by Ron Chernow
The flash point in the feud between Rockefeller and Rogers came in 1899 when James Stillman, William Rockefeller, and Rogers acquired secret control of Anaconda Copper of Butte, Montana, a mining venture formerly owned by Senator George Hearst. They made the purchase with a $39 million loan from National City Bank. They then turned around, restyled the new holding company Amalgamated Copper, and fobbed it off on a gullible public for $75 million, retiring the $39 million loan and pocketing a $36 million profit. Rockefeller was incensed by the issuance of so much watered stock, which gave him a chance to feel self-righteous when his own virtue was under attack. The new company was floated by Stillman and National City Bank, and both William and Rogers exploited their Standard Oil connections to stoke a speculative fever.
To execute this deal, Rogers made the mistake of inviting a sharp-eyed Boston stockbroker named Thomas W. Lawson into the project. Starting in July 1904, Lawson published a tell-all account in Everybody’s magazine that was later collected into a classic volume entitled Frenzied Finance. The most melodramatic potboiler in American financial history, the book opened with this histrionic dedication: “TO PENITENCE: that those whose deviltry is exposed within its pages may see in a true light the wrongs they have wrought—and repent.”58 Describing himself as a mere “neophyte in crime,” Lawson gave his exposé a confessional note: “I have unwittingly been made the instrument by which thousands upon thousands of investors in America and Europe have been plundered.” 59
The gist of his indictment was that the public paid two-thirds of the purchase price for Amalgamated Copper while Rogers and his comrades took two-thirds of the stock. At the time, Lawson noted, Standard Oil was considered “the greatest power in the land,” and its supposed involvement had stimulated a buying mania.60 At the subscription deadline on May 4, 1899, mobs had formed outside National City Bank, and four burly policemen had to shut the doors against these disappointed investors. With the offering five times oversubscribed, Rogers handed out preferred allotments to favored politicians. Rogers and William Rockefeller had lured investors with the promise of their own involvement, but they dumped stock soon after it was issued. Lawson’s character sketches were as memorable as his revelations about the syndicate’s methods. Oddly, he expressed affection for William Rockefeller, whom he portrayed as solid, laconic, and far more trustworthy than Rogers. In Henry Rogers, he found his true protagonist, a mutable man of violent extremes, an actor of genius who got lost in the many roles he shuffled:
Yet away from the intoxicating spell of dollar-making this remarkable man is one of the most charming and lovable human beings I have ever encountered, a man whom any man or woman would be proud to have for a brother. . . . Once he passes under the baleful influence of “The Machine,” however, he becomes a relentless, ravenous creature, pitiless as a shark, knowing no law of God or man in the execution of his purpose.61
By liberally splashing the names Rockefeller and Standard Oil across his pages, Lawson made it seem as if John D. had formed a conspiratorial trio with Rogers and William. At one point, he said more truthfully, “It was the first venture of size these two strong wheelmen [Rogers and William] of ‘Standard Oil’ had undertaken without the cooperation of John D. Rockefeller, and it appeared that he was considerably worked up over the public hubbub, and so opposed to the whole Amalgamated affair that nothing short of a great success could justify his subordinates’ temerity.”62 In a footnote, Lawson further conceded that Rockefeller never put a dime into the Amalgamated flotation. Nevertheless, the general public came away with the impression that John D. was pulling the strings.
At one point, Lawson quoted Rogers’s views on the merits of cartels versus competition: “No man has done his business properly who has missed a single dollar he could have secured in the doing of it. . . . It is one of the first principles Mr. Rockefeller taught me; it is one he has inculcated in every ‘Standard Oil’ man, until today it is a religion with us all.”63 While Rogers was talking in general terms, it again left the impression that John D. lurked somewhere behind the copper trust.
Had he not been unfairly implicated, Rockefeller might have enjoyed the rebuke delivered to Rogers. When the Lawson series began, Junior rushed him a copy, declaring, “I think you will be well repaid for reading this article, although it seems to be written in a bitter, vituperative, sensational manner.”64 Any such satisfaction, however, paled before the sense that he had been unjustly slandered. “They said I owned copper stock—that Boston man said it— when as a matter of fact it belonged to my partners and I had nothing to do with it,” he was still seething years later. “It was not pleasant to sit still and take all the abuse and not hear one word of explanation from them.”65 Rockefeller suffered in silence, knowing that if he spoke up he would have to repudiate his brother. After the Lawson series, John D. and Rogers saw each other only twice during the next five years.
