Titan

by Ron Chernow

  When Junior returned to 26 Broadway, he immediately wrote to his parents, describing Morgan’s brusqueness and his response. “The whole thing suggested the final sweep-up of the room and we seemed to be the crumbs around the edge which of course must be swept up and expect to be swept up and which it was most annoying to find at this late date still on the floor.” 104 His parents were overjoyed that Junior had stood up to Morgan. His father, reading the letter aloud to Cettie, paused every few sentences to exclaim, “Great Caesar, but John is a trump!” Cettie—every inch the Spartan mother—was no less amazed. “Indeed you were masterly in the conduct of the negotiation,” she wrote back, “and you are so quiet and unassuming in both words and manner. Control of self wins the battle, for it means control of others.”105 The ecstatic response of Junior’s parents perhaps hints at relief from unspoken doubts, as if they both had wondered whether he could meet the demands imposed by the family fortune.

  After the meeting, Morgan urged Frick to visit Rockefeller at his Pocantico estate. To avoid publicity, Frick took a carriage up after dark, and the coachman waited at the front gate while Frick and Rockefeller huddled behind some shrubbery. “Wouldn’t it have made quite a story for the newspapers—our skulking around in the bushes in the dark?” Rockefeller later mused.106 As usual, he was wary and distant, not tipping his hand. “As my son told Mr. Morgan, I am not anxious to sell my own properties. But as you surmise, I never wish to stand in the way of a worthy enterprise. I do frankly object, however, to a prospective purchaser arbitrarily fixing an ‘outside figure,’ and I cannot deal on such a basis.” 107 When Frick finally told him that Judge Gary’s figure for Rockefeller’s ore properties was five million dollars below its true value, Rockefeller said curtly, “Then, I will trust you to represent me.”108 With his usual minimalist art, Rockefeller had concluded this epochal meeting in about fifteen minutes. On February 28, when Gates and Junior sat down with Frick at 26 Broadway, they maintained the party line that Rockefeller was not eager to sell. Just two weeks later, Rockefeller’s papers show a startling development that altered the course of the negotiations. Gates had commissioned new maps of potential ore deposits along the Mesabi Range that disclosed for the first time the likely existence of undiscovered mines. As Junior interpreted this catastrophic news to his father, “We had supposed up to date that we now controlled practically all of the ore reserve of the range. In view of this new map, the information of which is known only to ourselves, we are more inclined to make some trade.”109 After this, the Rockefellers subtly softened their negotiating posture, aided by a rapport between Junior and Frick so strong that Junior was later made an executor of Frick’s estate. “I have met no one in business whom I have been more strongly drawn to and have greater confidence in than Mr. Frick,” Junior told his father in mid-March.110 The talks were also assisted by Rockefeller’s declared resolve not to extract the last penny so as “to leave a favorable and friendly impression on Mr. Morgan,” as Junior put it.111

  For all that, Rockefeller reaped a fantastic profit in the creation of U.S. Steel, the first billion-dollar corporation and the first trust to overtake Standard Oil in size. The Consolidated stock originally bought for $10 a share in 1893 now fetched the equivalent of $160 in cash in 1901. Gates and Junior made an agreement with Frick that the Rockefellers would receive $80 million for the Consolidated stock—half in the form of U.S. Steel common stock and half in preferred—and another $8.5 million for the fifty-six lake vessels of the Bessemer fleet. Gates estimated that $55 million of the $88.5 million was clear profit. The U.S. Steel deal swelled Rockefeller’s net worth beyond $200 million ($3.5 billion today) and made him the second-richest man in America. On the other hand, he fell further behind Andrew Carnegie, who had received $300 million in bonds as his portion for the sale of Carnegie Steel. But this moment marked the zenith of Carnegie’s wealth, whereas Rockefeller was just warming up.

  Having overseen the Mesabi operation, Gates was not shy about demanding his due. When he delivered an oral report on the $55 million profit, Rockefeller saluted his effort and murmured quietly, “Thank you, Mr. Gates—thank you!” Gates fixed Rockefeller with a steady, quizzical look. For a long time, he had shown an almost filial deference toward his boss, but he was now well aware of his worth. Seizing the moment, he had the courage to say, “ ‘Thank you’ is not enough, Mr. Rockefeller.” Forced to reconsider, Rockefeller evidently came up with a large enough bonus, although Gates never revealed the exact amount.112 Notwithstanding his veneration of his mentor, Gates griped for years about his compensation and sometimes stooped to nasty jokes about Rockefeller’s avarice.

