John D. Rockefeller

Rockefeller was born on July 8, 1839 in Richford, New York to William Avery Rockefeller and Eliza Davison. He was the second child of his parents and had five siblings. His father was initially a lumberman, then a traveling agent and then popularized himself as a “botanic physician” and sold elixirs. The localites used to call him as “Big Bill”, and “Devil Bill”. His father spent all his life imparting a good amount of energy on tricks and schemes and ran away from plain hard work. His mother on the other hand struggled hard for the livelihood as William stayed away from his family for long time periods. Young Rockefeller used to help in the general household chores and also earned extra bucks by raising turkeys, selling potatoes and candy. He also sometimes loaned small amount of money to neighbors. Rockefeller was well-mannered, serious, religious, earnest and studious kind of a boy. He was often referred to as an earnest, religious, methodical and discreet individual. Also he was a magnificent debater, loved music and dreamt of a career in music. At the early age only, he showcased a brilliant mind for numbers and detailed accounting. His family shifted to Moravia, New York and then to Owego in 1851. He went to Owego Academy there. In 1853, his family again shifted to Strongsville, a suburb of Cleveland. Rockefeller entered in Cleveland's Central High School and afterwards did a ten weeks business course from Folsom's Commercial College studying bookkeeping.

 

When Rockefeller was 16 years old in 1855, he acquired his first job as an assistant bookkeeper, working for a small produce commission company, Hewitt & Tuttle. He used to work for long hours, but was quite delighted. He was especially very skilled at calculating transportation costs. His three months salary was $50. From the very starting, he donated approximately 6% of his earnings to charity, which, with time, increased to 10%. Rockefeller opted to establish commission business with a partner Maurice B. Clark in 1859. They enhanced $4,000 in capital. Rockefeller stepped ahead slowly in business making good money annually. After wholesale foodstuffs, the partners constructed an oil refinery in 1863 in "The Flats." Andrews, Clark & Company was the direct owner of the refinery. The company comprised of Clark & Rockefeller, chemist Samuel Andrews, and M. B. Clark's two brothers. The commercial oil business was new and less popular. “Whale Oil” became quite expensive for the common man and therefore a demand for a cheaper general-purpose lighting fuel increased highly. In February 1865, he purchased out the Clark brothers at an auction for $72,500 and established a company of Rockefeller & Andrews. Rockefeller was completely clear to grasp the advantage of post-war prosperity and the large growth westwards which was promoted by the great expansion of railroads and an oil-fueled economy. He acquired heavily, reinvested profits, quickly settled down with the changing markets and appointed observers to track the fast growing industry.

 

               

Rockefeller enrolled as a lifelong member of the Republican Party and was a great supporter of Abraham Lincoln and the party’s abolitionist wing. Rockefeller was also a true believer of the Erie Street Baptist Mission Church. At the church he taught Sunday school and also acted as a trustee, clerk and an occasional janitor.  

 

Rockefeller’s brother, William Rockefeller constructed one more refinery in Cleveland in 1866 and brought John into the partnership. Henry M. Flagler also became the partner and the company of Rockefeller, Andrews & Flagler was founded. By the year 1868, Rockefeller continued the exercise of borrowing and reinvesting profits which controlled cost and usage of refineries waste. The firm owned two Cleveland refineries and a marketing subsidiary in New York. Rockefeller, Andrews & Flagler was the ancestor of the Standard Oil Company.

By the ending of the Civil War in America, Cleveland was among the five main refining centers in the United States. Rockefeller established Standard Oil of Ohio in June 1870. In a short time span, the refinery became the most profitable one in Ohio. Eventually Standard Oil grew and became one of the biggest shippers of oil and kerosene in the country. The railroads were involved in serious fighting for traffic and in an effort to develop a cartel to control cargo rates, founded the South Improvement Company, in collusion with Standard and others present outside the main oil centers. The cartel acquired favored treatment as a high-volume shipper, which contained not only steep rebates of up to 50% for their product, but also rebates for the shipment of competing products. Portion of this scheme was the declaration of firmly enhanced freight charges. Therefore the same prompted a firestorm of protest from independent owners of oil well, which also included boycotts and vandalism. This, by the course of time, led to the finding of Standard Oil's part in the deal. Charles Pratt, a major refiner in New York, opposed this plan greatly and thus the proposal for railroads was shortly taken off. Pennsylvania abolished the cartel’s charter and equal rights returned back for some time.

