by Ron Chernow
It was Standard Oil of New York that functioned as the main banker for the affiliated companies, governing what was arguably the most stupendous cash flow ever produced in American industry. To maximize its leverage over Wall Street, it scattered its gigantic balances among many banks; a single Standard Oil entity, the National Transit Company, sometimes kept as much as $40 million on deposit. Standard Oil of New York also made large loans to banks, brokerage houses, railroads, and steel companies. So rich in cash, Standard Oil wielded a make-or-break power over Wall Street houses, which defied it at their peril. Standard directors often took out prodigious loans from the trust. On the eve of the 1893 panic, John D. had a $1.36 million loan outstanding while brother William owed $865,000.
As president of New York Standard, William Rockefeller parlayed his position into one of exceptional prominence on Wall Street. For John, the street might be a sinful haunt, but it had its own sulfurous charms for William. In 1884, while they both served as directors of the Chicago, Milwaukee, and St. Paul Railroad, William had met James Stillman, the youngest director of National City Bank. In an inspired move, Stillman recruited William as a director. By the time Stillman became the bank’s president in 1891, National City had been so enriched by the Standard Oil bounty that it was nicknamed the Oil Bank.
When the 1893 panic struck, John D. was just emerging from the seclusion occasioned by his medical problems. He raced back to New York from Cleveland to orchestrate a massive salvage operation. In the course of the panic, he provided almost $6 million to fifty-eight individuals and firms who were turned down by banks and desperately needed his intervention. To bail out these borrowers, Rockefeller had to borrow almost $4 million, and nearly $3 million of that came from Standard of New York. This was a tricky balancing act, since he was borrowing on the collateral of securities then collapsing in value. In October 1893, the Standard Oil treasurer, William T. Wardwell, having decided that Rockefeller had reached the permissible limit, did the unthinkable: He shut down the lending window on the company founder. A stupefied George Rogers relayed this verdict to his boss: “He has refused to give me any more money, because he had no assurance of getting it back when he wanted.” 10 After frantic negotiations, Wardwell boosted Rockefeller’s credit line to $2.8 million in exchange for a lien on his quarterly dividend of $775,000 from Standard Oil stock. Some of Rockefeller’s letters reflect tragicomic confusion as he struggled to collect loans from debtors in order to pay off his own debt to Standard Oil. In early September, he wrote to Cettie from New York that he had settled his debts, with $550,000 to spare. “We are steadily emerging from the panic, but I hope never to go through with another such experience.”11
When it came to old friends, his generosity could be dazzling. When Captain Vandergrift telegraphed from Pittsburgh that a trust company he directed stood in mortal peril, Rockefeller telegraphed promptly, “How much do you want?” “One million dollars,” came the response to which Rockefeller replied, “Check for one million is on the way.” 12 But he was so inundated with pleas that many more people were spurned than saved, generating unavoidable bitterness. Frederick T. Gates referred to these painful quandaries in an October 1893 letter: “I have today on my desk urgent imperative appeals to save old friends [of Mr. Rockefeller’s] amounting to many hundreds of thousands of dollars. I have incurred the enmity of many important business enterprises because I have had to decline to assist them in the last few days.”13 More than one person who was refused later accused Rockefeller of having ruined him.
During the panic, Rockefeller awakened to the public responsibilities attending great wealth. Having long been reflexively hostile to government, he now found himself cooperating with Washington to calm the jitters in financial markets. In 1894, the U.S. Treasury, alarmed by the outflow of gold that legally backed the gold standard, turned to J. P. Morgan for a rescue operation. After telling John G. Carlisle, the Treasury secretary, that this was impossible, Morgan conferred hastily with Stillman—a measure of Stillman’s new stature on Wall Street. “He was greatly upset and overcharged,” recalled Stillman, “nearly wept, put his head in his hands and cried: ‘They expect the impossible!’ So I calmed him down and told him to give me an hour and by that time I cabled for ten millions from Europe for the Standard Oil and ten more from other resources.” When Stillman walked into Morgan’s office to report the $20 million, Morgan grew giddy and triumphant. “He took the pose of savior of his country and assumed all the credit,” Stillman observed archly, crediting the real success to himself and Standard Oil. “But then you see, he is a poet; Morgan is a poet.” 14 Rockefeller never claimed credit for his action and preferred no publicity.
