Rockefeller’s Right Hand Man: Henry Flagler


                       rc13909 Photo: Florida Memory

Rockefeller’s Right Hand Man: Henry Flagler

By Michael D. Roberts

The pdf is here

History can be fickle.  Take the story of the two men who walked Euclid Avenue in the days when its magnificent mansions made it one of the grand boulevards of the world.  They were often seen together in deep conversation about their work.

One man, the taller of the two, would go on to become part of American folklore, while the one of brisk step would become an historical afterthought, obscured by the myopia of chroniclers who overlooked his importance in creating the world’s largest business venture.

The taller man was John D. Rockefeller, destined to become the richest man in the world, and the more vigorous at his side was Henry M. Flagler who played no small role in the accumulation of that wealth.  They were neighbors walking to their offices where they were business partners, sharing a large partner’s desk.

They lived in a period of Cleveland history that spanned the years between the Civil War and the turn of the 20th Century.  It was a period marked by achievement and wealth, one that would never be duplicated here.

The era was the catalyst for the industrialization of America, and made Cleveland the international focus for electricity, steel, oil, paint, communications, chemicals and machine tools.   For the most part, history has been generous to the makers of this remarkable time.  They were the predecessors of the Fortune 500.

Their names read like a manifest of industry itself: Rockefeller of Standard Oil, Wade of Western UnionGliddenSherwin and Williams of paint, Chisholm and Otis of steel, Brush of the electric light, White of sewing machines and trucks, Warner and Swasey of optics and machine tools, and Grasselli of chemicals.

But one notable figure of the era has not been celebrated by local historians to the extent he deserves. Largely because of his retiring demeanor and preference for the more obscure side of business along with anonymity as a hallmark of his charitable efforts, Henry M. Flagler has not been accorded a significant place in the mosaic of Cleveland history.  In many city histories he has gone unmentioned.

 Even the titan of the times, John D. Rockefeller, once remarked that he wished he had Flagler’s brains.  Rockefeller knew better than most this man’s capabilities and some say Flagler had as much to do with making Standard Oil the most powerful company in the world as did Rockefeller himself.

By most accounts, Flagler was a dapper, good humored man whose manner radiated an ease that could be disarming, for in many ways he was a rogue, a man made for the times.  Behind this charm was a cunning and toughness that was managed by an extraordinary mind.  He kept an amusing, but prophetic sign on his desk that read:

Do unto others as they would do unto you—and do it first.

Flagler was nearly ten years older than Rockefeller having been born in Hopewell, New York, in February of 1830, the son of a traveling Presbyterian minister. At 14, with little formal education, but sharp of wit and a quick study, Flagler set out to make his way in the world, leaving a small town in New York to seek similar surroundings in Northwestern Ohio in a place called Republic near Sandusky.

 He was able to get a job clerking for $5 a month plus room and board.  It soon became evident that Flagler had a keen eye for the intangibles needed to be successful in the world of commerce.  Within the year, his pay was increased to $12 monthly, but more importantly storekeeping was nurturing the flair he was developing for business.

Later, he liked to tell friends how he learned how to apply the concept of value to business deals, by selling brandy from the same barrel to customers based on what they would pay for it and not a standard price.

In 1853, Flagler married the niece of Stephen V. Harkness a prominent citizen of Bellevue who owned several businesses including a distillery. Liquor was a valued commodity and easily made in stills using the abundant grain found in rural areas.  While beer was selling for 13 cents a quart, whiskey sold for half as much and it was in the liquor business that Flagler made his first fortune a few years before the Civil War.

With his strong religious upbringing, Flagler abstained from alcohol, but saw no sin in selling as much as he could to others. He had no moral aversion to profit.

Harkness was related through Henry’s step-brother, Dan Harkness, who was older. They had grown up together.  Flagler’s affiliation with the Harkness family would have a fortuitous effect upon his future.

It was in the late 1850s that Flagler met John D. Rockefeller who was working for a Cleveland grain broker and traveled the hinterlands in search of business. By the start of the Civil War in 1861, Rockefeller was brokering most of the Harkness grain.

As the grim realities of war approached, Flagler did two things.  He bought his way out of military service, paying $300 for a substitute to take his place in the ranks. The other thing he did was to abandon the liquor business for yet another venture, salt.

The enormous army being assembled needed to be fed and salt was a much needed preservative.  And there were abundant salt springs just north in Saginaw, Michigan. In 1862, Flagler and another family member started a salt company.

At first, the Flagler salt venture was successful as the demand for it by the war drove prices up followed by the creation of many competing companies.  But as the war came to an end, the demand for salt collapsed, resulting in the demise of many businesses including Flagler’s.

            With the reduced demand for salt there began an effort on the part of the industry to control the price and flow of the product.  Flagler witnessed the formation of a cartel intended to squeeze out competition.  In fact, in later years he would become an expert in this “squeeze” and used the word to describe the elimination of competitors.

His experience in the salt business, particularly his failure to anticipate the drop in prices and the formation of anti-competitive coalition, cost him the fortune he made in liquor and proved to be an indelible lesson. He was $50,000 in debt and needed a job.

  Failure never prevented him from pursuing what he enjoyed most: making money. After the demise of his salt business, he moved to Cleveland where he joined a merchant commission house, prospered, paid off his debt and bought the business.

The move to Cleveland would prove to offer an even greater fortune, one that destined Flagler to become an integral, if not principal figure, in creating the greatest industrial company the world had known. What sparked this adventure was Flagler’s reunion with his acquaintance from his merchant days in Bellevue, John D. Rockefeller.

            With the discovery of oil in Pennsylvania in 1859, there began a frenzy among speculators as to how to best generate wealth from the geysering, black liquid that would change the world.  It was only natural that Rockefeller’s attention would be drawn to those oil fields and the fortune that beckoned.

The main use of oil at the time was for lighting.  Refined into kerosene, oil changed the way people lived, making the days longer and brighter. The demand for such an illuminator was worldwide.

Finding the oil was one thing, but extracting it from the ground, shipping it and refining it into a product that was safe and inexpensive, presented quite another set of problems.  These were the problems that Rockefeller dealt with daily when he and Flagler joined in business in 1867.

Their bond had been cemented by a large investment in the fledgling company on the part of Flagler’s uncle, Stephen V. Harkness.  In a short time, the firm of Rockefeller, Andrews and Flagler owned two refineries and a sales office in New York.

Samuel Andrews was a refining expert, having developed several different processes to give oil a distinctive quality at an economical cost.  Rockefeller was a man of frugality and detail.  He had intricate knowledge as to how many staves were in a barrel or the number of drops of solder that it took to seal a can.

Rockefeller also had an eye for talent, too, and in Flagler he found an alter ego, a man of verve and spirit that fit the reckless, if not lawless, days that characterized the Gilded Age and the robber barons that made it.  Simply said, Flagler was the smartest man that Rockefeller had ever met.

This was providential, for the task before them was mercurial, presenting one financial hazard after another with no effective way to control the rapid rise and fall in prices caused by increasing competition and over production of crude oil. Within a few years the price of a barrel could fluctuate from 10 cents to $13.25.   It seemed that anyone with a few dollars could open a refinery, even if it was nothing but a shed where a few barrels a day could be distilled.

In the meantime, Flagler was put in charge of the firm’s transportation issues, a key responsibility since the cost of shipping oil could make a large difference in the profit margin. Years later this would be the crux of the government’s case against the company’s efforts to become a monopoly.

