CHAPTER 20

The Standard Oil Crowd

Outwardly at least, Frederick T. Gates was the antithesis of his famous patron, as florid and melodramatic as Rockefeller was cool and withdrawn. With close-set eyes that looked slightly crossed, head tilted to one side with a sardonic smile, the philanthropic chief often looked as if he was skeptically sizing up the world. A tall, well-built man with a restless, energetic air, he could talk with gusto for hours at a stretch, as if delivering a fiery sermon or Shakespearean soliloquy. Capable of tremendous flashes of wrath or indignation, he was colorful in both action and speech. When he pontificated, he threw his feet up on the desk, jabbing his finger through swirling cigar smoke, or jumped up from his seat, hair tousled, tie askew, to pace the floor with lawyerly deliberation. One colleague said he had “a voice that thundered out of Sinai” and he knew no middle ground in advocating a cause.¹ In a prose self-portrait, Gates described himself as “eager, impetuous, insistent, and withal exacting and irritable.”²

Like Rockefeller himself, Gates yoked together two separate selves—one shrewd and worldly, the other noble and high-flown. Born in upstate New York in 1853, not far from the Susquehanna River that flowed through Rockefeller’s boyhood, Gates was the son of a high-minded, impecunious Baptist minister, who had eked out a meager existence in small, impoverished towns. As a boy, Gates rebelled against the Puritan heritage that viewed earthly life as a melancholy sojourn. In his memoirs, he recalled that the “singing was pleasing, but otherwise Sunday school was a bore, as was church. I remember well my weekly relief when it was over and we could go home for dinner.” ³ Of his twice-daily prayers, he said, “If it taught anything, it taught us thus early that prayer is a mere empty form of words.”⁴ The wonder was that the boy grew up to be a preacher.

When Gates was a teenager, his father went to Kansas for the American Baptist Home Mission Society, which only aggravated the family’s financial woes. Gates had to quit school at fifteen to help pay off their debt. For several years, he taught school and clerked in a dry-goods store and a bank, storing up valuable business experience. After briefly attending Highland University in Kansas, he entered the University of Rochester in 1875, where his interest in religion was rekindled. A good Baptist, he would not dance, play cards, or frequent the theater. Two years later, he entered the Rochester Theological Seminary, then under the sway of its president, Dr. Augustus H. Strong. Gates was briefly entranced by Strong’s theological system. “His instruction formed the foundation of our seminary course, and at that time it was almost wholly imaginary” was his later mordant judgment. ⁵ Gates was drawn to the ministry, not as a retreat into an otherworldly life so much as a liberation from poverty and academic drudgery.

After graduating from the seminary in 1880, Gates was assigned his first pastorate in Minnesota. When his young bride, Lucia Fowler Perkins, dropped dead from a massive internal hemorrhage after sixteen months of marriage, the novice pastor not only suffered an erosion of faith but began to question the competence of American doctors—a skepticism that later had far-reaching ramifications for Rockefeller’s philanthropies. A period photo shows a handsome young man with a long, lean face, a handlebar mustache, and a somewhat wistful air. After launching into “a zealous campaign to convert sinners,” Gates soon lightened up, scrapping much of the scholastic baggage he had picked up in the seminary. To succeed as a pastor, he decided that he had to study the economic, intellectual, and social forces of his time. A biblical modernist, he employed science, history, and reason to explicate sacred texts. He also worked to retire the church’s debt and wrote essays for the Minneapolis Tribune.

After eight years in Minnesota, Gates, thin and emaciated, seemed destined for a career as theadbare as his father’s. Then one day in 1888, heaven sent relief in the shape of a rich man, George A. Pillsbury, a founder of the flour fortune, the state’s wealthiest Baptist, and then the mayor of Minneapolis. He told Gates in confidence that he suffered from an incurable disease and needed advice about making a $200,000 bequest to a local Baptist academy. Gates advised Pillsbury to start out by giving the academy $50,000, contingent on the Baptists raising an equal sum—what we would today call a matching grant— then leave the remaining $150,000 in his will. Gates was subsequently drafted to drum up the $50,000, which he did so superlatively well that he threw up the ministry for good and became executive secretary of the new American Baptist Education Society. His contact with Rockefeller and involvement in the University of Chicago followed soon thereafter.

Those Baptists who thought they had slipped an advocate into Rockefeller’s inner sanctum were grievously disappointed. At first, Rockefeller still gave disproportionately to Baptist causes, as missionaries from every continent descended upon Gates’s office in droves. But despite his fondness for Baptist clergy, Rockefeller was also exposed to many greedy, calculating pastors and began to retreat from the sectarian spirit that had guided his giving. As Gates said, “I think his greatest trouble was with ministers because he had a natural liking for them and they were always trying to get money out of him.”⁶ By 1895, Rockefeller told Gates that he wanted to give to the five main Protestant denominations. This delighted the lapsed minister, who had grown so dismayed by the Baptist church in his town of Montclair, New Jersey, that he had switched to the local Congregational church. He was increasingly convinced “that Christ neither founded nor intended to found the Baptist Church, nor any church.”⁷

For someone like Gates, torn between heaven and earth, serving as Rockefeller’s chief philanthropic adviser was an ideal synthesis. When they started working together in 1891, Rockefeller was fifty-two and Gates thirty-eight. In spite of his uncommon intelligence, Gates often felt self-conscious under Rockefeller’s icy scrutiny. As he grew more comfortable in his presence, he developed a powerful loyalty to him. “I will do my best to serve in any business capacity,” Gates humbly told him early on, “but I beg you not to place any confidence in me (I have little in myself ) and to begin with matters in which I could not possibly do much harm.” He ended by saying, “No one but my father has been so kind to me.”⁸ Having long chafed at a minister’s salary, Gates could now indulge his ripest fantasies of wealth. Where his father had made less than $400 a year, Gates started with Rockefeller at $4,000 a year, his salary rising to $32,000 by 1902.

What Gates gave to his boss was no less vital. Rockefeller desperately needed intelligent assistance in donating his money at a time when he could not draw on a profession of philanthropic experts. Painstakingly thorough, Gates combined moral passion with great intellect. He spent his evenings bent over tomes of medicine, economics, history, and sociology, trying to improve himself and find clues on how best to govern philanthropy. Skeptical by nature, Gates saw a world crawling with quacks and frauds, and he enjoyed grilling people with trenchant questions to test their sincerity. Outspoken, uncompromising, he never hesitated to speak his piece to Rockefeller and was a peerless troubleshooter.

Gates believed implicitly in Rockefeller’s goodness and wisdom. “If he were placed in a group of say twenty of the greatest men of affairs of today,” he once remarked in a speech, “before these giants had been with him for long, the most self-confident, self-assertive of them would be coming to him in private for his counsel.”⁹ Having known many rich people, Gates was impressed that Rockefeller had no private yachts or railroad cars. He was always quick to defend Rockefeller, sometimes wittily. When a man complained to him that Rockefeller in his Cleveland years cared only for money, Gates retorted, “In heaven’s name, what else could he do in that city!”¹⁰ In a typical utterance, Gates said, “The Rockefellers have done incomparably more to permanently enrich the commonwealth than any other family since the founding of the republic.”¹¹

Gates did not consider Rockefeller totally innocent in business, but he believed that whatever reprehensible deeds he had committed had simply reflected the business morals of his time. Yet he had no firsthand knowledge of the matter, for while he supervised Rockefeller’s philanthropic and outside business investments, he was always excluded from anything pertaining to Standard Oil. As Junior said, “The oil companies didn’t like him and consequently I was the person who was the liaison.”¹² Since Gates entered the scene just as Rockefeller was retiring and was sequestered from his single largest holding, he had the luxury of believing in Rockefeller’s innocence by assuming that he had behaved as well at Standard Oil as in his subsequent ventures.

Significantly, Rockefeller surrounded himself in the early 1890s with brand-new men who could defend his past with total sincerity—and total ignorance. By recruiting subordinates who had never worked at Standard Oil, he had a chance for a fresh start, where he could make his behavior, for the first time, as ethical as his rhetoric. Led by Gates, these subordinates guaranteed that the Rockefeller millions were donated or invested scrupulously. Once he had an ex-pastor on the payroll, Rockefeller was necessarily kept on his best behavior, locked into a new moral regimen. Junior’s presence at 26 Broadway further ensured that father would behave more ethically than in the past.

As at Standard Oil, Rockefeller encouraged independence, and once he had carefully trained his philanthropic lieutenants, he gave them a wide berth. Gates found his boss patient, kind, and considerate, but realized that Rockefeller’s genial midwestern manner and humor were something of a cover. “His usual attitude towards all men was one of deep reserve, concealed beneath commonplaces and humorous anecdotes. He had the art with friends and guests of chatting freely, of calling out others, but of revealing little or nothing of his own innermost thoughts.”¹³ When Gates went to the oracle for guidance, he sometimes left more mystified than before. As he wrote of Rockefeller, “His deliberation was sometimes extreme; his reluctance to argue and speak out his thoughts fully, his skill in not exposing the slightest surface for attack, his long silences, so that we could not locate even his objections, were sometimes baffling.”¹⁴ Rockefeller never offered blame or praise and revealed his opinion of employees only by adding or subtracting to their duties. His psyche was like a set of Chinese boxes: If you penetrated the outer wall, then you faced another wall, then another, ad infinitum.

As Rockefeller moved into retirement, his wealth was accumulating at an astonishing rate. During his tenure at Standard Oil, the trust had usually paid a fixed dividend of 12 percent, reflecting his prudent leadership. With Archbold at the helm, by contrast, the dividends surged, jumping to 31 percent in 1896 and 33 percent in 1897 and 1899. Buoyed by these dividends, the price of Standard Oil shares leaped from 176 in 1896 to a high of 458 three years later. However much Rockefeller deplored this extravagant dividend policy, he was its foremost beneficiary, and it heightened the pressure on him to gear up his philanthropy to handle increasing amounts of money.

With hundreds of appeals pouring in daily from around the world, Rockefeller made Gates promise that he would never forward begging letters to him or reveal his address. While Rockefeller continued to give out hundreds, if not thousands, of individual bequests to needy friends, relatives, and strangers— he sent one upstate cousin a pair of well-worn shoes, another an old suit—he increasingly followed a policy enunciated in an 1889 letter to Gates: “I am more and more disposed to give only through organized institutions.”¹⁵ Gates executed this policy of wholesale giving faithfully, dismissing small requests for money with the fatal remark, “This is a retail business.”¹⁶

Sometimes Rockefeller gave Gates glimpses into his inner sadness. One day, Gates remarked to Rockefeller that benevolence was its own reward, that the man who looked for gratitude would die embittered. “His only reply, uttered with deliberation and unwonted emphasis, was, ‘DON’T I KNOW THAT?’ ”¹⁷ Gates saw that while he was always surrounded by people, Rockefeller had few, if any, real friends and was isolated by his wealth. Visiting Rockefeller at a southern hotel around 1910, Gates found him rather lonely and forlorn and suggested he contact some cultivated local men. “Well, Mr. Gates,” said Rockefeller, “if you suppose I have not thought about the matter you are mistaken. I have made some experiments. And nearly always the result is the same—along about the ninth hole out comes some proposition, charitable or financial!”¹⁸ Rockefeller experienced more disenchantment with people in charity than in commerce, once telling his son, “I have lent and given people money, and then seen them cross the street so that they would not have to speak to me.”¹⁹

From the time he signed on as chief almoner, Gates knew his life had changed irrevocably. “I now saw myself largely cut off from disinterested friendships and almost of necessity a centre of intrigue and dislike,” he wrote in his memoirs.²⁰ As he watched people scheme and grovel for Rockefeller’s fortune, it was hard to preserve his faith in human nature. “If you could be here in this office,” he once wrote William Rainey Harper, explaining his own caution, “and see the exhibition of human meanness, and even dishonor, among otherwise respectable men when they come to negotiate with Mr. Rockefeller’s wealth, you would appreciate better than you can now how this perhaps unnatural caution has arisen.”²¹

A close student of the boss’s psychology, Gates was aware of Rockefeller’s preferred self-image and played on it effectively. There was a manipulative side to Gates, as shown by a letter he wrote a friend in which he set forth twenty-two fund-raising tips. Tip number six read: “If you find [the prospective donor] big with gift do not rush him too eagerly to the birth. Let him take his time, with gentle management. Make him feel that he is giving it, not that it is being taken from him with violence.” Number seven advised: “Appeal only to the noblest motives. His own mind will suggest to him the lower and selfish ones.”²² One suspects Gates applied some of these pointers to Rockefeller himself, posing all the while as the faithful servant.