Stillman’s behavior during the panic had a deleterious effect on his relationship with Rockefeller, who had given him $5 million amid multiple demands. Rockefeller believed that the crafty Stillman had not only held his money longer than necessary but employed it to buy stocks at bargain prices instead of using it to shore up his bank. Under any circumstance, Rockefeller would have been critical of an alliance between Standard Oil and a Wall Street bank, but after the 1893 panic his disenchantment with Stillman gave him extra misgivings about William’s policy of placing large balances in his bank. One of Rockefeller’s financial advisers, Henry E. Cooper, indignantly told him, “You ought to get after him hard!” “No, Mr. Cooper, we will do nothing,” said Rockefeller evenly. “But we shall not forget it!”15
In November 1887, as he listened to Rockefeller testify before the new Interstate Commerce Commission, Henry Demarest Lloyd saw the witness as the prince of darkness, evil incarnate. Afterward, he furiously scribbled notes that he headed “Fanatic Standard Oil,” and had this to say about Rockefeller:
He is . . . a depredator . . . not a worshipper of liberty . . . a Czar of plutocracy, a worshipper of his own Money Power over mankind. He will never sacrifice any of his plans for the restraints of law or patriotism or philanthropy. . . . His greed, rapacity, flow as a Universal solvent wherever they can, melting down into gold for him, private enterprise, public morals, judicial honor, legislative faith, gifts of nature. He will stop when he is stopped—not before. Not a tiger but a lynx . . . a make-up like that of the “gentleman pirate” of romance, think cold ruthless. 16
Convinced that Standard Oil was the archetypal trust, Lloyd embarked on a book-length study two years later, and by the time Wealth Against Commonwealth appeared in 1894, he was sure that the public was ripe for his revelations. As he wrote on the eve of publication, “the sky seems full of signs that the time for the appearance of such information has come.” 17
Known as “the Millionaire Socialist,” the natty Lloyd had longish hair, wire-rimmed spectacles, and a flowing mustache, which gave him a vaguely artistic air. Among his friends he included Clarence Darrow, Jane Addams, Eugene Debs, and Booker T. Washington. He was toasted by many literary figures, and Robert Louis Stevenson called him a “very capable, clever fellow,” asserting that “he writes the most workmanlike article of any man known to me in America.”18 A foppish reformer, Lloyd attended trade-union meetings wearing pince-nez on a gold chain, a gray top hat, and glossily polished boots. When he supported anarchists blamed for the Haymarket Square riot in Chicago in 1886, his outraged father-in-law, a co-owner of the Chicago Tribune, disinherited him and placed his estate in trust for Lloyd’s children. To maintain his existence as a dapper millionaire and literary troubadour for radical causes, Lloyd relied on his wife’s income.
Lloyd’s politics became more radical over time. With a messianic outlook, he had promiscuous sympathy for every crusade. Starting out as a free-market liberal, he then turned to socialism, trade unions, worker cooperatives, and utopian communities. He once referred to himself as “a socialist-anarchist-communist-individualist-collectivist-cooperative-aristocratic-democrat”—and that was just for starters.19 Scarcely a cause in the Progressive panoply—from attacking tariffs to favoring municipal ownership of utilities to combating sweatshops— escaped his
wide-ranging vision. Like Karl Marx, he believed in the inevitable collapse of capitalism, which he thought corrupt and predatory. Also like Marx, he imagined that competition led to monopoly—a welcome step since it was “a necessary and indubitable step toward national and international cooperation.” 20
Lloyd returned to Standard Oil—the subject of his 1881 story in the Atlantic Monthly—for several reasons. Dismayed by the failure of the Sherman law to curb monopolies, he ridiculed it as “The Anti-Trades Union Law,” a mere ruse perpetrated by “a world-wide concert of action of a money power, crazy with greed, and fanatical to the hilt, to re-enslave the working people.”21 He could also now draw upon a wide body of material churned up by government investigations against Standard Oil. Drawing on a small army of Rockefeller haters, including George Rice, Lewis Emery, and Roger Sherman, he gathered court records and trial transcripts, which he stuffed into pigeonholes at his home in Winnetka, outside Chicago. When one acquaintance visited him there, Lloyd told him, “I will prove that John D. Rockefeller is the most selfish usurper that ever lived.”22 With Dostoyevskian passion, he filled notebooks with flaming diatribes against the American plutocracy, describing the Rockefellers and Vanderbilts as members of a “cruel, selfish, carnivorous, short-sighted herd.”23 The lists of sensational titles he compiled for his Standard Oil book—including Slime in Genesis, Fountains of Pitch, and Barbarians of Business—said as much about his overheated imagination as they did about the trust.24 In fact, Lloyd spouted so much fustian that it made it easy for businessmen to dismiss him despite his often accurate insights.
