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American Moguls: John D. Rockefeller

Mark Wyatt McGinnis

John D. Rockefeller, acrylic on paper, 2022, Mark W McGinnis

John D. Rockefeller

1839-1937

God gave me the money.

America’s wealthiest man was born John Davison Rockefeller in Richford, New York. His father, William, was also known as “Devil Bill.” He was a con and confidence man who loved fine horses, fine rifles, and any woman who would have him. “Devil Bill” mixed his own elixirs to cure any ailment. He was home with his family rarely, but he had other families and had to keep moving when the law was looking for him. He bragged, “I cheat my boys every chance I get. I want ‘em sharp.”

John’s mother, Eliza, could not have been more different. She was a respectable daughter of a prosperous farmer who vehemently opposed her marriage to Bill, but Bill seems to have had unlimited charm. With a mostly absent husband and six children, Eliza was a disciplined, diligent worker and expected the same of her children, not sparing the willow switch when necessary. She was a devote Northern Baptist, and the austere faith stayed with John until his death. Late in his life, he said, “From the beginning, I was trained to work, to save, and to give.” John’s giving began early, saving his dimes for the church; he worked hard for those dimes. He raised turkeys and chickens for sale and sold pieces of candy at school and potatoes to the neighbors. At 12, John worked for a farmer hoeing his crops, saving $50 with his farm-work and other enterprises. He then loaned the $50 to the farmer at the going interest rate. John was a boney, small-eyed, silent, reserved, and self-controlled boy. He did well in the early education he had, excelling in mathematics.

The Rockefeller family moved to Cleveland, where John attended the first free high school west of the Alleghenies. After high school, he took a ten-week course in bookkeeping. It was 1855, and jobs were scarce, but John was persistent, often trying the same business several times. He dressed well in a dark suit and black tie; finally, he had success and was delighted. Throughout his life, he celebrated September 26th as “Job Day.” At 16, he had his first formal job in business as an assistant bookkeeper. The pay was 50 cents a day, but John was engrossed in learning all aspects of the firm. His employers soon recognized their good luck and had John handling transportation costs, negotiations, and collecting debts. At this time, he said his goals were to make a fortune and live to 100. John began keeping what he called Ledger A. In it he kept a precise record of his income, expenses, savings, and giving. Later in life, he called the ledger his most treasured possession and often showed it to his Sunday school students.

While his frugal employers continually gave John more responsibility, they did not compensate him proportionately. In 1859, John D. Rockefeller and a partner opened a business dealing in grain, hay, meats, and other goods. To fund the venture, they used their savings and took out a $1,000 loan from “Devil Bill” (at an inflated high-interest rate, still cheating the boys). As might be expected, the business was a great success. When the Civil War began, the business thrived even more. Rockefeller received a notice that he was drafted into the army. As was common with men of some wealth, he hired a man to take his place. Had he gone to war and been killed, the business history of America would have been distinctly different.

During the war, the demand for kerosene used in lamps grew, causing crude oil derricks to dapple areas in Pennsylvania. Production went from 2,000 barrels in 1859 to 4,000,000 in 1869. Rockefeller understood the potential of the black resource that was to make him a fortune beyond his dreams. He switched his business interests to oil, building, with partners, a refinery in Cleveland. In oil refining at the time, 60% of the barrel was refined to kerosene, and 40% “waste” was dumped into rivers and sludge piles. Remembering his mother’s motto, “willful waste makes woeful want,” Rockefeller hired a chemist. Soon, the oil waste was being processed into lubricants, petroleum jelly, and paraffin wax. In time he would be making 300 products from oil, including gasoline. Rockefeller envisioned owning the complete supply and production elements of his business. He bought stands of white oak to make the oil barrels, built kilns to dry the oak, and made the barrels with his own workers. He built similar systems for each step of production.

In 1870, he abolished his partnership and formed Standard Oil. In the following decade, Rockefeller would execute what might be the greatest business consolidation and expansion in America’s history. Two years after the founding of Standard Oil, he took over 22 of the 26 competing refineries in Cleveland. It was called “The Cleveland Massacre.” And this was just the beginning. Standard Oil “absorbed” refineries and related businesses with incredible speed. Rockefeller saw Standard Oil as an “angel of mercy,” taking the weak companies and making them part of something strong and productive, creating order from chaos. He said, “Competition is a Sin.” When a company was approached to be purchased, they had no real choice. Standard Oil offered them cash or Standard shares. Rockefeller always recommended the shares, and many of those who were wise enough to do so became very wealthy. If the business Standard wished to buy, probably at a low price, refused to be purchased, Standard Oil would crush them and then buy it for a fraction of the original offer. Ruthlessness would be an understatement.

By 1879 Standard Oil refined 90% of the oil in the United States. They owned 20,000 oil wells, 4,000 miles of pipeline, 5,000 railroad tanker cars, tanker ships that carried huge amounts of oil overseas and employed over 100,000 people. In 1893 Rockefeller further centralized his empire into the Standard Oil Trust, creating the largest, richest, most feared company in the world. The company’s covert business dealings put them in court continuously for 40 years, where their high-paid lawyers could often tie up cases indefinitely. All Standard executives signed pledges of secrecy and were held to them. One of Rockefeller’s mottos was “Hide the profits, say nothing.”

