John D. Rockefeller
John Davison Rockefeller (July 8, 1839 – May 23, 1937) was an American industrialist who played a prominent role in the early oil industry with the founding of Standard Oil (ExxonMobil is the largest of its descendants). Over a forty-year period, Rockefeller built Standard Oil into the largest company in the world, and was for a time the richest man in the world. [1] A devout Baptist, he supported many church activities throughout his life, and spent his last forty years focusing on philanthropic pursuits, primarily education and public health, eventually giving away about half of his wealth. Its the roc, holla!
Early Life
Rockefeller was born in Richford, New York, the second of the six children to William Avery Rockefeller (November 13, 1810 - May 11, 1906) and Eliza Davison (September 12, 1813 - March 28, 1889). William was a travelling salesmen of dubious products, such as "cancer cures," a philanderer and bigamist. As he was frequently gone for extended periods, Eliza struggled to maintain a semblance of stability at home. Young Rockefeller's contemporaries described him as articulate, methodical, and discreet. [see Chernow] When he was a boy, his family moved around western New York from Richford to Moravia and, in 1851, to Owego, where he attended Owego Academy. In 1853 his family bought a house in Strongsville, near Cleveland, Ohio. John entered Central High School in Cleveland at the age of fifteen. He and his brother, William, boarded at a house near their school. John joined the Erie Street Baptist Church, which later became the Euclid Avenue Baptist Church. Active in its affairs, he became a deacon at the age of nineteen and a trustee at the age of 21. He left high school in 1855 to take a business course at Folsom Mercantile College, completing the six-month course in three months.
After six weeks of looking for a job, the 16 year old Rockefeller finally found employment as an apprentice bookkeeper at Hewitt & Tuttle, commission merchants and produce shippers, for 50 cents a day. His seriousness, diligence, and honesty led to steadily increasing responsibilities and pay over the next two years. Nevertheless, Rockefeller reached the point where he felt he was no longer getting paid according to his contribution and, in 1859, left to form his own produce commission business with a partner, Maurice Clark. Clark & Rockefeller quickly became a successful firm, and its partners accumulated enough capital to invest in other Cleveland businesses. In 1863, they invested in an oil refinery with chemist Samuel Andrews.
Rockefeller married Laura Celestia ("Cettie") Spelman (September 22,1839-March 12,1915), on September 8, 1864 in Cleveland. The couple would have four daughters and a son. The eldest daughter, Bessie (1866-1906), married Charles Strong, a philosopher. The second daughter, Alice (1869-1870), died in infancy. Alta (1871-1962), married E. Parmalee Prentice, a lawyer. The youngest daughter, Edith (1872-1932), married Harold Fowler McCormick, a friend of John, Jr., and son of Cyrus McCormack, inventor of the mechanical harvesting reaper. His only son, John D., Jr. (1874-1960), married the daughter of the most powerful leader in the Senate, Nelson W. Aldrich, and eventually inherited much of the family fortune and continued his father's philanthropic work.
In 1865 Rockefeller had gotten so involved in the oil business, and was so confident of its future growth, that he sold out his share of the commission business to his partner Clark, then applied the proceeds toward a significant investment in another refinery, and formed the partnership of Rockefeller & Andrews.
At about the same time Rockefeller's brother, William, started another refinery. In 1867 Rockefeller & Andrews absorbed this business, and Henry M. Flagler joined the partnership, forming Rockefeller, Andrews & Flagler. In 1870 the two Rockefellers, Andrews, Flagler, and a silent partner, Stephen V. Harkness, formed the Standard Oil Company, with John D. Rockefeller as president.
Standard Oil
By the early 1870s, Cleveland had become established as one of the five main refining centers in the U.S. (besides Pittsburgh, Philadelphia, New York, and the region in northeastern Pennsylvania where most of the oil originated), and Standard Oil had established itself as the most profitable refiner in Cleveland. When it was found out that at least part of Standard Oil's cost advantage came from secret rebates from the railroads bringing oil into and out of Cleveland, the competing refiners insisted on getting similar rebates, and the railroads quickly complied. By then, however, Standard Oil had grown to become one of the largest shippers of oil and kerosene in the country.
The railroads were competing fiercely for traffic and, in an attempt to create a cartel to 'stabilize' freight rates, formed of the South Improvement Company. Rockefeller agreed to support this cartel if they gave him preferential treatment as a high volume shipper which included not just steep rebates for his product, but also rebates for the shipment of competing products. Part of this scheme was the announcement of sharply increased freight charges, which touched off a firestorm of protest which eventually led to the discovery of Standard Oil's part of 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 the railroads soon backed off.
