Rockefeller, John D.
John D. Rockefeller
Born July 8, 1839 (Richford, New York)
Died May 23, 1937 (Ormond, Florida)
John D. Rockefeller was one of the most successful industrialists in the history of the United States. His creation of the powerful Standard Oil Trust in the late nineteenth century permanently changed the course of business in the country. Rockefeller was a disciplined, serious, and ambitious man, driven by a desire for order and efficiency. When the oil industry was new, he quickly saw that competition among small companies would lower profits for everyone, and he attempted to take over the entire business to keep this from occurring. To gain the monopoly, or the exclusive possession or right to produce a particular good or service, he evaded and broke laws and destroyed the careers of many rivals. In contrast to his less desirable actions, however, Rockefeller was also a great philanthropist who gave substantial amounts of money to help institutions and organizations. The American public was split in its opinion of the man. Some thought him an evil genius seeking to gain too much control over the economy, but he was viewed by others as a kind man who tried to help his fellow man. Regardless of how America saw him, Rockefeller always seemed sure of the rightness of his own path.
"It has seemed as if I was favored and got increase because the Lord knew that I was going to turn around and give it back."
A troubled childhood
Rockefeller was born in 1839, in Richford, New York, and was the second of six children. Rockefeller's parents were very unlike each other. His father, William Avery Rockefeller, was a lively and charming man. He had a good sense of business and taught John about money. Unfortunately he was also a very dishonest man who could not settle down to family life. Rockefeller's mother, Eliza Davison Rockefeller, was a devout Baptist and a highly disciplined and reserved woman. She was extremely strict with her children. Eliza served as the sole caregiver of her family most of the time because William worked as a peddler and traveled from town to town to sell his goods. In 1849 William was arrested and charged with rape, but for some unknown reason the case never went to court. Sometime in the 1850s he assumed the false identity of Dr. William Levingston, a traveling doctor who claimed to be able to cure cancer. In 1855, using his fake name, William Rockefeller married a woman in New York and from then on lived as a bigamist (someone with two spouses). Several times a year William returned to stay with his first family, always bringing them money and taking an active interest in John's future. As a boy Rockefeller probably did not know much about the secret life of his father, whom he adored.
Rockefeller was much more like his mother. Both were serious to the point of being grim, moral, quiet, and hardworking, and both were committed to their church and religion. The family lived modestly, often finding it difficult to pay their bills, especially when William was away for long periods. Rockefeller learned to be enterprising as a child. If he saved enough money to buy a bag of candy, he would divide the candy up and sell it in individual pieces at a profit. When he was just twelve years old, he saved up $50 and loaned it to a farmer at a 7 percent interest rate (a percentage of the sum borrowed).
The Rockefeller family relocated several times, and in 1853, when John was fifteen, they moved to Cleveland, Ohio. Rockefeller had picked up some schooling before the move, but it was not until the family settled in Cleveland that he was able to attend two years of high school without interruption. He worked very hard at his studies and was good in math. His father urged him to pursue business, so he attended a three-month commercial education program that taught him bookkeeping and banking practices. At that time Rockefeller also joined the Erie Street Baptist Church and rapidly became an important member of the struggling congregation. He swept floors and washed windows, served as a clerk, raised money for a Sunday school library, and became one of the church's trustees (someone who was given responsibility for a property or organization). Out of his first meager earnings he contributed almost 10 percent of what he received to charities.
Becoming a businessman
After finishing his business course, Rockefeller applied for work at every large commercial establishment in Cleveland. At the age of sixteen he found a job as a clerk in a commission house, a firm that bought and sold futures contracts (binding agreements to buy or sell goods at a later date) in groceries and grains. After working at the company for three and a half years, during which he gained the confidence of many Cleveland businessmen and bankers, the nineteen-year-old Rockefeller quit his job and joined with a partner to form a business handling grain, hay, meats, and miscellaneous goods. Both partners invested $2,000 in the business. Due largely to Rockefeller's hard work and wise decision-making, the company made a modest profit in its first year, despite heavy competition in the field. The second year of business, 1861, marked the beginning of the American Civil War (1861–65; a war between the Union [the North], who were opposed to slavery, and the Confederacy [the South], who were in favor of slavery). Orders from the Union army, a rapid growth of agricultural shipments to industrial centers, and a heavy European demand for foodstuffs brought large profits to the partnership, and Rockefeller made his first small fortune. He soon began to foresee, however, that the trade in farm products would soon bypass Cleveland due to the spread of railways through the West. Rockefeller was ready for change when the oil industry began to attract widespread attention in the mid-1860s.
Before the 1850s fuels made from oil were not practical because oil could only be obtained through a difficult process that involved skimming it from the tops of ponds and other nonmoving bodies of water. When the first modern oil well was drilled in Pennsylvania in 1859, crude oil suddenly became available in large quantities, and in 1861 the first oil refinery (a building in which a raw material was processed to free it from impurities) opened in the United States. Because there were railroad lines that directly connected Cleveland to the oil fields of Pennsylvania, Rockefeller thought he could compete in the refining business. In 1865 he invested in an oil refinery, although few businessmen at the time thought there was much of a future in the industry. He bought out his partner's share in the refinery and began to focus on it full-time, borrowing large amounts of money to expand the refinery and taking in new partners to help him build up the business. By the end of the year, his refinery was producing at least twice as much oil as any other in Cleveland, and by 1868 it was the largest refinery in the world.
A family and church man
In 1864 Rockefeller married Laura Celestia Spelman (1839–1915), the daughter of a wealthy merchant. Their marriage, unlike that of Rockefeller's parents, was a union of shared values and beliefs. Both preferred a quiet, family-centered life to socializing, and they did not like showy displays of wealth. The Rockefellers had four children that reached adulthood: Bessie, Alta, Edith, and John Davidson Jr. Another child, Alice, died in infancy. Despite the long hours he worked, Rockefeller was a concerned and loving father to his children. He tried to pass on his moral and religious beliefs to his children, and he made them work for the things they wanted, but he was not strict like his own mother had been. His son, John Jr., as quoted by Ron Chernow in Titan: The Life of John D. Rockefeller, Sr., called his father "a beloved companion." He went on to explain: "He had a genius with children. He never told us what to do or not to do. He was one with us."
