Volume II · February 1947 · Number 2
"With High Esteem"
--ALAN H. GLEASON
The discovery of a brief correspondence between John D. Rockefeller, Sr., and Dr. Martin B. Anderson in the archives of the University of Rochester Library sheds interesting light on the careers and personalities of both of these men. Of the three letters known to exist, two are in the possession of the library. Inquiry revealed a third letter in the Rockefeller files.
Dr. Anderson initiated the exchange in 1884. At that time, Rockefeller was rapidly approaching the peak of his career. The gigantic Standard Oil Trust had been formed only a few years before. Three months prior to the exchange of letters, Rockefeller had brought his war with his strongest remaining competitor, the Tidewater Company, to a successful conclusion. He was planning continued expansion into new domestic and foreign fields. Though only forty-five years old, he was worth some $20,000,000. A reticent man, not prone to discuss himself nor his business, he was hated by many and misunderstood by most. Attacked violently as a ruthless crusher of competitors, an unprincipled preyer upon the meager fortunes of poor widows, a manipulator of courts, elections, and legislatures, he chose to remain silent until many years later when he permitted the introduction of evidence which gave the lie to many of the accusations hurled against him and his firm. Today he is still an enigma to most Americans because of the wealth of widely divergent opinion concerning his character and career. The best course is to assume that he was neither as bad nor as good as he has been portrayed by extremists on both sides. Existing evidence reveals him to have been a man of exceptional shrewdness, motivated by a desire, common to most humans in varying degree, for the power and security of wealth. From his own standpoint, he had merely done what was considered good business and had done it better than others.
In 1884 Dr. Anderson was approaching the end of his long career as president of the University of Rochester. In addition to his exacting administrative duties, he taught political economy and numerous other subjects. A gifted and conscientious teacher, he was keenly interested in acquainting his students with the great moral and economic issues of the day in order that they might take their place in society as useful, well-informed citizens. It was characteristic of him that, in seeking to portray accurately some of the tremendous economic forces in operation at the time, he should inquire directly of the foremost proponent of industrial combination of his time, John D. Rockefeller. Accordingly, Dr. Anderson wrote the following letter:
Rochester Jan 8th 1884
My dear Sir
I am just beginning my yearly course of lectures on Political Economy. I am always desirous to make them practical in their influence upon the young men. There are two general topics to which I beg leave to call your attention with the hope that some one of the men in your employ may be permitted to give me the facts and principles requisite to their illustration.
(1) Every one knows that the Price of refined Petroleum to consumers has been greatly reduced within a few years past. It is equally well known that the quality of the article has been improved as constantly as the price has gone down. I wish to know as far as possible, how far these results so important to the inhabitants of our own and other countries have been due to the consolidation of the small oil producing and refining companies, thereby generating economy in the production and transportation of oil. It is evident that there has been a certain fixed ratio between the reduction of the price of oil and the improvement of its quality and the extent to which the capital and labor employed in its production, have been brought under the control of a single corporation. It is this "ratio" and its elements which I wish to illustrate. I wish to establish the law which underlies it and which tends to control all the processes of production and distribution in modern trade and manufactures.
(2) I wish to ascertain the rate per ton at which R. Roads can afford to transport very large quantities of goods of which the production is constant, in comparison with the rate at which these Roads can transport small quantities, irregularly produced and sent to market. This matter may be formulated as follows. What is the difference in the net cost to a R. Road, per ton per mile for transporting the same goods over the same distance in very small, and very large quantities?
