named New York City’s corporation counsel. In 1884, Whitney shrewdly supported Grover Cleveland, the mayor of Buffalo, for president and brokered a truce between the reform-minded Cleveland and Tammany Hall. When Whitney emerged as an influential insider in Cleveland’s presidential campaign, some critics thought him a Standard Oil tool. In reality, Rockefeller voted for James G. Blaine, a paladin of business interests, and predicted the election would be “a great calamity” if Cleveland won.27 In an unprecedented step, Rockefeller allowed his name to be listed as vice president for a Republican fund-raising effort in the city of Cleveland.
To further Grover Cleveland’s candidacy, Whitney persuaded Henry B. Payne that the growing furor over Standard Oil made it an inauspicious time for him to vie for the Democratic nomination. Instead, Henry and Oliver Payne poured $170,000 into Cleveland’s war chest. After Cleveland’s victory, it looked as if Whitney would be named interior secretary. Then the press tagged him with the sobriquet of “Coal Oil Billy” and raised the specter that Standard Oil would loot public lands. As a consolation prize, Whitney settled for an appointment as secretary of the navy. For all the baseless speculation about his links to Standard Oil, Whitney was seldom asked to perform favors for the trust and spent most of his time constructing a new steel navy. Around the time that William and Flora Whitney moved to Washington, Oliver Payne, citing the “need for a rest,” resigned from Standard Oil.28
Despite its many shareholders, the Standard Oil trus
t was always controlled by a small clique of powerful families. “I think it is true that the Pratt family, the Payne-Whitney family (which were one, as all the stock came from Colonel Payne), the Harkness-Flagler family (which came into the Company together) and the Rockefeller family controlled a majority of the stock during all the history of the Company up to the present time,” Rockefeller commented in 1910.29 Because the Harkness and Payne families were sociable and intermarried with the Vanderbilts and Whitneys, they spread a great deal of Standard Oil bounty through America’s social aristocracy.
While Standard Oil gadflies pounced on the political bonds between the Paynes and William Whitney, they missed a more flagrant case of political corruption: that of Johnson Newlon Camden, who served as a West Virginia senator from 1881 to 1887 but never severed his ties to Standard Oil. Approaching his 1881 election to the U.S. Senate as a straight business proposition, he favored a liberal distribution of cash to the West Virginia legislature to secure results. As he plaintively told Flagler that year, “Politics is dearer than it used to be—and my understood connection with the Standard Oil Co. don’t tend to cheapen it—as we are all supposed to have bushels.” This was prelude to an urgent request for “$10,000 in some turn—stocks or oil—Please keep an eye out and let me know.”30 Apparently, Standard Oil obliged, for in the next letter, Camden reported victory to Flagler. “I also appreciate sincerely the substantial kindness of the Ex[ecutive] Com[mittee]—and used it without hesitation as I needed it temporarily.”31
Even after entering the Senate, Camden continued to correspond with Rockefeller and Flagler as if he was still an active Standard Oil executive, and he discussed the trust’s negotiations with the B&O Railroad on U.S. Senate stationery. He organized a railroad with Oliver Payne and urged Rockefeller, Flagler, and Harkness to join them. Throughout his term, Camden stood sentinel over Standard Oil interests, and when two pipeline bills inimical to the trust appeared in the Maryland legislature in 1882, he acted promptly, informing Flagler with satisfaction, “My dear Mr. Flagler, I have arranged to kill the two bills in Md. legislature at comparatively small expense.” 32
With Grover Cleveland’s election in 1884, many businessmen braced for reform in Washington, but he turned out to be quite moderate. Nonetheless, the public revulsion against monopolies steadily gathered force, producing an Anti-Monopoly Party that condemned railroad pools and rate discrimination. Although grain elevators, meatpackers, and harvesting-machine companies were all feeding off railroad rebates, Standard Oil was thrust into the foreground of antimonopoly indictments. As the World wrote in a scorching attack against the trust in 1887, “When the 19th century shall have passed into history, the impartial eyes of the reviewers will be amazed to find that the U.S., supposed to be conservative of human liberty and human right, tolerated the presence of the most gigantic, the most cruel, impudent, pitiless and grasping monopoly that ever fastened itself upon a country. ” 33
Nonetheless, it took time to establish the legal rationale for government regulation of private business. In 1876, in Munn v. Illinois, the Supreme Court had famously declared, “Property does become clothed with a public interest when used in a manner to make it of public consequence, and affect the community at large.”34 By this point, Standard Oil wasn’t overly worried about an interstate-commerce bill against railroad discrimination. The trust ran its own pipeline system to the seaboard and was confident that if railroad regulation came it could still be bypassed. When Congress finally passed the Interstate Commerce Act in 1887, outlawing railroad pools and rebates and setting up the first regulatory commission, Senators Payne and Camden dutifully voted against the bill, but its defeat had not been assigned a high priority by the trust.