Rockefeller's primary passions were work, family, and church. Even after he became extremely wealthy, he continued to attend a modest Baptist church with a congregation made up mainly of working-class people. Helping others was always part of his belief system. He was known to quietly press envelopes filled with money into the hands of needy members of his congregation as they left the church, and both Rockefeller and his wife taught Sunday school classes for decades. Rockefeller had no problem separating the ruthless activities he used to create his oil monopoly with his charitable and religious actions. He believed that human beings had a religious obligation to do their work as well as they were able and, consequently, to make as much money as possible. He was not concerned about the wide and growing gap between the rich and the poor since it was, in his opinion, all part of God's plan. Rockefeller never doubted that he had been chosen by God to create his corporation, make a huge fortune, and then give his money to worthy causes. In an interview with the New York Times (quoted by Chernow), Rockefeller explained that these views had long guided him: "I remember clearly when the financial plan, if I might call it so, of my life was formed. It was out in Ohio under the ministration of a dear old minister who preached, 'get money, get it honestly, and then give it wisely.' I wrote that down in a little book."
The Standard Oil monopoly
In its early years the oil industry was subject to destructive cycles of success and failure, with oil prices soaring to high levels and then dropping steeply. It was relatively cheap to build a small refinery, so when oil prices were high, newcomers seeking quick profits rushed to get into the business. Their production, added to that of the older refineries, flooded the market with oil, causing prices to fall. Low prices led to lack of profit and soon the small companies began to collapse. Only the large companies like Rockefeller's had enough money to hold out until prices rose again. In this climate Rockefeller and his new partner, Henry Flagler (1830–1913), knew that they had to run their refinery as efficiently as possible. They invested heavily in the most advanced equipment and machinery, putting most of the money they made back into the company and borrowing large sums to constantly expand. They paid particular attention to keeping their business expenses as low as possible by avoiding waste, producing in large quantities, and obtaining reasonable rates from companies that provided them services.
Low shipping rates were essential to maintaining a profit in the oil industry. Railroads commonly gave favored shippers rebates, or partial refunds, of their publicly stated rates. The larger the shipper was, the higher the rebate he received. Rockefeller made deals with the railroads to get the biggest rebates and the lowest rates possible, offering large-scale and consistent business in return. This allowed him to sell his refined oil for a lower price than his competitors. He cut other costs by investing in businesses that provided supplies to his refinery. Since oil was initially shipped in barrels, Rockefeller bought a plant to make the company's barrels. The company needed wood for the barrels, so Rockefeller bought his own timber tracts, or wooded areas for logging. He owned his own warehouses, bought his own tank cars, and owned or produced much of the raw materials and transportation he needed to operate. Later, when oil began to be transported in underground pipeline systems, Rockefeller and his associates invested in the pipeline industry and engaged in an industrial war with competitors in the field until his company had a monopoly. Rockefeller aimed to control every aspect of oil production and sales, from the drilling process to the delivery of the oil to the customer's door.
In 1870 the Standard Oil Company was incorporated, which meant all its separate businesses were united into one large company. At the time it controlled about 10 percent of the country's oil industry. Rockefeller was unhappy with the disorder in the industry, and he had a solution—the Standard Oil Company would buy out its competition, eliminating the inefficient newer companies and placing the more successful rivals under his able management. He began to build his empire in 1871, when he purchased twenty-one of Cleveland's twenty-six refineries. He offered the owners a good price for their businesses, giving them the option of taking payment in Standard Oil stock or in cash. Many felt they had to sell because Rockefeller's connections to the railroads meant that Standard Oil would always receive better shipping rates and would therefore be able to drive them out of business. Some others claimed they had been threatened with financial ruin if they did not sell, and this led some historians to call Rockefeller's purchasing plan the Cleveland Massacre.
By the end of 1872, Rockefeller and his associates controlled all the major refineries in Cleveland, New York, Pittsburgh, Pennsylvania, and Philadelphia, Pennsylvania. Over the next decade, the Standard Oil Company continued to expand, and in 1879 its thirty-seven stockholders controlled between 90 and 95 percent of the country's refining capacity. Because most of Rockefeller's transactions had been done in secret, many Americans were surprised to suddenly find that Standard Oil had become an industrial giant.
Standard Oil continued to grow during the 1880s. Under the direction of Rockefeller's brother, William, the firm expanded into the international market. Standard Oil products became well known in Asia, Africa, South America, and Central Europe. By the 1890s Standard Oil had pioneered a nationwide system to deliver oil directly to homes and businesses in almost every American town. Although consumers benefited greatly from this practice, criticism of Standard Oil's business tactics increased. One major complaint was that the company required the stores that sold its products to agree to sell only Standard products.
John D. Rockefeller Jr.
John D. Rockefeller Sr.'s reputation for ruthless business methods was lessened somewhat in the next generation by his son and heir, John D. Rockefeller Jr. (1874–1960). John Jr. was brought up in a loving but solitary family atmosphere. The social life of the family centered on the Baptist Church, and young Rockefeller and his four sisters were taught to live morally upright, religious lives. Rockefeller was a shy, sensitive child who adored his father. At an early age he had to deal with stories in the press that claimed his father was a corporate criminal, and at the age of thirteen he experienced a nervous collapse.
After graduating from Brown University in 1897, young Rockefeller—largely to please his father—entered the offices of the family's Standard Oil Company in New York City to prepare himself to supervise his father's vast business interests. Rockefeller disliked the business world, so he occupied himself increasingly with managing his father's estates and philanthropic (related to the giving of money or gifts to promote human welfare) enterprises. The Rockefeller Institute for Medical Research, the General Education Board, and the Rockefeller Foundation were financed by the elder Rockefeller, but his son participated actively in their management.
From 1900 to 1908 Rockefeller became more closely involved with Standard Oil. When the company was accused of unfair competitive practices, he separated himself from active policy making. He could not escape from hostilities toward his family name, however. In 1913 there was trouble at the Colorado Fuel and Iron Company, in which his family held large amounts of stock. The workers there went on strike, demanding improved conditions, better wages, and union recognition. The strike was violently suppressed by management, and Rockefeller was connected to management by his family's control of the company. Hurt by accusations from labor leaders that he had sided with the owners, Rockefeller drafted a plan for worker representation in company affairs that became a model for industrial relations during the 1920s. He explained his plan in speeches and articles and came to be considered a leader in labor reform.
Among the best-known philanthropies in which Rockefeller played a major part were conservation and national park projects in the West; the purchase of the Barnard Cloisters, a medieval museum in upper Manhattan, for the Metropolitan Museum of Art; the creation of the Rockefeller Center in New York City; and a donation of the land for the United Nations building. Modest and unaffected by his wealth, Rockefeller helped remove the bad associations from the family name and awakened other businessmen to their social responsibilities. He died on May 11, 1960, in Tucson, Arizona.