Gates had a talent for dressing up proposals to Rockefeller with the right touch of historic drama. He made each gift seem a momentous advance in human civilization and often mimicked Rockefeller’s own business rhetoric— talking about educational trusts, for instance—to sell him a program. Gates knew that Rockefeller viewed himself as an instrument of God in business and philanthropy. By striking this note, Gates could always capture his mentor’s attention. Many years later, Gates sent him the following New Year’s greeting:

Certainly no man can survey your marvelous career without feeling that it bears in very high and special degree the marks of a “Plan of God.” I remember well how your life has been to yourself a series of great surprises, how vistas altogether unexpected have suddenly opened before your astonished gaze, and now that you have arrived at a point when you can look back over a long course, how often and how deeply must it have impressed itself on your mind that you have been simply an instrument in the hands of the Great Power that is not ourselves. How clear must it now be to you in the retrospect that this Great Unseen Power was guiding you all the time and ever to ends unseen, vaster, more varied, more far reaching than any human wisdom could compass or conceive. If now at the beginning of this new year I may venture to offer you a toast, it would be—John D. Rockefeller, His Life, A Plan of God.²³

While Gates would function as a never-ending source of ideas for the philanthropies, it is important to credit Rockefeller’s own contribution. The same mind that created the Standard Oil empire was actively engaged in building up his charitable empire. As Gates noted, Rockefeller “came to have hardly less pleasure in the organization of his philanthropy than in the efficiency of his business.”²⁴ In retirement, he actually gave more time to philanthropy than to investments. While Gates often generated ideas, Rockefeller never hesitated to wield his veto power or force Gates to rethink proposals. Gates had to take account of the many things that Rockefeller had ruled off-limits, such as funding social-welfare agencies. He never had infinite freedom to draw up programs and needed to conform to Rockefeller’s wishes. His power, if vast, was circumscribed.

Rockefeller developed such a mystique of infallibility that people assumed his touch was no less unerring in his private investments than at Standard Oil. Whenever it was known that he had bought a stock, exultant investors rushed to join him. Sometimes, Rockefeller contributed to his own myth. “It has always been my rule in business to make everything count,” he once told an old friend. “To make every cent something. I never go into an enterprise unless I feel sure it is coming out all right.” ²⁵

If he ever set eyes on that windy boast, Frederick T. Gates would have grinned, for he had found Rockefeller’s personal finances in a shocking state, run haphazardly without a full-time portfolio manager. The mastermind of Standard Oil had proved to be a passive and easily hoodwinked investor. By 1890, as he banked ten million dollars in annual income, Rockefeller still deferred, with surprising credulity, to advice proffered by supposed friends. He fell particularly under the sway of two fellow congregants from the Fifth Avenue Baptist Church, Colgate Hoyt and Charles Colby. Hoyt often dropped by his house in the morning and accompanied him downtown, touting stocks all the while. Rockefeller reposed implicit faith in these two churchgoers, who induced him to pour millions into ruinous investments in a score of companies. Through their exertions, he acquired an investment empire that he knew solely from misleading figures on a statement. What reconciled Rockefeller to this setup was that he took minority stakes and imagined that his partners were investing equivalent amounts.

As members of the executive committee of the Northern Pacific Railroad when Rockefeller was its major stockholder, Colby and Hoyt avidly pushed investments in timber stands of the Pacific Northwest. They planned to build up the town of Everett, Washington, at the juncture where the Northern Pacific would supposedly establish its major terminus on Puget Sound. As the Great Northern Railroad also neared completion, the whole area was convulsed by a speculative mania. Colby and Hoyt erred, however, in one small but costly matter: The Northern Pacific terminal ended up in Tacoma, not Everett. Meanwhile, blindly following their counsel, Rockefeller had added mines, steel mills, paper mills, railroads, and even a nail factory to his holdings.

Rockefeller’s unwonted lack of vigilance owed something to his fragile health during the early 1890s, when he was trying to clear his mind of cares. Sensing that some of his outside investments might not be as sound as advertised, he mentioned to Gates one day that if, on his philanthropic excursions, he happened to be near one of these investments, he might want to scout out the premises. While Rockefeller was already impressed by Gates’s resourcefulness, he also knew that with Gates he risked less potential embarrassment than with a professional financial analyst who might broadcast his failures on Wall Street.

Soon after Gates moved to New York in 1891, he was about to embark on a tour of Baptist schools in Alabama when Rockefeller asked if he would inspect an iron furnace he had bought there on an old friend’s advice; he said he was perplexed why it had fallen into a receiver’s hands. When Gates filed his report, it was instantly clear that he was no courtier serving up syrupy lies to soothe his sovereign. The entire operation, Gates said bluntly, had nothing to do with iron but was a thinly veiled attempt to boom local real estate; many Baptist ministers had been tricked into buying nearby land that was supposed to appreciate because of its proximity to the iron operation. Rockefeller hid his amazement and contended breezily that he had taken this “little flyer” to help an old friend’s son learn the iron business. By way of comparison, Rockefeller alluded to his lucrative iron business in Wisconsin, then allegedly yielding $1,000 per day. A few months later, he sent the intrepid Gates to take a look.

Gates traveled to Wisconsin and with quiet tenacity began asking questions. He found exactly the same fraud as that perpetrated in Alabama: The iron-works were being used to pump up local real estate and auction off lots at inflated prices. The supposed profits were pure moonshine: Rockefeller was actually losing about $1,000 per day. To anyone who knew Rockefeller, the situation seemed inconceivable: He had made large investments without independently verifying the numbers sent by his friends.

When he appeared at Forest Hill to relay the bad news, Gates knew that the boss could not dismiss $600,000 in mortgage bonds as a “little flyer,” and Rockefeller was visibly upset. As Gates recounted the meeting:

He was deeply agitated and, had I not been able to give him the most positive assurances, would have been incredulous. He kept me with him at Forest Hill until he could get the old friend to his side from Wall Street, who had been mainly instrumental in selling him the bonds. This gentleman denied every one of my allegations, but he could only meet my proofs with protestations and tears of rage and apprehension.²⁶

A few days later, the contrite scoundrel—whether Colby or Hoyt is unclear— returned to Rockefeller, confirmed the truth of Gates’s allegations, and agreed to have the mortgage-bond covenants rewritten.

Shaken by this duplicity, Rockefeller sent his sleuth to probe his investment in the San Miguel Consolidated Mines high in the Rocky Mountains. The scheme’s promoter had entertained many previous investors who had journeyed westward to tour the site. At once, Gates scented trouble when he quizzed a mining engineer in Denver about the San Miguel properties. “What!” the man shouted. “Do you mean to tell me that John D. Rockefeller has invested money in that Damned Swindle!!”²⁷ When Gates journeyed to Telluride, he learned that the mines were phantoms and that the company had only abandoned claims.

At this point—it was now late 1892—Gates was still operating at one remove from Rockefeller in a nearby office in the Temple Court; after the San Miguel fiasco, Rockefeller moved him into his office at 26 Broadway. He saw that Gates had a flair for business that surpassed anything he had encountered at Standard Oil. In a stunning display of trust, Rockefeller gave him unrestricted access to his files for all investments outside of Standard Oil. As Gates poked around in this fetid swamp, he was appalled by what he found. “I unearthed some twenty of these sick and dying corporations,” he recalled, “every one of which showed a balance sheet in red ink.” ²⁸

As Gates sorted through the failed investments, George Rogers joined the chorus of those urging Rockefeller to institute new oversight procedures for his $23 million investment portfolio, including $14 million in railroad securities. Emboldened by Gates’s findings, Rogers suggested creation of an executive committee. Gates would handle investments and benevolent matters; Gates’s Montclair neighbor Starr Murphy would assume legal responsibilities; and Rogers would take care of office matters, each to be paid $10,000 a year. As Rogers candidly told his chastened boss, “This will seem to you at first as very high but it will be considerable [sic] cheaper than being robbed as you have been and even now you are without exact knowledge as to many of the investments in which you have large sums involved.” ²⁹ Pointing out the perils of passive investment, he suggested that Rockefeller assign deputies to oversee these companies.

Beyond the shocking misrepresentation of his investments, Rockefeller had another dispiriting discovery in store: Hoyt and Colby had surreptitiously bailed out of the worthless operations and left him holding the bag, often with a majority stake. Even though he terminated relations with this pair, he could not dispose of their sour investments so easily and thought the most prudent course was to buy total control of the companies and turn them around. Holding practically all the stock of thirteen foundering companies, Rockefeller made Gates president of virtually all of them. Overnight, the young minister who had dreaded poverty was running two railroads plus a far-flung group of mines, timber, and manufacturing concerns. Most of these highly speculative investments never panned out.

As if born to rule business empires instead of saving souls, Gates operated with great swagger and panache. While he jettisoned many money-losing enterprises, he developed great affection for the Everett Timber and Investment Company. Touring this terrain each year in a luxurious private railroad car, he bought up for Rockefeller all the forests in sight, a spree that finally netted 50,000 acres in Washington State and another 40,000 on Vancouver Island. Eventually, these timber tracts fetched five or six times their purchase price, compensating Rockefeller for the losses he had sustained in the Pacific Northwest debacle. Gates himself invested in several of the companies he managed for Rockefeller, and in 1902 he cashed in a tidy $500,000 profit.

In Gates, Rockefeller had found not merely an able investor but a prodigy. In 1917, asked by B. C. Forbes to name the greatest businessman he had ever encountered, Rockefeller startled readers by skipping Flagler and Archbold—not to mention Henry Ford and Andrew Carnegie—and naming Frederick T. Gates. “He combines business skill and philanthropic aptitude to a higher degree than any other man I have ever known,” stated Rockefeller.³⁰ Enough Puritan guilt resided in Gates’s soul that he always stressed his charitable work and deprecated his business exploits. When Adolph Ochs, publisher of The New York Times, asked for background information about him in 1912, Gates replied modestly, even evasively, “While I have had intimate relation with Mr. Rockefeller’s private business, that is, his private and personal investments, my interests are and always have been rather in his benevolent work than in his business.” ³¹ This would have been news to many on Wall Street who had experienced the temper of this hard-driving, cigar-smoking, flamboyant majordomo of the world’s largest private fortune.

