The purpose of this research is to examine the career of John D. Rockefeller, the founder of Standard Oil and the man who established the fabulously wealthy Rockefeller dynasty. John D. Rockefeller’s life was fairly typical of that of many other 19th-century Americans. In many other respects, it was a life that has never been equalled. John D. Rockefeller was born on July 8, 1839. One report of his childhood says that “his first distinct recollections were of the rough farming country near the villiage of Moravia in western New York, where he lived from his fourth to his eleventh year; in 1843 his father paid $3100 for the ninety-two acre tract in Moravia township.”
This farm country of western New York was practically wilderness. The Rockefellers were not frontiersmen in the sense that they had to fight off Indians, but they did live in the United States at a time when most of the nation was rural. Rockefeller’s childhood on the farm was typical of that of most youngsters of his generation. He came from a large family which was not actually poor but had to struggle to avoid being poor. His parents provide an interesting combination of characteristics. Rockefeller’s mother was Scotch-Irish and his father was Anglo-Saxon. Both were hardworking, thrift-oriented people who taught their children the value of the work ethic and the value of money, but the resemblance does not seem to have gone further than that in terms of personal character. John Rockefeller’s mother, the former Eliza Davison, has been described by one of his biographers in the following manner: “Her deep piety and strong will were accompanied by a remarkable serenity, which she transmitted to her son.” The father, William Avery Rockefeller, has been described in the following terms: “He did precisely as he pleased; his will brooked no opposition; he lacked moral scruple in certain relationships, and followed his impulses without proper thought of the consequences.”
The life of Rockefeller was to be characterized by the strong example of willfulness set for him by both parents. It was also defined by both the serenity and the lack of scruples. On one hand, he was known for handing out dimes to small boys. On the other hand, he was often compared to a snake, and not just by his enemies. As the founder of what is now possibly the most aristocratic family in the United States, Rockefeller was like many founding fathers of great families. He was no saint, but he definitely had agreeable sides to his nature. He was an American original, a 19th-century, Horatio Alger character who, through hard work and perseverance, built one of the largest private fortunes in the world and, in doing so, helped make America one of the wealthiest and strongest nations on earth.
The Rockefellers, both father and son, lived at a time when the phrase “business is business” was believed to cover a wide range of instances in which moral scruples could be overlooked in order to gain greater profits. The example set by his father had great deal to do with John’s later creation of Standard Oil Trust and his often-criticized ways of dealing with opponents. However, John D. Rockefeller did not invent the back-stabbing nature of American capitalism. He merely proved himself to be very good at it. In addition, he used his income to further the Andrew Carnegie tradition of great wealth being used to further the interests of the public. The influence of both his mother and father can be seen in the following quotation:
Early in this country, John D. Rockefeller, perhaps the richest and most powerful industrialist and the most widely hated and feared man in America, established a series of important philanthropic insitiutions to promote medical research, education and public health.
At 16, Rockefeller, whose family had moved to Ohio, finished his courses at a nearby business school and began looking for work in the Cleveland commercial world. The economic realities of his life dictated that he would have to start out working for others. In his mind, that was a temporary matter. He was first employed as a clerk and bookkeeper for two merchants, Hewitt and Tuttle, who specialized in shipping produce. At his job interview, “not a word was said about salary: ‘I cared very little about that,’ he has recorded. Later, his wage was fixed at $3.50 a week…The best part of his pay came from experience.”
Rockefeller sensed from the beginning that there was no point in working for anyone else except as a means of learning how to run a business of his own. The reason he cared so little about his salary at Hewitt and Tuttle was that he had no intention of remaining a salaried employee for the rest of his life. The firm he joined was well run, and he considered it to be a good place to further his business education. Therefore, the firm he worked for was either paying him very little in cash or providing him with a business education and paying him a little cash besides, depending on one’s perspective. Rockefeller himself believed in the second point of view.
Pennsylvania and Ohio in the 1850’s were the center of an expanding American oil indudstry whose full potential was not to be realized by anyone for many years. Prior to the development of modern petroleum-driven engines, oil was used in its refined forms for lubricants and lamps, among other things. John D. Rockefeller, using the small sum of money given to him on reaching adulthood by his father, invested in the future of the oil industry. According to one writer, “In Cleveland, after beginning as a bookkeeper, Rockefeller went into a partnership in a refinery with two easy-going Englishmen, the Clark brothers, but soon bought them out. He expanded with great daring, borrowing wherever he could, and bringing in new partners.”
