Billionaire John D. Rockefeller (July 8, 1839 to May 23, 1937) continues to rank as one of the richest men of modern times. From his humble beginnings he became the founder of Standard Oil in 1870 and began ruthlessly destroying his competitors to build a monopoly on the oil industry. He expanded into ancillary businesses such as steel, copper, railroads, general stores, and newspapers. His quest for complete control brought him into conflict with the U.S. government, which passed the Sherman Antitrust Act of 1890 to break up Standard Oil, sparking a bitter battle that the government ultimately won in 1911.
Rockefeller retired in 1896, leaving the company to his only son and pursuing a second career as a philanthropist, donating hundreds of millions of dollars to worthy causes. His strict public personality was tempered by his habit of handing out 10 cents to his children. Rockefeller, who died just six and a half weeks before his 98th birthday, remains one of Wall Street's great figures, reviled as a villain and praised as an innovator and benefactor, and one of the world's most powerful men. He is widely recognized as one of the great figures. history.
Investmentpedia / Lara Antal
Early life and education
Rockefeller's father, William Avery Rockefeller, lived a nomadic life as a snake oil salesman who called himself a doctor, while his mother raised six children. After his family finally put down roots in Strongsville, Ohio, outside Cleveland, Rockefeller dropped out of high school and began working as a committee clerk at age 16. He left his position to form a business partnership with an oil drilling company. Maurice Clark built the first oil refinery in Cleveland in 1863. Rockefeller and Clark became Rockefeller, Andrews & Flagler in 1870, a company focused on refineries rather than drilling.
In 1864 he married Laura Celestia “Setti” Spellman (1839-1915), with whom he had four daughters (one died at 13 months of age) and one son, John D. Father of Rockefeller Jr. He will follow in his father's footsteps and take over the business.
Notable achievements
strategic focus
In 1870, Rockefeller, Andrews, and Flagler founded Standard Oil, which in just two years took control of all of Cleveland's refineries. Rockefeller had a deep understanding of how to manage risk. He knew that oil speculators had the potential to make huge profits if they reached deposits, but also knew that they faced large financial losses if their efforts failed. Because of this, he strategically focused on the refining business, where profits are smaller but more stable.
innovative trust
In 1881, Standard Oil was placed under the control of a nine-member board of trustees headed by Rockefeller. He and his partners devised a first-of-its-kind trust that exchanged personal stock holdings for shares in the trust. Rockefeller now exercises centralized control and veto power over all boards of directors within the conglomerate. Immediate benefits include further cost savings, lower heating oil prices, and industry-wide standardization. Rockefeller's companies now had the assets and funding to build or acquire pipelines and other infrastructure on a scale previously unthinkable.
Research and Development
Standard Oil hired chemists who developed methods to improve the variety and quality of combustible fuels and to convert waste into usable materials. This means that the oil that comes out of the ground is refined into a variety of products such as diesel fuel, varnish, petroleum jelly, and toothpaste.
The lower manufacturing costs of these new products have increased the company's global economies of scale. Through intense research and development, Rockefeller also discovered how to utilize traditionally discarded petroleum byproducts to create lubricants, petrolatum, paraffin wax, and other useful items.
final diversification
Standard Oil was involved in many ancillary industries, including railroads, shipping, gas, iron, copper, steel, banking, and trust companies. It has also increased its presence in unexpected fields such as general merchandise stores. By supplying meat, sugar, and other products at artificially low prices to stores that sold only Standard Oil kerosene, Rockefeller forced stores to carry only Standard Oil kerosene, thereby forcing them to carry other brands. The owner of a shop selling kerosene was forced out of business. Standard Oil similarly published articles in newspapers to promote its version of events.
creation of a monopoly
Rockefeller saw fierce competition in the oil industry as a devastating effect and began to systematically eradicate it. He used his huge profits to buy out his competitors, beginning in his six weeks in 1872 known as the “Cleveland Massacre,” and severely damaged 22 of his 26 competitors' refineries. Acquired at a low price. In addition to leveraging vast amounts of cash, Rockefeller entered into secret agreements with the three major railroads serving Cleveland known as the “South Improvement Companies.”
Standard Oil agreed to split oil shipments among the railroads for a negotiated amount in exchange for the railroads charging competitors exorbitant rates. The company not only receives rebates on the cost of transporting the oil; It will also receive a portion of the funds generated by the higher fees charged by its competitors. News of the agreement leaked, and a panic ensued, with rival companies fearing bankruptcy and selling out to Rockefeller to avoid complete ruin. Due to the outcry, the agreement was dissolved without actually being implemented.
In the years that followed, Rockefeller's offers to buy out competitors were usually easily accepted, but Rockefeller also had ways to persuade resistance, including by:
- They bought up every barrel of oil, creating a shortage and paralyzing small businesses.
