John D. Rockerfeller

John_D._Rockefeller
facebooktwittergoogle_plusredditpinterestlinkedin
0 0

“If your only goal is to become rich, you will never achieve it.”

Standard-Oil

John Davison Rockefeller Sr. (July 8, 1839 – May 23, 1937) was an American business magnate and philanthropist. He was a co-founder of the Standard Oil Company, which dominated the oil industry and was the first great U.S. business trust. Rockefeller revolutionized the petroleum industry, and along with other key contemporary industrialists such as Andrew Carnegie, defined the structure of modern philanthropy. In 1870, he founded Standard Oil Company and actively ran it until he officially retired in 1897.[3]

Rockefeller founded Standard Oil as an Ohio partnership with his brother William along with Henry Flagler, Jabez A. Bostwick, chemist Samuel Andrews, and a silent partner, Stephen V. Harkness. As kerosene andgasoline grew in importance, Rockefeller’s wealth soared and he became the world’s richest man and the first American worth more than a billion dollars, controlling 90% of all oil in the United States at his peak.[a]Adjusting for inflation, his fortune upon his death in 1937 stood at $336 billion, accounting for more than 1.5% of the national economy, making him the richest person in US history.[4][5][6][7]

Rockefeller spent the last 40 years of his life in retirement at his estate, Kykuit, in Westchester County, New York. His fortune was mainly used to create the modern systematic approach of targeted philanthropy. He was able to do this through the creation of foundations that had a major effect on medicine, education and scientific research.[8] His foundations pioneered the development of medical research and were instrumental in the eradication of hookworm and yellow fever.

Rockefeller was also the founder of both the University of Chicago and Rockefeller University and funded the establishment of Central Philippine University in the Philippines. He was a devoted Northern Baptist and supported many church-based institutions. Rockefeller adhered to total abstinence from alcohol and tobacco throughout his life.[9] He was a faithful congregant of the Erie Street Baptist Mission Church, where he taught Sunday school, and served as a trustee, clerk, and occasional janitor.[10][11] Religion was a guiding force throughout his life, and Rockefeller believed it to be the source of his success. Rockefeller was also considered a supporter of capitalism based in a perspective of social darwinism, and is often quoted saying “The growth of a large business is merely a survival of the fittest.”[12][13]

Early life

Rockefeller was the second of six children and eldest son born in Richford, New York, to con artist William Avery “Bill” Rockefeller (November 13, 1810 – May 11, 1906) and Eliza Davison (September 12, 1813 – March 28, 1889). His siblings were Lucy (1838–1878), William Jr. (1841–1922), Mary (1843–1925), and twins Franklin (Frank) (1845–1917) and Frances (1845–1847). His father was of English and German descent while his mother was of Scots-Irish descent. Bill was first a lumberman and then a traveling salesman who identified himself as a “botanic physician” and sold elixirs. The locals referred to the mysterious but fun-loving man as “Big Bill” and “Devil Bill”.[14] He was a sworn foe of conventional morality who had opted for a vagabond existence and who returned to his family infrequently. Throughout his life, Bill became notorious for shady schemes.[15] In between the births of Lucy and John, Bill and his mistress/housekeeper Nancy Brown had a daughter named Clorinda (c. 1838–?, died young). Between John and William Jr.’s births, Bill and Nancy had another daughter, Cornelia (c. 1840–?).[16]

Eliza, a homemaker and devout Baptist, struggled to maintain a semblance of stability at home, as Bill was frequently gone for extended periods. She also put up with his philandering and his double life, which includedbigamy.[17] Thrifty by nature and necessity, she taught her son that “willful waste makes woeful want”.[18] Young Rockefeller did his share of the regular household chores and earned extra money raising turkeys, selling potatoes and candy, and eventually lending small sums of money to neighbors. He followed his father’s advice to “trade dishes for platters” and always get the better part of any deal. Bill once bragged, “I cheat my boys every chance I get. I want to make ’em sharp.”[19]

