"EXTRACT EVERY DOLLAR"
"Standard Oil's" arguments always are absolutely flawless, and this was
one of their best. I was fast becoming imbued with the wisdom of the
plan which Mr. Rogers was revealing so adroitly, and began secretly to
wonder if after all I was not a novice in such business.
Unerringly Mr. Rogers followed my thoughts. He piled Pelions of better
things on Ossas of good ones. Surely it was after watching some parallel
hoodwinking put through by a remote ancestor of "Standard Oil" that Puck
enunciated his famous dictum, "What fools these mortals be." I fell in
like the veriest tyro--hypnotized and happy.
"How much of this first section do you figure, Mr. Rogers, that we are
to give to the public?" I inquired.
"We, Mr. Rockefeller and myself, have carefully considered this phase of
it, and as we all want to retain as much as possible of the stock, we
would not sell over $5,000,000 to the public."
"But can you do this?" I asked. "If the public know 'Standard Oil' is
retaining nearly all the stock they will sour on it."
"Leave that to us," he said, knowingly. "We can iron this out so easily
you need not give it another thought, for no one can have any possible
rights in the matter until he has been allotted stock, and as all those
who come in are to have big profits from the start, they will raise no
objection to anything we do."
"All right, if you think it's wise. You know," I responded; "but who
will be in this besides ourselves?"
"Every one of us--Stillman, Daly, Olcott, Flower, Morgan, all who can be
of use to us will have to be let in on some of the ground floors. The
foundation profits, as we agreed under the old plan, will be twenty-five
per cent. to you, seventy-five per cent. to us. After that we will
jointly take care of those we let in. Is that all right?"
When Henry H. Rogers sets out to batter down an antagonist he is as
fierce as an eagle foraging for her young; victorious, he is as amiable
and generous as a salesman who has unloaded on a customer a big cargo of
damaged goods. Anything the victim wants he can have by simply naming
it.
Fascinated by his mastery of the subject and the obvious completeness of
his plans, I could only continue to assent. He went on:
"There's another section of the subject we must get at now, Lawson, and
decide on once and for all. You seem to have made no provisions for the
most important end of the whole business, the selling end. What is your
idea as to how we shall control the selling end?"
"I had given that little thought, Mr. Rogers," I replied. "I believe
that easily takes care of itself. The demand is always greater than the
supply. We shall have the metal to sell, the world will be more anxious
to buy than we to sell: what more can be necessary?"
"Lawson," said the master brain of the greatest and most successful
commercial enterprise in the world, "you know the stock-market, but you
don't know the first principle of working to advantage a great business
in which you absolutely control the production. The novice assumes that
consumption when it is greater than production makes the price, but this
is one of the many time-worn sophistries of business. Do you suppose
Standard Oil has built itself up to where it is and made the money it
has simply because there were always more lamps than we had oil? If you
do, you are in dense ignorance of the foundation requisite for great
success. As the world goes to-day, the prices of necessities and
luxuries are fixed and should be fixed by the man who controls both the
selling and the producing end, for there is a greater profit to be had
by supply to regulated demand and demand to regulated supply than from a
charge made and regulated by supply and demand. Standard Oil gets
to-day and has always since its birth got its enormous profit from its
'regulation' department. Production yields it a proper profit and by
supplying legitimate demands it earns other fair profits, but its big
gains come from so adjusting one to the other that there can be no such
thing as competition. Do you see?"
"I agree that is not my end, Mr. Rogers, though in a general way I know
about railroad rebates, steamship comebacks, and such things; but I
don't see how they are required in our copper business, where the demand
is of such proportions that the producer sets the price and makes a
profit away above what may be gained in other business enterprises.
Surely no one would ask larger gains than are naturally made out of
copper."
"Lawson," responded Mr. Rogers with oracular emphasis, "that is where
your business education is flawed. No man has done his business properly
who has missed a single dollar he could have secured in the doing of it.
