In 1861, 21-year-old Henry pooled his savings of approximately US$600 with a friend, Charles P. Ellis. They set out to western
Pennsylvania and its newly discovered oil fields. Borrowing another US$600, the young partners began a small
refinery at
McClintocksville near
Oil City. They named their new enterprise
Wamsutta Oil Refinery. Rogers and Ellis and their refinery made US$30,000 during their first year. This amount was more than the earnings of three whaling ship trips during an average voyage of more than a year's duration. When Rogers returned home to Fairhaven for a short vacation the next year, he was greeted as a success. In Pennsylvania, Rogers was introduced to
Charles Pratt (1830–91). Born in
Watertown, Massachusetts, Pratt had been one of eleven children. His father, Asa Pratt, was a carpenter. Of modest means, he spent three winters as a student at Wesleyan Academy, and is said to have lived on a dollar a week at times. In nearby
Boston, Massachusetts, Pratt joined a company specializing in paints and whale oil products. In 1850 or 1851, he came to New York City, where he worked for a similar company handling paint and oil. Pratt was a pioneer of the natural oil industry, and established his
kerosene refinery
Astral Oil Works in the Greenpoint section of
Brooklyn, New York. Pratt's product later gave rise to the slogan, "The holy lamps of Tibet are primed with Astral Oil". He also later founded the
Pratt Institute. When Pratt met Rogers at McClintocksville on a business trip, he already knew Charles Ellis, having earlier bought whale oil from him back east in Fairhaven. Although Ellis and Rogers had no wells and were dependent upon purchasing
crude oil to refine and sell to Pratt, the two young men agreed to sell the entire output of their small Wamsutta refinery to Pratt's company at a fixed price. This worked well at first. Then, a few months later, crude oil prices suddenly increased due to manipulation by speculators. The young
entrepreneurs struggled to try to live up to their contract with Pratt, but soon their surplus was wiped out. Before long, they were heavily in debt to Pratt. Charles Ellis gave up, but in 1866, Henry Rogers went to Pratt in New York and told him he would take personal responsibility for the entire debt. This so impressed Pratt that he immediately hired him for his own organization.
New York, oil refining Pratt made Rogers foreman of his Brooklyn refinery, with a promise of a
partnership if sales ran over $50,000 a year. The Rogers' family moved to Brooklyn. Rogers moved steadily from foreman to manager, and then superintendent of Pratt's Astral Oil Refinery. He accomplished and exceeded the substantial sales increase goal which Pratt had set when recruiting him. As promised, Pratt gave Rogers an interest in the business. In 1867, with Henry Rogers as a partner, he established the firm of
Charles Pratt and Company. In the next few years, Rogers became, in the words of
Elbert Hubbard, Pratt's "hands and feet and eyes and ears" (
Little Journeys to the Homes, 1909). As their family grew, Henry and Abbie continued to live in New York City, but vacationed frequently at Fairhaven. While working with Pratt, Rogers invented an improved way of separating
naphtha, a mixture of hydrocarbon compounds produced during the distillation of
crude oil, from the oil. He was granted U.S. Patent # 120,539 on October 31, 1871.
Fighting Rockefeller In the early 1871–1872, Pratt and Company and other refiners became involved in a conflict with
John D. Rockefeller,
Samuel Andrews, and
Henry M. Flagler (of
Rockefeller, Andrews & Flagler, a Cleveland-based refining company) and the
South Improvement Company. In developing what would become
Standard Oil, Rockefeller, a manager of extraordinary abilities, and Flagler, an exceptional marketer, recognized that the costs and control of the shipment of crude oil would be key elements in competition with other refiners. With its combination of clever
market manipulation, and hard-nosed dealings with the powerful
Pennsylvania Railroad (PRR), the South Improvement scheme was an example of the type of business tactics which Rockefeller and his associates used to become successful. Although Rockefeller became the target of many who decried Standard Oil's ruthlessness in subsequent years, the South Improvement rebate scheme was Flagler's idea. South Improvement was basically a mechanism to obtain secret favorable net rates from
Tom Scott of the
Pennsylvania Railroad (PRR) and other railroads through secret
rebates from the
common carrier. A "common carrier" is somewhat like a utility, inasmuch as it often has certain rights, powers and monopolies on its services beyond those normally afforded regular business enterprises. A common carrier was expected to serve the public good and treat its customers uniformly. Rates in that era were promulgated and published in what was called "tariffs" and were public information. The rebate scheme was done outside of that process. As an opposite effect, normally afforded "tariffs" were increased and charged to customers not privy to the scheme. Newspapers were quick to publicize the issue. The injustice of the South Improvement scheme outraged many independent oil producers and owners of refineries. Rogers led the opposition among the New York refiners. The New York interests formed an association, and about the middle of March 1872 sent a committee of three, with Rogers as head, to Oil City to consult with the Oil Producers' Union. Working with the Pennsylvania independents, Rogers and the New York delegation managed to forge an agreement with the railroads, whose leaders eventually agreed to open their rates to all and promised to end their shady dealings with South Improvement. Rockefeller and his associates quickly started another approach, which frequently included buying up opposing interests. Their dominance of the growing industry and the squeezing out of smaller competitors continued and expanded. But, the South Improvement incident prompted growing public sentiment to support governmental oversight and regulation of large businesses, including the railroads. Congress passed new antitrust laws, the administration created the
Interstate Commerce Commission (ICC), and the courts eventually ordered the breakup of the Standard Oil Trust in the early 20th century.
