by Andrea Mays
Competition was alive and well in the oil industry. With a small investment, anyone could drill for oil and pump it out of the ground. With a small investment, anyone could build a small refinery. Rockefeller did not attempt to control all aspects of production, drilling, and refining. Indeed, in the absence of some barrier to entry by other potential competitors, he could not. With the cost advantage that came with being the largest refiner in the country, Rockefeller could deter entry by new competitors through price-cutting. If he could price below his competitors’ costs, he could make it unprofitable for them to enter the refining business at all. He could also exploit his company’s relationship with the railroads: Standard Oil would get the lowest shipping rates; its competitors paid higher rates, raising their costs relative to Standard’s. In one ill-fated cartel plan that never actually went into effect, Rockefeller’s company was to have received “drawbacks” from the railroads, a refund for every barrel of oil the railroads shipped for Rockefeller’s competitors.
The story of his commercial success, however, did not end there. In an example of industrial expansion never seen before or since, in the first three months of 1872, Rockefeller increased the size of Standard Oil through dozens of mergers with competitors, increasing market share from around four percent to twenty-five percent of refining capacity in the United States. Rockefeller approached his many competitors—large and small—with an offer to sell out to or join his firm. He knew many of the firms were financially weak: three-quarters of the refiners were losing money. Total refining capacity in the United States was twelve million barrels per year and crude oil supplies reached just five million barrels per year; profit margins for refiners with excess capacity were squeezed between rising crude prices and falling prices of the final product. Refineries operating at such a small, inefficient scale were not able to compete head-to-head against Rockefeller: his refining and shipping costs were lower than theirs. Rockefeller approached the refineries’ owners, showed them his company accounts, and invited them to join him, paying them—their choice—in cash or Standard shares. Some competitors, surprised by the efficiency of Rockefeller’s operations, joined him right away. Many of the men who complained later that Rockefeller had not been fair with them had taken cash buyouts rather than stock and, when the price of Standard stock soared, regretted their choice. Most of those men who had chosen stock went on to become very wealthy.
Of course, there were also setbacks, and not all of Standard’s actions were intended to benefit consumers. Rockefeller’s company and most of its competitors participated in two failed attempts to form refiner cartels. The South Improvement Company Plan and the “Pittsburgh Plan” were both failed schemes that disproved the myth that Rockefeller “controlled” the price of kerosene. Each time refiners attempted concerted action to raise prices by limiting output and raising prices, sales fell and the refiners’ excess capacity problem worsened. The solution for an industry with too much capacity was not higher prices, which encouraged yet more competitors to enter. And an agreement among so many competitors was bound to be plagued by cheating; there was incentive to participate in the scheme and simultaneously cheat on the side, offering price discounts to attract customers. To say that the plans were unpopular with independent oil producers would be an understatement. Three thousand men, wildcatter independent oil producers from western Pennsylvania, met in the Titusville Opera House, carrying banners denouncing the South Improvement Company Plan. The public and politicians added their voices to the tumult. United and furious, the producers boycotted the refiners and railroads that had hatched the plan. The conspiring infant was strangled in its cradle; the plan was abandoned. Not a single barrel of oil was shipped under the South Improvement Company Plan.
Like the refining industry, railroads had a cost structure of very high initial expenditures—purchasing rights of way, laying track, purchasing locomotives and cars—with very low per ton-mile (marginal) costs. Once the track was laid between two cities, the cost of transporting an additional carload of oil along it was negligible. The low marginal costs experienced by all the railroads added to their tendency to overbuild, and gave competing railroads incentive to lure customers away from one another. Because their services were essentially identical, railroads competed based on price alone, periodically engaging in surreptitious price wars to attract large freight customers such as coal and steel producers. Discounts, kept secret to avoid overt price wars, were endemic throughout the industry and had been for decades. The largest shippers, like Rockefeller in the oil industry and Andrew Carnegie in the steel industry, negotiated the largest discounts, to the disadvantage of their competitors. The railroads suffered periods of what they termed “cutthroat competition”—bad for their profits, but good for the shippers and ultimately for the consumer.
