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THE TRUTH ABOUT MR. ROCHEFELLER
AND THE MERRITTS

BY

FREDERICK T. GATES

 

I

Many worthy people were shocked by the disclosure of
Leonidas and Alfred Merritt, witnesses before the Stanley
Committee, of the chicanery, as they alleged, of a ‘‘ Baptist
minister,’’ employed as the sinister tool of John D. Rockefeller.
Eighteen years ago, in 1893, ‘‘the preacher,” they said, had
filched with diabolical cunning from the two witnesses, simple
“‘lumberjacks,”’ as they called themselves, a matter of ‘‘seven
hundred million tons” of iron ore, the chief source, in fact, of
the country’s present supply. So deftly had the thimblerigging
been done that they were wholly unable to explain the process.
“T could not conceive,’’ said Leonidas in his testimony, ‘how
in hell, within these few months, without spending a cent of
money above my board bill, I could have gone to New York and
lost all those millions.” And the two brothers took nearly two
entire days of the time of the Committee, in attempting to show
that Mr. Rockefeller, acting through ‘‘the preacher,” like a wolf
in sheep’s clothing, had first fraudulently deceived, and later
cruelly robbed them.

It was I who acted for Mr. Rockefeller. He saw only one
of the brothers, him but once, for five minutes, and then only
to receive Merritt’s grateful hand clasp. The reluctant and
unpleasant duty falls to me to tell the facts and to contrast them
with the Merritt falsehoods. My narrative, compelled in self-
defence, shall be free from passion or resentment.

The true story of the Merritts is a story of wild speculation
in the early nineties in Missabe mining properties, then of doubt-
ful and, as it proved, long distant value, a story of overwhelming

I
2

debt in the great panic of ’93, of financial collapse averted

by Mr. Rockefelier, only to be followed by a conspiracy of false- _

hood against him for booty, then failure, betrayal, exposure and
wholesome retraction. We shall come to all that, but for the
moment our task must be to get our problem into its simple
elements. Perhaps, to begin with, we can cut off a few tons
from the seven hundred millions. That will help some.

LITTLE ORE AND MILLIONS OWED

The Merritts claimed in their Stanley testimony that their
ores in ’93 were at least equal in volume to the Missabe ores
of the Steel Corporation, estimated by the Merritts at 700,-
000,000 tons. The content of an iron mine is measured, bought
and sold, not by underground gropings of the imagination in
undiscovered ore, but in actual ore disclosed by drill or test pit,
measured in feet and calculable. The best authority in 1893
on the Merritt ores then in sight, was Horace V. Winchell, a well-
known mining engineer and geologist of Minnesota, who repeat-
edly and carefully examined the Merritt properties in 1893.
Mr. Winchell offered his oath in court that the contents of the
Merritt mines shown up in 1893 were not more than 25,000,000
‘tons. The Merritts themselves in ’93 only doubled this. Ina
detailed statement given me by Leonidas Merritt on July 1,
1893, which lies before me as I write, the sum total of their ores
foots up to 51,000,000 tons.

Our problem is being simplified, and we are encouraged to try
again. This fifty-one million or twenty-five million tons was
the estimate of all the ore in all their mines. The five mines
which concern us were owned, in fact, by five stock companies,
and the Merritts themselves, that is to say, the whole family of
brothers, actually did own about forty per cent. of the stock.
It was only by courtesy of other owners that they could claim
to control the mines. But even this alleged ownership of forty
per cent. was a mere paper ownership, fictitious in any real sense.
Actual ownership was always with the Merritt creditors, to be
effectually asserted whenever they chose. From the discovery
of the ores in 1890, the Merritts had been the most confident,
daring and reckless of the Duluth promoters. Under the domi-
nation of three fixed and wholly illusory prepossessions, as we
shall presently see, without capital, they had organized mining
3

companies right and left, and bought large interests in promising
locations everywhere, on time or for borrowed cash. In this
and railroad extension, they had pyramided debt upon debt,
until on July 1, 1893, they owed, as I regret to believe, not less
than two million dollars, not a dollar yet to Mr. Rockefeller.
For I must anticipate here so far as to say, that in January, 1894,
Mr. Rockefeller paid them more than a million for their stocks,
all of which was absorbed by their creditors, and their own most
trusted attorney stated later, under oath, that they still owed,
in round numbers a million.

We have now reduced our problem to its simplest elements.
So reduced, let us re-state it. On July 1, 1893, the Merritt
family owned about forty per cent. of the stock of the five
Missabe mining companies, the ore bodies of which were then
known to contain from twenty-five to fifty million tons of ore.
For this stock and perhaps their railroad stock, the Merritts owed
at least two million dollars, and I have reason to believe much
more. In that year, 1893, the great panic struck the country.
The iron industry suffered worst of all. Everything fell to half
its value. By July, 1893, the Merritts could not have sold their
stocks in the open market at Duluth, which has a small Wall
Street of its own, for more than one-half of their debts as above
estimated. I havea complete list of Duluth quotations, recently
got and sworn to, as verification of this statement. The stocks
were quoted or sold nowhere else. The Merritts weathered the
storm of ’93, but in January, 1894, their Minnesota creditors, not
Mr. Rockefeller, forced the Merritts to sell their holdings to
whomsoever would pay the most money for them. It so hap-
pened that Mr. Rockefeller, having some knowledge of the Mis-
sabe Range and believing in its future value, was willing to pay
more for the Merritt stocks than any one else. For that reason
alone, after offering their stocks widely to capitalists and iron
magnates, the Merritts sold their holdings to Mr. Rockefeller.
Stated in its simplest elements, this is the whole story. There is
nothing either in the size of the transactions, for they were
comparatively small, or in their character, for they were per-
fectly straightforward and amicable, to excite the least public
interest. The charge of fraud, and the lawsuit set up after-
wards, owe their origin wholly to the prominence and wealth of
the financier who purchased the Merritt holdings in 1894. How
baseless the charge was, and how hollow the lawsuit, we shall see.
4

Tue THREE FIXED ILLUSIONS

A flood of needed light will be thrown at the outset on the
Merritts, and the Missabe situation in 1893 and succeeding years,
if I begin at the beginning, and describe the state of mind which
led the Merritts to pile up their mountain of debt with such
seeming recklessness. In their state of mind, this was the natural
and inevitable thing to do. For they were the unconscious vic-
tims of three fixed illusions, by no means uncommon in the lati-
tude of Duluth at that time. The first was that the Missabe ores
would immediately come into universal use, and from the outset
would largely if not wholly displace the other ore supplies of the
country. The second was that they themselves had coopered
up, and as a family did control, all the really valuable mines on
the range. The third illusion was that the ore prices which had
prevailed during 1890, ’91, and ’92, and for years previous, were
the normal prices of iron ore, and would continue to prevail
without serious abatement so far into the future as the mind could
penetrate. On the basis of these beliefs, they figured that they
were about to control the country’s chief ore supply, and that
cheap mining, high prices, and immense outputs would speedily
pay their debts and bring them fabulous riches. Over against
these dreams of avarice, let us now set the facts.

