Ida Tarbell: The "Muckraker" Who Beat John D Rockefeller and Big Oil

21:44Ida Tarbell:And this is a moment when the big magazines, your Harper's, your Atlantic, cost 35 cents an issue, which means they're too expensive for the middle class. They're like a kind of quasi-luxury item. They cost a lot to make because you have these woodcut illustrations, apparently, that are very labor intensive. But there's this new technology coming along that lets you, I guess, do some kind of an engraving out of a photo. And so McClure is like, oh, I can lower my costs and I can sell a cheaper magazine, which is important to him, not just because he wants to sell more at a lower price, but because he wants to reach that overlooked middle class.

22:21Ida Tarbell:He has this social ambition that the magazine is going to, you know, influence the thinking of a broader swath of Americans that have read magazines to this point. A little similar to the Benjamin Franklin story. Yeah, it really is. It really is. And in the way that, you know, Franklin is coming along at just the very beginning of the Industrial Revolution and at this moment when there's more economic mobility than there's been, McClure and Ida Tarbell are coming along in the second Industrial Revolution. Thomas Edison. Thomas Edison, electricity, oil, and the internal combustion engine are about to come along.

22:57Ida Tarbell:And they are transforming the world, transforming work, creating vast fortunes. Inequality is rising. And you're starting to see the early part of the backlash to this from farmers and from basically poor industrial workers who sort of see this accumulation of money and power and the way it is harming them. But there is this vast middle class of small business owners and tradesmen and office clerks, really the Benjamin Franklin types, who are still like not really tuned in. You know, they are aware that they're benefiting from these new technologies. They have electric lights if they're lucky.

23:34Ida Tarbell:If not, they have kerosene, which is way better than whale oil. And this is McClure's audience, right? He wants to tell them sort of the bigger story. What is the big world historical arc that is happening now? And, you know, it's not like a luxury, pure political magazine. He publishes Arthur Conan Doyle, you know, Sherlock Holmes stories. He publishes Jack London. He publishes Mark Twain, covers science. In fact, Ida Tarbell starts out writing about science for him, interviews Louis Pasteur in France. Rad to do that. So Ida starts out doing that science writing. She moves back to the U.S. and winds up writing these extremely popular multi-part series about the lives of Napoleon and Lincoln.

24:17People always, they love him.

24:19Ida Tarbell:Oh, people read so many biographies. A publishing person once said, like, if you want to write a bestselling book, it should be Lincoln's doctor's dog. But really the core of McClure's magazine is this theme of money and power and corruption taking a more and more important role in American life. And so there are articles about corrupt local governments. There are stories about union thugs beating up non-union workers. but clearly the biggest money and power story of this era is the story of the trusts, right? Of these monopolistic roll-ups of different industries. You know, there's a beef trust and there is a sugar trust and there's U.S.

25:03Ida Tarbell:Steel and General Electric. And of course, there is Standard Oil. It's like a list of our episodes. Yes, that we've done and that are yet to come. Yes. And so Ida Tarbell and Sam McClure are looking out at this world. She is the star writer. This is the essential subject. And Ida Tarbell thinks, well, maybe I should go back to my childhood. You know, maybe I should tell the story of John D. Rockefeller and Standard Oil. As she's thinking about this, she goes and talks to her father about this idea. He's still in the oil business, but it has been a struggle for him. His partner several years earlier had actually gotten into some kind of business trouble and killed himself.

25:44Ida Tarbell:and Ida's dad inherited the partner's debts and had to mortgage the family's house. And so when Ida told her dad, she was thinking of, you know, digging into this story of what's really going on with John D. Rockefeller and Standard Oil, he said, don't do it. They'll destroy the magazine. They won't let you publish. Like, they are too big and too powerful. Yeah, it'll be a journalistic massacre instead of the Cleveland massacre. She didn't listen. and in 1901, she set out to tell the story of John D. Rockefeller and the rise of Standard Oil. And she knew that she wanted to tell it as a story, as a narrative, you know, the narrative how this man and his company rose to power, used power.

