Oilbow on the Cuyahoga
SELDOM CAN the surge growth of a city be traced to one cause and one day. But in the case of Cleveland, real growth began in the hour that the State of Ohio tied up in Cleveland in 1827, having dropped down from the Akron summit.
The frontier period ended abruptly with the canal opening. Now came that flood of goods pouring down the Cuyahoga valley on the canal, fed by Cuyahoga water. These shipments brought cash to the west, which started a stream of commerce to and from the east. This commerce gave rise to a row of commission houses lining the east bank of the Cuyahoga, men who learned the sources of all products.
Construction of houses drew heavy imports from the east. A few ironmongers were getting started, using the red kidney ore found on the surface along the Cuyahoga. Coal came down the Cuyahoga valley by canal from Massillon for heating Cleveland.
A good shipping trade developed between the mouth of the Cuyahoga and Buffalo. The commission houses on the east bank of the Cuyahoga stretched farther south from the mouth as long slender warehouses grew there.
And by the time of the Civil War, the Cuyahoga stage was set for a vast national commerce.
When you break partners with a man in a close-out show-down, you suddenly realize from then on you will have to fight the very same strengths you once wanted on your side. But by ten o’clock on the morning of February 4, 1865, the three Clark brothers hadn’t taken the breakup that seriously.
All six of the men in the showdown that morning on the east bank of the Cuyahoga near the mouth of Kingsbury Run did understand that the outcome today would tell whether the three Clark brothers and their lawyer had more nerve than the young partner they were trying to dismiss.
It was also understood that the whole of the Andrews, Clark & Company should go to the high bidder. However, none of them understood that the outcome would affect the lives of millions of people over the next 100 years, and turn the banks of this river shiny black and iridescent.
Maurice Clark knew the young partner best. They had been very close friends. That’s why it jarred Clark now as he stared across the table into the coldest blue eyes on the river. What had attracted Clark in the first place was the young man’s unbelievable calmness in the face of business panic, and his humorless sense of destiny.
Even now, as the business was about to break up, the young partner sat facing them as calm as ice, just as if alone he was an even match for the three Clark brothers and their lawyer.
Maurice snapped, “John, the Clark Brothers bid five hundred dollars for the business.”
Rockefeller bid a thousand. The young man’s expressionless bid echoed so fast it looked as if he would go all the way to $10,000.
Clark knew he would have trouble panicking his young partner because of the spartan discipline under which John D. Rockefeller had been raised.
When he was a boy his red-haired, blue-eyed mother praised him highly for diving into the river to save a drowning boy; then she immediately whipped him for being on the ice without permission. It would take a lot to shock him after that.
Maurice Clark jumped the bid suddenly. $5000.
The young partner did not hesitate. $5,500.
At an early age the young man developed a canny way with a dollar. His father spread it all over town that “I trade with the boys and skin ’em, and I just beat ’em at it every time I can. I want to make ’em sharp.”
So John probably knew the true value of the business. Maurice Clark figured the bidding might as well get up there. $10,000 was the Clark’s bid.
$10,500 came the echo.
However, if John had to borrow to pay, he’d probably drop out next round. As a boy the young partner had lent out $50 from his turkey-raising money to a farmer for a year at interest. At the end of the year he got his fifty, but in addition interest - $3.75.
He saw how easily that $3.75 came compared to worked-for money he had just received for three days of potato digging at 37½¢. He wrote in his diary, “The impression is gaining ground with me that it is a good thing to let my money be my servant, not make myself a slave to money.” The young man liked to get interest, not give it.
$11,000 ... cash! Clark bid.
$11,500 Rockefeller countered.
Another unnerving thing about bidding against this calm young man, he could lose all but the last hand, and still win. He had that shot-with-luck bearing. His sister had said, “When it’s raining porridge, you’ll find John’s dish right side up.”
$12,000, bid Maurice Clark.
$12,500, Rockefeller bid.
The Clark brothers stared at their partner gauging his stubbornness.
They knew of his famous stubborn job hunt. When he graduated from high school, John went to Folsom’s Commercial College for three months to learn “bookkeeping and business ethics.”
