There is something to be said about those who made a lot of money in the early days of America. They were captains of industry, titans who knew no bounds. Yes, many of them made shortcuts, plenty of those men were considered to be greedy robber barons, but hardly anyone can deny the fact that without those magnates, America would not be the powerhouse that it is today.
One such legacy is the story of a man who started out small, but would eventually go on to build the biggest oil company in the world. That man’s name was John D. Rockefeller and today we’re going to be looking into the entirety of his life.
John D. Rockefeller started out in a relatively quiet family setting, born in the idyllic town of Richford, New York, where he would spend his days with his five other siblings and mother. His father, Bill, was a huckster, a con-man and a cheat, who would often travel across the country, essentially selling snake oil. Bill was, more or less, a complete cheat and would often pop in and out of his children’s lives. He wasn’t a kind nor was he a sincere man, for he had fathered many other children and had even started a second family far away from John. Yet, there can be something said for the way that Bill’s influence had on the young John, for he learned from his father how to desire the very best, instead of just settling for less.
Life for John was one of industry and hard work. In 1855, he took upon himself the task of getting a real job at the age of 16. He found work as an assistant bookkeeper, where he would assist with keeping records of shipments and calculating the cost of transportation. He had been previously enrolled in a ten-week course designed to teach bookkeeping, and pretty soon he was finding it easy enough to do the job well. His performance was noticed and he was eventually given a handsome raise to the tune of $25 a month. This kind of money was enough to help begin to fund his seedling ideas on how to work for himself.
In 1859, he had sufficiently managed to save $1,000 dollars and managed to finagle his father into giving him a loan of the equal amount, giving John enough funds to be able to invest in the sale of produce. He was able to make sufficient money from the business due to the fact that the Civil War had broken out in 1861 and this naturally caused the value of produce to skyrocket. Of course, the Civil War itself was a problem for John D. Rockefeller due to the fact that he was scheduled to be drafted to serve the Union during the war. This was problematic. Despite the fact that John Rockefeller believed in abolition and was a staunch supporter of Lincoln, he had no desire to leave his business behind and go fight in a war. So, he found a loophole through the Enrollment Act known as Substitution. Back then, it was possible for a wealthy businessman to pay someone several hundred dollars in order to serve in the war on their behalf. So, Rockefeller did what most rich people back then did and paid someone to replace him in the draft, so that he could continue working on his business.
Oil production was starting to become a big deal across the United States. In Pennsylvania, there was significant production of oil and the government was trying to incentivize the harnessing of oil, often to disastrous effects because they did not have the most efficient way of processing and gathering oil. Rockefeller took notice of this emerging market and made the executive decision to build an oil refinery in Cleveland. The problem with oil production back then was the fact that a significant amount of oil would get wasted due to inefficient extraction methods. A company would dredge up a large amount of oil, collect as much as it could and then allow for the runoff to be dumped into bodies of water, since that part of the product didn’t have any use for fuel. Rockefeller saw a different opportunity with such runoff and began to sell it as all sorts of different products. They would develop paraffin wax, lubricating oils and petroleum jellies with the runoff and sell it for a hefty profit. This would eventually lead to many railroad companies taking an interest in the sheer amount of product that Rockefeller’s refiner was moving.
John had owned the refinery with several other parties, including two gentlemen known as the Clark Brothers, whom he chose to buy out in 1865, gaining him significant control of the refinery and putting most of his wealth into the oil business. This left him and his partner, a chemist by the name of Samuel Andrews, to be the only ones left controlling the refinery. They started their business up, calling themselves Rockefeller and Andrews and it was the day that John’s legacy would begin.
Rockefeller’s dedication to using the crude oil refinement process byproduct set him apart from his competition and enabled him to gain dominance in the oil refinery world. The money coming in was extremely good and soon he was able to build another refinery and would go on to end up owning the largest refinery in the world. He was able to gain a strong market dominance due to the Cleveland areas capacity to produce kerosene oil and his efforts at improving the refinement process yielded better and better results.
In 1870, Rockefeller decided that his partnership with Andrews and Flagler (another oil tycoon) had run its course and that he was ready for more than just a partnership. He wanted to run his own operation and so he started Standard Oil Company, a corporation. He issued shares to his partners but established himself as chairman. He had seen the immense opportunity in oil, but there was a problem: competition. The barriers to entry for the oil business weren’t particularly high — all one needed was just enough money to purchase a refinery and they could start thier business — meaning there would be plenty of competition for Standard Oil; competition that Rockefeller did not want to have to deal with.
So, John chose to push for a hard campaign of absorbing competitors through any means necessary. Standard Oil was like a shark, prowling across the nation and looking for refineries to purchase, absorbing them into Standard Oil. Rockefeller’s blitz was unheard of at the time and moved so fast that within two years, the majority of Cleveland’s refineries belonged to Standard Oil. Rockefeller was a determined man and had the sales skills to back up his desires, so he had worked on secret deals, sweetheart bargains and other incentives with his rivals in order to convince them to join his side. This massive amount of product that Standard Oil was shipping caused even more of a frenzy amongst the railroad companies, as they all competed with one another to earn Rockefeller’s favor, leading to even more special dealings in which Rockefeller would receive rebates for his business, making the price of kerosene oil even lower than before. This led to an abundance of oil hitting the American market and it was affordable enough to be used in many homes.
