Rockefeller was born on farm at Richford, in Tioga County, New York, on
July 8, 1839, the second of the six children of William A. and Eliza
(Davison) Rockefeller. The family lived in modest circumstances. When he
was a boy, the family moved to Moravia and later to Owego, New York,
before going west to Ohio in 1853. The Rockefellers bought a house in
Strongsville, near Cleveland, and John entered Central High School in
Cleveland. While he was a student he rented a room in the city and
joined the Erie Street Baptist Church, which later became the Euclid
Avenue Baptist Church. Active in its affairs, he became a trustee of the
church at the age of 21.
He left high school in 1855 to take a business course at Folsom
Mercantile College. He completed the six-month course in three months
and, after looking for a job for six weeks, was employed as assistant
bookkeeper by Hewitt & Tuttle, a small firm of commission merchants
and produce shippers. Rockefeller was not paid until after he had worked
there three months, when Hewitt gave him $50 ($3.57 a week) and told
him that his salary was being increased to $25 a month. A few months
later he became the cashier and bookkeeper.
John Davison Rockefeller (July 8, 1839 - May 23, 1937)
was the guiding force behind the creation and development of the
Standard Oil Company, which grew to dominate the oil industry and became
one of the first big trusts in the United States, thus engendering much
controversy and opposition regarding its business practices and form of
organization. Rockefeller also was one of the first major
philanthropists in the U.S., establishing several important foundations
and donating a total of $540 million to charitable purposes.
Rockefeller's stake in the oil industry increased as the industry itself
expanded, spurred by the rapidly spreading use of kerosene for
lighting. In 1870 he organized The Standard Oil Company along with his
brother William, Andrews, Henry M. Flagler, S.V. Harkness, and others.
It had a capital of $1 million.
By 1872 Standard Oil had purchased and thus controlled nearly all the
refining firms in Cleveland, plus two refineries in the New York City
area. Before long the company was refining 29,000 barrels of crude oil a
day and had its own cooper shop manufacturing wooden barrels. The
company also had storage tanks with a capacity of several hundred
thousand barrels of oil, warehouses for refined oil, and plants for the
manufacture of paints and glue.
Standard prospered and, in 1882, all its properties were merged in the
Standard Oil Trust, which was in effect one great company. It had an
initial capital of $70 million. There were originally forty-two
certificate holders, or owners, in the trust.
After ten years the trust was dissolved by a court decision in Ohio. The
companies that had made up the trust later joined in the formation of
the Standard Oil Company (New Jersey), since New Jersey had adopted a
law that permitted a parent company to own the stock of other companies.
It is estimated that Standard Oil owned three-fourths of the petroleum
business in the U.S. in the 1890s.
In addition to being the head of Standard, Rockefeller owned iron mines
and timberland and invested in numerous companies in manufacturing,
transportation, and other industries. Although he held the title of
president of Standard Oil until 1911, Rockefeller retired from active
leadership of the company in 1896. In 1911 the U.S. Supreme Court found
the Standard Oil trust to be in violation of the anti-trust laws and
ordered the dissolution of the parent New Jersey corporation. The
thirty-eight companies which it then controlled were separated into
individual firms. In his biography, Study in Power, John D. Rockefeller,
Industrialist and Philanthropist, the historian Allan Nevins reports
that Rockefeller at that time owned 244,500 of the company's total of
983,383 outstanding shares.
Rockefeller was 57 years old in 1896 when he decided that others should
take over the day-to-day leadership of Standard Oil. He now focused his
efforts on philanthropy, giving away the bulk of his fortune in ways
designed to do the most good as determined by careful study, experience
and the help of expert advisers.
From the time he had begun earning money as a boy, he had been giving a
share of his income to his church and charities. His philanthropy grew
out of his early family training, religious convictions, and financial
habits. "I believe it is every man's religious duty to get all he can
honestly and to give all he can," he once wrote. During the 1850s, he
made regular contributions to the Baptist church, and by the time he was
21, he was giving not only to his own but to other denominations, as
well as to a foreign Sunday school and an African-American church.
Support of religious institutions and African-American education
remained among his foremost philanthropic interests throughout his life.
As his wealth grew in the 1870s and 1880s, Rockefeller came to favor a
cooperative and conditional system of giving in which he would agree to
supply part of the sum needed for a particular project if the others
interested in it also would provide substantial financial support. It
was on such a conditional basis that Rockefeller participated in the
founding of the University of Chicago. The American Baptist Education
Society had resolved in 1889 to establish a "well-equipped college" in
Chicago. At the urging of the society's director, the Rev. Frederick T.
Gates, Rockefeller offered to give $600,000 of the first $1 million for
endowment, provided the remaining $400,000 was pledged by others within
90 days. Thus begun, the University of Chicago was incorporated in 1890,
and over the next twenty years Rockefeller contributed to help build up
the institution, always on condition that others should join in its
support. In 1910 he made a farewell gift of $10 million, which brought
his total contributions to the university to about $35 million. In
withdrawing from further activity there, he wrote: "I am acting on an
early and permanent conviction that this great institution, being the
property of the people, should be controlled, conducted and supported by
the people."
Rockefeller recognized the difficulties of wisely applying great funds
to human welfare, and he helped to define the method of scientific,
efficient, corporate philanthropy. The method was this: to create
charitable corporations and give them title to great funds, whose
management and use would be governed by trustees and overseen by
officers with specialized training and experience, with both the
trustees and officers being dedicated to continuous study of the
opportunities for the best uses of the funds under their care. To help
manage his philanthropy, Rockefeller hired the Rev. Frederick T. Gates,
whose work with the American Baptist Education Society and the
University of Chicago inspired Rockefeller's confidence. With the advice
of Gates and, after 1897, his son, John D. Rockefeller Jr., Rockefeller
established a series of institutions that are important in the history
of American philanthropy, science, and medicine and public health.
In 1901 he founded the Rockefeller Institute for Medical Research (now
The Rockefeller University) for the purpose of discovering the causes,
manner of prevention, and the cure of disease. From its laboratories
have come cures for diseases, and new knowledge and scientific
techniques which have helped to revolutionize medicine, biology,
biochemistry, biophysics and other scientific disciplines. A few of the
noted achievements of its scientists are the serum treatment of spinal
meningitis and of pneumonia; knowledge of the cause and manner of
infection in infantile paralysis; the nature of the virus causing
epidemic influenza; blood vessel surgery; a treatment for African
sleeping sickness; the first demonstration of the preservation of whole
blood for subsequent transfusion; the first demonstration of how nerve
cells flow from the brain to other areas of the body; the discovery that
a virus can cause cancer in fowl; peptide synthesis; and identification
of DNA as the crucial genetic material.
In 1902 Rockefeller established the General Education Board (GEB) for
the "promotion of education within the United States of America without
the distinction of race, sex or creed." In its active years between 1902
and 1965, the GEB distributed $325 million for the improvement of
education at all levels, with emphasis upon higher education, including
medical schools. In the South, where there was special need, the GEB
helped schools for both white and African-American students. Also, out
of the Board's work with children's clubs in the farm arena grew the 4-H
Club movement and the federal programs of farm and home extension.
In 1909 Rockefeller combined his special interest in the South and his
interest in public health with the creation of the Rockefeller Sanitary
Commission for the Eradication of Hookworm Disease. Its purpose was "to
bring about a cooperative movement of the medical profession, public
health officials, boards of trade, churches, schools, the press, and
other agencies for the cure and prevention of hookworm disease," which
was especially devastating in the South. From its headquarters in
Washington, D.C., the Sanitary Commission launched a massive campaign of
public education and medication in eleven Southern states. It paid the
salaries of field personnel, who were appointed jointly by the states
and the Commission, and sponsored public education campaigns and the
treatment of infected persons. As part of this program, more than 25,000
public meetings were attended by more than 2 million people who were
given the facts about hookworm and its prevention. So successful was its
work that a new agency was created as part of a new Rockefeller
philanthropy to expand the work to other countries and to attack other
diseases both in the South and abroad.
In 1913 Rockefeller established the Rockefeller Foundation (RF) to
"promote the well-being of mankind throughout the world." In keeping
with this broad commitment, the Foundation through the years has given
important assistance to public health, medical education, increasing
food production, scientific advancement, social research, the arts, and
other fields all over the world.
The Foundation's International Health Division expanded the work of the
Sanitary Commission worldwide, working against various diseases in
fifty-two countries on six continents and twenty-nine islands, bringing
international recognition of the need for public health and
environmental sanitation. Its early field research on hookworm, malaria
and yellow fever provided the basic techniques to control these diseases
and established the pattern of modern public health services. The RF
built and endowed the world's first School of Hygiene and Public Health,
at The Johns Hopkins University, and then spent over $25 million in
developing public health schools in the U.S. and in twenty-one foreign
countries. Its agricultural development program in Mexico led to what
has been called the Green Revolution in the advancement of food
production around the world; and the RF provided significant funding for
the International Rice Research Institute in the Philippines. Thousands
of scientists and scholars from all over the world have received RF
fellowships and scholarships for advanced study. The foundation helped
to found the Social Science Research Council and has provided
significant support for such organizations as the National Bureau of
Economic Research, the Brookings Institution, the Council on Foreign
Relations, and Russian Institute at Columbia University. In the arts the
RF has helped establish or support the Stratford Shakespearean Festival
in Ontario, Canada, and the American Shakespeare Festival in Stratford,
Connecticut; Arena Stage in Washington, D.C.; Karamu House in
Cleveland; and Lincoln Center for the Performing Arts in New York.
In addition to creating these corporate philanthropies, Rockefeller
continued to make personal donations. Among others whose activities
received his financial support were various colleges and universities,
including Yale, Harvard, Columbia, Brown, Spelman, Bryn Mawr, Wellesley,
and Vassar; theological schools; the Palisades Interstate Park
Commission; San Francisco Earthquake victims; the Anti-Saloon League;
Rockefeller Park and other parks in Cleveland; Baptist missionary
organizations; and various YMCAs and YWCAs.
John D. Rockefeller and Laura C. Spelman (1839-1915), a teacher, were
married on September 8, 1864, in Cleveland. The Rockefellers had five
children -- four daughters and a son, John D., Jr. (1874-1960), who
inherited much of the family fortune and continued his father's
philanthropic work. Their eldest daughter, Bessie (1866-1906), married
Charles Strong. Their second daughter, Alice (1869-1870), died in
infancy. Alta (1871-1962) married E. Parmalee Prentice, and the youngest
daughter, Edith (1872-1932), married Harold Fowler McCormick.
In the 1870s Rockefeller began to make business trips from Cleveland to
New York. After a time he started bringing along his family for lengthy
stays and, in 1884, he bought a large brownstone house at 4 West 54th
Street, the land of which is now part of the garden of the Museum of
Modern Art. Beginning in the 1890s, the family spent part of their time
at Pocantico Hills, about 25 miles north of New York. For a number of
years the Rockefellers returned during the summer to their Forest Hill
home in East Cleveland. As he grew older, Rockefeller spent several
months each year at his country homes in Lakewood, New Jersey, and
Ormond Beach, Florida.
Rockefeller died on the morning of May 23, 1937, at The Casements, his
home in Ormond Beach. He was 97 years old. He is buried in Lakeview
Cemetery in Cleveland.
In 1859, with $1,000 he had saved and another $1,000 borrowed from his
father, Rockefeller formed a partnership in the commission business with
another young man, Maurice B. Clark. In that same year the first oil
well was drilled at Titusville in western Pennsylvania, giving rise to
the petroleum industry. Cleveland soon became a major refining center of
the booming new industry, and in 1863 Rockefeller and Clark entered the
oil business as refiners. Together with a new partner, Samuel Andrews,
who had some refining experience, they built and operated an oil
refinery under the company name of Andrews, Clark & Co. The firm
also continued in the commission business but in 1865 the partners, now
five in number, disagreed about the management of their business affairs
and decided to sell the refinery to whoever amongst them bid the
highest. Rockefeller bought it for $72,500, sold out his other interests
and, with Andrews, formed Rockefeller & Andrews.
John Davison Rockefeller Sr. (July 8, 1839 – May 23, 1937) was an American business magnate and philanthropist. He was a co-founder of the Standard Oil Company, which dominated the oil industry and was the first great U.S. business trust. Rockefeller revolutionized the petroleum industry, and along with other key contemporary industrialists such as Andrew Carnegie, defined the structure of modern philanthropy. In 1870, he founded Standard Oil Company and actively ran it until he officially retired in 1897.[3]
Youth
John D. Rockefeller, Sr.
Rockefeller Archive Center
John D. Rockefeller, Sr.
John D. Rockefeller was born July 8, 1839, in Richford, New York, about midway between Binghamton and Ithaca. His father, William Avery Rockefeller, was a "pitch man" -- a "doctor" who claimed he could cure cancers and charged up to $25 a treatment. He was gone for months at a time traveling around the West from town to town and would return to wherever the family was living with substantial sums of cash. His mother, Eliza Davison Rockefeller, was very religious and very disciplined. She taught John to work, to save, and to give to charities.
By the age of 12, he had saved over $50 from working for neighbors and raising some turkeys for his mother. At the urging of his mother, he loaned a local farmer $50 at 7% interest payable in one year. When the farmer paid him back with interest the next year Rockefeller was impressed and said of it in 1904: "The impression was gaining ground with me that it was a good thing to let the money be my servant and not make myself a slave to the money…"
From 1852 Rockefeller attended Owego Academy in Owego, New York, where the family had moved in 1851. Rockefeller excelled at mental arithmetic and was able to solve difficult arithmetic problems in his head -- a talent that would be very useful to him throughout his business career. In other subjects Rockefeller was an average student but the quality of the education was very high.
In 1853, the Rockefellers moved to Cleveland, Ohio, and John attended high school from 1853 to 1855. He was very good at math and was on the debating team. The school encouraged public speaking and even though Rockefeller was only average, it was a skill that would prove to useful to him.
Early Business Career: 1855-1863
In the spring of 1855 Rockefeller spent 10 weeks at Folsom's Commercial College -- a "chain College" -- where he learned single- and double-entry bookkeeping, penmanship, commercial history, mercantile customs, banking, and exchange. From his father he had learned how to draw up notes and other business papers. His father was very meticulous in matters of business and believed in the sacredness of contracts.
In August of 1855, at the age of 16, Rockefeller began looking for work in Cleveland as a bookkeeper or clerk. Business was bad in Cleveland at the time and Rockefeller had problems finding a job. He was always neatly dressed in a dark suit and black tie. Cleveland was not a large city in 1855 and Rockefeller could easily visit every business in under a week's time. He returned to many businesses three times. Finally, on September 26, 1855, he got a job as an assistant bookkeeper with Hewitt & Tuttle, commission merchants and produce shippers.
Rockefeller soon impressed his employers with his seriousness and diligence. He was very exacting and scrupulously honest. For example, he would not write out a false bill of lading under any circumstances. He went to great lengths to collect overdue accounts. He was pleasant, persistent, and patient, and he got the company's money from the delinquents. (For all this work, he was not well paid. But whatever he was paid, he always gave to his church and local charities.)
By 1858, Rockefeller had more responsibilities at Hewitt & Tuttle. He arranged complicated transportation deals that typically involved moving a single shipment of freight by railroad, canal, and lake boats. He began to engage in trading ventures on his own account. He was naturally cautious and only undertook a business venture when he calculated that it would be successful. After he carefully weighed a course of action, he would then act quickly and boldly to see it through to fruition. He had iron nerves and would carry through very complicated deals without hesitation. This combination of caution, precision, and resolve soon brought him attention and respect in the broader business community in Cleveland.
