CHAPTER VII

"YOU ARE NOT TO REFINE"

In the obituary column of the Cleveland _Herald_, of June 6, 1874, was given the news of the death of one of the pioneer manufacturers of Cleveland. He began the refining of petroleum in that city in 1860, several years before any of those who afterwards became the sovereigns of the business had left their railroad platforms, book-keeping stools, and lawyers' desks. He was married in the same year, and from that time until his death, in 1874, gave his whole life to his refinery and his family, and was successful with both. The _Herald_ said of him editorially:

"He was well known in Cleveland and elsewhere as a business man of high character. He was a prominent member of the First Presbyterian Church, was at one time President of the Young Men's Christian Association, and was active in all enterprises of a religious and benevolent character. He was about forty years of age, and leaves a wife and three children."

His enterprise had been "very profitable," his wife said afterwards in court, in narrating how she and her children fared after the death of the husband, father, and bread-winner. "My husband devoted his entire energies and life to the business from about 1860 to the time of his death, and had acquired through his name a large patronage. My husband went into debt just before his death," she continued, "for the first time in his life. For the interest of my fatherless children, as well as myself, I thought it my duty to continue the business. I took $75,000 of the $100,000 of stock, and continued from that time, 1874, until November, 1878, making handsome profits, during perhaps the hardest business years of the time since my husband had begun."[113]

The business received from her the most thorough and faithful attention, and she maintained the prosperity her husband had founded by making a profit of about $25,000 a year.

A representative of one of the oil combination came to her, she continued, "with a proposition that I should sell to them." This agent was "a brother manufacturer," who, but a short time before in a conference with her, had agreed that in view of the dangers which seemed to threaten them, he and she should mutually watch out for each other, and that no arrangement should be made by either without letting the other know. The next she saw of her ally he pounced upon her in her office with the news that he was in the oil combination, that the head of it had told him he meant to have control of the refining business if it took him ten years, but he hoped to have it in two. He went on to warm the woman's heart by the declaration that since he had become acquainted with the secrets of the organization he wondered that he and she had been able to hold out so long. After which preliminaries he proposed that she, too, should sell to it. With sagacity and spirit she declined point-blank to have any negotiation with him.

She declined to deal with subordinates, and said she did not want to sell. The principal then called upon her at her residence. This was in 1878, and these were dark days for "outside" refiners. One by one they were sinking out of sight, and slipping under the yoke like the victims of the "reconciliation" and "equalization" described in the last chapter.

For six years word had been passing from one frightened lip to another that they were all destined for the maw or the morgue, and the fulfilment of the word had been appalling. He knew the members of the oil combination, one of the best-known veterans of the oil region testified in this case, naming them; "I have heard some of them say, in substance, 'that they intended to wipe out all the refineries in the country except their own, and to control the entire refining business of the United States.'"

"The big fish are going to eat the little fish," one of the big fish told a neighbor and competitor. When one of the little fish said he "would not sell and was not afraid," he was told, "You may not be afraid to have your head cut off, but your body will suffer!"

The woman was brave with love and enthusiasm for the memory of her husband and the future of her children. She had had a great success, but she knew the sea she was swimming. She saw strong men going down on every side. She herself afterwards told in court of her great anxiety as she would hear of one refinery after another surrendering, feeling sure that that would eventually be the fate of her company.

All that the witnesses just quoted had reported, all that was said of the same tenor by the witnesses before Congress in 1876, and much more, had been filling the hearts of the business men of Cleveland, Pittsburg, Titusville, New York, with a reign of terror ever since 1872. It was with a full realization of all this that she went down to her parlor to receive the great man of commerce, who passes the contribution-box for widows' mites outside the church as well as within. This gentleman was in her house in pursuance, practically, of his own motion. She did not want to sell; the suggestion of a sale had come from the other side. "I told him," the widow said to the judge, "that I realized that my company was entirely in the power" of his company. "All I can do," I said to him, "is to appeal to your honor as a gentleman, and to your sympathy, to do the best with me that you can. I beg of you to consider your wife in my position, left with this business and with fatherless children, and with a large indebtedness that my husband had just contracted for the first time in his life. I felt that I could not do without the income arising from this business, and I have taken it up and gone on, and been successful in the hardest years since my husband commenced." "I am aware," he replied, "of what you have done. My wife could never have accomplished so much." She had become alarmed, the woman of business resumed, because his company was "getting control of all the refineries in the country."

