Random Reminiscences of Men and Events
in 1874 been engaged in the lubricating oil business which was carried
on after his death as a corporation known as the Backus Oil Company.
In the latter part of 1878, our company purchased certain portions of
the property of this company. The negotiations which led to this
purchase extended over several weeks, being conducted on behalf of
Mrs. Backus, as the principal stockholder, by Mr. Charles H. Marr, and
on behalf of our company by Mr. Peter S. Jennings. I personally had
nothing to do with the negotiations except that, when the matter first
came up, Mrs. Backus requested me to call at her house, which I did,
when she spoke of selling the property to our company and requested me
to personally conduct the negotiations with her with reference to it.
This I was obliged to decline to do, because, as I then explained to
her, I was not familiar with the details of the business. In that
conversation I advised her not to take any hasty action, and when she
expressed fears about the future of the business, stating, for
example, that she could not get cars to transport sufficient oil, I
said to her that, though we were using our cars and required them in
our business, yet we would loan her any number she needed, and do
anything else in reason to assist her, and I did not see why she could
not successfully prosecute her business in the future as in the past.
I told her, however, that if after reflection she desired to pursue
negotiations for the sale of her property some of our people, familiar
with the lubricating oil business, would take up the question with
her. As she still expressed a desire to have our company buy her
property, negotiations were taken up by Mr. Jennings, and the only
other thing that I had to do with the matter was that when our experts
reported that in their judgment the value of the works, good will, and
successorship which we had decided to buy were worth a certain sum, I
asked them to add $10,000, in order to make doubly sure that she
received full value. The sale was consummated, as we supposed, to the
entire satisfaction of Mrs. Backus, and the purchase price which had
been agreed upon was paid.
To my profound astonishment, a day or two after the transaction had
been closed, I received from her a very unkind letter complaining that
she had been unjustly treated. After investigating the matter I wrote
her the following letter:
November 13, 1878.
DEAR MADAM:
I have held your note of the 11th inst., received yesterday, until
to-day, as I wished to thoroughly review every point connected with
the negotiations for the purchase of the stock of the Backus Oil
Company, to satisfy myself as to whether I had unwittingly done
anything whereby you could have any right to feel injured. It is
true that in the interview I had with you I suggested that if you
desired to do so, you could retain an interest in the business of
the Backus Oil Company, by keeping some number of its shares, and
then I understood you to say that if you sold out you wished to go
entirely out of the business. That being my understanding, our
arrangements were made in case you concluded to make the sale that
precluded any other interests being represented, and therefore,
when you did make the inquiry as to your taking some of the stock,
our answer was given in accordance with the facts noted above, but
not at all in the spirit in which you refer to the refusal in your
note. In regard to the reference that you make as to my permitting
the business of the Backus Oil Company to _be taken_ from you, I
say that in this as in all else you have written in your letter of
the 11th inst., you do me most grievous wrong. It was but of little
moment to the interests represented by me whether the business of
the Backus Oil Company was purchased or not. I believe that it was
for your interest to make the sale, and am entirely candid in this
statement, and beg to call your attention to the time, some two
years ago, when you consulted Mr. Flagler and myself as to selling
out your interests to Mr. Rose, 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; but wishing to take a liberal
view of it, I urged the proposal of paying $60,000, which was
thought much too high by some of our parties. I believe that if you
would reconsider what you have written in your letter, to which
this is a reply, you must admit having done me great injustice, and
I am satisfied to await upon your innate sense of right for such
admission. However, in view of what seems to be your present
feeling, I now offer to restore to you the purchase made by us, you
simply returning the amount of money which we have invested, and
leaving us as though no purchase has been made.
Should you not desire to accept this proposal, I offer to you 100,
200 or 300 shares of the stock at the same price that we paid for
the same, with this addition, that if we keep the property we are
under engagement to pay into the treasury of the Backus Oil Company
any amount which added to the amount already paid would make a
total of $100,000 and thereby make the shares $100 each.
That you may not be compelled to hastily come to a conclusion, I
will leave open for three days these propositions for your
acceptance or declination, and in the meantime believe me,
Yours very truly,
JOHN D. ROCKEFELLER.
