"YOU ARE NOT TO REFINE"
In the obituary column of the Cleveland _Herald_, of June 6, 1874, was
given the news of the death of one of the pioneer manufacturers of
Cleveland. He began the refining of petroleum in that city in 1860,
several years before any of those who afterwards became the sovereigns
of the business had left their railroad platforms, book-keeping stools,
and lawyers' desks. He was married in the same year, and from that
time until his death, in 1874, gave his whole life to his refinery and
his family, and was successful with both. The _Herald_ said of him
editorially:
"He was well known in Cleveland and elsewhere as a business man of
high character. He was a prominent member of the First Presbyterian
Church, was at one time President of the Young Men's Christian
Association, and was active in all enterprises of a religious and
benevolent character. He was about forty years of age, and leaves a
wife and three children."
His enterprise had been "very profitable," his wife said afterwards
in court, in narrating how she and her children fared after the death
of the husband, father, and bread-winner. "My husband devoted his
entire energies and life to the business from about 1860 to the time
of his death, and had acquired through his name a large patronage. My
husband went into debt just before his death," she continued, "for the
first time in his life. For the interest of my fatherless children, as
well as myself, I thought it my duty to continue the business. I took
$75,000 of the $100,000 of stock, and continued from that time, 1874,
until November, 1878, making handsome profits, during perhaps the
hardest business years of the time since my husband had begun."[113]
The business received from her the most thorough and faithful
attention, and she maintained the prosperity her husband had founded by
making a profit of about $25,000 a year.
A representative of one of the oil combination came to her, she
continued, "with a proposition that I should sell to them." This
agent was "a brother manufacturer," who, but a short time before in
a conference with her, had agreed that in view of the dangers which
seemed to threaten them, he and she should mutually watch out for each
other, and that no arrangement should be made by either without letting
the other know. The next she saw of her ally he pounced upon her in her
office with the news that he was in the oil combination, that the head
of it had told him he meant to have control of the refining business
if it took him ten years, but he hoped to have it in two. He went on
to warm the woman's heart by the declaration that since he had become
acquainted with the secrets of the organization he wondered that he and
she had been able to hold out so long. After which preliminaries he
proposed that she, too, should sell to it. With sagacity and spirit she
declined point-blank to have any negotiation with him.
She declined to deal with subordinates, and said she did not want to
sell. The principal then called upon her at her residence. This was
in 1878, and these were dark days for "outside" refiners. One by one
they were sinking out of sight, and slipping under the yoke like the
victims of the "reconciliation" and "equalization" described in the
last chapter.
For six years word had been passing from one frightened lip to
another that they were all destined for the maw or the morgue, and
the fulfilment of the word had been appalling. He knew the members of
the oil combination, one of the best-known veterans of the oil region
testified in this case, naming them; "I have heard some of them say, in
substance, 'that they intended to wipe out all the refineries in the
country except their own, and to control the entire refining business
of the United States.'"
"The big fish are going to eat the little fish," one of the big fish
told a neighbor and competitor. When one of the little fish said he
"would not sell and was not afraid," he was told, "You may not be
afraid to have your head cut off, but your body will suffer!"
The woman was brave with love and enthusiasm for the memory of her
husband and the future of her children. She had had a great success,
but she knew the sea she was swimming. She saw strong men going down on
every side. She herself afterwards told in court of her great anxiety
as she would hear of one refinery after another surrendering, feeling
sure that that would eventually be the fate of her company.
All that the witnesses just quoted had reported, all that was said
of the same tenor by the witnesses before Congress in 1876, and much
more, had been filling the hearts of the business men of Cleveland,
Pittsburg, Titusville, New York, with a reign of terror ever since
1872. It was with a full realization of all this that she went down
to her parlor to receive the great man of commerce, who passes the
contribution-box for widows' mites outside the church as well as
within. This gentleman was in her house in pursuance, practically, of
his own motion. She did not want to sell; the suggestion of a sale had
come from the other side. "I told him," the widow said to the judge,
"that I realized that my company was entirely in the power" of his
company. "All I can do," I said to him, "is to appeal to your honor
as a gentleman, and to your sympathy, to do the best with me that you
can. I beg of you to consider your wife in my position, left with this
business and with fatherless children, and with a large indebtedness
that my husband had just contracted for the first time in his life. I
felt that I could not do without the income arising from this business,
and I have taken it up and gone on, and been successful in the hardest
years since my husband commenced." "I am aware," he replied, "of what
you have done. My wife could never have accomplished so much." She had
become alarmed, the woman of business resumed, because his company was
"getting control of all the refineries in the country."
