Rockefeller Pal Flagler Hit Gold Despite Bust in Saginaw Salt Industry
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Courtyard of Flagler's Alcazar Hotel, now the St. Augustine City Hall and Lightner Museum, is a veritable garden of Eden.
Flagler's Royal Poinciana Hotel in Palm Beach, Florida, was the world's largest hotel and world's largest wooden structure.
Did brutal lessons from Saginaw's cut-throat Civil War era salt industry lead to America's greatest fortune?
A case could be made that if Rockefeller partner Henry Flagler hadn't been tutored in the perils of unfettered competition in Saginaw he may never have had the knowledge or discipline to take Standard Oil to the financial heights.
Mr. Flagler, a New York native who grew up in Ohio, went bankrupt in a Saginaw salt business torn by excessive competition.
He lit out of town, broke, just before Bay County's salt entrepreneurs combined together and made the business profitable, soon embracing Saginaw firms in the Bay and Saginaw Salt Manufacturing Association.
The indomitable Mr. Flagler was far from finished, however, since he had a pal he had helped get started in the grain brokerage in Ohio. The pal's name? John D. Rockefeller.
So, although Flagler and partner Barney York went bust in Saginaw, producing no salt after 1866, a decade later Flagler was building an opulent home on Fifth Avenue in New York City.
How did he do that? Well, after leaving Saginaw, a poverty stricken Flagler clerked briefly in a store in his hometown of Bellevue, Ohio, and soon took off for greener pastures -- Cleveland, to get back in the family grain business.
Flagler was able to buy into the infant Standard Oil by leveraging loans through family connections, also paying off his Saginaw debts. He quickly became Rockefeller's most trusted adviser and intimate confidant. Their desks were back to back in the infant Standard office.
"Eliminate the competition" became their byword, fueled by Flagler's experience in Saginaw. "Flagler's Saginaw experience had taught him the great dangers inherent in ruinous competition, therefore, he and Rockefeller were as one in their determination to put the Cleveland oil industry on a sound footing . . . ," wrote Edward N. Akin in "FLAGLER: Rockefeller Partner andFlorida Baron:" Gainesville, University Press of Florida, 1991.
With his newly-won wealth, Flagler, nine years older than John D., set out to make his own mark apart from the Standard Oil Company's best known leader.
Flaglerheaded for untouched Florida in the 1880s and became a prime force in developing St. Augustine, Palm Beach, Miami, Nassau in the Bahamas, and Key West, in that order.
His Florida East Coast (FEC) railroad pushed steadily south and his massive hotels and housing developments sprang up like palm trees in the desert.
Author Akin gives Flagler credit for changing the trend of American tourists from visiting southern California or Europe to Florida. He did that by connecting the U.S. eastern cities like New York and the Midwest to the sunshine state via his rail lines.
The name Flagler is all over the east coast of Florida, including Flagler College, once his fabulous Ponce de Leon Hotel, in St. Augustine. Another magnificent hotel, the Alcazar, went broke during the Depression but now is the St. Augustine city hall and museum.
Despite his bad experience there, Flagler also left his mark on Saginaw. The firm of Flagler & York, formed in 1862, was thelargest of 20 such firms operating in south Saginaw, then known as Salina, the name a reference to the saline deposits below ground.
Saginaw was the center of vast salt deposits stretching 50 miles in all directions. The state had set aside 12 salt springs in various locations for the public domain but there was plenty of salt left for entrepreneurs to exploit.
In 1859, a bill introduced by Sen. James Birney of Bay City had provided a tax exemption plus a state bounty of 10cents per bushel of salt produced. With demand sparked by the Civil War, production of salt in Michigan went from 5,000 barrels in 1860 to 200,000 barrels in 1862.
Flagler was a founder of the First Congregational Church in Saginaw and was superintendent of the sabbath school for three years. He was also founder of the Saginaw County Agricultural Society and a member of the Salina Lodge of Free and Accepted Masons.
Flagler built a house in Saginaw for $2,500 from the first salt profits, which Mr. Akin lists as $26,850 in 1863. The partners invested in land on the Cass River and 16.5 acres in Salina, part of which was dedicated to the Flagler & York addition to Salina of 47 platted lots, selling for $250 to $300 each.
Saginaw was not a complete loss for Flagler. He sold his house "at handsome profit," according to Mr. Akin, who did extensive research on newspapers and land records here.
Flagler died May 20, 1913, at age 83 at his cottage in Palm Beach. His body is entombed in Memorial Presbyterian Church in St. Augustine, next to his first wife, Mary.###
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