In early 1907, Rockefeller took revenge against Rogers at a meeting of Standard Oil’s board of directors. After investing millions of his own money in the Virginia Railway, a coal-carrying railroad in Virginia, Rogers could no longer carry the debt and sought relief from Standard Oil. Spying his chance to cut Rogers down to size, Rockefeller told his partners, “Gentlemen, we should not as an organization become involved in other corporations or side issues. We are making money and success as an oil corporation and we should confine our efforts to Standard alone.” When a vote was taken, Rockefeller prevailed, and Rogers grew so enraged that he slammed his fist on the table, threatening to sell every share of Standard Oil stock he owned. To this, Rockefeller placidly replied, “What is your price?” When Rogers named it, Rockefeller rejoined, “I will meet you here with a certified check tomorrow at 10.” The next day, in an incalculable blunder, Rogers handed over his block of Standard Oil stock to Rockefeller, surrendering in a moment of pique a vast fortune in future dividends and appreciation.66 As we shall see shortly, Rockefeller might have had more than the Lawson series on his mind, for he thought that Rogers had played a treacherous trick on him by meeting with Ida Tarbell.
Posterity has received another portrait of Henry H. Rogers, and, given the power of the pen that drew it, it has been an imperishable one. Something of a literary man, Rogers had long admired Mark Twain and read his books aloud to his children. “If I ever meet that man,” he once commented, “I’d like to do something for him.”67 He thus responded with alacrity in 1893 when Twain’s friend Clarence Rice asked if Rogers would meet the author at the Murray Hill Hotel to discuss the bankruptcy of Twain’s publishing house, which was staggering under heavy debts. The two men, who had met on a yacht two years before, were both legendary raconteurs and wits and developed an instant rapport. Rogers decided to mount a rescue effort and the next morning wrote out a check for eight thousand dollars. Taking Twain’s finances in hand, he kept Twain’s creditors at bay and rallied his spirits, inviting him along with Archbold to prizefights at the New York Athletic Club. With canny foresight, Rogers insisted that Twain retain all his copyrights, “a service which saved me and my family from want and assured us permanent comfort and prosperity,” Twain said later. 68 Under Rogers’s tutelage, Twain invested his royalties wisely and paid off his debts. Awash with gratitude, Twain refused to publish Henry Demarest Lloyd’s Wealth Against Commonwealth.
A friend of infinite tact, Rogers endeared himself to Twain as much by the manner as the substance of what he did. “By no sign, no hint, no word did he ever betray any consciousness that I was under obligations to him,” Twain wrote. “I have never been so great as that, and I have not known another who was.”69 Their friendship survived Twain’s financial crisis, and Rogers later negotiated lucrative book contracts for Twain, who became a frequent guest aboard Rogers’s steam yacht, the Kanawha. (During one cruise, Twain composed his sketch “The Loaves and the Fishes,” in which he argued that the true miracle of the biblical story was not the multiplication of bread and fishes but that twelve disciples served five thousand people an
d lived to tell the tale.) When Rogers was devastated by Lawson’s vitriolic portrait in Frenzied Finance, Twain supplied favorable anecdotes about him for a profile in The World’s Work, a magazine published by Frank Doubleday. For Rogers, Twain reserved his highest encomium: “He is not only the best friend I have ever had, but is the best man I have known.”70
A frequent visitor to 26 Broadway, Twain loved to smoke cigars, read, and lounge on the sofa in Rogers’s office while his friend entertained a steady stream of visitors. He had no concerns about Rogers’s reputation. “He’s a pirate all right,” Twain said, “but he owns up to it and enjoys being a pirate. That’s the reason I like him.” 71 For a time, Twain turned 26 Broadway into his downtown clubhouse and sometimes lunched with Junior. “I got down here to the Standard Oil in time for late luncheon with young Rockefeller—it is the best homemade table in the North,” Twain once told his wife.72 He formed a favorable opinion of Junior as “a plain, simple, earnest, sincere, honest, well-meaning, commonplace person, destitute of originality or any suggestion of it.”73 A defender to the end, Twain later blamed the muckrakers and Teddy Roosevelt for Standard Oil’s infamy. That the trust had scarcely had a strike in more than four decades proved to him that “the Standard Oil chiefs cannot be altogether bad or they would oppress their sixty-five thousand employees from habit and instinct, if they are so constituted that it is instinctive with them to oppress everybody else.”74