Neither of these offers was accepted. In order that this may not rest
on my unsupported assertion, I submit the following documents: The
first is a letter from Mr. H.M. Backus, a brother of Mrs. Backus's
deceased husband, who had been associated with the business and had
remained with the company after his death. The letter was written
without any solicitation whatever on my part, but I have since
received permission from Mr. Backus to print it. It is followed by
extracts from affidavits made by the gentleman who conducted the
negotiations on behalf of Mrs. Backus. I have no wish to reprint the
complimentary allusion to myself in Mr. Backus's letter, but have
feared to omit a word of it lest some misunderstanding ensue:
BOWLING GREEN, OHIO, September 18, '03.
MR. JOHN D. ROCKEFELLER,
Cleveland, Ohio.
I do not know whether you will ever receive this letter or not,
whether your secretary will throw it into the waste-basket or not,
but I will do my part and get it off my mind, and it will not be my
fault if you do not receive or read it. Ever since the day that my
deceased brother's wife, Mrs. F.N. Backus, wrote you the unjust and
unreasonable letter in reference to the sale of the property of the
old Backus Oil Company, in which I had a small interest, I have
wanted to write you and record my disapproval of that letter. I
lived with my brother's family, was at the house the day you called
to talk the matter of the then proposed purchase of the property
with Mrs. Backus by her request, as she told Mr. Jennings that she
wanted to deal through you. I was in favour of the sale from the
first.
I was with Mrs. Backus all through the trouble with Mr. Rose and
with Mr. Maloney, did what I could to encourage her, and to prevent
Mr. Rose from getting the best of her. Mrs. Backus, in my opinion,
is an exceptionally good financier, but she does not know and no
one can convince her that the best thing that ever happened to her
financially was the sale of her interest in the Backus Oil Company
to your people. She does not know that five more years of the then
increasing desperate competition would have bankrupted the company,
and that with the big debt that she was carrying on the lot on
Euclid Avenue, near Sheriff Street, she would have been swamped,
and that the only thing that ever saved her and the oil business
generally was the plan of John D. Rockefeller. She thinks that you
literally robbed her of millions, and feeds her children on that
diet three times a day more or less, principally more, until it has
become a mania with her, and no argument that any one else can
suggest will have any effect upon her. She is wise and good in many
ways, but on that one subject she is one-sided, I think. Of course,
if we could have been assured of continued dividends, I would have
been opposed to selling the business, but that was out of the
question. I know of the ten thousand dollars that was added to the
purchase price of the property at your request, and I know that you
paid three times the value of the property, and I know that all
that ever saved our company from ruin was the sale of its property
to you, and I simply want to ease my mind by doing justice to you
by saying so. After the sale to your company I was simple enough to
go to Buffalo and try it again, but soon met with defeat and
retired with my flag in the dust. I then went to Duluth, and was on
the top wave, till the real-estate bubble broke, and I broke with
it. I have had my ups and downs, but I have tried to take my
medicine and look pleasant instead of sitting down under a juniper
tree and blaming my losses to John D. Rockefeller.
I suppose I would have put off writing this letter for another year
or more as I have done so long, had it not been for a little chat
that I had with Mr. Hanafin, Superintendent of the Buckeye Pipe
Line Company, a day or two since when I was relating the sale,
etc., of the old B.O. Co.'s business, and in that way revived the
intention that had lain dormant since the last good resolution in
regard to writing it was made. But it's done now, and off my mind.
With much respect and admiration to John D. Rockefeller I remain,
Yours truly,
H.M. BACKUS.
It appears from the affidavits that the negotiations were conducted on
behalf of Mrs. Backus and her company by Charles H. Marr, who had been
in the employ of the Backus Company for some time, and by Mr. Maloney,
who was the superintendent of the company from the time of its
organization and was also a stockholder; and on behalf of the Standard
Oil Company by Mr. Peter S. Jennings.
There has been an impression that the Standard Oil Company purchased
for $79,000 property which was reasonably worth much more, and that
this sacrifice was occasioned by threats and compulsion. Mr. Jennings
requested Mr. Marr to submit a written proposition giving the price
put by the Backus Company upon the several items of property and
assets which it desired to sell. This statement was furnished and was
annexed to Mr. Jennings's affidavit. The Standard Oil Company finally
decided not to purchase all of the assets of the company, but only the
oil on hand, for which it paid the full market price, amounting to
about $19,000, and the item "works, good-will, and successorship,"
which were offered by Mr. Marr at $71,000, and for which the Standard
offered $60,000, which was promptly accepted. Mr. Marr made affidavit
as follows:
"Charles H. Marr, being duly sworn, says that, in behalf of the
Backus Oil Company, he conducted the negotiations which led to the