The developing oil industry was then divided into three segments. The first was drilling and getting the oil up from the ground. The second was refining the pumped-up crude oil and making it a salable product. The third phase involved transportation. Of the three, the first was a gamble, and the third required far more money than Rockefeller was to have for some time. Rockefeller therefore chose refining and, within a few short years, was beginning to reinvest his profits in other aspects of the industry as well.
Rockefeller began the process that earned him the nickname “Anaconda” fairly early in his financial career. His goal from the outset was to dominate the industry. One writer stated, “He realized that the only way to dominate the industry was not by producing oil, but by refining and distributing it, and undercutting his rivals by cheaper transport.” The evidence of how well he followed his father’s example in business practices can be seen in the following continuation of the above quote: “With the help of a new partner, Henry Flagler, he persuaded the railroads to give secret rebates on his oil, extending the existing practice of allowing discounts for large quantities of freight.”
What this meant was that Rockefeller, in addition to having more refined petroleum for sale than most petroleum brokers, also had found means of transporting it for less than anyone else was paying the railroad. It was not long before he was generating a tremendous share of the space used in the local railroads for his own business purposes. This made the railroads further dependent on his patronage and enabled him to drive down the price of transporting the oil even further. His technique for dealing with the railroads was both simple and effective. On the one hand, railroads were the most important aspect of his business interests. On the other hand, he manipulated the railroads like he manipulated everything else that he ever became involved with. In time, it would be increasingly difficult for his opponents to get anything like an equivalent price per barrel for transporting their oil by railroad. Again, Rockefeller did not invent this practice in America. In fact, he never denied having shown an instant genius for perfecting this sort of business practice and making it constantly more profitable. John D. Rockefeller was, on an intellectual basis, perfectly suited for a life in American business during the last half of the 19th century.
He did nothing illegal during the early stages of his career. This was chiefly because the legal code took several decades to catch up with the practices of the business community. Rockefeller considered his methods of driving down prices to have been mere extensions of a homemaker’s desire to purchase groceries at the lowest possible price. His competitors thought otherwise and, like his later critics in the press and government, pointed out that there was always something menacing and dangerous about the way he operated. One authority said, “It was the secrecy of Rockefeller’s methods, as much as their ruthlessness that made him such a special figure of hatred. As his trade and refineries expanded, his rivals never quite knew what was hitting them.”
One of his more ruthless techniques was to buy into other companies through surrogates, thereby having his own spies present (and voting) at the shareholders’ meetings of corporate rivals. Another technique of his was to buy out companies in secret, using their actions (controlled by him) to help manipulate the market in his own favor. Some people believe this practice was necessary and for the best in 19th-century America. However, no one denies that this was the financial basis of the Rockefeller fortune. When put by circumstances into a region and industry that took cut-throat business tactics for granted, Rockefeller earned the contempt of his peers. He was so ruthless that word of his lack of civilized values became widespread. By law, he did not have to respect the rights of others, and, in the name of profit, he did not. Acording to one report, “by 1870, after only seven years in the business, he was able to establish a joint stock company called Standard Oil Company with a capital of a million dollars, of which he owned 27 percent. Already, the company held a tenth of the oil industry in America.”
This meteoric rise through the economic system was considerably easier in 19th-century America than it would have been 100 years later, but this does not make it any less extraordinary. The original investment made with funds given him by his father had been a mere $3,000. Within seven years, he was worth nearly a third of a million dollars. This was in an era in which the $3.50 a week he had started out earning was by no means the exception among American workers and employees.
In spite of his later reputation for generosity, Rockefeller never got along very well with his workers. The same sense of egotistical drive that had brought him up from poverty led him to show contempt for those who refused to take risks and therefore, in Rockefeller’s opinion, deserved to remain poor. In 19th-century America, labor was something that capital was supposed to exploit, and only a small percentage of the public was even beginning to question this. Not only did Rockefeller exploit his workers, he also worked hard to interfere with their efforts at unionizing. Even between 1870 and 1890, when Rockefeller was beginning to impress people as both a financeer and a philanthropist, he was rated very poorly by workers as an employer.