- Buy up land to prevent other companies from building pipelines
- Organize price competitions among wholly owned subsidiaries, forcing holdout companies to sell at a loss
- Secret bribes to members of parliament
- Limiting the number of trains that can be shipped by leveraging our close relationships with railway companies
- Purchase all equipment and equipment suppliers and refuse to sell replacement parts to holdouts
By 1882, Standard Oil had a near monopoly on the oil business in the United States.
lose monopoly
The government took issue with Standard Oil's almost complete monopoly and passed the Sherman Antitrust Act in 1890 to break it. In response, Standard Oil's legal team quickly converted the trust into a holding company. Holding companies function similarly to trusts, but were outside the legal definition of a trust. The government coordinated its legislative attack accordingly, and again in 1911 a Supreme Court ruling dissolved the holding company.
Standard Oil was broken up into smaller but sizable chunks under government supervision. Although their names have changed over the years, Chevron (CVX), Exxon Mobil (XOM), and ConocoPhillips (COP), among others, all share Standard Oil's lineage. Because these companies had the advantages of Standard Oil's research and development and infrastructure, they easily transitioned into gasoline producers when kerosene sales declined as a result of Edison's invention of the light bulb.
wealth and philanthropy
A devout Baptist, Rockefeller believed that God had given him the ability to make money and saw no contradiction between his ruthless business practices and his faith. In fact, he believed that dividing the world into rich and poor was part of God's plan. Or, in his own words, “It was as if I had gotten a favor and gotten even more, because the Lord knew I was going to turn around and return the favor.” is.”
And he certainly did. After his retirement in 1896, Rockefeller devoted his energy to his philanthropy, donating hundreds of millions of dollars in his later years. He was also known for his habit of wearing nickels and dimes and handing them out to children. He founded the Rockefeller Foundation in 1913 with the help of his son and continued its activities after his own death. When he died in 1937, his wealth was worth 1.5% of that year's gross U.S. economic product (by comparison, in 2018, Bill Gates' wealth was worth 0.45% of that year's gross domestic product). did).
heritage
Indeed, one of Rockefeller's major legacies was federal antitrust and labor union-strengthening legislation. During Rockefeller's lifetime (and afterward), many people rightly criticized the radical means by which he had amassed his wealth. Still, his business activities and philanthropy have benefited millions of people. The Rockefeller Foundation continues to uphold its stated mission: “to promote the well-being of humanity throughout the world.” Additionally, he founded the University of Chicago and the Rockefeller University (originally the Rockefeller Institute for Medical Research).
His legacy was passed on to his descendants. John D. Rockefeller Jr. built the famous Art Deco Rockefeller Center in Manhattan. It continues to house offices to this day, as well as popular businesses such as Radio City Music Hall, the Rockettes, Rainbow His Room, and an outdoor skating rink. Link is famous for its annual towering Christmas tree; saturday night live and tonight show. Rockefeller's grandson, Nelson Aldrich Rockefeller, served four terms as Republican governor of New York, served as the 41st vice president under President Gerald Ford, and ran for the Republican presidential nomination three times. There are times.
What is John D. Rockefeller's background?
John D. Rockefeller was born into modest circumstances in 1839, the son of a traveling snake oil salesman who called himself a doctor and his deeply religious and disciplined wife who raised him in a Baptist church. The family eventually settled in the suburbs of Cleveland, Ohio, where John dropped out of high school and took a job as a bookkeeper at age 16. His first business was buying and selling hay, grain, meat, and other merchandise. He then chose to enter the oil business as oil production expanded in western Pennsylvania in the early 1860s.
How long has Standard Oil existed as a monopoly?
Rockefeller founded Standard Oil in 1870 with colleagues Samuel Andrews and Henry M. Flagler. Within two years, the company had a monopoly on oil refining in the Cleveland area. In 1881, the company was reorganized as a trust company, the first of its kind, allowing it to expand rapidly by building or acquiring oil pipelines and other infrastructure. By 1882, it had a virtual monopoly on the U.S. oil business.
The federal government did not accept this situation, and Congress passed the Sherman Antitrust Act in 1890, which broke up Standard Oil. A bitter battle ensued, with the government finally winning in a 1911 Supreme Court decision. Thus, Standard Oil existed for 19 years as a virtual national monopoly.
What is John D. Rockefeller's legacy?
Rockefeller retired from business in 1896 and devoted his life to philanthropy. He donated hundreds of millions of dollars to his philanthropic efforts during his lifetime, and along with his son John Jr., founded the Rockefeller Foundation to continue its work after his death, and it continues to do so today. continuing. He founded the University of Chicago and Rockefeller University. But Rockefeller and the Standard Oil Company were also responsible, though not willingly, for antitrust laws and laws that strengthened labor unions.
conclusion
Billionaire John D. Rockefeller was admired and loathed at times, but his importance as the principal founder of the Standard Oil monopoly and a world-class philanthropist has never been so great. You can't avoid the fact. His legacy continues today thanks to the work of the Rockefeller Foundation and the continuing institutions he founded, including the University of Chicago and Rockefeller University (originally known as the Rockefeller Institute for Medical Research). I am. A ruthless businessman who showed no mercy to his competitors, he still ranks as one of the richest men in the modern world, one of the greats of Wall Street, and one of the most powerful men in history. It has been.
