06 - Random Reminiscences of Men and Events by John D. Rockefeller

Dive into the insightful reflections of a prominent figure from the oil revolution of the 20th century. This compelling book embodies the essence of experience, as it chronicles the life of the second highest taxpayer in the U.S. during the 1920s. Though not included in the text, enjoy a glimpse of his wisdom through a poignant poem I was early taught to work as well as play, My life has been one long, happy holiday; Full of work and full of play- I dropped the worry on the way- And God was good to me every day. (Summary by sidhu177)

Episode Transcript

Speaker 1 (00:01):
Chapter five of Random Reminiscences of Men and Events by
John D. Rockefeller. This is a LibriVox recording. All LibriVox
recordings are in the public domain. For more information or
to volunteer, please visit LibriVox dot org. Recording by William Tomko,

(00:23):
Random Reminiscences of Men and Events by John D. Rockefeller,
Chapter five. Other Business Experiences and business Principles. Going into
the iron ore fields was one of those experiences in
which one finds oneself rather against the will. For it
was not a deliberate plan of mine to extend my

(00:44):
cares and responsibilities. My connection with iron ores came about
through some unfortunate investments in the Northwest Country. These interests
had included a good many different industries, mines, steel mills,
paper mills, a nail factory, railroads, lumber fields, smelting properties,
and other investments about which I have now forgotten. I

(01:08):
was a minority stockholder in all these enterprises and had
no part in their management. That all of them were profitable.
As a matter of fact, for a period of years
just preceding the Panic of eighteen ninety three, values were
more or less inflated, and many people who thought they
were wealthy, found that the actual facts were quite different

(01:29):
from what they had imagined, when the hard experiences of
that panic forced upon them the unpalatable truth. Most of
these properties I had not even seen, having relied upon
the investigation of others respecting their worth. Indeed, it has
never been my custom to rely alone upon my own
knowledge of the value of such plants. I have found

(01:50):
other people who knew much better than I how to
investigate such enterprises. Even at this time I had been
planning to relieve myself of business cares, and the panic
only caused me to postpone taking the long holiday to
which I had been looking forward. I was fortunate in
making the acquaintance of mister Frederick T. Gates, who was

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then engaged in some work in connection with the American
Baptist Education Society, which required him to travel extensively over
the country north, south, east, and west. It occurred to
me that mister Gates, who had a great store of
common sense, though no special technical information about factories and mills,

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might aid me in securing some first hand information as
to how these concerns were actually prospering. Once, as he
was going south, I suggested that he look over an
iron mill in which I had some interest, which happened
to be on his route. His report was a model
of what such a report should be. It stated the facts,
and in this case they were almost all unfavorable. A

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little later he happened to be going west, and I
gave him the name and address of property in that
region in which I held a minority interest. I felt
quite sure that this particular property was doing well, and
it was somewhat of a shock to me to learn
through its clear and definite account that it was only
a question of time before this enterprise, too, which had

(03:15):
been represented as rolling in money, would get into trouble
if things kept on as they were going, nursing the
commercially ill. I then arranged with mister Gates to accept
a position whereby he could help me unravel these tangled
affairs and become, like myself, a man of business. But
it was agreed between us that he should not abandon

(03:37):
his larger and more important plans for working out some
philanthropic aspirations that he had. Right here, I may stop
to give credit to mister Gates for possessing a combination
of rare business ability, very highly developed and very honorably exercised,
overshadowed by a passion to accomplish some great and far
reaching benefits to mankind, the influence of way which will last.

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He is the chairman of the General Education Board and
active in many other boards, and for years he has
helped in the various plans that we have been interested in,
where money was given in the hope that it would
do something more than temporary service. Mister Gates has for
many years been closely associated with my personal affairs. He
has been through strenuous times with me and has taken

(04:24):
cares of many kinds off my shoulders, leaving me more
time to play golf, plan roads, move trees, and follow
other congenial occupations. His efforts in the investigations in connection
with our educational contributions, our medical research, and other kindred
works have been very successful. During the last ten or