In public, Standard Oil pretended to welcome the equal treatment mandated by the new act and vowed to accept no more rebates. As Rockefeller and Archbold later claimed in 1907 when their subsequent behavior was questioned, “Since the enactment of the interstate commerce law in 1887, the Standard Oil Co. has most carefully observed its provisions and in no case has wilfully violated the law.”35 Rockefeller tended to portray himself as a hard-driving executive who went as far as the law allowed but not an inch further. Allan Nevins concurred in this view, noting that “following the Interstate Commerce Act of 1887, the Standard, as careful observers generally agree, came close to a general obedience of the new law, and asked no outright rebates.”36
But there is reason to question this assertion. Right before the act’s passage, Standard had to grapple with state challenges to railroad rebates, and the ubiquitous Colonel Thompson, closeted with railway officials, found ways to skirt the new regulations. In the spring of 1886, Thompson conferred with officials of the Lake Shore Railroad after the Ohio Supreme Court had outlawed freight discriminations. They came up with a way to create the illusion that all shippers paid the identical posted rates while Standard Oil was compensated secretly through an accounting gimmick. As Thompson explained this subterfuge to Rockefeller:
Our arrangement is a very simple one: We are paying the open tariff rates to Michigan and all other points and this same is required of all other shippers. I have a distinct understanding with the proper persons that we are not required or expected to pay more than formerly and in order that we may not be out any money . . . we deduct from Chicago payments an equivalent amounting to what would have been a proper payment on all the other points, each month. You will readily see the object of this and you will observe in the situation we are in that no better or fairer arrangement could possibly have been made or one more satisfactory to us.37
When the Missouri railroad commissioner ordered uniform freight rates in 1888, Thompson advised Rockefeller, “We have reason to think that this order will be withdrawn. At any rate, the roads will pay no attention to it.”38
Such oral arrangements may have helped to pacify Standard Oil in the wake of the Interstate Commerce Act. Also, no governmental body could strip it of its giant tank-car fleet and the lucrative royalties they brought in; Standard Oil wasn’t compelled to supply tank cars to competitors. There were even unexpected dividends from the equality prescribed by the act. The new Interstate Commerce Commission said the railroads had to charge the same rate for oil in barrels (used by independents) and in tank cars (used by Standard Oil); as a result, the roads, for the first time, could charge for the weight of the barrels, penalizing independent shippers. For a brief period, the Interstate Commerce Act might have chilled collaboration between trusts and railroads, but they gradually figured out ways to evade the law and slip back into well-worn arrangements. The fight against the railroad rebate remained a hardy perennial of reform politics for a generation. In 1907, Standard Oil was briefly slapped with the largest fine in corporate history for a practice it had supposedly given up long before.
By the 1888 election, protests against the trusts—oil, whiskey, sugar, and a score of others—had broken out in so many places that the national platforms of both parties harshly condemned economic concentration. Agrarian reformers in the South and West agitated against the railroads as the midwives of monopoly. Protestant evangelicals deplored the moral crisis that accompanied industrialization and the lopsided distribution of wealth. There was a great upsurge of activity among organized labor as membership in the Knights of Labor soared to 700,000 in 1886. That year, policemen fired on picketers at the McCormick reaper plant in Chicago, provoking the protest at the Haymarket in which a bomb exploded, killing seven people. In 1888, Edward Bellamy published his best-selling utopian novel, Looking Backward, with its socialist version of the technocratic society overtaking America. The general public was of two minds and viewed the new entrepreneurs as alternately sinister and heroic. By 1888, Rockefeller began to pop up in fawning magazine features about rich Americans, but he was also singled out as a notorious trust king in Joseph Pulitzer’s World and other papers. The press kept up an editorial drumbeat against Standard Oil, demanding vigorous state and federal antitrust action.
Amid this crescendo of criticism, Rockefeller again came under the scrutiny of government investigators. When a New York senate committee investigated Standard Oil in 1888, it learned just how elusive he could be. When a process server came to 26 Broadway, he was told that Mr. Rockefeller was out of town. When he went to 4 West Fifty-fourth Street, he was told that Mr. Rockefeller was at home but could not be seen. At this point, the process server spent the night dozing on Rockefeller’s stoop, lest the mogul attempt an early-morning departure. Ringing the doorbell shortly after daybreak, he was told Mr. Rockefeller had left. Blandly denying that he had fled the process server, Rockefeller later explained that he had been in Ohio and hastened back when notified of the investigation. In fact, Rockefeller had also kept his visit to Cleveland a secret because he feared being served there with a subpoena in a suit by local refiners.
To coach Rockefeller for the New York senate hearings, Standard Oil hired an eminent lawyer, Joseph H. Choate. Choate was slow to appreciate his unusual client, who greeted him cordially then stretched out on a couch with a languid air. When Choate tried to sound him out on several company matters, his tight-lipped client revealed nothing. Choate was frustrated by this seemingly indolent man who kept quizzing him. “I wonder how we shall make out with Mr. Rockefeller,” Choate asked Flagler in concern. “He seems so helpless. He is asking questions all the time.” Flagler was amused. “Oh, you will find that he can take care of himself,” he replied. “You needn’t worry about him.”39
Several years earlier, during testimony in Albany, Rockefeller had given identical replies to thirty consecutive questions, declining each time to answer on advice of counsel. This time, he knew he had to be, or at least seem, more forthcoming. On a frosty morning in February 1888, clad impeccably in frock coat and top hat, Rockefeller entered a packed hearing room of the superior court in New York City, flanked by Joseph Choate. Since he was fast becoming a mythical figure, his testimony drew extensive press coverage. Still handsome at forty-eight, with a full head of close-cropped hair and a neat reddish brown mustache, he strode in with a purposeful air. On closer inspection, however, one could detect lines around his eyes, and he seemed older and more tired than a few years earlier. He was now carrying a more onerous burden than he knew.