He promised, with tears in his eyes, that he would stand by her. It
should never be said, he cried, that he had wronged the widow of his
fellow-refiner. "He agreed that I might retain whatever amount of stock
I desired. He seemed to want only the control. I thought his feelings
were such that I could trust him, and that he would deal honorably
with me." This was the last she saw of him. He promised to come to
see her during the negotiations, but did not do so. He promised to
assist and advise her, but did not do so. He declined to conduct the
negotiations with her in person as she requested, "stating to her,"
he said, in giving his version of the affair to the court, "that I
knew nothing about her business or the mechanical appliances used in
the same, and that I could not pursue any negotiations with her with
reference to the same; but that if, after reflection, she desired to
do so, some of our people familiar with the lubricating-oil business
would take up the question with her.... When she responded, expressing
her fears about the future of the business, stating that she could
not get cars to transport sufficient oil, and other similar remarks,
I stated to her that though we were using our cars, and required them
in our own business, yet we would loan her any number she required, or
do anything else in reason to assist her, and I saw no reason why she
could not prosecute her business just as successfully in the future
as in the past." This assurance to his widow-competitor that he would
let her have cars was, of itself, enough to justify all her alarm, and
show that there was no hope for her but in making the best surrender
possible. It was proof positive that he did control the transportation,
that the well-defined report that no one but he and his could get
their business done by the railroad was true. Permission to go upon
the highways by the favor of a competitor is too thin a plank for even
a woman to be got to walk. Withdrawing from direct connection, but
managing the affair to the end as he testifies, he sent back to her the
agent she had refused to talk with.
Negotiations were accordingly resumed perforce with this agent. He
submitted to his principals a statement in her behalf of the value of
the property, but did not waste time over the form of letting her see
it, or consulting with her before submitting it in her name.
This statement she never authorized, never heard of, and never read
until it was produced in court against her.[114]
One interesting feature of the contract which was the subject of the
"adventure" described in the chapter "Not to Exceed Half" was repeated
here. The representative who "took up this matter" with the widow
carried on his bargaining in great part with the minor stockholders,
one of whom claimed afterwards that all he had done was under her
directions, and "to her entire satisfaction." But she was entirely
unaware of either her "directions" or her "satisfaction." "He never
had the slightest authority from me to represent me in any way in the
sale."[115]
Another of the minor stockholders also busied himself in representing
her without her knowledge. On behalf of the widow agents were making
figures, though she knew nothing of their agency or the figures.
By these combined efforts a sale was finally concluded at figures
which, though she owned seven-tenths of the property, she had never
authorized, and were far below the only figures she had given as those
she was willing to take.
Compelled to deal with a subordinate against her will, fearing to
remain in so hazardous an occupation, and yet needing for her children
the income it brought her, this woman manufacturer's position was most
harassing. All through, as her cashier and treasurer told the court,
she was dissatisfied, felt that she was compelled to sell though she
wanted to retain her property.
"In my hearing," her confidential clerk said, "she declared she sold
because she was compelled to do so."
She told her fellow-stockholders that she had been informed by the
agent who was dealing with her, that if they did not sell out it would
only be a question of time before they would be forced to sell out, as
he intended to place oil like that made by her company in the hands of
all their agents, to undersell them and close them out. This decided
them to sell.
"Inasmuch as the managers of the Standard Oil Company appeared to have
made up their minds to obtain this property, and not to give them the
chance they had before in competition," the stockholders, as one of
them testified, "concluded it better to sell the property at such price
as they could then get, rather than to run the risk of a still greater
loss in the future, not one of the stockholders desiring to part with
the property at all, but rather choosing with fair competition to
retain their interest in the property."[116]
She had made 15 per cent. in the last six months, and, aside from
these threats, the business looked prosperous, for the orders were
becoming more numerous every day. But the widow could refuse to sell
only by braving threats which had broken more than two out of three
of all the men about her. She put upon the property a price warranted
by its income, $200,000, which was adopted by the directors of the
company in a formal motion authorizing a sale at that figure. But in
her name a proposition was made by the agent to sell for $71,000. "I
never heard of the figure of $71,000," she says, "and cannot imagine
where it originated. The only proposition that was ever made was that
of $200,000." What the stock was worth in her estimation and that
of her employés who had inside knowledge is seen in the evidence of
her confidential clerk. Though he was her nephew also, he had with
difficulty, he says, bought stock at par.
