John D. Rockefeller: The Wealthiest American of All Time
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.
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.
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."
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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."
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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."
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.
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.
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.