In 1913, the Rockefeller holdings at Ludlow, Colorado were the site of what came to be known as the Ludlow Massacre. In spite of the fact that Rockefeller was by then world-renowned as a philanthropist, the following occurred:
Strikers were attacked by armed guards in the fall of 1913. Men were shot, clubbed, jailed and deported from the state. The next Spring, the state militia, sent upon demand by the company, invaded the striker’s camp and burned shacks and tents.
Women and children were among the fatalities at Ludlow, and, while this was an extraordinary incident, it was by no means an isolated example of the labor relations that helped to define Rockefeller’s career. The man who had risen so far and so quickly had contempt for those whom he saw as his natural underlings. Rockefeller was, first and foremost, a believer in the law of the jungle. He was religious and he was a great philanthropist, but he was still capable of ordering affairs such as the Ludlow Massacre without any apparent feelings of excessive guilt.
The Rockefeller attitude toward shooting strikers on one hand and generously handing out money to medical and other research on the other hand was by no means out of keeping with the accepted moral code of his era. The concept that business required a certain degree of emotional toughness was an accepted fact of life. Rockefeller may have been a much hated figure among the people he exploited, but he was not really guilty of any major act of ignoring the accepted standards of society. The fact that Standard Oil was able to show so much contempt for humanity uring this period says as much about America as it does about Rockefeller and Standard Oil.
This attitude toward labor was not influenced by his opposite attitude toward philanthropy. Rockefeller had a very personalized code about who he was supposed to treat well and who he was supposed to treat poorly. His family was definitely a part of the former category. He bought an estate when he was raising a family:
For the children, Forest Hill was a perfect place to spend their summers and almost every provision was made for their entertainment: There was a lake for boating, fishing and swimming; expansive yards for lawn tennis or other games . . . when his son was eight, the senior Rockefeller was already negotiating for a pony.
While his grandchildren were eventually to be educated in the need for a sense of proportion and the concept of service to the community, the first generation of Rockefeller’s heirs were brought up to enjoy wealth and the means by which it was acquired. All were sent to the best schools, and his son and heir, John D. Rockefeller Jr., eventually took over the family business interests (This son eventually ordered the Ludlow Massacre). Rockefeller Sr., who starved out business allies and opponents alike, who underpaid his workers and who undermined the railroads and any sense of fair play in business, was by all accounts a very loving parent. Again, he had separate images of his parents to guide him in his dual course.
Late in the career of Rockefeller, a series of articles by the “muckraking” journalist Ida Tarbell painted him as a distinctly vicious sort of monster. Whether this was true or not (Rockefeller’s apologists usually state that he was no worse than others in the oil business of that era), his holdings were subject to tremendous government scrutiny during the early years of the 20th century. This was the era when Theodore Roosevelt was “trust-busting,” and there was no more prominent trust in the nation than Standard Oil. Thus, many journalists soon began to express an interest in the manner in which the Rockefeller fortune was being expanded. The public and Congress soon became interested in this as well: “One of Rockefeller’s historical schievements was to provoke the anti-trust movement and the machinery of Congressional investigation which has pursued the American oil industry ever since.”
The result of this concern was the Sherman Anti-Trust Act, which was proposed in Congress by noted Republican Sen. John Sherman and signed by the Republican President Harrison in 1890. The law, a creation of the party which supported laissez-faire, was later proven to be quite vague. On the other hand, it was intended as only a first step in the battle against the trusts and, on that basis, must be considered at least somewhat more impressive. It had very little effect on the Rockefeller fortune, although getting around this law required a very impressive maneuver by the oil billionaires. The law itself “was a historic milestone as the first major counterattack by the federal government against corporate monopoly and the beginning of a movement which had no parallel in Europe. But its limitations were evident to many at the time.”