Standard’s large scale of operations, huge in relation to other refiners, allowed Rockefeller and his partners to negotiate preferential rates from the railroads because Standard was capable of lowering the railroads’ costs. Standard guaranteed shipment of forty carloads of oil. Smaller independent refiners produced less and unpredictable volumes of traffic. By guaranteeing volumes, Standard lowered the railroads’ cost of transportation by two-thirds, passing some of the savings on to Rockefeller through secret discounts.
28. Manufacturing Book A, 59, citing Rockefeller Records 1881–1886. R. W. Hidy and M. E. Hidy, “History of Standard Oil Company,” vol. 1, Pioneering in Big Business, 1882–1911 (New York: Harper & Brothers, 1955).
29. Charlton Hinman, “ ‘The Halliwell-Phillipps Facsimile’ of the First Folio of Shakespeare,” Shakespeare Quarterly 5, no. 4 (Autumn 1954): 395–401. In June 1903, Folger purchased this volume also, now Folger 33.
30. John D. Rockefeller to Henry C. Folger, September 21, 1885, Rockefeller archive, Sleepy Hollow, New York.
31. Folger archive, letter to Amherst class historian, also cited in Dickinson, 120. Donald C. Dickinson, Dictionary of American Book Collectors (New York: Greenwood Press, 1986), 120.
32. Emily Folger autograph notes, Folger archive, box 33.
Chapter 6: “Had I the Means, I Would Not Hesitate . . . to Buy”
1. The text of the Sherman Act: “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.” Section 2 reads: “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.”
2. Prayer and discourse by Dr. S. Parkes Cadman, Henry Folger: 18 June 1857–11 June 1930 at Mr. Folger’s funeral (New Haven: privately printed).
3. Throughout the text the notation for each copy of the First Folio is designated with a letter F, for Folger, followed by a number assigned by the Folger Library to indicate a particular copy. I have also included the W or West number assigned to each copy of the First Folio in West, Shakespeare’s First Folio: Volume I.
4. Henry C. Folger to John D. Rockefeller, April 13, 1895, Folger archive, box 23.
5. Henry C. Folger to John D. Rockefeller, March 13, 1895, Folger archive, box 23.
6. Marsden Perry resold the collection in installments after the financial panic of 1907 and the disappointing loss of the Devonshire quartos to Huntington. Folger acquired many items from Perry’s collection. Folger Shakespeare Library Marsden Perry correspondence file. Huntington purchased a significant portion of the remainder of the Perry collection.
7. Ralph Willard Hidy and Muriel Hidy, History of Standard Oil Company (New Jersey): Pioneering in Big Business, 1882–1911 (New York: Harper, 1955), 342.
8. T
his is the sole copy attributed to Folger in Lee’s 1902 Census. Folger actually owned six copies at the time. West, The Shakespeare First Folio, 2:160.
9. That year, he also purchased from bookseller George D. Smith at the bargain price of $12 a copy of the 1616 volume of Jonson’s Workes.
10. Folger Shakespeare Library H. H. Furness correspondence file.
11. Rosenbach, Henry Folger as a Collector, 105.
12. “The new Earl, whose interests lay far more with hunting, shooting and fishing than with Shakespeare . . .” Victor Gray, Bookmen: London: 250 Years of Sotheran Bookselling (London: Henry Sotheran, 2011), 150–151. Based on Folger’s correspondence with Railton, housed at the John Rylands Library, Manchester, U.K.
13. Rosenbach, Henry Folger as a Collector, 79.
14. Gray, Bookmen, 151.
15. Robert Cowtan, Memories of the British Museum (London: Richard Bentley and Son, 1872). Shortly thereafter, the museum required Harris to sign any pages he worked on for them.
16. Rosenbach, Henry Folger as a Collector, 104–105.
17. February 28, 1917, autograph letter signed Mrs. Godfrey, Folger archive, box 21.
18. Sidney Lee, “The Shakespeare First Folio: Some Notes and a Discovery,” Cornhill Magazine, no. 34 (April 1899): 449–458, 452. Also cited in West, Shakespeare’s First Folio, 1:137.
19. Sidney Lee, 1924, 105. Also quoted in West, Shakespeare’s First Folio, 1:138.
20. West, The Shakespeare First Folio, 1:137.
Chapter 7: “The Most Precious Book in the World”
1. West, The Shakespeare First Folio, 1:103 note b. As the Warwick Castle copy was purchased in a lot with no specific value attributed to it, we do not have a specific price for it (W 64, F 6).