Another perceptive author developed intense affection for Rogers. In 1896, the sixteen-year-old Helen Keller, who was blind and deaf, met him and Twain at a gathering to raise money for her future education. Even before the meeting, Twain laid the groundwork, telling Mrs. Rogers, “It won’t do for America to allow this marvelous child to retire from her studies because of poverty.”75 Rogers paid for much of Helen Keller’s education at Radcliffe College, which she gratefully acknowledged. “That I haven’t missed my small part of usefulness in the world, I owe to Mr. Clemens and Mr. Rogers,” she wrote.76 After graduating cum laude, Helen stayed in touch with Rogers and poignantly dedicated her book The World I Live In to “My Dear Friend of Many Years.”77 Before he died, Rogers established an annuity that gave her lifelong security. Helen Keller’s teacher, Anne Sullivan, later revealed that “Mr. Rockefeller [ Junior] and his father have been interested in Helen most of her life.” 78 Unlike the help from Rogers, the Rockefeller money was given anonymously.
In the 1890s, Rockefeller stumbled, almost by accident, into owning most of the iron ore on the Mesabi Range, the last business project that he executed on a monumental scale.
This legendary investment began as another blunder bequeathed by his bumbling former advisers, Colby and Hoyt. When Gates first examined the iron-ore properties the two had bought in Cuba, Michigan, and Wisconsin, he thought they were worthless holes. Colby and Hoyt had, however, unearthed one promising entity: the Minnesota Iron Company. Gates was impressed on a westward journey by the potential of the Mesabi Range, which contained a broad band of iron ore laid across a 120-mile strip in northern Minnesota. Though it held out hope of being the richest such vein ever found in North America, its commercial utility had not been demonstrated. Unlike hard rock dug from underground mines and fed into blast furnaces, the Mesabi ore was fine, powdery stuff that either clogged furnaces or blew out their chimneys, scattering dust across the countryside. On the other hand, it lay close to the surface and in such abundance that it could be scooped out by steam shovels at a fraction of the expense of underground mines.
Among the pioneers in Mesabi ore were the backwoods Merritt family. These so-called seven men of iron—four brothers and three nephews—borrowed recklessly, snapped up tremendous tracts of land, then launched construction of a railroad to carry the ore to Lake Superior. When the 1893 panic savaged iron prices, however, they faced a severe cash squeeze. The atmosphere in Duluth grew incendiary as workers with drawn pistols forced their way into the office of the Merritts’ railroad to demand payment of overdue wages.
In rescuing the Merritts, Rockefeller reenacted his old pattern of swooping down, fortified with cash, on distressed properties and seizing a commanding position. As with the malodorous Lima oil, he wagered that the Mesabi ore would someday be of value—even as Andrew Carnegie and his experts gleefully scoffed at this preposterous idea. As Carnegie’s right-hand man, Charles Schwab, said of these naysayers, “They couldn’t understand how [Rockefeller], without knowledge of the iron business, could invest money in ores that were useless—at least for a long time to come.” 79 To which Rockefeller retorted tersely, “It was a surprise to me that the great iron and steel manufacturers did not place what seemed to be an adequate value on these mines.”80 He believed that, like the early days in oil, the steel industry was on the verge of overproduction and would soon fall prey to suicidal competition unless stabilized by strong owners. An expert in the strategic importance of transportation, he avidly eyed the extensive rail and dock facilities controlled by the Merritts.