Combining forces: joining Standard Oil In 1874, Rockefeller approached Pratt with a plan to cooperate and consolidate their businesses. Pratt discussed it with Rogers, and they decided that the combination would benefit them. Rogers formulated terms, which guaranteed financial security and jobs for Pratt and himself. Rockefeller had apparently learned a lot about Rogers' talents and negotiating skills during the South Improvement conflict. He quietly accepted the offer on the exact terms Rogers had laid out. In this manner, Charles Pratt and Company (including Astral Oil) became one of the important independent refiners to join the Standard Oil Trust. By this date, Charles Pratt was reaching an age to consider retirement, and he subsequently devoted much of his time and interests to activities such as founding the
Pratt Institute. However, Pratt's son,
Charles Millard Pratt (1858 to 1913), became Corporate Secretary of Standard Oil. As a part owner of Pratt and Company, Rogers, who was about 35 years old, now owned a share of Standard Oil himself. In the deal, Rockefeller had also added Henry Rogers to his team. He undoubtedly placed a high value on Rogers' potential. History does not tell us if he foresaw that the promising young man was destined to become one of his major partners.
Building Standard Oil with John D. Rockefeller Standard Oil was an oil refining conglomerate. Its successors continued to be among the world's biggest corporations over 140 years later.
John D. Rockefeller, long regarded as the principal founder, was of a modest background and education. Born in New York in 1839, he moved with his family to Cleveland in 1855. His first job was as an assistant bookkeeper for a produce company. He delighted, as he later recalled, in "all the methods and systems of the office". He became particularly well skilled at calculating transportation costs, a skill which would later serve him well. He worked in variety of small business enterprises during the next few years, owning interests in several. During this time, Rockefeller became friends with
Henry Morrison Flagler. The two men had much in common, as they were both conservative, hard-working, energetic, and driven to make money. Their backgrounds included working separately for a number of years in various retail enterprises, including the grain business. Although they were teetotalers personally, distilled spirits were a byproduct of the handling of corn, and both embraced the business opportunity that they presented; making money was clearly paramount. In their separate forays into business, financial results for the two had been mixed. Flagler, nine years senior to Rockefeller, had been completely wiped out financially in a venture into salt. Only a loan from a relative,
Stephen V. Harkness, allowed him to keep creditors at bay and stay out of total ruin. In the second half of the 19th century, the United States began a transition from use of whale oil to petroleum for heating and lighting. Discovery of oil fields in western Pennsylvania in the late 1850s and the promise of increased industrial activity and economic growth after the end of the
American Civil War combined to make the refining of crude oil seem an attractive business to Rockefeller. He and Flagler enlisted chemist
Samuel Andrews and with his brother,
William Rockefeller,
Jabez Bostwick, and Flagler's relative and
silent partner,
Stephen V. Harkness, went into the refining business in Cleveland as
Rockefeller, Andrews & Flagler. By all accounts, Rockefeller was an extraordinarily talented manager and financial planner, Flagler was an exceptional marketer, and Andrews had the know-how to oversee refining aspects. It was to be a very successful combination. As the demand for kerosene and a new byproduct, gasoline, grew in the United States, by 1868, what was to become Standard Oil was the world's largest oil refinery. In 1870, Rockefeller formed
Standard Oil Company of Ohio and started his strategy of buying up the competition and consolidating all oil refining under one company. It was during this period that the Pratt interests and Henry Rogers were brought into the fold. By 1878 Standard Oil held about 90% of the refining capacity in the United States. Flagler's wife was in failing health due to what was later determined to be
tuberculosis. On advice of her physician, he took her to Florida for the winter months beginning in 1877, and she did seem to improve with the gentle winter and cool ocean breezes there. While in Florida, Flagler was struck with the lack of good rail transportation south of
Jacksonville, the equally poor availability of good lodging, and the potential the impoverished state held as a vacation destination for northerners. Sensing a major business opportunity, he began to invest and become a major developer of Florida's east coast in what many regard as his "second career." However, his ventures in Florida marked the beginning of his gradual reduction in management participation at Standard Oil. In 1881 the company was reorganized as the Standard Oil Trust. In 1885, the headquarters were relocated from Cleveland to
New York City. By this time, the three main men of Standard Oil Trust had become John D. Rockefeller, his brother William, and Henry Rogers, who had emerged as a key financial strategist. By 1890, Rogers was a vice president of Standard Oil and chairman of the organization's operating committee.
