by Ron Chernow
For the first time in several years, John D. Rockefeller, Sr., strode through the portals of 26 Broadway on October 24 and took up his command post. “I was surprised to find so many men who had come to the front since my last visit years ago. Afterward I had an opportunity to talk with old associates and many new ones, and it was a source of great gratification to me to find that the same spirit of cooperation and harmony existed unchecked.”25 Rockefeller offered his services to J. P. Morgan, and his millions formed part of the twenty-fivemillion-dollar fund that Morgan marshaled that day to keep the stock market open, averting the bankruptcy of at least fifty brokerage houses. Whatever his personal distaste for Morgan, Rockefeller generously praised his leadership during the 1907 panic. “His commanding personality served a most valuable end,” he wrote in his memoirs. “He acted quickly and resolutely when quickness and decision were the things most needed to regain confidence.” 26
Several family members sought Rockefeller’s help to withstand the storm. He bought $4.5 million of International Harvester stock from the cash-strapped McCormicks and extended a huge $7 million loan to his brother William, who was hip-deep in stock-market maneuvers. Even with a brother, Rockefeller could not suspend standard business practices—Frank had already learned that—and he asked William to furnish a list of securities as collateral. But when Rockefeller’s adviser Henry E. Cooper demanded more, it prompted an ironic reminder from Rockefeller: “Well, Mr. Cooper, don’t be too rigorous. Remember, William is a very rich man.”27
With full-blown panic raging around him, Rockefeller refused to depart from his daily schedule for long and, after his one day at the office, he returned to Pocantico to play golf. During his morning game, he was interrupted repeatedly by urgent messages, and each time he pedaled his bike back to the carriage house and made another enormous pledge to stave off trouble. He then resumed his game with his usual sangfroid and air of unconcern.
During the 1907 panic, Rockefeller, for the first time, appeared civic-minded to the general public and garnered lavish praise. As he told a relative, the newspapers had “spoken very kindly and favorably, and all have shown great appreciation of what we have tried to do to save the ship.”28 For a time, it seemed this goodwill might moderate the antitrust zeal against Standard Oil, but this hope soon evaporated when Rockefeller told a reporter, “The runaway policy of the past administration can have but one result. It means disaster to the country, financial depression, and chaos.”29 According to Rockefeller, he made this statement off-the-record and professed pity for the errant reporter who published it in violation of his solemn oath. The comment aggravated the hostility that President Roosevelt already felt toward Rockefeller, especially since Rockefeller kept pleading ill health as his reason for not coming to the White House to discuss Standard Oil. Privately, Roosevelt said that Rockefeller felt wounded because the government had published the plain truth about Standard Oil.
After the Landis fine was announced, Standard Oil tried to alter its strategy and negotiate a government compromise. That September, it held out a tempting deal to investigators: It would open its books and abide by any recommendations to guarantee compliance with the antitrust laws if the government withdrew its suit. Government officials were caught off guard by this peace offering. “A really astonishing proposal,” James R. Garfield wrote in his diary.30 But Roosevelt was no longer in the mood for a truce. “If we have a criminal case against these men,” he told Attorney General Charles Bonaparte, “I should be very reluctant to surrender it.”31
Archbold should have persisted in his conciliatory approach, but he was too accustomed to heavy-handed politics. He was openly contemptuous of all political attacks against the combine. During the spring and summer of 1908, he held several confidential meetings wih President Roosevelt arranged by Senator Jonathan Bourne of Oregon. The president expressed an earnest wish to see the Standard Oil case settled out of court. While Archbold believed in his sincerity, he also knew that Roosevelt had vacillated on this issue. Archbold then resorted to a typically tactless maneuver. In late October 1907, he had Senator Bourne suggest to the president that if the government struck a deal, Standard Oil would help Roosevelt win renomination in 1908. A horrified Garfield called this brazen offer “stupidly corrupt.” 32
Because of Rockefeller’s helpful intervention in the Panic, Roosevelt observed a brief moratorium in attacking Standard Oil then made up for lost time in January 1908. In a special message to Congress, he complained that “the speculative folly and flagrant dishonesty of a few great men of wealth” had engendered the loss of fiscal confidence, and he condemned the “bitter and unscrupulous craft” of the Standard Oil leadership in fighting reform measures.33 The antitrust suit would proceed as planned.