Even though he stayed in the background, the press soon detected the power held by the eccentric, shaggy-haired Gates. “In appearance Mr. Gates is not the ordinary type of financier,” the New York Daily Tribune noted. “Everything about him, from the carelessly brushed iron gray hair and cropped moustache to his feet indicate breezy indifference to what others may think about him.”³² Investment houses trifled with him at their peril, for Gates oversaw a securities portfolio of unprecedented size for a private individual. At a time of thin capital markets, he needed to scrounge to find gilt-edged securities to absorb the Rockefeller millions. As if he were a one-man investment bank, Rockefeller participated, under Gates’s supervision, in major stock-and-bond underwriting syndicates alongside the most august Wall Street houses. While it was not unusual in that era for rich individuals to complete syndicates, the sheer scope of Rockefeller’s involvement was something novel.

Even in old age, Rockefeller received stock quotes twice daily and could rattle off the precise number of shares he owned in many stocks. He adhered to several hallowed investing rules. Perhaps the most sacred was that Gates not disturb his Standard Oil stock, the bulk of his fortune. As at Standard Oil, Rockefeller insisted upon keeping a cash balance that never dipped below $10 million. Since he also had a sizable stake in U.S. government bonds, he felt he could play the market with impunity. A born contrarian, Rockefeller insisted upon buying in declining markets and selling in rising ones. When accumulating a position, he bought stocks each time they declined an eighth of a point; when unwinding a position, he sold each time the stock rose an eighth of a point—a technique that gave him an average over an extended period. Having twice been sued by people for offering incorrect market advice, he refrained from offering stock tips. There was also some genuine humility at work, for Rockefeller admitted that he had no “prophetic vision as would make me try to mislead anybody else . . . by one of my miserable guesses.”³³

Since his aides superintended a royal treasury of securities, he had to implement special security precautions. He laid down an ironclad rule that no employee could invest in stocks or bonds of any company in which he held a major stake, and a minimum of two people had to be present whenever the safe housing his securities was opened. Rockefeller’s subordinates seemed more jittery than their phlegmatic boss about dealing with such stupendous sums. Starr Murphy recalled an occasion when the boss asked him and a colleague to bring $60 million in securities to his Pocantico estate for his personal inspection. With no small dread, the two men drove up to Westchester, totally unguarded. Rockefeller did not show any anxiety about the absence of security and only at the end alluded to the situation by remarking, with deadpan face and humorous drawl, “I suppose that you gentlemen will return to New York together.”³⁴

Efforts to manipulate Rockefeller often backfired after the Colby and Hoyt affair. In 1910, for instance, Rockefeller was vacationing in Augusta, Georgia, when he received a visit in his hotel suite from Henry Clay Frick, who solemnly advised him to buy 50,000 shares of Reading Railroad stock. The moment Frick left, Rockefeller got on the phone and issued orders to liquidate his block of 47,500 shares; he had the satisfaction of selling the final 2,500 shares at the stock’s peak.

Rockefeller grappled with the classic dilemma faced by all large investors: how to buy stocks without pumping them up or sell without dragging them down. As his fame spread, his market moves could set off frenzied stampedes of traders. To forestall this, Rockefeller employed a double set of brokers: a primary broker parceled out orders among dozens of secondary brokers who were ignorant of his identity, thus masking his steps behind a maze of intermediaries. For a long time, he paid double commissions, before he worked out a single-commission arrangement with a broker named Paul D. Langdon. On finde-siècle Wall Street, stock pools were both legal and voguish, and Rockefeller had no ethical qualms about participating in them.

Entering the autumnal phase of his life, Rockefeller preferred sure, steady gains to speculative killings. When one promoter tried to peddle some gold-mining shares, Gates cut him off short. “If you were to say that the vein was pure gold, 24 karats fine, broad, easily workable, and close to a railway, to be had for a song, I doubt if Mr. Rockefeller’s attention could be attracted. . . . He has come to a time in life and circumstances in fortune when these things no longer attract his cupidity.” ³⁵ Rockefeller seldom responded to the countless inventors who trooped to his office hoping to sell patents. It was easier to lend large sums, backed by first-class securities as collateral, than to have investments dispersed among dozens of enterprises. For all his fabled rapacity, Rockefeller was a forgiving lender and, by all accounts, lenient to a fault. “Never have I known Mr. Rockefeller to call a private loan, foreclose a private mortgage, or oppress a debtor,” complained Gates.³⁶ Another investment adviser, Henry E. Cooper, concurred: “He was never too hard on people in business; he was too easy.”³⁷

To finance sporadic stock-market forays, Rockefeller borrowed huge sums from banks, up to fifteen or twenty million at a time, pledging his government bonds as collateral. This was all a trifle confusing for Junior, who continued to take his father’s straitlaced pronouncements against speculative investing at face value. As he moved into middle age, the son even took to lecturing his wayward father, chiding him with his own rhetoric. On the eve of World War I, when Senior’s borrowings swelled to nearly $10 million, Junior reminded him of how he had “frequently given utterance to my belief, that you should never be a borrower, but always long of cash.” ³⁸

For a long time, Rockefeller resisted efforts to professionalize his investment team, and Gates soldiered on as best he could. In 1897, Charles O. Heydt—later Rockefeller’s expert on real-estate matters—joined the staff, followed a few years later by Bertram Cutler, who helped manage the family investments for the next fifty years. Even with this team in place, the investment operation was still slipshod, and in 1907 Gates told Rockefeller, “I have long thought that it would prove helpful if you could have a man in the office who had before him at all times every day the complete list of your investments and whose business it is to familiarize himself intimately with every one of them—to have his finger, so to speak, on the pulse of every one of them all the time.”³⁹ The following year, Rockefeller finally capitulated and formed a four-member committee, including Gates and Junior, to manage his money.

As with the Rockefeller philanthropies, Gates operated tentatively at first in the wolfish world of Wall Street but was soon very much master of the situation. Before long, he confidently conveyed to Rockefeller his scathing opinions of such globe-straddling moguls as Andrew Carnegie and J. Pierpont Morgan. At the time, the world of high finance revolved around a spirited rivalry between Morgan and Jacob Schiff of Kuhn, Loeb. Convinced that Rockefeller was already controversial enough, Gates tried, whenever possible, to avoid clashes between these two financiers, and he balked at joining boardroom revolts, stock-market squeezes, and other activities that might bring Rockefeller into any further disrepute.

Famished for blue-chip securities, Gates clamored for inclusion in both J. P. Morgan and Company and Kuhn, Loeb syndicates, but always believed that he got superior treatment from Kuhn, Loeb. Under the aegis of this house, Rockefeller swallowed huge chunks of railroad issues, including giant stakes in the Southern Pacific, the Union Pacific, and the Pennsylvania Railroads. He also took a large share in loans floated for the Imperial Japanese government in 1904–1905 during the Russo-Japanese War and for the Chinese government in 1911. He contributed to Kuhn, Loeb’s consolidation of the Chicago meatpackers, led by Armour and Swift, helping to foster another trust. Constantly on the prowl for good securities, he sometimes bought from Kuhn, Loeb just to maintain harmonious relations.

Gates and his minions smarted at the high-handed treatment they received from J. P. Morgan and Company, where they were routinely assigned small portions of mediocre issues—curious treatment for the world’s richest investor. In the early 1900s, Rockefeller found himself with disconcerting frequency involved in Morgan’s biggest blunders, including the Chicago Street Railway that he financed for the magnate Charles Yerkes and the International Mercantile Marine, Morgan’s abortive effort to forge a North Atlantic shipping cartel. For Rockefeller, this was not happenstance but reflected Morgan’s settled antipathy. Bruised by these bad investments, Rockefeller told his son in 1911, “In future, when investments are offered us by this house, we will be of one mind, I think, in accepting nothing which we do not all agree is very desirable for us to have.”⁴⁰ After J. P. Morgan, Sr., died in 1913, Rockefeller told his advisers to keep up cordial relations with the Morgan bank while tartly reminding them that “we have had sufficient experience with the House of Morgan & Company in the role of ‘pack horses’ for their poor investments.”⁴¹

In spite of his phalanx of able advisers, Rockefeller had a very uneven record as an investor. Among his triumphs, he extended a six-million-dollar loan to the fledgling General Motors in 1906—about $98 million today—taking notes for his cash. When the notes were paid off, Rockefeller took payment in General Motors shares, which then obligingly soared from 200 to 1,500. He also fared well as the premier investor in Consolidation Coal and the B&O Railroad. Yet Rockefeller could stumble abysmally, as evidenced by his mystifying relationship with George Gould. When Jay Gould, who had memorably looted the Erie Railroad, died in late 1892, leaving an estate of more than $100 million, his twenty-eight-year-old spendthrift son George inherited his investments. He proved an unlikely business partner for Rockefeller. Where Rockefeller frowned upon the expense of private railroad cars, George Gould owned an entire train and savored the patrician pleasures of fencing, hunting, yachting, and polo. The New York tabloids also delighted in reporting upon his racy relations with women. Whatever his misgivings about George’s philandering, Rockefeller was attracted by the Missouri Pacific and other western railroads that Gould wanted to weld into a transcontinental empire. In 1902, Rockefeller took giant portions of a Missouri Pacific stock offering, and before long he had buried $40 million in this graveyard, as much as George Gould himself had.

Troubles soon developed. In 1906, irate over Gould’s profligate spending and failure to consult him, Rockefeller had his son withdraw from the Missouri Pacific board. By 1909, Rockefeller felt so abominably treated by Gould that he refused further cooperation unless his representatives controlled the board. As the price of rescuing the Missouri Pacific, Jacob Schiff of Kuhn, Loeb likewise insisted upon heavy board representation. When Gould finally resigned the presidency, he installed a crony in his stead, leading Gates to declare it high time to terminate relations with “the mad failed Gould.”⁴² In 1912, Rockefeller unloaded his holdings in the Missouri Pacific stock, ending the misadventure.

Starting in the late 1890s, newspapers published sensational accounts of a shadowy cabal known on Wall Street as the “Standard Oil Crowd.” As diarist Henry Clews recorded, “A new order had come, due to the most powerful influence that had ever manifested itself in Wall Street. This influence was very largely composed of the Standard Oil combination, who introduced in their Wall Street operations the same quiet, unostentatious, but resistless measures that they had always employed in the conduct of their corporate affairs.”⁴³ It was popularly assumed that John D. Rockefeller masterminded these diabolical exploits and was determined to digest Wall Street itself. “It has been said that I control all the banks, all the trust companies, all the insurance companies, even all the railroads in the United States,” a chagrined Rockefeller told one reporter in 1906. “Will you believe me when I say that I do not own a controlling interest in any bank, trust company or insurance company?” ⁴⁴

Rockefeller dabbled in stocks more than he admitted, but he was largely a passive investor and remained as leery of Wall Street as any cracker-barrel Populist. Once pressed for investment advice, he retorted, “I suppose if I were to give advice it would be to keep out of Wall Street.” ⁴⁵ When he bought a seat on the New York Stock Exchange in 1883, he made an obligatory appearance before the admissions committee, then avoided the exchange for the next fiftyfour years. He proudly pointed out that, during his tenure, Standard Oil was never listed on the exchange and that management’s attention was “directed to the administration of the business rather than to the stock gambling.”⁴⁶ Although he never issued a public refutation, Rockefeller played no part in the Standard Oil crowd and cringed at the exploits of its three mainstays: Henry H. Rogers, James Stillman, and his own brother William. Rogers and William paid for their speculations with Standard Oil checks, a practice that always riled John D.