He promised, with tears in his eyes, that he would stand by her. It should never be said, he cried, that he had wronged the widow of his fellow-refiner. "He agreed that I might retain whatever amount of stock I desired. He seemed to want only the control. I thought his feelings were such that I could trust him, and that he would deal honorably with me." This was the last she saw of him. He promised to come to see her during the negotiations, but did not do so. He promised to assist and advise her, but did not do so. He declined to conduct the negotiations with her in person as she requested, "stating to her," he said, in giving his version of the affair to the court, "that I knew nothing about her business or the mechanical appliances used in the same, and that I could not pursue any negotiations with her with reference to the same; but that if, after reflection, she desired to do so, some of our people familiar with the lubricating-oil business would take up the question with her.... When she responded, expressing her fears about the future of the business, stating that she could not get cars to transport sufficient oil, and other similar remarks, I stated to her that though we were using our cars, and required them in our own business, yet we would loan her any number she required, or do anything else in reason to assist her, and I saw no reason why she could not prosecute her business just as successfully in the future as in the past." This assurance to his widow-competitor that he would let her have cars was, of itself, enough to justify all her alarm, and show that there was no hope for her but in making the best surrender possible. It was proof positive that he did control the transportation, that the well-defined report that no one but he and his could get their business done by the railroad was true. Permission to go upon the highways by the favor of a competitor is too thin a plank for even a woman to be got to walk. Withdrawing from direct connection, but managing the affair to the end as he testifies, he sent back to her the agent she had refused to talk with.

Negotiations were accordingly resumed perforce with this agent. He submitted to his principals a statement in her behalf of the value of the property, but did not waste time over the form of letting her see it, or consulting with her before submitting it in her name.

This statement she never authorized, never heard of, and never read until it was produced in court against her.[114]

One interesting feature of the contract which was the subject of the "adventure" described in the chapter "Not to Exceed Half" was repeated here. The representative who "took up this matter" with the widow carried on his bargaining in great part with the minor stockholders, one of whom claimed afterwards that all he had done was under her directions, and "to her entire satisfaction." But she was entirely unaware of either her "directions" or her "satisfaction." "He never had the slightest authority from me to represent me in any way in the sale."[115]

Another of the minor stockholders also busied himself in representing her without her knowledge. On behalf of the widow agents were making figures, though she knew nothing of their agency or the figures. By these combined efforts a sale was finally concluded at figures which, though she owned seven-tenths of the property, she had never authorized, and were far below the only figures she had given as those she was willing to take.

Compelled to deal with a subordinate against her will, fearing to remain in so hazardous an occupation, and yet needing for her children the income it brought her, this woman manufacturer's position was most harassing. All through, as her cashier and treasurer told the court, she was dissatisfied, felt that she was compelled to sell though she wanted to retain her property.

"In my hearing," her confidential clerk said, "she declared she sold because she was compelled to do so."

She told her fellow-stockholders that she had been informed by the agent who was dealing with her, that if they did not sell out it would only be a question of time before they would be forced to sell out, as he intended to place oil like that made by her company in the hands of all their agents, to undersell them and close them out. This decided them to sell.

"Inasmuch as the managers of the Standard Oil Company appeared to have made up their minds to obtain this property, and not to give them the chance they had before in competition," the stockholders, as one of them testified, "concluded it better to sell the property at such price as they could then get, rather than to run the risk of a still greater loss in the future, not one of the stockholders desiring to part with the property at all, but rather choosing with fair competition to retain their interest in the property."[116]

She had made 15 per cent. in the last six months, and, aside from these threats, the business looked prosperous, for the orders were becoming more numerous every day. But the widow could refuse to sell only by braving threats which had broken more than two out of three of all the men about her. She put upon the property a price warranted by its income, $200,000, which was adopted by the directors of the company in a formal motion authorizing a sale at that figure. But in her name a proposition was made by the agent to sell for $71,000. "I never heard of the figure of $71,000," she says, "and cannot imagine where it originated. The only proposition that was ever made was that of $200,000." What the stock was worth in her estimation and that of her employés who had inside knowledge is seen in the evidence of her confidential clerk. Though he was her nephew also, he had with difficulty, he says, bought stock at par.

