Last Train to Paradise by Les Standiford Read Free Book Online Page A

the entire matter. If oil could be brought to their refineries at a rate below that offered to competitors, it would create an unassailable competitive advantage. In the highly competitive oil market, no other factor in the process could differentiate one player from the next to such a degree.
    As a result, Flagler soon became a master at the negotiation of rebates from the major rail carriers who served the oil fields, carrying crude oil to Cleveland for processing. In return for lower rates, Flagler would guarantee massive shipments to the railroads. To meet these goals, Flagler would in turn have to acquire more crude and increase his refining capacity, and in order to make that happen, he and Rockefeller would need money, a lot of it.
    Later, a writer was to ask John D. Rockefeller if he had had the idea to incorporate the business. Rockefeller minced no words. “No, sir, I wish I’d had the brains to think of it. It was Henry M. Flagler.” With Rockefeller’s grudging agreement, the Standard Oil Company went public in January of 1870, its capitalization of $1 million divided into ten thousand shares. Rockefeller took about 2,600 of the shares, and Flagler about half that. All but one thousand of the shares were taken by various insiders. Inside a dozen years, the worth of the company would grow to $82 million, a staggering rate of increase, and one fueled largely by Flagler’s remorseless goal to control completely the production of refined oil in Cleveland.
    A reserved and devoted family man in his personal life—he was dedicated to the care of his fragile wife, Mary, and was reportedly content to spend his evenings and weekends at home by her side—Flagler was a ferocious tactician at the office. Within a few months, he and Rockefeller had either bought out or scared off twenty of their twenty-five competitors. The choice offered to most was simple: accept what Flagler always insisted was a “fair” price for their holdings, or go broke trying to compete with a powerhouse that could do business more cheaply.
    In a letter to an associate of the day, Flagler displayed his characteristic approach to business negotiation: “If you think the perspiration don’t roll freely enough, pile the blankets on him. I would rather lose a great deal of money than to yield a pint to him at this time.”
    Flagler’s irksome tactics were not limited to his fellow refiners. In 1872 he took advantage of a fall in oil prices to persuade most of the Pennsylvania oil producers to join with him in a scheme directed at the entire rail industry. In what may sound familiar to those accustomed to today’s OPEC shenanigans, Flagler proposed an industry-wide agreement to limit oil production, thereby guarding against price fluctuations, and also forcing rate concessions from carriers who would have to play ball or be frozen out.
    Though public outcry foiled the most egregious of these “associations,” sub-rosa agreements of the sort were the order of the day. And, fat with the ever-growing profits, Standard Oil could afford to construct its own transportation systems, including the newly developed network of pipelines. The rich simply got richer.
    By 1877 the company had become a behemoth that had far outgrown its Cleveland roots. Rockefeller and Flagler determined to move their operations to the burgeoning city of New York, where the company’s far-flung holdings could more easily be managed and where other titans such as railroad builder Cornelius Vanderbilt, fur mogul William B. Astor, and department store maven Alexander T. Stewart had made their homes.
    Despite the heady move, Flagler was not keen to join the New York City social swirl. Even in Cleveland, he had virtually no social life. His wife had been plagued by a lifetime of chronic bronchitis, and when Flagler was not at his office, he was with her.
    The move to New York did little for Mary’s health, and when her doctors changed their diagnosis to tuberculosis, they also