While John always professed warm friendship for his brother, their values had radically diverged over the years as William became a typical grandee of the Gilded Age and plunged lustily into a world of fashionable clubs and resorts. Having sold much of his Standard Oil stock to his brother, William was not nearly as rich as John, but he was still one of the six major recipients of Standard Oil stock and was often listed among the ten richest Americans. A connoisseur of the good life, he loved cocktails, gambling, fast-trotting horses, hunting, fishing, opera, theater, and yachts. His Fifth Avenue mansion faced Alva Vanderbilt’s French limestone château, and he frequented her costume balls. His weekend house, Rockwood Hall, a vast pile of towers and turrets with 204 rooms and gardens landscaped by Frederick Law Olmsted, loomed over the Hudson River. He also had a rugged Adirondack estate of several thousand acres. In 1888, along with such moguls as J. P. Morgan, William K. Vanderbilt, and Cyrus McCormick, William founded the Jekyll Island Club—the posh resort of the “One Hundred Millionaires”—on an island off the Georgia coast that soon boasted roads with names such as Morgan Road and Rockefeller Path. In his later years, William traded in his Baptist upbringing for a more epicurean life. “I used to be very much interested in the church,” he told a friend in later years, “but I haven’t attended for many a day.”⁴⁷ Unlike John, William gave little to charity and turned a deaf ear to John’s entreaties to contribute to the University of Chicago. At one point, when pressing William to help build a church, John needled him by saying: “Paintings are good, this would be better.”⁴⁸ William was more jaundiced than John was about the motives of people who solicited his money.

It was in their stock-market operations that the two brothers differed most— so much so that John stayed aloof from enterprises in which William was involved. In declining a proposed investment, John simply told his financial staff, “No, that is William’s,” and that ended all discussion. ⁴⁹ As a denizen of Wall Street, William was often found in his downtown office, puffing on a cigar and glancing at a stock ticker by the window. Besides being president of Standard Oil of New York, he was a director of forty companies, including railroads, banks, and copper mines, plus steamship, gas, and water companies. What irked John was that William engaged in stock promotions and market raids and other activities that he equated with gambling and manipulation. It might have been friction over this issue that caused their relationship to cool in the late 1890s. In 1897, John omitted William’s name alone from a list of top Standard Oil executives slated to receive large salary increases, prompting this plaintive protest from Flagler:

I wish you would include Will—from a purely business standpoint. I think he is worth as much as the younger of “the three others” and I doubt if you realize what a reflection upon him it would seem to be left out. The last day of this month will round out thirty years since I joined you and Will in business. Do not let us at this late day do anything that will have the appearance even of unkindness. I think I know Will’s personal feeling for you better than you do—it is far more kindly than you imagine. ⁵⁰

John held back from William’s stock-market deals in part because he associated them with James Stillman, who on the strength of his Standard Oil connections and his friendship with William had converted National City Bank into New York’s largest bank. “I like William,” said Stillman, a darkly elegant, taciturn man, “because we don’t have to talk. Often we sit fifteen minutes in silence before one of us breaks it!” ⁵¹ They were an oddly matched pair, William good-natured and easygoing, Stillman an icy individual who played his cards close to the vest. One of Stillman’s descendants left this description of him: “Stern, brooding, forever silent except when dropping sardonic remarks, he was known on Wall Street as ‘the man with the iron mask.’ ”⁵² At one point, Stillman feuded with his wife and banished her forever from the house, forbidding his five children from mentioning her name. The rapport between James Stillman and William Rockefeller was transferred to their children. Stillman’s daughters, Elsie and Isabel, married William’s sons, William G. and Percy, breeding a line of Stillman Rockefellers who would be central figures in the subsequent history of National City Bank, today’s Citicorp.

Many contemporary critics assumed that John D. formed an investing triumvirate with his brother and Stillman; in fact, he had serious reservations about Stillman’s character and regretted his friendship with William. Evidently, Stillman repaid the compliment. One day, he dropped by 26 Broadway to visit William, strolled over to Junior’s desk, and proceeded to make derogatory comments about Senior. At once, Junior rose stiffly to his feet, spluttering, “Mr. Stillman, you can say those things to my father but you can’t say them to his son. Good day.”⁵³

In spite of their uneasy relationship, Stillman invited Junior to become a National City Bank director in 1901. Junior was tempted to accept but feared that Stillman’s rival J. P. Morgan might retaliate by excluding his father from underwriting syndicates. Senior was more concerned that the appointment might lend credence to the bothersome canard that he held a major stake in National City Bank. If Junior took the position, Senior warned him, it “might seem to indicate a closer relation in that quarter than really exists, or would be wise for us to publish to the world.”⁵⁴ For once defying his father’s wishes, Junior joined the National City Bank board; Senior, relenting, bought ten thousand shares of the bank’s stock. As it turned out, Junior resigned from the bank board the following year, finding some of its practices questionable.

The significance of Senior’s stake in National City Bank should not be overstated. A 1906 statement of his holdings shows that he had $415,000 invested in the bank as opposed to $375,000 in the First National Bank— controlled by Morgan’s crony George F. Baker—while his largest bank holding was $1.4 million in New York Trust, dominated by the Harkness family. He also bought a substantial stake in Bankers Trust when it was started in 1903. In general, Rockefeller deliberately avoided National City Bank and the Standard Oil crowd, but he chose never to make that public and thought it unconscionably craven that William, Stillman, and Henry Rogers failed to disabuse the press. Once asked privately about Stillman’s bank, he replied dryly, “It is called, I am told, the Rockefeller institution. But I don’t control it. I have perhaps $300,000 of its stock, and its capital is $200,000,000. . . . I have never been in the building in my life. Why, I declare I don’t even know where it is located.”⁵⁵

Rockefeller did acquire a major interest in one bank. After the Armstrong investigation of 1905 exposed massive double-dealing between insurance companies and their bankers, reform legislation was enacted in 1911 that forced the Equitable Life Assurance Company to spin off its subsidiary, the Equitable Trust Company. Seizing this chance, Rockefeller, George Gould, and Kuhn, Loeb took control, with Rockefeller the principal shareholder. Rockefeller hoped to participate in the bank’s lucrative financial operations and soon urged all companies within the Standard Oil universe to switch their accounts to the bank. Profiting from the Rockefeller tie, the Equitable Trust became within a decade America’s eighth-largest bank. The move was fraught with significance for the Rockefellers, for the bank was to merge with the Chase Bank following the 1929 crash; the resulting institution would be the fortress of Rockefeller-family finance. If the descendants of William Rockefeller were identified with National City, the progeny of John D. were always associated with Chase.

Of the three principals in the Standard Oil crowd—Rogers, Stillman, and William Rockefeller—it was Henry H. Rogers who most entranced the public. In the pantheon of Standard directors, nobody save John D. himself achieved wider fame. There was something lithe and lethal, charming and fierce, about Rogers that made him a magnetic figure even to those he repelled. At Standard Oil, they affectionately dubbed him the “Savage Old Tiger,” while Wall Street, taking his initials, christened him Hell Hound Rogers. He was a handsome and athletic man, with a theatrical mustache, a sharp gaze, and a swashbuckling aura.

Rogers had a chameleon personality. He could be sensitive and generous one moment, a pitiless foe the next. In Manhattan clubs and drawing rooms, he charmed companions, relating hilarious stories and playing a wicked game of poker. He was also very charitable: He helped Colonel Edwin Drake’s impoverished widow and also built a school, library, church, parish house, and masonic hall in his hometown of Fairhaven, Massachusetts. “He looked at you and he owned you,” said one Standard Oil colleague, fascinated by his kaleidoscopic moods. “He was affable unless you tramped on his little toe. He was a man of the fiercest likes and dislikes that I ever knew in the business.”⁵⁶ “His expression could transform itself totally while he blinked his eyes,” a reporter wrote in the Evening Post. “His voice could travel through the scale of vindictiveness, indifference, politeness, affability and friendliness in a single sentence.” ⁵⁷

Rogers’s journey from an impecunious boyhood to the summit of Wall Street affluence was startling. A sea captain’s son, he spent his adolescence clerking in a grocery store, hawking newspapers, and working on a railroad before setting off with a friend to operate a small refinery outside Oil City. Through a mutual friend, he was introduced to Charles Pratt, who bought his operation and ushered him into the Standard Oil fold. Had he stuck to oil, Rogers would have fared far better in his relations with Rockefeller, who thought he divided both his time and loyalty. From his elegant mahogany office, decorated with small bronze bulls and bears, Rogers hatched deals by the dozen, forcing reporters to work full-time to track his machinations. At one point, he became the veritable czar of Staten Island, controlling its trolleys, railroads, ferries, and electric and gas companies. In 1884, he and William Rockefeller formed the Consolidated Gas Company to provide gas to Brooklyn, and he also vied with J. Edward Addicks for control of Boston gas.

With his executive flair, Rogers thought he was the ideal candidate to succeed Rockefeller and he was elevated to vice president of the trust in 1890. He therefore bristled when Archbold was tapped for the top spot. The decision was partly a question of style. Rockefeller was irked by Rogers’s gambling and profanity, his strutting in public and mingling with high society. Rockefeller also favored Archbold because he was wedded to Standard Oil business, whereas Rogers was often distracted by other interests. Rogers sometimes bullied Standard Oil subordinates to starve his gas competitors of needed oil, even if this hurt Standard profits—a cardinal sin in Rockefeller’s view.

The flash point in the feud between Rockefeller and Rogers came in 1899 when James Stillman, William Rockefeller, and Rogers acquired secret control of Anaconda Copper of Butte, Montana, a mining venture formerly owned by Senator George Hearst. They made the purchase with a $39 million loan from National City Bank. They then turned around, restyled the new holding company Amalgamated Copper, and fobbed it off on a gullible public for $75 million, retiring the $39 million loan and pocketing a $36 million profit. Rockefeller was incensed by the issuance of so much watered stock, which gave him a chance to feel self-righteous when his own virtue was under attack. The new company was floated by Stillman and National City Bank, and both William and Rogers exploited their Standard Oil connections to stoke a speculative fever.

