No sooner had I entered Mr. Rockefeller’s office than I employed every moment I could spare from current business and benevolence in making as thorough a study of his investments with the syndicates of friends as I could. The files were thrown open to me, and I unearthed some twenty of these sick and dying corporations, every one of which showed a balance sheet in red ink. Just then came the panic of 1893. It was impossible for the stockholders of these corporations to furnish money for their development of operation. Sale or receiverships became inevitable. Mr. Rockefeller determined to dissociate himself entirely from the syndicates of friends and I set about the slow and difficult work of effecting an amicable but complete separation from them. In some cases we bought out the other interests. In other cases we sold out our interests. Sometimes we traded stocks to effect the separation. In the end Mr. Rockefeller controlled practically all the stock of some thirteen of the corporations of the now dissolved syndicates, and had little or no interest in the others.
Among these inheritances were several corporations in the Puget Sound country. The syndicate, then influential in the management of the Northern Pacific, had undertaken to develop at limitless expense a city called Everett in a wilderness on the shore of Puget Sound. There was an Everett Steel and Wire Company which, after several years, I sold to the American Steel and Wire Company. There was a Puget Sound Reduction Company, established at great cost for the smelting of precious ores. This I sold to the American Smelting and Refining Company—the Guggenheims then controlling that company. The Puget Sound Pulp and Paper Company I sold after a few years to the enterprising young Englishmen who had it in charge on salary, and who sold a large part of their annual output in the Orient. Then, too, we had a most picturesque little railroad which ran from Everett sixty miles up into the mountains, ending in a vast amphitheatre of crags. It was called the Everett and Monte Cristo Railroad. It cost nearly Two Millions and was designed to convey to the smelter the limitless gold, silver, lead, and arsenic ores that were supposed to lie deep in the bowels of the mountains. There were the Pride of the Mountains, the Monte Cristo, the Rainy, and other veins supposed to contain fabulous wealth. All proved to be either mere “scabs” on the surface, or else too poorly mineralized to pay. The railroad had been built for the most part with Mr. Rockefeller’s money before the mines had been fully explored and their worthlessness demonstrated. One spring a big freshet washed out the railroad and a part only was rebuilt. The scenery of these snow-capped mountains was hardly less imposing and awe-inspiring than the Alps around the Jungfrau or the Matterhorn. In my annual trips I used to ride up on the cow-catcher and be regaled at dinner with the delicious trout caught in the stream. There was in Everett a hotel company, and a street railway company. In all these various companies Mr. Rockefeller’s investment amounted to some Two or Three Millions. Some of them, for illustration, the mines, were total losses. I recovered part of the heavy railroad cost by selling all that remained of the road after the flood to the Northern Pacific.
Of all these interests there was one superlatively good. It was the Everett Timber and Investment Company. I thought this good from the start and offered every shareholder from the outset one hundred percent of cost for his stock. All quickly accepted and Mr. Rockefeller came to own every share. So soon as possible I began the wholesale buying of standing timber through a competent local agent, both in Washington and British Columbia. In the course of years, as the price rose to five or six times the cost, I would sell tracts of timber for which buyers appeared. I was able to report to Mr. Rockefeller before I left him that I had already made enough out of the timber and investment company alone to repay him all his Puget Sound losses, and there remained an unsold surplus of one billion feet at least on which there had already accrued Two Millions more of profit. So, with all his heavy losses in the Puget Sound country, Mr. Rockefeller came out in the end with millions of profit.
The management of these various Puget Sound interests took some of my time every day for a good many years before all were finally disposed of. I used to make an annual visit to look them over, besides carefully auditing their accounts through a skilled auditor. These trips West in a private car were always delightful. I invariably took friends. Once Mr. John D. Rockefeller, Junior, and our friend, Mr. Oglebay; once Auntie and Vida Harper, then a young lady, and Frank. Once or twice Mother and Frederick; once or twice Mr. Gale and members of his family; once Mr. Murray. We always went by the Northern Pacific, except once only by the Union Pacific. But we always came back by the Canadian Pacific for its superb scenery. We would stop over a day at points of great interest, like Lake Pend Oreille and Banff. We lived luxuriously in our private car and nothing could be more delightful, not even European travel.
The separation of interests in breaking up the syndicates involved a great deal of delicate negotiation. It was known that Mr. Rockefeller had not conceived, organized, or conducted any of these companies, and that of all the members of the syndicates he was by far the heaviest loser. No one therefore was disposed to blame Mr. Rockefeller for the failures and the disappointed hopes. In disentangling the interests, all persons were treated precisely alike and with entire and obvious fairness. Each stockholder was given the privilege of selling out at a price fixed for all, or remaining in and going on with Mr. Rockefeller, in such of the companies as he adopted. 1 do not recall one word of criticism from any stockholder.
And in the later management of the companies that fell to me to conduct, some thirteen, if I remember aright, impoverished, struggling with difficulties, and in a few cases entirely hopeless, we never, so far as we knew, made an enemy.
And, too, when one by one we sold them out, we had no difficulties with any of the purchasers. In the entire administration of these Puget Sound companies, from first to last, we never were involved in a law suit or an acrimonious controversy. This was due not only to our desire to be fair, but also to clear and exact understandings in writing in all our important dealings.
In this chapter it has been convenient for me to touch lightly on a number of Mr. Rockefeller’s Pacific Coast investments and, rapidly glancing forward through some eight or ten years, to show how at length 1 disposed of them or worked them out into solid investments. We shall not need to recur to them and so in the next chapter 1 will return from this long excursion into the future to the year 1892, in which this chapter started.
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The Lake Superior Consolidated Iron Mines
Chapters In My Life 