The Standard Oil Trust
In 1882 the Standard Oil Company owned controlling or substantial amounts of stock in forty associated companies around the nation. The company needed the legal power that would allow it to operate all these companies. The Standard Oil Trust was formed by an agreement that placed all properties owned or controlled by the Standard Oil Company in the hands of nine trustees (directors), including Rockefeller, Flagler, and Rockefeller's brother, William. The trustees exercised general supervision over all Standard Oil companies and over the other companies in which Standard held stock. Standard Oil Company (Ohio) stock was exchanged for trust certificates. The trust certificates provided shares of ownership of the whole trust, which included the assets of all regional Standard Oil companies, one of which was Standard Oil of New Jersey, the third largest U.S. refinery at the time. The trust also permitted Standard Oil to work around state laws that might restrict its operations, because, in name, the ownership had been delegated to the trustees, rather than a company. But in effect the trust created a giant new centralized company.
Standard under attack
Standard Oil had developed a bad reputation not long after its creation. Rockefeller destroyed many careers in his attempts to eliminate his rivals in the industry, and he often used dishonest methods to make business owners sell to him or stop competing with Standard Oil. Some of his company's executives and managers resorted to illegal means, including violence and intimidation, when dealing with competitors. Though Rockefeller was not personally associated with these illegal ventures, he was nonetheless openly ruthless when making business decisions. The press frequently printed stories about Standard Oil's underhanded tactics and its complete domination of the industry. Political cartoons about Rockefeller appeared in newspapers and magazines. Journalist Henry Demarest Lloyd (1847–1903) began a campaign against Standard Oil in 1881 with his Atlantic Monthly article "Story of a Great Monopoly." Lloyd was considered to be one of the first muckrakers, a group of journalists who searched for and exposed corruption in public affairs. His most important book, Wealth Against Commonwealth (1894), strongly criticized the Standard Oil monopoly.
By the 1880s, after hundreds of mergers and consolidations, the railroad, steel, and other monopolies like Standard Oil were so powerful that no government commission could regulate them, and public resentment grew. In 1889 Kansas enacted the first state antitrust legislation, and the effort soon spread across the South and the West. By 1900 twenty-seven states had created laws prohibiting or regulating trusts. Many trusts were simply too big to be controlled by the laws of any one state, however, and public pressure mounted for the federal government to take action. But the federal government was in no hurry to respond. The business trusts, including Standard Oil, donated heavily to political campaigns and frequently bribed legislators.
In 1890, finally responding to the public outcry against big business and monopolies, Congress passed the Sherman Antitrust Act, which made unfair restraint of trade, or unreasonably limiting one's competition, illegal and outlawed monopolies. On March 2, 1892, the Ohio Supreme Court convicted Standard Oil of violating the Sherman Act. The court decision led to the breaking up of the Standard Oil Trust back into its independent companies. Standard responded by taking advantage of favorable state laws in New Jersey, and the New Jersey refinery became the trust's parent holding company, a company whose primary function was to own the stocks of other corporations. Rockefeller remained president, and the management of the trust was still supervised by the directors who sat on the boards of the companies controlled by the parent company. The supposedly separate companies were therefore able to continue acting as a single unit.
The end of the oil career
In 1894 journalist Ida M. Tarbell (1857–1944; see entry) began writing a nineteen-article investigative series on Standard Oil that ran from 1902 to 1904 in McClure's magazine. Tarbell exposed many of the dishonest business practices Rockefeller used to get rid of his competitors in the oil industry. Tarbell also criticized Rockefeller's personal life, even publishing information about his bigamist father that had, until then, been kept secret. The reporting in the series was judged by historians to be fair and accurate despite the fact that Tarbell had a personal grudge against Rockefeller, as one of the rivals he had put out of business was her father. The series was extremely popular and was published in book form in 1904 as The History of the Standard Oil Company. Tarbell's writings focused public resentment on the Standard Oil Trust at a time when the corporation could not afford the attention, since the public was hostile to its monopolizing and the federal government was just beginning to investigate it for violations of the Sherman Antitrust Act. Rockefeller, always private and withdrawn, never publicly responded to Tarbell's articles, which hurt his company's reputation deeply. Within one year of the book's release, the federal courts brought charges against Standard Oil for being a monopoly and restraining trade. Many believed that Tarbell's book, and the public's reaction to it, played a part in the government's decision to break up the powerful trust.
In 1891 Rockefeller suffered from a mysterious illness that caused him to, among other things, lose his eyebrows and all his hair. His poor health was often attributed to the negative press that surrounded the retired industrialist. Despite the press, Rockefeller was always proud of all he had accomplished. He continued to believe that monopolies were the most efficient form of business and that their existence was necessary to raise the American standard of living.
Rockefeller stepped down as the president of Standard Oil in 1896 and retired from the business entirely a year later. Because his name was so closely associated with the company's power and success, the executives of Standard asked that he keep the title of president even though he would no longer play an active role in the company. The public was unaware of his retirement and continued to hold him accountable for the company's questionable business methods for many more years.
In 1911 the Supreme Court ruled that the Standard Oil Trust was in violation of the Sherman Antitrust Act. The Court ordered the trust to be dissolved, separating the parent holding company, Jersey Standard, from its thirty-three major subsidiaries. Many of the individual companies continued to operate under the name Standard Oil. These included the Standard Oil Company of Indiana (later American), the Standard Oil Company (Ohio), Standard Oil Company of California (later Chevron), Standard Oil of New Jersey (later Exxon), and Standard Oil of New York (later Mobil).
Rockefeller, the philanthropist
Rockefeller had always donated his money to those in need and causes that helped American society. His generosity was so well-known that he was chased daily by people who wanted help for themselves or for a charitable organization. Rockefeller spent hours of his spare time listening to people's requests for donations. In one case in 1882, two women from New England asked his church's congregation to help them fund improvements on a school they operated for freed female slaves. Rockefeller was eager to help, for he gladly supported institutions that gave people a chance to improve themselves. Though he only gave the women $250 that day, in the end he donated most of the money that created the campus for Spelman College, a historically African American liberal arts college for women located in Atlanta, Georgia. The school was given his wife's maiden name.
In his early philanthropic endeavors, Rockefeller depended on the Baptist Church to provide guidance for his gift-giving. The church wanted its own university, and in 1892, backed by Rockefeller's donation of $600,000, the University of Chicago opened. The university would eventually receive a total of about $80 million from Rockefeller and his son. While investigating the prospects of the university before making his donation, Rockefeller met Frederick T. Gates (1853–1929), a talented young Baptist leader and businessman. In 1891 Rockefeller, overburdened by philanthropic demands, asked Gates to open an office in New York to assist him in planning his donations. Rockefeller did not want to give his money away impulsively; he wanted a rational plan like the one he had followed in building Standard Oil. For most of the rest of his life, with substantial help from Gates, Rockefeller applied his business talents to organized giving.