(3) Connected with this is another question regarding the difference in cost to a R Road for transporting goods for short and long distances? These points bear upon the general topics of centralization of industries, and "special rates" for transportation. When a given branch of industry comes to be centralized by the special business capacity of an individual or a corporation, the result is called a "monopoly." When through the vast amount of business which such a centralized industry gives to a R. Road it receives "special rates" the interference of the State is called for to set such contracts aside. My object is to get facts and illustrations with which to explain the economical laws which control the movements to which I have above alluded. I cannot of course expect you to give your attention to such details. But I thought it possible that you would have some men in your employ who might attend to the matter and at the same time serve my purpose as a teacher and your purposes in reducing the processes of your vast operations to simple and easily comprehensible laws. If I have made a mistake in my supposition, please tear up my letter and give it no further attention. I have studied the subject somewhat but have had no means of reading the facts necessary for proofs and illustration. I have also studied your business career and it has seemed to me that your Phenomenally successful experience might be made eminently available for the ends of economical science.
Yours very truly
(sgd) M. B. Anderson
John D. Rockefeller Esq.
Dr. Anderson's characteristic zeal for reducing human relationships in all fields to simple and easily comprehensible "laws" is clearly revealed in his letter. He had evidently developed certain hypotheses and was seeking factual evidence in order to test and illustrate his conclusions. It was said of him that he had a "passion for intellectual accumulation" and an encyclopedic mind which he loved to store with detailed information from a wide variety of fields. (Kendrick, Asahel C., Martin B. Anderson, p. 220).
The answer from Mr. Rockefeller, though brief, contains significant statements when viewed in the light of their historical background. He replied:
NEW YORK. Jan. 24, 1884.
Dear Dr. Anderson:
Through the kindness of the Pres't of the Erie Railway Co., we had forwarded you a day or two since, data which will, I trust, be of assistance in respect to the transportation question referred to in yours of 8th inst.
I find, on looking into the subject, that in order to make up a correct history of our oil manufacture since the beginning of the effort at centralization, some 14 years ago, would require an amount of research we are wholly unable to give to it, from the fact that the books are widely scattered throughout the country, & I doubt my ability to have anything prepared that would be of practical value to You.
Beside this, I fear that if you take so notable a case as the Standard Oil Co., for the illustration of the principle you seek to elucidate, it is as likely to react upon you as to be beneficial.
You know that great prejudice exists against all successful business enterprises - the more successful, the greater the prejudice.
With high esteem,
Very Truly Yours
Jno. D. Rockefeller
M. B. Anderson, L.L.D., President,
Rochester, N. Y.
Mr. Rockefeller willingly provided abundant data pertaining to railroad rates, but the request for information concerning the concentration of control in the oil industry apparently faced him with a dilemma. Too little information would present a biased picture of a highly complex situation. The collection of sufficient data was evidently beyond his capacity at the time. He therefore provided no information whatsoever. The embittering and perhaps disillusioning effect of attacks upon him are revealed in his assumption that even such a prominent educator as Dr. Anderson, a man well-known for his tolerance and objectivity, would be prejudiced by the biased opinions to which a study of the Standard Oil, Trust might expose him at that time. It has been said of Rockefeller that he was relatively insensitive to attacks upon him, but evidence provided by those who knew him well indicates he felt the attacks more deeply than was generally realized. He was himself largely to blame for the lack of understanding concerning his true temperament, for he admittedly followed a fixed policy of reticence on the grounds that he was "determined that it was useless to waste energy on denials and disputes with jealous or disappointed people." (Nevins, Allan, John D. Rockefeller, p. 346.) But he later realized this policy was a mistake, for it misled many potential friends who regarded silence as a tacit admission of guilt.
Dr. Anderson's answer to Rockefeller's letter is long, but deserves quotation in full for it shows remarkable insight into the significance of the economic developments of the time. It is given as it appears in his copybook, since the original is no longer in the Rockefeller files.
