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Chapter 6: Entering the Business World - Dane Starbuck, The Goodriches: An American Family [2001]

Edition used:

The Goodriches: An American Family (Indianapolis: Liberty Fund, 2001).

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


Chapter 6

Entering the Business World

No agency of modern times has ever affected such marvelous transformations in business or wrought such rapid and easy fortunes for investors as Natural Gas. . . . Especially are these favoring conditions true in the Natural Gas Fields in and around . . . Indiana, a State notably enterprising and wealthy before her people had learned of the boundless reservoir of riches that lay beneath the surface of many of her oldest and richest counties, and a commonwealth that is since leaping forward to a destiny so great and near that it fairly dazzles the imagination to contemplate.

Gas Boom of Gas City, Indiana

They were exciting times. By the end of 1888, thousands of people came daily from all over the state to east-central Indiana on excursion trains to see the wonder. There, in fields where the most notable sights had previously been shocks of wheat and corn, beautiful flaming torches of light poured forth. The countryside was ablaze with the burning of millions of cubic feet of the best fuel in the world. What limestone had done for such communities as Bedford, Bloomington, and Ellettsville in the 1880s and 1890s and coal had done, during the same period, for Vigo, Sullivan, Vermillion, Knox, and Greene counties, natural gas did for small Indiana towns such as Dunkirk, Elwood, Fairmount, Farmland, Hartford City, Jonesboro, Knightstown, Muncie, Redkey, Portland, Salem, and Winchester. In March 1892, one small town in Grant County, Harrisburg, took formal action in recognizing the transformation, renaming itself “Gas City.”1

In the years from 1886 to 1892, the “natural gas craze” occurred. It started on March 14, 1886, in Portland, Indiana, when a well struck gas at a depth of 990 feet. The boom was on, with a frenzy reminiscent of a gold rush. By the following April, a local well was producing 5 million cubic feet daily. By January 1891, another well’s daily output was nearly 15 million cubic feet. Wells by the hundreds were being drilled. By 1892, it was estimated that the gas fields of east-central Indiana were several times larger than the known combined size of all other gas fields in the United States. The fuel spouted from the ground with such ease that the state geologist estimated that by the latter half of 1887 there had been an average waste of one hundred million cubic feet of it a day.2

The cheap energy seemed unlimited. It brought to the area trainloads of newspaper reporters, capitalists, and the curious from such faraway places as Cincinnati, Buffalo, and New York City. In the late 1880s, three hundred members of the American Association for the Advancement of Science visited to witness the phenomenon. The find created unprecedented growth. By 1900, the population of Muncie, Indiana, just twenty-five miles west of the Goodriches’ hometown, had grown to more than twenty thousand, quadrupling in size since 1880. Real estate speculation was at its zenith. One man who shied away from buying an eight-acre plot in Delaware County in 1888 for $1,600 found that only sixty days later the property had changed hands five times and had doubled in price.3

The gas craze fueled nearly boundless growth in the Goodriches’ hometown of Winchester. Around the town square, a dozen or more two-, three-, and four-story buildings popped up that are still the mainstay of the town’s commercial center. Because of its cheap energy, the area attracted businesses in an unprecedented way. The result was an industrial explosion that was only slightly less dramatic than the natural gas find itself. The discovery of natural gas resulted in the relocation of dozens of industries, particularly foundries, that relied upon the cheap fuel to melt iron and other metals. The largest industry to exploit the gas resources was the glass industry, which relied upon the seemingly inexhaustible fuel to heat large demanding furnaces. In 1880, only 4 glass factories existed in Indiana; by 1900, there were 110, most of which were in east-central Indiana. The best-known, and ultimately the largest, glass company in the Midwest would be in Muncie. In 1887, five brothers, about the same ages as the five Goodrich brothers, had moved their company from Buffalo, New York, to Muncie to take advantage of the gas boom. They were the Ball family, and the corporation they founded is today a Fortune 500 company with more than thirteen thousand employees and $2 billion in annual sales.4

The Goodrich brothers were too savvy not to take advantage of the great gas boom. One of the first companies that the family held a substantial interest in was the Rock Oil Company, which was located in Winchester. The Rock Oil Company was formed on June 8, 1886, less than two months after gas was discovered in Jay County. It had thirty-three founding investors who issued a capital stock of $50,000. It was established to incorporate a gas, oil, and mining company. Although drilling for oil was done almost as aggressively in the area as for natural gas, the anticipated oil boom was never realized.5