2. Ibid., 1:176.
3. A copy of the survey and Lee’s letter of request for information are Appendix 4.1 in West, 1: 184–185.
4. Lee’s Census says 160, but West says 158. Lee writes that two of the copies were stated to have been destroyed.
5. Even what was to be considered a “copy” was subjective and arbitrary. See West, The Shakespeare First Folio, 1:132–133, for a complete discussion of what constitutes a “copy.”
6. By this time, he owned W 113, F 55; W 72, F 14; W 64, F 6; W 102, F 44; W66, F 8; and W 94, F 36.
7. New York Times Saturday Review of Books and Art, December 13, 1902, BR17.
8. Emphasis in original. A. B. Railton to Henry Folger, March 4, 1899, Folio file 1, Folger Shakespeare Library.
9. Railton to Henry C. Folger, April 1899. Folger folio file #1, Folger Shakespeare Library.
10. Lee, “The Shakespeare First Folio,” 449.
11. Henry C. Folger Jr., “A Unique First Folio,” Outlook 87 (November 23, 1908), 690.
12. Both the marked-up and corrected versions are illustrated in the ne plus ultra of facsimiles, The Norton Facsimile. See also Blayney, The First Folio of Shakespeare, 16–17.
13. Hinman, “The ‘Halliwell-Phillipps Facsimile,’ ” 395–401, 396.
Chapter 8: “A Shakespeare Discovery”
1. Blayney, The First Folio of Shakespeare, 16–17, illustrates the First Folio page whose signature is Bb6v.
2. On the rarity of some of the quartos, a few of Shakespeare’s plays in quarto size survive in only one or two known copies. There are but a half dozen known copies of Hamlet Q2 (1604), including the Howe copy at the Folger Shakespeare Library and the Devonshire copy at the Huntington Library. There are only two known copies of Hamlet Q1, neither complete—the British Museum copy lacks the title page and the Huntington copy lacks the last leaf. So when a facsimile edition of the Q2 was issued in 1969, the British Museum borrowed the title page from the Huntington Library. The Folger owns the world’s only known copy of the 1594 Titus quarto.
3. Rosenbach, Henry Folger as a Collector, 81.
4. Ibid.
5. The Folger price list has $7,300. In a November 11, 1905, letter, Folger had offered the owner, John Camp Williams, $7,250 plus a copy of Lee’s Facsimile. West, The Shakespeare First Folio, 2:164.
6. Sidney Lee, Notes & Additions to the Census Copy of the Shakespeare First Folio (London: Oxford University Press, 1906), 21.
7. Wheeler, “Letters of Sir Thomas Bodley to Thomas James, First Keeper of the Bodleian Library,” (Oxford: The Bodleian Library, 1926).
Chapter 9: “Do . . . Devise Some Way to Get the Books”
1. Emily C. Folger theater diary entry, November 18, 1912, Folger archive.
2. Sidney Lee, Shakespeares Comedies, Histories, & Tragedies, a Supplement to the Reproduction in Facsimile of the First Folio Edition (1623) from the Chatsworth Copy in the Possession of the Duke of Devonshire, K.G. Containing a Census of Extant Copies with Some Account of Their History and Condition (Oxford: Clarendon Press, 1906), 30.
3. Lee, Notes & Additions, 13.
4. Emily Folger travel diary, Places I’ve Been, 48, 1906, Folger archive.
5. Lee, Notes & Additions, 19, footnote 1.
6. Ibid., 19, 20.
7. Rosenbach, Henry Folger as a Collector, 83.
8. Sotheran Firm, London Booksellers, Bibliotheca Pretiosa: Being an Unusually Choice Collection of Books and Manuscripts in Exceptional Fine Condition, 1907 (London).
9. Emily Folger, Places I’ve Been, 50.
10. Ibid.
11. “American Captures Shakespeare Prizes,” New York Times, December 29, 1907.
12. The Supreme Court opinion is at 221 U.S. 1 (1911).
13. Folger documentary file for W 116, F 58. West, The Shakespeare First Folio, 2:156.
14. Folger faced little competition for the other three First Folios he purchased in 1910. He paid $3,400 for one (W 87, F29), $6,250 in November for another (W 73, F 15), and $2,100 in December for his last copy of the year (W 82, F 24).
