Taking on the Trust
By Steve Weinberg
(Norton, 304 pages, $29.95)
In 1901, John D. Rockefeller had reason for optimism.
His Standard Oil empire dominated the global petroleum business. His products had found satisfied customers in every nook and cranny of business and household life. The year before he had covered half the $500,000 in campaign expenses incurred by William McKinley, the recently re-elected Republican president. His $3 million in annual dividend income alone was 5,700 times the earnings of the nation's typical worker.
But he hadn't counted on two things. On Sept. 6, an anarchist fatally shot McKinley, ushering into office an altogether different sort of Republican -- Theodore Roosevelt, a man who would famously speak of "the malefactors of great wealth." And Ida Tarbell, a new kind of journalist -- a prototype of what later would be called a muckraker and later still an investigative reporter -- was preparing to launch a series of excoriating profiles of Rockefeller's business practices that would eventually alter his own fate and his company's.
The stories of Rockefeller and Tarbell have been told before, but Steve Weinberg's "Taking on the Trust" is the first book aimed entirely at narrating their epic clash and their surprisingly intertwined personal histories. The book's timing could not be more apt. Early in the 20th century, Americans rebelled against a laissez-faire, untrammeled business environment that gave rise to the fortunes of robber barons and to feelings of frustration and powerlessness among ordinary workers and business people. Today, after a generation of deregulation and free-market policies -- not to mention lurid tales of financial buccaneering -- there are similar signs of a shift in sentiment toward the tighter government oversight of business.
The book's timing is apt in another way as well. In an era of economic upheaval in American journalism, it is fascinating to read about a once penniless Irish immigrant, Samuel McClure, who was able to found a magazine that created practically overnight a platform for incisive reporting -- not only by Tarbell but also by Lincoln Steffens, Ray Stannard Baker, Josiah Willard and others.
Mr. Weinberg, a journalism professor at the University of Missouri and himself a distinguished investigative reporter, keeps his two main characters headed relentlessly toward their ultimate confrontation, and he is more willing to criticize Tarbell than one might expect. Indeed, his deeply researched account is scrupulously evenhanded, fair to both the man who was by far the nation's richest tycoon and the woman who was its most famous reporter.
Both Rockefeller and Tarbell had to struggle through challenging childhoods and early careers; both were frequently uprooted in their youth, scrambling from place to place as their families sought opportunity in a rapidly expanding but panic-plagued economy. Rockefeller launched his public life as a bookkeeper in Cleveland; Tarbell began hers as a would-be expatriate author in Paris. Both were crucially influenced by up-close exposure to the reckless oil boom touched off in the muddy drilling fields near Titusville, Pa., in the 1850s.
Rockefeller was born in rural New York to an itinerant medicine salesman, a philandering confidence man who managed to marry the daughter of a prosperous farmer. A housekeeper's rape charge against Rockefeller père forced the family to skedaddle to Cleveland, where he continued his wandering ways. But his wife kept the kids together (with money help from their father, most of the time). At the age of 16, John D. quit school and landed an apprentice job at a produce-trading firm.
A prodigious worker and devout Baptist (no drinking, no dancing), John D. soon moved from vegetables to petroleum and from buying and selling to building a business with complete vertical integration -- controlling his new commodity from wellhead to pipeline to refinery to customer. He had a keen eye for figures and an unusual ability to connect with people from different walks of life. He also had a healthy respect for competition and sought to eliminate it whenever possible.
The business landscape across which Rockefeller strode was almost without rules. The corporation was replacing the individual proprietor as the fundamental structure of commerce, and the trust -- a forerunner the now familiar holding company -- was a way of controlling corporate empires across states. Unburdened by modern disclosure mandates, the trust also permitted emerging industrial octopi to mask their size and collaboration.
Practices long since outlawed today -- accepting kickbacks and offering bribes to the employees of other companies for sensitive information -- allowed Rockefeller and his lieutenants to muscle their way into every corner of the industry. Competitors were either driven into bankruptcy by cut-rate pricing or, if Rockefeller admired their acumen, invited aboard.
Born in northwestern Pennsylvania 18 years after Rockefeller, in 1857, Tarbell was a rarity among daughters of the working class -- she was encouraged to pursue an education. Her father worked at many trades, including welding, teaching and farming. But the oil boom brought him prosperity as a barrel maker. Before long, he found himself up against the power of Rockefeller's Standard Oil empire, which curtailed the growth of the barrel business by introducing more efficient tanks and tank cars. Ida's once ebullient father became dour and depressive as the trust squeezed him and his neighbors.
Despite family setbacks, Ida managed to become one of the first women to attend Allegheny College, 30 miles from her home. She studied chemistry, calculus, history and economics, among other subjects. "Her book learning, supplementing her real-world experience to come," Mr. Weinberg asserts, "placed her at an advantage over the less formally educated Rockefeller."
After graduation in 1880, she was hired as a teacher at a high school in Poland, Ohio (a school once attended by McKinley). But she didn't like the work and quit after two years, later landing an editorial job at The Chautauquan, the organ of the popular educational movement based in upstate New York.
McClure's Magazine was one of Ms. Tarbell's biggest customers.
From there she took a great leap, scraping together enough money to go to Paris and write a biography of Madame Roland, a prominent republican sympathizer during the French Revolution. Landing in France with $150 to her name, Tarbell befriended a handful of American expatriates, learned the language and pursued her research -- which kept getting interrupted by free-lance writing assignments. Her biggest customer became McClure, who lured her to New York in 1894 to join his magazine.
Tarbell soon became a superstar. Her natural intellectual rigor, combined with the experience of researching Roland's life (the biography appeared in 1896), made her an unusually effective reporter. Unsatisfied with a single source, she tested documents and the recollections of interviewees against one another until she was satisfied that she had an accurate account. Her work at McClure's first focused on historical figures, but her information was so fresh and her writing so compelling that, when her biographical chronicles were serialized in the magazine, they helped to double its circulation.
Then McClure invited her to turn her attention to Rockefeller. For a while there was some question whether, given Tarbell's family's history, she was the right person to investigate the oil trust. But McClure had confidence in her fairness, and she dug in. The more she reported, the more convinced she became that Rockefeller's ruthlessness was pervasive and beyond moral if not legal bounds.
She ultimately found what Mr. Weinberg calls a "smoking gun" -- a secret document offering clear evidence of Rockefeller's pattern of business espionage. It had been given to a young Standard Oil clerk to burn, but he had noticed the name of an independent refiner who happened to be his Sunday school teacher and had turned the document over to the teacher, who passed it along to Tarbell.
Tarbell's serialized articles -- detailing predatory pricing against competitors and the secret rigging of railroad rates -- caused a sensation. Public outrage mounted against Rockefeller and the trust. Finally, in 1911, the Supreme Court -- in an opinion tracking the findings of Tarbell's reports -- ruled that Standard Oil had violated the Sherman Antitrust Act and had to be broken up.
The verdict was a triumph for Tarbell and a major defeat for Rockefeller. Investors decided that Standard Oil was more valuable in parts, and Rockefeller ended up worth even more than before. Still, the court's decision -- forcing Rockefeller to do something that he dearly did not want to do, as a price for illegal conduct -- was a demonstration that the power of wealth was not absolute and that the power of the press to expose corruption was not to be ignored. Thus did Ida Tarbell became the mother of modern investigative reporting.