Wealth Against Commonwealth had no kind words to spare for Standard Oil. Lloyd marshaled every wispy allegation made against the trust and printed it as gospel truth. Where Ida Tarbell later portrayed Rockefeller and his cohorts as superb if immoral businessmen, Lloyd presented them as brazen criminals who owed everything to diabolical deeds. Later on, speaking privately of the “criminal character” of the Standard Oil executives, he insisted that they “ought to be in the penitentiary.” 25 Like his Atlantic Monthly piece, his book was chockablock with errors and egregious misrepresentations—for instance, he described the Rothschilds as Standard Oil’s agents abroad. Accusing Rockefeller of rigging artificial shortages to drive up kerosene prices, Lloyd failed to see that the trust maintained its dominance by keeping prices low and selectively engaging in predatory pricing. He ennobled any businessman, however greedy or inept, who opposed Rockefeller.
Yet for all its weaknesses, the book had a profound and lasting impact and ranks as a classic of muckraking literature. Lloyd was a superb stylist whose mellifluous prose captivated readers. Every paragraph was a call to arms.26 Whatever the holes in his argument, he gave a clear, intelligent shape to a complex story, especially when it came to the importance of railroad rebates in the rise of Standard Oil. When he argued that the South Improvement Company never died but became Rockefeller’s master blueprint, he laid down a line of argument followed by Ida Tarbell. What also gave the book its force was Lloyd’s political message: “Liberty produces wealth, and wealth destroys liberty.”27 As the trusts’ power rippled through society, he said, it corrupted every corner of American life. The noble experiment of American democracy was being undermined by businessmen who had grown more powerful than the state and controlled its elected representatives. “Our system, so fair in its theory and so fertile in its happiness and prosperity in its first century, is now, following the fate of systems, becoming artificial, technical, corrupt.” 28
In Wealth Against Commonwealth, Lloyd omitted all names, even though Rockefeller, Flagler, and others were all too recognizable. Standard Oil was never mentioned and was usually referred to as the “oil combination” or some other euphemism. This technique protected Lloyd from libel prosecution, though he fell back upon a highfalutin explanation for it. “It seems of the highest importance that the book should retain its character of an illustration of the motives and results of our commercial civilization, not an attack on a particular corporation or body of men.”29
Lloyd’s manuscript found a publisher with difficulty. Mark Twain, who then had his own publishing venture, turned it down in deference to his close friendship with Henry H. Rogers. As Twain told his wife, “I wanted to say [to Lloyd] the only man I care for in the world; the only man I would give a damn for; the only man who is lavishing his sweat and blood to save me & mine from starvation and shame, is a Standard Oil fiend . . . but I didn’t say that. I said I didn’t want any book; I wanted to get out of the publishing business.”30 Luckily for Lloyd, he won the passionate sponsorship of another literary luminary, his former Atlantic Monthly editor, William Dean Howells, who was bowled over by his indictment of Rockefeller. “I think that the monstrous iniquity whose story you tell so powerfully, accomplished itself in our time, is so astounding, so infuriating, that I have to stop from chapter to chapter, and take breath.”31 Howells steered Lloyd to Harper and Brothers, who agreed to issue the book if the author substantially condensed it, paid for publication, and guaranteed a sale of fifteen hundred copies—a deal only a rich radical could afford.