Among those to whom the law’s limitations were obvious were Rockefeller’s lawyers, who were among the first of the breed of highly respected and well trained legal advisers of businessmen who wish to remain legal in their operations but who also wish to profit from every loophole they can. The loophole they found was based on the fact that the interstate commerce clause of the Constitution. By re-registering the company in New Jersey, where state law then permitted corporations to hold shares in corporations outside the state, Rockefeller bought himself another 16 years of unimpeded monopoly. Standard Oil became Standard Oil of New Jersey, a holding company that owned stock in all other extensive corporations within the trust that Rockefeller had created. From 1890 to 1906, when Roosevelt finally prosecuted Standard Oil of New Jersey as an illegal trust, hundreds of millions of dollars continued to come into Rockefeller’s hands. However, from 1907 to 1911, Rockefeller was involved in a lengthy appeal which finally resulted in a Supreme Court decision against him. Speaking for the majority, Chief Justice White commented that the “‘very genius for commercial development and organization’ which had created the Standard Oil Trust had pressed it to form a monopoly, and to ‘drive others from the field and exclude them from their right to trade.’ The Supreme Court decreed that within six months Standard Oil must divest itself of all its subsidiaries.”
Of course, at this point it was 21 years since the passage of the Sherman Act and half a century since Rockefeller had begun refining operations in Ohio. He was, by 1911, fabulously wealthy and the possessor of the sort of cash reserves which had not even been dreamed of prior to his generation. Standard Oil of New Jersey remained a major corporation in the American oil industry, although not as powerful as it had been, and the oil industry itself continued to be governed by a variety of power plays and efforts at monopolistic blackmail that culminated in the OPEC Embargo of 1973. Rockefeller was long dead by that time, but had he been alive he would undoubtedly have understood and approved the OPEC maneuver. He had begun to perfect it himself the moment that he entered the oil industry. Rockefeller, who was a reasonably honest human being, always conceded that he was acting in a less-than-public-spirited manner, but the fact remained (significantly, as far as he was concerned) that in creating wealth for himself he simultaneously created great wealth and jobs for others. Neither Rockefeller nor any other oil man of his generation ever seriously worried about the environment that they were destroying in their greed.
Rockefeller was no hypocrite, and he openly defended his business practices in Darwinian terms to anyone who would listen. One writer said, “Rockefeller’s rivals in the oil fields had been predatory and greedy petty capitalists who had been swallowed up by Standard Oil because of their lack of discipline in battle. ‘The growth of a business is merely a survival of the fittest,’ Rockefeller told a Sunday school class.”
Viewed according to his own standards, Rockefeller was an extremely open and honest portrayer of life as he saw it. He was a robber baron. He knew that many people disapproved of him, and he did not care. Rockefeller’s goal had been money, not popularity. If this could have been achieved through cut-throat business practices, he was willing to resort to such practices. At the same time, after 1911, he was willing to be restricted to taking his enormous profits and investing them safely in the legal and approved forms of American business. The Rockefeller family remained in the oil business after 1911, but after that year they began to diversify their holdings into other areas as well. The real story of Rockefeller the moneymaker was over by 1911, even if the family wealth was only beginning at that time. John D. Rockefeller’s grandchildren were to be among the wealthiest men and women in the world. This was partly from their inheritance from John D. Rockefeller and partly from the continued wise investment of their funds in many other areas of the economy.
John D. Rockefeller was also a very efficient and hard-working businessman whose success in life was at least partly the result of the honest, public side of his nature. Piracy and honest business practices combined to produce the Rockefeller fortune:
A large measure of his success was due to improvements, economies and original methods of marketing; but his monopoly was secured by methods condemned even by the tolerant business ethics of the day, and pronounced criminal by the courts.
However, there were many observers then and now who have contended that the incredible industrialization of America that occurred between 1865 and 1900 could not possibly have occurred without corruption and forceful dishonesty. Men like Rockefeller, even if their primary goal was self-enrichment, helped to produce great wealth and power for the American economy they dominated. Some of this wealth percolated down to the average American, and, after the New Deal, this was enough to help create a truly affluent society in comparison to that of practically any other nation. If John D. Rockefeller was considered contemptible, he was not the only one who profited from his own actions. Many of his most vehement critics were free to spend time attacking him and other robber barons precisely because the wealth that men like Rockefeller created invariably circulated to others as well. Rockefeller helped make America wealthy, even if this was incidental to the full story of his life.