She had refused to sell at par to others. Now the only offer she could
get was $60,000 for the works and good-will, the purchasers paying in
addition the cash value of the material in stock, and at that price she
had to let them go. She asked to be allowed to remain an owner to the
extent of $15,000 in the business into which she and her husband had
built their lives. "No outsider can have any interest in this concern,"
was the reply. The combination "has dallied as long as it will over
this matter," its agent continued. "It must be settled up to-day or go."
The power of this business to produce a profit of $25,000 a year was
worth almost $400,000, according to the valuations maintained for
the stock of the oil trust on the New York Stock Exchange by the men
who bought out the widow. One hundred dollars in oil trust stock
producing $12 a year has sold as high as $185. If $12 a year was
worth $185, $25,000 a year was worth nearly $400,000. It was part of
the agreement that the oil company should go on as before. "It was
particularly enjoined," testified the cashier and treasurer, "that the
sale should be kept a profound secret."[117] It was intended that the
company should go on as before as far as the public was concerned. The
purchasers agreed to continue to employ the hands already at work, but
stipulated that not a word should be said to any one of them to reveal
that the company was not as independent as it had been.[118]
"And you are not to engage in the refining business," is the concluding
phrase of an agreement between the oil combination and a once
competitor whom it had forced to sell out in 1876.[119]
"You are not to engage in refining," the same power said in 1877 to the
Pennsylvania Railroad, and now to this widow: You must sign this bond
not to go into business again for ten years.
The bond is given in full in the record of the case. It put the widow
under a forfeit of five thousand dollars for ten years, that--
"I will not directly, or indirectly, in any way, either alone or in
company with any person, or as a share-holder in any corporation,
engage in or in any way concern myself or allow knowingly any capital
or moneys to be employed in the business or trade of refining,
manufacturing, producing, piping, or dealing in petroleum, or any of
its products, within the county of Cuyahoga, and State of Ohio, nor at
any other place whatsoever."[120]
Their secret of success, the president swore in this very case, is "the
very large volume" of purchases, "long continuance in the business,"
"experience," "knowledge of all the avenues of trade," "skill of
experienced employés," and so forth. But with all this they did not
dare leave this middle-aged woman free to challenge them again on
the field of competition. The purchase was made in the name of three
members of the great oil company, and it was paid for by the check of
that concern.
Of these men one was among the "trustees" indicted and tried in 1885
for complicity in the plot to blow up a rival refinery, but let go by
the judge.
At the time the sale was concluded the widow refiner declared, "The
obtaining of her stock was no better than stealing." When the papers
were brought to her to sign she "hesitated," and said, "It is like
signing my death-warrant. I believe it will prove my death-warrant."
"The promises made by the president," she testifies, "were none of them
fulfilled."
Being only a woman, and not understanding "business," for all her
brilliant success in stepping into her husband's place, and doing
the double work of home-maker and bread-winner, the widow could not
restrain herself from giving a most uncommercial piece of her mind
to those who had got possession of her property for a sum which they
would recover out of its profits in two or three years. She sent the
following letter:
"November 11, 1878, Monday Morning.
"SIR,--When you left me at the time of our interview the other
morning, after promising me so much, you said you had simply dropped
the remarks you had for my thought. I can assure you I have thought
much and long as I have waited and watched daily to see you fulfil
those promises, and it is impossible for me to tell you how utterly
astonished I am at the course you have pursued with me. Were it not
for the knowledge I have that there is a God in heaven, and that you
will be compelled to give an account for all the deeds done here, and
there, in the presence of my husband, will have to confess whether you
have wronged me and his fatherless children or not--were it not for
this knowledge I could not endure it for a moment, the fact that a
man, possessed of the millions that you are, will permit to be taken
from a widow a business that had been the hard life work and pride
of herself and husband, one that was paying the handsome profit of
nearly twenty-five thousand dollars per annum, and give me in return
what a paltry sum, that will net me less than three thousand dollars;
and it is done in a manner that says, Take this or we will crush you
out. And when, on account of the sacred associations connected with
the business, and also the family name it bears, I plead that I may be
permitted to retain a slight interest (you having promised the same
at our interview), you then, in your cold, heartless manner, send
me word that no outsider can hold a dollar's worth of stock in that
concern. It seems strange to be called an outsider in a business that
has been almost entirely our own and built up at the _cost_ it has to
ourselves. It is impossible for us to find language to express our
perfect indignation at such proceedings. We do not envy you in the
least when this is made known in all its detail to the public. One of
your own number admits that it is a great _moral_ wrong, but says as
long as you can cover the points legally you think you are all right.