26:31Ida Tarbell:And she knew that her narrative had to be extremely solid, you know, based on unambiguous documentary evidence. And And she was an incredibly meticulous reporter. You know, she'd wanted to be a scientist. And she started out sort of annotating articles. She was a very rigorous journalist. So her first move is she knows that Standard Oil had based government investigations for a long time. Nothing had ever really come of them. Government hadn't done anything to Standard Oil. But there were these investigations. And the investigators wrote reports. You know, you want to look like you're doing something without really doing something?

27:07Ida Tarbell:Write a report. and she knew there was a report on that early deal between Standard Oil and the railroads, the one that, you know, made her dad get so upset when she was 14 years old. She goes to look for this report and she can't find a copy. Eventually somebody tells her, oh yeah, that report, the railroad presidents paid a bounty. They'd pay people like$100 to turn in copies of the report. So people are taking them out of libraries. They're fighting them at home. It's like, take it. Yeah, yeah. There is a market for those reports. And a big bonfire out back. And a big bonfire out back. She did manage to find one copy at the New York Public Library.

27:49Ida Tarbell:Shout out. Hooray for the libraries. Yeah. And so, you know, she's working on this story. And she's working for months and months before an article even publishes. Hooray for magazines. And of course, Standard Oil, which knows everything about everybody at this point, That is their whole game. Finds out she's working on the story. They hire a PR crisis firm. They have a guy. There are no PR crisis firms yet, but they have a guy. His name's Henry Rogers. He's a vice president at the company. And he's friends with Mark Twain, actually. Of course he is. Of course he is. And Mark Twain has written for McClure's.

28:21Ida Tarbell:And so this guy, Henry Rogers, this standard oil exec, tells Mark Twain he wants to talk to Ida Tarbell about whatever she's working on. And Mark Twain tells McClure and McClure tells Ida Tarbell. And so Ida Tarbell goes to see Henry Rogers, vice president of Standard Oil, at his mansion on East 57th Street. What does she say in her autobiography about this moment? Ida said she was a bit scared. Was I putting my head into the lion's mouth? She was not. It went great. Weirdly, they kind of loved each other. Henry is like, how'd you get interested in oil? And Ida's like, I grew up in the oil country in Pennsylvania.

28:58Ida Tarbell:And Henry says, of course, Tarbell's tank shops. I knew your father. They figure out they were neighbors. He's like, I probably saw you gathering flowers over at your side of the ravine. And Ida, here's what she said about him. She called Henry as fine a pirate as ever flew his flag in Wall Street. So wait, is Henry just like doing the PR thing where he's like cozying up to her? Well, yes. And I mean, part of the PR thing, I think, is this company has a story to tell. The company has a side of the story. They believe in what they are doing. It is not purely cynical. And so I think smart PR, and I think Henry was basically smart PR, is, well, if this story is going to happen, let's tell our side of the story.

29:45Ida Tarbell:And that is what Henry is going to do. And in fact, Ida's going to go back to him again and again, and Henry's going to keep talking to her for a long time. She spends about a year before she publishes anything. She travels through Washington, Pennsylvania, Ohio. She's reading court documents and government statistics, and she's talking to everybody she can talk to. And there's one little story that I think captures a lot about the depth of her reporting, and it's this. There was an office boy who worked at Standard Oil. He was a teenager. And his job included feeding documents into a furnace, the shredder of its day.

30:24Ida Tarbell:We have a document furnace down in the basement. Sure. And one day, I guess he has something he's about to throw in the fire or something. I don't know exactly, but he spots a familiar name on one of these documents that's about to go into the furnace. It was his old Sunday school teacher whose day job was being an independent operator in the oil business. Standard Oil does not like a independent operator. They really don't. And so what the office boy sees on this document that he's supposed to burn is that the local railroad office was secretly sending information about this Sunday school teacher's oil shipments to Standard Oil.

31:06Ida Tarbell:And then Standard Oil was giving orders to the railroad office. Specifically, they sent a letter about a shipment of this independent guy's oil that said, stop that shipment. This is this is what Standard Oil was doing. So to be clear, Standard Oil is communicating with the railroads to interfere with their competitor. Yes. In an instance like this, they're probably bribing the local railroad agent. Like there were a lot of ways that they worked with the railroad. That's an incentive structure, Jacob. It is a very rational incentive structure. The kid, the office boy, the burner of documents, thinks this doesn't seem entirely on the level.