15. On January 12, 13, 16, and 17, the company’s legal team, led by Rockefeller’s trusted chief counsel John Davis, advocated for the second time its best case in a grueling, four-day procedure.
16. The court articulated a new legal principle: henceforth evaluation of “restraints of trade” under the Sherman Antitrust Act would be conducted under a “rule of reason.” That meant the court would enjoin and penalize only those restraints of trade that worked in opposition to the public interest. That was good news for Standard. Under the rule of reason, the company could not be found guilty of a per se—an automatic—violation of the Sherman Act simply because it restrained trade. Then Justice White announced the rest of the opinion. 221 U.S. 1 (1911).
17. McClure’s 39 (May–October 1912), 409.
18. In Chief Justice Edward D. White’s words: “on the one hand, with relentless pertinacity and minuteness of analysis, it is insisted [by the government] that the facts establish that the assailed combination took its birth in a purpose to unlawfully acquire wealth by oppressing the public and destroying the just rights of others, and that its entire career exemplifies an inexorable carrying out of such wrongful intents, since, it is asserted, the pathway of the combination, from the beginning to the time of the filing of the bill, is marked with constant proofs of wrong inflicted upon the public, and is strewn with the wrecks resulting from crushing out, without regard to law, the individual rights of others.”
He recognized the argument made by Standard: “On the other hand, in a powerful analysis of the facts, it is insisted [by Standard Oil] that they demonstrate that the origin and development of the vast business which the defendants control was but the result of lawful competitive methods, guided by economic genius of the highest order, sustained by courage, by a keen insight into commercial situations, resulting in the acquisition of great wealth, but at the same time serving to stimulate and increase production, to widely extend the distribution of the products of petroleum at a cost largely below that which would have otherwise prevailed, thus proving to be . . . a benefaction to the general public. . . .” 221 U.S. 1 (1911).
19. Daniel Yergin, The Prize: The Epic Quest for Oil, Mon
ey, and Power (New York: Simon & Schuster, 1991), 110.
20. Ibid.
21. Henry Folger letter to Captain Robinson, Folger archive.
22. New York Times, November 11, 1911, 1.
23. “Huth Library Sale Resumed on June 5, Part II of Auction Dispersal of Great Book Collection Contains 2,596 Lots,” New York Times, May 19, 1912.
24. Later, when President William Howard Taft learned that Folger had reached forty-nine First Folios, more than the total number in all of England, he coyly reported, “We have the fiftieth at Yale,” hoping to plant the seed for a possible donation from the Folger collection. Folger did not bite.
25. William James, Talks to Teachers on Psychology and to Students on Some of Life’s Ideals (New York: Norton, 1958), Chapter 7.
26. West, The Shakespeare First Folio, 2:201.
27. Ibid., 2:210; A. S. W. Rosenbach, Books and Bidders: The Adventures of a Bibliophile (Boston: Little, Brown, 1927), 84–85.
28. West, The Shakespeare First Folio, 2:183.
29. Ibid., 1:111.
30. “ENGLAND’S RAREST BOOKS BEING BOUGHT BY AMERICANS,” New York Times, July 12, 1914.
31. Time Literary Supplement, August 16, 1915.
32. The invoice is quoted in full in West, The Shakespeare First Folio, 1:24.
33. Folger archive. Also see West, The Shakespeare First Folio, 2:243, in describing West 187, Lee 108.
34. Ibid.
Chapter 10: “The False Folio”
1. Henry Clay Folger to Robert Bateman, December 12, 1916, Folger Shakespeare Library, Folger correspondence file B22.
2. Nicholas Basbanes, A Gentle Madness: Bibliophiles, Bibliomanes, and the Eternal Passion for Books (Owl Books, 1999), 197. See also redwoodlibrary.org/notables/perry.htm, accessed December 13, 2010.
3. Donald C. Dickinson, Dictionary of American Book Collectors (New York and London: Greenwood Press, 1986), 258. See also A Preliminary List of Books and Manuscripts Relating to the Life and Writings of William Shakespeare, Forming the Collection of Marsden Perry, Providence, Rhode Island, 1891, privately printed.