Percy Goodrich was one of the original investors in the Rock Oil Company. Within a short time, Ed and James, along with Percy, became directors of the company. James also served as corporate secretary, becoming responsible for filing the company’s annual reports and maintaining records.6 Three of the remaining four directors and officers of the company were A. L. Kitselman, D. M. Kitselman, and E. F. Kitselman. These three brothers, along with a fourth Kitselman brother, were from Ridgeville, a small town in northwestern Randolph County. The Kitselman brothers began a company that manufactured, beginning in 1883, roller skates and, beginning in 1887, wire fences. The Kitselman brothers moved their operations to Muncie in 1900. In 1901, they formed what would become one of the largest wire-making companies in the country, the Indiana Steel and Wire Company.7

By 1886, the Goodriches had recognized the tremendous growth opportunities associated with the natural gas fields. As a result, they pooled the wealth they had garnered from farming and retail and entered into the utility business. At the turn of the century, it was not uncommon for the Goodrich brothers to help locate natural gas fields and actually do some of the legwork in drilling the wells.8 This was their start in the public utilities business.

On July 30, 1901, the Goodrich brothers formed, with a capital stock of $50,000, a second natural gas company known as the Union Heat, Light and Power Company of Union City, Indiana. James, Percy, John, and Edward were four of the six directors. Union Heat provided heat, light, and electricity to consumers in both eastern Randolph County and western Darke County, Ohio. It also operated for the purposes of drilling, buying, and selling natural gas and oil. James’s initial investment in the company was $12,400, which entitled him to 248 shares. By 1915, he owned 956 of the total of 3,000 shares. The other brothers owned a total of 760 shares between them, and the remaining investors were business associates of the Goodrich family: Jesse “Jett” Moorman, William E. Miller, and James W. McCamish. For several years, James Goodrich served as president of this company. In 1915, Union Heat purchased the Portland Gas Company.9

Besides the Rock Oil Company and Union Heat, the Goodrich brothers had controlling interest in the Lynn Gas Company and the Indiana-Ohio and the Western Ohio Public Services Companies (electric companies). These utilities also served communities in east-central Indiana and west-central Ohio, including Union City, Indiana; Union City, Ohio; and Greenville, Ohio.

During this time, the Goodrich brothers maintained their interest in their farm operations. After graduating from high school in 1881 with his brother James, Percy Goodrich began with the other brothers a farming operation called simply Goodrich Farms. Eight years later, in 1889, Percy quit farming to sell furniture and hardware. John and Ed Goodrich were also involved in this business known as the Goodrich Brothers. The three of them operated stores both in Winchester and Maxville, the latter a small town six miles west of Winchester that has disappeared. Nine years later, on January 5, 1898, the five brothers established the Goodrich Brothers Hay and Grain Company. It bought and sold grain, seed, and farm implements in the area. By 1917, the company (which had by then become the Goodrich Brothers Company) was the largest grain dealer in Indiana. A forerunner of the company had been established by the brothers’ maternal grandfather, Edward Edger, in 1860. The only stockholders of Goodrich Brothers were the five brothers and their wives. John was president. Percy, the oldest brother, became secretary and general manager of the hay and grain business. He later also assumed the title of chairman of the board.10

The Goodrich brothers also invested heavily in electric companies, such as Citizens Heat, Light and Power Company, based in Winchester. Reorganized on July 21, 1913, Citizens Heat was the successor to the Citizens Water and Light Company, which had been established on June 6, 1899. Citizens Heat provided electricity to approximately nine thousand Randolph County residents. Citizens Heat also owned the water company in Winchester. Edward Goodrich managed Citizens, while William Wallace served on the board of directors with Edward. Several other businessmen with whom the Goodrich brothers would form financial alliances in banking, coal, and other ventures served as directors, including Jesse Moorman, William E. Miller, and Thomas L. Ward, all of Winchester, and Edwin F. Kitselman of Muncie.11