On March 1, 1859 -- several months before his 20th birthday -- Rockefeller went into business for himself, forming a partnership with a neighbor, Maurice Clark. Each man put up $2,000 and formed Clark & Rockefeller -- commission merchants in grain, hay, meats, and miscellaneous goods. At the end of the first year of business, they had grossed $450,000, making a profit of $4,400 in 1860 and a profit of $17,000 in 1861. The commission merchant business was very competitive and Clark & Rockefeller's success was due in large part to Rockefeller's natural business abilities.
During the Civil War their business expanded rapidly. Grain prices went up and so did their commissions. Most of their selling was done on commission, so Clark & Rockefeller took no risks from price fluctuations. Rockefeller's style was very precise and calculated. He was not a gambler but a planner. He avoided speculation and refused to make advances or loans.
Rockefeller was extremely hard working. He traveled extensively, drumming up business throughout Ohio, and then would go to the banks and borrow large sums of money to handle the shipments. This aggressive style built the business up every year.
However, by the early 1860s, Rockefeller realized that the future of the commission merchant business in Cleveland was going to be limited. He had become convinced that the railroads were going to become the primary means of transportation for agricultural commodities. This would be to the disadvantage of Cleveland, because its position as an important Lake Erie port was its primary transportation advantage. He saw that the rising grain output of the Midwest and the Northwest of J. J. Hill would change the nature of the business for good. The huge elevators on Lake Michigan and the flour-millers of Minneapolis would be the dominant players in the business. Rockefeller came to believe that the future of Cleveland lay in the collection and shipment of raw industrial materials -- not agricultural commodities. This would allow Cleveland to exploit its geographical advantages -- mid-way between the Eastern seaboard and Chicago -- and accessible to both rail and water transportation. He saw his chance in 1863 -- oil.
Oil Refining 1863-65
On August 27, 1859, Edwin Drake struck oil near Titusville, Pennsylvania, setting off a frenzied oil boom in what soon became known as the "oil regions" of northwestern Pennsylvania. Drake was the employee of a group of New Haven, Connecticut, investors in the Pennsylvania Rock Oil Company. They had obtained a sample of the Pennsylvania oil and had a Yale University chemist analyze it. The chemist determined that the Pennsylvania oil was of very high quality and could be refined into a variety of useful products.
The technology used by Drake was not new. What was new was the idea of drilling for oil -- the idea that you could pump oil out of the ground like you could pump water.
The technology for drilling wells was quite advanced by 1859. To that time, wells were drilled for either water or salt (more accurately, brine which would be refined to get the salt). In the process of drilling for salt all over the United States in the early 19th century it was not uncommon -- especially in the Pennsylvania area -- to get oil seepage into the salt well. Most of the time this was regarded as a nuisance, but some enterprising merchants went into the business of selling the oil in small bottles as a "Natural Remedy" or "Curative Agent."
The technology for refining oil was also known by the early 1850s. Doctor Abraham Gesner, a Canadian, in August 1846 patented a method for distilling kerosene (a name he invented from the Greek "keros" -- wax -- and "elaion" -- oil) from coal. In 1850, a Scottish industrial chemist, James Young, patented a method of obtaining "burning oils" from petroleum through destructive distillation. In 1852 two Boston chemists, Luther and William Atwood, began making lubricants from coal tar. Finally, in 1856, Samuel Downer, a whale-oil merchant, bought out the Atwoods and boosted production to 650,000 gallons of refined oil a year. By 1861, coal-oil lamps were widespread and coal-oil was even made in Cleveland.
Rockefeller began investigating the feasibility of entering the oil refining business in 1862 and the firm of Andrews, Clark & Company was formed in 1863. (Samuel Adams had experience with shale-oil refining, and Clark brought in his brothers.) Probably figuring in Rockefeller's decision to enter the business was the entry into Cleveland later that year of the long-planned Atlantic & Great Western Railroad. The A&GW line went east to Meadville, Pennsylvania, then northeast to Corry, Pennsylvania, and then across the border into New York state, where it connected to the Erie Railroad. The A&GW also had branches into the heart of the oil regions -- Titusville and Franklin. This gave Cleveland two routes to New York City -- the New York Central-Lake Shore system, and the A&GW-Erie connection. This immediately gave Cleveland a transportation advantage over Pittsburgh, which was dominated by the Pennsylvania Railroad.
The Pennsylvania oil was of high quality. One barrel yielded 60-65% illuminating oil, 10% gasoline, 5-10% benzoyl or naphtha (a volatile inflammable liquid used as a solvent in dry cleaning, varnish making, etc.), with the remainder tar and wastes.
Rockefeller abhorred waste and devoted considerable energy to increasing the efficiency of his refining business. He believed that the secret of success was attention to detail -- to wringing little efficiencies out of every aspect of his business. He hired his own plumber and bought his own plumbing supplies. He built his own cooperage shop and made his own barrels for the oil. He bought tracts of white-oak timber for making the barrels. Instead of transporting the freshly cut green timber directly to the cooperage shop, he had kilns built on the timber tracts to dry the wood on site, to reduce the shipping weight of the lumber. He bought his own wagons and horses to transport the wood to the cooperage shop in Cleveland. (We would call this "vertical integration" today.)
Oil Refining 1865-1870
In February 1865, at the age of 24, Rockefeller bought out the Clark brothers (Maurice Clark had brought his brothers into the refining business) for $72,500 and gained complete control of the business. The Clarks had resisted borrowing money to expand and Rockefeller was convinced of the correctness of his course. He immediately moved to greatly extend his enterprise. He borrowed heavily and plowed all his profits back into the business in order to expand it further, and took decisive steps to strengthen and increase the efficiency of all aspects of the firm.
In 1866, John D. brought his brother William Rockefeller into the partnership and they built another refinery in Cleveland which they named the Standard Works. They also opened a New York City office with William Rockefeller in charge, to handle the export business, which eventually became larger than the domestic business.
Henry M. Flagler
In 1867, Henry M. Flagler (1830-1913) became a partner, and Rockefeller, Andrews & Flagler was formed. Flagler had left school at age 14. Not wanting to burden his poor family any further, he walked to the Erie Canal in 1844 and took it to Lake Erie, and then went to Ohio via a lake steamer. Flagler and Rockefeller had met years earlier in Bellevue, Ohio, when Rockefeller was buying grain for his commission house and Flagler was a grain merchant. Flagler had gone into the salt well business but went broke in 1865. He began to recoup his fortune in 1865 in Cleveland as a manufacturer of oil barrels and had an office in the same building as Rockefeller. Flagler and Rockefeller were very much alike -- ambitious and shrewd, with a taste for expansion. Flager's wife's uncle, Stephen V. Harkness, became a silent partner and made substantial investments in the partnership, though he never took an active part in running the business. These investments by Harkness and Flagler were used to expand the business even further.
By 1868, Rockefeller, Andrews & Flagler was the largest refiner in the world. Flagler and Rockefeller understood that the only way to make profits consistently in oil refining was to make the business as large as possible and to utilize all their "waste" products. The refining process during this early period was very primitive -- refining consisted simply of cooking the oil and purifying it somewhat. The physical plant was simple: some large vats, stills, the piping, and a few chemicals. A small refinery could be set up with just $10,000, and a large one with $50,000. In modern language, the barriers to entry were very, very low. It would be like setting up a small business in today's business climate.
Consequently, if the price of kerosene was high, even the small and inefficient refiners could make good money. So, even when the price of kerosene fell sharply, driving some refiners out of business, the entry costs were so low that when times were good many small operators could enter the business cheaply, making it a very competitive market.
It was the logic of this competitive structure that determined Rockefeller and Flagler's course of action.
They built high-quality, larger, better-planned refineries. They built permanent facilities using the best materials available.
They owned their own cooperage (barrel making) plant, their own white-oak timber and drying facilities, and bought their own hoop iron. Consequently, they cut the cost of a barrel from about $3.00 to less than $1.50.
They manufactured their own sulfuric acid (which was used in the purification process) and devised technology to recover it for re-use.
They owned their own drayage service, consisting of at least 20 wagons in 1868.
They owned their own warehouses in New York City and their own boats on the Hudson and East Rivers to transport their oil.
They were the first to ship oil via tank cars (albeit big wooden tubs mounted in pairs on flat cars -- later to evolve into the modern form of a tank car). And they owned their own fleet of tank cars.
They built huge holding tanks near their refineries for storing crude and refined oil, with the equipment for drawing off the oil from the tank cars into the holding tanks.
Their huge size made it economical to build the necessary physical plant to handle all the "waste" products from the refining of kerosene. They began manufacturing high quality lubricating oil that quickly replaced lard oil as a lubricant for machinery. Gasoline, which many refiners surreptitiously dumped into the Cuyahoga River at night (the river often caught fire), Rockefeller and Flagler used as fuel. They manufactured benzene (used as a cleaning fluid; a solvent for fat, gums, and resin; and to make varnish), paraffin (insoluble in water, used for making candles, waterproofing paper, preservative coatings, etc.), and petrolatum (used as a basis for ointments and as a protective dressing; as a local application in inflammation of mucous membrane; as an intestinal lubricant, etc. -- white petrolatum later marketed under the brand name Vaseline). They shipped naphtha (volatile inflammable liquid used as a solvent in dry cleaning and in wax preparations, varnish and paint making, burning fluid for illumination, and as a fuel for motors) to gas plants and other users.
In short, nothing was left to chance, nothing was guessed at, nothing left uncounted and measured. Efficiencies down to the smallest detail of the business were the order of the day. Economy, precision, and foresight were the cornerstones of their success.
The sheer size of the business and the fact that Cleveland was served by two railroad systems -- the New York Central (via the Lake Shore) and the Erie (via the Atlantic & Great Western -- which Jay Gould bought in 1868) -- and had access to the Lake for water-borne shipping, gave Rockefeller and Flagler tremendous leverage with the railroads. Consequently, Flagler was able to negotiate big rebates from the railroads. The combination of size, efficiency, and the rebates gave Rockefeller and Flagler an advantage over other refiners that they would never relinquish.
The railroad situation benefited not only Rockefeller and Flagler; other Cleveland refiners also benefited at the expense of the refiners in Pittsburgh. Pittsburgh was a prisoner to the Pennsylvania Railroad, which had a monopoly in that city. The Pennsylvania Railroad wanted to ship everything to Philadelphia because it meant more money for them. Consequently, Cleveland refiners had a built-in advantage over Pittsburgh. In this regard, the railroads -- the Erie and New York Central -- were not "victims" of the "crooked" refiners; rather, the railroads looked upon the refiners as associates and co-workers. They had a commonality of interests.
The Standard Oil Company: 1870-1882
On January 10, 1870, the Standard Oil Company of Ohio was created by John D. Rockefeller (30%), William Rockefeller (13.34%), Henry Flagler (16.67%), Samuel Andrews (16.67%), Stephen Harkness (13.34%), and O. B. Jennings (brother-in-law of William Rockefeller, 10%). It held about 10% of the oil business at the time of its formation.
In Rockefeller's eyes, the state of the oil business was chaotic. Because entry costs were so low in both oil drilling and oil refining, the market was glutted with crude oil with an accompanying high level of waste. In his view, the theory of free competition did not work well when there was a mix of very large, efficient firms and many medium and small firms. His view was that the weak firms, in their attempts to survive, drove prices down below production costs, hurting even the well-managed firms such as his own.
Although his economics may be suspect in modern eyes, his solution -- a market with a few (maybe one!) large, vertically integrated firms -- in effect an oligopolistic market -- was what other industrial sectors eventually evolved into. What makes oil stand out is that it happened by design -- as the result of a plan formulated by a single person -- John D. Rockefeller.
During 1871, Rockefeller formulated his plan for consolidating all oil refining firms into one great organization with the aim of eliminating excess capacity and price-cutting. Although no written records exist, both Rockefeller and Flagler 30 years later claimed this was when they worked out the master plan, which they later implemented. The claim that the plan was formulated in 1871 is evidenced by the fact that all the major Cleveland banks joined the Standard Oil organization in 1871 and later backed Rockefeller and Flagler to the hilt in their rapid expansion.
The South Improvement Scheme
What interrupted Rockefeller and Flagler's careful planning was the emergence of the South Improvement scheme of 1871. Tom Scott of the Pennsylvania Railroad came up with the idea. The scheme was inspired by the Anthracite Railroad combination of 1868-71 in which five railroads and two coal companies bought up all the coal pits along the five railroads in order to control output and prices.
The South Improvement Company had been created by the Pennsylvania Legislature in 1870 and its charter allowed the Company to hold the stocks of other companies outside the state. This was an unusual power at the time and made it ideal for Scott's scheme. Scott arranged for the purchase of the charter by a group of Philadelphia and Pittsburgh refiners with Scott in the background.
The scheme was essentially a plan to unite the oil-carrying railroads in a pool; to unite the refiners in an association, the South Improvement Company; and to tie the two elements together by agreements which would stop "destructive" price-cutting and restore railroad freight charges to a profitable level.
To enforce the cooperation of refiners, a set of rebates was agreed to for participating refiners. This alone would have undoubtedly forced all the refiners into the combine, but the scheme did not stop there. In what turned out to be a public relations disaster, the participants decided to add a drawback on every barrel shipped by a non-participant equal to the ordinary rebate. In effect, this would be a tax on non-participants, the proceeds of which would be transferred to the participating oil refiners.
What the planners forgot, however, was to include the producers in the scheme as well. Despite efforts to reassure the drillers in the Oil Regions that the scheme would benefit them as well by keeping prices up, the Oil Regions Men revolted and organized an effective boycott of all the refiners and railroads they suspected of being part of the scheme. Consequently, the scheme collapsed in 1872 before it was ever implemented.
Subsequent historians repeated the view of many at the time that Rockefeller had been one of the originators of the South Improvement Scheme. In fact he had not been, but he and Flagler did agree to participate, and worked hard to set up the scheme. Rockefeller's most important error of his career was to not go public at the time with his side of the story. This was the first time that a broad public became aware of Rockefeller and the episode was to forever tarnish his reputation. He said of it later, "Our silence encouraged the wildest romancers to spread wild tales about us;" and on another occasion, "I shall never cease to regret that at that time we never called in the reporters."
In December 1871, during the dust-up over the South Improvement Scheme, Rockefeller and Flagler set in motion their plan to consolidate the industry. They began by buying up all their competitors in Cleveland. The strategy and tactics were Rockefeller’s and he handled the negotiations with the rival refiners personally. He began with the strongest refineries first. He believed that if he had bought up the weak refineries first then he would be faced with higher prices later and stiffer resistance. Consequently, he approached the strongest first and bought them out.
His technique was always the same. The merger would be effected by an increase in the capitalization of The Standard Oil. The rival refinery would be appraised and the owners would be given Standard Oil stock in proportion to the value of their property and good will and they would be made partners in Standard Oil. The more talented owners would also be brought into the Standard Oil management. If they insisted upon cash they received it.
Later some owners who had been bought out complained to the press that they had been treated unfairly. The evidence is overwhelming that the Standard’s rivals were paid fair -- even generous -- prices for their property, and if they had the wisdom to take Standard Oil stock, they ended up very rich indeed.
By March or April 1872, Rockefeller had bought up and/or merged with almost all the refineries in Cleveland. The inefficient and poorly constructed refineries were dismantled, while the better-quality ones were upgraded to Rockefeller and Flagler’s standards.
After the conquest of Cleveland, the Standard inexorably expanded. All the transactions were kept as secret as possible. The leaders of the Standard were so successful in this secrecy at times that many rival independent refiners were totally unaware of what was going on.
In 1872, Jabez A. Bostwick was brought into the Standard along with his important oil facilities on Long Island and on New York Harbor. In 1873, Standard acquired Devoe Manufacturing Company (Long Island) and Chess, Carley and its important distribution system in the Kentucky region (Louisville, KY). In 1874, Standard began building its own pipeline system using Bostwick & Co.