Undeterred, 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, and buying them out. In six weeks in 1872, Standard Oil had absorbed 22 of his 26 Cleveland competitors. Eventually, even his former antagonists, Pratt and Rogers saw the futility of continuing to compete against Standard Oil, and, 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 (1858-1913) 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, then make them a decent offer. If they refused his offer, he told them he would run them into bankruptcy, then cheaply buy up their assets at auction. Most capitulated.
Monopoly
Standard Oil gradually gained almost complete control of oil production in America. At that time, many legislatures had made it difficult to incorporate in one state and operate in another. As a result, Rockefeller and his partners owned separate companies across dozens of states, making their management of the whole enterprise rather unwieldy. In 1882, Rockefeller's lawyers created an innovative form of partnership to centralize their holdings, giving birth to the Standard Oil Trust. The partnership's size and wealth drew much attention. 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 percent over the life of the company), Standard Oil's business practices created intense controversy. The firm was attacked by journalists and politicians throughout its existence, giving momentum to the anti-trust movement.
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. Tarbell was considered a muckraker--not very different from what one would call an investigative journalist today. 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 rich 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.)
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, leading to the dissolution of the trust. Rockefeller continued to consolidate his oil interests as best as he could until New Jersey, in 1899, changed it's incorporation laws to effectively allow a re-creation of the trust in the form of a single holding company. At its peak, Standard Oil had about 90 percent of the market for kerosene products.
On May 15, 1911, the Supreme Court of the United States held that Standard Oil, which by then held only a 64% market share, remained a monopoly and ordered it to be broken up into 34 new companies. These included, among many others, Continental Oil, which became Conoco; Standard of Indiana, which became Amoco; Standard of California, which became Chevron; Standard of New Jersey, which became Esso, and later, Exxon; Standard of New York, which became Mobil; and Standard of Ohio, which became Sohio. Rockefeller, who had rarely sold shares, owned stock in all of them.
JDR's wealth
In 1902 an audit showed Rockefeller was worth about $200 million--compared to the total national wealth in 1902, which was about $101 billion. (The GDP that year was about $22 billion, but the $200 million refers to assets not to annual income.) His wealth grew significantly after 1911, as the demand for gasoline soared, reaching about $900 million. In his lifetime he gave away about $550 million. After 1900 he actively bought stocks and bonds on his own account, investing heavily in banking, mining and railroads.
By 1896, Rockefeller had shed most of his day-to-day involvement in the affairs of Standard Oil, though he retained his title as president until 1911. Most people never realized he had given up control--in 1913, for example, President Woodrow Wilson assumed he was still in charge. By then, he also had significant interests in banking, shipping, mining, and other industries. After 1920 or so most of his fortune was tied up in philanthropic foundations or in long-term family trusts controlled by outside financial managers. That meant that only the annual income could be spent, and that the huge capital base itself could not be used for any purpose, especially not political ones.
Philanthropy
From his very first paycheck, Rockefeller tithed ten percent of his earnings to his church. As his 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 T. Gates after 1891, and after 1897 also by his son.
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." [Rockefeller, 168]
He and his advisors invented the conditional grant that 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 coöperation." [Rockefeller 183]
In 1884, he provided major funding for a college in Atlanta for black women, that became Spelman College (named for Rockefeller's in-laws who were ardent abolitionists before the Civil War).
Rockefeller gave $80 million to the University of Chicago under William Rainey Harper, turning a small Baptist College into a world-class institution by 1900. His General Education Board, founded in 1902, was established to promote childrens' education, including schools for black children in the South. Its most dramatic impact came funding the recommendations of the Flexner Report of 1910 (which had been funded by the Carnegie Foundation for the Advancement of Teaching; it revolutionized the study of medicine in the U.S.
Despite his personal preference for homeopathy, Rockefeller became one of the first great benefactors of health science. In 1901, he founded the Rockefeller Institute for Medical Research in New York City. It changed its name to Rockefeller University in 1965, after expanding its mission to include education. Rockefeller University, a biomedical research institute that would, over the next century, produce or be home to 23 Nobel laureates. He founded the Rockefeller Sanitary Commission in 1909, an organization that eventually eradicated the hookworm disease that had long plagued the South. The Rockefeller Foundation was created in 1913 to continue and expand the scope the work of the Sanitary Commission, which was closed in 1915. He gave nearly $250 million to the Foundation, which focused on public health, medical training, and the arts. It endowed Johns Hopkins School of Hygiene and Public Health, the first of its kind. It built the Peking Union Medical College into a great institution; it helped in war relief, 1914-16; it employed William Lyons Mackenzie King of Canada to study industrial relations. Rockefeller's fourth main philanthropy, the Laura Spelman Rockefeller Memorial Foundation, created in 1918, supported work in the social studies; it was later absorbed in the Rockefeller Foundation.