When he was a boy, his family moved to Moravia, NY, and in 1851 to Owego, where he attended Owego Academy. In 1853, his family moved to Strongsville, a suburb of Cleveland. Rockefeller attended Cleveland’s Central High School and then took a ten-week business course at Folsom’s Commercial College, where he studied bookkeeping.[20]

In spite of his father’s absences and frequent family moves, young John was a well-behaved, serious, and studious boy. His contemporaries described him as reserved, earnest, religious, methodical, and discreet. He was an excellent debater and expressed himself precisely. He also had a deep love of music and dreamed of it as a possible career.[21] Early on, he displayed an excellent mind for numbers and detailed accounting.

 Rockefeller at age 18, ca. 1857

Pre-Standard Oil career

As a bookkeeper

In September 1855, when Rockefeller was sixteen, he got his first job as an assistant bookkeeper working for a small produce commission firm called Hewitt & Tuttle. He worked long hours and delighted, as he later recalled, in “all the methods and systems of the office.”[22] He was particularly adept at calculating transportation costs, which served him well later in his career. The full salary for his first three months’ work was $50 (50 cents a day).[23] As a youth, Rockefeller reportedly said that his two great ambitions were to make $100,000 and to live 100 years.[24]

Business partnership

In 1859, Rockefeller went into the produce commission business with a partner, Maurice B. Clark, and they raised $4,000 in capital. Rockefeller went steadily ahead in business from there, making money each year of his career.[25]After wholesale foodstuffs, the partners built an oil refinery in 1863 in “The Flats“, then Cleveland’s burgeoning industrial area. The refinery was directly owned by Andrews, Clark & Company, which was composed of Clark & Rockefeller, chemist Samuel Andrews, and M. B. Clark’s two brothers. The commercial oil business was then in its infancy. Whale oil had become too expensive for the masses, and a cheaper, general-purpose lighting fuel was needed.[26]

While his brother Frank fought in the Civil War, Rockefeller tended his business and hired substitute soldiers. He gave money to the Union cause, as did many rich Northerners who avoided combat.[27] Rockefeller was an abolitionist who voted for President Abraham Lincoln and supported the then new Republican Party.[28] As he said, “God gave me money”, and he did not apologize for it. He felt at ease and righteous following John Wesley‘s dictum, “gain all you can, save all you can, and give all you can.”[29]

In February 1865, in what was later described by oil industry historian Daniel Yergin as a “critical” action, Rockefeller bought out the Clark brothers for $72,500 at auction and established the firm of Rockefeller & Andrews. Rockefeller said, “It was the day that determined my career.”[30] He was well positioned to take advantage of postwar prosperity and the great expansion westward fostered by the growth of railroads and an oil-fueled economy. He borrowed heavily, reinvested profits, adapted rapidly to changing markets, and fielded observers to track the quickly expanding industry.[31]

Beginning in the oil business

In 1866, his brother William Rockefeller Jr. built another refinery in Cleveland and brought John into the partnership. In 1867, Henry M. Flagler became a partner, and the firm of Rockefeller, Andrews & Flagler was established. By 1868, with Rockefeller continuing practices of borrowing and reinvesting profits, controlling costs, and using refineries’ waste, the company owned two Cleveland refineries and a marketing subsidiary in New York; it was the largest oil refinery in the world.[32][33] Rockefeller, Andrews & Flagler was the predecessor of the Standard Oil Company.