The newly discovered Missabe ores were not unlike a heavy
soil or, when dry, a powdery dust, easily handled by a steam
shovel with little or no blasting. They differed wholly from the
ores previously used. These were rock-like in texture, quarried
out by drill and by dynamite, and going into the blast furnace
like coarse gravel and small stones. For such ores, all furnaces
then existing had been constructed, the temperature and force
of the blast had been regulated, the mixture of coke and lime-
stone had been adjusted. Attempts to put the dust-like Missabe
ores into this mixture, resulted in irregularities, chief among
which was, that much of the dust was blown out of the top of the
furnace by the terrific force of the blast, to settle on the sur-
rounding countryside in such quantities as sometimes to evoke
angry damage suits. If, on the other hand, the ores were too
closely confined, the furnaces would occasionally explode and
be wrecked. Not until a new form of furnace had been designed
and existing furnaces in considerable numbers had been dis-
mantled and rebuilt on new lines, did the Missabe ores come into
5

general use. From the first the experts warned the Merritts of
allthis. But the Merritts saw in these counsels of prudence, only
a conspiracy of capitalists to destroy their credit and yet their
properties for nothing. Railroads are thought to be not averse
to getting paying freight. But in the early days, the Iron
Range Railroad in Minnesota refused to build even the short
spur from its main line which would tap and control fabulous
Missabe tonnage, because the experts reported against the ores.
To the Merritts this refusal was another and more convincing
sign of conspiracy to freeze them out. Their ancient hatred of
iron experts crops out in their recent testimony. Nevertheless,
the experts, with their laws of chemistry and physics, were right.
The Missabes did have to wait outside, and were given a tardy,
reluctant and suspicious admission to the furnaces of the
country. The mountains of wealth, which seemed to the vision
of the Merritts so very near and so very high, were far away.
Nor were the Merritts nearer the truth in fancying that they
had cornered Missabe ores. Every year added new discoveries
of great ore bodies, quite outside the Merritt corner. Brains,
enterprise, money and science, undreamed by the Merritts,
were employed for many years on all parts of the Missabe Range
with astonishing results. The third illusion of the Merritts
was dissolved by the great panic, which brought the iron busi-
ness to a standstill, spread its influence over several years, and
cut all ore values practically in half. Speaking with substantial
accuracy, no mining company made one dollar out of mining
Missabe ores for the first ten years after their discovery. Expect-
ing immediate and enormous profits, complete indeed were the
illusions of the Merritts, as they plunged into debts of millions
on the brink of the panic of ’93.

We are now ready for a still closer view of the Merritts. Let
us study them in action. We shall see them always acting on
the illusions as accurately as automata pulled by wires.

Tue ILLusions Work WILD EXPANSION

The Iron Range Railroad having refused to tap the Mis-
sabe Range, there had been begun in 1892 an independent road
to connect the range with the lake, called the Duluth, Missabe
and Northern Railroad. Ties and rails had now been laid on a
streak of dirt sixty-six miles long, costing $660,000 or $10,000
6

per mile, one-fifth raised by the Merritts, four-fifths by others.
For this, they issued to themselves $1,200,000 first mortgage
six per cent. gold bonds and $1,200,000 par value of stock. To
complete this unfinished roadbed, to build branches to several
ore bodies, to construct an extension of twenty-nine miles into
Duluth, to buy dock frontage and build the costly docks needed
will cost about $3,500,000 new money, and the! panic is now on
the horizon. The railroad is usable after a fashion as it is.
Local resources are exhausted. The partners owning the four-
fifths call a halt. Not so the Merritts. The programme of
expansion shall be pushed through. Control of the railroad will
be bought, if necessary, and the partners ousted. The stocks
giving control are bought wholly on time for $665,000, a pre-
posterous price, one would think. See cost of road and bond
issue above. These stocks are put in the names of trusted
friends, to keep them out of the hands of the Merritt creditors.
The Merritts are now in control and the policy of expansion will
prevail. To finance the large scheme, the Merritts are relying
on the aid of a young friend from New York, with whom they
had previously had friendly dealings on prospective lake trans-
portation, Mr. Charles W. Wetmore. Although of limited means
himself, Mr. Wetmore was thought to have resources at his
command. The well-known Colby-Hoyt Syndicate, of which Mr.
Wetmore was a member, owned several hard ore mines on the
Gogebic Range in Wisconsin and a detached group of mines in
Cuba, and Mr. John D. Rockefeller was believed to act often
with that syndicate and to have an interest in these mines. Mr.
Wetmore was not an agent of Mr. Rockefeller, whom, indeed,
he had never seen but twice, nor did he claim to be, and he after-
wards made oath, as did Mr. Rockefeller, that there never was
the slightest relation of agency between them at any time
direct or indirect.

Mr. Wetmore heard the Merritts’ story of fabulous quantities
of ore on the Missabe, of the ease and cheapness with which it
could be mined, of the enormous profits immediately to be real-
ized, of limitless wealth just ahead, and he himself also fell |
under the spell of the three illusions. He visited the range and
he did not visit the furnaces. So the Merritts and Wetmore,
for mutual profit, formed a close personal and business alliance,
endorsing each other’s notes, mingling each other’s collateral,
ultimately occupying the same offices in New York. Hence-
7

forward for a year, their names must be hyphenated. Mr. Wet-
more speedily interested himself and several personal friends
in some choice properties on the range, under the guidance of the
Merritts, and undertook the serious task of raising among east-
ern capitalists by the sale of bonds the $1,600,000 then supposed
to be enough for the railroad. In January, 1893, Mr. Rocke-
feller took a quarter of the whole lot, but scarcely any one else
wanted any. Mr. Wetmore tried in vain to sell them to banks
and financial institutions. No one would take the bonds of a
small, distant ore railroad, to undeveloped mines of doubtful
ore values. Wetmore was reduced to borrowing money from
banks in driblets on short time, with the bonds as collateral
widely margined. As to investments in Missabe, Mr. Rocke-
feller declined to join his syndicate and formally sent him word
that he would neither invest money in, or loan money on Mis-
sabe mines. I conveyed this decision to Mr. Wetmore January
18, 1893, as I find from my memoranda, repeating it to him on
March 7th and to his friends, the Colbys, on March 8th.

By this time it had become almost as clear to Mr. Wetmore
as it now is to the reader that the Wetmore-Merritt situation
could be saved and brought to success with the greatest difficulty,
if at all. Ruin could be averted only by union with powerful
interests, preferably and more likely those actually engaged in
the iron ore business.

On THE RocKs—SIGNALS OF DISTRESS

Accordingly, Wetmore and the Colbys got their heads together
and put down on paper the first plan for the union of the great
iron ore interests of the Lake Superior District. This early
dream in March, 1893, was an anticipation of what actually did
happen in March, 1901, eight years later, in the formation of the
United States Steel Corporation. The large conception was
unfolded to me by Mr. Joseph L. Colby on March 16th. They
were to form a great corporation. This corporation was to take
in the Minnesota Iron Company, with its mines, its railroads
and its ships, and its immense resources of cash, direct and ©
indirect, the Colby-Hoyt Wisconsin interests, with their hard
ore mines, and the Wetmore-Merritt interests on the Missabe
Range, with their unfinished railroad and undeveloped mines.
This scheme was worked over for nearly two months. Figures
8

were made and conferences held. Irreconcilable differences,
developed, however, on April 11th, and the plan had to be given
up.

Itis now May. The Merritt brothers in Duluth are cramped
for money and send Leonidas down to New York to find out what
is the matter with Wetmore. Matter enough. Leonidas finds
the situation serious. Everybody is snugging up for the money
panic. Perhaps he can talk of Missabe values more persuasively
than Wetmore. He will stay; and sends for his trunk. The first
plan of consolidation has failed. Perhaps a second and less
ambitious plan will go better if Mr. Merritt is himself an active
factor. The three illusions are now veiled if not dissolved. Mr.
Merritt is confronting a condition, not a theory, and that con-
dition spells ruin. Consolidation with old range mines, even,
will not now be scorned, if thereby immediate succor can be had.
Let us try a second and simpler plan.

Although I never heard of this scheme until long afterwards,
I find that it involved the union of the Merritt-Wetmore Missabe
interests with all but one of the Colby-Hoyt Wisconsin interests.
Merritt and Wetmore agreed to buy the Colby properties at a
valuation of $4,000,000, half in stock and half in bonds. The
Merritt properties were to go in on a valuation to be determined
by a committee duly named. A holding company was formed
and incorporated in Wisconsin by the Merritt-Wetmore group,
called the New York and Missabe Company. Dates were fixed
for the appraisals. All this was worked out in a formal legal
document. I have secured the original document as a curiosity,
with the signatures of Wetmore and Leonidas Merritt duly
appended to it. But the Colby party never could be brought
to sign it; and it, too, was laid aside.