Flagler’s basic job was to negotiate the rates with railroads, canal boats and pipelines.  He was doing this as Rockefeller was consolidating the thirty-some refineries in Cleveland by adding them through buyouts or force.

As the firm’s capacity to produce refined oil increased, the need for cheaper freight rates became imperative to fend off competitors.   The crude oil was shipped from Pennsylvania to Cleveland where it was refined.  The finished product was then shipped to New York where it was sold for export.

Flagler was deft and precise in his dealings with the railroads.  He guaranteed to ship a substantial amount of oil on a given line in a timely manner in return for a secret rebate. The results of an early negotiation with one line showed that the regular freight fee was $2.40 a barrel and Flagler had engineered a preferential rate of $1.65.  He became expert at playing the railroads off against each other, particularly during their frequent rate wars.  Secrecy was essential because other oil firms were being charged more to ship on the same line.

By 1870, the firm’s business had burgeoned enormously.  Investors and other oil companies were eager to join the ranks of the prospering enterprise.  Recognizing the need for more capital, but fearing the loss of control, the partners were faced with a dilemma.

Years later Rockefeller would attribute the solution to the dilemma to Flagler’s brilliance.   On January 10, 1870, a company called Standard Oil was created in a brief 200-word incorporation document written by Flagler, who had no legal training, but whose idea created one of the greatest commercial ventures of all time.

At the time of the incorporation Rockefeller owned 2,667 shares. Flagler had 1,333 shares, but he voted the Harkness shares giving him equal status in the leadership of the company.  There was never a serious dispute between the men over the company.

Once the new company was in existence it was voracious in its acquisitions of refineries, first dominating the Cleveland market and then reaching out into other regions. By the spring of 1872, Standard Oil was refining 10,000 barrels of oil daily, employing 1,600 workers with a weekly payroll of $20,000.  Cleveland was well on its way to becoming the oil capitol of America.

Flagler liked to use the term “sweat” in association with the acquisition of competitors.  That meant that there was little room for negotiation. They either had to sell to Standard or simply go out of business.  The offer for these “sweated” businesses was consistent.  The deal was cash or Standard Oil stock.  Ironically, nearly all who took stock prospered far beyond their expectations.  Many of those who had taken cash became bitter as they witnessed the rise of Standard Oil.

The immense volume of oil spawned ever more favorable freight rates and became the tool which Rockefeller and Flagler used to acquire more and more competitors. The precise date of Standard Oil’s rise to the domination of the nation’s oil industry was October 17, 1877 when it purchased Empire Transportation Company and the Columbia Conduit Company thus becoming the primary provider of oil traffic to Europe. These companies owned a combination of rail cars, shipping and pipelines. Not only did Standard Oil control the nation’s refining industry, it now was poised to control the transportation of oil.

By 1877, Cleveland could no longer contain the vast reach of Standard Oil’s international business and the company began to shift its headquarters to New York. In the fall of that year, Flagler moved to New York, thus bringing to an end his years in Cleveland.

These had been good years in Cleveland which he had enjoyed socially and as a leading member of the First Presbyterian Church.  His wife, Mary, who had been ailing most of her life, was the focus of his personal concerns.  At night he would return to his mansion on Euclid Avenue in the evening and read to her. One account said that he only missed two such evenings in 17 years.

As Standard Oil extended its grip on the industry, it began to be challenged by legal issues. The company was authorized to do business only in the state of Ohio.  To operate a refining business in another state, on the face of it, was illegal. To skirt the law, Flagler devised a series of trusteeships to operate these businesses acquisitions.

 He also conceived several plans that would consolidate the oil industry to give the company an advantage.  While the initial plans failed, they drew the attention of competitors and the authorities.  In April of 1879, Rockefeller, Flagler and others were indicted in Pennsylvania in connection with an attempt to create a monopoly.

 While nothing came of this legal action, it was the beginning of a string of investigations and media inquiries that would extend into the next century and force anti-trust action to break the company into 33 entities.

The legal manipulations and subsequent investigations were chronicled by Ida Louise Tarbell, the foremost muckraker of her day, and author of the famous book The History of the Standard Oil Company.

Flagler’s ties with Standard Oil slowly gave way, although he remained active when it became clear that the only way for the company to keep its dominance over the oil business was to gain favored cooperation of the pipeline companies that were being built in the east.

 Negotiating for the control of pipelines was Flagler’s last daily involvement with Standard Oil.  He would remain linked to the company as a consultant and stockholder, but his attention and fortune was being ever more drawn to Florida where he had first visited prior to Mary’s death in May of 1881. He married twice more, having had three children by his first wife.

Flagler had always been remote and elusive with the media and his timely exit from the operations of Standard Oil allowed him to be a peripheral figure in the anti-trust scandal that would be shouldered by Rockefeller in the coming decades.

 In time, the Flagler name would be more associated with the development of Florida and the construction of its railroads.  He invested $50 million in the state.  His days in Cleveland, from 1867 to 1877 were overshadowed by the audacity of his efforts in Florida, particularly the construction of a railroad from Daytona over the ocean to Key West.

No one was more responsible for the development of that state than was Henry Flagler.  Sensing the potential of tourism, Flagler first built the 54-room Hotel Ponce de Leon in St. Augustine.

He built a bridge over the St. Johns River, opening Southern Florida to rail traffic, and purchased a hotel near Daytona.  He then expanded his burgeoning rail system to Palm Beach which became the winter Mecca for American society.

He built his house, the Whitehall in Palm Beach which is now the Flagler Museum.  His rambling Breakers Hotel continues as the city’s dominant hostelry.

Unwilling to bask in the sunshine of achievement, Flagler extended the Florida East Coast Railway to Biscayne Bay by 1896.  Here he paused to create a city, carving out streets, installing water and electricity, and even funding the town’s first newspaper.

Famed and revered, Flagler remained a modest man and when the townspeople urged that the city be named after its benefactor, he turned it down, insisting that the better name would be that from Indian lore— Miami.

Envisioning trade with Latin American and access to the Panama Canal, he pressed on with his railway to Key West, taking seven-years of hop scotching from key to key on bridges that were engineering marvels.  In 1935, a fierce storm destroyed the 107-mile railroad. As a commercial venture, it never succeeded.

            In 1902, Rockefeller, now somewhat distant from his old friend and business partner, wrote Flagler the following:

You and I have been associated in business upwards of thirty-five years, and while there have been times when we have not agreed on questions of policy, I do not know that one unkind word has ever passed or unkind thought existed between us. I feel my pecuniary success is due to my association with you, if I have contributed anything to yours I am thankful.

Flagler died on May 20, 1913 in Florida at the age of 83.

 The memory of Rockefeller and Flagler walking to work on Euclid Avenue and plotting their world-wide dominance of the oil industry amid the clatter of hoofs and the cry of coachmen is an image that deserves preservation as a unique moment in Cleveland history. Flagler was a personage never to be underestimated, especially by the hindsight of history.