Around the turn of the century, a remarkable new invention, previously found only in large cities, became available in people’s homes—the telephone. The Goodrich brothers pooled their money and became directors of several local telephone companies: Investors Telephone Company, Interstate Telephone and Telegraph Company, and the Eastern Indiana Telephone Company. The latter company was one of the first the brothers invested in. The Eastern Indiana Telephone Company was also located in the family’s hometown of Winchester. James, Percy, and Edward were three of the original eighteen investors in Eastern Indiana Telephone when it was formed on January 5, 1899, with a capital stock of $150,000. Percy Goodrich was treasurer of the company.12 These three telephone companies served east-central Indiana and west-central Ohio. From the late 1800s to 1920, the Goodrich brothers established or bought into one small-town utility after another. These included the Washington Water, Light and Power Company in Washington (Daviess County, Indiana) and the Jeffersonville Water Company in Jeffersonville (Clark County, Indiana). James Goodrich obtained both companies through serving as receiver of the Cincinnati, Chicago and Louisville Railroad from 1908 to 1912.

At the turn of the century, there were no state or federal agencies regulating gas, electric, telephone, or other utilities. Anyone who could raise the funds to buy pipelines or put in telephone poles and wire could do business. This resulted in fierce competition. Often, several gas, electric, and telephone companies began to operate in the same area. It was not uncommon to have two or three gas lines running down the same city street; the same was true of telephone poles and lines. But, as with nearly any industry, only the efficient survive, and the Goodrich companies were efficient. In 1920, the Goodriches’ gas company put out of business the Monarch Gas Company in Winchester. Within a short time, the Goodriches held a monopoly in most basic utilities: coal, electric, water, natural gas, and telephones. Percy Goodrich ran the coal and grain operations of the various companies, Ed operated the electric and water, and William Wallace, the natural gas. The brothers all served as directors or officers of the various telephone companies.

James’s business interests far exceeded east-central Indiana. At one time or another over the next twenty years, he would assume several other positions: president of the Patoka Coal Company in Pike County, the Railway Service and Supply Company in Indianapolis, and the National City Bank of Indianapolis; secretary-treasurer of the Winona Railway Company in southern Indiana; treasurer of the Union Reduction Company; and director of dozens of other companies, including the Red River Refining Company, an oil refining company in Chicago, as well as the Goodrich brothers’ utility and grain companies in east-central Indiana.

Shortly after the turn of the century, the family became involved in the business that they would be most closely associated with in their home community—banking. On June 1, 1901, James founded, along with thirty-four other local stockholders, the Peoples Loan and Trust Company. James served as president of Peoples until his death in 1940. In 1901, the amount of the capital stock was set at $30,000. Within one year of opening, Peoples had total assets of $115,000. By 1907, the bank had outgrown its original location and moved to its present location at the corner of Meridian and Washington streets in Winchester. Early loans were made for everything from the purchase of local businesses to teams of horses for farmwork. Over the years, the Goodrich brothers bought interests in various other small-town Indiana banks, including banks in Eaton, Farmland, Modoc, Redkey, Ridgeville, and Tipton, and Citizens Bank in LaCrosse. The banks in Farmland and Modoc were converted into branches of Peoples Loan and Trust in 1931, as was the Ridgeville bank in 1939. Peoples Loan and Trust eventually eclipsed in assets the much older Randolph County Bank, which had been established in 1865. Peoples Loan and Trust became the flagship of the Goodrich family’s later business enterprises.13

Most, but not all, of the business ventures taken on by the Goodrich brothers became successful. Shortly after the turn of the century, James and Percy had become friends with a farmer and businessman in Huntington, Indiana, by the name of Edward Wasmuth. Wasmuth had been a political associate of James Goodrich’s, serving as state Republican chairman during the time that Goodrich was governor. He had earlier served as president of the National Hay Association, where Wasmuth became good friends with Percy. It was through these connections that the Goodrich brothers invested in Wasmuth’s business, a furniture company in Peru, Indiana. The Wasmuth-Goodrich Company came into being on July 16, 1919. It mostly made and sold kitchen cabinets. Percy Goodrich was vice-president of the company, while James and, later, Pierre, were directors. By the 1930s, however, the Depression had hit hard, making luxury items such as kitchen cabinets expendable. The company was dissolved in October 1936 by the Miami County Circuit Court.14