31:47Ida Tarbell:And so instead of putting these particular documents into the furnace, he gives them to his Sunday school teacher on the sly, one presumes. And the Sunday school teacher gives the documents to Ida Tarpil. And Ida sees that as Standard Oil got bigger and bigger, took control of more and more of the oil business, the company came to have more and more power over the railroads in small ways like this, right, bribing local railroad workers, but also in big ways, right? Eventually, Standard Oil got railroads to give it a discount on shipping and also to charge its competitors extra and kick that money back to Standard Oil.

32:32Ida Tarbell:Wild, wild. And she brings this information to her buddy, Henry Rogers, vice president of Standard Oil. She says, like, what is going on with these rebates in the railroads? What's he say? Oh, Ida, somebody would have taken them if we had not. And then she's like, yeah, but nobody else could have. Standard oil is the giant. You set the rules. You dominate the business. Like, if you wanted to make the railroads give the same rates to everybody, you could. You could make it so oil companies are just competing on the merits. And Henry Rogers says, There was always somebody without scruples and competition.

33:11However small that somebody might be, he might grow. And this, for Ida, is the essence of the worldview of Standard Oil.

33:21Ida Tarbell:You need to smother competition in the cradle. Yes, very good. Very good. She actually says in her autobiography, she says that there was this obsession of the Standard Oil company, that danger lurked in small as well as great things, that nothing, however trivial, must live outside of its control. obsessive control, not just of the market, of everything. Of everything. And everybody. So in 1902, she publishes her first article about Standard Oil in McClure's. It'll eventually turn into a 19-part series. Wow. Wow. People actually read in those days. They really did, as we'll see. The series will include everything we've been talking about and more.

34:08Ida Tarbell:Robert, it will include widows who are forced to sell to Standard Oil below market prices. Oh, investigative journalists love a widow. Love a widow. It'll include the card catalog that Standard Oil kept to monitor every little store that sold oil. Surveillance. Surveillance. It'll include the ways that Standard Oil harassed the stores that sold other companies oil. And to be clear, it'll include a lot of the clever and efficient things that Standard Oil did as well. There's actually an article called The Legitimate Greatness of the Standard Oil Company. Very fair of her. Very fair. At least somewhat fair.

34:48Ida Tarbell:And it is a hit. It is a massive hit. The magazine is selling out faster than usual on the newsstand. Subscriptions are growing. Newspapers are writing editorials about it. There's a play on Broadway that opens called The Lion and the Mouse. That is an allegory of Ida Tarbell and John D. Rockefeller. And, you know, it's this long series. So the stories are coming. It's building. Sam McClure tells Ida Tarbell, You are today the most famous woman in America. In 1904, the series is published as a book called The History of the Standard Oil Company. And you can see the whole idea, you know, the whole story in one place.

35:30And the basic picture is a company run by a truly brilliant businessman

35:36Ida Tarbell:who used every new technology and efficiency gain he could to build his company, and who also used threats and bribery and coercion to drive his competitors out of business so he could gain complete control of the oil industry in America. Does one have to bring the other? Did Ida Tarbell think that if you are going to master an industry, you will inevitably cross the line? I don't think she did think that. Like, she was not anti-business. She wanted business to be a moral pursuit. And there was a real kind of moral quality. Think of the children to her writing that I haven't talked about here.

36:15Ida Tarbell:But she thought that this strangle the competitors in the cradle was a dishonorable part of what should be an honorable part of American life. And so her book closes with a call to action. And it's not anti-business, but it's anti-monopoly. What are we going to do about it? For it is our business. We, the people of the United States, and nobody else, must cure whatever is wrong in the industrial situation, typified by this narrative of the growth of the Standard Oil Company. So it's 1904 when the book comes out. Presidential election year. Nice timing by a publicist. True. And one of the candidates had an idea for what the people of the United States should do about Standard Oil and monopoly power in America.

37:02Ida Tarbell:I'll give you a clue. It was not the Democratic nominee, Alton B. Parker. Ooh. It was the guy he was running against. Guessing he got famous. You'll know after the ad.

37:36Ladies and gentlemen, we are back from the break.