I do not think a fair judge would find me guilty of avarice, either in
business or in the manner of my living, and yet I am made fairly
miserable if I discover that, in any business I do, I have not extracted
every dollar possible. It is one of the first principles Mr. Rockefeller
taught me; it is one he has inculcated in every 'Standard Oil' man,
until to-day it is a religion with us all."
There you have it--the fundamental precept of the gospel of greed. "What
must ye do to be rich? Extract every dollar." How the formula explains
"Standard Oil," and how completely it reveals the Rockefeller attitude
of mind! Greed crystallized into a practice, dignified into a principle,
consecrated into a religion and become a fanaticism. But, mind you, not
the dross, but the rule; not profit, but precedent. Money no object, but
our laws must be kept. Shylock's god is "Standard Oil's." The ravenous
lust for gold that possesses these men is not an appetite, but a fever.
In them it is the craving of the tiger for blood. Gorged and glutted
with riches, their millions piled into the hundreds, masters of the
revenues of empires, still they are as the daughters of the
horse-leech.
Once in Ogreland there was a giant, larger and fiercer than any of his
fellows, and it was the habit of this monster to compel the inhabitants
of the territory which he ruled to render him every evening a tribute of
human hearts. At sundown he would come out of his castle and seat
himself in a great chair in front of the huge iron gate, and his vassals
would lay at his feet the dripping sacks of hearts for which they had
scoured the land. "How many have you brought me to-day, my merry men?"
he would say as he weighed the sacks in his mighty fingers. "Are they
large and juicy?" How they came or whence, he cared not at all; the
screams of the unfortunates whose hearts were torn from their breasts he
neither heard nor thought of; hearts he must have, and if people were
killed, so much the worse for them. But the ogre _ate_ all the human
hearts his vassals gathered for him; he lived on them and grew greater
and lustier, for they were the food his great frame required for its
sustenance, and he never had all he really wanted.
"Standard Oil" in our life to-day plays the role of this mythological
giant, forcing its tribute of dollars from the people, indifferent to
the blood and tears in which they are soaked, oblivious of the cries of
the victims from whom they have been dragged; but, unlike the giant,
_"Standard Oil" does not need this tribute to sustain its life, nor to
make richer its blood_.
But to return to Mr. Rogers, who triumphantly proceeded with his plot:
"Let me show you, Lawson, how you have overlooked the best part of the
copper business. We have found that for years Lewisohn Brothers have had
a double-clamped and riveted contract with at least half the best
producing mines in the country to sell their output, and they have grown
very wealthy. As near as we can make it, they have made at least fifty
millions in one way or another in the last ten or twelve years. First,
they have had a big profit as their commission for selling; next, big
interest out of the advances they make to companies while their output
is being sold; now, they actually control the copper market of the
world. Think of it, Lawson, for a few seconds, and the possibilities
will loom up to you. You can buy or sell any number of millions of
pounds in futures or actual deliveries. Suppose a man controlling the
selling of three or four hundred million pounds a year should knock the
price to, say, ten cents, sell to himself the year's output of all the
mines he controls and then lift the price to, say, twenty cents. He
would have a sure profit, with absolutely no risk, of thirty to forty
millions of dollars. If he should sell the next year's output short at
twenty and drop the price back to ten, he would have another thirty or
forty millions. Wouldn't he? Then if, before he broke the price, he sold
copper mining stocks short, and if, before advancing the price, he
covered and loaded up with them, he could easily make an additional
thirty or forty millions. Think it over, and you will agree with me that
the possibilities are far beyond those of oil, and perhaps at the same
time you can account for the violent fluctuations in copper stocks and
the price of the metal during recent years. A man in such position could
absolutely _dictate_ to all new mines whose selling agency he could
secure under long-term contracts. When their stocks were up, he could
pinch them to the edge of bankruptcy by refusing to sell their metal or
advance them the cash they needed for operation. Now, don't you agree
with me that you overlooked one of the most important branches of the
copper business when you made no provision for taking in the selling
end?"