Then he laid siege to Cleveland for a job. The 16-year-old boy made a list of all the large companies in Cleveland. He wanted training that would lead to his own business. He started right down his list - canals, banks, wholesale merchants.
He got all the way to the bottom of his list. No job. So he started at the top of the list again, making a second round of calls. Some of the employers who recognized this as a second call became very unpleasant. They were shocked at his reaction. It was as if he hadn’t even heard them. Just thanked them, and walked out.
When he hit the bottom of the list for the second time, without a job, his family and friends stepped in. They told him to try smaller places of business. John thanked them and started at the top of his list, third time. He said that he was not the least discouraged, “Because I’m every day at my business, the business of looking for work. I put in my full time on it.”
Halfway down his list on the third go-’round he walked into Hewitt & Tuttle, commission merchants on Merwin Street on the Cuyahoga River. Mr. Hewitt offered him the job of bookkeeper-clerk in Hewitt & Tuttle on the morning of September 26, 1855. Salary was not mentioned.
That same afternoon John Rockefeller hung his hat on a peg beside the high desk which contained the ledger, the letter press, and the blotter on which he was to record every transaction. He put his foot on the rung of the high chair like a man who had finally got the toehold he was looking for, and he swung onto the seat like a man taking charge.
He never did ask the salary.
As Maurice Clark studied his partner, he knew that a man who’ll go without work until he gets the job he wants, won’t shake out of this bidding at $13,000.
And a man who has so little regard for money that he doesn’t even ask the salary is hard to bid against.
The Clarks bid $15,000
$15,500, echoed the partner.
The position at Hewitt & Tuttle relieved the young clerk’s family, but it worried a friend of his that he still didn’t know his salary. It even worried Mr. Tuttle, the other partner in Hewitt & Tuttle.
“Young man, if you ever have occasion to procure goods for this firm, always inquire the price before buying.”
“Now your salary is three dollars and fifty cents a week. Why didn’t you ask before?”
“I cared very little about that. My real pay will be learning business.”
Tuttle stared at the young man. “I’ll write your first week’s check. How do you spell Rockefeller? Everybody’ll have trouble with that one.”
Many have, including Maurice Clark. But along the Cuyahoga there was little trouble with it, and principally because of Mr. Tuttle and Mr. Hewitt. They were so pleased with the ultra-precise, ultracareful work of young J. D. Rockefeller that they talked him up in the trade. He was raised to $25 a month, then $500 a year. But his real pay was much greater. Hewitt & Tuttle was a commission merchant firm and a whole university of business education, if you knew what the ledgers were saying.
What they said to the young bookkeeper was that bushels of corn located downstate in country counties were worth fifty cents. But floated north to the 44,000 people of Cleveland, they were worth a dollar and a quarter each. But how you moved them was important, in what kind of containers or vehicles. It was also important to be able to store them - to wait for favorable market prices.
He learned the value of an item is where it is located. He learned that the science of moving the item to where it is worth more is an art. You can use up the margin or preserve part of it.
Shortly Rockefeller was given great freedom and authority to arrange complex transactions involving transshipment of goods over various carriers - canals to the Cuyahoga to dock, to railroads or lake vessels or wagons.
In 1858 he was raised to $600 a year.
That year he took some of his own money and bought 80 barrels of pork on his own account and resold them at a profit. Then he bought some flour and hams and resold.
Isaac Hewitt noted the young man’s innovations and adopted some of them.
Rockefeller asked for $800 a year. Hewitt would like to have paid it, but felt he couldn’t. He offered $700.
In the auction, Maurice Clark, who remembered how recently Rockefeller had been earning $700 a year, knew that his next bid would seem like a lot of money to the young man.
$20,000 was the bid to shame John out.
$20,500, John bid.
Clark of course, knew that John Rockefeller had been accustomed to big financial responsibilities. His mother had looked to him since late boyhood as the head of the household. There were two brothers and a sister to support.
The father, William Avery Rockefeller, was an excellent businessman in early life, but the opposite of his son John. A handsome black-haired giant, he had a smile like the sun coming out, and charm to burn.