To execute this deal, Rogers made the mistake of inviting a sharp-eyed Boston stockbroker named Thomas W. Lawson into the project. Starting in July 1904, Lawson published a tell-all account in Everybody’s magazine that was later collected into a classic volume entitled Frenzied Finance.The most melodramatic potboiler in American financial history, the book opened with this histrionic dedication: “TO PENITENCE: that those whose deviltry is exposed within its pages may see in a true light the wrongs they have wrought—and repent.”⁵⁸ Describing himself as a mere “neophyte in crime,” Lawson gave his exposé a confessional note: “I have unwittingly been made the instrument by which thousands upon thousands of investors in America and Europe have been plundered.”⁵⁹

The gist of his indictment was that the public paid two-thirds of the purchase price for Amalgamated Copper while Rogers and his comrades took two-thirds of the stock. At the time, Lawson noted, Standard Oil was considered “the greatest power in the land,” and its supposed involvement had stimulated a buying mania.⁶⁰ At the subscription deadline on May 4, 1899, mobs had formed outside National City Bank, and four burly policemen had to shut the doors against these disappointed investors. With the offering five times oversubscribed, Rogers handed out preferred allotments to favored politicians. Rogers and William Rockefeller had lured investors with the promise of their own involvement, but they dumped stock soon after it was issued. Lawson’s character sketches were as memorable as his revelations about the syndicate’s methods. Oddly, he expressed affection for William Rockefeller, whom he portrayed as solid, laconic, and far more trustworthy than Rogers. In Henry Rogers, he found his true protagonist, a mutable man of violent extremes, an actor of genius who got lost in the many roles he shuffled:

Yet away from the intoxicating spell of dollar-making this remarkable man is one of the most charming and lovable human beings I have ever encountered, a man whom any man or woman would be proud to have for a brother. . . . Once he passes under the baleful influence of “The Machine,” however, he becomes a relentless, ravenous creature, pitiless as a shark, knowing no law of God or man in the execution of his purpose.⁶¹

By liberally splashing the names Rockefeller and Standard Oil across his pages, Lawson made it seem as if John D. had formed a conspiratorial trio with Rogers and William. At one point, he said more truthfully, “It was the first venture of size these two strong wheelmen [Rogers and William] of ‘Standard Oil’ had undertaken without the cooperation of John D. Rockefeller, and it appeared that he was considerably worked up over the public hubbub, and so opposed to the whole Amalgamated affair that nothing short of a great success could justify his subordinates’ temerity.”⁶² In a footnote, Lawson further conceded that Rockefeller never put a dime into the Amalgamated flotation. Nevertheless, the general public came away with the impression that John D. was pulling the strings.

At one point, Lawson quoted Rogers’s views on the merits of cartels versus competition: “No man has done his business properly who has missed a single dollar he could have secured in the doing of it. . . . It is one of the first principles Mr. Rockefeller taught me; it is one he has inculcated in every ‘Standard Oil’ man, until today it is a religion with us all.”⁶³ While Rogers was talking in general terms, it again left the impression that John D. lurked somewhere behind the copper trust.

Had he not been unfairly implicated, Rockefeller might have enjoyed the rebuke delivered to Rogers. When the Lawson series began, Junior rushed him a copy, declaring, “I think you will be well repaid for reading this article, although it seems to be written in a bitter, vituperative, sensational manner.”⁶⁴ Any such satisfaction, however, paled before the sense that he had been unjustly slandered. “They said I owned copper stock—that Boston man said it— when as a matter of fact it belonged to my partners and I had nothing to do with it,” he was still seething years later. “It was not pleasant to sit still and take all the abuse and not hear one word of explanation from them.”⁶⁵ Rockefeller suffered in silence, knowing that if he spoke up he would have to repudiate his brother. After the Lawson series, John D. and Rogers saw each other only twice during the next five years.

In early 1907, Rockefeller took revenge against Rogers at a meeting of Standard Oil’s board of directors. After investing millions of his own money in the Virginia Railway, a coal-carrying railroad in Virginia, Rogers could no longer carry the debt and sought relief from Standard Oil. Spying his chance to cut Rogers down to size, Rockefeller told his partners, “Gentlemen, we should not as an organization become involved in other corporations or side issues. We are making money and success as an oil corporation and we should confine our efforts to Standard alone.” When a vote was taken, Rockefeller prevailed, and Rogers grew so enraged that he slammed his fist on the table, threatening to sell every share of Standard Oil stock he owned. To this, Rockefeller placidly replied, “What is your price?” When Rogers named it, Rockefeller rejoined, “I will meet you here with a certified check tomorrow at 10.” The next day, in an incalculable blunder, Rogers handed over his block of Standard Oil stock to Rockefeller, surrendering in a moment of pique a vast fortune in future dividends and appreciation.⁶⁶ As we shall see shortly, Rockefeller might have had more than the Lawson series on his mind, for he thought that Rogers had played a treacherous trick on him by meeting with Ida Tarbell.

Posterity has received another portrait of Henry H. Rogers, and, given the power of the pen that drew it, it has been an imperishable one. Something of a literary man, Rogers had long admired Mark Twain and read his books aloud to his children. “If I ever meet that man,” he once commented, “I’d like to do something for him.”⁶⁷ He thus responded with alacrity in 1893 when Twain’s friend Clarence Rice asked if Rogers would meet the author at the Murray Hill Hotel to discuss the bankruptcy of Twain’s publishing house, which was staggering under heavy debts. The two men, who had met on a yacht two years before, were both legendary raconteurs and wits and developed an instant rapport. Rogers decided to mount a rescue effort and the next morning wrote out a check for eight thousand dollars. Taking Twain’s finances in hand, he kept Twain’s creditors at bay and rallied his spirits, inviting him along with Archbold to prizefights at the New York Athletic Club. With canny foresight, Rogers insisted that Twain retain all his copyrights, “a service which saved me and my family from want and assured us permanent comfort and prosperity,” Twain said later.⁶⁸ Under Rogers’s tutelage, Twain invested his royalties wisely and paid off his debts. Awash with gratitude, Twain refused to publish Henry Demarest Lloyd’s Wealth Against Commonwealth.

A friend of infinite tact, Rogers endeared himself to Twain as much by the manner as the substance of what he did. “By no sign, no hint, no word did he ever betray any consciousness that I was under obligations to him,” Twain wrote. “I have never been so great as that, and I have not known another who was.”⁶⁹ Their friendship survived Twain’s financial crisis, and Rogers later negotiated lucrative book contracts for Twain, who became a frequent guest aboard Rogers’s steam yacht, the Kanawha. (During one cruise, Twain composed his sketch “The Loaves and the Fishes,” in which he argued that the true miracle of the biblical story was not the multiplication of bread and fishes but that twelve disciples served five thousand people and lived to tell the tale.) When Rogers was devastated by Lawson’s vitriolic portrait in Frenzied Finance, Twain supplied favorable anecdotes about him for a profile in The World’s Work, a magazine published by Frank Doubleday. For Rogers, Twain reserved his highest encomium: “He is not only the best friend I have ever had, but is the best man I have known.”⁷⁰

A frequent visitor to 26 Broadway, Twain loved to smoke cigars, read, and lounge on the sofa in Rogers’s office while his friend entertained a steady stream of visitors. He had no concerns about Rogers’s reputation. “He’s a pirate all right,” Twain said, “but he owns up to it and enjoys being a pirate. That’s the reason I like him.” ⁷¹ For a time, Twain turned 26 Broadway into his downtown clubhouse and sometimes lunched with Junior. “I got down here to the Standard Oil in time for late luncheon with young Rockefeller—it is the best homemade table in the North,” Twain once told his wife.⁷² He formed a favorable opinion of Junior as “a plain, simple, earnest, sincere, honest, well-meaning, commonplace person, destitute of originality or any suggestion of it.”⁷³ A defender to the end, Twain later blamed the muckrakers and Teddy Roosevelt for Standard Oil’s infamy. That the trust had scarcely had a strike in more than four decades proved to him that “the Standard Oil chiefs cannot be altogether bad or they would oppress their sixty-five thousand employees from habit and instinct, if they are so constituted that it is instinctive with them to oppress everybody else.”⁷⁴

Another perceptive author developed intense affection for Rogers. In 1896, the sixteen-year-old Helen Keller, who was blind and deaf, met him and Twain at a gathering to raise money for her future education. Even before the meeting, Twain laid the groundwork, telling Mrs. Rogers, “It won’t do for America to allow this marvelous child to retire from her studies because of poverty.”⁷⁵ Rogers paid for much of Helen Keller’s education at Radcliffe College, which she gratefully acknowledged. “That I haven’t missed my small part of usefulness in the world, I owe to Mr. Clemens and Mr. Rogers,” she wrote.⁷⁶ After graduating cum laude, Helen stayed in touch with Rogers and poignantly dedicated her book The World I Live In to “My Dear Friend of Many Years.”⁷⁷Before he died, Rogers established an annuity that gave her lifelong security. Helen Keller’s teacher, Anne Sullivan, later revealed that “Mr. Rockefeller [ Junior] and his father have been interested in Helen most of her life.” ⁷⁸ Unlike the help from Rogers, the Rockefeller money was given anonymously.

In the 1890s, Rockefeller stumbled, almost by accident, into owning most of the iron ore on the Mesabi Range, the last business project that he executed on a monumental scale.

This legendary investment began as another blunder bequeathed by his bumbling former advisers, Colby and Hoyt. When Gates first examined the iron-ore properties the two had bought in Cuba, Michigan, and Wisconsin, he thought they were worthless holes. Colby and Hoyt had, however, unearthed one promising entity: the Minnesota Iron Company. Gates was impressed on a westward journey by the potential of the Mesabi Range, which contained a broad band of iron ore laid across a 120-mile strip in northern Minnesota. Though it held out hope of being the richest such vein ever found in North America, its commercial utility had not been demonstrated. Unlike hard rock dug from underground mines and fed into blast furnaces, the Mesabi ore was fine, powdery stuff that either clogged furnaces or blew out their chimneys, scattering dust across the countryside. On the other hand, it lay close to the surface and in such abundance that it could be scooped out by steam shovels at a fraction of the expense of underground mines.

Among the pioneers in Mesabi ore were the backwoods Merritt family. These so-called seven men of iron—four brothers and three nephews—borrowed recklessly, snapped up tremendous tracts of land, then launched construction of a railroad to carry the ore to Lake Superior. When the 1893 panic savaged iron prices, however, they faced a severe cash squeeze. The atmosphere in Duluth grew incendiary as workers with drawn pistols forced their way into the office of the Merritts’ railroad to demand payment of overdue wages.

In rescuing the Merritts, Rockefeller reenacted his old pattern of swooping down, fortified with cash, on distressed properties and seizing a commanding position. As with the malodorous Lima oil, he wagered that the Mesabi ore would someday be of value—even as Andrew Carnegie and his experts gleefully scoffed at this preposterous idea. As Carnegie’s right-hand man, Charles Schwab, said of these naysayers, “They couldn’t understand how [Rockefeller], without knowledge of the iron business, could invest money in ores that were useless—at least for a long time to come.” ⁷⁹To which Rockefeller retorted tersely, “It was a surprise to me that the great iron and steel manufacturers did not place what seemed to be an adequate value on these mines.”⁸⁰ He believed that, like the early days in oil, the steel industry was on the verge of overproduction and would soon fall prey to suicidal competition unless stabilized by strong owners. An expert in the strategic importance of transportation, he avidly eyed the extensive rail and dock facilities controlled by the Merritts.

When Rockefeller advanced money to the Merritts in the panic summer of 1893, he was one of the few people who could have saved them. Naively, he expected to disburse a modest $100,000, and he never imagined that the Mesabi project would tax his colossal resources and consume eight years of his time. In exchange for his investment, Rockefeller negotiated a deal with the Merritts to set up a holding company, the Lake Superior Consolidated Iron Mines, which would combine the Merritts’ rail and mining assets and the rather mediocre mining properties cobbled together by Colby and Hoyt. The idea was that the Merritts would run the company and employ Rockefeller’s cash infusion to finish the stalled railroad. At first, Rockefeller owned only a fifth of the stock, but he exercised final control through his first mortgage bonds, which enjoyed a lien on the entire company in the event of a default.