While Standard Oil faced the federal courts and received steady criticism from the press, Rockefeller focused his attention almost entirely on his philanthropy. Sometime in the 1890s he decided to create an institution to carry out medical research and find cures for disease. What made his idea so radical was that he wanted his institution to pay its scientists and doctors to work full-time to conduct their research, a concept never before tried. Gates put together the plans for the Rockefeller Institute for Medical Research (later known as Rockefeller University), which opened its doors in 1901 and quickly became a world-famous center for research and graduate education in the biomedical sciences. In 1902 he established the General Education Board, an institution funded with $129 million to promote U.S. education that did not discriminate on account of sex, race, or religious beliefs. The board helped to establish high schools in the South in a cooperative effort with local communities. In 1909 he established the Rockefeller Sanitary Commission for Eradication of Hookworm Disease to cure and prevent the disease in which parasites infest the body.
The Rockefeller Foundation was formed in 1913 in New York "to promote the wellbeing of mankind throughout the world," according to the foundation's Web site. In its first year Rockefeller contributed $35 million, and the next year $65 million. Its professional staff was charged with the duty of spending the foundation's money on projects that, according to an early memorandum to the trustees (quoted on the Rockefeller Foundation Web site), went "to the root of individual or social ill-being and misery." The foundation's first act was to grant $100,000 to the American Red Cross to build its headquarters in Washington, D.C., and to create a memorial to medical personnel during the Civil War. By the early twenty-first century, the foundation had given more than $2 billion to institutions and causes all over the world. As writers for American Experience, PBS noted on the organization's Web site, the Rockefeller Foundation represented "permanent corporate philanthropy on a scale never before seen—a charitable trust to parallel the oil trust that had made it possible."
Rockefeller's donations went far beyond these most famous examples of his philanthropic works. He was never personally involved in the organizations he created, leaving their operations and policies up to the experts appointed to run them. He was quite modest about his generosity and often told interviewers that he believed he had contributed more to the American people by building an efficient oil industry than by his philanthropy. Historians estimated that the total of Rockefeller's lifetime donations was somewhere more than $500 million, and many of his institutions were still in existence in the early twenty-first century.
Rockefeller lived to be ninety-eight years old. He died on May 23, 1937, in Ormond, Florida.
For More Information
Chernow, Ron. Titan: The Life of John D. Rockefeller, Sr. New York: Vintage Books, 1998.
Coffey, Ellen Greenman. John D. Rockefeller: Richest Man Ever. San Diego, CA: Blackbirch Press, 2001.
Nevins, Allan. John D. Rockefeller: The Heroic Age of American Enterprise. New York: Charles Scribner's Sons, 1940.
Rockefeller, John D. Random Reminiscences of Men and Events. New York: Doubleday, Page & Company, 1909.
Chernow, Ron. "The Philanthropist as Quarry: John D. Rockefeller's Acts of 'Retail' Generosity." The Philanthropy Round Table. http://www.philanthropyroundtable.org/magazines/1998/november/chernow.html (accessed on July 7, 2005).
Rockefeller Foundation. http://www.rockfound.org/Documents/180/intro.html (accessed on July 7, 2005).
"The Rockefellers." American Experience, PBS. http://www.pbs.org/wgbh/amex/rockefellers/peopleevents/index.html (accessed on July 7, 2005).
Rockefeller, John D.
John D. Rockefeller
Born July 8, 1839
Richford, New York
Died May 23, 1937
Ormond Beach, Florida
American businessman, philanthropist
"I know of nothing more despicable and pathetic than a man who devotes all the hours of the waking day to the making of money for money's sake."
John D. Rockefeller built his fortune in the oil business from the ground up. His phenomenally successful Standard Oil Company dominated the oil industry for nearly forty years and became one of the first big trusts (monopolies) in the United States. The federal government, under President Theodore Roosevelt (1858–1919; see entry), attacked the Standard Oil Trust in court, and succeeded in forcing it to split into separate companies in order to stimulate competition.
When Rockefeller died just six weeks short of his ninety-eighth birthday, he was thought to have amassed a personal fortune worth $5 billion (about $50 billion in 2002 prices). Increasingly throughout his life, his interests turned to philanthropy (goodwill to fellow people, especially the active effort to promote human welfare), donating half a billion dollars to fund universities and medical research, among other things. The influence of his philanthropic institutions has continued to grow after his death.
Childhood and youth
John Davison Rockefeller was not born into wealth. He was born on a farm near the small town of Richford, in the middle of New York State, the second of six children born to William and Eliza Rockefeller. One writer describes Rockefeller's father as a "snake oil salesman," a dealer in ineffective substances or mixtures promoted as having medicinal value. The family moved several times before Rockefeller was a teenager. In 1853, when he was fourteen, the family bought a house in Strongsville, Ohio, near Cleveland.
Rockefeller attended Central High School in Cleveland, renting a room in the city so that he could be closer to school. He also joined the Erie Street Baptist Church. Young Rockefeller became a trustee of his church at age twenty-one, and was strongly religious for the rest of his life. For many years, he taught Sunday school and served on church boards with streetcar conductors and other working-class people. He also took seriously the religious conviction to give away one-tenth of what he earned, even when starting out at a very low salary.
Rockefeller did not graduate from high school. Instead, he left Central High to attend the Folsom Mercantile College, where he spent three months completing a course in accounting. In 1855 he was hired as an assistant bookkeeper at Hewitt and Tuttle, a small wholesale grocery company. It was three months before he received his first paycheck—for $50, or about $3.50 a week. He soon received a raise to $6.25 a week. (These figures reflect the value of a dollar in 1855; in 2002, Rockefeller's weekly salary would have been worth about $120.) A few months after that, he was promoted to cashier and head bookkeeper.
Meet Mrs. Rockefeller
In 1864 Rockefeller married Laura Celestia Spelman (1839–1915), who had been a classmate of his at Central High School. Laura was a school teacher and the daughter of a successful Cleveland businessman. The Rockefellers had five children, one of whom died as an infant.
Initially the family lived on Euclid Avenue in Cleveland. In later years, as Rockefeller's oil business grew, he
bought a house in New York City (on West Fifty-fourth Street, where the Museum of Modern Art is now located). Rockefeller also bought a country estate at Pocantico Hills, north of New York City, as well as country estates in Lakewood, New Jersey, and Ormond Beach, Florida. Despite the many residences, Rockefeller lived simply, had few pleasures, and was devoted to his family
Rockefeller spent four years working for Hewitt and Tuttle. In that time, he managed to save one thousand dollars. In 1859 he took his savings, borrowed another thousand dollars from his father, and launched his own grocery business. That same year, in Titusville, Pennsylvania, a few miles almost directly east of Cleveland, the first American oil well was drilled. It was a discovery of enormous significance to the Industrial Revolution, a period of fast-paced economic change that began in Great Britain in the middle of the eighteenth century, and certainly to Rockefeller.