She had refused to sell at par to others. Now the only offer she could get was $60,000 for the works and good-will, the purchasers paying in addition the cash value of the material in stock, and at that price she had to let them go. She asked to be allowed to remain an owner to the extent of $15,000 in the business into which she and her husband had built their lives. "No outsider can have any interest in this concern," was the reply. The combination "has dallied as long as it will over this matter," its agent continued. "It must be settled up to-day or go."

The power of this business to produce a profit of $25,000 a year was worth almost $400,000, according to the valuations maintained for the stock of the oil trust on the New York Stock Exchange by the men who bought out the widow. One hundred dollars in oil trust stock producing $12 a year has sold as high as $185. If $12 a year was worth $185, $25,000 a year was worth nearly $400,000. It was part of the agreement that the oil company should go on as before. "It was particularly enjoined," testified the cashier and treasurer, "that the sale should be kept a profound secret."[117] It was intended that the company should go on as before as far as the public was concerned. The purchasers agreed to continue to employ the hands already at work, but stipulated that not a word should be said to any one of them to reveal that the company was not as independent as it had been.[118]

"And you are not to engage in the refining business," is the concluding phrase of an agreement between the oil combination and a once competitor whom it had forced to sell out in 1876.[119]

"You are not to engage in refining," the same power said in 1877 to the Pennsylvania Railroad, and now to this widow: You must sign this bond not to go into business again for ten years.

The bond is given in full in the record of the case. It put the widow under a forfeit of five thousand dollars for ten years, that--

"I will not directly, or indirectly, in any way, either alone or in company with any person, or as a share-holder in any corporation, engage in or in any way concern myself or allow knowingly any capital or moneys to be employed in the business or trade of refining, manufacturing, producing, piping, or dealing in petroleum, or any of its products, within the county of Cuyahoga, and State of Ohio, nor at any other place whatsoever."[120]

Their secret of success, the president swore in this very case, is "the very large volume" of purchases, "long continuance in the business," "experience," "knowledge of all the avenues of trade," "skill of experienced employés," and so forth. But with all this they did not dare leave this middle-aged woman free to challenge them again on the field of competition. The purchase was made in the name of three members of the great oil company, and it was paid for by the check of that concern.

Of these men one was among the "trustees" indicted and tried in 1885 for complicity in the plot to blow up a rival refinery, but let go by the judge.

At the time the sale was concluded the widow refiner declared, "The obtaining of her stock was no better than stealing." When the papers were brought to her to sign she "hesitated," and said, "It is like signing my death-warrant. I believe it will prove my death-warrant." "The promises made by the president," she testifies, "were none of them fulfilled."

Being only a woman, and not understanding "business," for all her brilliant success in stepping into her husband's place, and doing the double work of home-maker and bread-winner, the widow could not restrain herself from giving a most uncommercial piece of her mind to those who had got possession of her property for a sum which they would recover out of its profits in two or three years. She sent the following letter:

"November 11, 1878, Monday Morning.

"SIR,--When you left me at the time of our interview the other morning, after promising me so much, you said you had simply dropped the remarks you had for my thought. I can assure you I have thought much and long as I have waited and watched daily to see you fulfil those promises, and it is impossible for me to tell you how utterly astonished I am at the course you have pursued with me. Were it not for the knowledge I have that there is a God in heaven, and that you will be compelled to give an account for all the deeds done here, and there, in the presence of my husband, will have to confess whether you have wronged me and his fatherless children or not--were it not for this knowledge I could not endure it for a moment, the fact that a man, possessed of the millions that you are, will permit to be taken from a widow a business that had been the hard life work and pride of herself and husband, one that was paying the handsome profit of nearly twenty-five thousand dollars per annum, and give me in return what a paltry sum, that will net me less than three thousand dollars; and it is done in a manner that says, Take this or we will crush you out. And when, on account of the sacred associations connected with the business, and also the family name it bears, I plead that I may be permitted to retain a slight interest (you having promised the same at our interview), you then, in your cold, heartless manner, send me word that no outsider can hold a dollar's worth of stock in that concern. It seems strange to be called an outsider in a business that has been almost entirely our own and built up at the _cost_ it has to ourselves. It is impossible for us to find language to express our perfect indignation at such proceedings. We do not envy you in the least when this is made known in all its detail to the public. One of your own number admits that it is a great _moral_ wrong, but says as long as you can cover the points legally you think you are all right. I doubt, myself, very much the legality of all these things. But do not forget, my dear sir, that God will judge us morally, not legally, and should you offer him your entire monopoly, it will not make it any easier for you. I should not feel that I had done my entire duty unless, before I close, I drop a remark for your thoughts. In my poor way I have tried, by my life and example, with all those I have come in contact with in a business way, to persuade them to a higher, purer, and better life. I think there is no place in the world that one has such opportunities to work for good or evil as in a business life. I cannot tell you the sorrow it has caused me to have one of those in whom I have had the greatest hopes tell me, within the last few days, that it was enough to drive _honest_ men away from the Church of God, when professing Christians do as you have done by me."

