Tuesday, February 9, 2016

All I wanted to do is write a little article....

Eighteen days pass.

Then nine more.

The article is about Amasa Stone. I've been reading heavily in Cleveland history, and in October I happened to visit the North Chagrin Reserve. It's a local park, one of the largest in the arae. There's a big, unfinished gatehouse for a never-built English manor house there, called Squire's Castle. I did a little digging, and learned it had been built by Feargus B. Squire. Wikipedia had no article about Feargus B. Squire, so I researched and wrote one. It turns out that Squire's house in Wickliffe, Ohio, is still partially standing. So I went to take photos of it. Across the street is a huge Gilded Age mansion that is now the Wickliffe City Hall. I did some digging, and discovered it was the home of Harry Coulby, one of Squire's friends and a big-time shipping magnate. Wikipedia had no article about Harry Coulby, so I researched and wrote one. Coulby and Squire were both involved with Pickands Mather, one of the greatest shipping fleets on the Great Lakes. Wikipedia had no article about Pickands Mather, so I researched and wrote one.

Samuel Mather, who co-founded Pickands Mather, married Flora Stone -- daughter of Amasa Stone. I wondered who she was; these robber barons didn't marry commoners! It turns out her father was Cleveland's first millionaire. His name was Amasa Stone, and there was no article on him, either.

Now there is.

I had no idea Amasa Stone was so deeply important to Cleveland's history and development. Here's a working-class guy from Massachusetts who is mostly known for building railroad bridges. He moves to Cleveland in 1850, and within eight years is running two railroads. During the Civil War, he's considered the best railroad guy in Ohio...and Abraham Lincoln consults him on logistics, supply, and troop movement issues. After the war, he rises even higher in railroading circles. In 1868, as luck would have it, Cornelius Vanderbilt -- the richest man in American history, and owner of the New York Central Railroad -- was expanding westward. He needed Stone's Lake Shore & Michigan Southern Railway to cooperate with him, so he put Stone on his board of directors. That same year, Vanderbilt had Stone meet with the rising oil refining magnate John D. Rockefeller. Rockefeller didn't want to see Vanderbilt, but Stone -- a Cleveland man like Rockefeller -- arranged the meeting and Vanderbilt and Rockefeller became business associates.

That same year, Rockefeller struck a deal with Stone's railroad. The railroads were engaged in cutthroat competition for business, slashing rates so much they were losing money. Worse, in an attempt to get oil business, each road had purchased vast numbers of tank cars. But with so many tank cars available, each railroad used only a handful. This left tankers sitting empty, and losing money. Rockefeller set up a secret cartel of oil refiners in Cleveland. They promised 60 tank cars a day of oil (a hell of a lot), which would use up the LS&MS' tank car fleet and keep it busy. In return, the LS&MS would cut rates on Rockefeller oil by 30 percent. Rockefeller agreed not to ship oil with any other railway unless the LS&MS could not take the oil, and the LS&MS agreed not to offer a rebate to any other refiners unless they could provide at least 60 tank cars of oil a day (which none of them could).

It got better: In 1870, Rockefeller formed a holding company called Standard Oil. He then learned of a conspiracy being bruted about by Thomas Scott of the Pennsylvania Railroad and Peter Watson of the LS&MS. Rockefeller joined it. Their plan was simple: Scott would bribe the venal and money-grubbing Pennsylvania state legislature to get them to issue a vaguely-worded state charter for a new corporation the South Improvement Company (SIC). The Pennsy, the New York Central Railroad, and the Erie Railroad would pass (through the SIC) at 50 percent rebate on all shipments of oil back to Standard Oil. Any time the SIC carried the oil of a outsider refiner, the SIC would give a 40-cents-per-barrel payment to Standard Oil. The SIC would also provide Standard Oil with information on the shipments of their competitors, giving them a critical advantage in pricing and sales. The goal was to drive the other refiners out of business, leaving only Standard Oil.

But Rockefeller wanted to go further than that: He wanted a monopoly on oil refining in Cleveland. Once the SIC had severely weakened his competitors, Standard Oil would buy out the city's 26 oil refining companies at fire-sale prices. This monopoly would allow Standard Oil to dominate the national refining market, drive out its competitors in Pennsylvania and Texas, and garner significantly higher profits. To make these purchases, Standard Oil needed cash. To secure the cash, Rockefeller allowed Stone (who by then was deeply involved in the banking industry as well as railroading) to buy shares in Standard Oil at par. Stone then used his influence at his own and other banks to get Rockefeller the financial backing he needed. Stone subsequently owned the equivalent of 5 percent of the entire outstanding stock of Standard Oil. Between February 17 and March 28, 1872, Rockefeller was able to buy out 22 of the 26 major refiners in Cleveland, an event which historians call "the Cleveland Massacre". Events moved so quickly that additional capital was needed to buy out even more refineries. Rockefeller decided the banks couldn't provide it, so he had Standard Oil issue a massive amount of new shares on January 2, 1872. In the first new issue, 4,000 shares of stock were handed out to the exisiting shareholders pro rate in the form of a dividend (which gave Stone another 200 shares). The second new issue constituted 11,000 shares. A big chunk went to Rockefeller, but other big blocs went to the owners of refineries as payment for their operations. The third issue was a reserve of 10,000 shares, which was given to Rockefeller in trust to use for future purchases. Everyone profited, but none more so than John D. Rockefeller -- who tightened his influence over Standard Oil (essentially forcing out his co-investors).