The failure of the second attempt to consolidate left the Mer-
ritt-Wetmore syndicate in despair. It was impossible to get
money for the railroad, for the mines or for themselves, any-
where, at any price. May and June went by, with conditions
worse every hour. The Merritts in Duluth had let their con-
tracts for the big dock and for the extensions of the railroad;
the contractors were at work with hundreds of men; the rail-
road debt was piling up at the rate of ten thousand dollars per
day; the mines were idle; and no money was forthcoming from
the east. The financial arrangements planned in the spring had
completely broken down. The railroad was trembling on the
9

brink of a receivership. Interest on the bonds was not paid.
Suits were actually begun. There were labor riots on the Mis-
sabe Range. Contractors were knocked down on the Merritt
Railroad by their enraged men. Knives were drawn. Men
actually entered the railroad offices in Duluth and demanded
cash on their pay checks at the ends of drawn revolvers. The
personal affairs of the Merritts themselves were in no better
shape. Some of their creditors were jumping on them and
threatening to sell their collateral. ‘‘Must have some money
at once to save Merritt boys’ collateral, which means control of
best properties,” so Leonidas Merritt wires me in July. The
complete financial collapse of the Merritt-Wetmore syndicate,
of the Merritts personally, and of the Duluth, Missabe and
Northern Railroad is now a mere question of days.

RESCUE BY Mr. ROCKEFELLER

But it is often darkest just before dawn, and we shall now
see the crisis averted by a successful negotiation with Mr.
Rockefeller. Merritt and Wetmore came to me July 1, 1893,
with a series of financial propositions for the transfer to the
shoulders of Mr. Rockefeller of the load that was now crushing
them. These propositions were discussed, modified, added to,:
mutually adjusted and finally embodied in a series of contracts,
of which the essential one was dated July 1st. All were finally
reaffirmed and bound together for convenience in one paper,
dated August 28th. I strip them of their cumbrous legal phras-
ing, also of their technical niceties, and describe their terms as
actually carried out by Mr. Rockefeller more liberally at all
points than was agreed, because the situation proved to be much
worse than had been foreseen. :

Mr. Rockefeller was to finance the railroad with $500,000.
(He actually put in over $2,000,000.) Mr. Rockefeller was to
take over without recourse the Adams and Lone Jack mining
properties, which the partners, Wetmore and Merritt, had
recently bought for $428,000 short paper. Mr. Rockefeller was
to advance Merritt and Wetmore as partners considerable sums
of needed cash, and to the Merritts personally $150,000, that
they might retain control of their stocks. Mr. Rockefeller
was to buy all the ore the Mountain Iron Mine could produce
and ship over the railroad that fall, so as to put the mine in
10

operation. The Merritts, on their part, were to put their rail-
road stock and all their best mining stocks, the ‘‘ Mountain Iron,”
“Biwabik,”’ ‘Missabe Mountain,” ‘‘Rathburn,” “Shaw,” into
one basket or company, to be called the Lake Superior Consoli-
dated Iron Mines, issuing the Consolidated stock to themselves
on valuations for their mines to be fixed by themselves, Leonidas
Merritt to be President and the Merritts to control. This com-
pany was to buy from Mr. Rockefeller all his mining stocks,
including the Adams and Lone Jack now his, paying for these
stocks in debenture bonds of the Consolidated Company, so
many bonds for so much stock. The trade was not one-sided.
Mr. Rockefeller’s profits, if any, were problematical and wholly
future. On the par value of the bonds, he could, indeed, be
shown a paper profit of perhaps a million and a quarter, but the
bonds were then unsalable at any price that would show a profit.
We have seen Mr. Wetmore unable to work off the far better
railroad bonds, though they were offered at 80 with a bonus of
one-third in stock. Moreover, it was for the interest of the
Merritts and, as it proved, against his own, that Mr. Rocke-
feller took bonds instead of stock. For if Mr. Rockefeller takes
bonds on the basket instead of stock, it will be no concern of his
how much stock shall be issued for the Merritt-Wetmore mines;
the Merritts can put their own valuations on their mines and
issue as much stock to themselves as they please. They use
this coveted freedom with generous liberality. Their first esti-
mate of the cash value of all the mines was $7,000,000. Then,
in secret family conclave, they concluded they were worth,
after some mutual adjustments, $10,125,000. Then they added
a property worth, they thought, $400,000. This made a total of
$10,525,000. Then they shut their eyes and doubled the whole,
so as to make $21,050,000. At my suggestion, the railroad.
stock was added, and at a valuation of $200 per share, so as to
come in on a reasonably just parity. This added about $5,000,-
000, making a grand total of $26,050,000 of Consolidated stock at
par to be issued. Of this stock, the Merritt brothers received.
about $10,000,000 par value for stocks, bought, by them, one is
compelled to add, with perhaps $2,000,000 of other people’s
money and possibly a little of their own. Prudent financiers like.
Mr. Carnegie, for instance, who later himself made a similar
choice of bonds, will probably not blame Mr. Rockefeller for
preferring bonds to stock, from a basket so amply filled with paper:
11

of value unknown to him. Still, the sequel was to prove that
Mr. Rockefeller was over-cautious. He did not then dream that
he and his office force were to give eight good years to the de-
velopment of those properties, then worth in cash only ten dollars
per share, that added values would be developed year by year,
and that at length, with hope long deferred, and after putting
ten millions into development, every share in the basket would
be sold to the Steel Corporation for the equivalent of more than
one hundred and sixty dollars cash on the day of sale—worth
it also, and probably more. So in the sequel, Mr. Rockefeller
might better have taken stock instead of bonds.

Mr. Rockefeller did not sign the vital contract dated July
Ist until July 12th, some days after Leonidas Merritt and Charles
W. Wetmore had put their names to it. When he had signed, I
telephoned to Wetmore’s office, where Merritt was, and got back
word that Mr. Merritt, who had never seen Mr. Rockefeller,
wished to grasp his hand. They were together a few moments.
I was present. The talk was on climates, Minnesota and other.
At length, Mr. Merritt began to extol the Missabe Range. Mr.
Rockefeller listened a moment politely, excused himself, and the
social call was over. Neither ever saw the other again.

The contract creating the Lake Superior Consolidated Iron
Mines in the midst of the panic, saved and finished the railroad,
opened the mines, and carried the Merritts successfully through
the panic without the loss of one dollar or of one share of stock.
The Merritts were jubilant. ‘‘We have passed the danger
point.’ ‘‘The days are past when we rate ourselves as paupers.”’
“Perfect confidence is restored.” ‘‘We are taking care of
everything without trouble, and this without any collateral.”
So ran their letters and telegrams for weeks and months after.
One letter of Leonidas Merritt to Hon. W. W. Braden of St.
Paul, dated August 1oth, justifies fuller quotation, for Merritt
now swears that he was decoyed into this consolidation. His
letter written at the time will tell the facts:—

‘“My DEAR SIrR:—Have been in this city, as you know,
employed every hour for the last three months financeering
through ways and means to bring to a successful conclusion
the scheme of consolidation of the iron interests of the Mis-
sabe Range. Have been continually confronted with the
financial situation, which has grown worse day by day.
Financial arrangements made when I first came here have
12

fallen through again and again on account of the tight
money market. Have, however, now made some connec-
tions with able people (Mr. Rockefeller?) and only have to
complete the consolidation in order to get such advances
as will relieve the situation for all time,” etc., etc.

Leonidas Merritt was later confronted with this letter on the
_ witness stand and compelled to acknowledge it as his own, with
its frank assertion that he had been working with might and
main for the consolidation for months, as his one hope of finan-
cial salvation.

INTERESTING EPISODES

It is now September, 1893. The Merritts were busily engaged
during the remaining months of the year, in gathering in their
widely scattered stocks, held by their creditors as collateral,
and getting them converted into Consolidated stock, and
returned.

In the fruitful imagination of Leonidas Merritt (who, by the
way, has actually printed a volume of blank verse on this sub-
ject), these somewhat monotonous months are rich in defamatory
incident. We will amuse ourselves with two or three of these
picturesque, if not quite accurate, episodes, as told by him to the

Stanley Committee.
The first is a hair raiser. Enter Gates: ‘‘I come from John
D. Rockefeller.” ‘“‘You will remain in the place you now

occupy.” “You will be taken care of, but you have got to do
the will of John D. Rockefeller.” “If we protect you, the
(minority) stock will be thrown out and the other fellows will be
ruined.” Mr. Merritt is equal to the occasion. In thunder
tones, he hurls back defiance:—‘‘You came from John D.
Rockefeller. Go back to John D. Rockefeller and tell him when
I steal for a living I will steal for myself.”