Many might believe that Rockefeller was acting ruthlessly with the way that he absorbed other companies, but he saw it differently. The man had always been extremely focused on processes and systems, going so far as to be obsessed with tracking every single expense that he had made (whether personal or professional) within a little book he called Ledger A. When he focused on consuming the weaker refineries and underperforming businesses, he considered himself to be doing them a favor, as the reason they were failing wasn’t because they didn’t have a good product, but rather because they had poor business processes. Indeed, Rockefeller’s focus on process was so extremely pressing, that it was the sole reason that Standard Oil was doing so well. The company continued to grow simply because Rockefeller understood the logical underpinnings of the business and knew what was necessary for the company to do well.
Yet, despite the fact that Standard Oil had quickly gained control of 90% of the domestic oil market, there was a growing hatred stemming from the public toward Rockefeller’s actions. The press treated him bitterly, looking at his backroom deals, secret bargains and transportation arrangements with the railroads as being unethical and unfair. They pointed their finger at his growing wealth and claimed Standard Oil workers were being exploited. To make matters worse, despite the fact that Standard Oil had made kerosene cheap enough to be used in just about every home, it was growing clear that the government didn’t want Standard Oil to be so big. This was a big problem.
Standard Oil was, more or less, the first real monopoly within America. It had worked hard to gain market dominance and had firm control over the oil market. The vilification of the company was intense, despite the fact that it had employed over 100,000 employees Americans and created industry across the country. It didn’t help that during the height of his company’s power, a book was released documenting all of the practices that Rockefeller had engaged in whilst building this corporation. There was a lot of pressure at that point, and it was starting to get to Rockefeller’s head. He grew ill from the stress and began losing his hair, he suffered from severe insomnia and depression at times. He had worked very hard to create a massive company that was changing the way America did business, but in the end, was hated by those he tried to serve.
These factors led to Rockefeller making the decision to reduce his role within Standard Oil. It had, for a brief time, been the biggest oil company in all the world, but the problem was that he found himself entirely unable to seize control of the foreign markets as he had once dreamed of. As pressure from the public and scrutiny from the government increased, it was becoming clear that he wouldn’t reach his dream of owning all the oil on the planet.
Eventually, the government ruled that Rockefeller’s company violated the Sherman Anti-Trust Act, a bill designed to prevent companies from colluding and work together, and ordered that Standard Oil be broken up into smaller companies. This was ruled in 1911 and Rockefeller was given six months to get their affairs into order. Standard Oil was eventually broken into 34 companies and as the major shareholder of Standard Oil, Rockefeller was awarded shares those 34 companies as well. This inadvertently ended up increasing his fortune as each of those 34 companies began to flourish. That year, his wealth increased to 900 million dollars.
With Standard Oil having been broken up, Rockefeller found himself no longer working as hard with big oil. His health had suffered and he found himself beginning to focus more on his philanthropy. While he was a ruthless businessman, a shrewd dealer, and a tough, no-nonsense negotiator, he was also a deeply religious man. He was a Baptist man and followed after the Christian principles of giving to those who were in need. One such principle that he took very seriously was the idea that when a man is to give to others, he is to do it in secret, a principle espoused by Jesus Christ. So, while many people in America reviled him for his role in Big Oil and the practices that many considered to be exploitative, most did not know about the charitable efforts.
A man obsessed with process, however, Rockefeller didn’t just hand his money to those who were poor, but rather he focused on developing a good system of giving away money so that it would create the most good in the world. He funded education as much as possible, investing money into the founding of the Atlanta Baptist Female Seminary as well as granting 80 million dollars to the University of Chicago. Science and medicine were also important to him, as he founded the Rockefeller Institute for Medical Research in 1901. Its mission was to figure out what was causing diseases and how to stop them. Thanks to the existence of the Institute, many breakthroughs in medical science were made.
His emphasis on education could be seen throughout his entire life. One such product of his focus on higher education was the creation of the General Education Board, founded in 1903. The General Education Board’s purpose was to promote education amongst all people and distributed large sums of money to help improve education at just about every level.
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Indeed, John Rockefeller was a man that most historians are forced to puzzle over. While he was a brilliant magnate and a genius when it came to managing companies, many of his practices were considered to be unethical by the general public. His penchant for secret deals, backroom discussions, kickbacks, and rebates, contributed to this image of him being a cruel robber baron, taking as much money as he could for himself and giving nothing back. Yet at the same time, we are forced to deal with the fact that he lived a relatively modest life, often buying one suit per year and wearing it until it was completely ragged before purchasing another. His family was taken care of, but were not spoiled as he was extremely cautious with handing money to those whom he loved. His focus on philanthropy was intense and he ended up giving away nearly 540 million dollars before passing away at the age of 98 in 1937. He was, more or less, a man of his time and a man of paradoxes. Whether a reader can conclude that he was a good man for his extreme charity, or a bad man, for his secret deals and collusions, it is without dispute that John D. Rockefeller was a man who greatly changed the trajectory of American business forever.
Philanthropy Roundtable : http://www.philanthropyroundtable.org/almanac/hall_of_fame/john_d._rockefeller_sr
The History of John D. Rockefeller: http://thehustle.co/the-history-of-john-d-rockefeller-standard-oil
U.S History: http://www.ushistory.org/us/36b.asp
Rockefeller Archive Center: http://rockarch.org/bio/jdrsr.php
Biography of Rockefeller: http://www.biography.com/people/john-d-rockefeller-20710159#early-years