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twelve years, my son has shared with mister Gates the
responsibility of this work, and more recently mister Starr J.
Murphy has also joined with us to help mister Gates,
who has borne the heat and burden of the day
and has well earned some leisure which we have wanted
him to enjoy, but to return to the story of
our troubled investments. Mister Gates went into the study of

(05:07):
each of these business concerns and did the best he
could with them. It has been our policy never to
allow a company in which we had an interest to
be thrown into the bankruptcy court if we could prevent it,
For receiverships are very costly in many ways, and often
involve heavy sacrifices of genuine values. Our plan has been

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to stay with the institution, nurse it, lend it money
when necessary, improve facilities cheap in production, and avail ourselves
of the opportunities which time and patience are likely to
bring to make it self sustaining and successful. So we
went carefully through the affairs of these crippled enterprises in
the hard times of eighteen ninety three and eighteen ninety four,

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carrying many of them for years after sometimes buying the
interests of others and sometimes selling our own interest. But
all or nearly all escaped the expenses and humiliation of bankruptcy,
receivership and foreclosure. Before these matters were entirely closed up,
we had a vast amount of experience in the doctoring

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of the commercially ill. My only excuse for dwelling upon
the subject at this late date is to point out
the fact to some business men who get discouraged, that
much can be done by careful and patient attention, even
when the businesses apparently in very deep water. It requires
two things. Some added capital put in by one's self

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or secured from others, and a strict adherence to the
sound natural laws of business the ore minds. Among these
investments were some shares in a number of ore minds,
and an interest in the stocks and bonds of a
railroad being built to carry the ore from the mines
to lake ports. We had great faith in these mines,
but to work them the railroad was necessary. It had begun,

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but in the Panic of eighteen ninety three it and
all other developments were nearly ruined. Although we were minority
holders of the stock, it seemed to be up to
us to keep the enterprise alive. Through the harrowing panic days.
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

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to go into the then greatly upset money market and
by currency at a high premium to ship west by express,
to pay the laborers on the railroad, and to keep
them alive. When the fright of the panic period subsided
and matters became a little more settled, we began to
realize our situation. We had invested many millions, and no

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one wanted to go in with us to buy stock.
On the contrary, everybody else seemed to want to sell.
The stock was offered to us in alarming quantities. Substantially
all of the capital stock of the companies came without
any solicitation on our part, quite the contrary, and we
paid for it in cash. We now found ourselves in

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control of a great amount of ore lands, from some
of which the ore could be removed by a steam
shovel for a few cents a ton, But we still
faced a most imperfect and inadequate method of transporting the
ore to market. When we realized that events were shaping
themselves so that to protect our investments we should be
obliged to go into the business of selling in a

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large way, we felt that we must not stop short
of doing the work as effectively as possible, and having
already put in so much money. We bought all the
ore land that we thought was good that was offered
to us. The railroad and the ships were only a
means to an end. The ore lands were the crux
of the whole matter, and we believed that we could

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never have too many good mines. 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. The lands, which contained a good many of
our best ore mines, could have been purchased very cheaply
before we became interested. Having launched ourselves into the venture,

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we decided to supply ore to everyone who needed it
by mining and transporting. With the newest and most effective facilities,
and our profits, we invested in more ore lands. Mister
Gates became the president of the various companies which owned
the mines and the railroad to the lake to transport
the ores, and he started to learn and developed the
business of ore mining and transportation. He not only proved

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to be an apt scholar, but he really mastered the
various complexities of the business. He did all the work
and only consulted me when he wished to. Yet I
remember several interesting experiences connected with the working out of
these problems building the ships. After this railroad problem was solved,
it was apparent that we needed our own ships to

(09:52):
transport the ore down the lakes. We knew absolutely nothing
of building ships for ore transportation, and so, following out
our custom, we went to the man who, in our judgment,
had the widest knowledge of the subject. He was already
well known to us, but was in the ore transportation
business on a large scale on his own account. And

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of course, the moment we began to ship or we
realized that we would become competitors. Mister Gates got into
communication with this expert and came with him one evening
to my house in New York just before dinner. He
said he could stay only a few minutes, but I
told him that I thought we could finish up our
affairs in ten minutes, and we did. This is the