Given their intertwined fates, it seems odd that Rockefeller met the head of the Minnesota family, Leonidas Merritt, on only a single occasion and then briefly in June 1893. Gates tried to shield Rockefeller from such contacts, but Merritt warmly insisted that he wished to shake his savior’s hand. When they met at 26 Broadway, the meeting lasted five minutes, and Rockefeller was the pattern of affability. He touted the virtues of the Mesabi venture then turned to the Minnesota weather. After a few more pleasantries, he politely excused himself and never saw any of the Merritts again. Afterward, Gates made it clear that his boss would now withdraw behind his customary screen. “In talking to me,” he told Leonidas Merritt, “you are talking to Mr. Rockefeller.” ⁸¹ Even by his own extremely reclusive standards, Rockefeller was remarkably aloof during his eight-year fling in the iron business. Though he became chief landlord of the Mesabi Range, he set foot on its slopes only once and that was long after he had disposed of his properties.

In the autumn, Rockefeller’s goodwill toward the Merritts ebbed. As their notes matured, they frantically pressed Gates for cash, and Rockefeller reluctantly obliged them with loans. Gates matured as a businessman during this crisis, and Rockefeller bestowed exceptional authority on him. When Gates visited Duluth in September, Rockefeller confided to Cettie, “[Gates] reports progress daily, and has one hundred thousand dollars in his pocket to use at his discretion.”⁸² By October, the initial loan had burgeoned to nearly $2 million, with no guarantee that the Mesabi ore would ever demonstrate commercial value. It all seemed a gamble gone hideously wrong. Pacing the Forest Hill porches, Rockefeller later remembered the harrowing, sometimes daily emergencies forced upon him by the uncouth Merritts, who kept their securities stuffed in their pockets: “I had to loan my personal securities to raise money, and finally we were compelled to supply a great deal of actual cash, and to get it we were obliged to go into the then greatly upset money market and buy currency at a high premium and ship west by express to pay the laborers and the railroad and to keep them alive.” ⁸³

In early 1894, still burdened by debt, the Merritts were forced to offer Rockefeller ninety thousand shares of Consolidated stock at ten dollars a share. As with Standard Oil, Rockefeller kept adding to his Consolidated holdings, the ten-dollar price being on a par with his other purchases at the time; the Merritts, though, vociferously claimed they had been swindled. A year later, they had to forfeit to Rockefeller an option on another 55,000 shares of Consolidated stock, surrendering to him complete control of the company. With fullthroated passion, Gates urged Rockefeller to expand his investment. “It is, in my opinion, the opportunity of a lifetime, one of those opportunities, the seizing or failing to seize, which marks the difference between success and failure in life.”⁸⁴

During the next few years, as steelmakers found ways to adapt their furnaces to the bargain-priced Mesabi ore, Consolidated stock rose to stratospheric heights. In a paroxysm of frustrated rage, the Merritts demonized the man they had earlier heralded as their savior. In a rancorous suit filed against Rockefeller in federal circuit court in Duluth, they portrayed themselves as innocent lumberjacks fleeced by the eastern mogul. Fearing a biased local jury, Rockefeller retained a Minnesota newspaperman to counteract local hostility toward him and even stepped up his Baptist-missionary donations in the state. As Rockefeller feared, the Duluth jury reached a verdict in favor of the Merritts, though it was overturned on appeal. The whole feud was finally settled out of court: Rockefeller paid $525,000 to the Merritts, who publicly retracted their charges. Of this settlement, Rockefeller commented sarcastically, “We settled, paid money, rather than submit to larger robbery by the twelve just and good men, as we could not get to a higher court.”⁸⁵Stung by the controversy, Gates was still defending his behavior almost twenty years later in a short polemical pamphlet, The Truth About Mr. Rockefeller and the Merritts, which he mailed out gratis to ten thousand people.

While Rockefeller and Gates were irked by the Merritts’ ingratitude, they were not entirely blameless. The Merritts alleged that Rockefeller had inflated the value of the mining properties he contributed to Consolidated, a charge that seems substantiated by Gates’s own papers. In early 1893, he had written two letters to Frank Rockefeller, expressing shock at the high prices Colby and Hoyt had paid for the mines. He summed up their value as follows: “Whatever induced Colby Hoyt & Co. to form syndicates to pay such enormous figures for these worthless properties, I cannot understand. I mean to keep pegging along at it from time to time until the whole thing comes out.”⁸⁶

Having acquired several million tons of iron ore and a railroad to cart it off, Rockefeller was now stymied by a group of Lake Superior shippers who would lease him vessels only at extortionate rates. To end the deadlock, Rockefeller again recruited a talented man from the enemy ranks, Samuel Mather of Cleveland, a son-in-law of Amasa Stone. On one of those historic occasions when the curtain parted fleetingly to reveal the wizard working the levers, Rockefeller held a cordial, ten-minute, predinner chat with Mather at West Fifty-fourth Street. The visitor left with a three-million-dollar order to build twelve ore-carrying ships, steel monsters that would surpass in size anything ever floated on the Great Lakes. After shaking hands with Rockefeller, Mather never saw him again.

Given the large number of ships that he had to build, Mather figured that the shipyards would gang up and gouge him, so he pretended that he needed only one or two. After the contractors submitted their bids, they were stunned to discover that they all had contracts. The operation of this fleet required another engineering feat: the creation of specially constructed docks on Lake Superior with long railroad trestles extending hundreds of feet into the water. As the lake’s shipping cartel watched in consternation, the Rockefeller operation began to load ore at the stupefying rate of ten thousand tons every six hours. Where the schooners had charged $4.20 a ton, Rockefeller’s operators carried their mineral cargo at a cost of 80 cents a ton.

When Mather declined to manage the fleet, Rockefeller asked Gates to suggest an experienced firm to pilot the ships. “No,” said Gates, increasingly showing flashes of a quirky independence, “I do not know of any firm to suggest at the moment, but why not run them ourselves?” Taken aback, Rockefeller replied, “You don’t know anything about ships, do you?” Gates confessed not but nominated his uncle LaMont Montgomery Bowers as a candidate. “He lives up the state, and never was on a ship in his life. He probably wouldn’t know the bow from the stern, or a sea-anchor from an umbrella, but he has good sense, he is honest, enterprising, keen, and thrifty.”⁸⁷ Having often hired people based on general ability, not specific skills—Gates himself being a prime example— Rockefeller acceded to the choice.

Bald and well-tailored, Bowers had an extensive business résumé, ranging from selling soap to running a real-estate agency in Omaha to selling groceries in upstate New York. Much to Rockefeller’s delight, he not only ably commanded but considerably expanded the fleet. Mostly under the aegis of the Cleveland-based Bessemer Steamship Company, Rockefeller acquired fifty-six steel vessels, the largest fleet on the Great Lakes and the world’s biggest assemblage of ore carriers. His position in lake shipping was so unassailable that he could dictate rates on Lake Superior, much as they had been dictated to him a few years earlier—a situation that galvanized Andrew Carnegie into organizing the competing Pittsburgh Steamship Company.

Tutored by Gates in the eccentric ways of Mr. Rockefeller, Bowers was told that he must not, under any circumstances, communicate with the boss. Rockefeller never saw the vast majority of ships in his armada. One day, however, Rockefeller dropped by unexpectedly to consult him on a shipping matter, prompting a humorous exchange. “You are making me break the orders I have from your own office, Mr. Rockefeller,” Bowers reminded him. “Oh, Mr. Bowers, I am getting along in years,” Rockefeller replied in his droll, midwestern manner. “I think I may really be allowed a little liberty by my office!”⁸⁸ Bowers’s success in managing the fleet was perhaps unfortunate, for it led directly to his later assignment to a Rockefeller-controlled mining venture in the Rocky Mountains called Colorado Fuel and Iron, where he would bring lasting disgrace to the Rockefeller name.

Rockefeller’s success on the Mesabi Range precipitated a clash between America’s two wealthiest individuals, John D. Rockefeller and Andrew Carnegie. In their approach to business, the two men had often mirrored each other, stressing attention to detail, ruthlessly slashing costs, and keeping dividends low. Both had struggled with their own unacknowledged avarice, pioneered in philanthropy, and prided themselves on being friends of the working man. Yet they never seemed to get along. Each Christmas, they perfunctorily exchanged gifts, Rockefeller giving Carnegie a paper vest, while Carnegie sent the teetotaler excellent whiskey. In letters to his colleagues, Carnegie often struck a jeering tone toward Rockefeller, refusing to concede his business acumen, and he suffered under the misapprehension that Rockefeller had conspired with Standard Oil colleagues in the Mesabi venture. Upon first hearing of his pact with the Merritts, Carnegie lectured his steel-company board, “Remember Rockafellows [sic] & Porter will own the [railroad] and that’s like owning the pipe lines—Producers will not have much of a show. . . . I don’t think Standard people will succeed in making ore a monopoly like oil, they have failed in every new venture and Rockefeller’s reputation now is one of the poorest investors in the world.” ⁸⁹

Much too patronizing toward Rockefeller, Carnegie had seriously misjudged developments in the ore business. Having moved decisively to control coke and coal supplies, he assumed that ore would always remain cheap and plentiful and flatly told colleagues that their “brilliant and talented young partners” should stay clear of that business.⁹⁰ When a colorful Pittsburgh promoter, Henry Oliver, tried to interest Carnegie in a joint venture with the Merritts, he responded with a tongue-lashing: “If there is any department of business which offers no inducement, it is ore.” ⁹¹ Luckily, Carnegie’s subordinates overruled him and took a stake in the Mesabi ore. As a result, Carnegie Steel was not entirely excluded from the rush to secure properties in northern Minnesota.

Having failed to move aggressively, Carnegie looked on impotently as Rockefeller applied to iron ore lessons he had learned in oil, such as controlling an industry through transportation and demoralizing competitors with prices too low for them to match. Two industry trends finally compelled Carnegie to broker a deal with Rockefeller. As mergers consolidated the steel industry, it became essential to pin down sure sources of supply. And as new furnaces were equipped to use the dirt-cheap Mesabi ore, it developed into the industry standard. By 1896, the press buzzed with speculation that Rockefeller would build a huge steel mill in Cleveland or south Chicago, forge a steel trust on the Standard Oil model, and go head-to-head with Andrew Carnegie. Meanwhile, Rockefeller poured another nineteen million dollars into the Mesabi Range to buttress his railroad and shipping operations.

It vexed Carnegie that Rockefeller, an oilman, had possessed such superior foresight in the iron-ore business. In his private correspondence, he vented his frustration in petty digs, referring to him derisively as Rockafellow and later on as Wreckafellow. In December 1896, a humbled Carnegie at last consented to a sweeping deal. He promised to consume the entire output of Rockefeller’s chief mines (a minimum of 600,000 tons of ore) at the rock-bottom royalty rate of twenty-five cents a ton. In exchange for this steep discount, however, Carnegie agreed to ship the entire amount plus another 600,000 tons from his own mines over Rockefeller’s railroads and on his vessels. It was the same kind of back-scratching arrangement that Rockefeller had negotiated with the railroads to monopolize the oil industry. To complete their truce, Carnegie pledged to refrain from buying new Mesabi fields or transporting iron ore, while Rockefeller renounced any ambition to construct a steel mill. A generation later, Carnegie still boasted of this deal before a Senate committee. “Don’t you know, it does my heart good to think I got ahead of John D. Rockefeller on a bargain.”⁹²In fact, the bargain had been Carnegie’s belated attempt to redress his own error.

Small competitors found it impossible to survive the union of the largest producer and largest consumer of iron ore, and Carnegie and Rockefeller profited smartly. As with oil, ore prices skidded lower, bankrupting marginal producers and bolstering the Rockefeller-Carnegie alliance. As the decade closed, ferocious competition broke out for the remaining Mesabi properties. The price of Lake Superior Consolidated stock that Rockefeller had bought for $10 in 1894 levitated to $60 in 1899, $70 in 1900, then a staggering $100 in 1901.