Published in 1894, the book passed through four printings within a year and sold a respectable eight thousand copies in its first decade. Some sour notes were heard amid the praise. The Nation began its scathing review by saying, “This book is a notable example of the rhetorical blunder of overstatement,” and it branded the book “five hundred pages of the wildest rant.”32 Yet the work was praised widely by many reformers, including Louis Brandeis, and Edward Everett Hale called it the most important American book since Uncle Tom’s Cabin. Since Lloyd distributed free copies to politicians, it became the bible of Washington trustbusters.
With his penchant for melodrama, Lloyd claimed he had been tailed by Standard Oil detectives and told friends that he “expected to be crushed by the Standard people.” He seemed half disappointed when 26 Broadway reacted to his book with stern silence. Although colleagues informed him of the book’s accusations, Rockefeller did not read it and said Standard Oil “paid no more attention to all this nonsense than an elephant might be expected to pay to a tiny mosquito.” 33 Rockefeller now declined almost weekly requests to sit for magazine profiles, including one from a new magazine being launched by Samuel S. McClure, who was then in Paris trying to sign up an obscure young writer from Pennsylvania, Ida Minerva Tarbell.
Even after the publication of Wealth Against Commonwealth, Lloyd regaled friends with scurrilous gossip about Rockefeller, telling one correspondent, with cynical relish, that the mogul had recently gone abroad, ostensibly to recuperate from the strain of his charities. Sure that Rockefeller had left the country to divide up global oil markets with the Russians, Lloyd guffawed at reports that Rockefeller’s health had broken down under the crushing weight of his beneficence. “The wonder is that he expects people to believe that sort of thing, and that they do believe it!” Lloyd told a friend.34 The irony, of course, is that Rockefeller spoke the unvarnished truth. Lloyd was always as blind to Rockefeller’s virtues as he was sensitive to his glaring vices.
By 1895, Rockefeller, age fifty-six, had begun to fade by imperceptible degrees into retirement. That year, he sat for a haunting portrait by Eastman Johnson that was commissioned by the board of the University of Chicago and that shows him toward the close of his business career. Set against a dark backdrop, the titan sits on a simple wooden chair, fixing the viewer with a fiery stare. His long, tapered fingers are delicately interlaced and his legs urbanely crossed, but there is a blazing intensity, an inextinguishable fire, in his eyes. Rockefeller still looks powerful and surprisingly youthful, but there is a sadness about him, as if he were stooped under a great weight and enveloped in unfathomable gloom.
Since he dated his retirement as early as 1894 and as late as 1897, there is some uncertainty as to when Rockefeller officially left 26 Broadway, but 1895 and 1896 are the likely watershed years. Though he was still suffering from sporadic digestive problems and ne
rvous strain, the 1893 panic had forced him to postpone his departure several times. In explaining his retirement, the Rockefeller literature has always stressed his health and the heavy burden of his charities, though another factor contributed as well: He had perfected the gleaming machinery of Standard Oil, and, his appointed task done, he felt he should pass the reins to younger men. As Gates put it, the business “had ceased to amuse him, it lacked freshness and variety and had become merely irksome and he withdrew.”35 By 1896, Rockefeller was skipping the daily lunch meetings at 26 Broadway and only occasionally exchanged memos with other executives. By June 4, 1896, he had already relinquished most of his duties, for he ended a letter to Archbold, “I shall be very pleased at any time to hear anything new that is important in the business, if it will not trouble you too much, or if you will kindly call Mr. Rogers.”36
In September 1897, Rockefeller suffered another medical setback, apparently related to circulatory problems, and his doctors insisted that he promptly transfer more day-to-day decisions to his representatives. “I do not call myself sick,” Rockefeller commented to one relative, “but this little warning I will promptly heed, as health is of the first importance.” 37 So in 1897—the year his son graduated from Brown—Rockefeller walked away from the empire that had consumed his energies for more than thirty years, and during the next fifteen years he scarcely appeared at 26 Broadway. He was succeeded by John D. Archbold, his jovial, pugnacious protégé, who gave a more defiant and combative tone to the trust in its duels with government investigators, committing a public-relations blunder of no small magnitude.