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only time I remember seeing personally anyone on the business
of the ore company. All the conferences, as I said before,
were carried on by mister Gates, who seemed to enjoy work,
and he has had abundant privileges in that direction. We
explained to this gentleman that we were proposing to transport

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our ore from these lake superior lands ourselves, that we
should like to have him assume charge of the construction
of several ships, to be of the largest and most
approved type, for our chance of success lay in having
boats which could be operated with the greatest efficiency. At
that time, the largest ships carried about five thousand tons,

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But in nineteen hundred when we sold out, we had
ships that carried seven thousand or eight thousand tons, and
now there are some that transport as much as ten
thousand tons and more. This expert naturally replied that, as
he was in the ore carrying trade himself, he had
no desire to encourage us to go into it. We
explained to him that as we had made this large investment,

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it seemed to us to be necessary for the protection
of our interests to control our own lake carriers, so
we had decided to mine ship and market the ore.
That we came to him because he could plan and
superintend the construction of the best ships for us, and
that we wanted to deal with him for that reason. That,
notwithstanding that he represented one of the largest firms among

(11:59):
our competitors, we knew that he was honest and straightforward,
and that we were most anxious to deal with him
employing a competitor. He still demurred, but we tried to
convince him that we were not to be deterred from
going into the trade, and that we were willing to
pay him a satisfactory commission for looking after the building
of the ships. Somebody, we explained, was going to do

(12:22):
the work for us, and he might as well have
the profit as the next man. This argument finally seemed
to impress him, and we then and there closed an agreement,
the details of which were worked out afterward to our
mutual satisfaction. This gentleman was mister Samuel Mather of Cleveland.
He spent only a few minutes in the house, during

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which time we gave him the order for about three
million dollars worth of ships. And this was the only
time I saw him. But mister Mather is a man
of high business honor. We trusted him implicitly, although he
was a competitor, and we never had occasion to regret it.
At that time there were some nine or ten ship
building companies located at various points on the Great Lakes.

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All were independent of each other, and there was sharp
competition between them. Times were pretty hard with them. Their
business had not yet recovered from the panic of eighteen
ninety three. They were not able to keep their works
in full operation. It was in the fall of the year,
and many of their employees were facing a hard winter.
We took this into account in considering how many ships

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we should build, and we made up our minds that
we would build all the ships that could be built,
and give employment to the idle men on the Great Lakes. Accordingly,
we instructed mister Mather to write to each firm of
ship builders and ascertain how many ships they could build
and put in readiness for operation at the opening of
navigation the next spring. He found that some companies could

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build one, some could build two, and that the total
number would be twelve. Accordingly, we asked him to have
constructed twelve ships, all of steel, all of the largest
capacity then understood to be practicable on the Great Lakes.
Some of them were to be steamships, and some consorts
for towing, but all were to be built on substantially

(14:12):
the same general pattern, which was to represent the best
ideals then prevalent for ore carrying ships. In giving such
an order, he was exposed of course, to the risk
of paying very high prices. This would have been certain
if mister Mather had announced in advance that he was
prepared to build twelve ships and asked bids on them.
Just how he managed it, I was not told until

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long after, And though it is now an old story
of the Lakes, I repeat it as it may be
new to many. Mister Mather kept the secret of the
number of ships he wished to construct absolutely to himself.
He set his plans and specifications, each substantially a duplicate
of the others, to each of the firms, and asked
each firm to bid on one or two ships, as

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the case might be. All naturally supposed that at most
only two ships were to be built, and each was
extremely eager to get the work or at least one
of the two vessels. On the day before the contracts
were to be let, all the bidders were in Cleveland
on the invitation of mister Mather. One by one they
were taken into his private office for special conference covering

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all the details preparatory to the final bid. At the
appointed hour, the bids were in deep was the interest
on the part of all the gentlemen as to who
would be the lucky one to draw the prize. Mister
Mather's manner had convinced each that somehow he himself must
be the favored bidder. Yet when he came to meet
his competitors in the hotel lobby, the beams of satisfaction

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which plainly emanated from their faces also compelled many heart searchings.
At last, the crucial hour came, and at about the
same moment, each gentleman received a little note from mister Mather,
conveying to him the tidings that to him had been
awarded a contract sufficient to supply his works to their
utmost capacity. They all rushed with a common impulse to