Henry Flagler from the Encyclopedia of Cleveland History

The link is here

FLAGLER, HENRY M. – The Encyclopedia of Cleveland History


FLAGLER, HENRY M. (2 Jan. 1830-20 May 1913), a developer of STANDARD OIL CO. (OHIO), was born in Hopewell, N.Y., to Elizabeth Harkness and itinerant Presbyterian minister Isaac Flagler. He attended school through the 8th grade, and at 14 went to live with his Harkness relatives in Republic, Ohio. In 1852 he joined Dan and Lamon Harkness in buying out F. C. Chapman’s interest in Chapman & Harkness, forming Harkness & Co., a distillery which made $50,000 for Flagler by 1863. During the CIVIL WAR he worked as an agent dealing in provisions. After losing $100,000 in the salt industry in Michigan, Flagler moved to Cleveland in 1866, briefly selling barrels to oil refiners, then becoming a commission merchant. By 1867 he had enough money to establish H. M. Flagler & Co.

In 1867 STEPHEN HARKNESS invested $100,000 in JOHN D. ROCKEFELLER‘s oil business, placing Flagler in charge of his investment; the firm became Rockefeller, Andrews, & Flagler. Flagler developed the idea of absorbing smaller refineries, and of replacing the partnership with a joint stock company in 1870 and with the Standard Oil trust in 1879. Flagler was secretary and treasurer of the corporation, and vice-president of Standard Oil until 1908 and a director until 1911, but ceased playing an active role after ca. 1881, when he moved to New York and began investing heavily in Florida, developing Palm Beach and Miami. Flagler married 3 times: Mary Harkness in 1853; Ida Alice Shourds in 1883 after Mary’s death; and Mary Lily Kenan in 1901 after divorcing Ida. He had 3 children: Jennie Louise, Carrie, and Harry. Flagler died in West Palm Beach and was buried in the Flagler Mausoleum in St. Augustine, Florida.

Chandler, David Leon. Henry Flagler (1986).

Akin, Edward N. Flagler (1988).

Martin, Sidney W. Florida’s Flagler (1949).

Last Modified: 16 Jul 1997 01:39:52 PM


Henry Flagler from Wikipedia

The link is here

Henry Flagler

From Wikipedia, the free encyclopedia
  (Redirected from Henry M. Flagler)
Henry Morrison Flagler
Born January 2, 1830
Hopewell, New YorkU.S.
Died May 20, 1913 (aged 83)
Palm Beach, FloridaU.S.
Net worth USD $60 million at the time of his death (approximately 1/651st of USGNP)[1]
Children Jennie L. (Mar 18, 1855-Mar 25, 1889)
Carrie (1858-1861)
Harry H. (1870-1952)

Henry Morrison Flagler (January 2, 1830 – May 20, 1913) was an American industrialist and a founder of Standard Oil. He was also a key figure in the development of the eastern coast of Floridaalong the Atlantic Ocean and was founder of what became the Florida East Coast Railway. He is known as the father of Miami, Florida and also founded Palm Beach, Florida.[2]



[edit]Upbringing and education

Henry Flagler was born in Hopewell, New York and was the son of Elizabeth Caldwell Morrison Harkness and the Rev. Isaac Flagler, a Presbyterian minister. His mother was the widow of Dr. David Harkness of Milan, Ohio who had been a widower when they married. Dr. David Harkness and his first wife were the parents of Stephen V. Harkness whose business success enabled him to invest substantially with Henry Flagler in the Standard Oil company.[3] Elizabeth and Dr. David Harkness had one son, Daniel M. Harkness, Henry’s half-brother.

Henry Flagler received an eighth-grade education before leaving home at 14 to join his half-brother Daniel M. Harkness to work in Daniel’s uncle’s store, Lamon G. Harkness and Company, inRepublic, Ohio at a salary of US$5 per month plus room and board. By 1849, Flagler was promoted to the sales staff of the company at a salary of $400 per month. He eventually left Republic and joined Daniel M. Harkness in Bellevue, Ohio in a new grain business started with Lamon G. Harkness in Bellevue. In 1862, Flagler left Bellevue and founded the Flagler and York Salt Company, a salt mining and production business inSaginaw, Michigan in 1862 with his brother-in-law Barney York. By 1865, the end of the American Civil War led to a drop in the demand for salt and the Flagler and York Salt Company collapsed. Heavily in debt, Flagler returned to Bellevue. He had lost his initial $50,000 investment and an additional $50,000 he borrowed from his father-in-law and Dan Harkness. Flagler felt he had learned a valuable lesson: invest in a business only after thorough investigation.[4]

[edit]Business and Standard Oil

Henry Flagler, c. 1882

Flaglers Gingerbread house in Bellevue, OH

After the failure of his salt business in Saginaw, Flagler returned to Bellevue and reentered the grainbusiness as a commission merchant with The Harkness Grain Company. Through this business, Flagler became acquainted with John D. Rockefeller, who worked as a commission agent with Hewitt and Tuttle for the Harkness Grain Company. By the mid-1860s, Cleveland had become the center of the oil refining industry in America and Rockefeller left the grain business to start his own oil refinery. Rockefeller worked in association with chemist and inventor Samuel Andrews.

In 1867, Rockefeller, needing capital for his new venture, approached Flagler. Flagler obtained $100,000 from family member Stephen V. Harkness on the condition that Flagler be made a partner. The Rockefeller, Andrews & Flagler partnership was formed with Flagler in control of Harkness’ interest.[5] The partnership eventually grew into the Standard Oil Corporation. It was Flagler’s idea to use the rebate system to strengthen the firm’s position against competitors and the transporting enterprises alike. Though the refunds issued amounted to no more than fifteen cents on the dollar, they put Standard Oil in position to outcompete other oil refineries.[6] By 1872, it led the American oil refining industry, producing 10,000 barrels per day (1,600 m3/d). In 1885, Standard Oil moved its corporate headquarters to New York City.

Standard Oil had the same principal owners that Rockefeller, Andrews and Flagler had, give or take a few business associates: one of whom was John D. Rockefeller‘s brother, William.[7] Standard Oil monopolized quickly and took America by storm.[8] Although Standard Oil was a partnership, Flagler was credited as the brain behind the booming oil refining business. According to Edwin Lefevre, in “Flagler and Florida” fromEverybody’s Magazine, XXII (February, 1910) p. 183, “When John D. Rockefeller was asked if the Standard Oil company was the result of his thinking, he answered, “No, sir. I wish I had the brains to think of it. It was Henry M. Flagler.”[9]

Henry Flagler dabbled in various businesses aside from building up infrastructure in Florida. When he envisioned successes in the oil industry, he and Rockefeller started building their fortune in refining oil in Cleveland, Ohio. Cleveland became very well known for oil refining, as, “More and more crude oil was shipped from the oil regions to Cleveland for the refining process because of transportation facilities and the aggressiveness of the refiners there. It was due largely to the efforts of Henry M. Flagler and John D. Rockefeller.”[10] Flagler and Rockefeller worked hard for their company to achieve such prominence. Henry explained: “We worked night and day, making good oil as cheaply as possible and selling it for all we could get.”[11] Not only did Flagler and Rockefeller’s Standard Oil company become well known in Ohio, they expanded to other states, as well as gained additional capital in purchasing smaller oil refining companies across the nation.[11] According to Allan Nevins, in John D. Rockefeller (p 292), “Standard Oil was born as a big enterprise, it had cut its teeth as a partnership and was now ready to plunge forward into a period of greater expansion and development. It soon was doing one tenth of all the petroleum business in the United States. Besides its two refineries and a barrel plant in Cleveland, it possessed a fleet of tank cars and warehouses in the oil regions as well as warehouses and tanks in New York.”[12]

By 1892, Standard Oil had a monopoly over all oil refineries in the United States. In an overall calculation of America’s oil refineries’ assets and capital, Standard Oil surpassed all.[13] Standard Oil’s combined assets equalled approximately $42,882,650.00 (U.S) from: Indiana, Kentucky, New Jersey, New York and Ohio. As well as the highest capitalization, totaling $26,000,000 (U.S).[13] The history of American oil refining begins with Henry Morrison Flagler, and his business associate and friend, John D. Rockefeller, as they built the biggest, most prosperous and monopolizing oil empire of their time: Standard Oil.

