Excerpts about Oliver Hazard Payne from "Titan" by Ron Chernow

p 144

...his company. That afternoon, when he {Oliver Payne} surveyed Standard Oil's ledgers, he was thunderstruck by the profits. Whether he was impressed by the railroad rebates or operating efficiencies is unclear, but he eagerly told Rockefeller, "Let us get the appraisers in and see what the plant is worth. "After conferring with his partners, Payne consented to a $400,000 price for his refinery. Rockefeller knew that he was overpaying but couldn't resist a deal that would certify his position as the world's largest oil refiner at age thirty-one. Though Rockefeller stipulated that James Clark wasn't welcome at Standard Oil, he wanted to enlist Payne's services, and the latter soon shared a private office with Rockefeller and Flagler. James Clark later told Ida Tarbell that he sold out only from fear of the SIC contract. As Tarbell's assistant reported, "He stated positively that Clark, Payne & Co. did not sell out before the organization of the SIC, and that it never considered selling out to the Standard before the SIC was formed."") According to later lawsuits, whenever Rockefeller suggested that rivals sell out to him, the SIC formed the burden of his appeal. Some old Cleveland refiners told Ida Tarbell that his menacing pitch ran as follows:

You see, this scheme is bound to work. It means an absolute control by us of the oil business. There is no chance for anyone outside. But we are going to give everybody a chance to come in. You are to turn over your refinery to my appraisers, and I will give you Standard Oil Company stock or cash, as you prefer, for the value we put upon it. I advise you to take the stock. It will be for your good."

Stung by charges that he had used coercion, Rockefeller retorted that he had been unfailingly friendly and courteous and never mentioned the SIC in negotiations. Strictly speaking, this was probably true, yet the timing of his twenty-two takeovers suggests strongly that the SIC was a prime factor and that the deals were done amid an atmosphere of well-timed intimidation. Several rivals alleged that Rockefeller orchestrated a chorus of terrifying rumors about his secret pact with the railroads. Even without direct threats, he knew his opponents' imaginations would embellish these stories and conjure up a conspiracy of unfathomable scope. "In 1872 reports were purposely circulated to the effect that the Standard Oil Company had entered into agreement with the railroads, whereby no outside refiner could bring crude oil to Cleveland and manufacture it without a loss," rival refiner J. W Fawcett of Fawcett and Critchley told Ida Tarbell in the early 1900s. "The refiners became prematurely alarmed at the reports of destructive competition and inability to secure crude oil, and they fell over each other in their haste to sell out. Had they refused to be coerced, and had they held together, there never would have been a Standard Oil Company.""

pp. 212-213:

In spring 1879, Rockefeller began a thirty-year career as a fugitive from justice, learning to stay nimbly ahead of the law.  For all his scoffing about the Clarion County indictments- "This case will never be brought to trial"- he took no chances.  Afraid of being extradited from New York, Rockefeller asked Chauncey Depew, the attorney for the New York Central, to approach New York governor Lucius Robinson, who agreed to deny any such requests from Pennsylvania. At the same time, Rockefeller had A. J. Cassatt approach Pennsylvania governor Henry M. Hoyt with a request that he cease further efforts to haul him into court. To make sure that the Pennsylvania Railroad didn't double-cross him, Rockefeller boosted production at his Philadelphia refineries serviced by the railroad-a generous bonus that could be canceled at any moment for misbehavior. Meticulous in such maneuvers, Rockefeller made sure to leave no fingerprints and told Captain Vandergrift that it was "of utmost importance that nobody knows of [Standard Oil's] thought of doing something about [the suit] outside the [Clarion] County."

From the outset, Standard Oil defendants saw an advantage in the Clarion County affair, which enabled them to refuse to testify at many civil proceedings by claiming it might harm them in the criminal case. Nevertheless, Rockefeller feared that the Clarion suit might set a precedent and adopted a combative approach. "We are disposed to fight the thing and not be subject to this blackmailing process always," he insisted.

