Random Reminiscences of Men and Events
organization has not only lasted but its efficiency has increased. For
fourteen years I have been out of business, and in eight or ten years
went only once to the company's office.
In the summer of 1907 I visited again the room at the top of the
Standard Oil Company's building, where the officers of the company and
the heads of departments have had their luncheon served for many
years. I was surprised to find so many men who had come to the front
since my last visit years ago. Afterward I had an opportunity to talk
with old associates and many new ones, and it was a source of great
gratification to me to find that the same spirit of cooeperation and
harmony existed unchanged. This practice of lunching together, a
hundred or more at long tables in most intimate and friendly
association, is another indication of what I contend, slight as it may
seem to be at first thought. Would these people seek each other's
companionship day after day if they had been forced into this
relation? People in such a position do not go on for long in a
pleasant and congenial intimacy.
For years the Standard Oil Company has developed step by step, and I
am convinced that it has done well its work of supplying to the people
the products from petroleum at prices which have decreased as the
efficiency of the business has been built up. It gradually extended
its services first to the large centres, and then to towns, and now to
the smallest places, going to the homes of its customers, delivering
the oil to suit the convenience of the actual users. This same system
is being followed out in various parts of the world. The company has,
for example, three thousand tank wagons supplying American oil to
towns and even small hamlets in Europe. Its own depots and employees
deliver it in a somewhat similar way in Japan, China, India, and the
chief countries of the world. Do you think this trade has been
developed by anything but hard work?
This plan of selling our products direct to the consumer and the
exceptionally rapid growth of the business bred a certain antagonism
which I suppose could not have been avoided, but this same idea of
dealing with the consumer directly has been followed by others and in
many lines of trade, without creating, so far as I recall, any serious
opposition.
This is a very interesting and important point, and I have often
wondered if the criticism which centred upon us did not come from the
fact that we were among the first, if not the first, to work out the
problems of direct selling to the user on a broad scale. This was done
in a fair spirit and with due consideration for everyone's rights. We
did not ruthlessly go after the trade of our competitors and attempt
to ruin it by cutting prices or instituting a spy system. We had set
ourselves the task of building up as rapidly and as broadly as
possible the volume of consumption. Let me try to explain just what
happened.
To get the advantage of the facilities we had in manufacture, we
sought the utmost market in all lands--we needed volume. To do this we
had to create selling methods far in advance of what then existed; we
had to dispose of two, or three, or four gallons of oil where one had
been sold before, and we could not rely upon the usual trade channels
then existing to accomplish this. It was never our purpose to
interfere with a dealer who adequately cultivated his field of
operations, but when we saw a new opportunity or a new place for
extending the sale by further and effective facilities, we made it
our business to provide them. In this way we opened many new lines in
which others have shared. In this development we had to employ many
comparatively new men. The ideal way to supply material for higher
positions is, of course, to recruit the men from among the youngest in
the company's service, but our expansion was too rapid to permit this
in all cases. That some of these employees were over-zealous in going
after sales it would not be surprising to learn, but they were acting
in violation of the expressed and known wishes of the company. But
even these instances, I am convinced, occurred so seldom, by
comparison with the number of transactions we carried on, that they
were really the exceptions that proved the rule.
Every week in the year for many, many years, this concern has brought
into this country more than a million dollars gold, all from the
products produced by American labour. I am proud of the record, and
believe most Americans will be when they understand some things
better. These achievements, the development of this great foreign
trade, the owning of ships to carry the oil in bulk by the most
economical methods, the sending out of men to fight for the world's
markets, have cost huge sums of money, and the vast capital employed
could not be raised nor controlled except by such an organization as
the Standard is to-day.
To give a true picture of the early conditions, one must realize that
the oil industry was considered a most hazardous undertaking, not
altogether unlike the speculative mining undertakings we hear so much
of to-day. I well remember my old and distinguished friend, Rev.
Thomas W. Armitage, for some forty years pastor of a great New York
church, warning me that it was worse than folly to extend our plants
and our operations. He was sure we were running unwarranted risks,
that our oil supply would probably fail, the demand would decline, and
he, with many others, sometimes I thought almost everybody, prophesied
ruin.
