Success, incredible wealth, and philanthropy… counterbalanced by ruthless commercial practices and monopoly. All words appropriately associated with the oil magnate that was John D. Rockefeller. But if questionable collusion and predatory pricing tarred his empire for many years, his extraordinary benevolence coats it too. He was a man of opposites and his legacy still impacts our world today.
Born in 1839 to a traveling salesman, Rockefeller developed his entrepreneurial skills from an early age. Raising turkeys and selling sweets as a boy, by the age of sixteen he had obtained a position as a clerk working for H
ewitt & Tuttle, a firm that traded grain and coal, amongst other things. However, then came a turning point, for in 1859 (he was 20 years old) he established his own commission firm with a partner. And, even more significantly, that same year America’s first oil well was drilled in Pennsylvania. Within four years, Rockefeller and others had invested in a Cleveland refinery and so his career in the oil industry had begun.
Another couple of years passed by and Rockefeller borrowed to buy a partner out, such that he could take control of the refinery. And in January 1870, he incorporated Standard Oil, along with a few others; yet another next step towards his spectacular rise.
Unsurprisingly, bearing in mind the speed at which Rockefeller clearly operated, Standard Oil grew through refinery acquisition very quickly. In no short time, it had a monopoly in the oil industry, and its tentacles reached across distribution and marketing of related products around the entire world. By 1882, the Standard Oil Trust held control over ninety percent of America’s refineries and pipelines, and because of its clout it also manufactured its own barrels and ran laboratories of scientists researching possible by-products. Rockefeller’s appetite for expansion was insatiable.
Staying one step ahead
It also comes as no surprise to learn that his methods and success started to come under intense scrutiny. Journalists, politicians, bureaucrats, they all began to question his methods for operating commercially. He was a forceful player, no doubt about that. Competition was taken very seriously and squashed. Property and resource acquisitions were made simply to block competitors from getting their hands on them. Bribery, spying, coercion, secret cartels and bullying agreements… all were strategies that came under investigation as some competitors thrived and others faced ruin. But one has to remember that regulation and the legal set up were still way behind Rockefeller and his operations. It wasn’t so much that he was operating illegally, as perhaps operating with very aggressive motives that had been unrestrained up to that point.
However, in 1890 US Congress passed the Sherman Antitrust Act, and in doing so the first federal legislation was put in place to protect trade from those operating in a monopolistic way. Then, within another two years, the Ohio Supreme Court went further and dissolved the Standard Oil Trust. But Rockefeller was, as ever, one step ahead of them. The various businesses originally held under that umbrella were adjusted to operate singly for a while and then transferred to become part of Standard Oil of New Jersey, where such a group holding was still permitted. To Rockefeller it must have felt a bit like a game. And it took until 1911 for that holding company to be dismantled, having been found guilty of violation of anti-trust laws.
The philanthropic years
Perhaps as an attempt to make amends… or perhaps drawn by the attraction of being publicly generous… by the mid-1890s Rockefeller had distanced himself from the day to day running of his operations anyway. His counterpart in the steel industry, Andrew Carnegie, clearly set an example of magnanimous generosity, for the Rockefeller Foundation was formed and Rockefeller actively funded the establishment of superb organisations such as the University of Chicago and the Rockefeller Institute for Medical Research.
He was a determined man, clearly. And when he put his mind to something, it would seem he achieved it tenfold every time. However, the ageing process was not yet one he could beat. He’d always aimed to hit the age of one hundred, but nature thwarted his plans and he died at the age of ninety seven, in 1937.
So that was John D. Rockefeller. A man who died one of the world’s richest. From humble beginnings, he’d worked hard, spotted opportunities, taken bold action, pursued his goals with vigour, and then sought to correct some of the imbalance he’d forged on the way through philanthropy. But it has to be noted that he wasn’t a risk taker… far from it. His strength was to spot a good business opportunity and take it. He took calculated risks, and had a knack for getting them right. And it’s not to be sniffed at that those same calculated risks were connected to a quickly blossoming and soon to be booming industry. He’d seen it had the potential to grow exponentially, and he’d taken action.
Does that simply make him lucky? Our final thought is to answer yes and no. He was lucky to be a man of that time, no doubt about it. But the fact that he was canny enough to spot the openings and bold enough to act, we’d say removes the label of ‘lucky’ and firmly stamps ‘astonishing entrepreneur’ on there instead. And let’s face it, there is no doubt that he played a significant role in shaping the US as it is today.