[edit]Florida: resort hotels and railroads

In 1876 on the advice of his physician, Flagler traveled to Jacksonville for the winter with his first wife, Mary (née Harkness) Flagler, who was quite ill. Two years after she died in 1881, he married again. Ida Alice (née Shourds) Flagler had been a caregiver for Mary Flagler. After their wedding, the couple traveled to Saint Augustine. Flagler found the city charming, but the hotel facilities and transportation systems inadequate.Franklin W. Smith had just finished building Villa Zorayda and Flagler offered to buy it for his honeymoon. Smith would not sell, but he planted the seed of St. Augustine’s and Florida’s future in Flagler’s mind.[14]

Although Flagler remained on the board of directors of Standard Oil, he gave up his day-to-day involvement in the corporation to pursue his interests in Florida. He returned to St. Augustine in 1885 and made Smith an offer. If Smith could raise $50,000, Flagler would invest $150,000 and they would build a hotel together. Perhaps fortunately for Smith, he couldn’t come up with the funds,[15] so Flagler began construction of the 540-room Ponce de León Hotel by himself, but spent several times his original estimate. Smith helped train the masons on the mixing and pouring techniques he used on Zorayda.[16]

Florida East Coast Railway, Key West Extension, express train at sea, crossing Long Key Viaduct, Florida. photo from Florida Photographic Collection

Realizing the need for a sound transportation system to support his hotel ventures, Flagler purchased short line railroads in what would later become known as the Florida East Coast Railway.

The Ponce de León Hotel, now part of Flagler College, opened on January 10, 1888 and was an instant success.

Ponce de Leon Hotel – Now Flagler College

This project sparked Flagler’s interest in creating a new “American Riviera.” Two years later, Flagler expanded his Florida holdings. He built a railroad bridge across theSt. Johns River to gain access to the southern half of the state and purchased the Hotel Ormond, just north of Daytona. He also built the Alcazar hotel as an overflow hotel for the Ponce de León Hotel. The Alcazar stands today as the Lightner Museum next to the Casa Monica Hotel in St. Augustine that Flager bought from Franklin W. Smith. His personal dedication to the state of Florida was demonstrated when he began construction on his private residence, Kirkside, in St. Augustine.

Flagler completed the 1,100-room Royal Poinciana Hotel on the shores of Lake Worth in Palm Beach and extended his railroad to its service town, West Palm Beach, by 1894, founding Palm Beach and West Palm Beach.[2] The Royal Poinciana Hotel was at the time the largest wooden structure in the world. Two years later, Flagler built the Palm Beach Inn (renamed Breakers Hotel Complex in 1901) overlooking the Atlantic Ocean in Palm Beach.

Flagler originally intended West Palm Beach to be the terminus of his railroad system, but in 1894 and 1895, severe freezes hit the area, causing Flagler to rethink his original decision. Sixty miles south, the town today known as Miami was reportedly unharmed by the freeze. To further convince Flagler to continue the railroad to Miami, he was offered land in exchange for laying rail tracks from private landowners, including Julia Tuttle, whom he had met in Cleveland, Ohio and who ran a trading post on the Miami River, the Florida East Coast Canal and Transportation Company, and the Boston and Florida Atlantic Coast Land Company.

Such incentive led to the development of Miami, which was an unincorporated area at the time. Flagler encouraged fruit farming and settlement along his railway line and made many gifts to build hospitals, churches, and schools in Florida.

Flagler’s railroad, the Florida East Coast Railway, reached Biscayne Bay by 1896. Flagler dredged a channel, built streets, instituted the first water and power systems, and financed the city’s first newspaper, The Metropolis. When the city was incorporated in 1896, its citizens wanted to honor the man responsible for its growth by naming it “Flagler”. He declined the honor, persuading them to use an old Indian name, “Mayaimi“. However, an artificial island was constructed in Biscayne Bay called Flagler Monument Island to honor Flagler. In 1897, Flagler opened the exclusive Royal Palm Hotel there. He became known as the Father of Miami, Florida.

Flagler’s second wife, the former Ida Alice Shourds, had been institutionalized for mental illness since 1895. In 1901, Flagler successfully persuaded the Florida Legislature to pass a law that made incurable insanity grounds for divorce, opening the way for Flagler to remarry. Judge Minor S. Jones of Florida’s 7th Judicial Circuit presided over the divorce. Flagler was the only person to be divorced under the law he pushed through before it was repealed in 1905.[17] On August 24, 1901, Flagler married his third wife, Mary Lily Kenan, and the couple soon moved into their new Palm Beach estate, Whitehall, a 55-room beaux arts home designed by the New York-based firm of Carrère and Hastings, which also had designed the New York Public Library and the Pan American Exposition.[18] Built in 1902 as a wedding present to Mary Lily, Whitehall (now the Flagler Museum) was a 60,000-square-foot (5,600 m²) winter retreat that established the Palm Beach “season” of approximately 8–12 weeks, for the wealthy of America’s Gilded Age.

By 1905, Flagler decided that his Florida East Coast Railway should be extended from Biscayne Bay to Key West, a point 128 miles (206 km) past the end of the Florida peninsula. At the time, Key West was Florida’s most populous city, and it was also the United States’ deep water portclosest to the canal that the U.S. government proposed to build in Panama. Flagler wanted to take advantage of additional trade with Cuba and Latin America as well as the increased trade with the west that the Panama Canal would bring. In 1912, the Florida Overseas Railroad was completed to Key West. Over thirty years, Flagler had invested about $50 million in railroad, home, and hotel construction and gave to suffering farmers after the freeze in 1894. When asked by the president of Rollins College in Winter Park about his philanthropic efforts, Flagler reportedly replied, “I believe this state is the easiest place for many men to gain a living. I do not believe any one else would develop it if I do not … but I do hope to live long enough to prove I am a good business man by getting a dividend on my investment.”[19]

[edit]Death and heritage

Statue of Henry Flagler that stands in front of Flagler College (Flaglers formerPonce de León Hotel) in Saint Augustine, Florida.

In 1913, Flagler fell down a flight of marble stairs at Whitehall. He never recovered from the fall and died in Palm Beach of his injuries on May 20 at 83 years of age.[20][21] He was entombed in the Flagler family mausoleum at Memorial Presbyterian Church in St. Augustine alongside his first wife, Mary Harkness; daughter, Jenny Louise; and granddaughter, Marjorie. Only his son Harry survived of the three children by his first marriage in 1853 to Mary Harkness. A large portion of his estate was designated for a “niece” who was said actually to be a child born out of wedlock.

When looking back at Flagler’s life after his death on May 20, 1913, George W. Perkins, of J.P. Morgan & Co., reflected, “But that any man could have the genius to see of what this wilderness of waterless sand and underbrush was capable and then have the nerve to build a railroad here, is more marvelous than similar development anywhere else in the world.” [22]

Miami’s main east-west street, is named Flagler Street, and is the main shopping street in Downtown Miami. There is also a monument to him on Flagler Monument Island in Biscayne Bay in MiamiFlagler College and Flagler Hospital are named after him in St. Augustine. Flagler County, FloridaFlagler Beach, Florida and Flagler, Colorado are also named for him. Whitehall, Palm Beach, is open to the public as theHenry Morrison Flagler Museum; his private railcar No. 91 is preserved inside a Beaux Arts pavilion built to look like a 19th Century railway palace.