 

Undeterred, despite the criticism by the press, Rockefeller still continued with his self-reinforcing cycle of purchasing competing refiners, enhancing the efficiency of his operations, stressing for discounts on oil shipments, weakening his competition, creating secret deals, increasing investment pools, and purchasing rivals out. In 1872, in less than four months, Standard Oil was able to absorb 22 Cleveland competitors out of 26. By the course of time, even his ex- antagonists, Pratt and Rogers observed the uselessness of continuing to compete against Standard Oil and therefore in 1874, they came out with a secret deal with their old nemesis to be acquired. Pratt and Rogers became the partners of Rockefeller. Specifically, Roger became one of the chief men of Rockefeller in the formation of the Standard Oil Trust. Also, the son of Pratt became the secretary of Standard Oil. For most of Rockefeller’s competitors, he had hardly to show them his books so that they could watch what they were standing against and then present them a decent offer. If by any chance, they refused his offer, he would run them into great economic decline followed by purchasing their assets in auction at extremely cheap rates. Standard was developing quite fast and had addition of its own pipelines, tank cars, and home delivery network.

 

The company kept the oil prices cheap only to suppress the competitors. Rockefeller made his products quite affordable for a layman and to enhance the market penetration. Rockefeller also sometimes sold his products at a much cheaper rated if felt strong requirement of the same. The company came out with over 300 oil-based products ranging from tar, paint to Vaseline and chewing gums. By the ending of 1870s, Standard was indulged in refining more than 90% of the oil in the United States. With this, Rockefeller was listed in the list of millionaires. Standard Oil battled with the Pennsylvania Railroad. Rockefeller had imagined the use of pipelines as a substitute transport system for oil and started a campaign to construct and acquire the same. The railroads after observing the Standard’s invasion into the transportation and pipeline fields, struck back and developed a subsidiary to purchase and construct oil refineries and pipelines. Standard, on the other hand, adhered back its shipments and with the support of other railroads, began a price war that badly reduced freight payments and resulted in labor unrest too. As time passed, Rockefeller dominance increased immensely and finally railroads sold all its oil interests to Standard. But following the after-effects of this battle, in 1879, the Commonwealth of Pennsylvania accused Rockefeller on charges of monopolizing the oil business, commencing flood of similar court proceedings in various states and the business practices of Standard Oil became a national issue.

    

Slowly, Standard Oil acquired almost complete control over oil refining and marketing in the U.S. following horizontal integration. Standard Oil replaced the old distribution system with its vertical system in the industry of kerosene. Kerosene was then supplied through tank cars, which would take the fuel to the local markets and delivered the same to retail customers. In spite of improving the quality and accessibility of kerosene products while largely decreasing their prices to the masses, the company’s business practices invited serious controversy. The company’s most powerful weapons against its competitors were underselling, differential pricing, and hidden transportation rebates. The company was attacked by several journalists and politicians throughout the company’s life, in part for these monopolistic methods, strengthening the anti-trust movement. Also during this time, several legislatures had made it hard to incorporate in one state and function in another. Due to the same, Rockefeller and his associates owned separate corporations across numerous states, creating their managements of the entire enterprise. In order to concentrate their holdings, the lawyer of Rockefeller developed an innovative form of corporation and established the Standard Oil Trust. The “Trust” was an organization of corporations. Its size and wealth snatched the attention of many. Rockefeller and eight other trustees ran 41 companies in the trust. Therefore, public and the press were instantly doubtful of this new legal entity. But other businesses captured the idea and imitated it which further annoyed the sentiments of the public. Eventually, Standard Oil had gained a position of the richest, largest and feared business globally. The company consistently was gaining profit with the passing of each year.

 

The company’s large empire contained of 20,000 domestic wells, 4,000 miles of pipeline, 5,000 tank cars, and more than 100,000 employees. For the time being, its shares of world oil refining touched above 90%. Despite of foundation of the trust and its noticed immunity from all the competitions, in the 1880s it had passed its crown of power over the world oil market. At last, Rockefeller surrendered his dream of acquiring a control over all the oil refining in the world. Eventually, with the arrival of foreign competitors and new finds abroad deteriorated his control. In the early years of 1880s, Rockefeller made one of his crucial innovations. In spite of disturbing the cost of crude oil directly, Standard Oil had been practicing indirect control by modifying oil storage charges in order to match market conditions. He chose to order issue of certificates against oil stored in its pipelines. These certificates became traded through speculators, therefore developing the first oil-futures market which set spot market costs from then onwards. Standard Oil established its own European presence by spreading into natural gas production in the United States, following into gasoline for automobiles. Standard Oil shifted its headquarters to New York City at 26 Broadway. Rockefeller became a chief personality in the city’s business community. In 1887, Congress came out with the Interstate Commerce Commission which was targeted with enforcing equal rights for all the railroad freight, but by this time Standard was more dependent on pipeline transport. Even more endangering to Standard’s power was the Sherman Antitrust Act of 1890. This act was initially used to control unions, but later became the central to the breaking the Standard Oil trust. The very first step to destroy the trust was from Ohio which applied its state anti-trust laws and forcefully separated Standard Oil of Ohio from the rest of the company in 1892.