However, he unfortunately had overcharmed Anne Vanderbeak, a part-time housemaid, who explained it to the sheriff. William Rockefeller was indicted. And from then on, he took longer and longer trips away from home; his business, on the fringe of medicine, became vague, mysterious and slightly suspect.
Mrs. Rockefeller therefore leaned on John D. At 15, the lad was a man in money matters. At 26, he probably couldn’t be frightened off at the $25,000 level.
Maurice Clark looked a query at his two brothers and his lawyer. The brothers nodded. Clark bid $30,000.
The six men in the room focused on John Rockefeller who stared out the window at the Cuyahoga. Without looking away from it, he said, “Thirty thousand five hundred dollars.”
Clark now figured Rockefeller was up to where he’d have to borrow not only from friendly banks, but some from more hostile money sellers.
Yet he remembered Rockefeller had an almost swaggering nerve when it came to borrowing money. Clark, of all people, had reason to know that.
In 1859, when John had been turned down for a raise to $800 a year, or $15.30 a week, he felt it was time to “go for himself.”
Along the river were several other commission merchant and produce shipping firms. In one of them was another ambitious clerk, Maurice B. Clark, highly capable, and highly discontented with his pay. Clark and Rockefeller had talked a lot about forming a partnership as commission merchants in grain, hay, meats, miscellaneous goods.
Now was the time. They figured they needed $4,000 to start, $2,000 apiece.
Clark, the senior of the two, had saved $2,000; Rockefeller only $900. Clark said, “Well, let’s start with that. And you can owe eleven hundred dollars into the pot.”
“No. We should be even. I’ll borrow.”
“How can a bank lend you money on a business that isn’t even working yet?”
Well, they couldn’t. But John Rockefeller went to his father, “You told me you’d have one thousand dollars for me when I turned twenty-one, sir.”
“Aye. But you’re a long way from that.”
“Only sixteen months, sir.”
“And you want the money sooner?”
“Yes, sir. Tomorrow, sir.”
Rockefeller senior stood up. “Tomorrow!”
“Yes, sir. But I mean to pay you interest on it for the sixteen months before I’m twenty-one.”
The Senior relaxed and said, “Very commendable. Six and one-half percent.”
“Five and a half, sir.”
Rockefeller senior smiled broadly and sat down, “Very good. You’re ready.”
Two days later John Rockefeller, with money in hand, said to his friend, “Maurice, I’m ready.”
The Clark & Rockefeller Company opened its doors on the Cuyahoga at 62 River Street. Rockefeller was young, but working on rented money matures a man fast.
In the auction, Maurice Clark knew that now at 26, after all they’d learned together, John wouldn’t hesitate to borrow a large portion of $30,000. The bid must be much higher, $40,000.
Young Rockefeller had already developed a habit of laying both hands side by side over his face, as if staring into the future. When the hands came down, he bid $40,500.
Maurice said the bidding had gone past the point of faith in the company. “We’re up to where you need tremendous confidence in the industry.”
However, Maurice Clark, of all people, should know the confidence John Rockefeller had in the industry.
The firm of Clark & Rockefeller started off so strong that in their first year they sold $450,000 worth of other peoples’ hay, wheat, pork, stone, and coal. Shipped it up the Cuyahoga or the canal or out over the five railroads along the river. Took out a net profit of $4,400.
Clark did most of the searching for new shipments to handle. Rockefeller ran the office, arranged the transports and the loans from banks to buy merchandise for resale. The partners already had their eyes on the extra warehouse space available along the river at Nos. 39-45 River Street, and some space on the dock.
This prosperity was based on the buying, selling, forwarding of good, solid, age-old commodities. But in the matter of confidence, the firm was about to take a sudden change that required confidence in the new and untried.
One morning at dawn in 1860, John Rockefeller looked out his office window on the east bank of the Cuyahoga to the black west shore as river commerce awakened.
The sun behind him ignited the bottoms of the clouds, then the tops of the trees. The waters remained dark except that suddenly a shaft of sun sliced between two warehouses to illuminate a cross-current strip of the turgid surface of the Cuyahoga.