The teamsters, men who drove commercial wagons drawn by horse-teams, fought pipelines tooth and nail, but were destined to lose because it was so much cheaper and easier for the producers to send their crude through pipes as opposed to wagons. It was a short logical step to extend those pipelines directly to refineries. Rockefeller made a deal with the Erie Railroad and gained control of important terminal facilities in New York harbor in exchange for shipping half of Standard’s oil on the Erie.
The Standard expanded into the Pennsylvania Oil Regions, gaining control of the Imperial Refinery near Oil City and bringing J.J. Vandergrift into the Standard management. Two large refineries in Titusville joined the Standard and John Archbold (later the President of Standard Oil) was brought into the management. The Standard expanded into Pittsburgh by merging Warden, Frew & Co. and Lockhart, Frew & Co., thereby acquiring half the refining capacity of Pittsburgh. The Standard expanded into Philadelphia by buying the largest refinery.
In 1875, the Standard bought more pipelines and firms in the oil buying business and merged them all into the United Pipe Lines in 1877. Flagler and Rockefeller negotiated an agreement with the railroads: the Pennsylvania Railroad would carry 51% of Standard Oil shipments; the Erie 20%; the NY Central 20%; and the Baltimore & Ohio 9%; and obtained rebates from all the railroads for being an "evener" (that is, the Standard was charged with making certain that the railroads all got their "fair" share).
In 1875-76, Johnson N. Camden (later a senator from West Virginia) came into the Standard secretly and moved to buy up all the West Virginia oil supply to squeeze the Pittsburgh independents. By 1876 Camden gained control of most of the West Virginia refineries.
In 1877, Standard bought the Columbia Conduit Co. of PA and gained control of its pipelines and refineries. Columbia had tried to bypass the Pennsylvania Railroad by building a pipeline from the Oil Regions down to the new B&O railroad line near Pittsburgh. The Pennsylvania Railroad used armed guards to prevent them from laying a pipeline under its right-of-way north of Pittsburgh. The Standard gained control of most of the property of the Empire Transportation Company -- a subsidiary of the Pennsylvania Railroad that had its own fleet of tank cars, pipelines, lake steamers, and terminals in New York harbor. The Empire had briefly threatened the Standard, but Rockefeller built 600 new tank cars, cut prices, and cancelled all his shipments over the Pennsylvania Railroad. The railroad capitulated and sold Rockefeller the Empire's assets.
In 1877-78, the Standard and the trunk lines agreed on a new split: Pennsylvania Railroad 47%; NY Central 21%; Erie 21%; B&O 11%. New York City was to get 63% of the total traffic and Baltimore and Philadelphia 37%. On refined oil, non-Standard companies shipping from Cleveland, Pittsburgh, and Titusville paid $1.44.5 per barrel while the Standard paid $.80!
In 1878, the Standard forced the railroads to pay a drawback of 20-35 cents a barrel of crude oil shipped by any other party. In effect, this was a tax levied by the Standard upon its competitors. This combination of rebates and "taxes" (some authors dub this a "drawback" -- but that term is also used to refer to a specific type of rebate) is what forced the remaining independent refiners to capitulate to the Standard. Production increased in the Pennsylvania Oil Regions because of a large discovery in the Bradford area. Standard was forced to frantically build as many large holding tanks as possible to hold the market glut of oil.
By 1879, the Standard Oil Company did about 90 percent of the refining in the United States, with almost 70 percent being exported overseas. The business had become so large and so complex that Rockefeller only dealt with the major problems and the larger outlines of his affairs. Rockefeller was only 40 years old.
The Standard’s only serious competitor -- the Tidewater Pipe-Line Company (later the Tidewater Oil Company) -- emerged in 1879-83. It took Rockefeller by surprise and succeeded in building a pipeline from the Oil Regions east across northern Pennsylvania to Williamsport, where the oil was transferred to the Reading Railroad. The Reading then took the oil down to a refinery at Chester, Pennsylvania on the Delaware Bay. Rockefeller tried to gain control of Tidewater but failed, and his rival had about 10% of the market in 1888.
The Standard Oil Trust: 1882-1892
On January 2, 1882 the Standard Oil Trust was formed. Attorney Samuel Dodd came up with the idea of a trust. A Board of Trustees was set up and all the Standard properties were placed in its hands. Every stockholder received 20 Trust certificates for each share of Standard Oil stock, and all the profits of the component companies were sent to the nine trustees who determined the dividends. The nine trustees elected the directors and officers of all the component companies.
The Trust was capitalized quite conservatively at $70,000,000 -- the true value was about $200,000,000 (no stock watering at the Standard). The nine Trustees controlled 23,314 of the 35,000 shares with J.D. Rockefeller holding 9,585 shares.
Rockefeller, at age 43, was the leader of the Trust because he was "primus inter pares" (first among his peers), not a dictator. As such, he could not dictate policy even when he felt strongly that he was right. An example of this was the Lima Oil field in Ohio. The field had been discovered in the early 1880s. The problem was that the oil was "sour" -- that is, it had a very high sulfur content so it smelled like rotten eggs. Even worse, when it was refined into kerosene and used in lamps it produced too much soot, which coated the lamp chimneys. Rockefeller wanted to buy up as much of the oil as possible and worry about solving the sulfur problem later. The other directors were unenthusiastic about this policy and John Archbold began quietly selling some of his Trust shares in the Standard. By 1888, the Standard owned 40,000,000 barrels of the Lima oil, which were stored in huge tank farms at the fields. Rockefeller hired a great chemist, Herman Frasch, who, with the aid of talented Standard engineers, devised a process using copper oxides to remove the sulfur from the oil. The result was a bonanza for the Standard, vindicating Rockefeller’s judgement.
By 1890, The Standard had set up an elaborate nationwide distribution system that reached nearly every American town. By 1904, 80% of American towns were served by Standard Oil carts that delivered the various products directly to businesses and homes. Standard Oil’s campaign to dominate even the smallest of the retail markets is probably the single most important reason that company became so disliked by the American public. The Standard was aggressive in its marketing practices and tried to force all grocery and hardware stores that sold kerosene and lubricants to sell only Standard products. This policy -- though successful in the short run -- made the Standard widely unpopular and simply increased its vulnerability to political attack.
On March 21, 1892 the Trust was formally dissolved. The Attorney General of Ohio had brought suit against the Trust in 1890 and it lost in 1892. Each trust certificate was to be exchanged for the proportioned share of stock in the 20 component companies of the Standard. The irony is that this had no practical effect on the Combination. The same men were still in charge, only now they were simply the majority shareholders of all the component companies.
Rockefeller Exits: 1892-1897
During 1891-92 all the evidence suggests that Rockefeller had a partial nervous breakdown from overwork. He lost all of his hair, including his eyebrows, and suffered from ill health in the early 1890s.
During this period Rockefeller's wealth had increased to such an extent that his major problem was what to do with it all. He solved this problem by hiring Frederick T. Gates in September of 1891 as a full-time manager of his fortune. By this time, Rockefeller was literally inundated with appeals from individuals and charities for funds. Gates not only removed this burden; he also oversaw all of Rockefeller’s investments, which were becoming huge in their own right. For example, by 1897 Rockefeller owned large holdings of the Missabe iron range in Minnesota, a railroad to carry the ore to Lake Superior, and a fleet of huge ore-carrying lake steamers. In 1901 Rockefeller sold his iron ore-related business to J.P. Morgan for $80,000,000 with an estimated profit of at least $50,000,000 -- a huge fortune in its own right, but it was just one of his investments. Morgan added the Rockefeller properties to the U.S. Steel Corporation.
By 1896, Rockefeller stopped going to his office daily and in 1897 he retired, at the age of 58. He took part in some management activity until 1899 but none to speak of thereafter. John Archbold ran Standard Oil from the mid-1890s onward. Archbold disliked prominence and asked Rockefeller to remain as the nominal president of Standard. Not publicly announcing his retirement was a great mistake on Rockefeller's part. Rockefeller had resisted the temptation to exploit the Standard's near-monopoly position by raising prices "too" much. Although Rockefeller's pricing policies did result in some "monopoly profits" for the Standard, they were fairly mild. Not so Archbold. He raised prices aggressively, and the dividends rolled in. The consequence was that Rockefeller got all the blame for the policies even though he had almost no further role in management.
Retirement and Philanthropy
From the mid-1890s until his death in 1937, Rockefeller’s activities were philanthropic. Rockefeller's fortune peaked in 1912 at almost $900,000,000, but by that time he had already given away hundreds of millions of dollars. His son, John D. Rockefeller, Jr., in 1897 joined Gates in the full time management of the fortune.
The University of Chicago -- which Rockefeller was largely responsible for creating -- alone received $75,000,000 by 1932.
He set up, at the urging of his son, the Rockefeller Institute for Medical Research (now Rockefeller University) and his gifts to it totaled $50,000,000 by the 1930s.
He founded the General Education Board in 1903 (later the Rockefeller Foundation). The General Education Board helped to establish high schools throughout the South by providing free professional advice on improving instruction and education. The effort was a cooperative one, and local money was used to build the high schools. In 1919, Rockefeller donated $50,000,000 to the Board to raise academic salaries, which were very low in the wake of WWI.
The Rockefeller Foundation was officially established in 1913 and Rockefeller transferred $235,000,000 to it by 1929.
In 1909, Rockefeller established the Rockefeller Sanitary Commission which was largely responsible for eradicating hookworm in the South by 1927.
When Rockefeller died, on May 23, 1937, his estate totaled only $26,410,837. He had given most of his property to his philanthropies and to his son and other heirs.
Rockefeller was a Schumpeteran entrepreneur. He clearly changed "the stream of the allocation of resources over time by introducing new departures into the flow of economic life" by creating the modern oil industry. His emphasis on size and efficiency and the use of modern chemistry resulted in the development of a wide variety of new products that made the lives of ordinary people better as a consequence. He made light cheap for untold millions and his great creation was ready, willing, and able to provide the cheap gasoline when it was needed, thus ushering in the age of the automobile in America.
Last, but not least, he set the standard for philanthropy. Just the eradication of hookworm in the South alone would merit his place as one of the great humanitarians of the 20th Century. But his reputation was so sullied that he never received the credit that he was due for this great act on behalf of humankind.
Rockefeller founded Standard Oil as an Ohio partnership with his brother William along with Henry Flagler, Jabez A. Bostwick, chemist Samuel Andrews, and a silent partner, Stephen V. Harkness. As kerosene and gasoline grew in importance, Rockefeller's wealth soared and he became the world's richest man and the first American worth more than a billion dollars, controlling 90% of all oil in the United States at his peak.[a] Adjusting for inflation, his fortune upon his death in 1937 stood at $336 billion, accounting for more than 1.5% of the national economy, making him the richest person in US history.[4][5][6][7]
Rockefeller spent the last 40 years of his life in retirement at his estate, Kykuit, in Westchester County, New York. His fortune was mainly used to create the modern systematic approach of targeted philanthropy. He was able to do this through the creation of foundations that had a major effect on medicine, education and scientific research.[8] His foundations pioneered the development of medical research and were instrumental in the eradication of hookworm and yellow fever.
Rockefeller was also the founder of both the University of Chicago and Rockefeller University and funded the establishment of Central Philippine University in the Philippines. He was a devoted Northern Baptist and supported many church-based institutions. Rockefeller adhered to total abstinence from alcohol and tobacco throughout his life.[9] He was a faithful congregant of the Erie Street Baptist Mission Church, where he taught Sunday school, and served as a trustee, clerk, and occasional janitor.[10][11] Religion was a guiding force throughout his life, and Rockefeller believed it to be the source of his success. Rockefeller was also considered a supporter of capitalism based in a perspective of social darwinism, and is often quoted saying "The growth of a large business is merely a survival of the fittest."
John D. Rockefeller (1839-1937), founder of the Standard Oil Company,
became one of the world’s wealthiest men and a major philanthropist.
Born into modest circumstances in upstate New York, he entered the
then-fledgling oil business in 1863 by investing in a Cleveland, Ohio,
refinery. In 1870, he established Standard Oil, which by the early 1880s
controlled some 90 percent of U.S. refineries and pipelines. Critics
accused Rockefeller of engaging in unethical practices, such as
predatory pricing and colluding with railroads to eliminate his
competitors, in order to gain a monopoly in the industry. In 1911, the
U.S. Supreme Court found Standard Oil in violation of anti-trust laws
and ordered it to dissolve. During his life Rockefeller donated more
than $500 million to various philanthropic causes.
John D. Rockefeller (1839-1937), founder of the Standard Oil Company,
became one of the world’s wealthiest men and a major philanthropist.
Born into modest circumstances in upstate New York, he entered the
then-fledgling oil business in 1863 by investing in a Cleveland, Ohio,
refinery. In 1870, he established Standard Oil, which by the early 1880s
controlled some 90 percent of U.S. refineries and pipelines. Critics
accused Rockefeller of engaging in unethical practices, such as
predatory pricing and colluding with railroads to eliminate his
competitors, in order to gain a monopoly in the industry. In 1911, the
U.S. Supreme Court found Standard Oil in violation of anti-trust laws
and ordered it to dissolve. During his life Rockefeller donated more
than $500 million to various philanthropic causes.
John Davison Rockefeller Sr. (July 8, 1839 – May 23, 1937) was an American
business magnate and philanthropist. He was a co-founder of the
Standard Oil Company, which dominated the oil industry and was the first great U.S. business trust. Rockefeller revolutionized the
petroleum industry, and along with other key contemporary industrialists such as
Andrew Carnegie, defined the structure of modern
philanthropy. In 1870, he founded Standard Oil Company and actively ran it until he officially retired in 1897.
[3]
Rockefeller founded Standard Oil as an
Ohio partnership with his brother
William along with
Henry Flagler,
Jabez A. Bostwick, chemist
Samuel Andrews, and a
silent partner,
Stephen V. Harkness. As
kerosene and
gasoline grew in importance, Rockefeller's wealth soared and he became the world's richest man and the first American worth more than a
billion dollars, controlling 90% of all oil in the United States at his peak.
[a] Adjusting for
inflation, his fortune upon his death in 1937 stood at $336 billion, accounting for more than 1.5% of the national economy, making him
the richest person in US history.
[4][5][6][7]
Rockefeller spent the last 40 years of his life in retirement at his estate,
Kykuit, in
Westchester County,
New York.
His fortune was mainly used to create the modern systematic approach of
targeted philanthropy. He was able to do this through the creation of
foundations that had a major effect on medicine, education and
scientific research.
[8] His foundations pioneered the development of medical research and were instrumental in the eradication of
hookworm and
yellow fever.
Rockefeller was also the founder of both the
University of Chicago and
Rockefeller University and funded the establishment of
Central Philippine University in the
Philippines. He was a devoted
Northern Baptist
and supported many church-based institutions. Rockefeller adhered to
total abstinence from alcohol and tobacco throughout his life.
[9]
He was a faithful congregant of the Erie Street Baptist Mission Church,
where he taught Sunday school, and served as a trustee, clerk, and
occasional janitor.
[11]
Religion was a guiding force throughout his life, and Rockefeller
believed it to be the source of his success. Rockefeller was also
considered a supporter of
capitalism based in a perspective of
social darwinism, and is often quoted saying "The growth of a large business is merely a
survival of the fittest."
He was America's first billionaire.
In a pure sense, the goal of any capitalist is to make money. And John D. Rockefeller could serve as the poster child for capitalism. Overcoming humble beginnings, Rockefeller had the vision and the drive to become the richest person in America.
At the turn of the century, when the average worker earned $8 to $10 per week, Rockefeller was worth millions.
Robber Baron or Captain of Industry?
John D. Rockefeller
John D. Rockefeller (1839-1937)
What was his secret? Is he to be placed on a pedestal for others as a "captain of industry?" Or should he be demonized as a "robber baron." A robber baron, by definition, was an American capitalist at the turn of the 19th century who enriched himself upon the sweat of others, exploited natural resources, or possessed unfair government influence.