America now stood on the threshold of an era of economic consolidation that saw trusts spread to many industries. What Rockefeller had accomplished in oil a generation earlier was now being imitated in steel, copper, rubber, tobacco, leather, and other products—much to the alarm of many voters. The ideological lines were drawn sharply in the 1896 presidential election. The Democratic candidate, William Jennings Bryan, an eloquent orator adored by socialists, populists, and silverites, vied with former Ohio governor William McKinley, a staunch advocate of tariffs, trusts, and hard currency. Apprehensive about a Bryan presidency, businessmen transformed the McKinley campaign into a crusade against trustbusting infidels. Standard Oil supplied $250,000 to McKinley’s coffers—equal to half of the total Democratic contributions—and Rockefeller sent another $2,500 to campaign manager Mark Hanna. For a man normally scornful of politicians, Rockefeller displayed unusual passion for McKinley, asserting, “I can see nothing else for us to do, to serve the Country and our honor.”⁹³

The business community reacted to the McKinley victory as if America had been blessedly spared a revolution, a mood summed up in Hanna’s congratulatory telegram to McKinley: “God’s in his heaven—all’s right with the world.”⁹⁴ During the next few years, a new faith arose in business circles about the inevitability and unrivaled efficiency of monopolies. Mark Hanna, now tagged “Dollar Mark” by the press, proclaimed loudly that the Sherman Antitrust Act would never be allowed to thwart this trend in a Republican administration.

Stimulated by the Spanish-American War, the Klondike gold strike, and McKinley’s reassuring presence, the American economy surged ahead in the late 1890s, propelling the United States past all other nations in industrial capacity. In a country that still liked to picture itself as composed of small businesses, huge companies now blanketed markets from coast to coast. As satirist Finley Peter Dunne observed in 1897, “I have seen America spread out from th’ Atlantic to th’ Pacific, with a branch office iv th’ Standard Ile Comp’ny in ivry hamlet.”⁹⁵ Between 1898 and 1902, 198 trusts or giant new corporations were created in coal, sugar, and other industries, prompting a growing backlash. At a Chicago antitrust conference in 1898, William Jennings Bryan drew roars from the faithful when he shouted, “One of the great purposes of government is to put rings in the noses of hogs!”⁹⁶ The McKinley administration, true to its promises, stood guard over the new corporate giants.

The merger wave conferred a new centrality on Wall Street investment houses, for the capital needs of the new trusts dwarfed the resources of small-town banks and private individuals. Only the prestigious Wall Street firms such as J. P. Morgan and Company or Kuhn, Loeb could tap the foreign and domestic capital needed to execute these transactions. Switching their focus from railroad bonds to industrial securities, they forged the new trusts, issued their stock, tucked away shares for themselves, and handpicked their executives. However much reformers deplored the trusts, they excited many investors, who absorbed wave after wave of new issues sponsored by Wall Street. While many Americans quaked before these giant new concerns, many others were trying to figure out how to profit from them.

When J. P. Morgan decided to create a steel trust in late 1900, he knew he would have to tangle with two men who were confirmed cynics about Wall Street: Carnegie, master of the steel mills, and Rockefeller, king of the iron ore. Morgan was worried that Carnegie would diversify into finished steel products and threaten his recently launched Federal Steel Company, while Carnegie feared a reverse maneuver by Morgan. Meanwhile, Carnegie and Morgan were both alarmed by reports that Rockefeller might diversify into steel mills. To avert overbuilding and internecine price wars, Morgan decided to spearhead a new steel consolidation.

Morgan was not thrilled about catering to Rockefeller, who had flouted Wall Street by financing his trust from retained earnings and holding cash reserves equal to those of many banks. He was also well aware of William Rockefeller’s intimacy with James Stillman of National City Bank. When Morgan contemplated a merger with the London house of Barings in 1904, his counterpart, Lord Revelstoke, reported afterward to a partner that Morgan “inveighed bitterly against the growing power of the Jews and of the Rockefeller crowd, and said more than once that our firm and his were the only two composed of white men in New York.”⁹⁷

In many respects, Rockefeller and Morgan were antithetical types, offering a vivid contrast between the ascetic and the sybarite, the Roundhead and the Cavalier. As the chieftain of the Anglo-American financial establishment, the wellborn Morgan, expensively educated in America and Europe, was a consummate insider in the business world. For more than forty years, he had been the chief conduit for British capital that had financed American railroads and industry. Blustery and theatrical, Morgan was impetuous and hot-blooded, cursed with a short attention span. At his headquarters at 23 Wall Street, he often seemed harried, ruling by brilliant snap judgments. Fond of luxury, Morgan inhabited the world of the ultrarich, with their gargantuan cigars, fine port, and oversized steam yachts.

For Rockefeller, Morgan embodied all the sins of pride, luxury, and arrogance. When they first met at William Rockefeller’s Hudson River mansion, they took an instant dislike to each other. “We had a few pleasant words,” noted Rockefeller. “But I could see that Mr. Morgan was very much—well, like Mr. Morgan; very haughty, very inclined to look down on other men. I looked at him. For my part, I have never been able to see why any man should have such a high and mighty feeling about himself.” ⁹⁸ For Morgan, Rockefeller was too dry and prudish, devoid of manly charms and vices. And how could he not grumble at the effrontery of someone who had created a cartel without him?

Nevertheless, both men detested competition as a destructive force, a dangerously antiquated notion. For years, Morgan had arbitrated disputes among railroad presidents, helping them to carve up territories, and his formation of industrial trusts constituted a logical progression in his career. When Judge Elbert H. Gary informed Morgan in early 1901 that Rockefeller’s Mesabi interests had to form part of any steel cartel, Morgan balked. “We have got all we can attend to,” he told Gary. When Gary persisted, Morgan glumly agreed that they had to incorporate Lake Superior Consolidated Iron Mines and Bessemer Steamship into U.S. Steel.

“How are we going to get them?” he asked.

“You are going to talk to Mr. Rockefeller,” said Gary.

“I would not think of it,” said Morgan.

“Why?”

“I don’t like him.”

“Mr. Morgan,” Gary retorted, “when a business proposition of so great importance to the Steel Corporation is involved, would you let a personal prejudice interfere with your success?”

“I don’t know,” said Morgan.⁹⁹

In all likelihood, Morgan’s attitude was a mixture of haughtiness and cowardice, for Rockefeller was one of the few people he could not intimidate. In an act of considerable self-mortification, Morgan asked Rockefeller if he could see him at 26 Broadway. Explaining that he was retired and never went to the office, Rockefeller said he would be happy to receive him at West Fifty-fourth Street. Rockefeller knew the bargaining edge of the last-minute holdout and enjoyed tweaking Wall Street’s foremost banker. Soon after he arrived at Rockefeller’s house, Morgan gruffly asked the price of the ore properties. Rockefeller threw up his hands in mock despair, reminded Morgan that he was retired, and told him to discuss the deal with his twenty-seven-year-old son, “who would undoubtedly be glad” to talk with him.¹⁰⁰ This was a blatant affront, but the banker grudgingly said that Junior should call at his office at Broad and Wall Streets.

Relishing their little game, Senior and Junior stalled in arranging the meeting and very nearly overplayed their hand. Then, on the morning of February 25, 1901, Henry Rogers stopped by Junior’s desk and inquired, “Would you like to go with me to meet Mr. Morgan?”¹⁰¹ Sensing that the time had come to put Morgan out of his misery, Junior accompanied Rogers that afternoon. Now it was Morgan’s turn to behave in a condescending manner. When Rogers and Junior entered his office, he was consulting with his partner Charles Steele and did not look up from his desk. When Steele left, Morgan finally lifted his eyes, and Rogers introduced Junior. Morgan complained about the delay and said matters had to be wrapped up within twenty-four hours. Junior explained that it had taken time to appraise the properties. “Well,” Morgan barked, glowering at Junior, “what’s your price?”

If Morgan thought he was dealing with a choirboy, he was soon undeceived. Showing an unexpected pluck that nobody, not even Junior, knew was there, he shot back, “Mr. Morgan, I think there must be some mistake. I did not come here to sell. I understood you wished to buy.”¹⁰² He asked Morgan to name a price that his father might accept or decline. For Junior, it must have been a revelatory moment: He was sparring with Wall Street’s potentate. When Morgan stepped out briefly, Henry Rogers, flabbergasted, advised Junior to soften his tone, but Junior said he meant every word and that he and father were “absolutely indifferent about coming into the consolidation.”¹⁰³ The tense standoff ended in a compromise: Morgan and Junior agreed that Henry Clay Frick would serve as an honest broker to establish a mutually agreeable price. As Junior was leaving, he asked Morgan whether his father might take a share in the steel syndication. Taking another jab, Morgan replied that the offering was oversubscribed and that he had delayed too long in submitting his request. Since Morgan had already set aside five-million-dollar allotments for William Rockefeller and James Stillman, he must have known that John D. would be stung by this exclusion.

When Junior returned to 26 Broadway, he immediately wrote to his parents, describing Morgan’s brusqueness and his response. “The whole thing suggested the final sweep-up of the room and we seemed to be the crumbs around the edge which of course must be swept up and expect to be swept up and which it was most annoying to find at this late date still on the floor.” ¹⁰⁴ His parents were overjoyed that Junior had stood up to Morgan. His father, reading the letter aloud to Cettie, paused every few sentences to exclaim, “Great Caesar, but John is a trump!” Cettie—every inch the Spartan mother—was no less amazed. “Indeed you were masterly in the conduct of the negotiation,” she wrote back, “and you are so quiet and unassuming in both words and manner. Control of self wins the battle, for it means control of others.”¹⁰⁵ The ecstatic response of Junior’s parents perhaps hints at relief from unspoken doubts, as if they both had wondered whether he could meet the demands imposed by the family fortune.