37:40Ida Tarbell:Please give a warm business history welcome to the 26th president of the United States, Theodore Roosevelt. Roosevelt. Roosevelt was the other huge, important figure in this American pivot we've been talking about of the early 1900s. in the backlash to the power of Standard Oil and the other trusts. And Roosevelt had an extremely interesting relationship with Ida Tarbell and the other investigative journalists of the era. And, you know, if you know one thing about Theodore Roosevelt and the journalists, you know about this speech he gave, which happened to be at a moment when he was frustrated with an article that attacked the U.S.

38:23Ida Tarbell:Senate. Roosevelt compared investigative journalists to a guy who was always looking down and just raking the muck beneath his feet. He said, The muckraker typifies the man who in this life consistently refuses to see aught that is lofty and fixes his eyes with solemn intentness only on that which is vile and debasing. Of course, the journalists loved this. Started proudly calling themselves the muckrakers. Sure, happy to look through the muck for embarrassing things. And there is this moment, kind of in the similar vein, when Ida Tarbell and another McClure's journalist meet with Roosevelt at the White House, and he tells them they're impractical.

39:03Ida Tarbell:Ida wrote later that Theodore Roosevelt was afraid that we were adding to the not inconsiderable revolutionary fervor abroad driving people into socialism. Yeah, and remember, Roosevelt was president because an anarchist assassinated President McKinley. Of course he's worried about agitation. This was the age of anarchism, and so journalists, what are they but anarchists with pens? Strong take. So this is the famous side of Roosevelt's relationship with Tarbell and the other journalists of the era. But there was another side to it. There's a book that really helped me think about this. It's by Doris Kearns Goodwin.

39:39Ida Tarbell:It's called The Bully Pulpit. Theodore Roosevelt, William Howard Taft and the Golden Age of Journalism. Another topic for biographies that anyone will buy. Yes, 100 percent. And Doris Kearns Goodwin talked about the way that Theodore Roosevelt needed, needed Ida Tarbell and her colleagues because he wanted to take on the trusts. But when he took office in 1901, the politics were not really in his favor because of that divide I was talking about earlier. You know, you had the farmers and the radicals who were anti-trust, who were fighting the trusts. And then you had the moneyed interests, trusts, J.P.

40:21Ida Tarbell:Morgan, who were profiting from the trusts. But then there was this vast, basically indifferent middle class, people who just didn't care that much. And Roosevelt knew that in order to really to have Congress on his side, to take real action against the trust, he needed to bring that middle class over onto his side. And he needed Ida Tarbell's nuance that business is not bad. Some monopolies are not bad, but you can abuse the monopoly. This would be the thing that he could hold on to. Yes. And and in fact, that is what happened. You know, that is what her stories about Standard Oil showed America.

41:02Ida Tarbell:And, you know, as I was saying, the magazine was targeted at exactly that kind of tuned out middle class that Roosevelt needed. And they read Iditar Bell's stories and they started thinking differently about monopoly power and the trust and the meaning of business in America. And Roosevelt uses that momentum to start changing things. In 1903, he actually signs three important bills into law, kind of one after the other. One of them makes it harder for railroads to pay rebates, rebates, quote unquote, like those ones Standard Oil has been getting. Another one is supposed to actually expedite antitrust prosecutions.

41:42Ida Tarbell:And the third one, maybe the biggest one, creates this Department of Commerce and Labor that has legal power to investigate companies, you know, engaged in interstate commerce. But Standard Oil, by this point, was so big and so powerful that these laws were not going to be enough. Robert, I know you love an old-timey political cartoon. And I love to read cartoons on the radio. You love to read cartoons on the radio. So here is one published in the magazine Puck in the year 1904, which is the year Ida's Standard Oil book came out, and also the year Theodore Roosevelt is running for election or re-election.

42:18Okay, I have to zoom in here because if you remember, political cartoons at the time had like a million things going on in them. They were very, very complicated. So right in the middle is an octopus. And the body of the octopus is an oil tank that says Standard Oil. So this is Standard Oil, the octopus. And what does the octopus have its tentacles around? Well, Congress, absolutely. This looks like the state house over there. It looks like it's crushing the middle class here. It's crushing rich guys and lots of people over here. And then over in the corner is the White House. And the tentacle of the Standard Oil octopus is about to reach out and crush the last remaining building that it has not crushed, the White House itself.