On February 24, 2006, a statue of Henry Flagler was unveiled in Key West near where the Over-Sea Railroad once terminated. Also, on July 28, 2006, a statue of Henry Flagler was unveiled on the southeast steps of Miami’s Dade County Courthouse, located on Miami’s Flagler Street.

The Overseas Railroad, also known as the Key West Extension of the Florida East Coast Railway, was heavily damaged and partially destroyed in the Labor Day Hurricane of 1935. The Florida East Coast Railway was financially unable to rebuild the destroyed sections, so the roadbed and remaining bridges were sold to the State of Florida, which built the Overseas Highway to Key West, using much of the remaining railwayinfrastructure.

Flagler’s third wife, Mary Lily Kenan Flagler, was born in North Carolina; the top-ranked Kenan-Flagler Business School at the University of North Carolina at Chapel Hill is named for Flagler and his wife, who was an early benefactor of UNC along with her family and descendants.[23] After Flagler’s death she married an old friend, Robert Worth Bingham, who used an inheritance from her to buy the Louisville Courier-Journal newspaper. The Bingham-Flagler marriage (and questions about her death or possible murder) figured prominently in several books that appeared in the 1980s when the Bingham family sold the newspaper in the midst of great acrimony. Control of the Flagler fortune largely passed into the hands of Mary Lily Kenan’s family of sisters and brother, who survived into the 1960s.

[edit]See also


  1. ^ Klepper, Michael; Gunther, Michael (1996), The Wealthy 100: From Benjamin Franklin to Bill Gates—A Ranking of the Richest Americans, Past and PresentSecaucus, New Jersey: Carol Publishing Group, p. xiii, ISBN 978-0-8065-1800-8OCLC 33818143
  2. a b “Madoff scandal stuns Palm Beach Jewish community”. Reuters. December 19, 2008. Retrieved 2008-12-20.
  3. ^ Martin 1949. 05.
  4. ^ Martin. 29.
  5. ^ Martin. p. 45.
  6. ^ Martin. p. 64.
  7. ^ Derbyshire, Wyn. “Six Tycoons: The lives of John Jacob Astor, Cornelius Vanderbilt, Andrew Carnegie, John D. Rockefeller, Henry Ford and Joseph P. Kennedy.” London: Spiramus Press Ltd, 2008, p. 132.
  8. ^ Derbyshire, Wyn. “Six Tycoons: The lives of John Jacob Astor, Cornelius Vanderbilt, Andrew Carnegie, John D Rockefeller, Henry Ford and Joseph P. Kennedy.” London: Spiramus Press Ltd, 2008, p. 129-132.
  9. ^ Martin, Sidney Walter. “Florida’s Flagler.” Georgia: University of Georgia Press, 2010, p. 56.
  10. ^ Martin, Sidney Walter.”Florida’s Flagler.” Georgia: University of Georgia Press, 2010, p. 55.
  11. a b Sammons, Sandra Wallus. “Henry Flagler, Builder of Florida.” Sarasota, Florida: Pineapple Press Inc, 2010, p. 4.
  12. ^ Martin, Sidney Walter. “Florida’s Flagler.” Georgia: University of Georgia Press, 2010, p. 58.
  13. a b Tarbell, Ida M. The History of the Standard Oil Company. New York: McClure, Phillips & Co, 1904, p. 376.
  14. ^ Nolan, David: Fifty Feet in Paradise, Harcourt, Brace, Jovanovich Publishers, 1984, page 95
  15. ^ Nolan, David: Fifty Feet in Paradise, Harcourt, Brace, Jovanovich Publishers, 1984, page 101
  16. ^ Nolan, David: Fifty Feet in Paradise, Harcourt, Brace, Jovanovich Publishers, 1984, page 105
  17. ^
  18. ^ Chandler p. 193.
  19. ^ Chandler
  20. ^ “Whitehall Flagler Museum”Destination 360. Retrieved 2010-04-04.
  21. ^ “Henry Morrison Flagler”Everglades Digital Library. Retrieved 2010-04-04.
  22. ^ Moffet, Samuel. Henry Morrison Flagler The Cosmopolitan; a Monthly Illustrated Magazine (1902) APS Online
  23. ^ “History”Kenan-Flagler Business School. Retrieved 2010-09-04.
  • Chandler, David. Henry Flagler: The Astonishing Life and Times of the Visionary Robber Baron who Founded Florida(New York: Macmillan Publishing Company, 1986)
  • Standiford, Les (2002). Last Train to Paradise. Crown Publishers, New York. ISBN 0-609-60748-0.
  • Martin, Sidney Walter (1998). Henry Flagler Visionary of the Gilded Age. Tailored Tours Publications, Buena Vista, Florida. ISBN 0-9631241-1-0.
  • Martin, Sydney Walter (1949). Florida’s Flagler. University of Georgia Press, USA.

[edit]Further reading

  • Akin, Edward N. (1991). Flagler: Rockefeller Partner and Florida Baron. University Press of Florida. ISBN 0-8130-1108-6.
  • Bramson, Seth H. (2002). Speedway to Sunshine: The Story of the Florida East Coast Railway. Boston Mills Press, Erin, ONT, Canada. ISBN 1-55046-358-6. Noted by the author as the official history of the Florida East Coast Railway.
  • Mendez, Jesus. “1892-A Year of Crucial Decisions in Florida”, Florida Historical Quarterly, Summer 2009, Vol. 88 Issue 1, pp 83–106, focus on Flager’s aggressive urban development of the city of St. Augustine, his improvement of the local railroad networks between several Florida communities, and negotiations regarding international government trade policies and regulations.
  • Nolan, David. Fifty Feet in Paradise: The Booming of Florida. Harcourt Brace Jovanovich, 1984.
  • Ossman, Laurie; Ewing, Heather (2011). Carrère and Hastings, The Masterworks. Rizzoli USA. ISBN 9780847835645.

[edit]External links

Overview of the life of Henry Flagler from the American Enterprise Institutue

Terrific overview of the life of Henry Flagler from the American Enterprise Institutue

The link is here


John D. Rockefeller could not have built his empire without one of America’s greatest entrepreneurs, Henry Flagler.

In all of American industrial history, perhaps only Henry Ford is more closely identified with the company he founded than is John D. Rockefeller.

In the 1860s, Rockefeller was just one of many entrepreneurs seeking to exploit the possibilities opened up by the brand-new technology of drilling for oil. No one outside the aborning industry had ever heard of him. But by 1880, Rockefeller’s Standard Oil controlled 80 percent of the by-then vastly larger American oil refining business. In 1902 Ida Tarbell began serializing “The History of the Standard Oil Company” in McClure’s Magazine. She very deliberately made Rockefeller the personification of the company. The book, published in 1904, was a phenomenal best seller and, while highly tendentious, extremely influential.

By the time Standard Oil was ordered broken up by the Supreme Court in 1911, to most people, Standard Oil and John D. Rockefeller were one and the same. And by that time, of course, Rockefeller was the richest man in the world, with a net worth that exceeded the U.S. national debt.