This precious bit of fustian on Chairman Stanley’s stage
was framed up, of course, for those of our more gullible fellow-
citizens who suppose that Mr. Rockefeller’s days and nights are
spent in crushing minorities. The facts are as follows. The
Merritts were so delighted with their consolidation deal that
some of them could not bring themselves to let in the other
stockholders in their mines on the ground floor. We had diffi-
culty in persuading them to this sacrifice. On September 11th
13

and again on the roth, I find myself writing to Duluth, insisting
on the ground floor for the minority, and supporting my argu-
ment by the opinions of Mr. Rockefeller and Mr. Murray, our
counsel. In early October I went to Duluth, partly on this
errand. There lies before me at this moment, a letter of mine
to Mr. Rockefeller, dated at the Spalding House, Duluth, Octo-
ber 16th, in which, among other things, I say: ‘‘We have con-
spired together to persuade the Merritts to let in their enemies,
who own considerable quantities of minority stock.’”’ There is no
other foundation for Mr. Merritt’s dramatic testimony than the
above facts.

It is to this period that the ‘‘Hard Up” story belongs. ‘‘Gates
told me,” swears Mr. Merritt, ‘‘that Rockefeller was hard up
for money. 1 believed it then but I don’t believe it now, because
I know Gates was a liar.” Andrus R. Merritt, a brother, on
September 30th applied for a loan of $100,000, doubtless for
Leonidas and the others, quite outside the contracts and with
no claim whatever. I quote from my letter of October 2nd,
declining the loan :—

‘“Mr. Rockefeller has put in between $1,500,000 and
$2,000,000 cash. This is only a portion of what he is
carrying. Other enterprises with which he has been long
associated and other men who have long been his friends,
have been constantly coming to him during these hard times
for assistance, and as the Senate continues inactive, they
are coming to him in larger numbers and with more urgency
‘than ever before. I have today on my desk urgent impera-
tive appeals to save-old friends from ruin amounting to
many hundreds of thousands of dollars. I have incurred
the enmity of important business enterprises with which
Mr. Rockefeller is connected because I have had to decline

- to assist them within the last few days. Each of them sup-
poses that it would not make any great difference to Mr.
Rockefeller were he to help him out, forgetful that his
request is one of many which make an aggregate absolutely
impossible in these times for any man or combination of
men to carry.”

I interrupt my story to ascertain from Mr. Rockefeller’s
books how he stood on that October morning in 1893, when I
wrote that letter. His bookkeeper lays before me a list of his
loans then outstanding to fifty-eight different men and com-
panies, which could not have got money at banks at that time,
14

footing up $5,969,422 cash advanced. To advance this money
to needy friends, Mr. Rockefeller had himself borrowed between
three and four million dollars and his bank account at that
moment was overdrawn more than $30,000.

Before I leave the great contract of consolidation, a final
word of explanation shall be furnished by Leonidas Merritt and
Charles W. Wetmore in their own words. I quote the essential
paragraphs of their already widely published letter of Novem-
ber 23d, 1893 :—

“Every step that has been taken, resulting in the great
combination of mining and railway interests, now con-
cluded, with the single exception, as far as I can remember,
of the purchase of the railway stock by the Consolidated
Company, which I believe was first suggested by Mr. Gates,
was planned and proposed by me and urged upon you.
With the exception stated, I do not recall any contract leading
to the consolidation, whose essential terms were not first
suggested by myself, and in every case you fulfilled, without
question, every obligation which was imposed upcn you by
these contracts.”

To this letter, Leonidas Merritt added. a postscript in his
own hand:

“T have carefully read the above statement of facts
signed by Mr. Wetmore and very cheerfully certify to
their accuracy.”

And so the fall months slipped harmoniously by without
incident. The Merritt creditors are patient with them. They
hope the consolidation will be helpful. They freely release
their collateral to be converted into Consolidated and returned.
The minority stockholders of the Merritt mines are satisfied
and pleased. So the Merritts weathered the storm of 1893.

THe MERRITTS SELL Out

I knew the Merritts were heavily in debt, but Leonidas had
carefully concealed from me the full extent of their obligations,
if, indeed, he knew himself, which I doubt. I supposed that
their difficulties were now past, when in January, 1894, we
received, to my great surprise, an offer from the Merritts to
15

sell 90,000 shares of their Consolidated stock. ‘They would
accept $10 a share, $900,000 for the whole. This stock we
bought, but gave the Merritts the right to buy back 55,000
shares of the stock in one year at the same price, with six per
cent. Why they were compelled to sell just at that time, we
never knew. The Merritts falsely swore before the Stanley
Committee that Mr. Rockefeller compelled them to sell by call-
ing a loan of over $400,000 and giving them twenty-four hours
in which to pay. In this, there is not one syllable of truth.
The Merritts owed Mr. Rockefeller at that time $150,000 only,
and five-sixths of that had a long time yet torun. Mr. Rocke-
feller never, at any time, in any way, called a loan on them,
for any sum whatsoever. The story of a sudden and cruel call
by Mr. Rockefeller is a calculated falsehood, to conceal the real
reasons for the sudden sale. They now complain of the price,
but in the same breath admit that eight dollars a share was all
they could get elsewhere. Mr. Rockefeller bought great quan-
tities of stock from other people during the months that fol-
lowed, freely offered at $8 and $8.50; indeed, it was more than
two years before Consolidated stock came to be worth more than
$10 a share in any market anywhere. Two weeks later, Mr.
Rockefeller purchased 12,000 shares more of stock from the
Merritts, at their request and at the same price.

The important feature of the stock purchase was the option,
given the Merritts for one year, to buy back 55,000 shares at the
same price, with interest. By that option, Mr. Rockefeller
intended to secure for the Merritts a year’s time, and in fact,
all the time they should ever need for working out their sal-
vation. The Merritts had only, at the end of the year, to ask a
renewal of the option for another year on the same terms, and
the same Mr. Rockefeller would have done the same thing and
so on for indefinite years. Mr. Rockefeller carried Louis J.
Merritt and his son, Hulett, for all they asked more than seven
years to the sale of the stock to the United States Steel Corpora-
tion in 1901, on renewed options freely given, the last one for
the wholesale term of five years. These two Merritts have been
millionaires ever since. If Leonidas and Alfred Merritt had
pursued the same course as their brother and his son, they
would have received the same treatment from Mr. Rockefeller,
and on the day of delivery of that block of 55,000 shares to the
Steel Corporation in April, 1901, the. Merritts could have sold it
\
16

for $9,190,500 cash in New York. Never have I known Mr.
Rockefeller to call a private loan, foreclose a private mortgage,
or oppress a debtor. But the Merritts would not have needed
the patience of Mr. Rockefeller more than two years and a half,
for by the middle of 1896 they could have borrowed ten dollars
per share on the stock elsewhere, and later much larger sums.
This option, if not wealth, was close to it, and the Merritts in
their journey were not again to get so near to riches; for alas!
within six months, Leonidas and Alfred Merritt threw their
option to the winds and with it the opportunity of a lifetime.
Under what malign influence they did this, with what hopes of
vast and immediate booty, and into what devious paths they
were led, I reserve for the second, and the sad and tragic part of
my story.

II
THe TEMPTER AND THE FALL

In the spring and summer of 1894, while in secure posses-
sion of their option for 55,000 shares, pregnant with future riches,
Leonidas and Alfred Merritt fell under the controlling influence
of a firm of lawyers, Anak A. Harris and his son, Henry E. Harris.
This proved to be the turning point with the Merritts. The
Harrises had recentiy appeared in Duluth from somewhere in
Kansas, it was said. The elder Harris was then in late middle
life, beginning anew in Minnesota the practice of law, for the
fourth time and in the fourth State. The new arrivals, with
their shingle just out in this strange city, were looking for
clients. The Merritts and the Harrises found themselves
mutually congenial.