Four years after starting their grocery business, Rockefeller and his business partner Maurice Clark decided to get into the oil business. Cleveland had become a center of oil refining, and after taking on a third partner, Samuel Andrews, Rockefeller and Clark built an oil refinery while continuing their grocery business.
In 1865 there was a disagreement among the group's partners, which by now numbered five, and they agreed to sell their oil refinery to Rockefeller. He sold the rest of his interest in the grocery business and, with Samuel Andrews as his sole remaining partner, launched the oil refining business of Rockefeller and Andrews.
Petroleum played a key role in the development of the Industrial Revolution. It was especially useful in transportation, since liquid petroleum products (such as gasoline and diesel fuel) were easier to use than coal. The development of a practical internal combustion engine (1885) and diesel engine (1892), both needing gasoline to run, soon made petroleum a key factor in transportation.
Initially, though, kerosene was the major product that Rockefeller produced. Kerosene was widely used to fuel lamps in residential houses, in place of candles, and Rockefeller and Andrews's refining business grew rapidly. (The Edison light bulb did not come along until 1879, and even then it was many years before electricity achieved widespread distribution.)
In 1870, eleven years after the formation of Rockefeller and Andrews, the two organized a new company with some additional partners, including Rockefeller's brother, William Rockefeller, Henry M. Flagler, and S. V. Harkness. The new partnership invested $1 million (compared with the $72,000 Rockefeller paid to obtain the first refinery five years earlier) in the new venture; its name was the Standard Oil Company.
Within two years, Standard Oil had bought up almost all the other refineries in Cleveland, as well as two near New York. The company was refining almost thirty thousand barrels of crude oil a day. It even manufactured its own wooden barrels and owned plants that manufactured paint and glue, byproducts of oil refining.
In 1882 Standard Oil and all of its properties were merged into the Standard Oil Trust, with forty-two owners and a value of $70 million (worth about $1.15 billion in 2002 dollars).
Elements of the Oil Business
- Drilling. Oil exists in large underground pools, or reservoirs. Drilling is the process of getting the oil out of the ground by sinking a well into the reservoir. Sometimes oil comes gushing up through the well; other times, it has to be pumped, especially after the reservoir has been tapped for a while. The advantage of the drilling business is that the oil itself costs nothing. There is a cost of drilling a well, however, and if no oil is found, the money is lost. If oil is found, often the owner of the land gets a share.
- Transportation. When John D. Rockefeller first got into the business, oil was usually stored in wooden barrels and shipped by wagon, or later by rail, to refineries where it could be turned into useful products. Refined products, such as kerosene, gasoline, and diesel fuel, also have to be distributed from the refinery to customers (at gasoline stations, for example).
- Refining. Before it can be used, the crude oil that comes from the ground must be refined. Oil from the ground is often black and thick, whereas a refined product, like gasoline or kerosene, is usually clear and much thinner. The chemical process of extracting molecules of hydrocarbons (those containing a combination of hydrogen and carbon atoms) that can be converted into energy is called refining. This is the part of the oil business that John D. Rockefeller entered.
- Distribution. After crude oil has been refined into various products, it must be distributed to customers. This involves transportation, again, and outlets for selling at retail, such as a gasoline station.
In 1892 a state court in Ohio ruled that the Standard Oil Trust violated state law and ordered it to be broken up. Rockefeller quickly moved to form a new company, Standard Oil Company (New Jersey), under a law passed in New Jersey that made such arrangements legal.
Giving it away
Rockefeller was president of Standard Oil until 1911, the same year that the U.S. Supreme Court ruled that Standard Oil violated the 1890 Sherman Antitrust Act and ordered the company broken up into thirty-eight separate companies. But it was fifteen years before then that Rockefeller retired and, at age fifty-seven, turned his attention to a second career: philanthropy, or the promoting of human welfare, especially by donating money to worthy causes. At the time of his retirement, Rockefeller owned about one-fourth of the shares in Standard Oil, as well as extensive holdings in mines, timberland, and other manufacturing and transportation companies.
What Is a Trust and Why Is It Illegal?
In 1882 John D. Rockefeller renamed his company Standard Oil Trust, and in 1906 the federal government sued the company for violating the 1890 Sherman Antitrust Act. What was the controversy about?
A trust is a combination of corporations that operate as one and has a monopoly (control) over an industry. In 1890 the U.S. Congress outlawed trusts, because of their ability to control prices and to drive out of business companies attempting to compete in the same industry. The "free enterprise" economic system long embraced by the United States is based on the idea that competition results in the lowest prices and greatest innovation, which benefits consumers. (The opposing idea, socialism, holds that the government should regulate economic activity to achieve the best results.)
Antitrust laws recognize that in some circumstances, such as when one company controls the majority of the market, there is no "free" competition since the big company can (and does) take actions that make it impossible for smaller competitors to remain in business.
By the turn of the twentieth century, Standard Oil controlled about 90 percent of the oil-refining business in the United States, and the Sherman Antitrust Act of 1890 was actually passed with Rockefeller's Standard Oil in mind. The act outlaws contracts and conspiracies designed to eliminate competition, and it prohibits monopolies or attempts to create a monopoly. Specific activities outlawed include: charging prices below what it costs to make a product, so that competitors are driven out of business (or decide not to get into the business in the first place); or entering secret deals with other companies, even in different businesses, so that competitors are driven out of business (for example, getting freight rates lower than are available elsewhere). Since the Sherman Antitrust Act was passed, the federal government has found it difficult to prove that large companies have engaged in illegal practices designed to create anticompetitive monopolies, or trusts.
The importance of donating money to worthy causes was not something new in Rockefeller's life. Since his earliest days in Cleveland, Ohio, he had given 10 percent of his income to his church. As a wealthy businessman, he was known for distributing dimes (worth about a dollar at 2002 prices) to children who came up to him on the street. But Rockefeller's philanthropy was more serious than giving away coins. Funding from his vast fortune helped create or support institutions that have long outlived their benefactor. Among them are:
- The University of Chicago. In 1889 Rockefeller contributed $600,000 toward the founding of the University of Chicago, a project of the American Baptist Education Society. It was often Rockefeller's practice to contribute part of the money needed for a project as a means of encouraging others to make contributions as well. The University of Chicago was incorporated in 1890 and subsequently received many other Rockefeller gifts totaling $35 million by 1910 (roughly $600 million at 2002 prices).
- The Rockefeller Institute for Medical Research (now called Rockefeller University). Rockefeller founded the institute in order to discover how to prevent and cure diseases. The institute, located in New York City, has been a leader in medical research and can claim credit for such achievements as the treatment of infantile paralysis, spinal meningitis, pneumonia, and the identification of DNA in genetics.