But Standard Oil was never a one-man operation even in its earliest days. Soon after entering the oil business fulltime, Rockefeller had taken on as partner an Englishman named Samuel Andrews. A gifted chemist and mechanic, Andrews made numerous important improvements in refining methods. If the Rockefeller refineries were more efficient than others, Samuel Andrews was the reason.

Later, Standard Oil often acquired other refineries and, if it was interested in bringing the management into the Standard Oil operation, would offer them a very good deal. Such major figures in Standard Oil history as Charles Pratt, Henry H. Rogers, and John D. Archbold joined the company in this way.

But there was a figure far more important to the history of Standard Oil than Andrews, who took no part in the management of the enterprise, or the later major figures who managed it superbly. This was Henry M. Flagler.

Rockefeller and Flagler were so close in the early days that they functioned virtually as a single entity as they designed and executed the strategy that allowed Standard Oil to dominate the oil industry. Astonishingly, Flagler would go on to a second triumph on his own, turning the state of Florida from a subtropical wilderness into a tourist mecca and agricultural powerhouse. Few entrepreneurs in the history of capitalism accomplished as much as Henry Flagler.

How important to the story of Standard Oil is he? Well, consider this. In later years, a reporter asked John D. Rockefeller whose idea it had been to transform the partnership of Rockefeller, Andrews, and Flagler into the corporation called Standard Oil.

“I wish I’d had the brains to think of it,” Rockefeller replied. “It was Henry M. Flagler.”

Like Rockefeller, Flagler was born in upstate New York, just as the new Erie Canal was transforming what had been a semi-frontier into an area of quickly growing prosperity. Nine years older than Rockefeller, Flagler was born in 1830. His father was an itinerant Presbyterian minister who spent his whole life on the edge of poverty. In an age when early death was still common, both of his parents had been married twice before and, indeed, Flagler had been named for his mother’s first husband, Henry Morrison. She had had a son, Daniel Harkness, by her second husband, eight years older than Henry. Flagler’s father had had two daughters by his first wife and one by his second.

After completing the eighth grade, a fairly good education by the standards of the mid-19th century, Flagler decided to leave home and seek his fortune in Ohio, where his half-brother Dan was living with his Harkness relatives. He walked the nine miles to the Erie Canal and caught a freight boat, working with the crew in lieu of paying a fare. He took a boat from Buffalo to Sandusky, Ohio, and walked the 30 miles to the town of Republic, where Dan was living. He arrived with only a carpet bag of clothes, nine cents, and a French five-franc piece that he would keep the rest of his life.

Asked whose idea it had been to transform the partnership into the corporation called Standard Oil, John D. Rockefeller said, ‘I wish I’d had the brains to think of it. It was Henry M. Flagler.’

Flagler quickly got a job in a store owned by Daniel’s uncle, Lamon Harkness, earning five dollars a month plus room and board. He soon showed a gift for salesmanship and for making friends. By the time he was 19, Flagler was working for Chapman and Harkness, which owned the store he had started in, and earning $400 a year in salary. Chapman and Harkness, besides owning a chain of retail stores, was also involved in the wholesale grain and liquor business. Ohio was then the center of the American grain belt, and Flagler quickly mastered the business and was made a partner in the firm.

In 1853 he married Lamon Harkness’s daughter Mary. Together they made an impressive couple. Although in frail health, Mary had a dark-haired, dark-eyed beauty. He was tall, strikingly handsome, and with eyes the rarest of colors, a deep lavender blue.

The early 1850s were a very prosperous time in the United States, thanks in part to the California gold strike, and Flagler flourished. His network of connections in the wholesale grain business expanded rapidly. One of the most important of these was Stephen V. Harkness, Mary’s first cousin (and his half-brother Dan’s older half-brother).

By the beginning of the Civil War, Flagler, still only 31, had two daughters, a large, comfortable house in Bellevue, Ohio, and about $50,000 in capital, a moderate fortune by the standards of the mid-19th century. But he was getting bored with the wholesale grain and liquor trade, which was a mature business, routine and unexciting. Flagler would always be happiest creating a new business, not merely running a successful one.

The war, with its wholly unprecedented demands for materiel and equipment, produced an enormous boom. And the army’s need for salt to preserve food caused demand for that commodity to soar. Salt mines had recently been discovered near Saginaw, Michigan, and the state encouraged their development by making them tax free and offering a bounty of 10 cents a bushel.

Flagler and his brother-in-law, Barney York, invested $50,000 each in a salt property and moved to Saginaw. Competition was intense and they had to learn the salt business from scratch. They made money while the war was on, but with its end, the boom in salt ended too. Flagler’s company went broke and he ended up being $50,000 in the hole, a sum he had to borrow from his father-in-law. He moved back to Bellevue, but instead of living in a large house, he and his family rented rooms in a boarding house.

Flagler soon went to Cleveland and got a job as a grain commission merchant with the firm of Maurice Clark (a former partner of John D. Rockefeller), with which he had dealt before the war. Unlike the salt business, Flagler knew the grain business backwards and forwards and with his gifts as a salesman was soon prospering once again. He paid back his father-in-law and moved his family to Cleveland. Before long he was living on Euclid Avenue, Cleveland’s most fashionable street, near Rockefeller’s house, and the two would often walk to and from work together, discussing the grain and oil businesses.

Edwin Drake had successfully drilled for oil in northwest Pennsylvania in 1859, showing that a substance that had previously been skimmed from ponds and brooks and used for patent medicine could be obtained in huge amounts. This made possible oil’s use as a cheap lubricant and, distilled into kerosene, as fuel for lamps, replacing ever more expensive whale oil. By the end of the Civil War, Rockefeller and Samuel Andrews were running the largest and most profitable oil refining business in Cleveland.

Rockefeller, expanding relentlessly, needed more capital and he approached Stephen Harkness, by this time one of the richest men in Ohio. Harkness was happy to invest $100,000 but wanted someone in the firm he could rely on to watch his interests. So he asked Rockefeller to take on Henry Flagler as a partner. Rockefeller was more than happy to do so, and in fact had already asked Flagler to join the firm, renamed Rockefeller, Andrews, and Flagler.

Rockefeller and Flagler were so close that they functioned virtually as a single entity as they designed and executed the strategy that allowed Standard Oil to dominate the oil industry.

Soon the two were sharing an office, their desks facing each other, as intimate as any two business partners have ever been. Besides discussing everything as they walked to and from their houses on Euclid Avenue, they would routinely pass drafts of documents back and forth between them until each was satisfied.

Rockefeller noted that Flagler had a remarkable ability to express clearly the intent of a document and the obligations of both sides in a contract. “Some lawyers,” Rockefeller wrote, “might sit at his feet and learn things about drawing contracts good for them to know.”

Besides being close partners, they also became intimate friends. “It was,” wrote Rockefeller years later, “a friendship founded on business, which Mr. Flagler used to say was a good deal better than a business founded on friendship.”

The oil business was nothing if not volatile in its first ten years. Northwest Pennsylvania, the only oil field in the world until the 1880s, was a wild and lawless place, much as the California gold fields had been in the 1850s. Worse from the standpoint of Rockefeller and his new partner, the price of oil fluctuated wildly, reaching as low in the 1860s as 10 cents a barrel and reaching as high as $13.25, as annual production rose from 2,000 barrels in 1859 to 4,250,000 in 1869.