In reply to this she received a letter in which her charge that her business had been taken from her was repelled as "a most grievous wrong," and "a great injustice." She was reminded that two years before she had consulted with the writer and another member of the oil combination "as to selling out your interest, at which time you were desirous of selling at _considerably less price_, and upon time, than you have now received in cash, and which sale you would have been glad to have closed if you could have obtained satisfactory security for the deferred payments. As to the price paid for the property, it is certainly three times greater than the cost at which we could now construct equal or better facilities."

The letter concluded with an offer to return the works upon the return of the money, or, if she preferred, to sell her one hundred, or two hundred, or three hundred shares of the stock at the price that had been paid her. These propositions were left open to her for three days.

The "cost of the works" is not the standard of value in such transactions. Six millions of dollars, according to a member of the committee of Congress which investigated the oil trust in 1888, is the value of the "works" on which they issued $90,000,000 of stock, which sold in the stock market at a valuation of $160,000,000.

The offer to sell back the refinery was like the offer to let her have cars. To accept it was to pass openly and consciously into slavery. Two years before, when she was weak with grief, inexperience, and the fear that she might not succeed in her gallant task of paying her husband's debts and saving the livelihood of the children, she had thought of selling out at a sacrifice. They knew this because she had asked their advice, and now cheapened her down by reference to the valuation of that moment of despair. All the life energies of herself and her husband, the various advantages of position, the benefit of their pioneership since 1860, and of having established a place in so lucrative a business, all the good-will of customers, all the elements that contributed to the ability to earn the nearly $25,000 a year she was making, were brushed out of the bargain by the mere assertion of a figure at which it was alleged better works could be built. By the time the offer was made she had, moreover, put the sum she had received into such investments, she told the court, as she had been able to find, and the money to accept the offer was no longer in her hands. Indignant with these thoughts, and the massacred troop of hopes and ambitions that her brave heart had given birth to, she threw the letter into the fire, where it curled up into flames like those from which a Dives once begged for a drop of water. She never reappeared in the world of business, where she had found no chivalry to help a woman save her home, her husband's life-work, and her children. But when the men who had divided her property among them invoked the assistance of the law to complete the "equalization" told of in the previous chapter, she went into court and told her story to save her friends from ruin. There, under the gathering dust of years, this incident has remained buried in the document-room of the Court of Common Pleas of Cuyahoga County, until now brought forth to give the people a glimpse into what the real things are which our professors of market philosophy cover with their glittering generalities about the cost of production and the survival of the fittest.

This episode and that of the "Agreement for an Adventure" in the preceding chapter have been written up by the author from the original papers on file in the Court of Common Pleas at Cleveland, which he visited for that purpose in 1891. Certified copies of the documents were procured from the clerk of the court. Lately, the astounding fact was ascertained that all the documents except two or three formal pleadings were gone from the records of the court. But for these certified copies there would now be no authentic record of these cases. This disappearance bears a strong likeness to the suppression of the investigation by the Committee of Commerce of Congress in 1872, and the theft of the testimony taken by the House Committee of Commerce[121] in 1876, and the mutilation of the transcript submitted to Congress in 1888 of the evidence taken in the Buffalo Explosion Case.[122]