Rockefeller in 1890s stepped into iron ore and ore transportation, compelling a clash with steel magnate Andrew Carnegie, and their competitors. He also indulged into a massive purchasing spree undertaking land for crude oil production in Ohio, Indiana, and West Virginia. The regular management of the trust was given to John Dustin Archbold as Rockefeller began to think of retirement. An agreement brokered by Henry Clay Frick exchanged the iron interest of Standard for U.S. Steel Stock and offered Rockefeller and his son membership of the firm’s board of directors. Although Standard Oil had faced a lot of criticism, but one of the most effective attacks was the publication of “The History of the Standard Oil Company” in 1904 by Ida Tarbell, a famous muckraker. Rockefeller on the other side started a publicity campaign to bring the image of his firm and himself in a positive direction. Rockefeller and his son continued to blend their interests related to oil as best as they could until New Jersey in 1909, modified its incorporation laws to allow the trust’s re- creation in the shape of a single holding company. Until 1911, Rockefeller absorbed his nominal title as president and kept his stocks. Finally in 1911, the Supreme Court of the United States discovered Standard Oil Company of New Jersey in violation under the Sherman Antitrust Act. According to the court’s order, the trust had to be broken down into 34 new companies. Rockefeller secured more than 25% of Standard’s stock at the time of this breaking up. After the same, the dominance of Rockefeller over the oil company declined initially but over a decade, this breakup proved to be quite profitable for Rockefeller as the firm’s net worth increased fivefold and so Rockefeller’s wealth.               

Rockefeller married toLaura Celestia "Cettie" Spelman in 1864. The couple had four daughters and a son.

Rockefeller died on May 23, 1937 of arteriosclerosis at the Casements, his home in Ormond Beach, Florida. He was interred in Lake View Cemetery in Cleveland.

Rockefeller’s life was full of controversies and also had a huge career in philanthropy. The image of Rockefeller is a fusion of all the experiences and the numerous ways he was viewed by his contemporaries which include his ex-competitors, politicians and writers. Some of them served the interests of Rockefeller, while some built their careers by fighting with Rockefeller. When he died in 1937, all his remaining wealth was mostly tied up in permanent family trusts which were estimated at $1.4 billion. According to some methods of calculating fortune, Rockefeller's net worth over the last 10 years of his life would smoothly give him the title of the wealthiest person known in recent history. Amazingly, according to the percentage of the United States' GDP, no other wealthier people of America including Bill Gates or Sam Walton would even come close to that of Rockefeller. His wealth was distributed through a system of foundations and trusts which regularly funded family philanthropic, commercial, and by the course of time political aspirations all through the 20th century.

1839: John D. Rockefeller was born.

1851: Shifted to Owego.

1853: He along with his family moved to Strongsville, a suburb of Cleveland.

1855: Got his first job as an assistant bookkeeper.

1859: Established commission business with partner Maurice B. Clark.

1863: Built an oil refinery with his partner.

1864: Rockefeller married Laura Clestia Spelman.

1865: Purchased out the Clark brothers at an auction and established Rockefeller & Andrews.

1866: Rockefeller came into a partnership with his brother William. His brother built one more refinery in Cleveland.

1870: Established Standard Oil of Ohio.

1870: Formed Standard Oil Trust.

1879: The Commonwealth of Pennsylvania accused Rockefeller on charges of monopolizing the oil business.

1883: Moved to New York with his family.

1902:04: Publication of "The History of Standard Oil Company" by Ida Tarbell took place.

1911: Rockefeller retired from the Standard Oil Company.

1911: Order of Standard Oil Trust break up came out.

1913: Rockefeller foundation was founded in New York.

1915: His wife passed away.

1937: Rockefeller died on May 23.