- The General Education Board. Rockefeller established and funded the General Education Board in 1902 to improve education, especially for the benefit of medical schools. The board distributed $325 million between 1902 and 1965, when it was dissolved.
- The Rockefeller Foundation. The Rockefeller Foundation was established in 1913 to "promote the well-being of mankind throughout the world." As with other Rockefeller philanthropic ventures, the Rockefeller Foundation often concentrated on health projects, especially in areas of public health and medical education. The foundation funded projects that addressed many diseases found in underdeveloped countries, such as malaria and yellow fever. The foundation continues to fund research in agriculture, as well as nonmedical projects.
Throughout his life Rockefeller also made generous contributions to the Baptist Church, the Young Men' Christian Association (YMCA) and the Young Women's Christian Association (YWCA), and the Anti-Saloon League, as befitting a serious, straitlaced teetotaler (one who does not drink alcoholic beverages).
Rockefeller died in Ormond Beach, Florida, on May 23, 1937, at the age of ninety-seven. He was buried in Cleveland, Ohio, in Lakeview Cemetery, having left a legacy both as one of the original monopolists and one of the most generous philanthropists in American history.
For More Information
Abels, Jules. The Rockefeller Billions: The Story of the World's Most Stupendous Fortune. New York: Macmillan, 1965.
Chernow, Ron. Titan: The Life of John D. Rockefeller, Sr. New York: Random House, 1998.
Coffey, Ellen Greenman. John D. Rockefeller, Empire Builder. Englewood Cliffs, NJ: Silver Burdett, 1989.
Myers, Elisabeth P. John D. Rockefeller, Boy Financier. Indianapolis, IN: Bobbs-Merrill, 1973.
Birmingham, Stephen. "Our Celebrated Eccentrics." Harper's Bazaar, October 1982, p. 88.
Chernow, Ron. "Blessed Barons." Time, December 7, 1998, p. 74.
Loomis, Carol J. "The Rockefellers: End of a Dynasty?" Fortune, August 4, 1986, p. 26.
"John D. Rockefeller, 1839–1937." Rockefeller University.http://www.rockefeller.edu/archive.ctr/jdrsrbio.html (accessed on February 14, 2003).
"The Rockefellers." PBS American Experience.http://www.pbs.org/wgbh/amex/rockefellers/index.html (accessed on February 14, 2003).
Tarbell, Ida M. "John D. Rockefeller, a Character Study." Ida Tarbell HomePage, Allegheny College.http://tarbell.alleg.edu/archives/jdr.html (accessed on February 14, 2003).
Rockefeller, John D.
Rockefeller, John D.
Founder of Standard Oil and the world's richest man when he died, John D. Rockefeller began as a frugal accounting clerk who set up a merchant grain business in 1858. With a $4000 investment, he went into the oil refining business in 1863. Through strict economy and the swift elimination of competitors, he soon dominated the oil refining industry. In 1911 his monopoly was broken by antitrust government regulations and Rockefeller turned to philanthropy, donating more than $500 million to charity. Rockefeller's descendants, have an estimated family worth of $6 billion through wise investments and astute business practices.
John D. Rockefeller was born on July 8, 1839, in Richford, New York. His father was a farmer and trader. His mother was from a Purtain background, and she raised her large family with very strict values. The family moved from the east coast to Cleveland, Ohio, in 1853. At this time the area was beginning to grow into a large city. John graduated from high school there and began his first job at the age of 16 in a Cleveland mercantile firm.
Following in the footsteps of his religious mother, Rockefeller was an active member of the Baptist Church, and beginning with his first job as a clerk, he gave one-tenth of his earnings to charity. In 1864 Rockefeller married Laura C. Spelman. They had four children: Bessie, Alta, Edith, and John Davidson Jr. As his income grew, so did his benefactions. The total of Rockefeller's lifetime philanthropies has been estimated at approximately $550 million.
Although he amassed an enormous fortune, Rockefeller preferred to live simply. His time was absorbed by business and later by organized giving. In both areas he imposed order, efficiency, and planning with extraordinary success and sweeping vision. He died on May 23, 1937, in Ormond, Florida, at the age of 97.
John D. Rockefeller, Jr. attended Brown University, and following his graduation, he went to work for his father. According to Webster's American Biographies, "Among Rockefeller's notable achievements were the restoration of colonial Williamsburg, Virginia; the planning of Rockefeller Center in New York City; the donation of the site for the United Nations headquarters building in New York; the creation of numerous forest and wildlife preserves; and the establishment of the United Services Organization (USO) during World War II." John Jr. married Abby Greene Aldrich and they had six children, Abby Aldrich, John D. III, Nelson Aldrich, Laurence Spelman, Winthrop, and David. One of his sons served as governor of Arkansas and the others worked in business and various philanthropies.
Success came early to John D. Rockefeller. His first firm, founded with Maurice B. Clark in 1859, grossed $450,000 in the first year of trading grain, hay, meats, and other goods. Clark did the fieldwork; Rockefeller was in charge of office management, bookkeeping, and relationships with bankers.
According to the Concise Dictionary of American Biography, "In 1863 Rockefeller, sensing the commercial possibilities in the recent linking of Cleveland by a railroad to the new 'Oil Regions' in northwestern Pennsylvania, had joined in building a refinery, which in two years was the largest in Cleveland." Within two years, guided by Samuel Andrews' technical knowledge, Rockefeller left his partnership with Clark and devoted himself to the business that rapidly became Cleveland's largest refinery. In 1865 Rockefeller bought out his original partners and—along with brother William Rockefeller, Samuel Andrews, and Henry Flagler—built a second refinery, the Standard Works.
With Flagler's assistance, favorable railroad freight rebates were secured for Standard Works. William Rockefeller was sent to New York to expand the East Coast market. Within three years, the company expanded vertically to include warehouses, fleets of wagons, and timber tracts for the making of its own barrels. The company eventually became so large that it required reorganization. A joint stock company, the Standard Oil Company of Ohio, with Rockefeller as president, was incorporated in 1870 and had capital of $1 million. Soon Standard Oil controlled one-tenth of American refining, but in an atmosphere of competitive chaos.
Rockefeller's next method for imposing order on the oil industry was to buy out most of the Cleveland refiners, then acquire others in New York, Pittsburgh, and Philadelphia. Standard Oil was efficiently organized, was managed with great foresight, and wielded tremendous economic leverage. As a result, the company was able to survive the temporary depressions that were difficult for smaller or less efficient companies. Its vertical structure was expanded to include pipeline systems, oil terminals, and direct-marketing facilities. By 1879 Rockefeller dominated the entire oil industry. Standard Oil was refining 90 percent of American oil using its own railroad tank cars, depots, ships, and docking facilities. Strict planning and economy were enforced throughout the process, which allowed the company to cut the price of refined oil from 23 cents per gallon to 7 cents per gallon during its first 20 years of operation.