Whatever conclusions can be drawn, Rockefeller's impact on the American economy demands recognition.
Rockefeller was born in 1839 in Moravia, a small town in western New York. His father practiced herbal medicine, professing to cure patients with remedies he had created from plants in the area. John's mother instilled a devout Baptist faith in the boy, a belief system he took to his grave. After being graduated from high school in 1855, the family sent him to a Cleveland business school.
Young John Rockefeller entered the workforce on the bottom rung of the ladder as a clerk in a Cleveland shipping firm. Always thrifty, he saved enough money to start his own business in produce sales. When the Civil War came, the demand for his goods increased dramatically, and Rockefeller found himself amassing a small fortune.
He took advantage of the loophole in the Union draft law by purchasing a substitute to avoid military service. When Edwin Drake discovered oil in 1859 in Titusville, Pennsylvania, Rockefeller saw the future. He slowly sold off his other interests and became convinced that refining oil would bring him great wealth.
Waste Not...
Rockefeller introduced techniques that totally reshaped the oil industry. In the mid-19th century, the chief demand was for kerosene. In the refining process, there are many by-products when crude oil is converted to kerosene. What others saw as waste, Rockefeller saw as gold. He sold one byproduct paraffin to candlemakers and another byproduct petroleum jelly to medical supply companies. He even sold off other "waste" as paving materials for roads. He shipped so many goods that railroad companies drooled over the prospect of getting his business.
Rockefeller demanded rebates, or discounted rates, from the railroads. He used all these methods to reduce the price of oil to his consumers. His profits soared and his competitors were crushed one by one. Rockefeller forced smaller companies to surrender their stock to his control.
Standard Oil — a Trust-worthy Company?
Rockefeller
John D. Rockefeller had to perform a delicate balancing act to maintain his reputation as a philanthropist while living the live of a wealthy businessman.
This sort of arrangement is called a trust. A trust is a combination of firms formed by legal agreement. Trusts often reduce fair business competition. As a result of Rockefeller's shrewd business practices, his large corporation, the Standard Oil Company, became the largest business in the land.
As the new century dawned, Rockefeller's investments mushroomed. With the advent of the automobile, gasoline replaced kerosene as the number one petroleum product. Rockefeller was a bona fide billionaire. Critics charged that his labor practices were unfair. Employees pointed out that he could have paid his workers a fairer wage and settled for being a half-billionaire.
Before his death in 1937, Rockefeller gave away nearly half of his fortune. Churches, medical foundations, universities, and centers for the arts received hefty sums of oil money. Whether he was driven by good will, conscience, or his devout faith in God is unknown. Regardless, he became a hero to many enterprising Americans.
John D. Rockefeller: Early Years and Family
John Davison Rockefeller, the son of a traveling salesman, was born on July 8, 1839, in Richford, New York. Industrious even as a boy, the future oil magnate earned money by raising turkeys, selling candy and doing jobs for neighbors. In 1853, the Rockefeller family moved to the Cleveland, Ohio, area, where John attended high school then briefly studied bookkeeping at a commercial college.
Did You Know?
One of the charitable organizations established by John D. Rockefeller, Sr. was the Rockefeller Sanitary Commission, founded in 1909. Less than 20 years after its creation, the Commission had achieved its primary goals, the successful eradication of hookworm disease across the southern United States.
In 1855, at age 16, he found work as an office clerk at a Cleveland commission firm that bought, sold and shipped grain, coal and other commodities. (He considered September 26, the day he started the position and entered the business world, so significant that as an adult he commemorated this “job day” with an annual celebration.) In 1859, Rockefeller and a partner established their own commission firm. That same year, America’s first oil well was drilled in Titusville, Pennsylvania. In 1863, Rockefeller and several partners entered the booming new oil industry by investing in a Cleveland refinery.
In 1864, Rockefeller married Laura Celestia “Cettie” Spelman (1839-1915), an Ohio native whose father was a prosperous merchant, politician and abolitionist active in the Underground Railroad. (Laura Rockefeller became the namesake of Spelman College, the historically black women’s college in Atlanta, Georgia, that her husband helped finance.) The Rockefellers went on to have four daughters (three of whom survived to adulthood) and one son.
John D. Rockefeller: Standard Oil
Early life
Rockefeller was the second of six children and eldest son born in Richford, New York, to con artist William Avery "Bill" Rockefeller (November 13, 1810 – May 11, 1906) and Eliza Davison (September 12, 1813 – March 28, 1889). His siblings were Lucy (1838–1878), William Jr. (1841–1922), Mary (1843–1925), and twins Franklin (Frank) (1845–1917) and Frances (1845–1847). His father was of English and German descent while his mother was of Scots-Irish descent. Bill was first a lumberman and then a traveling salesman who identified himself as a "botanic physician" and sold elixirs. The locals referred to the mysterious but fun-loving man as "Big Bill" and "Devil Bill".[14] He was a sworn foe of conventional morality who had opted for a vagabond existence and who returned to his family infrequently. Throughout his life, Bill became notorious for shady schemes.[15] In between the births of Lucy and John, Bill and his mistress/housekeeper Nancy Brown had a daughter named Clorinda (c. 1838–?, died young). Between John and William Jr.'s births, Bill and Nancy had another daughter, Cornelia (c. 1840–?).[16]
Eliza, a homemaker and devout Baptist, struggled to maintain a semblance of stability at home, as Bill was frequently gone for extended periods. She also put up with his philandering and his double life, which included bigamy.[17] Thrifty by nature and necessity, she taught her son that "willful waste makes woeful want".[18] Young Rockefeller did his share of the regular household chores and earned extra money raising turkeys, selling potatoes and candy, and eventually lending small sums of money to neighbors. He followed his father's advice to "trade dishes for platters" and always get the better part of any deal. Bill once bragged, "I cheat my boys every chance I get. I want to make 'em sharp."[19]
When he was a boy, his family moved to Moravia, NY, and in 1851 to Owego, where he attended Owego Academy. In 1853, his family moved to Strongsville, a suburb of Cleveland. Rockefeller attended Cleveland's Central High School and then took a ten-week business course at Folsom's Commercial College, where he studied bookkeeping.[20]
In spite of his father's absences and frequent family moves, young John was a well-behaved, serious, and studious boy. His contemporaries described him as reserved, earnest, religious, methodical, and discreet. He was an excellent debater and expressed himself precisely. He also had a deep love of music and dreamed of it as a possible career.[21] Early on, he displayed an excellent mind for numbers and detailed accounting.
Rockefeller at age 18, ca. 1857
Pre-Standard Oil career
As a bookkeeper
In September 1855, when Rockefeller was sixteen, he got his first job as an assistant bookkeeper working for a small produce commission firm called Hewitt & Tuttle. He worked long hours and delighted, as he later recalled, in "all the methods and systems of the office."[22] He was particularly adept at calculating transportation costs, which served him well later in his career. The full salary for his first three months' work was $50 (50 cents a day).[23] As a youth, Rockefeller reportedly said that his two great ambitions were to make $100,000 and to live 100 years.[24]
Business partnership
In 1859, Rockefeller went into the produce commission business with a partner, Maurice B. Clark, and they raised $4,000 in capital. Rockefeller went steadily ahead in business from there, making money each year of his career.[25] After wholesale foodstuffs, the partners built an oil refinery in 1863 in "The Flats", then Cleveland's burgeoning industrial area. The refinery was directly owned by Andrews, Clark & Company, which was composed of Clark & Rockefeller, chemist Samuel Andrews, and M. B. Clark's two brothers. The commercial oil business was then in its infancy. Whale oil had become too expensive for the masses, and a cheaper, general-purpose lighting fuel was needed.[26]
While his brother Frank fought in the Civil War, Rockefeller tended his business and hired substitute soldiers. He gave money to the Union cause, as did many rich Northerners who avoided combat.[27] Rockefeller was an abolitionist who voted for President Abraham Lincoln and supported the then new Republican Party.[28] As he said, "God gave me money", and he did not apologize for it. He felt at ease and righteous following John Wesley's dictum, "gain all you can, save all you can, and give all you can."[29]
In February 1865, in what was later described by oil industry historian Daniel Yergin as a "critical" action, Rockefeller bought out the Clark brothers for $72,500 at auction and established the firm of Rockefeller & Andrews. Rockefeller said, "It was the day that determined my career."[30] He was well positioned to take advantage of postwar prosperity and the great expansion westward fostered by the growth of railroads and an oil-fueled economy. He borrowed heavily, reinvested profits, adapted rapidly to changing markets, and fielded observers to track the quickly expanding industry.[31]
Beginning in the oil business
In 1866, his brother William Rockefeller Jr. built another refinery in Cleveland and brought John into the partnership. In 1867, Henry M. Flagler became a partner, and the firm of Rockefeller, Andrews & Flagler was established. By 1868, with Rockefeller continuing practices of borrowing and reinvesting profits, controlling costs, and using refineries' waste, the company owned two Cleveland refineries and a marketing subsidiary in New York; it was the largest oil refinery in the world.[32][33] Rockefeller, Andrews & Flagler was the predecessor of the Standard Oil Company.
Standard Oil
Main article: Standard Oil
Founding and early growth
John D. Rockefeller ca. 1875
By the end of the American Civil War, Cleveland was one of the five main refining centers in the U.S. (besides Pittsburgh, Pennsylvania, New York, and the region in northwestern Pennsylvania where most of the oil originated). In June 1870, Rockefeller formed Standard Oil of Ohio, which rapidly became the most profitable refiner in Ohio. Standard Oil grew to become one of the largest shippers of oil and kerosene in the country. The railroads were fighting fiercely for traffic and, in an attempt to create a cartel to control freight rates, formed the South Improvement Company in collusion with Standard and other oil men outside the main oil centers.[34] The cartel received preferential treatment as a high-volume shipper, which included not just steep rebates of up to 50% for their product but also rebates for the shipment of competing products.[34] Part of this scheme was the announcement of sharply increased freight charges. This touched off a firestorm of protest from independent oil well owners, including boycotts and vandalism, which eventually led to the discovery of Standard Oil's part in the deal. A major New York refiner, Charles Pratt and Company, headed by Charles Pratt and Henry H. Rogers, led the opposition to this plan, and railroads soon backed off. Pennsylvania revoked the cartel’s charter, and non-preferential rates were restored for the time being.[35]
Undeterred, though vilified for the first time by the press, Rockefeller continued with his self-reinforcing cycle of buying competing refiners, improving the efficiency of his operations, pressing for discounts on oil shipments, undercutting his competition, making secret deals, raising investment pools, and buying rivals out. In less than four months in 1872, in what was later known as "The Cleveland Conquest" or "The Cleveland Massacre", Standard Oil had absorbed 22 of its 26 Cleveland competitors.[36] Eventually, even his former antagonists, Pratt and Rogers, saw the futility of continuing to compete against Standard Oil: in 1874, they made a secret agreement with their old nemesis to be acquired. Pratt and Rogers became Rockefeller's partners. Rogers, in particular, became one of Rockefeller's key men in the formation of the Standard Oil Trust. Pratt's son, Charles Millard Pratt, became Secretary of Standard Oil. For many of his competitors, Rockefeller had merely to show them his books so they could see what they were up against and make them a decent offer. If they refused his offer, he told them he would run them into bankruptcy and then cheaply buy up their assets at auction. He saw himself as the industry’s savior, "an angel of mercy" absorbing the weak and making the industry as a whole stronger, more efficient, and more competitive.[37] Standard was growing horizontally and vertically. It added its own pipelines, tank cars, and home delivery network. It kept oil prices low to stave off competitors, made its products affordable to the average household, and, to increase market penetration, sometimes sold below cost if necessary. It developed over 300 oil-based products from tar to paint to Vaseline petroleum jelly to chewing gum. By the end of the 1870s, Standard was refining over 90% of the oil in the U.S.[38] Rockefeller had already become a millionaire.[39]
Standard Oil Trust Certificate 1896
In 1877, Standard clashed with Thomas A. Scott the president of the Pennsylvania Railroad, its chief hauler. Rockefeller had envisioned the use of pipelines as an alternative transport system for oil and began a campaign to build and acquire them.[40] The railroad, seeing Standard’s incursion into the transportation and pipeline fields, struck back and formed a subsidiary to buy and build oil refineries and pipelines.[41] Standard countered and held back its shipments and, with the help of other railroads, started a price war that dramatically reduced freight payments and caused labor unrest as well. Rockefeller eventually prevailed and the railroad sold all its oil interests to Standard. But in the aftermath of that battle, in 1879 the Commonwealth of Pennsylvania indicted Rockefeller on charges of monopolizing the oil trade, starting an avalanche of similar court proceedings in other states and making a national issue of Standard Oil’s business practices.[42]
Monopoly
Standard Oil gradually gained almost complete control of oil refining and marketing in the United States through horizontal integration. In the kerosene industry, Standard Oil replaced the old distribution system with its own vertical system. It supplied kerosene by tank cars that brought the fuel to local markets, and tank wagons then delivered to retail customers, thus bypassing the existing network of wholesale jobbers.[43] Despite improving the quality and availability of kerosene products while greatly reducing their cost to the public (the price of kerosene dropped by nearly 80% over the life of the company), Standard Oil's business practices created intense controversy. Standard's most potent weapons against competitors were underselling, differential pricing, and secret transportation rebates.[44] The firm was attacked by journalists and politicians throughout its existence, in part for these monopolistic methods, giving momentum to the antitrust movement. By 1880, according to the New York World, Standard Oil was "the most cruel, impudent, pitiless, and grasping monopoly that ever fastened upon a country."[45] To the critics Rockefeller replied, "In a business so large as ours..... some things are likely to be done which we cannot approve. We correct them as soon as they come to our knowledge."[45]
At that time, many legislatures had made it difficult to incorporate in one state and operate in another. As a result, Rockefeller and his associates owned dozens of separate corporations, each of which operated in just one state; the management of the whole enterprise was rather unwieldy. In 1882, Rockefeller's lawyers created an innovative form of corporation to centralize their holdings, giving birth to the Standard Oil Trust.[46] The "trust" was a corporation of corporations, and the entity's size and wealth drew much attention. Nine trustees, including Rockefeller, ran the 41 companies in the trust.[46] The public and the press were immediately suspicious of this new legal entity, and other businesses seized upon the idea and emulated it, further inflaming public sentiment. Standard Oil had gained an aura of invincibility, always prevailing against competitors, critics, and political enemies. It had become the richest, biggest, most feared business in the world, seemingly immune to the boom and bust of the business cycle, consistently racking up profits year after year.[47]
Its vast American empire included 20,000 domestic wells, 4,000 miles of pipeline, 5,000 tank cars, and over 100,000 employees.[47] Its share of world oil refining topped out above 90% but slowly dropped to about 80% for the rest of the century.[48] In spite of the formation of the trust and its perceived immunity from all competition, by the 1880s Standard Oil had passed its peak of power over the world oil market. Rockefeller finally gave up his dream of controlling all the world’s oil refining, he admitted later, "We realized that public sentiment would be against us if we actually refined all the oil."[48] Over time foreign competition and new finds abroad eroded his dominance. In the early 1880s, Rockefeller created one of his most important innovations. Rather than try to influence the price of crude oil directly, Standard Oil had been exercising indirect control by altering oil storage charges to suit market conditions. Rockefeller then decided to order the issuance of certificates against oil stored in its pipelines. These certificates became traded by speculators, thus creating the first oil-futures market which effectively set spot market prices from then on. The National Petroleum Exchange opened in Manhattan in late 1882 to facilitate the oil futures trading.[49]
Even though 85% of world crude production was still coming from Pennsylvania wells in the 1880s, overseas drilling in Russia and Asia began to reach the world market.[50] Robert Nobel had established his own refining enterprise in the abundant and cheaper Russian oil fields, including the region’s first pipeline and the world’s first oil tanker. The Paris Rothschilds jumped into the fray providing financing.[51] Additional fields were discovered in Burma and Java. Even more critical, the invention of the light bulb gradually began to erode the dominance of kerosene for illumination. But Standard Oil adapted, developing its own European presence, expanding into natural gas production in the U.S. then into gasoline for automobiles, which until then had been considered a waste product.[52]
Standard Oil moved its headquarters to New York City at 26 Broadway, and Rockefeller became a central figure in the city's business community. He bought a personal residence in 1884 on 54th street near the mansions of other magnates such as William Henry Vanderbilt. Despite personal threats and constant pleas for charity, Rockefeller took the new elevated train to his downtown office daily.[53] In 1887, Congress created the Interstate Commerce Commission which was tasked with enforcing equal rates for all railroad freight, but by then Standard depended more on pipeline transport.[54] More threatening to Standard’s power was the Sherman Antitrust Act of 1890, originally used to control unions, but later central to the breakup of the Standard Oil trust.[55] Ohio was especially vigorous in applying its state anti-trust laws, and finally forced a separation of Standard Oil of Ohio from the rest of the company in 1892, the first step in the dissolution of the trust.[55]
In the 1890s, Rockefeller expanded into iron ore and ore transportation, forcing a collision with steel magnate Andrew Carnegie, and their competition became a major subject of the newspapers and the cartoonists.[56] Rockefeller also went on a massive buying spree acquiring leases for crude oil production in Ohio, Indiana, and West Virginia, as the original Pennsylvania oil fields began to play out.[57] Amidst the frenetic expansion, Rockefeller began to think of retirement. The daily management of the trust was turned over to John Dustin Archbold and Rockefeller bought a new estate, Pocantico Hills, north of New York City, turning more time to leisure activities including the new sports of bicycling and golf.[58]
Upon his ascent to the presidency, Theodore Roosevelt initiated dozens of suits under the Sherman Antitrust Act and coaxed reforms out of Congress. In 1901, U.S. Steel, now controlled by J. Pierpont Morgan, having bought Andrew Carnegie's steel assets, offered to buy Standard’s iron interests as well. A deal brokered by Henry Clay Frick exchanged Standard’s iron interests for U.S. Steel stock and gave Rockefeller and his son membership on the company’s board of directors. In full retirement at age 63, Rockefeller earned over $58 million in investments in 1902.[59]
Rockefeller as an industrial emperor, 1901 cartoon from Puck magazine
One of the most effective attacks on Rockefeller and his firm was the 1904 publication of The History of the Standard Oil Company, by Ida Tarbell, a leading muckraker. She documented the company’s espionage, price wars, heavy-handed marketing tactics, and courtroom evasions.[60] Although her work prompted a huge backlash against the company, Tarbell claims to have been surprised at its magnitude. "I never had an animus against their size and wealth, never objected to their corporate form. I was willing that they should combine and grow as big and wealthy as they could, but only by legitimate means. But they had never played fair, and that ruined their greatness for me." Tarbell's father had been driven out of the oil business during the South Improvement Company affair.