On another occasion, the Goodrich brothers failed to capitalize on a golden opportunity to gain an even larger share of the midwestern agribusiness. Harold W. McMillen, a Fort Wayne native, had approached Percy in the early 1930s about merging the Goodriches’ grain business with his sugar-beet operation in Decatur, Indiana. McMillen proposed that he would purchase and store sugar beets and the Goodrich Brothers would expand their operations in grains: corn, wheat, soybeans, and oats. For some reason, the brothers rejected McMillen’s merger offer.15 McMillen decided to establish his own grain company and formed Central Soya, which has become one of the largest agribusinesses in the country.16 Instead of merging with McMillen, the Goodriches made one of their few poor business decisions when they merged many years later, in 1947, with the Acme-Evans Milling Company in Indianapolis. The merger would ultimately involve a lengthy court battle by Pierre in the 1960s and the demise of the Goodrich brothers’ grain operations. Still, the Goodrich brothers enjoyed phenomenal success in the business world. By the 1920s, their family’s financial dynasty was just beginning to be formed.

[1. ]See Logan Esarey, A History of Indiana (Indianapolis: Hoosier Heritage Press, 1970), pp. 910–12. Harrisburg, Indiana, officially changed its name to Gas City on March 21, 1892. See also Gas Boom of Gas City, Indiana (Indianapolis: Department of Geology and Natural Resources, 1892), pp. 4–5 (a souvenir book located in the Gas City Middle Township Public Library).

[2. ]See Gas Boom of Gas City, pp. 5–6. There is a minor dispute regarding where the first gas well was struck. The town of Eaton, Indiana, only a few miles west of Jay County, claims that the first significant gas well was struck near there. See Keith Roysdon, “Eaton Market Tells of Town’s Gas Boom Past,” Muncie (Ind.) Star Press, August 12, 1996, sec. A, p. 3, col. 1.

[3. ]See Robert S. Lynd and Helen Merrell Lynd, Middletown: A Study in Contemporary American Culture (New York: Harcourt, Brace, 1929), p. 15, n. 4.

[4. ]For one of the best studies of the significance of the gas boom in transforming east-central Indiana from an agrarian area into a modern industrial area, see Dwight W. Hoover’s Magic Middletown (Bloomington: Indiana University Press, 1986), pp. 1–5. Just a few of the many glass companies that located in east-central Indiana are the Woodbury Glass Company (later known as Anchor Hocking), in Winchester; Kerr Glass and Indiana Glass, in Hartford City; Owens-Illinois Glass Company, in Gas City; and Ball Brothers, Muncie Glass, and the Port Glass Works, in Muncie. For a discussion of the importance of glass in east-central Indiana, see Wiley W. Spurgeon, “Jarred Memories: Local Glass Industry Faded as Markets, Companies Changed,” Muncie (Ind.) Star Press, October 6, 1996, sec. F, p. 1, col. 1.

[5. ]See “Remembrance of ‘The Great Oil Boom’ of Parker City,” Winchester (Ind.) News-Gazette, June 29, 1976, p. 1, col. 1.

[6. ]The Rock Oil Company was located at 7 South Meridian Street. Article 2 of its bylaws states: “The object and purpose of said company was the production of gas either natural or manufactured for lighting, heating, and fuel purposes and purposes of mining petroleum, oil, rock, and minerals.” Bylaws of the Rock Oil Company, State Archives, Indiana Commission on Public Records, Indianapolis, Indiana, 1701–30 1/2.

[7. ]Information about the Kitselmans was taken from a family-history paper in the author’s possession, “The Starbucks and the Kitselmans,” pp. 9–11.

[8. ]Perce G. Goodrich, interview, November 9, 1992.

[9. ]See “The Union Heat, Light and Power Company of Union City, Indiana,” pp. 36–53, Dissolved Corporations, State Archives, Indiana Commission on Public Records, Indianapolis. The articles of incorporation for Union Heat were filed on July 30, 1901. In 1915, the Goodrich brothers owned more than half of the 3,000 shares: James, 956; William Wallace, 354; Percy, 171; Edward, 165; and John B., 70. The Peoples Loan and Trust Company owned 63 shares. The last annual report filed with the secretary of state’s office showing ownership by the Goodriches of Union Heat, Light and Power was dated June 21, 1926.