Oddly enough, Rockefeller was probably best known in his later life for the practice of giving a dimes to children wherever he went. He even gave dimes as a playful gesture to men like tire mogul Harvey Firestone and President Hoover.
Legacy
As a youth, Rockefeller allegedly said that his two great ambitions were to make $100,000 and to live 100 years. He died on May 23, 1937, 26 months shy of this 100th birthday, at the Casements, his home in Ormond Beach, Florida. The next day, former Standard Oil companies the world over stopped work for 5 minutes to honor his memory. He was buried in Lake View Cemetery in Cleveland. After his father's death, his son John D. Rockefeller Jr. retained the (Jr) in his name, often saying there was only one John D. Rockefeller.
Rockefeller had a long and controversial career in 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." [Latham p 104]
Biographer Ron Chernow wrote of Rockefeller:
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." [Titan 1998]
Notwithstanding these varied aspects of his public life, Rockefeller may ultimately be remembered simply for the raw size of his wealth. By the time of his death in 1937, Rockefeller's fortune, by then largely devolved to his son, other family, and various foundations, was estimated at $1.4 billion. Adjusted for inflation, Rockefeller's net worth over the last decades of his life would easily place him among the very wealthiest persons in history. As a percentage of the United States economy, no other American fortune, not Bill Gates' or Sam Walton's, would even come close.
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. Grandson David Rockefeller was a leading New York banker, serving for over 20 years as CEO of Chase Manhattan (now the retail financial services arm of JP Morgan Chase). Another grandson, Nelson A. Rockefeller, was Republican governor of New York and Vice President of the United States. A third grandson, Winthrop Rockefeller, served as Republican Governor of Arkansas. Great-grandson, John D. "Jay" Rockefeller IV is currently a Democratic Senator from West Virginia.
Rockefeller has passed into popular culture as the embodiment of wealth. Oysters Rockefeller was named for him because the dish was so 'rich'. The Rockefeller family was a major benefactor in funding the reconstruction effort in France after the First World War. As a consequence, Rockefeller (along with the Rothschilds) was considered in that country the canonical billionaire--synonymous with extreme wealth. John D. Rockerduck is a Disney character popular in Europe who is a foil of Disney's other well-known rich duck, the avaricious Scrooge McDuck.
See also
References
- Chernow, Ron. Titan: The Life of John D. Rockefeller, Sr. 1998. ISBN 0679438084.
- Folsom, Jr., Burton W. The Myth of the Robber Barons. (1996)
- Hidy, Ralph W. and Muriel E. Hidy. Pioneering in Big Business, 1882-1911: History of Standard Oil Company (New Jersey) (1955)
- Knowlton, Evelyn H. and George S. Gibb. History of Standard Oil Company: Resurgent Years 1911-1927 (1956)
- Latham, Earl ed. John D. Rockefeller: Robber Baron or Industrial Statesman? (1949) excerpts from secondary sources
- Morris, Charles R. The Tycoons: How Andrew Carnegie, John D. Rockefeller, Jay Gould, and J. P. Morgan Invented the American Supereconomy 2005 ISBN 0805075992
- Nevins, Allan. Study in Power: John D. Rockefeller, industrialist and philanthropist (1954). There are numerous editions and versions of this biography.
- Tarbell, Ida M. The History of the Standard Oil Company (1904), there are numerous editions and abridgements of this muckraking book.
- Williamson, Harold F. and Arnold R. Daum. The American Petroleum Industry: The Age of Illumination, 1859-1899 (1959), also vol 2, American Petroleum Industry: the Age of Energy 1899-1959 (1964), economic history
Primary Sources
- John D. Rockefeller; Random Reminiscences of Men and Events (1933)
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Notes
External links
- The History of the Standard Oil Company, by Ida Tarbell, full text, HTML
- Timeline of the Rockefeller family history since his birth
- A genealogy of his family
- John D. Rockefeller in United States Census Records
- Illustrated article about John D Rockefeller and the Standard Oil Company
- Works by John D. Rockefeller at Project Gutenberg