Standard Oil

Main article: Standard Oil

Founding and early growth

 John D. Rockefeller ca. 1875

By the end of the American Civil War, Cleveland was one of the five main refining centers in the U.S. (besides Pittsburgh, Pennsylvania, New York, and the region in northwestern Pennsylvania where most of the oil originated). In June 1870, Rockefeller formed Standard Oil of Ohio, which rapidly became the most profitable refiner in Ohio. Standard Oil grew to become one of the largest shippers of oil and kerosene in the country. The railroads were fighting fiercely for traffic and, in an attempt to create a cartel to control freight rates, formed the South Improvement Company in collusion with Standard and other oil men outside the main oil centers.[34] The cartel received preferential treatment as a high-volume shipper, which included not just steep rebates of up to 50% for their product but also rebates for the shipment of competing products.[34] Part of this scheme was the announcement of sharply increased freight charges. This touched off a firestorm of protest from independent oil well owners, including boycotts and vandalism, which eventually led to the discovery of Standard Oil’s part in the deal. A major New York refiner, Charles Pratt and Company, headed by Charles Pratt and Henry H. Rogers, led the opposition to this plan, and railroads soon backed off. Pennsylvania revoked the cartel’s charter, and non-preferential rates were restored for the time being.[35]

Undeterred, though vilified for the first time by the press, Rockefeller continued with his self-reinforcing cycle of buying competing refiners, improving the efficiency of his operations, pressing for discounts on oil shipments, undercutting his competition, making secret deals, raising investment pools, and buying rivals out. In less than four months in 1872, in what was later known as “The Cleveland Conquest” or “The Cleveland Massacre”, Standard Oil had absorbed 22 of its 26 Cleveland competitors.[36] Eventually, even his former antagonists, Pratt and Rogers, saw the futility of continuing to compete against Standard Oil: in 1874, they made a secret agreement with their old nemesis to be acquired. Pratt and Rogers became Rockefeller’s partners. Rogers, in particular, became one of Rockefeller’s key men in the formation of the Standard Oil Trust. Pratt’s son, Charles Millard Pratt, became Secretary of Standard Oil. For many of his competitors, Rockefeller had merely to show them his books so they could see what they were up against and make them a decent offer. If they refused his offer, he told them he would run them into bankruptcy and then cheaply buy up their assets at auction. He saw himself as the industry’s savior, “an angel of mercy” absorbing the weak and making the industry as a whole stronger, more efficient, and more competitive.[37] Standard was growinghorizontally and vertically. It added its own pipelines, tank cars, and home delivery network. It kept oil prices low to stave off competitors, made its products affordable to the average household, and, to increase market penetration, sometimes sold below cost if necessary. It developed over 300 oil-based products from tar to paint to Vaseline petroleum jelly to chewing gum. By the end of the 1870s, Standard was refining over 90% of the oil in the U.S.[38] Rockefeller had already become a millionaire.[39]

 Standard Oil Trust Certificate 1896

In 1877, Standard clashed with Thomas A. Scott the president of the Pennsylvania Railroad, its chief hauler. Rockefeller had envisioned the use of pipelines as an alternative transport system for oil and began a campaign to build and acquire them.[40] The railroad, seeing Standard’s incursion into the transportation and pipeline fields, struck back and formed a subsidiary to buy and build oil refineries and pipelines.[41] Standard countered and held back its shipments and, with the help of other railroads, started a price war that dramatically reduced freight payments and caused labor unrest as well. Rockefeller eventually prevailed and the railroad sold all its oil interests to Standard. But in the aftermath of that battle, in 1879 the Commonwealth of Pennsylvania indicted Rockefeller on charges of monopolizing the oil trade, starting an avalanche of similar court proceedings in other states and making a national issue of Standard Oil’s business practices.[42]

Philanthropy

Rockefeller’s charitable giving began with his first job as a clerk at age 16, when he gave six percent of his earnings to charity, as recorded in his personal ledger. By the time he was twenty, his charity exceeded ten percent of his income. Much of his giving was church-related.[65] His church was later affiliated with the Northern Baptist Convention, which formed from American Baptists in the North with ties to their historic missions to establish schools and colleges for freedmen in the South after the American Civil War. Rockefeller attended Baptist churches every Sunday; when traveling he would often attend services at African-American Baptist congregations, leaving a substantial donation.[66] As Rockefeller’s wealth grew, so did his giving, primarily to educational and public health causes, but also for basic science and the arts. He was advised primarily by Frederick Taylor Gates[67] after 1891,[68] and, after 1897, also by his son.