Meanwhile, oil refining was a deeply fragmented business. Cleveland alone had more than 30 refineries. Most of these were ramshackle affairs. Many people were unwilling to invest more capital in the oil business than absolutely necessary, afraid that the oil would cease to flow in Pennsylvania and they would be out of luck.

Rockefeller was a superb supervisor of operations, with a keen eye for waste and inefficiency. As his biographer Ron Chernow notes, he anticipated in many ways the famous efficiency studies of Frederick Winslow Taylor. He would keep a red notebook with him at all times, and his managers soon learned to dread when he pulled it out and jotted down ideas that they would have to follow up on.

In one case he was inspecting a plant in New York City that manufactured five-gallon cans of kerosene for export to Europe. He noted that the can lids were applied with 40 drops of solder and asked the manager if he had ever tried using only 38. A small percentage of cans leaked with 38 drops, but none did with 39, which became the new standard. Rockefeller noted that that one drop per can saved the plant $2,500 the first year. Applied throughout the Standard Oil empire over the years, it saved, as Rockefeller noted happily, “many hundreds of thousands of dollars.”

If Rockefeller always paid close attention to the nuts and bolts, Flagler was more of a big-picture man. He made four fundamental contributions to the strategy that turned the Cleveland partnership of Rockefeller, Andrews, and Flagler into the globe-girdling Standard Oil Corporation.

First, as we have seen, it was Flagler who convinced Rockefeller to incorporate and, indeed, he who wrote the act of incorporation despite not even being a lawyer. Being incorporated made it much easier to finance expansion without losing control of the company. The company was, at first, capitalized at $1 million, with 10,000 shares, each with a par value of $100. Rockefeller received 2,667 shares, Flagler and Andrews 1,333 each. The rest were held by Stephen Harkness, William Rockefeller (John’s younger brother), and a new investor named Oliver B. Jennings, who was William Rockefeller’s brother-in-law. The old partnership of Rockefeller, Andrews, and Flagler retained 1,000 shares.

To ensure that the interests of the stockholders would always be paramount, none of the stockholders in the company management received a salary, only the dividends from the stock. This, as it turned out, was not much of a sacrifice. In the first year, Standard Oil paid out $105 per share in dividends.

It would not be an exaggeration to say that no individual ever had as much influence on the history of a single state as Flagler had on Florida.

Second, Flagler, unlike the owners of Standard Oil’s competitors, insisted on building only state-of-the-art refineries. This was a brave financial decision but it made them the low-cost producers with all the advantages of that position.

Third, Flagler convinced Rockefeller, who needed very little convincing, to aggressively buy up their smaller competitors. This would give them increased market influence over the volatile price of oil and control of the Cleveland oil market. He devised a formula to arrive at a fair evaluation of their worth.

Fourth, Flagler realized that there was no controlling the price of crude oil, which then, just as now, fluctuated over a broad range. Demand tended to rise steadily, but supply rose in fits and starts. The reason is simple enough. Drilling for oil and exploring for new fields are always a very expensive gamble, with many dry holes. So drilling and exploration increase only when prices are high (as they are now: every offshore drilling rig in existence is engaged in exploration). But this causes the new wells and new fields to come on line in a rush, knocking the price back down as supply suddenly increases dramatically. This was as true in 1870, when the world’s annual production was less than five million barrels, as it is today, with annual production reaching 30 billion barrels.

But the price of transportation, Flagler knew, could be controlled or at least influenced, and transportation was the largest cost component of a barrel of refined oil, after the crude itself. Here Cleveland refiners had a distinct advantage over their rivals in Pittsburgh, the other center of oil refining. For while Pittsburgh was considerably closer to the oil fields, it was served only by the mighty Pennsylvania Railroad, which had no hesitation whatever to use its transportation monopoly to extract high prices. Cleveland was served not only by the Pennsylvania but also by the Erie and the Lake Shore railroads, the latter controlled by Commodore Vanderbilt’s New York Central after 1869. And Cleveland refineries in the summer months could also ship oil by boat through the Erie Canal to New York.

Flagler and Rockefeller would play the railroads like a fiddle. They not only negotiated secret rebates for their own shipments, but also were able to extract a rebate on the shipments of other refiners. In effect, their competitors, unknowingly, were paying a tax to Standard Oil in order to ship their own products.

(None of this, of course, was illegal in any way at the time. In the post–Civil War era, the United States was rapidly evolving from an economy based on agriculture and small, largely family-held enterprises to a modern industrial state with corporations employing tens of thousands. It had not yet learned what rules were necessary in the new economic conditions to assure a stable, competitive marketplace. Indeed, it can be argued that the capitalists of that era helped mightily to show what rules were needed.)

This gave Rockefeller and Flagler a formidable advantage in seeking to become the dominant company in the oil refining business. Using Flagler’s formula, they would make an offer to a rival they wanted to acquire and the rival had, in effect, three choices. It could accept the offer and take cash, accept it and take Standard Oil stock, or face ruin because of high transportation costs.

Flagler and Rockefeller always paid a fair price—or at least what they thought was a fair price. And as the great historian Allen Nevins pointed out in his book on Rockefeller, the prices that Standard Oil paid to acquire its monopoly in the 1870s and ’80s were often more generous than were the prices the Roosevelt administration paid to assemble the monopoly called the Tennessee Valley Authority in the 1930s. And, of course, those who chose to take Standard Oil stock had no complaints whatever.

As Standard expanded exponentially it found itself facing ever more of a problem with Ohio’s state incorporation law. As in all other states at that time, the law forbade corporations from owning stock in another company or property in another state. Those restrictions had not been much of a problem when the laws had been originally passed in the early and mid-19th century. But as railroads and then the telegraph increasingly unified the United States into a gigantic common market, and companies grew to supply this new, national market, these laws less and less reflected economic reality.

As electricity began to displace kerosene for lighting, Flagler pushed for Standard Oil to begin aggressively marketing gasoline as a fuel for automobiles.

Standard Oil soon had subsidiaries all over the country and, in order to comply with the law, Flagler, as secretary of the corporation, would name himself trustee to hold the stock of the subsidiaries for the benefit of the stockholders of Standard Oil. But by the end of the 1870s, there were many people acting as trustees for subsidiaries and this became increasingly unwieldy.

Again it was Flagler who, in all likelihood, found the solution. Instead of each subsidiary having its own trustee, with these trustees scattered through the ever-expanding Standard Oil empire, in 1879 three men whom today we would call “middle managers” were appointed trustees for all the subsidiaries. In theory, these three controlled all Standard Oil property outside of Ohio. In fact, of course, they did exactly what they were told. This was the beginning of the trust form of organization, a term that has echoed down American economic history ever since.

In 1882, a very talented lawyer named Samuel C. T. Dodd refined the system. He and Flagler drafted a new Standard Oil trust agreement that set up separate corporations in each state with major properties belonging to Standard Oil. Each had its own board of directors, but the stock of the various corporations was all in the hands of the trustees, who issued “certificates of interest” to the stockholders of Standard Oil of Ohio so that they would receive the dividends.

In 1892, the Ohio Supreme Court ruled that the trust was contrary to Ohio law and had to be dissolved. But in 1889, New Jersey had passed the first modern incorporation law, allowing corporations to hold stock in other corporations and property wherever located. So when a reporter asked Dodd about the decision, he replied, “The only effect will be to inconvenience us a little.” Standard Oil (New Jersey) simply took over as the dominant corporation in the Standard Oil empire, and Standard Oil’s grip on the oil industry was in no way disrupted.