Soon after selling out to Mr. Rockefeller, therefore, the
Merritts brought suit against their old companies for extrav-
agant compensation for services, the Harrises appearing as
their attorneys. The relationship of trust was thus established
between them. Nevertheless, on the 1oth day of July, 1894,
Colonel Harris appeared at Mr. Rockefeller’s office in New York
and asked to see him personally. Mr. Rockefeller was not
meeting strangers. I declined to see Harris. Two members
of the office staff were delegated to meet him. He said that he
had once transacted some business for a company with which
!

17

he believed Mr. Rockefeller to be connected, that he was now
counsel for several of Mr. Rockefeller’s acquaintances, naming
them, and that they could vouch for him. He said he did not
want trouble with Mr. Rockefeller, that he had great influence
with the Merritts, and that he could dissuade the Merritts
from bringing suits against Mr. Rockefeller personally. If Mr.
Rockefeller would buy this ‘‘Consolidated” stock which he had
with him in considerable quantity, at a price considerably above
the market, he would have no personal difficulties with the
Merritts. Harris came in on three successive days. His words
were recorded. We refused to pay the extra price for his stock,
and Harris went away in a huff.

This episode disclosed to us the true character of the man
whom the Merritts had now taken to their bosoms. But we
little dreamed then, of the depths to which Colonel Harris
could descend, nor the blind fatuity with which the Merritts
would follow him. We were soon undeceived. On October
2oth, the Harrises brought suit in the name of Alfred Merritt
against Mr. Rockefeller and myself (my name dropping out
later) for damages in the sum of about $1,250,000. The com-
plaint was that the Merritts had bought Mr. Rockefeller’s
Wisconsin and Cuban hard ore stock in the celebrated con-
solidation agreement of the year before, under misapprehen-
sion; that Leonidas Merritt had been deceived into doing this,
to the damage of himself and his brothers, by fraudulent mis-
representations made to him by Mr. Rockefeller personally,
and afterwards by Mr. Gates as Mr. Rockefeller’s agent. This
particular suit was a test case. If Alfred Merritt were to
recover the full amount demanded, all the brothers and per-
haps all other stockholders could recover in succession. In fact,
according to the Harris arithmetic and the Harris view of law
and equity, the Consolidated Company, in the mere act of
buying from Mr. Rockefeller the offending mining stocks for
about $2,000,000, had been damaged to the extent of about
$10,000,000 cash.

This suit was trumped up by Harris, who did not hesitate
to boast that he had “‘discovered’’ it and that he expected to
make reputation out of it. His the discovery certainly was.
As for the Merritts, they had not understood that they had any
claim against Mr. Rockefeller. They knew that he had done
them no wrong, and that he had saved them during the panic,
18

and up to the last their letters to me breathed only gratitude.
But Harris poisoned their minds with the hopes of vast booty
and, as I cannot doubt, seduced them to become his tools.
Honorable members of the bar have ugly names, with which
they stigmatize such legal practice as this, and they well know
the abhorrent methods by which such men seek to compass their
ends. Let us now, for a moment, escape this fetid atmosphere,
and take a closer look at the properties which Mr. Rockefeller
had sold to the Consolidation, which have now become the sub-
ject of litigation, and which have in them, according to Harris,
such terrific potency of damage.

THE CONSPIRACY

In the late eighties and early nineties, the Colby-Hoyt Syn-
dicate had purchased a group of iron mines in Cuba. These
mines were developed, a railroad and dock built at heavy cost,
and they were now about to begin the shipment of ore. It was
at this juncture that Mr. Rockefeller sold his stocks, as above,
to the Merritt-Wetmore consolidation. That was seventeen
years ago. Those mines have been active ever since. They
were subsequently sold to the Pennsylvania Steel Company,
and I am officially informed that more than six million tons of
ore have been shipped from them and they have proved very
profitable to their owners. The Colby-Hoyt Syndicate had also
purchased a group of mines on the Gogebic Range in Wisconsin.
One of these was the Aurora. Mr. Rockefeller put his share
of that mine into the consolidation. That mine was, and is, one
of the greatest and best mines in Wisconsin and has continued
to ship a very choice and high grade quality of ore ever since;
the total amounting to nearly if not quite three million tons.
The other of these Wisconsin mines is best known by the name
of the Tilden, a group of mines, in fact. The Tilden Mine was
then a large shipper of ore, has continued to ship ever since, and
has for many years been operated by the United States Steel
Corporation. ‘

About the 1st of January, 1894, and before the Merritts sold
out to Mr. Rockefeller, the Tilden, though a great mine, believed
to contain at least six million tons of ore, got into difficulty and
fell into a receivership, a common enough thing in that period
of financial stringency. When Mr. Rockefeller learned that
19

the Tilden was in trouble and before the news had become in
any way public, he communicated all the facts to the Merritts
and the Consolidated Company and made proposals in advance
for assuming personally any possible loss or depletion in value.
His proposals, therefore, in effect exchanged for stock of the
Consolidated Mines at its face value, all bonds, with interest,
that he had received for the agreed profit, and also all bonds,
with interest, received for the Tilden property. This cancelled,
in round numbers, $2,200,000 par value of fixed obligations, an
equal face value of stock being issued to him instead. It was
seven years before these stocks were worth as much as the bonds
exchanged. I am not here to praise Mr. Rockefeller, but to
defend him and myself. I cannot resist saying, however, that
if a more honorable, prompt and spontaneous act, wholly free
from legal obligation, is recorded in the history of American
finance, than this of Mr. Rockefeller’s, I have yet to learn of that
act.

The Merritts at that time, wisely and with our hearty ap-
proval, indeed, at the suggestion of our attorney, Mr. Cotton,
employed personal counsel in New York. They chose Judge
John F. Dillon and his partner, Mr. Rush Taggart, lawyers of
national reputation and of the highest character. These gentle-
men carefully reviewed the Consolidated contract and all the
documents connected therewith in the interest of the Merritts.
They came to my office and I threw every fact, circumstance
and paper connected with our dealings with the Merritts open
to their inspection. They had long conference with our counsel,
Mr. Murray. After acquainting themselves with all the facts,
these gentlemen advised the Merritts to conclude the arrange-
ments proposed by Mr. Rockefeller and to maintain their
friendly relations with him. Tome, Messrs. Dillon and Taggart
had nothing but praise for the good faith with which Mr. Rocke-
feller had acted. The Merritts must have told their counsel
every fact known to them and breathed into their ear any sus-
picion they entertained; yet Judge Dillon and Mr. Taggart,
though the Tilden was in a receivership, never suggested mis-
representation in connection with these deals. This was nine
months before Harris brought suit. It was reserved for distant,
obscure, and migratory Harris to ‘“‘discover”’ what the researches,
on the spot, of such eminent lawyers as Messrs. Dillon and Tag:
gart had overlooked.
20