  For a time, it seemed the steel trust might effect a rapprochement between Rockefeller and J. P. Morgan. As one of the largest U.S. Steel stockholders, Rockefeller demanded and won board seats for himself and his son. Yet financial differences quickly soured his relations with Morgan. Rockefeller was upset by U.S. Steel’s extravagant dividends, even though he was a major recipient. In 1904, to register his protest, he resigned from the board, never having attended a meeting, and left Junior behind to represent him. By 1911, the Rockefellers liquidated the last of their U.S. Steel holdings. During the next two years, Morgan enjoyed an unspoken revenge by continuing to assign Rockefeller inferior positions in the weaker bond syndicates while excluding him from the sounder issues. Gates was always mystified by Morgan’s success. “He seems to be a man incapable of calm and reasoning reflection; the victim of a succession of unreasoning impulses.”113

  Before leaving Rockefeller’s exploits in the realm of iron ore, we should mark a prominent casualty of this adventure: his already troubled relationship with brother Frank. During the 1890s, Frank remained a vice president of Standard Oil of Ohio and took home a generous salary, despite his extended absences from Cleveland and a scornful indifference to business. As irascible as ever, he wrote testy letters to Standard Oil colleagues, forcing John and William to mediate. Frank was devoured by bitterness and often lapsed into violent, ungovernable rages that were aggravated by his alcoholism.

  Frank could never curb his compulsive gambling. Wanting to emulate the big killings of his brothers, he was tempted again and again into foolhardy ventures. With the best intentions, John fed Frank’s gambling addiction, even though Frank often did not realize the source of the loans. John and William continued to carry a $180,000 mortgage on his Kansas ranch and bailed him out when his crops failed in 1893. This generosity only highlighted Frank’s chronic dependency and further embittered him. In extending loans to Frank, John followed his usual strict accounting rules, which he always applied in a compulsive, inflexible fashion. Nevertheless, when it suited his convenience, Frank was offended by his brother’s refusal to compromise on his business principles.

  Frank’s best friend at the time was a bluff Irishman named James Corrigan. They hunted together, maintained adjoining estates in Ohio, and often invested together. A handsome man with a heavy jaw and bull neck, Corrigan was a popular, pugnacious Cleveland businessman. In the early 1880s, he had sold several refineries to John D., who had given him his first job and counted him as a friend. As payment for one refinery, Rockefeller gave Corrigan 2,500 shares of Standard Oil. With this money, Corrigan bought a half interest in the Franklin Iron Mining Company in the Lake Superior region of Wisconsin—the investment that first piqued Rockefeller’s interest in the Mesabi Range. John loaned Frank the money to purchase the other half, keeping the mining stock as collateral. Not without reason, John D. later ruefully stated, “Neither my brother nor Corrigan had any reason to complain of my conduct. I made James Corrigan his fortune. I made my brother his fortune.”114

  When the 1893 panic struck, John D. behaved in exemplary fashion. He and William agreed to cancel their mortgage on Frank’s Kansas ranch. Corrigan, meanwhile, took more loans from John D., secured by his Standard Oil stock, bringing the total to more than $400,000; Frank ran up debts to his brother in excess of $800,000, or $13 million in contemporary dolla
rs. By these actions, John D. acquired considerable power over the two men, for he had retained as collateral their Franklin mining stock, Corrigan’s Standard Oil shares, and Corrigan’s share in a lake shipping fleet.

  As the panic deepened, Rockefeller refused to release collateral despite Corrigan’s pleas that he could use his lake vessels to raise additional money. In October 1894, Corrigan tried to borrow another $150,000 from John without posting extra collateral. George Rogers tersely informed Corrigan that “Mr. Rockefeller had advanced all he ought to on the Franklin mine property and that unless he could offer some further collateral, I felt very sure Mr. Rockefeller could not help him out.”115 When Corrigan stopped making interest payments altogether, Rockefeller carried him for another year before calling the loan. He offered to pay Corrigan $168 or $169 per share for his 2,500 shares of Standard Oil, which would yield enough to retire his $400,000 in debt.