At bottom, Rockefeller must have been genuinely alarmed by the impending criminal prosecution, for he decided to placate the producers and cut a political deal. On the day before Christmas 1879, Standard Oil rescinded the immediate-shipment policy and agreed to meet with producers at the Fifth Avenue Hotel in New York. In a historic agreement, Standard Oil renounced -- or seemed to renounce -- the use of secret rebates and drawbacks and consented to publicly posted freight rates; its United Pipe Lines would no longer discriminate among shippers and would transport all oil within reasonable limits. In return, the criminal and civil cases against Standard Oil in Pennsylvania were scuttled. In time, it emerged that Standard's pledge to repudiate rebates was largely a rhetorical flourish to settle the cases.

Aware that Standard Oil's fate was now being thrashed out in the political arena, Rockefeller reversed a long-standing prejudice and took shares in two Cleveland newspapers, investing $5,000 in the Herald and $10,000 in the Leader, explaining to Colonel Oliver Payne that since "Mr. Flagler felt perhaps we had given too little heed to influences of this kind, I decided best to do it." While Rockefeller's official policy remained one of obdurate silence, he now had more avenues of press access than he admitted. Payne,  meanwhile, believed that Standard Oil should move from bribing politicians to controlling them directly, telling Rockefeller, apropos of the Ohio legislature, "I wish to say that I have got through with sentiment in politics…We must see hereafter that there is one man in the Legislature from this County that has brains, influence and is our man." Rockefeller told Payne to do "all that is necessary."

Around this time, Rockefeller recruited to the Standard legal staff Roger Sherman, who had masterminded the producers' case against him. For years a champion of Oil Creek, Sherman had fought valiantly to imprison Rockefeller. Now Rockefeller was wily enough to offer him a job, and Sherman was naive enough -- or original enough -- to accept it. Always proud of his persuasive powers, Rockefeller took special pleasure in wooing opponents whom he had learned to appreciate by tracking their ploys against him. When a lawyer named Virgil Kline won two lawsuits against him in the 1880s, Rockefeller invited him to his office. "Mr. Kline," he said, "you have given us a good licking. Now I would like to have you come and work for me."   Kline agreed and became a long-standing member of the Standard Oil legal staff.

Things worked out differently for Roger Sherman, who realized after a strangely inactive year on the payroll that Rockefeller had given him a five-year contract expressly to neutralize him. When he tried to wriggle free of the contract, he was able only to strike a compromise that allowed him to resume his general practice in western Pennsylvania while remaining on retainer to Standard Oil. When he later returned to the crusade against Rockefeller, the independents were too disenchanted by his flirtation with Standard to deal with him. True to his wishes, Rockefeller had tarnished Sherman, separating him from his onetime admirers.

Ever since his boyhood as the son of the town pariah, Rockefeller had evinced more than a trace of paranoia. Now, embattled in courts and legislative chambers, he was convinced that evildoers were plotting against him and complained to one colleague about  "this iniquitous proceeding of getting the United States out with a drag-net for the Standard Oil Co."   As chief instigator of his misery, he cited George Rice, an independent refiner, who would pursue him with the tenacity of a harpy for decades.

Rockefeller's movements in 1879 were governed largely by the need to duck subpoenas. In July the New York State Assembly held hearings, chaired by Alonzo Barton Hepburn, to probe clandestine relations between the railroads and various industries.  While the panel examined flour millers, meatpackers, and salt makers, it zeroed in on Standard Oil as the most notorious beneficiary of back scratching with the railroads. That summer, Rockefeller stayed at Forest Hill,  safely beyond the committee's reach.

As was true of many exposes of Rockefeller, the Hepburn hearings fueled public indignation against him while it also inadvertently enhanced his mystique as an invulnerable genius. The committee trotted out William H. Vanderbilt, who paid resounding tribute to the disciplined craft of the Standard Oil executives. "Long ago I said if the thing kept on the oil people would own the roads .... These men are smarter than I am a great deal. They are very..."

pp. 289-292:

…growth, and it came to symbolize all the disquieting forces reshaping America. It was the "parent of the great monopolies which at present masquerade under the new-found name of `Trusts,' " said one newspaper, and it served as shorthand for the new agglomerations of economic power. A business system based on individual enterprise was creating combinations of monstrous size that seemed to threaten that individualism. And modern industry not only menaced small-scale commerce but appeared to constitute a sinister despotism that endangered democracy itself as giant corporations overshadowed government as the most dynamic force in American society.