Rockefeller called her "Miss Tarbarrel" in private but held back in public saying only, "not a word about that misguided woman."[60] Instead Rockefeller began a publicity campaign to put his company and himself in a better light. Though he had long maintained a policy of active silence with the press, he decided to make himself more accessible and responded with conciliatory comments such as "capital and labor are both wild forces which require intelligent legislation to hold them in restriction."[61] He wrote and published his memoirs beginning in 1908.
Judge Kenesaw Mountain Landis wags his pen at John D. Rockefeller, who is sitting in the witness stand, during the Standard Oil case on July 6, 1907
Critics found his writing to be sanitized and disingenuous and thought that statements such as "the underlying, essential element of success in business is to follow the established laws of high-class dealing" seemed to be at odds with his true business methods.[61]
Rockefeller and his son continued to consolidate their oil interests as best they could until New Jersey, in 1909, changed its incorporation laws to effectively allow a re-creation of the trust in the form of a single holding company. Rockefeller retained his nominal title as president until 1911 and he kept his stock. At last in 1911, the Supreme Court of the United States found Standard Oil Company of New Jersey in violation of the Sherman Antitrust Act. By then the trust still had a 70% market share of the refined oil market but only 14% of the U.S. crude oil supply.[62] The court ruled that the trust originated in illegal monopoly practices and ordered it to be broken up into 34 new companies. These included, among many others, Continental Oil, which became Conoco, now part of ConocoPhillips; Standard of Indiana, which became Amoco, now part of BP; Standard of California, which became Chevron; Standard of New Jersey, which became Esso (and later, Exxon), now part of ExxonMobil; Standard of New York, which became Mobil, now part of ExxonMobil; and Standard of Ohio, which became Sohio, now part of BP. Pennzoil and Chevron have remained separate companies.[63]
Rockefeller, who had rarely sold shares, held over 25% of Standard’s stock at the time of the breakup.[64] He, as well as all stockholders, received proportionate shares in each of the 34 companies. In the aftermath, Rockefeller’s control over the oil industry was somewhat reduced but over the next 10 years, the breakup also proved immensely profitable for him. The companies’ combined net worth rose fivefold and Rockefeller’s personal wealth jumped to $900 million.[62]
Philanthropy
Rockefeller's charitable giving began with his first job as a clerk at age 16, when he gave six percent of his earnings to charity, as recorded in his personal ledger. By the time he was twenty, his charity exceeded ten percent of his income. Much of his giving was church-related.[65] His church was later affiliated with the Northern Baptist Convention, which formed from American Baptists in the North with ties to their historic missions to establish schools and colleges for freedmen in the South after the American Civil War. Rockefeller attended Baptist churches every Sunday; when traveling he would often attend services at African-American Baptist congregations, leaving a substantial donation.[66] As Rockefeller's wealth grew, so did his giving, primarily to educational and public health causes, but also for basic science and the arts. He was advised primarily by Frederick Taylor Gates[67] after 1891,[68] and, after 1897, also by his son.
He was influenced by a meeting with Swami Vivekananda, who urged him to use more of his philanthropy to help the poor and distressed people.[69][70]
Rockefeller believed in the Efficiency Movement, arguing that: "To help an inefficient, ill-located, unnecessary school is a waste..... it is highly probable that enough money has been squandered on unwise educational projects to have built up a national system of higher education adequate to our needs, if the money had been properly directed to that end."[71]
He and his advisers invented the conditional grant, which required the recipient to "root the institution in the affections of as many people as possible who, as contributors, become personally concerned, and thereafter may be counted on to give to the institution their watchful interest and cooperation."[72]
In 1884, Rockefeller provided major funding for a college in Atlanta for African-American women, which became Spelman College (named for Rockefeller's in-laws who were ardent abolitionists before the Civil War).[73] The oldest existing building on Spelman's campus, Rockefeller Hall, is named after him.[74] Rockefeller also gave considerable donations to Denison University[75] and other Baptist colleges.
Rockefeller gave $80 million to the University of Chicago[76] under William Rainey Harper, turning a small Baptist college into a world-class institution by 1900. He also gave a grant to the American Baptist Missionaries foreign mission board, the American Baptist Foreign Mission Society in establishing Central Philippine University, the first Baptist and second American university in Asia, in 1905 in the Philippines.[77][78]
His General Education Board, founded in 1903,[79] was established to promote education at all levels everywhere in the country.[80] In keeping with the historic missions of the Baptists, it was especially active in supporting black schools in the South.[80] Rockefeller also provided financial support to such established eastern institutions as Yale, Harvard, Columbia, Brown, Bryn Mawr, Wellesley and Vassar.
Rockefeller and his son John Jr. in 1915
On Gates' advice, Rockefeller became one of the first great benefactors of medical science. In 1901, he founded the Rockefeller Institute for Medical Research[79] in New York City. It changed its name to Rockefeller University in 1965, after expanding its mission to include graduate education.[81] It claims a connection to 23 Nobel laureates.[82] He founded the Rockefeller Sanitary Commission in 1909,[79] an organization that eventually eradicated the hookworm disease,[83] which had long plagued rural areas of the American South. His General Education Board made a dramatic impact by funding the recommendations of the Flexner Report of 1910. The study had been undertaken by the Carnegie Foundation for the Advancement of Teaching; it revolutionized the study of medicine in the United States.
He created the Rockefeller Foundation in 1913[84] to continue and expand the scope of the work of the Sanitary Commission,[79] which was closed in 1915.[85] He gave nearly $250 million to the foundation,[73] which focused on public health, medical training, and the arts. It endowed Johns Hopkins School of Hygiene and Public Health,[79] the first of its kind.[86] It also built the Peking Union Medical College in China into a notable institution.[75] The foundation helped in World War I war relief,[87] and it employed William Lyon Mackenzie King of Canada to study industrial relations.[88] In the 1920s, the Rockefeller Foundation funded a hookworm eradication campaign through the International Health Division. This campaign used a combination of politics and science, along with collaboration between healthcare workers and government officials to accomplish its goals.[89]
John D. Rockefeller's painting by John Singer Sargent in 1917
Rockefeller's fourth main philanthropy, the Laura Spelman Rockefeller Memorial Foundation, was created in 1918.[90] Through this, he supported work in the social studies; this was later absorbed into the Rockefeller Foundation. In total Rockefeller donated about $550 million.[91]
Rockefeller became well known in his later life for the practice of giving dimes to adults and nickels to children wherever he went. He even gave dimes as a playful gesture to wealthy men, such as tire mogul Harvey Firestone.[92][93]
Marriage and family
Further information: Rockefeller family
Against long circulating speculations that his family has French roots, genealogists proved the German origin of Rockefeller and traced them back to the early 17th century. Thereupon Johann Peter Rockenfeller (baptized 27 September 1682 in the Protestant church of Rengsdorf) immigrated in 1723 from Altwied (today a district of Neuwied, Rhineland-Palatinate) with three children to North America and settled down in Germantown, Pennsylvania.[94][95]
The name Rockenfeller (from Rockenfeld) refers to a deserted place Rockenfeld (English: distaff field) in the district of Neuwied. Even today there are numerous inhabitants in this region with the surname Rockenfeller.
In 1864, Rockefeller married Laura Celestia "Cettie" Spelman (1839–1915), daughter of Harvey Buell Spelman and Lucy Henry. They had four daughters and one son together. He said later, "Her judgment was always better than mine. Without her keen advice, I would be a poor man."[25]
Elizabeth "Bessie" Rockefeller (August 23, 1866 – November 14, 1906)
Alice Rockefeller (July 14, 1869 – August 20, 1870)
Alta Rockefeller (April 12, 1871 – June 21, 1962)
Edith Rockefeller (August 31, 1872 – August 25, 1932)
John Davison Rockefeller, Jr. (January 29, 1874 – May 11, 1960)
The Rockefeller wealth, distributed as it was through a system of foundations and trusts, continued to fund family philanthropic, commercial, and, eventually, political aspirations throughout the 20th century. John Jr.'s youngest son David Rockefeller was a leading New York banker, serving for over 20 years as CEO of Chase Manhattan (now part of JPMorgan Chase). Second son, Nelson Aldrich Rockefeller, was Republican governor of New York and the 41st Vice President of the United States. Fourth son Winthrop Aldrich Rockefeller served as Republican Governor of Arkansas. Grandchildren Abigail Aldrich "Abby" Rockefeller and John Davison Rockefeller III became philanthropists. Grandson Laurance Spelman Rockefeller became a conservationist. Great-grandson John Davison "Jay" Rockefeller IV served from 1985 until 2015 as a Democratic Senator from West Virginia and as a former governor of West Virginia,[96] and another, Winthrop Paul Rockefeller, served ten years as Lieutenant Governor of Arkansas.
Rumors
At the height of John D. Rockefeller's power as monopolist there were the first rumors that the family are said to guard as an "embarrassing secret". Joseph Pulitzer offered a reward of $8,000 for information about John's father Bill aka "Doc Rockefeller", by whom was only known that he was alive under a false name.[97] However, the journalists could not find him before his death, and only two years later the whole story was published.[98]
Bill, who traveled as a mountebank across the country, sometimes a glad-handing huckster or occasionally as "herbal doctor", although he had no legitimate medical training, abandoned his family around 1855, but remained legally married to Eliza up to her death. He adopted the name William Levingston and married, as a bigamist in Norwich, Ontario, Margaret L. Allen (1834–1910), without issue. He died in 1906 and his tomb was paid from the property of his second wife.[99]
Illnesses and death
Rockefeller monument in Lake View Cemetery, Cleveland
In his 50s Rockefeller suffered from moderate depression and digestive troubles and, during a stressful period in the 1890s, developed alopecia, a condition that causes the loss of some or all body hair.[100] By 1901 he did not have a hair on his body, and he began wearing wigs. The hair never grew back, but his other health complaints subsided as he lightened his workload.[101]
Rockefeller died of arteriosclerosis on May 23, 1937, less than two months shy of his 98th birthday,[102] at The Casements, his home in Ormond Beach, Florida. He was buried in Lake View Cemetery in Cleveland.
Legacy
Rockefeller had a long and controversial career in the oil industry followed by a long career in philanthropy. His image is an amalgam of all of these experiences and the many ways he was viewed by his contemporaries. These contemporaries include his former competitors, many of whom were driven to ruin, but many others of whom sold out at a profit (or a profitable stake in Standard Oil, as Rockefeller often offered his shares as payment for a business), and quite a few of whom became very wealthy as managers as well as owners in Standard Oil. They also include politicians and writers, some of whom served Rockefeller's interests, and some of whom built their careers by fighting Rockefeller and the "robber barons".
Biographer Allan Nevins, answering Rockefeller's enemies, concluded:
The rise of the Standard Oil men to great wealth was not from poverty. It was not meteor-like, but accomplished over a quarter of a century by courageous venturing in a field so risky that most large capitalists avoided it, by arduous labors, and by more sagacious and farsighted planning than had been applied to any other American industry. The oil fortunes of 1894 were not larger than steel fortunes, banking fortunes, and railroad fortunes made in similar periods. But it is the assertion that the Standard magnates gained their wealth by appropriating "the property of others" that most challenges our attention. We have abundant evidence that Rockefeller's consistent policy was to offer fair terms to competitors and to buy them out, for cash, stock, or both, at fair appraisals; we have the statement of one impartial historian that Rockefeller was decidedly "more humane toward competitors" than Carnegie; we have the conclusion of another that his wealth was "the least tainted of all the great fortunes of his day."[103]
Biographer Ron Chernow wrote of Rockefeller:[104]
What makes him problematic—and why he continues to inspire ambivalent reactions—is that his good side was every bit as good as his bad side was bad. Seldom has history produced such a contradictory figure.[105]
In 1865, Rockefeller borrowed money to buy out some of his partners and
take control of the refinery, which had become the largest in Cleveland.
Over the next few years, he acquired new partners and expanded his
business interests in the growing oil industry. At the time, kerosene,
derived from petroleum and used in lamps, was becoming an economic
staple. In 1870, Rockefeller formed the Standard Oil Company of Ohio,
along with his younger brother William (1841-1922), Henry Flagler
(1830-1913) and a group of other men. John Rockefeller was its president
and largest shareholder.
Standard Oil gained a monopoly in the
oil industry by buying rival refineries and developing companies for
distributing and marketing its products around the globe. In 1882, these
various companies were combined into the Standard Oil Trust, which
would control some 90 percent of the nation’s refineries and pipelines.
In order to exploit economies of scale, Standard Oil did everything from
build its own oil barrels to employ scientists to figure out new uses
for petroleum by-products.
