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  1. John D. Rockefeller: Introduction
  2. John D. Rockefeller: Early Life and Education
  3. John D. Rockefeller: Success Story
  4. John D. Rockefeller: Net Worth
  5. John D. Rockefeller: Famous or Infamous
  6. John D. Rockefeller: Most Influential Quotes

Rockefeller was obsessively attuned to his business’ efficiency. The company made its own barrels because this was cheaper than buying them. It bought the timber stands that supplied the white oak for these barrels, because, again, this was cheaper. It dried the timber on site, since this made it lighter and therefore cheaper to transport using, of course, the company’s own wagons. As a result the company paid $1.50 per barrel, or half of what its competitors did.

He soon supplemented this vertical integration with horizontal integration. Cleveland had far more refining capacity than it needed, and many of the businesses were weak. But first, he increased his control of the partnership, which had expanded to include Clark’s two brothers and a chemist named Samuel Andrews. He bought the Clarks out in 1865 to form Rockefeller & Andrews, then joined with his brother William, who had built a refinery in Cleveland, the next year. In 1867 they brought Henry M. Flagler into the partnership. Rockefeller, Andrews & Flagler, with its two Cleveland refineries and an export office in New York, was already the largest oil refinery in the world, but it was a minute fraction of its eventual size.

In 1870 the company reorganized as the Standard Oil Company of Ohio, with Rockefeller taking a 30% stake. The next year Tom Scott, president of the Pennsylvania Railroad, organized a pool of railroads and oil refiners called the South Improvement Company, which was intended to stabilize prices for refined products in an overcrowded industry and ensure steady rates for transporting them. Drillers, who were not invited to participate, balked, boycotting the cartel’s members and ending the scheme before it had started. 

Revelations about railroads’ plans to charge non-participating refiners extra, in order to fund rebates for participating ones, inflamed the public, and Standard Oil, as the largest refiner, came under attack in the press. Rockefeller stayed silent, fueling false rumors that he had been behind the whole plan. His silence in the face of public ire would form a pattern, probably harming his interests in the long run.

When the South Improvement Company failed, Rockefeller resolved to consolidate the industry himself. The first few months of 1872 would come to be known as the Cleveland Massacre, in which Standard Oil bought 22 of its 26 competitors in the city. It began with the strongest rivals, in order to establish momentum early rather than face mounting costs and opposition down the line. 

Much of Rockefeller’s approach was shrewd. He would show competitors Standard Oil’s books, and they would realize they didn’t stand a chance. Because of the company’s New York City connections and reputation for cost control, it never lacked financing. When rivals went down easily, they were given stock in Standard Oil, or cash if they preferred it, including goodwill. Some were brought into the company’s management.

If they held out, Rockefeller would resort to other methods. He would dump Standard Oil products at cost to squeeze the competition. He would buy up the area’s entire stock of barrels or chemicals needed in the refining process, creating bottlenecks. He would bribe legislators. As much as possible, he kept his campaign a secret, so that some didn’t know the extent or specifics of the consolidation. When holdouts saw every other refiner’s prices drop in unison, they knew something was happening, but not necessarily how many or which refineries had gone over to “the Standard.” Rockefeller surreptitiously bought up just about the entire West Virginia market in this way. 

At the end of the 1870s, when Rockefeller was just 40 years old, he controlled 90% of the country’s refining capacity and much more. He arranged for railroads to share Standard Oil’s shipments: in 1875, the Pennsylvania Railroad carried 51%, the Erie 20%, the New York Central 20%, and the Baltimore & Ohio 9%; the agreement was modified three years later. The railroads were happy to have the consistent shipments – and accordingly offered Standard Oil rebates – while Rockefeller was happy to reduce jostling between rival lines which could affect his transportation costs. 

He did have one major clash with the Pennsylvania Railroad, beginning in 1877. The Pennsylvania resented Standard Oil’s pipeline-building, which threatened its freight loads, and set up its own pipeline subsidiary. Rockefeller stopped shipping on the Pennsylvania entirely, sparked a rate war, and bought many of the railroad’s pipeline assets out from under it, forcing it to capitulate.   

Standard Oil had its hands in many other industries as well, such as iron, copper, steel and coal, but also more unexpected areas such as general stores. Standard Oil forced shops to carry its products alone by opening its own stores (which could draw on the empire’s war chest to slash prices) and driving noncompliant shop owners out of business. It bought up newspapers to promote its version of events. It owned its own boats, railroad cars and warehouses. It manufactured its own sulfuric acid.

A 1901 Puck cartoon depicting Rockefeller. Courtesy Wikimedia.

The company also did everything it could to reduce waste. When it was common practice to dump gasoline in the Cuyahoga River—which caught fire in 1868 and a dozen times since—Rockefeller kept it to use as fuel. The company marketed over 300 petroleum products, from naphtha to Vaseline, in an attempt to not waste any material. Rockefeller personally insisted that the 40 drops of solder used to seal each can of kerosene be cut to 39. (For more, see: Measuring Company Efficiency.)

And yet as much as Rockefeller insisted on leanness and efficiency, he assembled perhaps the least efficient kind of company, a lumbering behemoth that was, in fact, an alliance of geographically based subsidiaries operating across a swathe of industries. In a way, he understood the drawbacks. But he always denied that his goal was to make “money for money’s sake,” insisting that he made his money “for the good of mankind.” He saw his empire-building as contributing to that goal, and it is true that he dramatically reduced the price of fuel for ordinary consumers—to say nothing of his lifelong commitment to philanthropy. (For more, see: Conglomerates: Cash Flows or Corporate Chaos?)

Ordinary consumers, though, did not always see Rockefeller as their benefactor. The type of backlash the South Improvement Company generated would resurface a number of times during his life, growing more and more vehement. While Rockefeller won out against the Pennsylvania Railroad, the state brought charges against Standard for monopolizing the oil trade, and other states were soon suing on similar grounds.

Public ire really began to pick up when Standard Oil formed the world’s first trust in 1882. Up to that time, the Standard had been divided into 41 subsidiaries, largely because state laws barred companies from incorporating in one state and operating in another. The trust brought all of these companies together into one shareholding structure, and the unprecedented consolidation deepened the public’s suspicion of Rockefeller.

The Sherman Antitrust Act was passed in 1890 in a clear rebuff to Rockefeller’s anti-competitive actions, but the Standard Oil Trust remained intact for a while yet. Rockefeller’s most impassioned critic, Ida Tarbell (he called her “Tarbarrel”), was the daughter of one of the Titusville oilmen he had squeezed out of business in the 1870s. She wrote a 19-part polemic in McClure’s Magazine between 1902 and 1904 that denounced Rockefeller in personal as well as professional terms.

In 1907, during the trust-buster Theodore Roosevelt administration, the Justice Department began building a case against Standard Oil, which the government argued before a circuit court in 1909 and won. The case, Standard Oil Co. of New Jersey v. the United States, eventually went to the Supreme Court, where the government’s victory was upheld and the monopoly was broken up into 34 “Baby Standards.” (For more, see: Your Standard Oil Portfolio.)

A number of mergers and acquisitions (M&As) in the intervening century have all but erased the Standard Oil name, with the rights and assets now divided between Exxon Mobil Corp., Chevron Corporation and BP p.l.c. It is still possible to fill up at a Standard Oil pump, however. Chevron has kept the name at a handful of stations in order to protect its rights to the brand. 

What many in the public didn’t know is that Rockefeller had retired from Standard Oil’s day-to-day operations long before the court battle began. In 1891, his health started to deteriorate, and he suffered a form of nervous breakdown. All of his hair had fallen out by 1901, and he wore wigs for the rest of his life. From 1896 to 1899 his management role tapered off, and John Archbold replaced him at the company’s helm. 

He remained the nominal president, however, which opened him up to criticism when Archbold raised prices and dividend growth spiked. Rockefeller had shown restraint in pricing, believing his provision of cheap fuel to be part of his “missionary service to the whole world.” Archbold saw a field devoid of competition and he got greedy. 

Rockefeller devoted his retirement to family life and philanthropy. He had married Laura “Cettie” Spelman in 1864, and the couple had four daughters and one son. They raised their children in the most wholesome, humble circumstances it was possible for robber barons to approximate. The children did chores in exchange for modest allowances. They went skating and on bike rides with their father. John D. taught Sunday school and never touched alcohol or tobacco in his 97 years. 

Rockefeller approached philanthropy with the same reality-bending zeal he brought to business. The Rockefeller Foundation, founded in 1913, remains one of the largest and best-funded charities in the world. He endowed the University of Chicago, which has produced 89 Nobel laureates at the time of writing; and Spelman College, which currently tops US News’ ranking of historically black colleges and universities. 

His support for medical research and initiatives would, if it were the only thing he’d done in his life, have established a lasting legacy. By 1927, the Rockefeller Sanitary Commission had nearly eradicated hookworm in the South, where it had previously affected around 40% of school-aged children. The Rockefeller Institute sponsored the development of a yellow fever vaccine. These efforts at targeted philanthropy set an important precedent for later campaigns by attacking specific problems using scientific methods.

Rockefeller was also adept at what he called “retail” giving. He would attend services at black churches and leave generous donations as he left. He would give envelopes full of money to members of his own congregation who looked strapped for cash. (For more, see: How to Start Your Own Private Foundation.)

He died in Florida at the age of 97, having accomplished one of two goals he laid out for himself as a young man: to live to 100 and to make $100,000.


John D. Rockefeller: Net Worth
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