. THe Conspiracy UNFOLDS

By May, 1895, both parties are ready for trial. Our reply
to the Merritts was fourfold. First, we indignantly denied that
any deception or fraud had been practised. Second, we brought
many witnesses, of expert knowledge and unimpeachable char-
acter, to prove that these Colby-Hoyt mines contained large
bodies of ore of high grade, which could be cheaply and prof-
itably mined through many years to come. The subsequent
history of sixteen years has demonstrated the truth of our con-
tention. Our third point was that the Merritts had not in
fact suffered one cent’s damage by the consolidation. They
had got exactly as much for their stocks in the consolidation as
the very same stocks were selling for in cash oué of the consoli-
dation. I had bought their 100,000 shares in the consolidation,
but at almost the same time I had bought nearly 50,000 shares
of the same stocks outside the consolidation, hence undamaged,
at exactly the same price, and put them in myself. Never was
there the slightest difference in market value between an undam-
aged outside stock and its numerical equivalent in Consolidated.
The Duluth quotations are still preserved. Examine them.
Our fourth line of defence was the merely legal but valid one that
the Merritts had come to Mr. Rockefeller with the offer to buy
his stock, that the purchase and sale had been an open deal at
arm’s length, that the Merritts were twenty-one years old and
responsible for their contracts, that the deal was a closed question.
It was in anticipation of this obvious and fatal point that Col-
one! Harris had been obliged to frame up his charge of misrep-
resentation. We were curious to see when and where they would
locate the misstatements. Leonidas Merritt went on the stand
and swore that he had met Mr. Rockefeller only once, that this
five minutes call which I have described, took place in June, before
he signed the contract of July Ist, that he was deceived and led
to sign by what Mr. Rockefeller then said, that the interview
was three-quarters of an hour long, and that Mr. Rockefeller
poured into his ear representations about his Wisconsin and
Cuban mines with the loquacity of Leonidas Merritt himself
booming Missabes. Two unguarded sentences of Mr. Rocke-
feller’s long harangue could not have served Colonel Harris’
purposes more accurately if he had written them himself and
put them into Mr. Rockefeller’s mouth. These two sentences
21

had stuck in the mind of Leonidas Merritt like burrs. The first
was “‘Hereis Mr. Gates. He will transact this business with you,
and whatever he does will be satisfactory to me.” No need now
for a further interview with Mr. Rockefeller. Mr. Gates is the
duly accredited agent. Mr. Rockefeller’s second unguarded
statement was a request that Leonidas Merritt would tell all
these things which Mr. Rockefeller has been saying about his
properties to Mr. Merritt’s distant brothers and associates. For,
if the brothers should happen to recall that they had been
induced to sign these contracts by this message from Mr. Rocke-
feller, conveyed through brother Leonidas, who knows but they
too could recover and the amount, if our plans are successful,
may reach millions of dollars; attorneys’ fees in proportion.

Of course Mr. Rockefeller made oath, as did I, that there was
no suggestion of business in the few minutes call. Mr. Rocke-
feller’s chief clerk corroborated the length and attendant cir-
cumstances.

All three made oath that the time of the call was about the
middle of July. That was the important fact. It was after
the contract of July 1st had been signed by all parties, and, in
very truth, only because it had been signed, that Mr. Rocke-
feller, who, for years, had transacted in person no business with
strangers, and for this reason had hitherto declined to see Mr.
Merritt, now consented to a social hand clasp, no business to be
talked. Mark the date well. The date is July 12, 1893, after
the signing of the contract of July 1st, and as a result of the con-
tract, not an inducement to it. In the sequel, issues far greater
than can be weighed in gold are to be fixed by that date.

Leonidas Merritt was contradicted by three witnesses. Per-
haps Harris had foreseen that contradiction; certainly, he had _
prepared for it. Alfred Merritt had arrived in New York on
August 17th at noon. Alfred and Leonidas Merritt now recall
that on that very afternoon they had succeeded in closeting
me with them alone in Mr. Wetmore’s room in Wall Street,
and that there in secret, no witnesses being present, I rivalled
Mr. Rockefeller himself in loquacity, going over the same ground
and not omitting to send word by the two to the absent brothers.
It is said that in the mouth of two or three witnesses, every word
may be established. As this case is important and these things
will certainly be denied, it will be well to have, say, three wit-
nesses. Andrus R. Merritt now appears. He had visited New
22

York for a day or two that summer. He arrived on the after-
noon of August 19th. By one of those accidents, sometimes for-
tunate, which will happen in the best regulated families, there
fis on that very day another meeting with Mr. Gates. Andrus,
Leonidas and Alfred in trio together, distinctly recall that on
that afternoon, the three got me closeted with them in the same
Wall Street room, Wetmore being again absent, and no other
witnesses present to contradict, and that then and there I
rehearsed the now well-worn story word for word to the three,
and again, doubtless to the joy of Colonel Harris, sent word of
it all to the absent brothers in Duluth. Lucky Harris! Poor
Dillon and Taggart, grubbing along to make an honest livelihood,
and here was this great find, the biggest thing in sight, wholly
overlooked by them!

At the trial in Duluth, I could only deny that in August,
1893, I had ever been inside the room described or had any-
where any such conference, or made any representations. A
clerk occupying an anteroom, whom I must pass, swore that I
had never been there. Wetmore swore that no misrepresenta-
tions had ever been made, to his knowledge.

On my return to New York, after the trial, I lost no time in
looking up my whereabouts on the afternoons of August 17th
and 19th, 1893. As to the 17th, I found that during the whole
afternoon, I had been in the offices of the Farmers Loan & Trust
Company, attending a meeting of the Northern Pacific Collateral
Trust Committee, of which I was a member. The Committee
had been in session during the whole period of my alleged inter-
view with the Merritts. The minutes showed that I was present,
the members of the Committee recollected that I was present.
I had returned to my office, and that afternoon had written a
detailed account of the meeting to Mr. Rockefeller, who was in
Cleveland, signing the dictation after it was written out, and
taking a train for home at 4.20P.M. As tothe 19th, the records
of our office were not less clear as to my whereabouts. I had
spent the whole of the afternoon of the 19th in our offices at 26
Broadway, with our attorney Mr. Murray, and another attorney
by the name of Yale, in conference about certain properties
which Mr. Rockefeller was buying at Tarrytown. Mr. Rocke-
feller was in Cleveland. A private wire ran from his house in
Cleveland to our office in New York. We had consulted him
over the wire frequently during that afternoon on matters in
23

conference. The telegrams are preserved, with the record of the
hour and the minute of transmission. Mr. Murray and I con-
tinued our talk on the subject on the train homeward. I thus
had ample and overwhelming personal and documentary proof
that both the alleged interviews framed up with me had never
taken place.

But quite apart from these facts, any representations would
have been wholly impossible. The deal was brought to us, as
the reader has already perceived; we never sought it. Leoni-
das Merritt had already, in the previous June, signed a con-
tract to buy some of these very properties from the Colbys at
a valuation of $4,000,000. The offices of the Colbys and Wet-
more were practically together. Leonidas Merritt had occu-
pied Wetmore’s office with him for months. The books of both
the Wisconsin and Cuban mines were kept right at hand, almost
under the very eyes of Merritt. Mr. Wetmore was himself a
stockholder, as well as general counsel, of some or all of these
companies. All of these facts Leonidas Merritt knew perfectly
well. What knowledge he or his brothers had of these com-
panies, and that knowledge was measurably full, exact and
detailed, they got from the headquarters of the companies in the
offices: of Messrs. Colby and Hoyt and from Mr. Wetmore,
with all of whom these mines were a staple of daily conver-
sation.

Members of the bar may be curious to know what precisely
were the fraudulent misrepresentations alleged. I have asked
Mr. Murray, our counsel, to give this information. His words
in reply are as follows:

“In the final sifting of the testimony, Harris dropped
all the alleged misrepresentations but three. These were
that the companies owning the Wisconsin and Cuban mines
were ‘solvent and prosperous’; that they ‘owed very little
money outside of their funded indebtedness’; and that the
securities Mr. Rockefeller was to put in were ‘gilt edged.’
The statements were not made; had they been made they
would have been true. The testimony admitted went far
afield, but the whole legal fabric erected by the Harrises
depended upon the allegation that these statements were
made and that they were false. This was the sole founda-
tion for Alfred. Merritt’s suit for $1,250,000 and the claims
of the other brothers, which would have carried the total
to several million dollars.”’
24

We were unfortunate in having to try the case in the city
of Duluth just at that time. According to stories then current,
the Merritts—and there were many brothers—owed pretty
nearly everybody in town. I am credibly informed that publc
sentiment was not averse to their paying their debts, and to
the circulation of some Rockefeller money in Duluth. How-
ever this may be, it is quite certain that the jury never listened
to the testimony. As to the judge—well, he was reversed.
We were hopelessly beaten before we began. The actual fact
was, as I am informed by our attorneys, that in the light of
the evidence presented, and in the light of the decision of the
United States Circuit Court of Appeals, and in the light of sound
law and practice, the case should have been dismissed without
_ going to the jury at all. With heartless cruelty to the Merritts,
the upper court coolly reversed the trial judge. That is how
Leonidas Merritt “lost faith in courts” and the Merritts began
to think of getting, by settlement, some small fraction of the
several millions which they are now hopeless of getting through
the courts.