But this morning the river did not burn iron red, nor coal black. It shimmered iridescent, a sparkling scum of rainbow that would color the economic history of America.
It caused John Rockefeller to call his partner. They stared at it.
Aye, John, petroleum.
It came out of the ground crude at fifty cents the barrel, sold for eighty cents the gallon, refined.
But there’s so many in it, the spread is dropping fast.
John observed they must be careless businessmen that so much of their profit floats by our window.
Clark explained that he’d been approached by a fine young chemist from England, Sam Andrews, who had experience in illuminants. Although Andrews had no money, he wanted to get into the petroleum refining business. Maurice discouraged him. Maurice and John didn’t have $250 to spare.
John thought, “Perhaps we ought to listen to him.”
In 1863 Clark and Rockefeller put up half the capital to establish a small petroleum refinery on the south bank of Kingsbury Run where it emptied into the Cuyahoga. It was three acres located right on the track of the Atlantic & Great Western Railroad. The rest of the capital came from Clark’s two brothers, James and Richard. Sam Andrews was in charge of production.
The company was named Andrews, Clark & Company.
In the auction, Clark bid $45,000. There were three Clarks drawing a living from the company. They could bid pretty high to retain the jobs of three men.
$45,500 was John’s bid.
Refining was simple. Crude was strained into a tank and flowed to a still to be boiled. The first distillate was gasoline, practically a waste product. Next benzol or naphtha; next kerosene, which is what you were after for lighting and cooking.
Except for the time John Rockefeller took to ride his horse up past the Spelman house, hoping for a glimpse of Laura Celestia Spelman, he spent his days and nights on the Cuyahoga shore tending two thriving businesses.
Rockefeller believed that when a business has natural buoyance, that’s the time to help it grow. Put money in it.
He began borrowing money to expand the petroleum facility. Even started another small one upriver a few miles, as part of Andrews, Clark & Company, called The Standard Works. It meant Maurice Clark had to co-sign the bank loan notes.
Then Rockefeller suggested to Clark that they hire a plumber by the month instead of by the job.
It meant a steady expense, but it worked out all right. Then Rockefeller pushed again. He proposed buying their own pipes and joints in quantity. Not from the jobber.
They saved half the plumbing costs. But it meant Rockefeller had to ask Maurice to co-sign with him another bank loan note.
Maurice was nervous about borrowing. But Rockefeller was beginning to realize he could make better use of the money than the banks could.
Next it was the barrels.
Maurice objected - let’s stick to the business we’re in.
John countered - to do that we’d have to borrow. John reasoned for the difference between .90 and $2.50, they could pay the highest interest in town.
Maurice wanted to know just how much they would need to borrow to build a cooperage.
But John knew that hardly mattered if they were going to stay in petroleum!
Maurice Clark co-signed the increasing loan notes with increasing reluctance.
Rockefeller meanwhile was crosswise daily with Clark’s brother. Big Jim Clark did the buying of crude for the company; and he fretted under Rockefeller’s tight bookkeeping. Jim Clark was tough and profane. Their feud broke out in the open.
Clark bid $47,000. Rockefeller - $47,500.
About the time that Maurice Clark became openly worried and Jim Clark became resentful, Rockefeller saw that in buying timber for their barrels, they were paying top dollar. He proposed buying a timber tract.
Maurice signed another note reluctantly.
Soon after that John pointed out that meant hauling green timber to the cooperage, paying freight on a lot of sap. Needed was a kiln on the timber tract.
Maurice exploded, too many loans to extend this oil business! Over $100,000! But John said they should borrow whenever it would safely extend the business.
Maurice threatened to break up the business right then and there. Rockefeller smoothed it over. He privately concluded, however, that if any of the Clarks ever again suggested breaking up the company, he would not smooth it over. So that he would know how to handle the problem if it ever came up, he reviewed his personal credit around town. He found, to his surprise, that he could muster $50,000 in loans.
In the bidding, Jim Clark tapped Richard Clark on the arm. Richard Clark consulted some papers in a notebook from his chest pocket. He snapped the book shut, and nodded to Maurice. Maurice bid $50,000.
The figure silenced the room. Half of a $100,000 was a figure to command great respect.