Rockefeller’s enormous wealth and
success made him a target of muckraking journalists, reform politicians
and others who viewed him as a symbol of corporate greed and criticized
the methods with which he’d built his empire. As The New York Times
reported in 1937: “He was accused of crushing out competition, getting
rich on rebates from railroads, bribing men to spy on competing
companies, of making secret agreements, of coercing rivals to join the
Standard Oil Company under threat of being forced out of business,
building up enormous fortunes on the ruins of other men, and so on.”
In
1890, the U.S. Congress passed the Sherman Antitrust Act, the first
federal legislation prohibiting trusts and combinations that restrained
trade. Two years later, the Ohio Supreme Court dissolved the Standard
Oil Trust; however, the businesses within the trust soon became part of
Standard Oil of New Jersey, which functioned as a holding company. In
1911, after years of litigation, the U.S. Supreme Court ruled Standard
Oil of New Jersey was in violation of anti-trust laws and forced it to
dismantle (it was broken up into more than 30 individual companies).
John D. Rockefeller: Philanthropy and Final Years
Rockefeller
retired from day-to-day business operations of Standard Oil in the
mid-1890s. Inspired in part by fellow Gilded Age tycoon Andrew Carnegie
(1835-1919), who made a vast fortune in the steel industry then became a
philanthropist and gave away the bulk of his money, Rockefeller donated
more than half a billion dollars to various educational, religious and
scientific causes. Among his activities, he funded the establishment of
the University of Chicago and the Rockefeller Institute for Medical
Research (now Rockefeller University).
In his personal life,
Rockefeller was devoutly religious, a temperance advocate and an avid
golfer. His goal was to reach the age of 100; however, he died at 97 on
May 23, 1937, at The Casements, his winter home in Ormond Beach,
Florida. (Rockefeller owned multiple residences, including a home in New
York City, an estate in Lakewood, New Jersey, and an estate called
Kykuit, old Dutch for “lookout,” set on 3,000 acres near Tarrytown, New
York.) He was buried at Lake View Cemetery in Cleveland.
Notwithstanding these varied aspects of his public life, Rockefeller may ultimately be remembered simply for the raw size of his wealth. In 1902, an audit showed Rockefeller was worth about $200 million—compared to the total national GDP of $24 billion then.[11][106] His wealth continued to grow significantly (in line with U.S. economic growth) after as the demand for gasoline soared, eventually reaching about $900 million on the eve of the First World War, including significant interests in banking, shipping, mining, railroads, and other industries. According to the New York Times obituary, "it was estimated after Mr. Rockefeller retired from business that he had accumulated close to $1,500,000,000 out of the earnings of the Standard Oil trust and out of his other investments. This was probably the greatest amount of wealth that any private citizen had ever been able to accumulate by his own efforts."[107] By the time of his death in 1937, Rockefeller's remaining fortune, largely tied up in permanent family trusts, was estimated at $1.4 billion, while the total national GDP was $92 billion.[4] According to some methods of wealth calculation, Rockefeller's net worth over the last decades of his life would easily place him as the wealthiest known person in recent history. As a percentage of the United States' GDP, no other American fortune — including those of Bill Gates or Sam Walton — would even come close.[108]
Rockefeller, at the age of 86, penned the following words to sum up his life:[109]
I was early taught to work as well as play,
My life has been one long, happy holiday;
Full of work and full of play—
I dropped the worry on the way—
And God was good to me everyday.
John D. Rockefeller: Early Years and Family
John Davison Rockefeller, the son of a traveling salesman, was born on July 8, 1839, in Richford, New York. Industrious even as a boy, the future oil magnate earned money by raising turkeys, selling candy and doing jobs for neighbors. In 1853, the Rockefeller family moved to the Cleveland, Ohio, area, where John attended high school then briefly studied bookkeeping at a commercial college.
Did You Know?
One of the charitable organizations established by John D. Rockefeller, Sr. was the Rockefeller Sanitary Commission, founded in 1909. Less than 20 years after its creation, the Commission had achieved its primary goals, the successful eradication of hookworm disease across the southern United States.
In 1855, at age 16, he found work as an office clerk at a Cleveland commission firm that bought, sold and shipped grain, coal and other commodities. (He considered September 26, the day he started the position and entered the business world, so significant that as an adult he commemorated this “job day” with an annual celebration.) In 1859, Rockefeller and a partner established their own commission firm. That same year, America’s first oil well was drilled in Titusville, Pennsylvania. In 1863, Rockefeller and several partners entered the booming new oil industry by investing in a Cleveland refinery.
In 1864, Rockefeller married Laura Celestia “Cettie” Spelman (1839-1915), an Ohio native whose father was a prosperous merchant, politician and abolitionist active in the Underground Railroad. (Laura Rockefeller became the namesake of Spelman College, the historically black women’s college in Atlanta, Georgia, that her husband helped finance.) The Rockefellers went on to have four daughters (three of whom survived to adulthood) and one son.
John D. Rockefeller: Standard Oil
In 1865, Rockefeller borrowed money to buy out some of his partners and take control of the refinery, which had become the largest in Cleveland. Over the next few years, he acquired new partners and expanded his business interests in the growing oil industry. At the time, kerosene, derived from petroleum and used in lamps, was becoming an economic staple. In 1870, Rockefeller formed the Standard Oil Company of Ohio, along with his younger brother William (1841-1922), Henry Flagler (1830-1913) and a group of other men. John Rockefeller was its president and largest shareholder.
Standard Oil gained a monopoly in the oil industry by buying rival refineries and developing companies for distributing and marketing its products around the globe. In 1882, these various companies were combined into the Standard Oil Trust, which would control some 90 percent of the nation’s refineries and pipelines. In order to exploit economies of scale, Standard Oil did everything from build its own oil barrels to employ scientists to figure out new uses for petroleum by-products.
Rockefeller’s enormous wealth and success made him a target of muckraking journalists, reform politicians and others who viewed him as a symbol of corporate greed and criticized the methods with which he’d built his empire. As The New York Times reported in 1937: “He was accused of crushing out competition, getting rich on rebates from railroads, bribing men to spy on competing companies, of making secret agreements, of coercing rivals to join the Standard Oil Company under threat of being forced out of business, building up enormous fortunes on the ruins of other men, and so on.”
In 1890, the U.S. Congress passed the Sherman Antitrust Act, the first federal legislation prohibiting trusts and combinations that restrained trade. Two years later, the Ohio Supreme Court dissolved the Standard Oil Trust; however, the businesses within the trust soon became part of Standard Oil of New Jersey, which functioned as a holding company. In 1911, after years of litigation, the U.S. Supreme Court ruled Standard Oil of New Jersey was in violation of anti-trust laws and forced it to dismantle (it was broken up into more than 30 individual companies).
John D. Rockefeller: Philanthropy and Final Years
Rockefeller retired from day-to-day business operations of Standard Oil in the mid-1890s. Inspired in part by fellow Gilded Age tycoon Andrew Carnegie (1835-1919), who made a vast fortune in the steel industry then became a philanthropist and gave away the bulk of his money, Rockefeller donated more than half a billion dollars to various educational, religious and scientific causes. Among his activities, he funded the establishment of the University of Chicago and the Rockefeller Institute for Medical Research (now Rockefeller University).
In his personal life, Rockefeller was devoutly religious, a temperance advocate and an avid golfer. His goal was to reach the age of 100; however, he died at 97 on May 23, 1937, at The Casements, his winter home in Ormond Beach, Florida. (Rockefeller owned multiple residences, including a home in New York City, an estate in Lakewood, New Jersey, and an estate called Kykuit, old Dutch for “lookout,” set on 3,000 acres near Tarrytown, New York.) He was buried at Lake View Cemetery in Cleveland.
Youth
John D. Rockefeller, Sr.
Rockefeller Archive Center
John D. Rockefeller, Sr.
John D. Rockefeller was born July 8, 1839, in Richford, New York, about midway between Binghamton and Ithaca. His father, William Avery Rockefeller, was a "pitch man" -- a "doctor" who claimed he could cure cancers and charged up to $25 a treatment. He was gone for months at a time traveling around the West from town to town and would return to wherever the family was living with substantial sums of cash. His mother, Eliza Davison Rockefeller, was very religious and very disciplined. She taught John to work, to save, and to give to charities.
By the age of 12, he had saved over $50 from working for neighbors and raising some turkeys for his mother. At the urging of his mother, he loaned a local farmer $50 at 7% interest payable in one year. When the farmer paid him back with interest the next year Rockefeller was impressed and said of it in 1904: "The impression was gaining ground with me that it was a good thing to let the money be my servant and not make myself a slave to the money…"
From 1852 Rockefeller attended Owego Academy in Owego, New York, where the family had moved in 1851. Rockefeller excelled at mental arithmetic and was able to solve difficult arithmetic problems in his head -- a talent that would be very useful to him throughout his business career. In other subjects Rockefeller was an average student but the quality of the education was very high.
In 1853, the Rockefellers moved to Cleveland, Ohio, and John attended high school from 1853 to 1855. He was very good at math and was on the debating team. The school encouraged public speaking and even though Rockefeller was only average, it was a skill that would prove to useful to him.
Early Business Career: 1855-1863
In the spring of 1855 Rockefeller spent 10 weeks at Folsom's Commercial College -- a "chain College" -- where he learned single- and double-entry bookkeeping, penmanship, commercial history, mercantile customs, banking, and exchange. From his father he had learned how to draw up notes and other business papers. His father was very meticulous in matters of business and believed in the sacredness of contracts.
In August of 1855, at the age of 16, Rockefeller began looking for work in Cleveland as a bookkeeper or clerk. Business was bad in Cleveland at the time and Rockefeller had problems finding a job. He was always neatly dressed in a dark suit and black tie. Cleveland was not a large city in 1855 and Rockefeller could easily visit every business in under a week's time. He returned to many businesses three times. Finally, on September 26, 1855, he got a job as an assistant bookkeeper with Hewitt & Tuttle, commission merchants and produce shippers.
Rockefeller soon impressed his employers with his seriousness and diligence. He was very exacting and scrupulously honest. For example, he would not write out a false bill of lading under any circumstances. He went to great lengths to collect overdue accounts. He was pleasant, persistent, and patient, and he got the company's money from the delinquents. (For all this work, he was not well paid. But whatever he was paid, he always gave to his church and local charities.)
By 1858, Rockefeller had more responsibilities at Hewitt & Tuttle. He arranged complicated transportation deals that typically involved moving a single shipment of freight by railroad, canal, and lake boats. He began to engage in trading ventures on his own account. He was naturally cautious and only undertook a business venture when he calculated that it would be successful. After he carefully weighed a course of action, he would then act quickly and boldly to see it through to fruition. He had iron nerves and would carry through very complicated deals without hesitation. This combination of caution, precision, and resolve soon brought him attention and respect in the broader business community in Cleveland.
On March 1, 1859 -- several months before his 20th birthday -- Rockefeller went into business for himself, forming a partnership with a neighbor, Maurice Clark. Each man put up $2,000 and formed Clark & Rockefeller -- commission merchants in grain, hay, meats, and miscellaneous goods. At the end of the first year of business, they had grossed $450,000, making a profit of $4,400 in 1860 and a profit of $17,000 in 1861. The commission merchant business was very competitive and Clark & Rockefeller's success was due in large part to Rockefeller's natural business abilities.
During the Civil War their business expanded rapidly. Grain prices went up and so did their commissions. Most of their selling was done on commission, so Clark & Rockefeller took no risks from price fluctuations. Rockefeller's style was very precise and calculated. He was not a gambler but a planner. He avoided speculation and refused to make advances or loans.
Rockefeller was extremely hard working. He traveled extensively, drumming up business throughout Ohio, and then would go to the banks and borrow large sums of money to handle the shipments. This aggressive style built the business up every year.
However, by the early 1860s, Rockefeller realized that the future of the commission merchant business in Cleveland was going to be limited. He had become convinced that the railroads were going to become the primary means of transportation for agricultural commodities. This would be to the disadvantage of Cleveland, because its position as an important Lake Erie port was its primary transportation advantage. He saw that the rising grain output of the Midwest and the Northwest of J. J. Hill would change the nature of the business for good. The huge elevators on Lake Michigan and the flour-millers of Minneapolis would be the dominant players in the business. Rockefeller came to believe that the future of Cleveland lay in the collection and shipment of raw industrial materials -- not agricultural commodities. This would allow Cleveland to exploit its geographical advantages -- mid-way between the Eastern seaboard and Chicago -- and accessible to both rail and water transportation. He saw his chance in 1863 -- oil.
Oil Refining 1863-65
On August 27, 1859, Edwin Drake struck oil near Titusville, Pennsylvania, setting off a frenzied oil boom in what soon became known as the "oil regions" of northwestern Pennsylvania. Drake was the employee of a group of New Haven, Connecticut, investors in the Pennsylvania Rock Oil Company. They had obtained a sample of the Pennsylvania oil and had a Yale University chemist analyze it. The chemist determined that the Pennsylvania oil was of very high quality and could be refined into a variety of useful products.
The technology used by Drake was not new. What was new was the idea of drilling for oil -- the idea that you could pump oil out of the ground like you could pump water.
The technology for drilling wells was quite advanced by 1859. To that time, wells were drilled for either water or salt (more accurately, brine which would be refined to get the salt). In the process of drilling for salt all over the United States in the early 19th century it was not uncommon -- especially in the Pennsylvania area -- to get oil seepage into the salt well. Most of the time this was regarded as a nuisance, but some enterprising merchants went into the business of selling the oil in small bottles as a "Natural Remedy" or "Curative Agent."
The technology for refining oil was also known by the early 1850s. Doctor Abraham Gesner, a Canadian, in August 1846 patented a method for distilling kerosene (a name he invented from the Greek "keros" -- wax -- and "elaion" -- oil) from coal. In 1850, a Scottish industrial chemist, James Young, patented a method of obtaining "burning oils" from petroleum through destructive distillation. In 1852 two Boston chemists, Luther and William Atwood, began making lubricants from coal tar. Finally, in 1856, Samuel Downer, a whale-oil merchant, bought out the Atwoods and boosted production to 650,000 gallons of refined oil a year. By 1861, coal-oil lamps were widespread and coal-oil was even made in Cleveland.
Rockefeller began investigating the feasibility of entering the oil refining business in 1862 and the firm of Andrews, Clark & Company was formed in 1863. (Samuel Adams had experience with shale-oil refining, and Clark brought in his brothers.) Probably figuring in Rockefeller's decision to enter the business was the entry into Cleveland later that year of the long-planned Atlantic & Great Western Railroad. The A&GW line went east to Meadville, Pennsylvania, then northeast to Corry, Pennsylvania, and then across the border into New York state, where it connected to the Erie Railroad. The A&GW also had branches into the heart of the oil regions -- Titusville and Franklin. This gave Cleveland two routes to New York City -- the New York Central-Lake Shore system, and the A&GW-Erie connection. This immediately gave Cleveland a transportation advantage over Pittsburgh, which was dominated by the Pennsylvania Railroad.
The Pennsylvania oil was of high quality. One barrel yielded 60-65% illuminating oil, 10% gasoline, 5-10% benzoyl or naphtha (a volatile inflammable liquid used as a solvent in dry cleaning, varnish making, etc.), with the remainder tar and wastes.
Rockefeller abhorred waste and devoted considerable energy to increasing the efficiency of his refining business. He believed that the secret of success was attention to detail -- to wringing little efficiencies out of every aspect of his business. He hired his own plumber and bought his own plumbing supplies. He built his own cooperage shop and made his own barrels for the oil. He bought tracts of white-oak timber for making the barrels. Instead of transporting the freshly cut green timber directly to the cooperage shop, he had kilns built on the timber tracts to dry the wood on site, to reduce the shipping weight of the lumber. He bought his own wagons and horses to transport the wood to the cooperage shop in Cleveland. (We would call this "vertical integration" today.)