[10. ]See “Ninetieth Annual Goodrich Brothers Anniversary Luncheon,” a program pamphlet in the possession of the Columbia Club, Indianapolis. See Percy Goodrich, vol. 36 in the Indiana Biography Series, pp. 96–97.

[11. ]The Goodrich brothers held a large interest in Citizens Heat, Light and Power Company from 1913 to 1927. Citizens provided electricity to residences, offices, stores, livery stables, hotels, restaurants, theaters, churches, lodge halls, schools, and other establishments in Winchester, Farmland, Lynn, Saratoga, and Ridgeville. Later, it expanded its service area to include other Randolph County communities such as Spartansburg, Carlos City, Modoc, Losantville, and Deerfield, as well as Blountsville in Henry County and Fountain City in Wayne County. Citizens also provided water to the residents of Winchester. In 1913, Jesse Moorman was president of Citizens, Thomas L. Ward served as vice-president, and Edward Goodrich served as secretary and treasurer. In 1927, Citizens was sold to the United Public Utilities Company of Chicago, Illinois. All officers and directors except William Wallace Goodrich (who remained a director for three years) were located in Chicago. Citizens sold power to the Greenville Electric Light and Power Company of Ohio and the Indiana-Ohio Public Service Company. Interestingly, fuel oil, not natural gas or coal, was the original energy source. Citizens’ gross income in 1926 was derived from electricity (89.7 percent) and water (10.3 percent) production. The last full year that the Goodrich brothers owned a substantial share of Citizens was 1926, when the company’s assets were $556,099.52. See Indiana Public Service Commission, annual reports of the Citizens Heat, Light and Power Company—Winchester, Indiana, 1912 to 1927, especially for the year 1926, Re 4950, box 4, State Archives, Indiana Commission on Public Records, Indianapolis.

[12. ]The Eastern Indiana Telephone Company was located at 114 East Franklin Street. The articles of association were filed on November 16, 1905. The company had a capital stock of six thousand shares at $25 per share. At an initial offering, Percy Goodrich purchased a total of fifty-five shares for $1,375. The Eastern Indiana Telephone Company was purchased by General Telephone and Electric (GTE) in approximately 1969 in a deal wherein each share of Eastern Indiana stock was exchanged for two and a half shares of GTE stock. William Fitts, interview, December 28, 1991.

[13. ]See “Trust Company Begins Its Fifty-first Year,” Winchester (Ind.) News, June 29, 1951, p. 1, col. 2; “Winchester Bank Observes 75th Birthday This Month,” Richmond (Ind.) Palladium-Item, June 22, 1976, p. 2, col. 1; and “Peoples Loan and Trust Marking 75th Anniversary,” Muncie (Ind.) Star, June 23, 1976, p. 20, col. 1.

[14. ]The Wasmuth-Goodrich Company had originally been the Booth Furniture Company, which was incorporated on April 6, 1906, in Peru, Indiana. The change of name was granted by the secretary of state on July 16, 1919. At various times, Edward, Percy, James, and Pierre served on the company’s board of directors. The company experienced difficult financial times in the late 1920s, failing to file annual reports with the secretary of state’s office in 1928, 1932, and 1933. Because of this failure, Philip Lutz, Jr., Indiana’s attorney general at the time, brought an action to dissolve the company. The petition was granted by the Miami Circuit Court judge Val Phelps on October 7, 1936. See Wasmuth-Goodrich Company, 2424–19, Dissolved Corporations, State Archives, Indiana Commission on Public Records, Indianapolis; Perce G. Goodrich, interview, November 9, 1992; and Percy E. Goodrich, “Ed Wasmuth,” Down in Indiana 27 (September 20, 1947), Indiana Historical Society Library, Indianapolis. Edward Wasmuth was also president of the Wasmuth Grain and Coal Company and the Wasmuth Realty Corporation in Huntington County, Indiana.

[15. ]Perce G. Goodrich, interview, November 9, 1992.

[16. ]See Dick D. Heller, Jr., ed., “Vo-Ag,” in 1979 History of Adams County, Indiana, vol. 2 ([Decatur, Ind.]: Adams County Historical Society, 1980–89), pp. 154–55. The article contains the history of Harold W. McMillen’s establishment of Central Soya.