Part 4 (2/2)

”I am no beggar,” I have heard many of them say, to which I could only reply: ”I am sorry you feel that way about it.”

I have been this sort of beggar all my life and the experiences I have had were so interesting and important to me that I will venture to speak of them in a later chapter.

CHAPTER IV

SOME EXPERIENCES IN THE OIL BUSINESS

During the years when I was just coming to man's estate, the produce business of Clark & Rockefeller went on prosperously, and in the early sixties we organized a firm to refine and deal in oil. It was composed of Messrs. James and Richard Clark, Mr. Samuel Andrews, and the firm of Clark & Rockefeller, who were the company. It was my first direct connection with the oil trade. As the new concern grew the firm of Clark & Rockefeller was called upon to supply a large special capital.

Mr. Samuel Andrews was the manufacturing man of the concern, and he had learned the process of cleansing the crude oil by the use of sulphuric acid.

In 1865 the partners.h.i.+p was dissolved; it was decided that the cash a.s.sets should be collected and the debts paid, but this left the plant and the good-will to be disposed of. It was suggested that they should go to the highest bidder among ourselves. This seemed a just settlement to me, and the question came up as to when the sale should be held and who would conduct it. My partners had a lawyer in the room to represent them, though I had not considered having a legal representative; I thought I could take care of so simple a transaction. The lawyer acted as the auctioneer, and it was suggested that we should go on with the sale then and there. All agreed, and so the auction began.

I had made up my mind that I wanted to go into the oil trade, not as a special partner, but actively on a larger scale, and with Mr. Andrews wished to buy that business. I thought that I saw great opportunities in refining oil, and did not realize at that time that the whole oil industry would soon be swamped by so many men rus.h.i.+ng into it. But I was full of hope, and I had already arranged to get financial accommodation to an amount that I supposed would easily pay for the plant and good-will. I was willing to give up the other firm of Clark & Rockefeller, and readily settled that later--my old partner, Mr.

Clark, taking over the business.

The bidding began, I think, at $500 premium. I bid a thousand; they bid two thousand; and so on, little by little, the price went up.

Neither side was willing to stop bidding, and the amount gradually rose until it reached $50,000, which was much more than we supposed the concern to be worth. Finally, it advanced to $60,000, and by slow stages to $70,000, and I almost feared for my ability to buy the business and have the money to pay for it. At last the other side bid $72,000. Without hesitation I said $72,500. Mr. Clark then said:

”I'll go no higher, John; the business is yours.”

”Shall I give you a check for it now?” I suggested.

”No,” Mr. Clark said, ”I'm glad to trust you for it; settle at your convenience.”

The firm of Rockefeller & Andrews was then established, and this was really my start in the oil trade. It was my most important business for about forty years until, at the age of about fifty-six, I retired.

The story of the early history of the oil trade is too well known to bear repeating in detail. The cleansing of crude petroleum was a simple and easy process, and at first the profits were very large.

Naturally, all sorts of people went into it: the butcher, the baker, and the candlestick-maker began to refine oil, and it was only a short time before more of the finished product was put on the market than could possibly be consumed. The price went down and down until the trade was threatened with ruin. It seemed absolutely necessary to extend the market for oil by exporting to foreign countries, which required a long and most difficult development; and also to greatly improve the processes of refining so that oil could be made and sold cheaply, yet with a profit, and to use as by-products all of the materials which in the less-efficient plants were lost or thrown away.

These were the problems which confronted us almost at the outset, and this great depression led to consultations with our neighbors and friends in the business in the effort to bring some order out of what was rapidly becoming a state of chaos. To accomplish all these tasks of enlarging the market and improving the methods of manufacture in a large way was beyond the power or ability of any concern as then const.i.tuted. It could only be done, we reasoned, by increasing our capital and availing ourselves of the best talent and experience.

It was with this idea that we proceeded to buy the largest and best refining concerns and centralize the administration of them with a view to securing greater economy and efficiency. The business grew faster than we had antic.i.p.ated.

This enterprise, conducted by men of application and ability working hard together, soon built up unusual facilities in manufacture, in transportation, in finance, and in extending markets. We had our troubles and set-backs; we suffered from some severe fires; and the supply of crude oil was most uncertain. Our plans were constantly changed by changed conditions. We developed great facilities in an oil centre, erected storage tanks, and connected pipe-lines; then the oil failed and our work was thrown away. At best it was a speculative trade, and I wonder that we managed to pull through so often; but we were gradually learning how to conduct a most difficult business.

FOREIGN MARKETS

Several years ago, when asked how our business grew to such large proportions I explained that our first organization was a partners.h.i.+p and afterward a corporation in Ohio. That was sufficient for a local refining business. But, had we been dependent solely upon local business, we should have failed long since. We were forced to extend our markets into every part of the world. This made the sea-board cities a necessary place of business, and we soon discovered that manufacturing for export could be more economically carried on there; hence refineries were established at Brooklyn, at Bayonne, at Philadelphia, at Baltimore, and necessary corporations were organized in the different states.

We soon discovered, as the business grew, that the primary method of transporting oil in barrels could not last. The package often cost more than the contents, and the forests of the country were not sufficient to supply cheaply the necessary material for an extended time. Hence we devoted attention to other methods of transportation, adopted the pipe-line system, and found capital for pipe-line construction equal to the necessities of the business.

To operate pipe-lines required franchises from the states in which they were located--and consequently corporations in those states--just as railroads running through different states are forced to operate under separate state charters. To perfect the pipe-line system of transportation required many millions of capital. The entire oil business is dependent upon the pipe-line. Without it every well would be less valuable and every market at home and abroad would be more difficult to serve or retain, because of the additional cost to the consumer. The expansion of the whole industry would have been r.e.t.a.r.ded without this method of transportation.

Then the pipe-line system required other improvements, such as tank-cars upon railroads, and finally the tank-steamer. Capital had to be furnished for them and corporations created to own and operate them.

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