In the 1880s the nature of Rockefeller's business started changing; he moved beyond refining oil into producing crude oil itself, and moved his wells westward as new fields opened up. He pioneered this expansion by acquiring oil land before it was certain that its sulfuric oil could be refined. He employed scientist Herman Frasch, who devised new methods for making these fields yield an enormous profit. He also developed markets for the byproducts of his business—kerosene, lubricants, varnish, and fuel oil. As the penetration of American markets was assured, foreign markets in Europe, Asia, and Latin America were added.
Since 1872 Standard Oil had circumvented Ohio regulations by placing its out-of-state acquisitions in the hands of Henry Flagler as "trustee." All profits went to the Ohio company while the outside businesses, entrusted to a nine-man directorate that was itself incorporated, remained nominally independent. The Standard Oil trust, established in 1882, was the first of many such industrial combinations that caused public opposition to monopolies to change to hostility.
By 1883, after winning control of the pipeline industry, Standard's monopoly was at a peak. With a capital reserve of about $70 million, the trust was the world's largest and richest industrial organization. Journalists condemned Standard Oil for various unethical business practices: railroad rebates, a system Rockefeller did not invent that was used by many refiners; price discrimination; industrial espionage and bribery; and elimination of smaller firms through unfair competition, such as cutting off their crude oil supplies or restricting their transport outlets. Standard Oil was investigated by the New York State Senate and by the U.S. House of Representatives in 1888. A rising tide of reform sentiment led to the passage of the Sherman Antitrust Act in 1890. By now the Standard Oil trust controlled about 95 percent of the petroleum industry in the United States; had extensive holdings in mining, manufacturing, and transportation; had virtual control of pipeline distribution in the United States; and was an economic power of global proportions. In 1892 the Ohio Supreme Court ordered the trust dissolved. Rockefeller formally disbanded the trust by requiring the directors to hand in their trust certificates, but in practice the organization remained intact and still met regularly to determine overall policy.
Rockefeller's most famous excursion outside the oil industry began in 1893, when he helped develop the Mesabi iron ore range of Minnesota. Three years later, his Consolidated Iron Mines owned a great fleet of ore boats and virtually controlled Great Lakes shipping. As an iron ore magnate, Rockefeller now had the power to dictate to the steel industry. In an alliance with steel king Andrew Carnegie, Rockefeller agreed not to enter steelmaking and Carnegie sold his ore holdings to the vast new merger created by Carnegie and J. P. Morgan, U.S. Steel. In 1896, Rockefeller's fortune passed the $200 million mark for the first time.
In 1899 Standard was recreated legally as a "holding company," Standard Oil of New Jersey. Rockefeller retained the title of president until 1911, the year that firm was dissolved by the United States Supreme Court, but for more than a decade he had been retired from active business and had devoted himself to philanthropy. In his early career, Rockefeller had depended on the Baptist Church for advice; the Church wanted its own great university, and in 1892 the University of Chicago was Rockefeller's first major philanthropic creation. As his fortune grew, he established and endowed philanthropic foundations including: the Rockefeller Institute for Medical Research (now Rockefeller University) in 1901, the General Education Board in 1902, the Rockefeller Foundation in 1913, and the Laura Spelman Rockefeller Memorial Foundation in 1918 (named for his wife who had died in 1915).
As he was giving away a large percentage of his fortune, his successors at the helm of Standard Oil were raising prices and distributing record profits through enormous dividends. President Theodore Roosevelt was especially incensed at Standard's acceptance of illegal railroad rebates, a practice that continued long after it was outlawed. In 1907 one of the company's subsidiaries was fined $29.24 million, which was such an outrageous sum that the ruling was overturned on appeal. Undaunted, the government continued to pursue antitrust violations, and in 1911—after 444 witnesses and 1,374 exhibits were presented—Standard Oil of New Jersey was required to spin off 33 independent subsidiaries.
Chronology: John D. Rockefeller
1859: Established first company, Clark and Rockefeller.
1863: Entered his first oil refining business with a $4000 investment.
1865: Bought out his partners and opened Standard Works.
1870: Incorporated a joint stock company, Standard Oil Company of Ohio.
1879: Refined 90 percent of American oil.
1882: Established the Standard Oil trust as a way to circumvent the laws of Ohio.
1892: Ohio Supreme Court ordered the dissolution of Standard Oil trust.
1911: United States Supreme Court ordered the dissolution of Standard Oil of New Jersey, a holding company.
Because Rockefeller's business ethics were questioned, his philanthropic endeavors were initially received with suspicions. Some even turned down his offers of help, calling his benefactions tainted money. Eventually, through the use of publicity agents and by overcoming his own policy of silence about his affairs, he was able to bring about a change in public opinion and distribute a large portion of his wealth where it would work for the benefit of society.
Social and Economic Impact
John D. Rockefeller's genius was in his ability to organize, and this was shown in his business and his philanthropy's efforts. He was able to recognize and seize opportunity, solve difficult problems, and bring together talented groups of men to implement his plans. He won the loyalty of his partners and associates by giving them the freedom to use their talents to their fullest extent. 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 meticulousness attention to detail, though, kept him from understanding that business ethics and government intervention were forces to be taken into consideration. Laws that still regulate business and allow the government to break up monopolies were passed and tested in the court system because of Rockefeller's unwillingness to consider the good of the general public. The government subsequently filed antitrust complaints against American Telephone & Telegraph, International Business Machines, and Microsoft Corporation based on the same laws that were used to break up Rockefeller's monopoly.
According to Ron Chewnow's 1998 biography, "Never before in the history of the U.S. had there been so far-reaching a struggle between industry and government." The monopoly was broken when the Supreme Court ruled that Standard Oil's trade restraints violated the public interest, but ironically the required reorganization ultimately tripled the worth of John D. Rockefeller. With the emerging automobile industry, the end of antitrust litigation, and the posting of dividends in excess of 50 percent, the public exhibited in insatiable appetites for shares in any of the companies. Exxon, Mobil, and Chevron—along with Standard Oil—are just a few of the subsidiaries that came to dominate the oil industry throughout the twentieth century.
Sources of Information
Abels, Jules. The Rockefeller Billions: The Story of the World's Most Stupendous Fortune. New York: Macmillan, 1965.
Byers, Paula K., and Suzanne M. Bourgoin, eds. Encyclopedia of World Biography. Detroit: Gale Research, 1998.