As other states began to adopt the New Jersey model for incorporation law, the need for a trust form of organization for multistate companies faded. Indeed it lasted little more than ten years. So-called antitrust laws, however, are very much with us still, although they are much less used today as an instrument of government policy than earlier.

By 1892, both Flagler and Rockefeller were becoming much less involved in the day-to-day operations of the company they had created and guided to greatness, although Flagler would later make one more major contribution to the company. As electricity began to displace kerosene for lighting, Flagler pushed for Standard Oil to aggressively market gasoline as a fuel for the new automobiles that were increasingly seen on American streets and highways. Demand for gasoline soon came to dwarf the demand for kerosene. Rockefeller would increasingly devote much of the rest of his very long life (he lived to be 97) to his vast eleemosynary activities that would associate the Rockefeller name as much with good works as it had been associated with wealth and aggressive business practices.

Flagler took a different approach. He was a private man with no interest in having his name publicly associated with good works. But he was also a very generous man. When many Florida farmers were threatened with disaster after a severe freeze, Flagler wrote to a local minister and told him, “Find any and every case of real need where a chance to start again will be appreciated and see that they have that chance. The only condition I impose is that they do not know the gift comes from Henry M. Flagler.”

Always bored with routine management and now rich beyond counting, with millions more pouring into his coffers every year, Flagler decided to conquer a new world, the state of Florida, then largely uninhabited south of Jacksonville.

Flagler’s wife had been an invalid for most of her marriage, having contracted tuberculosis. In 1879, Flagler had taken her to Jacksonville for the winter but there was little to do in the town of only 7,000 people. And except for Jacksonville and Key West, there were no towns of any size in all of peninsular Florida, which was mostly swamp, scrub, and saw–grass marsh.

Flagler was a private man with no interest in having his name associated with good works. But he was also a very generous man.

Flagler couldn’t take the boredom and returned to New York, where he was by then living, after Standard Oil moved its headquarters there in 1878. He urged Mary to stay, but she refused to be alone. Within a year or two she was too weak to travel and died, aged only 47, in May 1881. Flagler felt terribly guilty, thinking he had sacrificed Mary on the altar of Standard Oil. Undoubtedly she would have died no matter how much personal attention he paid her.

It is possible that the guilt he felt over Mary’s death sparked his interest in Florida. If only the state had had more to offer by way of amusements, he may have thought, she would have been willing to stay there. In the winter of 1882–83 Flagler was hospitalized with a liver ailment and he read a great deal about Florida. He learned that the state was selling land cheaply in order to stimulate the economy. A Philadelphian had recently purchased 4 million acres (an area considerably larger than Connecticut) for only $1 million and was planning to drain it and plant sugarcane, fruits, and vegetables. Railroad mileage was rapidly increasing. A small but elegant hotel had been built in St. Augustine to cater to well-heeled vacationers.

Flagler sensed a waking giant. He decided to build a luxury hotel in St. Augustine with 540 rooms. As always, he built the best, hiring the architectural firm of Carrère and Hastings, which would later build the New York Public Library. The hotel was an immediate success, although it took a while to become profitable.

Flagler had recognized the importance of transportation to the oil business and now recognized its importance to the development of Florida. He purchased a small narrow-gauge railroad that ran between Jacksonville and St. Augustine, converted it to the standard gauge, and built a bridge over the St. Johns River to connect it to railroads further north.

He began extending his railroad southwards and soon reached as far as Daytona. As he entered a new area Flagler would build or rebuild hotels and other tourist facilities. By 1890 it was possible to board a Pullman car in New York and get to Daytona in just 36 hours. Florida, a semitropical jungle ten years earlier, was now the country’s leading winter resort.

The following year, Flagler, now 61, conceived the idea of extending his railroad not only to south Florida but all the way to Key West, then still the state’s largest city. Building a railroad across 150 miles of open ocean would rove one of the great engineering feats of the day and would not be finished until 1912. At that time Dade County, which sprawled across all of Florida south of Lake Okeechobee, was 7,200 square miles in size but had only 726 inhabitants. Flagler transformed it, bringing tourists south and sending winter produce north in the newly developed refrigerated railroad cars.

By the late 1890s he had made Palm Beach in the winter what Newport, Rhode Island, was in the summer: the most fashionable resort for the very rich. There were often a hundred private railroad cars parked on sidings in West Palm Beach at the height of the season. Flagler’s Royal Poinciana Hotel in Palm Beach, with 1,150 rooms, was the largest resort hotel in the world (and the largest wooden building ever erected).

Before the end of his life, Flagler would invest at least $50 million in his Florida enterprises, easily the equivalent of a billion dollars today. It would not be an exaggeration to say that no individual ever had as much influence on the history of a single state as Flagler had on Florida, with the possible exception of Brigham Young and Utah. But Flagler remained, as always, publicly modest. When a new town was incorporated, after the Florida East Coast Railroad reached it, the inhabitants wanted to name it after Flagler. He convinced them to name it instead after the little brook that fl owed into the Atlantic at that point. The brook was called the Miami.

Building a railroad across 150 miles of open ocean would prove one of the great engineering feats of the day and would not be finished until 1912.

But if his new empire was flourishing, his personal life was not. Two years after Mary died, Flagler married the woman he had hired to nurse her, Ida Alice Shrouds. But Ida did not easily make the transition from being a spinster who had to work for a living to being the wife of one of the country’s richest men. By the late 1890s she was hopelessly insane, confined to a hospital from which she would never emerge.

By that point, Flagler was deeply in love with Mary Lily Kenan, more than 30 years his junior. Mary Lily was everything that Ida had not been, well born and well bred, with an easygoing Southern charm. But with Ida alive he could not marry her. The only grounds for divorce in New York State were adultery, and he knew he could do nothing about that law. So Flagler moved his legal residence to Florida, where he thought he could. As he wrote to President McKinley in 1898, “my domain begins in Jacksonville.”

About $125,000 was quietly distributed among Florida state legislators, and Florida’s law was changed to include incurable insanity as grounds for divorce. Flagler married Mary Lily in 1901 and built her a 55-room mansion in Palm Beach called Whitehall. It is now the Henry Morrison Flagler Museum, visited by almost 100,000 people a year.

By the time the Florida East Coast Railway reached Key West, Flagler was 82 years old. The next year, he fell down a short flight of stairs and never recovered from his injuries, dying on May 20, 1913, at the age of 83.

Flagler’s extraordinary achievements in Florida were widely recognized. George Perkins, a partner of J. P. Morgan and Company, is typical. “That any man could have the genius to see of what this wilderness of waterless sand and underbrush was capable,” he wrote, “and then have the nerve to build a railroad here, is more marvelous than similar development anywhere else in the world.”

But because John D. Rockefeller has so dominated the story of Standard Oil, both in his time and later in history, Flager’s achievements and their remarkable partnership have not received the attention that is their due. John D. Rockefeller knew how much Flagler had contributed to the success of Standard Oil. In 1902, he wrote to Flagler, “You and I have been associated in business upwards of thirty-five years, and while there have been times when we have not agreed on questions of policy I do not know that one unkind word has ever passed or unkind thought existed between us. . . . I feel my pecuniary success is due to my association with you, if I have contributed anything to yours I am thankful.”

John Steele Gordon is the author of An Empire of Wealth: The Epic History of American Economic Power (HarperCollins).

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