Again it crept into my mind that in comparison with the diabolic
astuteness of this man, such knowledge and experience of business as I
had gathered were as those of the primary student to the post-graduate
scholar's. Again, there was no quarreling with his logic or his
conclusions.
"It is common knowledge in Boston," I replied, "that copper commissions
on the surface and below constitute as soft graft as any one would ask
for, but no one suspected the possibilities you outline. Do you actually
mean to say that that is the way the business has been conducted in the
past?"
Mr. Rogers lowered his voice confidentially:
"I can only tell you, Lawson, that we have dug up some queer doings
during our investigation, and I think I can put my finger on a great
many millions of dollars now in the hands of certain mine officers
which could be recovered by the different companies they have been
acting as trustees of. It would be quite an eye-opener to some of your
pious Bostonians to know that the controlling officials of several mines
are silent partners in some of the big selling agencies."
There was a pregnant interval of silence. Perhaps the expression of my
face suggested the thronging thoughts which seethed through my head as I
said:
"But surely, Mr. Rogers, that's off our beat. We shall make money enough
along our lines without getting into that kind of a game."
Mr. Rogers swung his chair half round and looked straight at me. For a
long second he stared--sitting half upright, his long, fine hands
clasping the arms of the chair with a clutch like steel. He said not a
word. Then he replied:
"Of course, Lawson, we have no need for such methods in our affairs. But
it is a duty we owe investors and ourselves not to conduct this business
in a way that will encourage others to continue doing it along the old
lines."
He frowned at me as much as to say (only he never uses such
expressions), "Oh, but you do make me tired," as he always did when I,
with a serious face, would ask him, as I often did: "How is it, Mr.
Rogers, that young John D. can make such a success of his
Sunday-School-Class Trust, and at the same time of his father's oil and
investment business?" In business hours Mr. Rogers taboos frivolity.
The neophyte in crime, being initiated into the mysteries of the
profession by some able Fagin, gets his instruction by degrees. Great
care is taken that he shall not realize too soon the depravity he is to
practise, lest, appalled by the hideousness of it, he might jump the
track, and along with each advance in knowledge goes a picture
representing the ease of the life and the lordly rewards and pleasant
adventures of the "industry." From the remote perspective of to-day very
similar seems to have been the process in this most momentous
conversation between Mr. Rogers and myself. The apprentice at the knees
of the master was being gently and gradually admitted into the secrets
of the calling--financial highwaymanry. At the moment, however, it
never entered my thoughts to imagine myself other than a favorite
lieutenant gathering the garnered wisdom of a great general of commerce.
So when Mr. Rogers shifted bobbins in his shuttle and agreeably and
naturally wove fancy patterns into the woof of our conversation, I
suspected no sinister motive. Indeed, in reply to his kindly queries, I
was delighted to tell him how well I was getting along with Butte,
Montana, and the other stocks that I had been dealing in, and how deeply
interested all the country was in our plans. We must have been fully
half an hour discussing the degree to which the craze for "Coppers" had
spread over all America and had affected even Europe, and it was
pleasant to realize his interest in my own personal well-being. Then,
suddenly, as the thread on a bobbin runs out, he paused and shifted to
the old subject--just as if a new phase of it had occurred to him.
"To come back, Lawson, to Lewisohn Brothers. We must buy that concern,
and at once. Had you best do it or we?"
Our pleasant talk had restored my mind to its normal alertness, and I
grasped at once the significance of the switch.
"I don't think I could begin to do as well as you on a trade of that
kind, Mr. Rogers," I answered, off the reel, "for I don't suppose they
will be anxious to sell, will they?"
"Anxious?" he replied, as quick as a chipmunk; "about as anxious as
Apollo to have one of his front teeth pulled! But they will sell, and at
my price, too. I think I know just where they stand, and when they know
I know it, I don't believe they will be long in seeing it my way, for I
shall show them what coming in with us means, and just what refusing my
offer means, too!"