Oil Refining 1865-1870
In February 1865, at the age of 24, Rockefeller bought out the Clark brothers (Maurice Clark had brought his brothers into the refining business) for $72,500 and gained complete control of the business. The Clarks had resisted borrowing money to expand and Rockefeller was convinced of the correctness of his course. He immediately moved to greatly extend his enterprise. He borrowed heavily and plowed all his profits back into the business in order to expand it further, and took decisive steps to strengthen and increase the efficiency of all aspects of the firm.
In 1866, John D. brought his brother William Rockefeller into the partnership and they built another refinery in Cleveland which they named the Standard Works. They also opened a New York City office with William Rockefeller in charge, to handle the export business, which eventually became larger than the domestic business.
Henry M. Flagler
In 1867, Henry M. Flagler (1830-1913) became a partner, and Rockefeller, Andrews & Flagler was formed. Flagler had left school at age 14. Not wanting to burden his poor family any further, he walked to the Erie Canal in 1844 and took it to Lake Erie, and then went to Ohio via a lake steamer. Flagler and Rockefeller had met years earlier in Bellevue, Ohio, when Rockefeller was buying grain for his commission house and Flagler was a grain merchant. Flagler had gone into the salt well business but went broke in 1865. He began to recoup his fortune in 1865 in Cleveland as a manufacturer of oil barrels and had an office in the same building as Rockefeller. Flagler and Rockefeller were very much alike -- ambitious and shrewd, with a taste for expansion. Flager's wife's uncle, Stephen V. Harkness, became a silent partner and made substantial investments in the partnership, though he never took an active part in running the business. These investments by Harkness and Flagler were used to expand the business even further.
By 1868, Rockefeller, Andrews & Flagler was the largest refiner in the world. Flagler and Rockefeller understood that the only way to make profits consistently in oil refining was to make the business as large as possible and to utilize all their "waste" products. The refining process during this early period was very primitive -- refining consisted simply of cooking the oil and purifying it somewhat. The physical plant was simple: some large vats, stills, the piping, and a few chemicals. A small refinery could be set up with just $10,000, and a large one with $50,000. In modern language, the barriers to entry were very, very low. It would be like setting up a small business in today's business climate.
Consequently, if the price of kerosene was high, even the small and inefficient refiners could make good money. So, even when the price of kerosene fell sharply, driving some refiners out of business, the entry costs were so low that when times were good many small operators could enter the business cheaply, making it a very competitive market.
It was the logic of this competitive structure that determined Rockefeller and Flagler's course of action.
They built high-quality, larger, better-planned refineries. They built permanent facilities using the best materials available.
They owned their own cooperage (barrel making) plant, their own white-oak timber and drying facilities, and bought their own hoop iron. Consequently, they cut the cost of a barrel from about $3.00 to less than $1.50.
They manufactured their own sulfuric acid (which was used in the purification process) and devised technology to recover it for re-use.
They owned their own drayage service, consisting of at least 20 wagons in 1868.
They owned their own warehouses in New York City and their own boats on the Hudson and East Rivers to transport their oil.
They were the first to ship oil via tank cars (albeit big wooden tubs mounted in pairs on flat cars -- later to evolve into the modern form of a tank car). And they owned their own fleet of tank cars.
They built huge holding tanks near their refineries for storing crude and refined oil, with the equipment for drawing off the oil from the tank cars into the holding tanks.
Their huge size made it economical to build the necessary physical plant to handle all the "waste" products from the refining of kerosene. They began manufacturing high quality lubricating oil that quickly replaced lard oil as a lubricant for machinery. Gasoline, which many refiners surreptitiously dumped into the Cuyahoga River at night (the river often caught fire), Rockefeller and Flagler used as fuel. They manufactured benzene (used as a cleaning fluid; a solvent for fat, gums, and resin; and to make varnish), paraffin (insoluble in water, used for making candles, waterproofing paper, preservative coatings, etc.), and petrolatum (used as a basis for ointments and as a protective dressing; as a local application in inflammation of mucous membrane; as an intestinal lubricant, etc. -- white petrolatum later marketed under the brand name Vaseline). They shipped naphtha (volatile inflammable liquid used as a solvent in dry cleaning and in wax preparations, varnish and paint making, burning fluid for illumination, and as a fuel for motors) to gas plants and other users.
In short, nothing was left to chance, nothing was guessed at, nothing left uncounted and measured. Efficiencies down to the smallest detail of the business were the order of the day. Economy, precision, and foresight were the cornerstones of their success.
The sheer size of the business and the fact that Cleveland was served by two railroad systems -- the New York Central (via the Lake Shore) and the Erie (via the Atlantic & Great Western -- which Jay Gould bought in 1868) -- and had access to the Lake for water-borne shipping, gave Rockefeller and Flagler tremendous leverage with the railroads. Consequently, Flagler was able to negotiate big rebates from the railroads. The combination of size, efficiency, and the rebates gave Rockefeller and Flagler an advantage over other refiners that they would never relinquish.
The railroad situation benefited not only Rockefeller and Flagler; other Cleveland refiners also benefited at the expense of the refiners in Pittsburgh. Pittsburgh was a prisoner to the Pennsylvania Railroad, which had a monopoly in that city. The Pennsylvania Railroad wanted to ship everything to Philadelphia because it meant more money for them. Consequently, Cleveland refiners had a built-in advantage over Pittsburgh. In this regard, the railroads -- the Erie and New York Central -- were not "victims" of the "crooked" refiners; rather, the railroads looked upon the refiners as associates and co-workers. They had a commonality of interests.
The Standard Oil Company: 1870-1882
On January 10, 1870, the Standard Oil Company of Ohio was created by John D. Rockefeller (30%), William Rockefeller (13.34%), Henry Flagler (16.67%), Samuel Andrews (16.67%), Stephen Harkness (13.34%), and O. B. Jennings (brother-in-law of William Rockefeller, 10%). It held about 10% of the oil business at the time of its formation.
In Rockefeller's eyes, the state of the oil business was chaotic. Because entry costs were so low in both oil drilling and oil refining, the market was glutted with crude oil with an accompanying high level of waste. In his view, the theory of free competition did not work well when there was a mix of very large, efficient firms and many medium and small firms. His view was that the weak firms, in their attempts to survive, drove prices down below production costs, hurting even the well-managed firms such as his own.
Although his economics may be suspect in modern eyes, his solution -- a market with a few (maybe one!) large, vertically integrated firms -- in effect an oligopolistic market -- was what other industrial sectors eventually evolved into. What makes oil stand out is that it happened by design -- as the result of a plan formulated by a single person -- John D. Rockefeller.
During 1871, Rockefeller formulated his plan for consolidating all oil refining firms into one great organization with the aim of eliminating excess capacity and price-cutting. Although no written records exist, both Rockefeller and Flagler 30 years later claimed this was when they worked out the master plan, which they later implemented. The claim that the plan was formulated in 1871 is evidenced by the fact that all the major Cleveland banks joined the Standard Oil organization in 1871 and later backed Rockefeller and Flagler to the hilt in their rapid expansion.
The South Improvement Scheme
What interrupted Rockefeller and Flagler's careful planning was the emergence of the South Improvement scheme of 1871. Tom Scott of the Pennsylvania Railroad came up with the idea. The scheme was inspired by the Anthracite Railroad combination of 1868-71 in which five railroads and two coal companies bought up all the coal pits along the five railroads in order to control output and prices.
The South Improvement Company had been created by the Pennsylvania Legislature in 1870 and its charter allowed the Company to hold the stocks of other companies outside the state. This was an unusual power at the time and made it ideal for Scott's scheme. Scott arranged for the purchase of the charter by a group of Philadelphia and Pittsburgh refiners with Scott in the background.
The scheme was essentially a plan to unite the oil-carrying railroads in a pool; to unite the refiners in an association, the South Improvement Company; and to tie the two elements together by agreements which would stop "destructive" price-cutting and restore railroad freight charges to a profitable level.
To enforce the cooperation of refiners, a set of rebates was agreed to for participating refiners. This alone would have undoubtedly forced all the refiners into the combine, but the scheme did not stop there. In what turned out to be a public relations disaster, the participants decided to add a drawback on every barrel shipped by a non-participant equal to the ordinary rebate. In effect, this would be a tax on non-participants, the proceeds of which would be transferred to the participating oil refiners.
What the planners forgot, however, was to include the producers in the scheme as well. Despite efforts to reassure the drillers in the Oil Regions that the scheme would benefit them as well by keeping prices up, the Oil Regions Men revolted and organized an effective boycott of all the refiners and railroads they suspected of being part of the scheme. Consequently, the scheme collapsed in 1872 before it was ever implemented.
Subsequent historians repeated the view of many at the time that Rockefeller had been one of the originators of the South Improvement Scheme. In fact he had not been, but he and Flagler did agree to participate, and worked hard to set up the scheme. Rockefeller's most important error of his career was to not go public at the time with his side of the story. This was the first time that a broad public became aware of Rockefeller and the episode was to forever tarnish his reputation. He said of it later, "Our silence encouraged the wildest romancers to spread wild tales about us;" and on another occasion, "I shall never cease to regret that at that time we never called in the reporters."
In December 1871, during the dust-up over the South Improvement Scheme, Rockefeller and Flagler set in motion their plan to consolidate the industry. They began by buying up all their competitors in Cleveland. The strategy and tactics were Rockefeller’s and he handled the negotiations with the rival refiners personally. He began with the strongest refineries first. He believed that if he had bought up the weak refineries first then he would be faced with higher prices later and stiffer resistance. Consequently, he approached the strongest first and bought them out.
His technique was always the same. The merger would be effected by an increase in the capitalization of The Standard Oil. The rival refinery would be appraised and the owners would be given Standard Oil stock in proportion to the value of their property and good will and they would be made partners in Standard Oil. The more talented owners would also be brought into the Standard Oil management. If they insisted upon cash they received it.
Later some owners who had been bought out complained to the press that they had been treated unfairly. The evidence is overwhelming that the Standard’s rivals were paid fair -- even generous -- prices for their property, and if they had the wisdom to take Standard Oil stock, they ended up very rich indeed.
By March or April 1872, Rockefeller had bought up and/or merged with almost all the refineries in Cleveland. The inefficient and poorly constructed refineries were dismantled, while the better-quality ones were upgraded to Rockefeller and Flagler’s standards.
After the conquest of Cleveland, the Standard inexorably expanded. All the transactions were kept as secret as possible. The leaders of the Standard were so successful in this secrecy at times that many rival independent refiners were totally unaware of what was going on.
In 1872, Jabez A. Bostwick was brought into the Standard along with his important oil facilities on Long Island and on New York Harbor. In 1873, Standard acquired Devoe Manufacturing Company (Long Island) and Chess, Carley and its important distribution system in the Kentucky region (Louisville, KY). In 1874, Standard began building its own pipeline system using Bostwick & Co.
The teamsters, men who drove commercial wagons drawn by horse-teams, fought pipelines tooth and nail, but were destined to lose because it was so much cheaper and easier for the producers to send their crude through pipes as opposed to wagons. It was a short logical step to extend those pipelines directly to refineries. Rockefeller made a deal with the Erie Railroad and gained control of important terminal facilities in New York harbor in exchange for shipping half of Standard’s oil on the Erie.
The Standard expanded into the Pennsylvania Oil Regions, gaining control of the Imperial Refinery near Oil City and bringing J.J. Vandergrift into the Standard management. Two large refineries in Titusville joined the Standard and John Archbold (later the President of Standard Oil) was brought into the management. The Standard expanded into Pittsburgh by merging Warden, Frew & Co. and Lockhart, Frew & Co., thereby acquiring half the refining capacity of Pittsburgh. The Standard expanded into Philadelphia by buying the largest refinery.
In 1875, the Standard bought more pipelines and firms in the oil buying business and merged them all into the United Pipe Lines in 1877. Flagler and Rockefeller negotiated an agreement with the railroads: the Pennsylvania Railroad would carry 51% of Standard Oil shipments; the Erie 20%; the NY Central 20%; and the Baltimore & Ohio 9%; and obtained rebates from all the railroads for being an "evener" (that is, the Standard was charged with making certain that the railroads all got their "fair" share).
In 1875-76, Johnson N. Camden (later a senator from West Virginia) came into the Standard secretly and moved to buy up all the West Virginia oil supply to squeeze the Pittsburgh independents. By 1876 Camden gained control of most of the West Virginia refineries.
In 1877, Standard bought the Columbia Conduit Co. of PA and gained control of its pipelines and refineries. Columbia had tried to bypass the Pennsylvania Railroad by building a pipeline from the Oil Regions down to the new B&O railroad line near Pittsburgh. The Pennsylvania Railroad used armed guards to prevent them from laying a pipeline under its right-of-way north of Pittsburgh. The Standard gained control of most of the property of the Empire Transportation Company -- a subsidiary of the Pennsylvania Railroad that had its own fleet of tank cars, pipelines, lake steamers, and terminals in New York harbor. The Empire had briefly threatened the Standard, but Rockefeller built 600 new tank cars, cut prices, and cancelled all his shipments over the Pennsylvania Railroad. The railroad capitulated and sold Rockefeller the Empire's assets.
In 1877-78, the Standard and the trunk lines agreed on a new split: Pennsylvania Railroad 47%; NY Central 21%; Erie 21%; B&O 11%. New York City was to get 63% of the total traffic and Baltimore and Philadelphia 37%. On refined oil, non-Standard companies shipping from Cleveland, Pittsburgh, and Titusville paid $1.44.5 per barrel while the Standard paid $.80!
In 1878, the Standard forced the railroads to pay a drawback of 20-35 cents a barrel of crude oil shipped by any other party. In effect, this was a tax levied by the Standard upon its competitors. This combination of rebates and "taxes" (some authors dub this a "drawback" -- but that term is also used to refer to a specific type of rebate) is what forced the remaining independent refiners to capitulate to the Standard. Production increased in the Pennsylvania Oil Regions because of a large discovery in the Bradford area. Standard was forced to frantically build as many large holding tanks as possible to hold the market glut of oil.
By 1879, the Standard Oil Company did about 90 percent of the refining in the United States, with almost 70 percent being exported overseas. The business had become so large and so complex that Rockefeller only dealt with the major problems and the larger outlines of his affairs. Rockefeller was only 40 years old.
The Standard’s only serious competitor -- the Tidewater Pipe-Line Company (later the Tidewater Oil Company) -- emerged in 1879-83. It took Rockefeller by surprise and succeeded in building a pipeline from the Oil Regions east across northern Pennsylvania to Williamsport, where the oil was transferred to the Reading Railroad. The Reading then took the oil down to a refinery at Chester, Pennsylvania on the Delaware Bay. Rockefeller tried to gain control of Tidewater but failed, and his rival had about 10% of the market in 1888.
The Standard Oil Trust: 1882-1892
On January 2, 1882 the Standard Oil Trust was formed. Attorney Samuel Dodd came up with the idea of a trust. A Board of Trustees was set up and all the Standard properties were placed in its hands. Every stockholder received 20 Trust certificates for each share of Standard Oil stock, and all the profits of the component companies were sent to the nine trustees who determined the dividends. The nine trustees elected the directors and officers of all the component companies.
The Trust was capitalized quite conservatively at $70,000,000 -- the true value was about $200,000,000 (no stock watering at the Standard). The nine Trustees controlled 23,314 of the 35,000 shares with J.D. Rockefeller holding 9,585 shares.