John Rockefeller had a wife, a baby, a sister, and a mother to support, and a pair of brothers to help get started after the war. At $50,000, you stop to consider these things. Besides he needed time to raise funds for the Erie Street Church, and he wanted to keep ten percent of his own income free for his charities.
But, after all, the refinery was earning well. It was big as refineries went along the Cuyahoga. And even without the Clarks, Rockefeller would still have Sam Andrews’ excellent engineering ability.
$50,500, John Rockefeller said.
A week after Maurice Clark had threatened to break up the company, John Rockefeller challenged Jim Clark on a couple of items of his travel to Titusville and the Pennsylvania oil regions to buy the crude oil for the refinery. John wanted a better accounting for Jim’s expenses and also for the oil he bought.
Jim Clark vulgarly abused Rockefeller, and scathingly referred to him as “the Sunday School Superintendent.” It was true that Rockefeller was a Sunday School Superintendent. But he knew he was not being complimented on it.
He endured a profane blast suggesting that it was time to get the Sunday School element out of the business. Then John said quietly, “Jim, I better tell you not to try to scare me with a bluff you don’t mean.”
Jim said he meant every word.
John asked if he spoke for his two brothers.
John said good. Remember this conversation, Jim.
In the years ahead, Jim Clark would remember it many times.
John Rockefeller walked out of the refinery.
The next morning the three Clark brothers were stunned to see a notice of dissolution in the Cleveland Leader, signed by Rockefeller. After the initial surprise, they rallied quickly, realizing there were three of them, and in a buy-out showdown they should be able to raise more money. They asked Andrews where he stood.
He stood with Rockefeller, but he could not command important dollars.
The Clarks needed to shake Rockefeller out of the bidding quickly now as they approached their own top limit.
$60,00, Clark bid.
There was a pause, and then a quiet voice - $60,500.
None of these men had expected numbers like this. The attorney was stunned.
Jim Clark told Rockefeller not to bid what he could not raise in cash.
John said that anything he bid, he could pay.
Incredible as that was, more so was what happened from that bid forward. Jim Clark announced that the three Clarks could each go bond on hired money so they could run this up as high as they wanted.
Rockefeller reminded Jim that he had once warned him not to bluff.
Jim said they were not bluffing - $65,000.
John bid $65,500.
Maurice warned they were now beyond faith in the company and the oil industry.
Rockefeller agreed totally. He said they were now up to faith in ourselves. He said his bid was $72,500.
Maurice Clark stood up, “The business is yours.”
The next day’s Cleveland Leader carried an advertisement for carbon oil, benzene, and lubricating oils from the new firm of Rockefeller & Andrews.
That same issue of the Cleveland Leader was exciting if you worked along the shores of the Cuyahoga. It explained that there were now 50 refineries, large and small, on the Cuyahoga. They represented an invested capital of $3,000,000, and they were putting out about 6,000 barrels of refined oil per day. Two thirds of it was shipped to New York and other ports for export.
And on one refinery there was a new sign: The Rockefeller & Andrews Company. Shortly after that there was another sign at the head of Kingsbury Run:
THE STANDARD WORKS
J. D. Rockefeller
Just about that moment, the Gilded Age began - and it seemed to run on iron and oil, which turned the Cuyahoga iron red with an iridescent scum of oilbow colors.
There were some in carriages going over the bridge who looked down at the red and the rainbow and said it was a shame to dirty the river that way. But those who were right down in the waters in boats and barges and scows thought the red and the rainbow were the sweetest colors a river ever had.
And a young man named J. D. Rockefeller was just on the point of becoming a legend among the bankers of Cleveland - in fact, of the world.
John would leave the river. That story is known to school children. John’s competitive shrewdness turned cruel - demanding excessive rebates from railroads hauling oil - price cutting in competitor’s back yards until they agreed to sell out to him.
John left the Cuyahoga for New York City where the banks were bigger.
His name came to stand for greed.
As a billionaire, he continued his boyhood habit of ten percent for charity.
|PREVIOUS CHAPTER||TABLE OF CONTENTS||NEXT CHAPTER|