REVERSAL—BETRAYAL—RETRACTION—SETTLEMENT

While they were groping about for the best way of opening
negotiations, their lawyer, Henry E. Harris, tried to sell to
our attorney in Duluth, Mr. Joseph B. Cotton, for $25,000 a
telegram from Leonidas Merritt in New York addressed to
his secretary in Duluth, saying he had that day had an inter-
view with Mr. Rockefeller. The telegram was dated July 12,
1893. Mr. Cotton shall tell us the story in his own words in
a moment. Meantime, he immediately communicated the
offer to us in New York, but otherwise kept his own counsel,
and we on our part replied not a word and bided our time.

At length the first overtures of settlement were made. They
caine in a roundabout way. The elder Harris approached an
old friend of mine in Minneapolis, who was now in our employ
as a travelling auditor. We told him to say to the Harrises
that we would not negotiate with them or even see them on
any terms whatsoever. The Merritts then turned to J. L. Wash-
burn, an honorable member of the bar in Duluth, who had been
retained by the Merritts after the Harrises had prepared the
case. His suggestion of settlement was communicated to us in
25

New Vork. We declined to entertain any question of settle-
ment whatever, except on the understanding that all charges
of fraud and misrepresentation should be withdrawn. ‘Under
no circumstances can we compromise an accusation of fraud.
Essential pre-requisite to any conference that Washburn state
settlement, if made, shall include, first, complete withdrawal of
all charges of fraud and misrepresentation.” (Appendix A.)
These were the opening words of our reply.

Mr. Washburn came to New York on the above understand-
ing. We told him, in the first place, that overtures had already -
been made by the Harrises for settlement and showed him the
documentary evidence of it. He was astounded. We then
told him why we would not treat with or even see the Harrises.
They could not be trusted, even by their own clients, much
less ‘by us. We showed him the stenographer’s reports of
Colonel Harris’ thrice repeated visit to our office, before the
suit was brought, in which he had offered his services to pre-
vent his clients from bringing any suit against Mr. Rockefeller.
This amazed him still more. We then narrated, to his horror,
the story of the younger Harris offering to sell the incrimin-
ating telegram, dated July 12th. And not content with this,
we told Mr. Washburn where I was on the 17th and roth of
August, 1893, and the overwhelming external proof we now had
of the Merritt conspiracy with Anak A. Harris & Son. We
disclosed to him just how we proposed to crush that conspiracy
the next time the case was tried and named the men who were
ready to swear to my alibis. The other members of the North-
ern Pacific Trust Committee were R. G. Rolston, John A.
Stewart, James Stillman, and J. D. Probst.

Why did we settle? In the first place, to avoid the trouble,
loss of time and annoyance of long continued litigation; and
we knew the prejudice of juries against rich men. Again,
there was a great family of Merritts, each with carefully nursed
claims to be presented on the basis of any verdict that any one
of them might get. They claimed millions. Our settlement
as actually made cleaned up the whole outfit, twenty-three
members of the Merritt family signing the papers. Still again,
we had secured a complete retraction of all charges of fraud
(Appendix B). Perhaps we over-valued that retraction. We
knew, of course, that it might be charged that the retraction had
been purchased with the price of the settlement, but we re-
26

flected that honest men, making true charges of fraud, are not
accustomed to retract those charges for a price in money put into
their hands. It is only false charges that are retracted for money,
because made for money. We believed that the retraction
accompanying the settlement would be generally accepted by
thoughtful people as evidence that these men knew all the time
that they were lying, and that their suit was a “‘strike” against
a rich man not believed to have much chance with a petit jury.
That is why we stipulated for the right to publish. We were,
therefore, on the whole reasonably content with the retraction
and are so still.

But we had another and a stronger reason. Washburn did
not ask a renewal of the lapsed option for 55,000 shares of Con-
solidated, which the Merritts had thrown to the winds when they
embraced the Harrises. That option had now begun to show
value. The stock had advanced to $20 per share, a gain of
$550,000 on the option stock. Washburn said the Merritts still
owed great sums (a year afterwards putting it at a million) over
and above the million that had gone to their creditors on the sale
of their stock. Many of these creditors had turned over to the
Merritts, without security, property which the Merritts, without
paying for, had sold to the Consolidated Mines. Mr. Rocke-
feller had now purchased almost the entire stock of the Con-
solidated and was visibly in possession. How natural it would
be, we reasoned, for these Merritt creditors, seeing their property
in Mr. Rockefeller’s company, to feel that somehow or other, he
himself ought to pay them. Moreover, we were now to do
business in Minnesota among and with these creditors for years
to come and we naturally preferred their good will to their ill
will. So we made the settlement, on Mr. Washburn’s assurance
that. the money would go to these creditors, as indeed it did, and
the option question was never renewed by the Merritts or by us.
We simply filed the retraction in the court in which the charges
had been made, and went our way in silence, never again to have
dealings with the Merritts or the Harrises.

TRAGIC EXPOSURE

Thus was finally settled the case of Merritt against Rocke-
feller, attracting greater public interest and curiosity, and
furnishing more exciting and sensational features, than any
27

case that had been tried in the courts of Duluth within the
last twenty years—except one. That remarkable exception
furnishes the dramatic sequel to our story, with a just and
terrible Nemesis. A stranger entering Duluth in the middle
of September, 1897, only eight months after the now famous
Merritt settlement, would have found the town all “torn up”
and the newspapers full of scare headlines about a lawsuit
in passionate and even frenzied progress at the courthouse.
For months the air of the city had been filled with sinister
rumors. Ominous hints have been let drop by the newspapers
of dreadful things that might be disclosed. The whole city has
been infected by the contagion of a subtle and elusive scandal,
involving the Merritts and the Harrises, and at last the great
secret is being exhibited to the public gaze, the skeleton is
being dragged from its closet. At the courthouse is being tried
with brutal frankness the great case of Alfred Merritt against
Anak A. Harris & Son. Leonidas Merritt is the star witness.
Yes, the Merritts and Harrises have fallen out and are now ina
fight. It is no mere legal prize fight for money. It is a duel
with deadly weapons, and it is to be a fight to the death, with no
quarter on either side. One party or the other is to fall and fall
forever. To some of us who know both parties, the probabilities
are that both will fall.

Alfred Merritt has sued Anak A. Harris for the recovery
of certain mining stocks, which Harris is fraudulently refusing
to give up. Merritt made a contract with Harris some three

years before that he should fight Mr. Rockefeller for $10,000
a year, and in order that Harris might be sure of his money,
Merritt had put wp some mining stocks of considerable value,
as security to Harris for his fees and expenses and to keep the
stocks, meanwhile, from the hands of the Merritt creditors.
And now that the suit is over, Harris not only claims that this
stock is his, but he also refuses to give up-to Merritt the docu-
‘ments and papers connected with the Rockefeller and other suits,
unless he shall be given an additional sum of $25,000. The
- precise figure is curiously suggestive. As Leonidas Merritt is
always an interesting witness and will soon testify, we will
elbow our way into the courthouse and secure standing room
only. Perhaps we shall hear something to our advantage. A
young man is on the stand, who says that he used to be a steno-
grapher for Colonel Harris, and that on February 9th, 1897
28

(only two weeks after the celebrated settlement), Andrus R.
Merritt came into Colonel Harris’ office and demanded papers
and documents connected with their legal affairs, now under-
stood to be settled. (Is Andrus after that telegram of July 12th?)
Colonel Harris asked him what he wanted with the documents,
reminded him that he had been acting queer lately, declined
to surrender the documents for less than $25,000, and bids Andrus
reflect whether or not he can afford to break with him. (Is
Harris also thinking of that telegram?)