He was influenced by a meeting with Swami Vivekananda, who urged him to use more of his philanthropy to help the poor and distressed people.[69][70]

Rockefeller believed in the Efficiency Movement, arguing that: “To help an inefficient, ill-located, unnecessary school is a waste….. it is highly probable that enough money has been squandered on unwise educational projects to have built up a national system of higher education adequate to our needs, if the money had been properly directed to that end.”[71]

He and his advisers invented the conditional grant, which required the recipient to “root the institution in the affections of as many people as possible who, as contributors, become personally concerned, and thereafter may be counted on to give to the institution their watchful interest and cooperation.”[72]

In 1884, Rockefeller provided major funding for a college in Atlanta for African-American women, which became Spelman College (named for Rockefeller’s in-laws who were ardent abolitionists before the Civil War).[73] The oldest existing building on Spelman’s campus, Rockefeller Hall, is named after him.[74] Rockefeller also gave considerable donations to Denison University[75] and other Baptist colleges.

Rockefeller gave $80 million to the University of Chicago[76] under William Rainey Harper, turning a small Baptist college into a world-class institution by 1900. He also gave a grant to the American Baptist Missionaries foreign mission board, the American Baptist Foreign Mission Society in establishing Central Philippine University, the first Baptist and second American university in Asia, in 1905 in the Philippines.[77][78]

His General Education Board, founded in 1903,[79] was established to promote education at all levels everywhere in the country.[80] In keeping with the historic missions of the Baptists, it was especially active in supporting black schools in the South.[80] Rockefeller also provided financial support to such established eastern institutions as Yale, Harvard, Columbia, Brown, Bryn Mawr, Wellesley and Vassar.

 Rockefeller and his sonJohn Jr. in 1915

On Gates’ advice, Rockefeller became one of the first great benefactors of medical science. In 1901, he founded the Rockefeller Institute for Medical Research[79] in New York City. It changed its name to Rockefeller University in 1965, after expanding its mission to include graduate education.[81] It claims a connection to 23 Nobel laureates.[82] He founded the Rockefeller Sanitary Commission in 1909,[79] an organization that eventually eradicated the hookwormdisease,[83] which had long plagued rural areas of the American South. His General Education Board made a dramatic impact by funding the recommendations of the Flexner Report of 1910. The study had been undertaken by theCarnegie Foundation for the Advancement of Teaching; it revolutionized the study of medicine in the United States.

He created the Rockefeller Foundation in 1913[84] to continue and expand the scope of the work of the Sanitary Commission,[79] which was closed in 1915.[85] He gave nearly $250 million to the foundation,[73] which focused on public health, medical training, and the arts. It endowed Johns Hopkins School of Hygiene and Public Health,[79] the first of its kind.[86] It also built the Peking Union Medical College in China into a notable institution.[75] The foundation helped in World War I war relief,[87] and it employed William Lyon Mackenzie King of Canada to study industrial relations.[88] In the 1920s, the Rockefeller Foundation funded a hookworm eradication campaign through the International Health Division. This campaign used a combination of politics and science, along with collaboration between healthcare workers and government officials to accomplish its goals.[89]

 John D. Rockefeller’s painting by John Singer Sargent in 1917

Rockefeller’s fourth main philanthropy, the Laura Spelman Rockefeller Memorial Foundation, was created in 1918.[90] Through this, he supported work in the social studies; this was later absorbed into the Rockefeller Foundation. In total Rockefeller donated about $550 million.[91]

Rockefeller became well known in his later life for the practice of giving dimes to adults and nickels to children wherever he went. He even gave dimes as a playful gesture to wealthy men, such as tire mogul Harvey Firestone.[92][93]



This profile is partly adapted from a Wikipedia entry on John D Rockefeller, available under the Creative Commons Attribution-ShareAlike License.

facebooktwittergoogle_plusredditpinterestlinkedin