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the hotel lobby, where they had been accustomed to meet,
each bent on displaying his note and commiserating his unsuccessful rivals,
only to discover that each had a contract for all
he could do, and that each had been actually bidding
against nobody but himself. Great was the hilarity which covered
their chagrin when they met and compared notes and looked

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into each other's faces. However, all were happy and satisfied.
But it may be said in passing that these amiable
gentlemen all United subsequently in one company which has had
a highly satisfactory career, and that we paid a more
uniform price for our subsequent purchases of ships. After the
combination had been made a landsman for ship manager. With

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these ships ordered, we were fairly at the beginning of
the ore enterprise. But we realized that we had to
make some arrangement to operate the ships, and we again
turned to our competitor, mister Mather, in the hope that
he would add this to his cares. Unfortunately, because of
his obligations to others, he felt that this was impractical.
I asked mister Gates one day soon after this, how

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are we to get some one to run these big
ships we have ordered? Do you know of any experienced firm? No,
said mister Gates. I do not know of any firm
to suggest at the moment, But why not run them ourselves?
You don't know anything about ships, do you? No? He admitted,
But I have in mind a man who I believe
could do it. Although when I tell you about him,

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I fear you will think that his qualifications are not
the best. However, he has the essentials. He lives up
the state and never was on a ship in his life,
he probably would 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. He has the
art of quickly mastering a subject, even though it be

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new to him and difficult. We still have some months
before the ships will be completed, and if if we
put him to work now, he will be ready to
run the ships as soon as they are ready to
be run. All right, I said, let's give him the job,
and we did. That man was mister L. M. Bowers.
He came from Broome County, New York. Mister Bowers went

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from point to point on the lakes where the boats
were building, and studied them minutely. He was quickly able
to make valuable suggestions about their construction, which were approved
and adopted by the designers. When the vessels were finished,
he took charge of them from the moment they floated,
and he managed these and the dozens which followed, with
the skill and ability that commanded the admiration of all

(18:38):
the sailors on the lakes. He even invented an anchor
which he used with our fleet, and later it was
adopted by other vessels, and I have heard that it
is used in the United States Navy. He remained in
his position until we sold out. We have given mister
Bowers all sorts of hard tasks since we retired from
the lake traffic, and have found him always successful. Lately,

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the health of a member of his family has made
it desirable for him to live in Colorado, and he
is now the vigorous and efficient vice president of the
Colorado Fuel and Iron Company. The Great Ships and the
railroad put us in possession of the most favorable facilities.
From the first the organization was successful. We built up
a huge trade mining and carrying or to Cleveland and

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other lake ports. We kept on building and developing until
finally the fleet grew until it included fifty six large
steel vessels. This enterprise, in common with many other important
business undertakings in which I was interested, required very little
of my personal attention, owing to my good fortune in
having active, competent, and thoroughly reliable representatives who assumed so

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largely the responsibility of administration. It gives me pleasure to
state that the confidence which I have freely given to
business men with whom I have been associated has been
so fully justified selling to the Steel Company. The work
went on uninterruptedly and prosperously until the formation of the

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United States Steel Corporation. A representative of this corporation came
to see us about selling the land, the ore, and
the fleet of ships. The business was going on smoothly
and we had no pressing need to sell. But as
the organizer of the new company felt that our mines
and railroads and ships were a necessary part of the scheme,
we told him we would be pleased to facilitate the

(20:33):
completion of the great undertaking they had I think already
closed with mister Carnegie for his various properties. After some negotiation,
they made an offer which we accepted, whereby the whole plant, mines, ships, railway,
et cetera, should become a part of the United States
Steel Corporation. The price paid was we felt very moderate

(20:55):
considering the present and prospective value of the property. This
transi action bids fair to show a great profit to
the Steel company for many years, and as our payment
was largely in the securities of the company, we have
the opportunity to participate in this prosperity. And so, after
a period of about seven years, I went out of

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all association with the mining, the transporting and the selling
of iron, ore follow the laws of trade, going over
again in my mind the events connected with this or
experience that grew out of investments that seemed at the time,
to say the least, rather unpromising. I am impressed anew
with the importance of a principle I have often referred to.