  To gauge the value of this stock, Corrigan’s attorney asked Rockefeller to provide detailed information about the trust’s stocks, assets, investments, and earnings during the previous five years. Rockefeller refused to publicize such sensitive information. “The securities to which you refer have a well-known market value, which is published in the newspapers every day,” Rockefeller told the attorney.116 At the time, few companies published annual reports. Yet Frank interpreted his brother’s behavior in darkly conspiratorial terms. Several years later, he told Ida Tarbell that when he met with him to plead for more time for Corrigan, John said, “Frank, persuade Corrigan to sell me his Standard Oil stock. He is in a tight place. He can never get out and I might as well have the stock as anybody.”117 Frank took this to mean that John was bent upon destroying Corrigan to obtain his Standard Oil stock, and Frank advised his friend not to sell under any circumstances.

  Corrigan finally sold his Standard Oil stock to John D. at $168 a share in February 1895. Rockefeller paid the market price, roughly equivalent to what he paid his Standard colleagues for their stock that month. One Standard executive, Joseph Seep, said that Rockefeller did not even keep Corrigan’s stock but distributed it among his colleagues. Nevertheless, before a month had elapsed, the stock zoomed to $185 and then much higher. Instead of blaming bad luck, Corrigan decided he had been swindled and in April 1895 wrote Rockefeller to that effect. When he received the letter, Rockefeller was stunned. “Is it possible that ‘Jim Corrigan’ should be willing to write me such a letter,” he wrote back, “after my uniform kindness to him for a lifetime?” 118 Some years later, possibly with the Corrigan affair in mind, Rockefeller lectured his son, “John, never lend money to your friends; it will spoil your friendships.”119

  Rockefeller had been neither Santa Claus nor Scrooge but simply a hard, un-sentimental lender. It is true that he had more than enough collateral to cover Corrigan’s $400,000 in loans, but he had exercised patience and carried Corrigan for a year after payments ceased. Gates even complained that Rockefeller was coddling him. Corrigan waited until July 1897 before filing suit, saying it had taken that long to serve a subpoena on Rockefeller. The delay was more likely due to the continuing rise in Standard Oil stock, which had jumped to nearly $350 a share because of Archbold’s generous dividend policy. Corrigan issued an ultimatum: Rockefeller could either give back his Standard shares or pay him $500 a share. The court-appointed arbitrators in the case, given rare access to Standard Oil’s confidential books, decided that Rockefeller’s conduct had been blameless. Even though Frank hotly insisted that John had cheated his best friend, he continued to touch his brother for money and a year later borrowed another $130,000. Still unaware of the true depth of Frank’s bile, John jotted down a memo for his files in February 1896, saying of Frank, “He is all very nice and pleasant and I think appreciates that I am doing things for him.”120

  After the Corrigan case, Frank began to seem deranged on the subject of his brother. He began to materialize at 26 Broadway or on the broad veranda at Forest Hill, boisterously demanding to see him. Because of the pending Corrigan suit, John would receive him only with a secretary present to record what he said. In 1898, John told William that Frank was now threatening him and asked him to intercede. John then had some long talks with a drunken Frank, who made extremely abusive remarks about him. Frank felt that his brother was so rich that he should forgive all his loans. When John differed, the breach between them widened. During their last meeting, as they walked down the street together, John said to him, “Frank, I’ll always be a brother to you.”121 They never spoke to or set eyes on each other again.

  Nursing an obsessive resentment, Frank decided to make a symbolic break with his brother. When John erected the towering obelisk at the family plot in Cleveland’s Lake View Cemetery in 1898, Frank had the caskets of his two children who had died in childhood disinterred from the family plot and transferred to another part of the cemetery. “Not one of my blood,” he declared, “will ever rest upon land controlled by that monster, John D. Rockefeller.”122 Soon thereafter, Frank, his wife, and three daughters withdrew from the Euclid Avenue Baptist Church.

  Even after these unforgivable insults, John let Frank represent him on several corporate boards. While Frank’s salary was reduced from $15,000 to $10,000 for his sinecure at Standard Oil of Ohio, he continued to draw this largely unearned salary until 1912. In September 1901, his finances ravaged by speculation, Frank told William that he would file for bankruptcy if he did not receive an immediate cash infusion of $86,000. When William secretly asked John to contribute half the amount, John wrote to him: “I will take half of the $86,000 if you take the other half, but Frank must not know that I am loaning the money.”123 In 1907, John and William again saved Frank from bankruptcy by guaranteeing loans that Frank had gotten from his stockbroker.