Throughout the 1860s and 1870s, Amasa Stone broadened his business empire to include five banks, nine iron mills and steel foundries, automobile and rail car manufacturing, a stone quarry, a woolen mill, real estate, and insurance. He even sat on the board of directors of Western Union.

But all was not well in the House of Stone. A bad carriage accident in 1867 left him with a bad limp, and he spent 13 months in Europe recovering. He had to resign a number of his directorships while he was gone, and this interrupted his career and wealth-building. A bout of ulcers and bad health in 1875 led him to flee to Europe for 18 months, again interrupting his business endeavors.

In 1876, a bridge Stone had designed and built over the Ashtabula River collapsed, killing 92 people. Stone was widely blamed for using a bridge design that was too weak for the long span, for buying shoddy materials, and for allowing construction faults in the bridge itself. He rejected these accusations, but his reputation was severely sullied.

Depression hit the United States in 1882. Many of Stone's businesses began to fail. His son-in-law, John Hay, was overseas on a delayed honeymoon with Stone's daughter, Clara. Stone had relied heavily on Hay since 1875, and now Hay's absence was proving a problem. Stone wrote letter after depressing letter to Hay, bemoaning his financial condition. He even begged Hay to return to America early, but Hay refused. On May 11, 1883, after three of Stone's iron mills went bankrupt, Amasa Stone put a pistol against his heart and pulled the trigger. No one really mourned him except his family. The public whispered that guilt over the Ashtabula River bridge disaster had finally gotten to him. Mark Twain called his dead "picturesque".

* * * * * * * * * *

During his lifetime, Stone had given generously to church organizations to help the poor, orphans, and single mothers.

He also helped found Case Western Reserve University. Stone's son, Adelbert, had drowned while at Yale University. About 1880, the city of Cleveland was trying to decide whether it should build its own private university or lure an existing one to the city (which had no institution of higher education). Stone's pastor, Dr. Hiram C. Haydn, sat on the board of trustees of Western College, then located in rural Hiram, Ohio. Haydn asked Stone if he'd help move the college to Cleveland, and Stone said yes. Amasa Stone shelled out a whopping $500,000 ($13 million) to move the college. Stone also paid for the college's new administration building (known as Adelbert Hall today) and its new dormitory, and got the college to become a university. The school of arts and sciences within the university was named Adelbert College. The new Western Reserve University opened on October 26, 1882. When Stone died, his daughter Flora Stone Mather inherited half his wealth. Western Reserve University was an all-male college at that time, and when it experimented with co-ed teaching the public and parents rebelled. Flora paid for an all-girls dormitory and college so that the experiment in co-ed teaching could continue. The hullaballo abated, and the women's college was named Flora Stone Mather College in 1929 in her honor.

Another of Stone's interests helped create one of New York's biggest state parks. Like many wealthy people, Stone had no real interest in the outdoors. But he did like to hunt on occasion, as that seemed to be the thing that wealthy people did. Stone purchased some 7,000 acres of land near Red House and Elko, New York, and turned it into a hunting reserve. After his death, the land was sold to Pennsylvania railroad magnate W.J. Knupp. In 1921, the state of New York bought the "Stone Estate" from Knupp and established Allegany State Park on July 30, 1921.

* * * * * * * * * *

I don't expect anyone to know who Amasa Stone is (or was). Not even Clevelanders.

But Clevelanders SHOULD know.

When I began researching this article, I right away found a couple of short biographies in very old magazines and books that provided me with a solid outline of Amasa Stone's life. But I began to realize that the facts of Amasa Stone's life were missing. An article might say he was "with" such-and-such railroad. But what position did he really hold? And when? A book might say that Stone was director of the Cleveland, Columbus & Cincinnati Railroad. But when did that service begin? When did it end?

As I dug deeper into Stone's life, I discovered much more about his dealings with Vanderbilt, Rockefeller, and other great robber barons of the late 1800s. I discovered the great story of his involvement in the "Cleveland Massacre", and the truly extensive nature of his iron and steel and banking holdings.

Even more fascinating was how the House of Stone continues to influence Cleveland to this day. Stone brought Western College to Cleveland, and now the university is one of the greatest private research institutions in the United States. University Hospitals, Case Western Reserve's healthcare unit, dominates the city's healthcare industry along with Cleveland Clinic. Flora Stone Mather and Clara Stone Hay both made major contributions to Case Western Reserve, and numerous buildings on the campus are named for them today. It was Clara's inheritance of several million dollars from Amasa Stone that allowed Samuel Mather to co-found Pickands Mather, and create the second-greatest iron mining and shipping fleet on the Great Lakes. Cleveland-Cliffs is the heir to this mining dynasty, and the Interlake Steampship Company is the biggest shipping fleet on the lakes today. The Mather family dominated Cleveland industry into the 1940s. And Amasa Stone Bishop -- Amasa Stone's great-grandson -- was a noted physicist and director of the Atomic Energy Commission.

Cleveland would be NOTHING without Amasa Stone.

And there was nothing written about him. Nothing really useful, extensive, or detailed.

And now there is.

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