Rockefeller, at age 43, was the leader of the Trust because he was "primus inter pares" (first among his peers), not a dictator. As such, he could not dictate policy even when he felt strongly that he was right. An example of this was the Lima Oil field in Ohio. The field had been discovered in the early 1880s. The problem was that the oil was "sour" -- that is, it had a very high sulfur content so it smelled like rotten eggs. Even worse, when it was refined into kerosene and used in lamps it produced too much soot, which coated the lamp chimneys. Rockefeller wanted to buy up as much of the oil as possible and worry about solving the sulfur problem later. The other directors were unenthusiastic about this policy and John Archbold began quietly selling some of his Trust shares in the Standard. By 1888, the Standard owned 40,000,000 barrels of the Lima oil, which were stored in huge tank farms at the fields. Rockefeller hired a great chemist, Herman Frasch, who, with the aid of talented Standard engineers, devised a process using copper oxides to remove the sulfur from the oil. The result was a bonanza for the Standard, vindicating Rockefeller’s judgement.
By 1890, The Standard had set up an elaborate nationwide distribution system that reached nearly every American town. By 1904, 80% of American towns were served by Standard Oil carts that delivered the various products directly to businesses and homes. Standard Oil’s campaign to dominate even the smallest of the retail markets is probably the single most important reason that company became so disliked by the American public. The Standard was aggressive in its marketing practices and tried to force all grocery and hardware stores that sold kerosene and lubricants to sell only Standard products. This policy -- though successful in the short run -- made the Standard widely unpopular and simply increased its vulnerability to political attack.
On March 21, 1892 the Trust was formally dissolved. The Attorney General of Ohio had brought suit against the Trust in 1890 and it lost in 1892. Each trust certificate was to be exchanged for the proportioned share of stock in the 20 component companies of the Standard. The irony is that this had no practical effect on the Combination. The same men were still in charge, only now they were simply the majority shareholders of all the component companies.
Rockefeller Exits: 1892-1897
During 1891-92 all the evidence suggests that Rockefeller had a partial nervous breakdown from overwork. He lost all of his hair, including his eyebrows, and suffered from ill health in the early 1890s.
During this period Rockefeller's wealth had increased to such an extent that his major problem was what to do with it all. He solved this problem by hiring Frederick T. Gates in September of 1891 as a full-time manager of his fortune. By this time, Rockefeller was literally inundated with appeals from individuals and charities for funds. Gates not only removed this burden; he also oversaw all of Rockefeller’s investments, which were becoming huge in their own right. For example, by 1897 Rockefeller owned large holdings of the Missabe iron range in Minnesota, a railroad to carry the ore to Lake Superior, and a fleet of huge ore-carrying lake steamers. In 1901 Rockefeller sold his iron ore-related business to J.P. Morgan for $80,000,000 with an estimated profit of at least $50,000,000 -- a huge fortune in its own right, but it was just one of his investments. Morgan added the Rockefeller properties to the U.S. Steel Corporation.
By 1896, Rockefeller stopped going to his office daily and in 1897 he retired, at the age of 58. He took part in some management activity until 1899 but none to speak of thereafter. John Archbold ran Standard Oil from the mid-1890s onward. Archbold disliked prominence and asked Rockefeller to remain as the nominal president of Standard. Not publicly announcing his retirement was a great mistake on Rockefeller's part. Rockefeller had resisted the temptation to exploit the Standard's near-monopoly position by raising prices "too" much. Although Rockefeller's pricing policies did result in some "monopoly profits" for the Standard, they were fairly mild. Not so Archbold. He raised prices aggressively, and the dividends rolled in. The consequence was that Rockefeller got all the blame for the policies even though he had almost no further role in management.
Retirement and Philanthropy
From the mid-1890s until his death in 1937, Rockefeller’s activities were philanthropic. Rockefeller's fortune peaked in 1912 at almost $900,000,000, but by that time he had already given away hundreds of millions of dollars. His son, John D. Rockefeller, Jr., in 1897 joined Gates in the full time management of the fortune.
The University of Chicago -- which Rockefeller was largely responsible for creating -- alone received $75,000,000 by 1932.
He set up, at the urging of his son, the Rockefeller Institute for Medical Research (now Rockefeller University) and his gifts to it totaled $50,000,000 by the 1930s.
He founded the General Education Board in 1903 (later the Rockefeller Foundation). The General Education Board helped to establish high schools throughout the South by providing free professional advice on improving instruction and education. The effort was a cooperative one, and local money was used to build the high schools. In 1919, Rockefeller donated $50,000,000 to the Board to raise academic salaries, which were very low in the wake of WWI.
The Rockefeller Foundation was officially established in 1913 and Rockefeller transferred $235,000,000 to it by 1929.
In 1909, Rockefeller established the Rockefeller Sanitary Commission which was largely responsible for eradicating hookworm in the South by 1927.
When Rockefeller died, on May 23, 1937, his estate totaled only $26,410,837. He had given most of his property to his philanthropies and to his son and other heirs.
Rockefeller was a Schumpeteran entrepreneur. He clearly changed "the stream of the allocation of resources over time by introducing new departures into the flow of economic life" by creating the modern oil industry. His emphasis on size and efficiency and the use of modern chemistry resulted in the development of a wide variety of new products that made the lives of ordinary people better as a consequence. He made light cheap for untold millions and his great creation was ready, willing, and able to provide the cheap gasoline when it was needed, thus ushering in the age of the automobile in America.
Last, but not least, he set the standard for philanthropy. Just the eradication of hookworm in the South alone would merit his place as one of the great humanitarians of the 20th Century. But his reputation was so sullied that he never received the credit that he was due for this great act on behalf of humankind.
The Rockefeller clan is as secretive as it is influential, and the
majority of the family manages to skirt the public eye. Nonetheless,
there are no shortage of Rockefellers whose standalone successes would
make even the Gilded Age oil baron proud. The single wealthiest family
member is David Rockefeller, who was CEO of Chase National Bank (now
JPMorgan Chase) and commands a fortune that
Forbes values at $3
billion. Politically well connected, Rockefeller was offered – and
declined – roles as Secretary of the Treasury and Chairman of the
Federal Reserve. He is perhaps most infamous for helping to precipitate
the Iran hostage crisis by encouraging President Jimmy Carter to admit
the Shah of Iran, Mohammad Reza Pahlavi, to the U.S. for hospital
treatment.
Many others in the family also made substantial inroads in politics,
collectively holding enough posts to rival another clan of American blue
bloods, the Kennedys. The biggest political name in the family is that
of the deceased Nelson Rockefeller, brother of David, who served as Vice
President under Gerald Ford. Another of David’s brothers, Winthrop
Aldrich Rockefeller, became the first Republican Governor of Arkansas
since reconstruction. His son, Winthrop Paul Rockefeller, continued the
family legacy by serving as the state’s Lieutenant Governor until his
untimely death in 2006. The only living Rockefeller policymaker is
Winthrop Paul’s cousin, John Davison Rockefeller IV, who currently
serves as a U.S. Senator from West Virginia.
John D. Rockefeller, an American industrialist (a person who owns or oversees an industrial corporation) and philanthropist (a person who works to help mankind), founded the Standard Oil Company, the University of Chicago, and the Rockefeller Foundation.
Childhood
John Davison Rockefeller was born on July 8, 1839, in Richford, New York, the second of six children. His father owned farm property and traded in many goods, including lumber and patent medicines. His mother, who was quite the opposite of his father's fun-loving ways, brought up her large family very strictly. After living in Oswego, New York, for several years, the family moved to Cleveland, Ohio, in 1853, when it was beginning to grow into a city. John graduated from high school there and excelled in mathematics.
After graduation Rockefeller attended a commercial college for three months, after which he found his first job at the age of sixteen as a produce clerk. In 1859, at age nineteen, he started his first company, Clark and Rockefeller, with a young Englishman. They grossed (money earned before expenses) four hundred fifty thousand dollars in the first year of trading. Clark did the fieldwork while Rockefeller controlled office management, bookkeeping, and relationships with bankers.
Expanding businesses
From the start Rockefeller showed a genius for organization and method. The firm prospered during the Civil War (1861–65), when Confederate (Southern) forces clashed with those of the Union (North). With the Pennsylvania oil strike (1859) and the building of a railroad to Cleveland, they branched out into oil refining (purifying) with Samuel Andrews, who had technical knowledge of the field. Within two years Rockefeller became senior partner; Clark was bought out, and the firm Rockefeller and Andrews became Cleveland's largest refinery.
With financial help from S. V. Harkness and from a new partner, H. M. Flagler (1830–1913), who also secured favorable railroad freight rebates, Rockefeller survived the bitter competition in the oil industry. The Standard Oil Company, started in Ohio in 1870 by Rockefeller, his brother William, Flagler, Harkness, and Andrews, had a worth of one million dollars and paid a profit of 40 percent a year later. While Standard Oil controlled one-tenth of American refining, the competition remained.
Rockefeller still hoped to control the oil industry. He bought out most of the Cleveland refineries as well as others in New York, Pittsburgh, and Philadelphia. He turned to new transportation methods, including the railroad tank car and the pipeline. By 1879 he was refining 90 percent of American oil, and Standard used its own tank car fleet, ships, docking facilities, barrel-making plants, depots, and warehouses.
Rockefeller came through the Panic of 1873, a severe financial crisis, still urging organization of the refiners. As his control approached near-monopoly (unfair control over an industry), he fought a war with the Pennsylvania Railroad in 1877 which created a refining company to try to break Rockefeller's control. But bloody railroad strikes (workers' protests) that year forced them to surrender to Standard Oil. Rockefeller's dream of order was near completion.
America's first trust
By 1883, after winning control of the pipeline industry, Standard's monopoly was at a peak. Rockefeller created America's first great "trust" in 1882. Ever since 1872, Standard had placed its gains outside Ohio in the hands of Flagler as "trustee" because laws denied one company's ownership of another's stock. All profits went to the Ohio company while the outside businesses remained independent. Nine trustees of the
John D. Rockefeller. Courtesy of the Library of Congress.
John D. Rockefeller.
Courtesy of the
Library of Congress
.
Standard Oil Trust received the stock of forty businesses and gave the various shareholders trust certificates in return. The trust had a worth of about seventy million dollars, making it the world's largest and richest industrial organization.
In the 1880s the nature of Rockefeller's business began to change. He moved beyond refining oil into producing crude oil itself and moved his wells westward with the new fields opening up. Standard also entered foreign markets in Europe, Asia, and Latin America. From 1885 a committee system of management was developed to control Standard Oil's enormous empire.
Attacking the trust
Public opposition to Standard Oil grew with the emergence of the muckraking journalists (journalists who expose corruption), in particular, Henry Demarest Lloyd (1847–1903) and Ida Tarbell (1857–1944) who published harsh stories of the oil empire. Rockefeller was criticized for various practices: railroad rebates (a system he did not invent and which many refiners used); price fixing; and bribery (exchanging money for favors); crushing smaller firms by unfair competition, such as cutting off their crude oil supplies or restricting their transportation outlets. Standard Oil was investigated by the New York State Senate and by the U.S. House of Representatives in 1888. Two years later the Ohio Supreme Court invalidated Standard's original trust agreement. Rockefeller formally disbanded the organization and in 1899 Standard was recreated legally under a new form as a "holding company," (this merger was dissolved by the U.S. Supreme Court in 1911, long after Rockefeller himself had retired from active control in 1897).
Perhaps Rockefeller's most famous excursion outside the oil industry began in 1893, when he helped develop the Mesabi iron ore range of Minnesota. By 1896 his Consolidated Iron Mines owned a great fleet of ore boats and virtually controlled Great Lakes shipping. Rockefeller now had the power to control the steel industry, and he made an alliance with the steel king, Andrew Carnegie (1835–1919), in 1896. Rockefeller agreed not to enter steelmaking and Carnegie agreed not to touch transportation. In 1901 Rockefeller sold his ore holdings to the vast new merger created by Carnegie and J. P. Morgan (1837–1913), U.S. Steel. In that year his fortune passed the $200 million mark for the first time.
Philanthropic endeavors
Rockefeller, from his first employment as a clerk, sought to give away one-tenth of his earnings to charity. His donations grew with his fortune, and he also gave time and energy to philanthropic (charity-related) causes. At first he depended on the Baptist Church for advice. The Church wanted its own university, and in 1892, the University of Chicago opened. The university was Rockefeller's first major philanthropic creation, and he gave it over $80 million during his lifetime. Rockefeller chose New York City for his Rockefeller Institute of Medical Research (now Rockefeller University), chartered in 1901. In 1902 he established the General Education Board.
The total of Rockefeller's lifetime philanthropies has been estimated at about $550 million. Eventually the amounts involved became so huge (his fortune reached $900 million by 1913) that he developed a staff of specialists to help him. Out of this came the Rockefeller Foundation, chartered in 1913, "to promote the well-being of mankind throughout the world." He died on May 23, 1937, in Ormond, Florida.
Rockefeller's personal life was fairly simple. He was a man of few passions who lived for his work, and his great talent was his organizing genius and drive for order, pursued with great single-mindedness and concentration. His life was absorbed by business and family (wife Laura and four children), and later by organized giving. He created order, efficiency, and planning with extraordinary success and sweeping vision.
John D. Rockefeller: The Ultimate Oil Man
John Davison Rockefeller was born the second of six children to a working class family in Richford, New York, a small community between Ithaca and Binghamton. In 1853, his family moved to a farm in Strongsville, Ohio, near Cleveland. He pursued a public education, but left high school to take business training.
In 1855, Rockefeller found his first job, working as an assistant bookkeeper for less than four dollars a week. He showed a talent for detail and a strong work ethic from the beginning. In 1859, Rockefeller's diligence was rewarded by being made a partner.
In that same year, oil was discovered in not-too-distant Titusville, Pennsylvania, touching off the growth of a new industry driven largely by the demand for kerosene for lighting. Rockefeller was immediately attracted to the oil business, but was repelled by the disorder of the wildcatters.
He finally made his bid in 1863, by creating a refining business with Maurice B. Clark and other partners. Cleveland, with its Great Lakes access, rail service and supply of immigrant labor, emerged early as a refining center. In 1870, Rockefeller teamed with his brother William, Henry M. Flagler, and Samuel Andrews (inventor of an inexpensive means of refining crude oil) to establish the Standard Oil Company.
John D. Rockefeller
Standard Oil and its subsidiaries quickly managed to consolidate the refining business in the Cleveland area and then began to extend their control into Pittsburgh, Philadelphia and New York City. Beginning in the 1870s, Standard Oil employed a number of cutthroat business practices, including:
Monopolization — Rockefeller is remembered for buying up all of the components needed for the manufacture of oil barrels in order to prohibit his competitors from getting their product on the market
Rate Wars — the giant Standard Oil was able to withstand short term losses by cutting the price of oil; smaller competitors could not keep pace and either went out of business or sold out to Rockefeller
Rebates — Rockefeller was able to demand a refund on public rates offered by the railroads; the carriers agreed to this practice because of Standard's immense volume
Intimidation — on more than one occasion Standard dispatched thugs to break up competitors' operations that could not otherwise be controlled
Standard Oil originally followed the path of horizontal integration, but later in its history it turned toward vertical integration.
Quotes by John D. Rockefeller: The Ultimate Oil Man.
Regarding Competition
The American Beauty Rose can be produced in the splendor and fragrance which bring cheer to its beholder only by sacrificing the early buds which grow up around it. This is not an evil tendency in business. It is merely the working-out of a law of nature and a law of God.
Address to Brown University students, 1904
Regarding Making Money
I believe the power to make money is a gift of God … to be developed and used to the best of our ability for the good of mankind. Having been endowed with the gift I possess, I believe it is my duty to make money and still more money and to use the money I make for the good of my fellow man according to the dictates of my conscience.
Interview with William Hoster
Quotes regarding John D. Rockefeller: The Ultimate Oil Man.
By Will Rogers
Sure must be a great consolation to the poor people who lost their stock in the late crash to know that it has fallen in the hands of Mr. Rockefeller, who will take care of it and see it has a good home and never be allowed to wander around unprotected again. There is one rule that works in every calamity. Be it pestilence, war, or famine, the rich get richer and poor get poorer. The poor even help arrange it.
Diary of America