The mega-monopoly was under constant criticism in the press. A leading newspaper called them “the most cruel, impudent, pitiless, grasping monopoly that has ever fastened upon a country.” But as with most great power, Standard Oil was viewed by many people with awe. And the ordinary person interacted with Standard Oil regularly. Every town of any size had a Standard Oil tank wagon drawn by horses, delivering kerosene and other oil products to businesses and homes. They, too, strove to have a monopoly in the communities.

John D. Rockefeller himself was a remarkable enigma. He was mild-mannered, amicable, free of any vanity, modest in lifestyle, quiet, deliberate, unaffected by criticism, and a constant planner. He heaped wealth and praise on his top managers. Rockefeller was not an autocrat and knew how to delegate responsibilities. He trusted the decisions of his most talented associates, even if he sometimes disagreed. He felt he was creating a new way of business that helped the American people by making the means of production far more efficient and orderly, eliminating waste, and bringing prices down. Rockefeller believed that the time of the individual in business was over; it was now the time of centralization and collective ventures. It was capitalistic heresy. He introduced the super-corporation that has dominated the American economy from his time onward. Rockefeller sincerely believed that God had given him the power to make money, that he had a talent as an artist or musician might have, and he needed to use that divine bequest to its fullest.

Stories of Rockefeller’s mildness with his employees are abundant. He kept an exercise machine in an often unused office. Unknown to him a new accountant was assigned to the space. One day Rockefeller came to use the device. The new worker, not knowing what the richest man in America looked like, said, “Get that thing out of here!” Rockefeller meekly replied, “All right,” and removed the equipment. After learning who he had been talking to, the account felt he would quickly be fired. Rockefeller never mentioned it to anyone. On another occasion, he was reviewing the mathematics one his employees. Rockefeller said, “Fine work!” He then quietly pointed out several small mistakes and said, “Well done.”

In 1890 the Sherman Anti-Trust Act passed the U.S. Congress. A primary reason it was created was to break up Standard Oil. It took ten years, but it did. Rockefeller came out richer than ever.

While the titan of industry had a mild, controlled demeanor, but turmoil was below the surface. In 1892 he suffered a nervous breakdown. Among the symptoms was the loss of all body hair, causing him to wear a hairpiece later in life. He withdrew from business life, worked with his gardeners, played golf, read religious writings, and recovered. He returned to work, but in 1897, at 58, he secretly retired, giving considerable input to his son, who was running his affairs.

What came to be known as the Standard Oil “Gang” greatly impacted the economy. They diversified into banking, insurance, public utilities, iron, coal, copper, and more.

In retirement, Rockefeller had one primary goal; to give his money away. It was a huge job. His fortune reached its peak in 1912 at $900 million. That is about $280 billion now– $100 billion more than any of the 21st Century’s super-billionaires. When he died in 1937 his worth was $26 million, around 2.5 billion today. He gave away a stupendous amount of money. He tried to distance himself from much of his philanthropy, staying in the background, even when the press often vilified him as stingy. Rockefeller hired Fredrick Gates, a Baptist minister, to help manage his giving. Education was one focus of the philanthropy, supporting education on all levels. Rockefeller is considered The University of Chicago’s founder, donating $35 million between 1892 and 1910. He also founded Spelman College, a free college for African-American women. The institution was named for Rockefeller’s wife’s family, who were diligent abolitionists.

Another of the major philanthropy efforts was The Rockefeller Foundation, which funded hospitals and medical programs not only in the U.S. but around the world, impacting world health. But there was one tragic area they supported. Rockefeller was a supporter of the practice of eugenics, the belief that human beings could be improved by correct breeding and the systematic suppression of undesirable traits in the race. This included sterilization of the cognitively different, restricting immigration of groups and races seen as unfit, outlawing mixed marriages, and some people supported more drastic means. In America, 30 states had laws that forced sterilization on people in mental institutions. Between 1907 and 1963, approximately 64,000 people were forcibly sterilized. What made Rockefeller’s support even more tragic was that his foundation gave 7 million dollars to support German research on eugenics, contributing to the horrors of the Holocaust. This terrible facet of his support of research does not negate the positive impact of his philanthropy for many millions of people around the globe that continues today. But eugenics is a chilling reminder of how easily a profoundly immoral practice can become embedded in a culture.

Rockefeller lived a very long, mostly healthy life. This may be attributed to what could be called his Baptist lifestyle. He did not smoke or drink alcohol, ate moderately and thoroughly chewed his food, exercised daily, was early to bed, and kept a strict daily schedule. He disliked doctors and preferred homeopathic medicines, possibly a leftover influence from “Devil Bill.” The story is told of a young reporter coming to his house for an interview and finding Rockefeller, then in his early 90s, in full golfing outfit. He asked the reporter to join him and fit the young man in his clothes. Through the game, Rockefeller pulled shiny dimes from his pocket and gave one to everyone he met. It was a practice he had been doing for decades and may have been motivated by the dimes he saved for the church 80 years before. At the end of the game, the reporter took a dime from his pocket and gave it to Rockefeller, who responded, “Young man, that is the first money anyone has given me in a very long time.”

James Davison Rockefeller died in 1937 at 98, two years short of the goal he had set for himself in his 20s. He died suddenly in his bed. No family was around him as they didn’t know anything was direly wrong. This may have been his preferred way to go. He wouldn’t have wanted to bother anyone.

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