Random Reminiscences of Men and Events

by John D. Rockefeller

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 we should go back to hand labour and throw away our efficient machines—and the sober good sense of the people will accept this fact when they have studied and tried it out. Just see how the list of stockholders in the great corporations is increasing by leaps and bounds. This means that all these people are becoming partners in great businesses. It is a good thing—it will bring a feeling of increased responsibility to the managers of the corporations and will make the people who have their interests involved study the facts impartially before condemning or attacking them.

On this subject of industrial combinations I have often expressed my opinions; and, as I have not changed my mind, I am not averse to repeating them now, especially as the subject seems again to be so much in the public eye.

The chief advantages from industrial combinations are those which can be derived from a coöperation of persons and aggregation of capital. Much that one man cannot do alone two can do together, and once admit the fact that coöperation, or, what is the same thing, combination, is necessary on a small scale, the limit depends solely upon the necessities of business. Two persons in partnership may be a sufficiently large combination for a small business, but if the business grows or can be made to grow, more persons and more capital must be taken in. The business may grow so large that a partnership ceases to be a proper instrumentality for its purposes, and then a corporation becomes a necessity. In most countries, as in England, this form of industrial combination is sufficient for a business co-extensive with the parent country, but it is not so in America. Our Federal form of government making every corporation created by a state foreign to every other state, renders it necessary for persons doing business through corporate agency to organize corporations in some or many of the different states in which their business is located. Instead of doing business through the agency of one corporation they must do business through the agencies of several corporations. If the business is extended to foreign countries, and Americans are not to-day satisfied with home markets alone, it will be found helpful and possibly necessary to organize corporations in such countries, for Europeans are prejudiced against foreign corporations, as are the people of many of our states. These different corporations thus become coöperating agencies in the same business and are held together by common ownership of their stocks.

It is too late to argue about advantages of industrial combinations. They are a necessity. And if Americans are to have the privilege of extending their business in all the states of the Union, and into foreign countries as well, they are a necessity on a large scale, and require the agency of more than one corporation.

The dangers are that the power conferred by combination may be abused, that combinations may be formed for speculation in stocks rather than for conducting business, and that for this purpose prices may be temporarily raised instead of being lowered. These abuses are possible to a greater or less extent in all combinations, large or small, but this fact is no more of an argument against combinations than the fact that steam may explode is an argument against steam. Steam is necessary and can be made comparatively safe. Combination is necessary and its abuses can be minimized; otherwise our legislators must acknowledge their incapacity to deal with the most important instrument of industry.

In the hearing of the Industrial Commission in 1899, I then said that if I were to suggest any legislation regarding industrial combinations it would be: First, Federal legislation under which corporations may be created and regulated, if that be possible. Second, in lieu thereof, state legislation as nearly uniform as possible, encouraging combinations of persons and capital for the purpose of carrying on industries, but permitting state supervision, not of a character to hamper industries, but sufficient to prevent frauds upon the public. I still feel as I did in 1899.