43:07Ida Tarbell:The cartoon was called Next. Oh! Because the White House was Next. Yes. I understand. You know, they write the names on all the cartoons. It's pretty clear. It's pretty clear. No subtlety. So Roosevelt is running this campaign on what he calls the three C's, conservation, consumer protection, and control of corporations. Four C's. I count four if you do control of corporations, yeah. The last one is the one we care about today, or the last two, I guess, control of corporations. And Roosevelt won, of course. And so now he can push his trust-busting campaign further. In 1906, his Department of Justice sues Standard Oil under the Sherman Antitrust Act, which has been around for a long time, but largely unused.

43:59Ida Tarbell:And the case lays out a lot of what Ida Tarbell talked about in her stories in her book. There's this actually incredible kind of paragraph that lists the allegations against the company. Rebates, preferences, and other discriminatory practices. Restraint and monopolization by control of pipelines and unfair practices against competing pipelines. Contracts with competitors in restraint of trade. Unfair methods of competition, such as local price cutting at the points where it's necessary to suppress competition. And espionage of the business of competitors and the operation of bogus, independent companies.

44:34But other than that, it's a fine company. It's a beautiful institution.

44:38Ida Tarbell:The case wound its way through the courts. They always wind. They say they wind. They bounce around. Went all the way, as we have to say, to the Supreme Court. And the government won. The United States of America won. Standard Oil was forced to split into dozens of separate companies. And Rockefeller got the news perfectly when he was playing golf on his personal golf course. I don't know how they gave him the news, but there's a story about what happened when he got the news. He was playing golf, I believe, with a Catholic priest. Sounds like a joke, but I think it's true. And he gets the news, and he says to the guy he's playing golf with, have you any money?

45:22Ida Tarbell:And the guy says, no, why? And Rockefeller says, buy Standard Oil. He felt he was going to be just fine. And he was right. He was right because shareholders in Standard Oil got shares in all of the newly formed 30-some companies that spun out of it, which included Standard Oil of New Jersey, which became a little company called Exxon, and Standard Oil of New York, which went on to become mobile. So Rockefeller lost in court, but he just kept getting richer. But of course, after that, you could have lots of scrappy oil companies come up and compete. Yeah, I mean, look, Iditar Bell's goal wasn't to make Rockefeller go broke, right?

46:08Ida Tarbell:It was to make the public understand that companies like Standard Oil weren't competing on a level playing field. They weren't trying to win market share by selling a better product or selling at a lower price. You know, she wanted people to know that they were using their power to force rivals out every way they could and that once they had that kind of monopoly power, there was no market anymore. The market didn't work anymore, you know, because the core of a market, the thing capitalism needs is competition. And she succeeded at that. And by the way, this is a person who, because she is a woman, can't vote, can't hold most business jobs who is doing this.

46:53She did help people understand this.

46:58Ida Tarbell:She helped create a new way of thinking about business in America, right? She helped to establish this world that we live in now where we understand that monopolies are a failure mode of capitalism and that sometimes we need the government to intervene to save capitalism from itself. We're two geniuses into our three-part American Genius series. Robert Smith, you're writing part three right now. What's coming next week? You know what you have to do in a third part of a series? You have to innovate. Yes. You have to disrupt. Yes. And in fact, our third American genius is the man who combined those two things, disruption and innovation, into one theory.

47:37And we'll have it next week. Today's show was produced by Gabriel Hunter Chang.

47:42Ida Tarbell:It was engineered by Sarah Bruguer. Our video editor slash producer is Matt Nielsen. Our showrunner and editor is Ryan Dilley, who researched and wrote much of the show today. I'm Jacob Goldstein. And I'm Robert Smith. Thanks for listening. Running a business shouldn't feel like surviving a software group project. One app for accounting, another for inventory, another for sales, and somehow none of them talk to each other. That's where Odoo comes in, an all-in-one business management software that brings every part of your business together, from sales and accounting to inventory and marketing, all in one powerful platform.

48:24Ida Tarbell:No messy integrations, no bouncing between tabs, and best of all, no spreadsheets. Stop managing software and start managing your business with one unified system. Try for free today at odoo.com slash iHeartRadio. That's O-D-O-O dot com slash iHeartRadio.