Click! His jaws came together.
"These are my plans," he continued. "They have all the money they want,
and such a large European and American following that nothing could be
accomplished by a financial squeeze, even if we resorted to that form of
pressure; and they are very bright men. Leonard Lewisohn, head of the
firm, is second to no man in America as a business man, which means he
will not hanker for a fight with us; and when I show him we will buy, if
necessary, the control of all the companies they represent, he will see
the absolute futility of opposing us. I have it right from the inside of
his own concern that Lewisohn Brothers have on hand a little over five
millions cash and its equivalent, and that they consider the good-will
and business of the firm worth ten to twelve millions more, which is
fair enough, for their direct earnings must be a million and a quarter
to a million and a half a year. Now here is what I propose offering
them, and no more: We will incorporate the firm into a new selling
company, which will have irrevocable contracts not only with our
consolidated companies but with everything that we can influence, and
the capital will be just the cash on hand, say five millions, we to take
fifty-one per cent. of the stock and give them forty-nine. I will
undertake to show them that their forty-nine will be more valuable under
those conditions than the whole is now."
This is where I sat up amazed. "But, Mr.--," I gasped.
I remember reading somewhere that New York's infamous Boss Tweed, at the
zenith of his extraordinary corrupt career, actually began negotiations
with a syndicate composed of his friends to sell them the New York City
Hall on a long-time note. When some curious heelers asked where the city
fathers should conduct the affairs of the metropolis, he beamed on them
in a paternal way as he explained: "Oh, a detail of the sale will be a
hundred years' lease back to the city at a rental which will give us
enough each five years to pay the purchase price."
Absurd, you say. Not so far-fetched as you may think, if you will
remember the conditions under which the National City--the "Standard
Oil" Bank--acquired New York's old Custom House on Wall Street. They
bought it from the United States Government, credited the purchase price
to Uncle Sam on their books, then rented it for a good round price to
the Government, whose new Custom House was not ready for occupancy, and
because it remained in Uncle Sam's possession, evaded municipal taxation
on the investment. They got the property absolutely without paying a
cent, and have ever since collected a splendid interest on the million
they did not invest.
But this deal which Mr. Rogers outlined to me seemed to go both of these
transactions a point or two better, inasmuch as neither of the parties
were corrupt city or government officials, but merely private citizens
in a country where all are free and equal, and where the Constitution
guarantees that no man's property shall be taken from him without due
process of law.
Before I could get my breath, Mr. Rogers, as if he divined my thought,
quietly said:
"One of the inducements I offer will be to allow them to reinvest the
money we pay them in the new consolidated company's stock, at a good big
advance over what it will cost us."
This was too much. I roared and roared, and even he had to laugh as he
quietly remarked: "I said you would find we had done better for you than
you could do for yourself, Lawson, for you must remember you are in on
this at actual cost."
I stopped laughing. "How is that? I thought you intended the new copper
company to have the fifty-one per cent. of the selling company?"
He looked at me with something akin to disgust. Then his voice changed,
and he let me have it straight from the shoulder:
"Lawson, do you really intend that this whole copper business shall be a
charitable affair? If you do, just count us out right here. We are
willing to accede to a lot of your ideas, but there is a line we must
refuse to cross even to please you. This fifty-one per cent. of the
selling company is to be owned by all of our friends, and it is one of
the things we must use as a sop to Daly, Stillman, Morgan, and the rest,
to make them enthusiastic on our main scheme, and it will not come under
our general arrangements of seventy-five and twenty-five per cent. It is
one of the things I want you to leave entirely to Mr. Rockefeller and
myself, and you can depend upon it we will do the right thing. All the
stock is to be pooled in our hands for a long term of years, so you can
say to the public that its operations will be in favor of the
consolidated company."
There you will note was the second explosive point in our conversation.