When Rockefeller advanced money to the Merritts in the panic summer of 1893, he was one of the few people who could have saved them. Naively, he expected to disburse a modest $100,000, and he never imagined that the Mesabi project would tax his colossal resources and consume eight years of his time. In exchange for his investment, Rockefeller negotiated a deal with the Merritts to set up a holding company, the Lake Superior Consolidated Iron Mines, which would combine the Merritts’ rail and mining assets and the rather mediocre mining properties cobbled together by Colby and Hoyt. The idea was that the Merritts would run the company and employ Rockefeller’s cash infusion to finish the stalled railroad. At first, Rockefeller owned only a fifth of the stock, but he exercised final control through his first mortgage bonds, which enjoyed a lien on the entire company in the event of a default.
Given their intertwined fates, it seems odd that Rockefeller met the head of the Minnesota family, Leonidas Merritt, on only a single occasion and then briefly in June 1893. Gates tried to shield Rockefeller from such contacts, but Merritt warmly insisted that he wished to shake his savior’s hand. When they met at 26 Broadway, the meeting lasted five minutes, and Rockefeller was the pattern of affability. He touted the virtues of the Mesabi venture then turned to the Minnesota weather. After a few more pleasantries, he politely excused himself and never saw any of the Merritts again. Afterward, Gates made it clear that his boss would now withdraw behind his customary screen. “In talking to me,” he told Leonidas Merritt, “you are talking to Mr. Rockefeller.” 81 Even by his own extremely reclusive standards, Rockefeller was remarkably aloof during his eight-year fling in the iron business. Though he became chief landlord of the Mesabi Range, he set foot on its slopes only once and that was long after he had disposed of his properties.
In the autumn, Rockefeller’s goodwill toward the Merritts ebbed. As their notes matured, they frantically pressed Gates for cash, and Rockefeller reluctantly obliged them with loans. Gates matured as a businessman during this crisis, and Rockefeller bestowed exceptional authority on him. When Gates visited Duluth in September, Rockefeller confided to Cettie, “[Gates] reports progress daily, and has one hundred thousand dollars in his pocket to use at his discretion.”82 By October, the initial loan had burgeoned to nearly $2 million, with no guarantee that the Mesabi ore would ever demonstrate commercial value. It all seemed a gamble gone hideously wrong. Pacing the Forest Hill porches, Rockefeller later remembered the harrowing, sometimes daily emergencies forced upon him by the uncouth Merritts, who kept their securities stuffed in their pockets: “I had to loan my personal securities to raise money, and finally we were compelled to supply a great deal of actual cash, and to get it we were obliged to go into the then greatly upset money market and buy currency at a high premium and ship west by express to pay the laborers and the railroad and to keep them alive.” 83
In early 1894, still burdened by debt, the Merritts were forced to offer Rockefeller ninety thousand shares of Consolidated stock at ten dollars a share. A
s with Standard Oil, Rockefeller kept adding to his Consolidated holdings, the ten-dollar price being on a par with his other purchases at the time; the Merritts, though, vociferously claimed they had been swindled. A year later, they had to forfeit to Rockefeller an option on another 55,000 shares of Consolidated stock, surrendering to him complete control of the company. With fullthroated passion, Gates urged Rockefeller to expand his investment. “It is, in my opinion, the opportunity of a lifetime, one of those opportunities, the seizing or failing to seize, which marks the difference between success and failure in life.”84
During the next few years, as steelmakers found ways to adapt their furnaces to the bargain-priced Mesabi ore, Consolidated stock rose to stratospheric heights. In a paroxysm of frustrated rage, the Merritts demonized the man they had earlier heralded as their savior. In a rancorous suit filed against Rockefeller in federal circuit court in Duluth, they portrayed themselves as innocent lumberjacks fleeced by the eastern mogul. Fearing a biased local jury, Rockefeller retained a Minnesota newspaperman to counteract local hostility toward him and even stepped up his Baptist-missionary donations in the state. As Rockefeller feared, the Duluth jury reached a verdict in favor of the Merritts, though it was overturned on appeal. The whole feud was finally settled out of court: Rockefeller paid $525,000 to the Merritts, who publicly retracted their charges. Of this settlement, Rockefeller commented sarcastically, “We settled, paid money, rather than submit to larger robbery by the twelve just and good men, as we could not get to a higher court.”85 Stung by the controversy, Gates was still defending his behavior almost twenty years later in a short polemical pamphlet, The Truth About Mr. Rockefeller and the Merritts, which he mailed out gratis to ten thousand people.