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If I can make this point clear to the young
man who has had the patience to follow these reminiscences
so far, it will be a satisfaction to me, and
I hope it may be a benefit to him. The
underlying essential element of success in business affairs is to
follow the established laws of high class dealing. Keep to
broad and shore lines and study them to be certain

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that they are correct ones. Watch the natural operations of
trade and keep within them. Don't even think of temporary
or sharp advantages. Don't waste your effort on a thing
which ends in a petty triumph unless you are satisfied
with the life of petty success. Be sure that before
you go into an enterprise, you see your way clear

(22:22):
to stay through to a successful end. Look ahead. It
is surprising how many bright business men go into important
undertakings with little or no study of the controlling conditions
they risk there all upon study diligently your capital requirements,
and fortify yourself fully to cover possible setbacks, because you

(22:42):
can absolutely count on meeting setbacks. Be sure that you
are not deceiving yourself at any time about actual conditions.
The man who starts out simply with the idea of
getting rich won't succeed. You must have a larger ambition.
There is no mystery in business success. The g eight
industrial leaders have told again and again the plain and

(23:03):
obvious fact that there can be no permanent success without
fair dealing that leads to widespread confidence in the man himself,
and that is the real capital we all prize and
work for. If you do each day's task successfully and
stay faithfully within these natural operations of commercial laws which
I talk so much about, and keep your head clear,

(23:26):
you will come out all right, and will then perhaps
forgive me for moralizing in this old fashioned way. It
is hardly necessary to caution a young man who reads
so sober a book as this not to lose his
head over a little success, or to grow impatient or
discouraged by a little failure. Panic experiences. I had desired

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to retire from business in the early nineties, having begun
work so young, I felt that at fifty it was
due me to have freedom from absorption in active business
affairs and to devote myself to a variety of interests
other than money making, which I claimed a portion of
my time since the beginning of my business career. But
eighteen ninety one ninety two were years of ominous outlook.

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In eighteen ninety three the storm broke and I had
many investments to care for. As I have already related,
this year and the next was a trying period of
grave anxiety to everyone. No one could retire from work
at such a time. In the standard we continue to
make progress even through all these panic years, as we
had large reserves of cash on account of our very

(24:33):
conservative methods of financing. In eighteen ninety four or eighteen
ninety five, I was able to carry out my plans
to be relieved from any association with the actual management
of the company's affairs. From that time, as I have said,
I have had little or no part in the conduct
of the business since eighteen fifty seven. I can remember

(24:56):
all the great panics, but I believe the panic of
nineteen o seven was the most trying. No one escaped
from it, great or small. Important institutions had to be
supported and carried through the time of distrust and unreasoning fear.
To mister Morgan's real and effective help. I should join
with other business men and give great praise. His commanding

(25:17):
personality served a most valuable end. He acted quickly and
resolutely when quickness and decision were the things most needed
to regain confidence, and he was efficiently seconded by many
able and leading financiers of the country who cooperated courageously
and effectively to restore confidence and prosperity. The question has

(25:38):
been asked, if I think we shall revive quickly from
the panic of October nineteen o seven. I hesitate to
speak on the subject, since I am not a prophet
nor the son of a prophet. But as to the
ultimate outcome, there is of course no doubt. This temporary
setback will lead to safer institutions and more conservative management

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upon the part of every one, and this is a
quality we need. It will not long depress our wonderful
spirit of initiative. The country's resources have not been cut down,
nor injured by financial distrust. A gradual recovery will only
tend to make the future all the more secure. And
patience is a virtue in business affairs as in other things.

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Here again I would venture to utter a word of
caution to business men. Let them study their own affairs
frankly and face the truth. If their methods are extravagant,
let them realize the facts and act accordingly. One cannot
successfully go against natural tendencies, and it is folly to
fail to recognize them. It is not easy for so

(26:43):
impressionable and imaginative a people as we Americans are, to
come down to plain hard facts. Yet we are doing
it without loss of self esteem or prestige throughout the world.
End of Chapter five, recording by William Tomko