I was too much concerned at the moment to take in all his words implied
or to appreciate the fine dexterity with which a difficult situation was
being handled. These decisive sentences were cracked off quick, sharp,
emphatic, like the snapping of a bunch of firecrackers. I began a "But,
Mr. Rogers," when he interrupted, and his words came stern, aggressive:
"Is it satisfactory to you or not? I am half beginning to think you are
crowding this good thing we have in copper a bit too much. I simply ask
now, Is this satisfactory to you? Do you leave it to us, or not? But
whether you do or not, this particular part does not go to the public in
any way."
He really showed a heap of irritation, and even now I think a little of
it was genuine anger. It came over me that perhaps I _was_ overcrowding
it and treating the whole copper enterprise too much as if it were my
personal property; for here was something I had had nothing to do with,
the setting out, pruning, and gathering the fruit from, this particular
plum-tree, and so I answered without any hesitation:
"It is you, I think, Mr. Rogers, who are a little unreasonable in not
giving me a chance to tell you how I look at it. Yes, it is perfectly
satisfactory. I will leave it entirely to you and Mr. Rockefeller.
Whatever you do will be all right."
At once Mr. Rogers' expression changed. He looked relieved, making no
attempt to disguise the fact that he had discharged a troublesome duty.
"That is the way to look at it, Lawson," he said. "You'll not suffer, I
promise you."
Meditating over the conversation afterward, I realized how delicate his
task really had been, and how well he had performed it. It had been to
settle this matter and to rearrange our copper plans that he had
summoned me to New York, and if I had proved refractory I can see he
would have been badly snagged in his negotiations with the Lewisohns. If
there had been a trace of dissension in our camp, that firm would never
have surrendered their great business on such terms as Rogers proposed
to exact.
This is as good a place as elsewhere to tell exactly how fair and just
Mr. Rogers proved himself in the cutting of this particular melon, and
to explain why he had been at such pains to have me leave it entirely to
his and Mr. Rockefeller's generosity. The fifty-one per cent. of the
sales company amounted in hundred-dollar shares to 26,000 ($2,600,000).
If I had insisted upon the arrangement then in force my share would have
been 6,500 shares ($650,000), which to-day are worth a fabulous figure.
For some time after this I heard nothing about the matter and was in
complete ignorance of what my portion was until one day Mr. Rogers said
in an offhand way: "By the way, Lawson, you can send me a check for your
allotment of the selling company's stock, 250 shares." Before I got a
chance to interpose a word he said: "We had to divide that up among a
great many, or there would have been a good deal of hard feeling, but,
after all, it's only a side-show and does not amount to anything when
you consider our real plans."
At this moment, carefully chosen for that very reason, our affairs were
swimming along so magnificently and my own profits were so great, that I
had not the heart to make any serious objection. I let the matter go
with an inward resolution that at the first convenient moment I would
slip out of the selling company. Sure enough, shortly afterward Mr.
Rogers said to me:
"Lawson, I do wish we could get in that selling company's stock from the
different holders." He did not actually say he was buying it in for the
Amalgamated Copper Company, but he desired that I infer it. I snapped
him up:
"All right. You can have mine, Mr. Rogers," I said.
"At what price?" And I think he thought that he would be compelled to do
some trading.
"Oh, about cost and interest," said I; and the thing was done. I
afterward learned that he had treated every one in much the same way,
and that he and Mr. William Rockefeller practically had it all. They
have it to-day, just as they and John D. Rockefeller, and possibly one
or two others in "Standard Oil," have appropriated all the inner
companies of "Standard Oil" where the real melons are cut--the secret
rebates and all the other under-the-rose profits--while they are so
industrious in their unloading of the stock of the main company,
Standard Oil, that the last annual report showed that the list of
outside stockholders numbers 4,100, this too at a time when 26 Broadway
sits up nights to disseminate the impression that the Rockefellers and
Rogers own it all.