None of us ever dreamed of the magnitude of what proved to be the
later expansion. We did our day's work as we met it, looking forward
to what we could see in the distance and keeping well up to our
opportunities, but laying our foundations firmly. As I have said,
capital was most difficult to secure, and it was not easy to interest
conservative men in this adventurous business. Men of property were
afraid of it, though in rare cases capitalists were induced to unite
with us to a limited extent. If they bought our stock at all, they
took a little of it now and then as an experiment, and we were
painfully conscious that they often declined to buy new stock with
many beautiful expressions of appreciation.
The enterprise being so new and novel, on account of the fearfulness
of certain holders in reference to its success, we frequently had to
take stock to keep it from going begging, but we had such confidence
in the fundamental value of the concern that we were willing to assume
this risk. There are always a few men in an undertaking of this kind
who would risk all on their judgment of the final result, and if the
enterprise had failed, these would have been classed as visionary
adventurers, and perhaps with good reason.
The 60,000 men who are at work constantly in the service of the
company are kept busy year in and year out. The past year has been a
time of great contraction, but the Standard has gone on with its plans
unchecked, and the new works and buildings have not been delayed on
account of lack of capital or fear of bad times. It pays its workmen
well, it cares for them when sick, and pensions them when old. It has
never had any important strikes, and if there is any better function
of business management than giving profitable work to employees year
after year, in good times and bad, I don't know what it is.
Another thing to be remembered about this so-called "octopus" is that
there has been no "water" introduced into its capital (perhaps we felt
that oil and water would not have mixed); nor in all these years has
any one had to wait for money which the Standard owed. It has suffered
from great fires and losses, but it has taken care of its affairs in
such a way that it has not found it necessary to appeal to the general
public to place blocks of bonds or stock; it has used no underwriting
syndicates or stock-selling schemes in any form, and it has always
managed to finance new oil field operations when called upon.
It is a common thing to hear people say that this company has crushed
out its competitors. Only the uninformed could make such an assertion.
It has and always has had, and always will have, hundreds of active
competitors; it has lived only because it has managed its affairs well
and economically and with great vigour. To speak of competition for a
minute: Consider not only the able people who compete in refining
oil, but all the competition in the various trades which make and sell
by-products--a great variety of different businesses. And perhaps of
even more importance is the competition in foreign lands. The Standard
is always fighting to sell the American product against the oil
produced from the great fields of Russia, which struggles for the
trade of Europe, and the Burma oil, which largely affects the market
in India. In all these various countries we are met with tariffs which
are raised against us, local prejudices, and strange customs. In many
countries we had to teach the people--the Chinese, for example--to
burn oil by making lamps for them; we packed the oil to be carried by
camels or on the backs of runners in the most remote portions of the
world; we adapted the trade to the needs of strange folk. Every time
we succeeded in a foreign land, it meant dollars brought to this
country, and every time we failed, it was a loss to our nation and its
workmen.
One of our greatest helpers has been the State Department in
Washington. Our ambassadors and ministers and consuls have aided to
push our way into new markets to the utmost corners of the world.
I think I can speak thus frankly and enthusiastically because the
working out of many of these great plans has developed largely since I
retired from the business fourteen years ago.
The Standard has not now, and never did have a royal road to
supremacy, nor is its success due to any one man, but to the multitude
of able men who are working together. If the present managers of the
company were to relax efforts, allow the quality of their product to
degenerate, or treat their customers badly, how long would their
business last? About as long as any other neglected business. To read
some of the accounts of the affairs of the company, one would think
that it had such a hold on the oil trade that the directors did little
but come together and declare dividends. It is a pleasure for me to
take this opportunity to pay tribute to the work these men are doing,
not only for the company they serve, but for the foreign trade of our
country; for more than half of all the product that the company makes
is sold outside of the United States. If, in place of these directors,
the business were taken over and run by anyone but experts, I would
sell my interest for any price I could get. To succeed in a business
requires the best and most earnest men to manage it, and the best men
rise to the top. Of its origin and early plans I will speak later.
THE MODERN CORPORATION
Beyond question there is a suspicion of corporations. There may be
reason for such suspicion very often; for a corporation may be moral
or immoral, just as a man may be moral or the reverse; but it is folly
to condemn all corporations because some are bad, or even to be unduly
suspicious of all, because some are bad. But the corporation in form
and character has come to stay--that is a thing that may be depended
upon. Even small firms are becoming corporations, because it is a
convenient form of partnership.
It is equally true that combinations of capital are bound to continue
and to grow, and this need not alarm even the most timid if the
corporation, or the series of corporations, is properly conducted with
due regard for the rights of others. The day of individual competition
in large affairs is past and gone--you might just as well argue that