Since Rockefeller had created the largest business empire of the late nineteenth century, it was only fitting that he should face the most massive antitrust suit of his day. Some 444 witnesses delivered 11 million words of testimony; swollen by 1,374 exhibits, the proceedings filled 12,000 pages in 21 thick volumes. Before it was over, Standard Oil also contested some 21 state antitrust suits from Texas to Connecticut, leading one historian to comment, “Never before in the history of the United States had there been so far-reaching a struggle between industry and government.” 34 To supplement its legal staff, Standard Oil retained John G. Milburn and M. F. Elliott of Wall Street, D. T. Watson of Pittsburgh, Moritz Rosenthal of Chicago, and John G. Johnson of Philadelphia. For its part, the Justice Department brought in Charles B. Morrison, a federal district attorney from northern Illinois, and Frank B. Kellogg, a Saint Paul attorney whose success in the case catapulted him to the post of secretary of state in the late 1920s.
Throughout the case, the public fancied Rockefeller to be the all-powerful wire-puller who manipulated Archbold and the other pliant marionettes. If this was sheer fantasy, what then was his actual influence? He did exert limited influence on Standard Oil strategy through the medium of Henry Clay Folger, a Standard Oil director. A thin, bearded man, Folger was diplomatic and extremely diligent in his duties. Unlike the rugged Standard Oil businessmen of an earlier day, Folger had graduated Phi Beta Kappa from Amherst and then attended Columbia Law School. A cultured man, he left to posterity America’s foremost collection of Shakespeare First Folios as well as a splendid library. Far more important to Rockefeller was that Folger played excellent golf and joined him on the links every Wednesday morning.
In memos to Folger about the suit, Rockefeller never touched on political or legal tactics but mostly addressed arcane calculations of profitability. Rockefeller wanted to prove that Standard Oil’s profits had never been excessive or extortionate. Many other companies watered their stock—that is, issued them at inflated capitalization—so that their dividends appeared deceptively modest. To save on taxes and conform to Ohio law, Standard Oil had kept its capitalization low, which produced misleadingly high dividends of 40 or 50 percent per year. Rockefeller pegged the real dividend rate at something closer to 6 or 8 percent.
Folger performed statistical analyses showing that with its capitalization more accurately stated to reflect retained earnings, Standard Oil had paid average dividends twice as high as Rockefeller had surmised. “I am surprised to find the average dividends for twenty-five years 13.86%,” the company founder confessed sheepishly to Folger. Rockefeller now had to rationalize the higher figure and suddenly found it within an acceptable range, noting the larger profits of “many other large businesses with less risk, including the United States Steel Company.”35 “Business men will not regard the earnings . . . which you present as excessive,” he told Folger.36 Afraid that militant trustbusters might see things differently, he promised to destroy this incriminating data. He also reminded Folger that Standard Oil had not kept prices low out of altruism but to deter competition and “keep our profits on such a basis that others would not be stimulated to enter the field of competition with us.” 37 This belied his frequent claim that his motive was to bequea
th cheap oil to the working people.
During his Standard Oil tenure, Rockefeller had mollified the public by generally keeping kerosene prices low. But when Archbold took control in the mid-1890s, he kept domestic prices high while depressing foreign prices to diminish overseas competition. During the dozen years before Rockefeller’s retirement, the trust’s return on assets ranged from 11 to 17 percent. With Archbold at the helm, returns soared from 21 to 27 percent between 1900 and 1906. This might have been smart business but it was very poor politics: The trust was booking record profits just when it could least afford to enrage public opinion. It is no coincidence that Ida Tarbell’s series and Teddy Roosevelt’s trust-busting coincided with Archbold’s more grasping regime. He was a much less clever monopolist than his mentor.