As the leading figure in this consolidation, Rockefeller was the emblematic figure of the Gilded Age and hence a lightning rod for criticism. He closely followed political developments and was keenly alert to any potential threats to his business interests. In his personal campaign contributions, though, he won a well-earned reputation as a stingy giver, and some politicians even felt miffed at his paltry gifts. The clandestine payoffs made by Standard Oil were a different matter, and Rockefeller never stinted in making payments to get the job done.

At the turn of the century, reporters spilled a great deal of ink over charges that Standard Oil had bought Henry B. Payne's election to the U.S. Senate in 1884. This putative case of political corruption received more attention from critics than any other, although little evidence was ever adduced to substantiate it. With his white hair and wire-rimmed glasses, Henry B. Payne -- father of Standard Oil's treasurer, Oliver Payne -- was an affable man with a distinguished air. A Cleveland lawyer and perpetual candidate for public office, he lobbied for mandatory education in Cleveland, worked ardently for the Union cause, and helped to found the Case School of Applied Sciences, while also serving as part owner of two railroads. Unlike his wealthy Euclid Avenue neighbors, Payne was a Democrat who had campaigned for Stephen Douglas in his 1860 presidential bid against Abraham Lincoln. Ironically, in light of later allegations, when he first ran for Congress, Standard Oil supported his opponent and helped to defeat him. Ambitious for his father, the cold, haughty Oliver Payne acted as his perennial campaign manager, starting with his congressional victory in 1874. Two years later, Oliver tried unsuccessfully to capture the Democratic presidential nomination for his father -- a presumptuous bid for an elderly freshman congressman. This lost cause earned Oliver a somewhat Machiavellian reputation, and one newspaper observed acidly: "He's got a purse that is inexhaustible, a silent tongue, and a capacity for the organization and manipulation of men."

In the late 1870s, Henry Payne lost his congressional seat. Approaching seventy, he might have retired gracefully from politics, but he could not seem to shed his daydreams of higher office. When he sought the Democratic presidential nomination in 1880, his opponents cruelly baited him about his age, and one stooped to calling him "an attenuated, dried-up old fossil." To retire these charges, Payne gave a nimble spring to his step, a youthful vigor to his gestures. Possibly more harmful was Payne's association with Standard Oil, which blemished his reputation among many Democrats. Payne received only eighty-one votes on the first ballot as General Winfield Hancock walked off with the nomination. 

At the time, U.S. senators were elected by state legislatures, creating an open season for graft and influence peddling by business interests. When the Ohio legislature elected Henry B. Payne to the Senate in 1884 -- the legislature would go down in history as the infamous "Coal-oil Legislature" for its obeisance to Standard Oil -- it was widely rumored that Oliver had sat behind a desk in a Columbus hotel room and doled out bills to legislators, the final tab reaching $100,000. These bribery allegations, though never proved, shadowed Senator Payne and provoked a firestorm of abuse against Standard Oil. Whether Oliver Payne bought the election is uncertain, but it seems far-fetched that Rockefeller or Standard Oil conspired with him.  Henry Payne was a staunch Democrat, and Standard Oil was a Republican stronghold. Rockefeller likely spoke the literal truth when he said, "I was opposed to the election of Senator Payne, as a Republican and never anything else but a Republican. And not one farthing of the money of the Standard Oil Company went to his election; nor were the Standard Oil Company favorable to his election, as a company."

