- Historic Sites
The Gentlewoman And The Robber Baron
When Ida Tarbell set out to probe the operations of John D. Rockefeller’s Standard Oil Trust, it seemed like David against Goliath all over again
April 1970 | Volume 21, Issue 3
During the Civil War, Rockefeller chose to sell produce to the Union army rather than to serve in its ranks. Before the war ended, the twenty-three-year-old merchant had foreseen greater potential in refining a new product, oil, to light the homes and lubricate the machines of America. Under his shrewd and frugal leadership his first refinery prospered. There must be no waste, Rockefeller decreed. He found a market even for the residuum that other refineries allowed to flow away into the ground. “It hurt him to see it unused,” Ida wrote, “and no man had a heartier welcome from the president of the Standard Oil Company than he who would show him how to utilize any proportion of his residuum.” Rather than pay a barrelmaker, Rockefeller set up his own barrel factory.
The youthful refiner got his greatest joy from a good bargain. One of those whom Ida interviewed told her that the only time he had ever seen Rockefeller enthusiastic was at the news that his firm had bought a cargo of oil much below the market price. “He bounded from his chair with a shout of joy,” the man recollected, “danced up and down, hugged me, threw up his hat, acted so like a madman that I have never forgotten it.”
On the basis of the large amount of oil he shipped eastward, Rockefeller began to receive the railroad rebates that Ida charged were the keystone of his future empire. She described how he and other large refiners conspired to force railroads to grant them “drawbacks,” additional rebates on the shipments of their competitors. Members of this clandestine combination, known as the South Improvement Company, received a rebate of $1.06 a barrel on crude oil shipped from Cleveland to New York, plus a drawback of $1.06 on each barrel shipped by their rivals. When an independent refiner paid eighty cents a barrel to ship crude oil from the Pennsylvania fields to Cleveland, the South Improvement Company received a forty-cent-per-barrel drawback on the shipment.
This advantage, Ida charged, was used as a club over the heads of other refiners in Cleveland, forcing them to “sell or perish.” His competitors wanted to keep their own businesses, Ida said, but “Mr. Rockefeller was regretful but firm. It was useless to resist, he told the hesitating; they would certainly be crushed if they did not accept his offer.” When twenty-one of the twenty-six firms sold out to Rockefeller, he controlled one fifth of the nation’s oil refining; “almost the entire independent oil interests of Cleveland collapsed in three months’ time,” Ida informed her readers. Privately an indignant Rockefeller denied Ida’s version. Standard had been an angel of mercy to the Cleveland firms in distress, he told friends. “They didn’t collapse,” he insisted. “They had collapsed before! That’s the reason they were so glad to combine their interest with ours, or take the money we offered.” However, Rockefeller, who had always met criticism with lofty silence, refused to reply publicly to the articles in McClure’s . “Not a word,” he insisted. “Not a word about that misguided woman!”
But the heir to Standard Oil, John D. Rockefeller, Jr., was stung to a veiled defense of his father’s business creation. In a speech entitled “Christianity and Business” he told members of the Y.M.C.A. at his alma mater, Brown University: “The American Beauty rose can be produced in its splendor and fragrance only by sacrificing the early buds which grow up around it.” Critics of Standard Oil never let John D., Jr., forget this unfortunate metaphor. Recalling it several years later, a bishop declared from the pulpit: “A rose by any other name will smell as sweet, but the odor of that rose to me smacks strongly of crude petroleum.”
If the creation of a perfect rose justified the sacrifice of other buds, could the same rationale be applied to the Standard Oil Trust? Ida’s answer was a vehement No. The heroes of her serial were the independent oil “farmers” and refiners whose livelihood was threatened by Rockefeller’s growing consolidation. “They believed,” Ida wrote, “in independent effort—every man for himself and fair play for all. They wanted competition, loved open fight. They considered that all business should be done openly; that the railways were bound as public carriers to give equal rates; that any combination which favoured one firm or one locality at the expense of another was unjust and illegal.”
The producers rose in united revolt against the South Improvement Company and the man whom they believed to be its Mephistopheles, refusing to sell oil until railroads agreed not to grant rebates, drawbacks, or any other special privileges. Ida remembered vividly that her own father, by then a producer himself, was one of those who had pledged not to sell.
The South Improvement Company scheme was defeated, but Rockefeller, Ida said, “had a mind which stopped by a wall, burrows under or creeps around.” He next negotiated a new rebate arrangement between Standard Oil and the New York Central Railroad. In a burst of indignant prose Ida berated her protagonist: