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John D. Rockefeller: The Wealthiest American of All Time
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John D. Rockefeller's name is synonymous with wealth, and he's one of the most controversial business tycoons in America's history. From his monopolistic Standard Oil to various ventures in banking and shipping, Rockefeller's empire continued to thrive, even after infamous antitrust suits.
Regardless of opinions about his ethics, John D. Rockefeller was able to overcome times of war and turmoil to turn a considerable profit. Determining how he became so accomplished involves taking a more in-depth look into the life of America's wealthiest man.
Son of a Con Artist
John D. Rockefeller was the son of William Avery "Devil Bill" Rockefeller, who was a businessman and lumberman before becoming a well-known con artist. He claimed to be a "botanic physician" who sold various elixirs to unsuspecting customers. Devil Bill was also involved with swindling customers using his other business of land speculation.
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Bill found desperate farmers who could barely bring in sufficient income. He gave them loans with a 12% interest rate. The high-risk borrowers often fell to foreclosure, allowing Rockefeller to swoop in and take their farms.
Scammed by His Father
Devil Bill lived the life of a vagabond and was away from home for extended periods. Bill's mistress was also the family housekeeper; he fathered two children with her. A patient homemaker, Devil Bill's wife (John's mother) put up with his double life, including bigamy with his mistress.
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John and his brothers were also victims of their father's grifting. Bill even said, "I cheat my boys every chance I get. I want to make them sharp." The only business trait John earned from his father was to enter a deal that was a sure thing.
Mentored by His Mother
Because Bill was rarely home, John helped his mother, Eliza, as much as he could. He completed various household chores and earned money raising turkeys and selling potatoes and candy. Eliza, a devout Baptist, taught John to be prudent with his income as "willful waste makes woeful want."
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Eliza was a far more significant influence on John than his father was. She inspired him to share his wealth, and he later became an ardent philanthropist. "From the beginning, I was trained to work, to save and to give," he claimed. His respect for money led to his training as a bookkeeper.
Beginnings in Bookkeeping
Before becoming an oil tycoon, John D. Rockefeller attended the first public high school in Cleveland, Ohio. Following graduation, his interest in money led to the completion of a 10-week business course studying bookkeeping. John was an academic and took his education seriously.
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He earned his first financial role for a produce company when he was only 16 years old. He had a penchant for transportation costs and business operations. John began earning $16 per month as an apprentice, and eventually, he received $58 each month based on his successful collections capabilities.
A Musical Background
John possessed an innate business understanding that his mother helped nurture. He was honest yet firm. A skilled communicator, Rockefeller became known for his ability to negotiate transportation rates with canal owners, ship captains and freight agents based on market conditions.
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If he hadn't been such an expert at debt collection and negotiation, leading to significant earnings, Rockefeller might have wound up in a completely different place. He had a passion and fondness for music and once considered it for a career.
Rockefeller's Personal Loan Shark
Following his time as a bookkeeper, John D. Rockefeller decided to improve his odds of success. Taking what he had learned from his time in the produce-commission business, he joined forces with his partner, Maurice B. Clark. Clark contributed $2,000 of their total $4,000 capital, but John only had $800 saved.
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Rockefeller borrowed the rest from his father; Devil Bill gave John a loan of $1,000. Even though it was for his son, he still charged an interest rate. Lower than his standard 12%, Bill offered the loan at 10% interest.
Abolitionist Draft Dodger
The Civil War caused massive food shortages due to the need for military supplies. Rockefeller's business boomed as the war dragged on. John's brother Frank fought for the North, but John was able to avoid service. He did so by donating to the Union army. It was a common practice for wealthy people to stay off the battlefield.
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John was a Republican and robust abolitionist who voted for Abraham Lincoln. He considered it his duty as a wealthy American patriot to donate to the Northern cause, something that was instilled upon him by his mother.
The Civil War and Oil
The federal government began subsidizing oil, which drove the price from $0.35 a barrel to $13.75 a barrel in 1862. Even with high transportation costs and additional levies on refined oil, Rockefeller and his partner decided to enter this new boom. They switched from produce to oil in 1863 with the purchase of a refinery near Cleveland.
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Most companies kept 60% of the oil product as kerosene and dumped the rest. A thrifty Rockefeller sold the remaining 40% for other uses. In 1865, he bought out his partners, which he said determined his career.
Oil Profits Grow
Unlike today, the oil industry was relatively small. Consumers used whale oil to light candles and heat homes, although the product was far too expensive for middle class consumers. Throughout the 1870s, kerosene became far more accessible and easier to transport due to reduced freight rates.
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Rockefeller's thrifty nature and use of the entirety of his oil led to cheaper availability of kerosene and other oil byproducts. Rockefeller became the most profitable oil refiner and the largest shipper in Ohio. He made his product accessible to consumers, no matter their socioeconomic class.
The Cleveland Massacre
John D. Rockefeller's keen business nature led to Standard Oil's exponential growth. As a practice, John pinpointed his least-efficient competitors and targeted them for purchase. Based on his low costs and ability to raise capital, he was able to undercut his competitors and force them to sell.
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He went through a brief period known as "The Cleveland Massacre" in which he made secret deals leading to Standard Oil's attainment of 22 out of 26 Ohio competitors within four months. The remaining competitors realized that resistance was futile and made deals with him for the purchase of their companies.
Vertical Integration Creation
Some people picture business tycoons as ruthless businessmen who want to destroy their competition. John D. Rockefeller's view was far more messianic. He thought of himself more as a savior to the industry rather than its sole leader. His ownership of pipelines and other delivery methods kept prices low and increased competition.
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As Rockefeller's successor put it, "That orderly, economic, efficient flow is what we now, many years later, call 'vertical integration.' I do not know whether Mr. Rockefeller ever used the word 'integration.' I only know he conceived the idea."
Other Than Oil...
By the late 1870s, Standard Oil was responsible for 90% of the United States' refined oil. The company was growing both vertically and horizontally. Its products had found their way into nearly every American household. Standard Oil's increased market share and profits allowed the company to expand and begin marketing other products.
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Because Standard Oil was using nearly 100% of the oil it produced, the company developed over 300 other oil-based products. It was responsible for introducing everything from chewing gum and petroleum jelly to paint and tar. Rockefeller had become a millionaire at this point, worth $26 million by today's exchange rates.
Standard Oil vs. Pennsylvania Railroad
Because Standard Oil was investing in oil pipelines as a less-expensive transportation method, railroad companies began to notice — especially Standard Oil's principal hauler, Pennsylvania Railroad. The railroad formed a subsidiary to enter the oil-refining industry, leading to a considerable business battle and price war.
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Standard held back its shipments and reduced prices with the help of other railroads. After a hard-fought battle, Pennsylvania Railroad had to concede. The company sold its oil interests to Standard Oil, increasing Standard's stranglehold on the industry. The fight led to the first of many legal battles in Standard's existence.
Developing Anxiety
In the wake of Standard Oil's battle with Pennsylvania Railroad, the Commonwealth of Pennsylvania took action and indicted John D. Rockefeller for monopolizing the oil industry. Lawsuits from other states trickled in, causing Standard Oil to receive a large amount of media attention, and subsequent criticism, for its business practices.
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Standard's legal conflicts lasted through the end of the 1880s. Under considerable stress, Rockefeller could not sleep. The constant attacks from the press caused him to say, "All the fortune that I have made has not served to compensate me for the anxiety of that period."
Standard Oil Trust
Standard Oil already gained a 90% market share of the American oil industry, even though hundreds of competitors existed. The criticisms of Standard Oil underselling, pricing and offering transportation rebates had allowed the company to enter a majority of American households. New York World called the company "the most cruel, impudent, pitiless and grasping monopoly that ever fastened upon a country."
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Standard achieved this by creating different corporations; it was difficult for companies to operate in multiple states at the time. Standard Oil's lawyers centralized the company's 41 holdings by creating the Standard Oil Trust.
The Largest Company in the World
Criticized by competitors and consumers, the Standard Oil Trust caused the company to become the wealthiest and largest business in the world. Standard Oil was seemingly unstoppable and made large profits year over year. Many other companies saw Standard's invincibility and formed trusts of their own.
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At its peak, Standard Oil boasted over 100,000 employees and owned 20,000 wells and 5,000 tank cars with 4,000 miles of pipeline. Increased public scrutiny caused Rockefeller to realize he would never own 100% of the country's oil. Standard's market share began to drop.
Creating the Oil Futures Market
During Standard Oil's market share drop, John D. Rockefeller's innovative business mind continued to grow. He changed the way the company charged for oil storage based on market conditions. Rockefeller traded certificates to speculators against any oil that was stored in his pipelines, leading to the first oil futures market.
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The new and innovative market established all oil prices for the foreseeable future. In 1882, the National Petroleum Exchange opened to facilitate this trading. The oil industry was now an international phenomenon with oil fields discovered in Russia and Asia.
Other Oil-based Products
Kerosene was finally on its way out as a source of illumination due to the invention of the light bulb. Standard Oil began to develop the natural gas market in the United States. Cheaper oil fields in Russia, the development of the world's first oil tanker and wealthy financiers, including the Rothschilds, forced Rockefeller to adapt.
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Primarily considered a waste product, automobile gasoline wasn't a common product for many oil companies at the time. As it had always done, Standard Oil found a niche market and proved once again that it wasn't going to bow to market pressures.
Relocation to the Big Apple
In the early 1880s, Standard Oil's headquarters relocated to New York City, and Rockefeller became a central business icon. He purchased a house near the mansion of William Henry Vanderbilt on 54th Street. Even with his expansive wealth and highly recognizable face, John D. Rockefeller took the elevated train to his office each day.
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He was unable to keep himself from the masses. On a regular basis, Rockefeller received threats to his life. Countless residents knew how much money he had and continually asked for charity, yet he kept utilizing public transportation.
The Beginning of Standard Oil's End
Businesses were getting out of hand by the late 1890s. Unions formed to protect workers, but the unions themselves weren't immune to corruption. Congress passed the Sherman Antitrust Act of 1890 to regulate the unions. States used the law to fight against Standard Oil's trust.
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Ohio took the first step by using its antitrust laws to force Standard Oil of Ohio from the rest of the corporation. From there, other states followed, and the official breakup of Standard Oil's trust had begun. Rockefeller did everything he could to keep his company relevant.
Rockefeller vs. Carnegie
Because of the breakup of Standard Oil's trust, the conglomerate entered the iron ore industry, including its means of transportation. The new venture caused a clash with American steel tycoon Andrew Carnegie, who was no stranger to competition. Newspaper cartoonists aimed their criticisms at the two millionaires during that period.
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Not ready for another round of business and legal battles, Rockefeller began to consider his retirement. J.P. Morgan swooped in and purchased both Carnegie's steel and Rockefeller's iron interests. Rockefeller earned a place on the board of directors and $58 million in total investments.
Tarnishing Rockefeller's Legacy
In 1904, Ida Tarbell wrote a work describing the various shady dealings and practices of John D. Rockefeller and Standard Oil. She wrote about the price wars, marketing techniques and legal battles in the publication "The History of the Standard Oil Company." It all but tarnished the legacy of America's richest man.
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The backlash against Rockefeller was staggering, and even Tarbell herself was surprised by the outcome. "I never had an animus against their size and wealth, never objected to their corporate form," she said, "but they had never played fair, and that ruined their greatness for me."
Changed Opinions
The backlash from Ida Tarbell's "The History of the Standard Oil Company" had a personal effect on Rockefeller. He never publicly shamed "that misguided woman" who wrote the publication. Still, Rockefeller's private account of the writer, whose father he had driven out of the oil business, was quite harsh.
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John D. Rockefeller was notorious for avoiding the press. He took this opportunity to conduct a press tour to improve his public perception. The views that his company followed established laws and ethical business practices fell upon deaf ears.
The U.S. vs. Standard Oil
John D. Rockefeller's tenacity continued into the 20th century, and John and his son furthered their fight to consolidate their oil business. The state of New Jersey's laws changed in 1909 and allowed for them to incorporate their holdings under one company, and Rockefeller was temporarily back in business.
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The Supreme Court of the United States had something else in mind. In 1911, the high court found that Standard Oil had violated the Sherman Antitrust Act. The court forced the illegal monopoly to break up. Standard Oil was no longer the largest oil company in the world.
Breaking Up Standard Oil
Because the Supreme Court had ruled that Standard Oil was an illegal monopoly, the Sherman Antitrust Act forced it to break up its assets. Standard Oil was to become 34 new companies. Many of those companies are still in existence today and are quite recognizable.
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These include ConocoPhillips, Amoco (which is part of British Petroleum), Chevron, ExxonMobil and Pennzoil. Rockefeller held on to significant shares in each of the companies. Although he was no longer in control of the oil industry, he profited tremendously.
The Rockefeller Dynasty
John D. Rockefeller was married to Laura Celestia Spelman in 1864. From 1866 through 1874, the couple had four daughters, Elizabeth, Alice, Alta and Edith, and one son, John Jr. The kids also had children, many of whom went on to lead very successful lives in public service and business.
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John Jr.'s youngest son, David, served as CEO of Chase Manhattan Bank for over 20 years. His second son, Nelson, was elected governor of New York before becoming the 41st Vice President of the United States. Another son, Winthrop, served as the Governor of Arkansas.
Family Philanthropy
John D. Rockefeller was the original creator of the conditional grant. The beneficiary was required 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 the institution their watchful interest and cooperation."
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John's wife, Laura, was also a supporter of civil rights and equality. They offered a massive donation to the Atlanta Baptist Female Seminary in Atlanta. The college for African-American women was later named Spelman College in honor of his wife's family name.
Religious Views
During John D. Rockefeller's adolescent years, the Second Great Awakening drew people to various Protestant churches. He attended the Erie Street Baptist Church with his mother, Eliza. The revival period promoted values such as hard work and good deeds, something Rockefeller attributed his philanthropic work to in his later years.
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His mother encouraged him to put a few cents into the offering basket each Sunday. He ultimately related charity to the church. Later, he would remember, "It was at this moment that the financial plan of my life was formed."
Health Issues and Death
John D. Rockefeller suffered from moderate depression. During the stressful period of his life, while he was dealing with negative press and lawsuits, he developed alopecia. The condition led to considerable hair loss. To cover it up, he began to wear toupeés.
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Rockefeller was a workhorse, and his health improved as his work decreased. Despite his ambition to live until he was 100 years old, John D. Rockefeller passed away due to complications related to arteriosclerosis just shy of his 98th birthday in 1937. He died in Florida, and his body rests in Lake View Cemetery in Cleveland.
The Rockefeller Legacy
John D. Rockefeller is known as the richest man in United States history. A real example of the American Dream, the name Rockefeller will forever be associated with wealth and success. Regardless of his controversies, no one can dispute his ability to make a business thrive, even during wartime and economic downturns.
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By the beginning of World War I, Rockefeller was worth around $900 million. According to his obituary, the business tycoon amassed nearly $1.5 billion from Standard Oil and other businesses in banking, shipping, mining, railroads and various other enterprises.
Source: https://www.life123.com/lifestyle/john-rockefeller-wealthiest-american?utm_content=params%3Ao%3D740009%26ad%3DdirN%26qo%3DserpIndex
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