Aside from his father, Oliver Payne gave Standard Oil a second important link to the Democratic Party through his brother-in-law, William C. Whitney. Even though Oliver had been two years older and infinitely richer than Whitney at the time, the two were fast friends at Yale. To an extent that some observers found unhealthy Oliver doted on his lovely, gregarious sister Flora; and when he arranged for her to meet Whitney in 1868, he already "knew that if  they met, they would fall in love with each other," he later admitted. When they married a year later, he became their self-appointed benefactor, buying  them a five-story Park Avenue brownstone. This was a mere curtain-raiser to his next gift, a showy $700,000 mansion, glistening with gorgeous paintings and Gobelin tapestries, at the corner of Fifth Avenue and Fifty-seventh Street, across from Cornelius Vanderbilt's residence. One historian said that Oliver insouciantly "presented it to the Whitneys as one might present a poodle," and with his sublime self-assurance, this lifelong bachelor moved into one of its sumptuous second-floor apartments.   William C. Whitney was a dashing man with a matchless talent for attracting moneyed patrons. Though he stayed only one year at Harvard Law School, he became a rich Wall Street lawyer, representing Commodore Vanderbilt and other railroad clients. Active in the Democratic Party, he won the patronage of Samuel J. Tilden, who, as governor, had him named New York City's corporation counsel. In 1884, Whitney shrewdly supported Grover Cleveland, the mayor of Buffalo, for president and brokered a truce between the reform minded Cleveland and Tammany Hall. When Whitney emerged as an influential insider in Cleveland's presidential campaign, some critics thought him a Standard Oil tool. In reality, Rockefeller voted for James G. Blaine, a paladin of business interests, and predicted the election would be "a great calamity" if Cleveland won."  In an unprecedented step, Rockefeller allowed his name to be listed as vice president for a Republican fund-raising effort in the city of Cleveland.

To further Grover Cleveland's candidacy, Whitney persuaded Henry B. Payne that the growing furor over Standard Oil made it an inauspicious time for him to vie for the Democratic nomination. Instead, Henry and Oliver Payne poured $170,000 into Cleveland's war chest. After Cleveland's victory, it looked as if Whitney would be named interior secretary. Then the press tagged him with the sobriquet of "Coal Oil Billy" and raised the specter that Standard Oil would loot public lands. As a consolation prize, Whitney settled for an appointment as secretary of the navy. For all the baseless speculation about his links to Standard Oil, Whitney was seldom asked to perform favors for the trust and spent most of his time constructing a new steel navy. Around the time that William and Flora Whitney moved to Washington, Oliver Payne, citing the "need for a rest," resigned from Standard Oil.

Despite its many shareholders, the Standard Oil trust was always controlled by a small clique of powerful families. "I think it is true that the Pratt family the Payne-Whitney family (which were one, as all the stock came from Colonel Payne), the Harkness-Flagler family (which came into the Company together) and the Rockefeller family controlled a majority of the stock during all the history of the Company up to the present time," Rockefeller commented in 1910.  Because the Harkness and Payne families were sociable and intermarried with the Vanderbilts and Whitneys, they spread a great deal of Standard Oil bounty through America's social aristocracy.

While Standard Oil gadflies pounced on the political bonds between the Paynes and William Whitney, they missed a more flagrant case of political corruption: that of Johnson Newlon Camden, who served as a West Virginia senator from 1881 to 1887 but never severed his ties to Standard Oil.  Approaching his 1881 election to the U.S. Senate as a straight business proposition, he favored a liberal distribution of cash to the West Virginia legislature to secure results. As he plaintively told Flagler that year, "Politics is dearer than it used to be - and my understood connection with the Standard Oil Co. don't tend to cheapen it - as we are all supposed to have bushels." This was prelude to an urgent request for "$10,000 in some turn-stocks or oil-Please keep an eye out and let me know. "  Apparently, Standard Oil obliged, for in the next letter, Camden reported victory to Flagler. "I also appreciate sincerely the substantial kindness [of the Executive Committee]-and used it without hesitation as I needed it temporarily. "

Even after entering the Senate, Camden continued to correspond with Rockefeller and Flagler as if he was still an active Standard Oil executive, and he discussed the trust's negotiations with the B&0 Railroad on U.S. Senate stationery. He organized a railroad with Oliver Payne and urged Rockefeller, Flagler, and Harkness to join them. Throughout his term, Camden stood sentinel over Standard Oil interests, and when two pipeline bills inimical to the trust appeared in the Maryland legislature in 1882, he acted promptly, informing Flagler with satisfaction, "My dear Mr. Flagler, I have arranged to kill the two bills in Md. legislature at comparatively small expense."