  After the Corrigan business, Frank no longer felt any need to muzzle himself. Reporters soon learned that to get an inflammatory quote about John D., they simply had to contact Frank Rockefeller. Discussing the Corrigan affair, Frank told one reporter, “That treacherous act was but a detail in my brother’s long record of heartless villainy. . . . He seems never to get enough. I wonder where it would end—this desire of his for more millions?”124 John never commented publicly on these diatribes. Unfortunately for John’s reputation, Frank began to spew forth this invective just as the muckraking era got under way. Coming from a brother, these highly quotable remarks made a tremendous impression upon the public, who never dreamed that John D.’s treatment of Frank was one area of his life where his record was spotless.

  CHAPTER 21

  The Enthusiast

  When Rockefeller receded from the business world in the mid-1890s, the average American was earning less than ten dollars per week. Rockefeller’s average income—a stupefying $10 million per annum in those glory days before income taxes—defied public comprehension. Of more than $250 million in dividends distributed by Standard Oil between 1893 and 1901, over a quarter went straight into Rockefeller’s coffers. As Standard Oil shares took flight in the late 1890s, one periodical computed that Rockefeller’s wealth had appreciated by $55 million ($972 million today) in nine months. “Where in the history of the world did any man ever make $55,000,000 in 9 months?” the editorialist demanded.1 Rockefeller was becoming Mister Money Bags, a byword for wealth.

  One might have thought Rockefeller would relax in retirement, but he was still a prisoner to the Protestant work ethic and attacked recreational interests with the same intensity that he had brought to business. “I have not had the experience of the majority of business men,” he later told William O. Inglis, “who find time hanging heavily on their hands.” 2 Yet his retirement was equally remarkable for its omissions. For instance, he lacked the wanderlust that infected other rich men, such as J. P. Morgan, in their later years. He never collected art or exploited his wealth to broaden his connections or cultivate fancy people. Aside from the occasional courtesy call from other moguls, he hobnobbed with the same family members, old friends, and Baptist clergy who had alw
ays formed his social circle. He showed no interest in old-money clubs, parties, or organizations. Commenting on this, Ida Tarbell branded Rockefeller a “social cripple” and detected an inferiority complex that made him afraid to venture beyond his home turf, but his behavior actually connoted mental health.3 When someone expressed surprise to Rockefeller that he had not gotten a big head, he replied, “Only fools get swelled up over money.”4 Comfortable with himself, he needed no outward validation of what he had accomplished. We can criticize him for lack of imagination, but not for weakness.

  It is striking that Rockefeller, so grave in business, was extremely fond of games in retirement and indulged in a little skylarking. As his body aged, his mind grew younger and more buoyant. Having missed a carefree boyhood, he seemed to want to compensate in his later years and he suddenly showed a lot of his father’s jollity. In the 1890s, Cleveland was seized by a bicycle craze, and the “wheel season” was opened each spring by hundreds of colorful tandem bikes gliding down Euclid Avenue. Though in his fifties, Rockefeller joined the fad with boyish élan. A firm believer in appropriate dress, he bought, in assorted shades, sporty riding costumes of corded knickerbocker suits, alpine hats, and cloth leggings. Frederick Gates was at Forest Hill when Rockefeller learned to ride, and he watched Rockefeller teach himself to turn around without alighting. “He would start in with a wide circle,” Gates recalled, “and then follow it round and round each time narrowing the circuit until without dismounting he was almost circling the rear wheel.” 5 As with industrial methods, Rockefeller broke down cycling into its component parts then perfected each movement. Much in the spirit of Big Bill, he liked to perform stunts on the bike, often jumping onto the seat as someone held the bike or holding open an umbrella as he rode with no hands. Through his interest in bike riding, Rockefeller came to master the fundamentals of civil engineering, a subject that had long intrigued him. When he wanted to ride his bike up the steep slope to the Forest Hill house, an engineer told him that no practicable grade could be found. “Nothing is impossible,” Rockefeller replied.6 Burying himself in civil-engineering books, he figured out a suitable angle—a 3 percent grade, in engineering lingo—and, true to his prediction, rode his bike straight up to the door.