When Frank Kellogg grilled Rockefeller in November 1908 at the customs house in New York, much of the testimony concerned Standard Oil’s pricing policy. Standing by maps showing the operational areas of Standard marketing units, Kellogg tried to entrap Rockefeller into admitting that the cartel had divided America into exclusive sales territories. “Does the Standard Oil of Ohio have a limited territory?” he asked. “It has not,” said Rockefeller calmly. “Has it not in the last five years?” asked Kellogg. “Not to my knowledge,” Rockefeller replied. “Its field is the world. That is its mission, to light the world with the cheapest and best.”38 Smiling and imperturbable, Rockefeller kept glancing for guidance to his lawyers, who continually raised objections to Kellogg’s questions.
Kellogg tried to show that Standard Oil routinely engaged in predatory pricing, eliminating competitors and then hoisting prices to exorbitant levels. He estimated that true competition prevailed in fewer than 10 percent of all petroleum markets and noted that kerosene prices had risen unreasonably from 1895 (when Archbold took charge) to 1906, creating widespread consumer discontent. To justify Standard’s plush earnings, Rockefeller cited everything from fire hazards to the vagaries of drilling to the need to invest in new fields. To which Kellogg responded with sarcasm: “But Standard Oil has been paying enormous dividends right along.” Lifting his eyes heavenward, Rockefeller replied, “And we were grateful for it.”39
Once again, the press found it hard to believe that this amiable old gent with his sudden memory lapses and fuzzy logic was the fearsome raptor of Standard Oil. “Now that Mr. Rockefeller has emerged from his seclusion and is seen in the fierce light of a public inquiry, he appears no such monster as the public fancy has painted,” observed one paper. “He is affable to the point of cordiality.”40 Said another: “If Rockefeller has been playing a part, he has done so in a way that would do credit to Uriah Heep. If not, it is barely possible that the curious old man has been misrepresented . . . and that the world owes him an apology.” 41 Perhaps if Rockefeller had made himself available at the beginning of his career as he now did at the end, he might not have been sitting in the witness stand.
In anointing Archbold as his successor, Rockefeller had made him the chief potentate in the world oil industry for the next twenty years. Round-faced, bright-eyed, and peppery, with a tiny body and big head, Archbold, the son of a poor Baptist minister, often bounded down the corridor whistling “Onward Christian Soldiers.” But a violent temper lurked beneath the vivacity. Nevertheless, he and Rockefeller always traded compliments about each other. “You know, when John Rockefeller dies,” Archbold said, “the world is going to be surprised to learn what a very great man he has been in every way.”42 Rockefeller responded in kind: “[Archbold] was a man of imagination, of courage, of great persuasiveness, with a genius for reading men and dealing with them.”43
Yet as chief executive of Standard Oil, Archbold stooped to a far rougher style of combat than Rockefeller had, and he freely bribed elected officials. Rockefeller, of course, was no stranger to such skulduggery, but he engaged in payoffs more reluctantly, if only because he so disliked politicians. Archbold had fewer scruples, and as government regulation intruded deeper into business, he decided that the trust needed permanent representation in the U.S. House and Senate.
The first documented instance of Archbold suborning an official occurred in 1898, during Frank Monnett’s suit against Standard of Ohio, when Archbold placed Senator Joseph B. Foraker of Ohio on the payroll. He started with a payment of $15,000, then made another of $14,500 three weeks later, winding up with a total of $44,000 in a six-month period. A corporate lawyer from Cincinnati and former Ohio governor, Foraker was a formidable speaker who earned the nickname of “Fire Alarm Joe” for his rousing oratory. Archbold got excellent value for his money. In February 1900, he wrote to the senator, apropos of a proposed bill hostile to Standard Oil: “It is so outrageous as to be ridiculous, but it needs to be looked after and I hope there will be no difficulty in killing it.”44 When Foraker helped to dispatch the bill, Archbold sent congratulations: “I enclose you a certificate of deposit to your favor for $15,000. . . . I need scarcely express our great gratification over the favorable outcome of affairs.” 45 The certificate of deposit was more difficult to trace than a check and was the instrument of choice for political bribery.