And now we will listen to our star witness, Leonidas Merritt :—
“Colonel Harris offered to sell me out. Mr. Washburn found it
out in New York while making the settlement, from the parties
who had a stenographic report of it. While he was there, one
evidence after another of the perfidy of the Harrises was flung
at him. No, we didn’t say anything to the Harrises at the
time. We had agreed among ourselves not to prosecute the
Harrises, although we would have been justified in so doing, for
the reason that it would haveruined them. (The great betrayal?)
We were much surprised when they undertook to steal this stock,
as we thought they would be satisfied and not try to blackmail
us any more. (In asking $25,000 for the telegram of July 12th?)
We wanted to get rid of their blackmailing schemes. When we
read in the newspapers that they were trying to blackmail us,
we thought that there was more in it than the value of the stock.”
Counsel asks him if he has become so convinced of the perfidy
of the Harrises that he thought that Rockefeller was more to
be believed than they. He answers ‘Yes.’

We will stay a little longer, to hear the testimony of Joseph
B. Cotton, attorney for Mr. Rockefeller, whom the plaintiffs, the
Merritts, are bringing on the stand as their own witness. Mr,
Cotton says in substance the following, as reported :—

“Shortly after the decision of the Court of Appeals on the
Rockefeller case, Henry E. Harris came into my office in the
Lyceum Building. After passing the time of day, he said,
‘Cotton, I am inclined to believe that Rockefeller and Gates were
right when they stated that the conference with Lon Merritt was
heid after the signing of the contract of July 1st. I was looking
over our papers and accidentally ran across a telegram from
Lon to M. M. Clark dated about July 12th, in which Lon said that
he had that day held a conference with Rockefeller. I do not
believe I will be in the next trial of the case.’
29

Henry then got up and walked over to my bookcase and
looked over the books. In a minute he came back and sat
down again.

‘Rockefeller,’ he said, ‘cares nothing for me and I care nothing
for him. If you had that telegram of which I have the original,
you could win the case on the next trial. It is valuable to you.’

‘I do not know that it is,’ Ireplied. ‘We have discovered inde-
pendent proof of the date of the conversation and that it occurred
atter the signing of the contract of July 1st, and I do not know
that we need it.’

He said that it would be valuable to us, nevertheless. ‘Of
course I will not give it to you,’ he continued, ‘but if you want
it, I can leave it some place where you can find it.’

‘What do you expect us to give you for it?’ I asked.

‘I shall want $25,000,’ he replied.”

“That is what he said,” continued Mr. Cotton, energetically,
raising himself in the chair and looking fiercely at Henry E.
Harris, ‘and no one knows it better than Henry E. Harris. He
asked me to communicate his proposition to Gates and Rocke-
feller, and I said that his offer would be spurned. He said that
he would not come to see me again, as it would look bad, but
that he would meet me at the St. Louis at 4 o’clock the next after-
noon. I never went there at that time, and I do not know
whether Mr. Harris did or not. He wanted me to meet him at
the Auditorium in Chicago with the money, after I had received
it from Rockefeller. He told me that he knew what risks he was
taking, but that he knew that I did not dare to open my head,
for if I did he would deny it and the people of Duluth, knowing
my connection with Rockefeller, would believe him and would
not believe me.”

The jury, after a ten days’ trial, brought in a verdict against
the Harrises in less than half an hour, indeed, almost without
leaving their seats.

Did Henry E. Harris offer to sell a telegram incriminating
Leonidas Merritt, to our attorney, Joseph B. Cotton, for $25,-
ooo? Was there such a telegram? Did Leonidas Merritt
know that there was such a telegram? Was his fury against
the Harrises and not against Cotton, due to his guilty knowl-
edge of the existence of the telegram? Did he know that
Cotton could have got the information about the telegram from
no one else than the Harrises? Did he call our Mr. Cotton as
30

his own witness because he knew Mr. Cotton’s testimony would
be true? How did he know Cotton’s story was true? Did
Andrus have the recovery of that telegram in mind when he
demanded the return of their papers from Harris on February
9, 1897, almost immediately after the return of Mr. Washburn
from the New York settlement? Did Harris refuse to give up
the papers without an extra fee of $25,000 because the tele-
gram of July 12th was among them? Did Harris remind Andrus
that Andrus could not afford to break with him, because there
were guilty secrets between them? Was the precise sum that
Harris asked for the papers, namely, $25,000, fixed upon, because
that was the sum that the son had demanded from Cotton for
the telegram, and the Harrises were bound to get $25,000 for
that telegram from one side or the other? Was the whole attack
on Mr. Rockefeller a frame-up between the Harrises and the
Merritts, and was their conspiracy completely exposed by the
' conspirators themselves when they fell out?

The above queries form together a picture puzzle. They
will be found, I think, to fit into each other, and when he has
put them all together, the reader will see a picture, which will
tell its own clear and graphic story. Henry E. Harris left
Duluth shortly afterwards. Other troubles followed him, and
he soon died. Anak A. Harris, the father, not long after fol-
lowed his son to the grave. I have disturbed the ashes of the
dead only in justice to the living.
31

Appendix A

Copy oF
WESTERN UNION TELEGRAM
Dated New York, Dec. 31, 1896.

To JosEpu B. Corton,
Lyceum Building, Duluth, Minnesota.

Telegram received. Under no circumstances can we com-
promise an accusation of fraud. Essential pre-requisite to any
conference that Washburn state settlement if made shall include,
first, complete withdrawal of all charges of fraud and misrepre-
sentation; secondly, a written statement, in form to be agreed
upon, with permission to publish, that shall intelligently explain,
consistently with the evidence given by defendant’s witnesses,
erroneous statements of plaintiff’s witnesses, and intelligently
explain how plaintiff’s witnesses came to testify erroneously.
With these things definitely understood, and provided further
that Washburn has full formal power to make complete and
final settlement of all possible controversies between parties
named in your telegram, and to give full releases, am willing to
meet Washburn in New York within next ten days for confer-
ence without prejudice.

Gro. WELWooD Murray.

Appendix B.

Certain matters of difference have existed between the under-
signed and Mr. John D. Rockefeller, and a certain litigation
has been pending between the undersigned Alfred Merritt and
Mr. Rockefeller, in which litigation it was claimed that certain
misrepresentations were made by Mr. Rockefeller and those
acting for him concerning certain properties sold by him to Lake

. Superior Consolidated Iron Mines. It is hereby declared that
from recent independent investigations made by us or under
our direction we have become satisfied that no misrepresentation
was made or fraud committed by Mr. Rockefeller or by his agents
or attorneys for him, upon the sale by him of any property to us
or any of us, or to Lake Superior Consolidated Iron Mines, or
32

upon the purchase by him from one or more of us of any stocks
or interests in any mining or railway company or companies»
or upon the pledge by us or either of us to him of stocks and
securities belonging to one or more of us; and we hereby with-
draw all such charges and claims and exonerate Mr. Rockefeller
and his agents and attorneys therefrom.

Duluth, Minn., January 22d, 1897.

In the presence of: ALFRED MERRITT (SEAL)
MERRILL M. CLARK JANE A. MERRITT (SEAL)
JosEPpH B. Cotton Leonripas MERRITT (SEAL)

EvizaBETH E. MERRITT (SEAL)
Anprus R. MERRITT (SEAL)
ELizABETH D. MERRITT (SEAL)
Lucien MERRITT (SEAL)
Mary J. MERRITT (S_ AL)
Joun E. MErritTtT (SEAL)
Erra M. Merritt (SEAL)
WILBur J. MERRITT (SEAL)
Ipa MERRITT (SEAL)
Anprus R. MERRITT, (SEAL)

As surviving partner of the late firm
of C.C. & A. R. Merritt

Eviza M. MERRITT (SEAL)
Hanson E. SmitTH (SEAL)

As Administrator Estate of Cassius C.

Merritt, dec’d.

Napo.Leon B. Merritt (SEAL)
MatiLpa T. Merritt (SEAL)

EuGENE T. MERRITT (SEAL)
ANNA MERRITT (SEAL)
Tuomas A. MERRITT (SEAL)

JEnNiE S. MERRITT (SEAL)
THE KNICKERBOCKER PRESS
(G. P. Putwam’s Sons)
New York