Oil and gas pipelines Petroleum
pipelines were first developed in Pennsylvania in the 1860s to replace transport in wooden barrels loaded on wagons drawn by mules and driven by
teamsters. This mule-drawn transportation was expensive and fraught with difficulties: leaking barrels, muddy trails, wagon breakdowns and mule/driver problems. The first successful metal pipeline was completed in 1865, when Samuel Van Syckel built a four-mile (6 km) pipeline from
Pithole, Pennsylvania, to the nearest railroad. This initial success led to the construction of pipelines to connect crude oil production, increasingly moving west as new fields were discovered and Pennsylvania fields declined, to refineries located near major demand centers in the Northeast. Biographer Z. James Varanini writes, "the completion of these pipelines represented a move towards a new type of interconnectivity of previously isolated states." When Rockefeller observed this, he began to acquire many of the new pipelines. Soon, his Standard Oil companies owned a majority of the lines, which provided cheap, efficient transportation for oil.
Cleveland, Ohio, became a center of the refining industry principally because of its transportation systems. Rogers conceived the idea of long pipelines for transporting oil and
natural gas. In 1881, the National Transit Company was formed by Standard Oil to own and operate Standard's pipelines. The National Transit Company remained one of Rogers' favorite projects throughout the rest of his life. East Ohio Gas Company (EOG) was incorporated on September 8, 1898, as a marketing company for the National Transit Company, the natural gas arm of Standard Oil Company of New Jersey. The company launched its business by selling to consumers in northeast Ohio gas produced by another National Transit subsidiary, Hope Natural Gas Company. Rubber-manufacturing city
Akron, Ohio, was the first to take advantage of the lower prices for natural gas. It granted the East Ohio Gas Company a franchise in September 1898, the same month that the company was founded. During the winter of 1898–99, the National Transit Company built a 10-inch
wrought iron pipeline that stretched from the Pipe Creek on the
Ohio River to Akron, with branches to Canton, Massillon, Dover, New Philadelphia, Uhrichsville, and Dennison. The first gas from the pipeline burned in Akron on May 10, 1899.
Copper During the 1890s, Rogers became interested in Anaconda and other
copper properties in the western United States. In 1899, with William Rockefeller, and
Thomas W. Lawson, he formed the first $75,000,000 section of the gigantic trust,
Amalgamated Copper Mining Company, which was the subject of much acrid criticism then and for years afterward. In the building of this great trust, some of the most ruthless strokes in modern business history were dealt: the $38,000,000 "watering" of the stock of the first corporation, its subsequent manipulation, the seizure of the copper property of the Butte & Boston Consolidated Mining Company, the using of the latter as a weapon against the
Boston & Montana Consolidated Copper and Silver Mining Company, the guerrilla warfare against certain private interests, and the wrecking of the Globe Bank of Boston. A holding company aimed at controlling copper production and distribution, Amalgamated Copper controlled the copper mines of
Butte, Montana and later became
Anaconda Copper Company, a revert to its original name.
Transit: Staten Island On July 1, 1892,
Staten Island, New York's first trolley line opened, running between
Port Richmond and
Meiers Corners. Trolleys, which cost only a nickel a ride through most of their existence, help facilitate mass transit across the Island by reaching communities not serviced by trains. Henry H. Rogers was long-known as the Staten Island transit magnate, and was also involved with the
Staten Island-Manhattan Ferry Service and the Richmond Power and Light Company. By 1907, Rogers was a member of the
Consolidated Stock Exchange of New York, one of around 13,000.{{Citation ==Business summary: "Hell Hound"==