Another favorite recipient of Standard Oil largesse was Senator Matthew Quay of Pennsylvania, who received $42,500 between 1898 and 1902. In one lighthearted note, Archbold told Quay that he was enclosing a $10,000 certificate of deposit as a reward for the senator’s “enticing ways.” 46 Evidently, Archbold felt more at ease with small, scattered payments, for he advised Quay on another occasion, “Please ask for payments as needed from time to time, not all at once.”47 Another true friend of the trust from western Pennsylvania was Representative Joseph C. Sibley, later called “a political procurer for Archbold, an agent for the seduction and corruption of public men by the Standard Oil.” 48 In official Washington, Sibley acted as a conduit for Standard Oil money, once writing to Archbold, “A Republican United States Senator came to me today to make a loan of $1,000. I told him I did not have it but would try and get it for him in a day or two. Do you want to make the investment?” 49
The trust’s Washington operations might never have surfaced had it not been for a kind act by Archbold. At his Tarrytown mansion, he employed a valued black butler, James Wilkins, who had a twenty-four-year-old ne’er-do-well son named Willie. Out of sympathy for Wilkins, Archbold hired Willie as an office boy at Standard Oil at a time when few if any blacks were employed there. Willie liked to play the ponies and was chronically short of cash. Hoping to take advantage of the political backlash against Standard Oil, he teamed up with Charles Stump, a nineteen-year-old white office boy, to scout out incriminating evidence on Archbold’s desk. In December 1904, the two young men pinched a couple of telegrams and contacted Fred Eldridge, an editor at William Randolph Hearst’s New York American, who studied the loot and said it was worthless. But he expressed a special interest in letters from Archbold to senators or congressmen and gave the two enterprising young men two hundred names that might interest readers. Armed with Eldridge’s wish list, Stump and Wilkins began to scour Archbold’s correspondence after hours, and when they spotted letters to Sibley and Foraker, they took them to Eldridge and haggled over prices. On several occasions, when they reached an impasse, the editor would say he had to “see Mr. Hearst.” 50 This espionage lasted from December 1904 until February 1905, when Archbold discovered the missing political documents, accused Stump and Wilkins of theft, then fired them. With the $20,500 that they had received from Hearst, the two young entrepreneurs were able to open their own saloon in Harlem.
For months, Archbold dreaded publication of the purloined letters and must have been puzzled when they did not appear. Hearst had stored the incriminating documents in his safe and awaited a propitious moment to unveil them. By attacking the trusts, Hearst had created a hybrid role for himself as the people’s tribune, who would advance his own imperial ambitions by exposing those of his fellow empire builders. By the 1930s, Hearst became fiercely reactionary, yet in the early 1900s he was still a pop
ulist champion. Showing exceptional self-control, Hearst did not publish the letters when he ran against Charles Evans Hughes, a friend of Rockefeller’s, for the New York governorship in 1906. “Charles, I do hope you beat that man Hearst!” Rockefeller told Hughes that year.51
But in the election of 1908, Hearst backed the Independence League Party, which nominated Massachusetts’s Thomas L. Hisgen, a manufacturer of axle grease, as its presidential candidate. Hisgen had once spurned a bid from Standard Oil to buy him out for $600,000, and when the trust retaliated by slashing prices and trying to ruin him, Hisgen became an implacable foe. Hearst picked him as the party’s candidate with the Archbold letters in mind. On September 17, 1908, Hearst gave a pro-Hisgen speech in Columbus, Ohio, in which he claimed that just before the talk a stranger had appeared in his hotel room and handed him copies of correspondence between Archbold and several politicians. “I am now going to read copies of letters written by Mr. John Archbold, chief agent of the Standard Oil, an intimate personal acquaintance of Mr. Rockefeller and Mr. Rogers,” Hearst announced with great fanfare.52 He then created a national sensation by reading aloud letters written by Archbold to Senator Foraker and Congressman Sibley. Later, in a Saint Louis speech, he recited two more specimens, with the correspondence prominently reproduced in Hearst papers.
Realizing that he could not deny the authenticity of the letters, Archbold tried to finesse the charges by claiming that the correspondence was “entirely proper.”53 At first, Foraker pretended that the payments were strictly lawful and aboveboard. “That I was employed as counsel for the Standard Oil Company at the time and presumably compensated for my services was common knowledge,” he insisted. “At least I never made any effort to conceal it.”54 When the public refused to buy this, Foraker and Sibley were hounded from public life. Archbold survived as head of Standard Oil, however, and the following year, perhaps to mend his increasingly tattered image, he gave one million dollars to Syracuse University.