Rochester Jan 28th 1884
My dear sir,
Accept my thanks for your kindness in sending the two Vol-reporting the arguments of vice President Blanchard before the State & Congressional Commitees of R. R, Transportation. These with articles on the subject by my friend Mr. Ed- Atkinson of Boston will answer all my wants upon the transportation question. In regard to the tendencies towards absorption of small establishments for production in large ones representing skill & capital so combined as to reduce the cost of production to the lowest possible limit, I beg leave to say that I did not for a moment expect or desire that you would give me details from your own business in illustration. It occured to me that, as the subject must have been continually before you, some reports or discussions before legislative committees might be known to you which I had not met. The whole matter of production on a large scale, securing so constant a decrease of cost of goods of all sorts to consumers, seems to me an inevitable law of economical progress whereby the consumers advantage is secured in harmony with the great moral law which demands that the interests of the many ought to prevail over the interests of the few. When the power loom was introduced, great temporary suffering was produced among the hand loom weavers. But on the whole, taking into account the increased purchasing power of money through the diminution of the cost of necessaries of life, the manufacturing laborer of today is better off than the old weavers were before the introduction of the power loom. The reduction of the cost of clothing to the great mass of poor men of all trades representing the consumers is so great that this invention has proved to be an enormous advantage. Now it seems to me that a line of ships under the control of a firm - or a R. Road or a great manufacturing or mining establishment, are "machines" which so economise skill, labor & capital that the cost of transportation and of all sorts of production are reduced for the advantage of the whole population of a nation or of all nations. These instances seem to me illustrations of a law which is universal in its action; But the action of this Law while it reduces cost & brings the means of well being more & more within the control of society at large, concentrates power in the hands of those who control these "machines" for production to an extent not easily comprehended. Hence the need of moral self control on the part of great corporations becomes constantly greater. The moral responsibility attaching to the modern industrial monarch becomes tremendous in its weight. These hints I will not expand. I should be glad to talk with you for a few hours on the general subject which I have outlined. As this concentration of power increases there will be more & more of a tendency to impose on it legislative limitations which are likely to weaken the right of property & introduce paternalism in gov't, and its counterpart, the socialistic tendency, which is at bottom, identical with it. Right here we find the great moral & Political problem of the future. Excuse this too long letter & believe me gratefully yours
M. B. A.
J. D. Rockefeller Esq.
It was said of Dr. Anderson that "he possessed an element which was akin to genius, an intuitive foresight almost startling sometimes in its fulfillments." (Kendrick, p. 161.) His closing sentences are a convincing demonstration of this ability. Only three years after this letter was written, the Interstate Commerce Act was passed, preluding a succession of laws regulating the railroad industry. A few years later the Sherman Anti-Trust Act was passed, the first of a series of federal "legislative limitations" on the concentration of industrial control in in the hands of private individuals. Since that time governmental regulation of business enterprise has steadily increased and a "socialistic tendency," already brought to fruition in Great Britain, has become quite marked in the United States. Rockefeller's own views on government interference are interesting. As early as 1898, he admitted that while the economic advantages of combination are great, "the dangers are that the power conferred by combination may be abused." Consequently he recommended additional state and federal supervision "not of a character to hamper industries, but sufficient to prevent frauds upon the public." (Rockefeller, Random Reminiscences, p. 68.)
Dr. Anderson's concern for the moral aspects of the problem of monopoly is typical of him. A zealous, orthodox Baptist, he felt a strong obligation to impart moral principles to his students and associates. It may be that contemporary attacks against the Standard Oil Company led him to believe that such principles were somewhat lacking in the case of his fellow Baptist, John D. Rockefeller. A firm believer in free enterprise, Anderson realized that such a system depended ultimately for its existence upon a strong and sincere feeling of responsibility toward the public on the part of those who had utilized the system to eliminate competition and concentrate power in their own hands. His letter indicates a desire to impress upon Rockefeller the moral implications of his position and to do this through a personal interview if possible.
While the effect of the correspondence may not have been perceptible, we have in these letters a brief glimpse of two striking personalities, one a maker of history, the other an avid student of history, momentarily brought in contact through a common interest in the fundamental economic forces at work during a crucial period of our nation's development. The customary phrase - "With High Esteem" - which Rockefeller used at the end of his letter, expresses the feeling that each man had for the other, and also describes today the attitude of the University toward one of its great benefactors and its first president.