I doubt, myself, very much the legality of all these things. But do
not forget, my dear sir, that God will judge us morally, not legally,
and should you offer him your entire monopoly, it will not make it
any easier for you. I should not feel that I had done my entire duty
unless, before I close, I drop a remark for your thoughts. In my poor
way I have tried, by my life and example, with all those I have come
in contact with in a business way, to persuade them to a higher,
purer, and better life. I think there is no place in the world that
one has such opportunities to work for good or evil as in a business
life. I cannot tell you the sorrow it has caused me to have one of
those in whom I have had the greatest hopes tell me, within the last
few days, that it was enough to drive _honest_ men away from the
Church of God, when professing Christians do as you have done by me."
In reply to this she received a letter in which her charge that her
business had been taken from her was repelled as "a most grievous
wrong," and "a great injustice." She was reminded that two years
before she had consulted with the writer and another member of the
oil combination "as to selling out your interest, at which time you
were desirous of selling at _considerably less price_, and upon time,
than you have now received in cash, and which sale you would have been
glad to have closed if you could have obtained satisfactory security
for the deferred payments. As to the price paid for the property, it
is certainly three times greater than the cost at which we could now
construct equal or better facilities."
The letter concluded with an offer to return the works upon the return
of the money, or, if she preferred, to sell her one hundred, or two
hundred, or three hundred shares of the stock at the price that had
been paid her. These propositions were left open to her for three days.
The "cost of the works" is not the standard of value in such
transactions. Six millions of dollars, according to a member of the
committee of Congress which investigated the oil trust in 1888, is the
value of the "works" on which they issued $90,000,000 of stock, which
sold in the stock market at a valuation of $160,000,000.
The offer to sell back the refinery was like the offer to let her have
cars. To accept it was to pass openly and consciously into slavery.
Two years before, when she was weak with grief, inexperience, and the
fear that she might not succeed in her gallant task of paying her
husband's debts and saving the livelihood of the children, she had
thought of selling out at a sacrifice. They knew this because she had
asked their advice, and now cheapened her down by reference to the
valuation of that moment of despair. All the life energies of herself
and her husband, the various advantages of position, the benefit of
their pioneership since 1860, and of having established a place in so
lucrative a business, all the good-will of customers, all the elements
that contributed to the ability to earn the nearly $25,000 a year she
was making, were brushed out of the bargain by the mere assertion of
a figure at which it was alleged better works could be built. By the
time the offer was made she had, moreover, put the sum she had received
into such investments, she told the court, as she had been able to
find, and the money to accept the offer was no longer in her hands.
Indignant with these thoughts, and the massacred troop of hopes and
ambitions that her brave heart had given birth to, she threw the letter
into the fire, where it curled up into flames like those from which
a Dives once begged for a drop of water. She never reappeared in the
world of business, where she had found no chivalry to help a woman save
her home, her husband's life-work, and her children. But when the men
who had divided her property among them invoked the assistance of the
law to complete the "equalization" told of in the previous chapter,
she went into court and told her story to save her friends from ruin.
There, under the gathering dust of years, this incident has remained
buried in the document-room of the Court of Common Pleas of Cuyahoga
County, until now brought forth to give the people a glimpse into what
the real things are which our professors of market philosophy cover
with their glittering generalities about the cost of production and the
survival of the fittest.
This episode and that of the "Agreement for an Adventure" in the
preceding chapter have been written up by the author from the original
papers on file in the Court of Common Pleas at Cleveland, which he
visited for that purpose in 1891. Certified copies of the documents
were procured from the clerk of the court. Lately, the astounding fact
was ascertained that all the documents except two or three formal
pleadings were gone from the records of the court. But for these
certified copies there would now be no authentic record of these cases.
This disappearance bears a strong likeness to the suppression of the
investigation by the Committee of Commerce of Congress in 1872, and the
theft of the testimony taken by the House Committee of Commerce[121]
in 1876, and the mutilation of the transcript submitted to Congress in
1888 of the evidence taken in the Buffalo Explosion Case.[122]