After the meeting, Morgan urged Frick to visit Rockefeller at his Pocantico estate. To avoid publicity, Frick took a carriage up after dark, and the coachman waited at the front gate while Frick and Rockefeller huddled behind some shrubbery. “Wouldn’t it have made quite a story for the newspapers—our skulking around in the bushes in the dark?” Rockefeller later mused.¹⁰⁶ As usual, he was wary and distant, not tipping his hand. “As my son told Mr. Morgan, I am not anxious to sell my own properties. But as you surmise, I never wish to stand in the way of a worthy enterprise. I do frankly object, however, to a prospective purchaser arbitrarily fixing an ‘outside figure,’ and I cannot deal on such a basis.” ¹⁰⁷ When Frick finally told him that Judge Gary’s figure for Rockefeller’s ore properties was five million dollars below its true value, Rockefeller said curtly, “Then, I will trust you to represent me.”¹⁰⁸ With his usual minimalist art, Rockefeller had concluded this epochal meeting in about fifteen minutes. On February 28, when Gates and Junior sat down with Frick at 26 Broadway, they maintained the party line that Rockefeller was not eager to sell. Just two weeks later, Rockefeller’s papers show a startling development that altered the course of the negotiations. Gates had commissioned new maps of potential ore deposits along the Mesabi Range that disclosed for the first time the likely existence of undiscovered mines. As Junior interpreted this catastrophic news to his father, “We had supposed up to date that we now controlled practically all of the ore reserve of the range. In view of this new map, the information of which is known only to ourselves, we are more inclined to make some trade.”¹⁰⁹ After this, the Rockefellers subtly softened their negotiating posture, aided by a rapport between Junior and Frick so strong that Junior was later made an executor of Frick’s estate. “I have met no one in business whom I have been more strongly drawn to and have greater confidence in than Mr. Frick,” Junior told his father in mid-March.¹¹⁰ The talks were also assisted by Rockefeller’s declared resolve not to extract the last penny so as “to leave a favorable and friendly impression on Mr. Morgan,” as Junior put it.¹¹¹

For all that, Rockefeller reaped a fantastic profit in the creation of U.S. Steel, the first billion-dollar corporation and the first trust to overtake Standard Oil in size. The Consolidated stock originally bought for $10 a share in 1893 now fetched the equivalent of $160 in cash in 1901. Gates and Junior made an agreement with Frick that the Rockefellers would receive $80 million for the Consolidated stock—half in the form of U.S. Steel common stock and half in preferred—and another $8.5 million for the fifty-six lake vessels of the Bessemer fleet. Gates estimated that $55 million of the $88.5 million was clear profit. The U.S. Steel deal swelled Rockefeller’s net worth beyond $200 million ($3.5 billion today) and made him the second-richest man in America. On the other hand, he fell further behind Andrew Carnegie, who had received $300 million in bonds as his portion for the sale of Carnegie Steel. But this moment marked the zenith of Carnegie’s wealth, whereas Rockefeller was just warming up.

Having overseen the Mesabi operation, Gates was not shy about demanding his due. When he delivered an oral report on the $55 million profit, Rockefeller saluted his effort and murmured quietly, “Thank you, Mr. Gates—thank you!” Gates fixed Rockefeller with a steady, quizzical look. For a long time, he had shown an almost filial deference toward his boss, but he was now well aware of his worth. Seizing the moment, he had the courage to say, “ ‘Thank you’ is not enough, Mr. Rockefeller.” Forced to reconsider, Rockefeller evidently came up with a large enough bonus, although Gates never revealed the exact amount.¹¹² Notwithstanding his veneration of his mentor, Gates griped for years about his compensation and sometimes stooped to nasty jokes about Rockefeller’s avarice.

For a time, it seemed the steel trust might effect a rapprochement between Rockefeller and J. P. Morgan. As one of the largest U.S. Steel stockholders, Rockefeller demanded and won board seats for himself and his son. Yet financial differences quickly soured his relations with Morgan. Rockefeller was upset by U.S. Steel’s extravagant dividends, even though he was a major recipient. In 1904, to register his protest, he resigned from the board, never having attended a meeting, and left Junior behind to represent him. By 1911, the Rockefellers liquidated the last of their U.S. Steel holdings. During the next two years, Morgan enjoyed an unspoken revenge by continuing to assign Rockefeller inferior positions in the weaker bond syndicates while excluding him from the sounder issues. Gates was always mystified by Morgan’s success. “He seems to be a man incapable of calm and reasoning reflection; the victim of a succession of unreasoning impulses.”¹¹³

Before leaving Rockefeller’s exploits in the realm of iron ore, we should mark a prominent casualty of this adventure: his already troubled relationship with brother Frank. During the 1890s, Frank remained a vice president of Standard Oil of Ohio and took home a generous salary, despite his extended absences from Cleveland and a scornful indifference to business. As irascible as ever, he wrote testy letters to Standard Oil colleagues, forcing John and William to mediate. Frank was devoured by bitterness and often lapsed into violent, ungovernable rages that were aggravated by his alcoholism.

Frank could never curb his compulsive gambling. Wanting to emulate the big killings of his brothers, he was tempted again and again into foolhardy ventures. With the best intentions, John fed Frank’s gambling addiction, even though Frank often did not realize the source of the loans. John and William continued to carry a $180,000 mortgage on his Kansas ranch and bailed him out when his crops failed in 1893. This generosity only highlighted Frank’s chronic dependency and further embittered him. In extending loans to Frank, John followed his usual strict accounting rules, which he always applied in a compulsive, inflexible fashion. Nevertheless, when it suited his convenience, Frank was offended by his brother’s refusal to compromise on his business principles.

Frank’s best friend at the time was a bluff Irishman named James Corrigan. They hunted together, maintained adjoining estates in Ohio, and often invested together. A handsome man with a heavy jaw and bull neck, Corrigan was a popular, pugnacious Cleveland businessman. In the early 1880s, he had sold several refineries to John D., who had given him his first job and counted him as a friend. As payment for one refinery, Rockefeller gave Corrigan 2,500 shares of Standard Oil. With this money, Corrigan bought a half interest in the Franklin Iron Mining Company in the Lake Superior region of Wisconsin—the investment that first piqued Rockefeller’s interest in the Mesabi Range. John loaned Frank the money to purchase the other half, keeping the mining stock as collateral. Not without reason, John D. later ruefully stated, “Neither my brother nor Corrigan had any reason to complain of my conduct. I made James Corrigan his fortune. I made my brother his fortune.”¹¹⁴

When the 1893 panic struck, John D. behaved in exemplary fashion. He and William agreed to cancel their mortgage on Frank’s Kansas ranch. Corrigan, meanwhile, took more loans from John D., secured by his Standard Oil stock, bringing the total to more than $400,000; Frank ran up debts to his brother in excess of $800,000, or $13 million in contemporary dollars. By these actions, John D. acquired considerable power over the two men, for he had retained as collateral their Franklin mining stock, Corrigan’s Standard Oil shares, and Corrigan’s share in a lake shipping fleet.

As the panic deepened, Rockefeller refused to release collateral despite Corrigan’s pleas that he could use his lake vessels to raise additional money. In October 1894, Corrigan tried to borrow another $150,000 from John without posting extra collateral. George Rogers tersely informed Corrigan that “Mr. Rockefeller had advanced all he ought to on the Franklin mine property and that unless he could offer some further collateral, I felt very sure Mr. Rockefeller could not help him out.”¹¹⁵ When Corrigan stopped making interest payments altogether, Rockefeller carried him for another year before calling the loan. He offered to pay Corrigan $168 or $169 per share for his 2,500 shares of Standard Oil, which would yield enough to retire his $400,000 in debt.

To gauge the value of this stock, Corrigan’s attorney asked Rockefeller to provide detailed information about the trust’s stocks, assets, investments, and earnings during the previous five years. Rockefeller refused to publicize such sensitive information. “The securities to which you refer have a well-known market value, which is published in the newspapers every day,” Rockefeller told the attorney.¹¹⁶ At the time, few companies published annual reports. Yet Frank interpreted his brother’s behavior in darkly conspiratorial terms. Several years later, he told Ida Tarbell that when he met with him to plead for more time for Corrigan, John said, “Frank, persuade Corrigan to sell me his Standard Oil stock. He is in a tight place. He can never get out and I might as well have the stock as anybody.”¹¹⁷ Frank took this to mean that John was bent upon destroying Corrigan to obtain his Standard Oil stock, and Frank advised his friend not to sell under any circumstances.

Corrigan finally sold his Standard Oil stock to John D. at $168 a share in February 1895. Rockefeller paid the market price, roughly equivalent to what he paid his Standard colleagues for their stock that month. One Standard executive, Joseph Seep, said that Rockefeller did not even keep Corrigan’s stock but distributed it among his colleagues. Nevertheless, before a month had elapsed, the stock zoomed to $185 and then much higher. Instead of blaming bad luck, Corrigan decided he had been swindled and in April 1895 wrote Rockefeller to that effect. When he received the letter, Rockefeller was stunned. “Is it possible that ‘Jim Corrigan’ should be willing to write me such a letter,” he wrote back, “after my uniform kindness to him for a lifetime?” ¹¹⁸ Some years later, possibly with the Corrigan affair in mind, Rockefeller lectured his son, “John, never lend money to your friends; it will spoil your friendships.”¹¹⁹

Rockefeller had been neither Santa Claus nor Scrooge but simply a hard, un-sentimental lender. It is true that he had more than enough collateral to cover Corrigan’s $400,000 in loans, but he had exercised patience and carried Corrigan for a year after payments ceased. Gates even complained that Rockefeller was coddling him. Corrigan waited until July 1897 before filing suit, saying it had taken that long to serve a subpoena on Rockefeller. The delay was more likely due to the continuing rise in Standard Oil stock, which had jumped to nearly $350 a share because of Archbold’s generous dividend policy. Corrigan issued an ultimatum: Rockefeller could either give back his Standard shares or pay him $500 a share. The court-appointed arbitrators in the case, given rare access to Standard Oil’s confidential books, decided that Rockefeller’s conduct had been blameless. Even though Frank hotly insisted that John had cheated his best friend, he continued to touch his brother for money and a year later borrowed another $130,000. Still unaware of the true depth of Frank’s bile, John jotted down a memo for his files in February 1896, saying of Frank, “He is all very nice and pleasant and I think appreciates that I am doing things for him.”¹²⁰

After the Corrigan case, Frank began to seem deranged on the subject of his brother. He began to materialize at 26 Broadway or on the broad veranda at Forest Hill, boisterously demanding to see him. Because of the pending Corrigan suit, John would receive him only with a secretary present to record what he said. In 1898, John told William that Frank was now threatening him and asked him to intercede. John then had some long talks with a drunken Frank, who made extremely abusive remarks about him. Frank felt that his brother was so rich that he should forgive all his loans. When John differed, the breach between them widened. During their last meeting, as they walked down the street together, John said to him, “Frank, I’ll always be a brother to you.”¹²¹ They never spoke to or set eyes on each other again.

Nursing an obsessive resentment, Frank decided to make a symbolic break with his brother. When John erected the towering obelisk at the family plot in Cleveland’s Lake View Cemetery in 1898, Frank had the caskets of his two children who had died in childhood disinterred from the family plot and transferred to another part of the cemetery. “Not one of my blood,” he declared, “will ever rest upon land controlled by that monster, John D. Rockefeller.”¹²² Soon thereafter, Frank, his wife, and three daughters withdrew from the Euclid Avenue Baptist Church.

Even after these unforgivable insults, John let Frank represent him on several corporate boards. While Frank’s salary was reduced from $15,000 to $10,000 for his sinecure at Standard Oil of Ohio, he continued to draw this largely unearned salary until 1912. In September 1901, his finances ravaged by speculation, Frank told William that he would file for bankruptcy if he did not receive an immediate cash infusion of $86,000. When William secretly asked John to contribute half the amount, John wrote to him: “I will take half of the $86,000 if you take the other half, but Frank must not know that I am loaning the money.”¹²³ In 1907, John and William again saved Frank from bankruptcy by guaranteeing loans that Frank had gotten from his stockbroker.

After the Corrigan business, Frank no longer felt any need to muzzle himself. Reporters soon learned that to get an inflammatory quote about John D., they simply had to contact Frank Rockefeller. Discussing the Corrigan affair, Frank told one reporter, “That treacherous act was but a detail in my brother’s long record of heartless villainy. . . . He seems never to get enough. I wonder where it would end—this desire of his for more millions?”¹²⁴ John never commented publicly on these diatribes. Unfortunately for John’s reputation, Frank began to spew forth this invective just as the muckraking era got under way. Coming from a brother, these highly quotable remarks made a tremendous impression upon the public, who never dreamed that John D.’s treatment of Frank was one area of his life where his record was spotless.