Chernow, Ron. Titan: The Life of John D. Rockefeller, Sr. New York: Random House, 1998.
Concise Dictionary of American Biography. New York: Charles Scribner's Sons, 1997, 1077-8.
Ernst, Joseph W., ed. Dear Father-Dear Son: The Correspondence of John D. Rockefeller and John D. Rockefeller, Jr. Bronx, NY: Fordham University Press, 1994.
Rockefeller, John D. Random Reminiscences of Men and Events. North Stratford, NH: Ayer, 1979.
Van Doren, Charles, ed. Webster's American Biographies. Springfield, MA: G. & C. Merriam Co., 1979.
Rockefeller, John D.
John D. Rockefeller
Born: July 8, 1839
Richford, New York
Died: May 23, 1937
American industrialist and philanthropist
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.
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.
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. TheStandard 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 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.
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.
For More Information
Chernow, Ron. Titan: The Life of John D. Rockefeller, Sr. New York: Random House, 1998.
Coffey, Ellen Greenman. John D. Rockefeller, Empire Builder. Englewood Cliffs, NJ: Silver Burdett, 1989.
Harr, John Ensor, and Peter J. Johnson. The Rockefeller Century. New York: Scribner, 1988.
Harr, John Ensor, and Peter J. Johnson. The Rockefeller Conscience: An American Family in Public and in Private. New York: Scribner, 1991.
Nevins, Allan. Study in Power: John D. Rockefeller, Industrialist and Philanthropist. Norwalk, CT: Easton Press, 1989.
Segall, Grant. John D. Rockefeller: Anointed With Oil. New York: Oxford University Press, 2001.
Rockefeller, John D.
John D. Rockefeller
John Davison Rockefeller was born on July 8, 1839, the second of six children in a modest farming family in New York . The Rockefellers moved to Ohio in 1853. Two years later, young Rockefeller left high school to enroll in a six-month college business course. He finished the course in three months and then spent six weeks looking for work. He found a job as an assistant bookkeeper. Within months, he was promoted to cashier and then bookkeeper.
In 1863, Rockefeller and a partner, Maurice Clark, entered the oil refining business, which had become a major industry in Cleveland. They found a new, experienced partner in Samuel Andrews (1836–1904), and together they founded an oil company. Within two years, the partners (of which there were now five) disagreed about management, so Rockefeller bought out the others and opened a new company with Andrews. In 1870, the two men joined forces with several other investors and developed the Standard Oil Company.
By 1872, Standard Oil had controlling interests in nearly every other oil refinery in Cleveland, plus two in New York. Five years later, Rockefeller controlled 90 percent of the American oil industry and was among the twenty richest men in the world. In 1882, he established the Standard Oil Trust. A trust is an organization of several businesses in the same industry. By banding together, the trust controls production and distribution of a product or service, thereby limiting any serious competition. (See Monopolies and Trusts .)
Rockefeller knew America depended on oil for its daily existence. Families and businesses used it to heat their homes and buildings; factories needed it to run their machines. By establishing his trust, Rockefeller forced consumers to pay whatever price he wanted to charge for his oil.
Some Americans, though weary of the situation, accepted Rockefeller's trust; others took action. At a time when corruption was infiltrating every aspect of life from politics to big business, a group of journalists made it their job to uncover and publicize that corruption. Pioneers of investigative journalism, these writers were called muckrakers (muckraking means digging up dirt). One of the most popular among them was Ida M. Tarbell (1857–1944). Tarbell wrote for the popular magazines of the day, including McClure's, a literary and political journal.
Tarbell began her investigation into the Standard Oil Company in 1902. Her findings and report were published in nineteen parts in McClure's from November 1902 to October 1904. In 1904, she published the entire account in book form under the title The History of the Standard Oil Company.
Tarbell's exposé focused on Rockefeller's involvement with the railroad industry . With so many new railroad lines, competition was fierce. In an effort to compete, railroads tried to undercut each other by charging lower and lower shipping rates. Although this was good for companies that relied on the railroads, it was devastating to the railroads themselves. Unable to make a profit, the railroads formed a monopoly to stabilize shipping rates. This monopoly was called the South Improvement Company.
The railroads knew they needed support if their monopoly was to work. Rockefeller, being the wealthiest and most frequent shipper, was the obvious choice among customers. He agreed to support the South Improvement Company on the condition that he be given preferential treatment. This meant he received hefty rebates (refunds) not only for each shipment he sent, but also for the shipment of competing products. So any oil or kerosene, from whatever source, that the railroads shipped brought Rockefeller a rebate.
The South Improvement Company announced a steep increase in freight charges, which incurred the wrath of business owners who depended on the railroads. The protests that followed the announcement brought the situation into the public eye, and it was then that Tarbell discovered Rockefeller's involvement in the scheme.
Although it came too late to help many of the smaller, independent oil businesses, Tarbell's exposé increased public pressure to put an end to Rockefeller's unethical behavior. The public had been aware of the robber baron 's basic lack of honesty, but Tarbell's report gave concrete evidence as to Rockefeller's greed and willingness to exploit others. By 1906, anti-Rockefeller sentiment was at its highest, partially because President Theodore Roosevelt (1858–1919; served 1901–9) publicly accused him of criminal acts.
The federal government had seven lawsuits pending against Standard Oil by 1907, claiming it was twenty times bigger than its closest competitor. In 1908, the government launched its biggest suit against Standard Oil, determined to break up the oil trust. It would take three years, but on May 15, 1911, the government ordered Standard Oil to dismantle and separate into thirty-four smaller companies, each with its own board of directors. The trust was broken. By this time, Rockefeller had already been retired for fourteen years.
Man of contradictions
Rockefeller was seen as a contradiction. Although he was a dishonest and greedy businessman, he was a deeply religious man who donated millions of dollars to charitable causes. To the University of Chicago he donated approximately $35 million. In 1901, he founded the Rockefeller Institute for Medical Research, known in the twenty-first century as Rockefeller University. The following year, he established the General Education Board (GEB), whose mission was to promote education in America without regard to race, sex, or creed (religious belief). Between 1902 and 1965, the GEB distributed $325 million for improvement of education at all levels. It was out of the GEB's work with children's clubs that the 4-H youth movement developed, and it is still active today.
Rockefeller founded the Rockefeller Foundation in 1913, which gives financial assistance to public health, medical education, scientific advancement, the arts, social research, and other endeavors.
Although known as a brutal businessman who would stop at nothing to get what he wanted, Rockefeller was a dedicated family man. He and his wife had five children, and the land on which their home stood in New York is now part of the garden of the Museum of Modern Art.
Rockefeller died in 1937 in his Florida home at the age of ninety-seven.