GMIH-014 John D. Rockefeller

John_D_Rockefeller_Podcast

 

If you are thinking of rich people the name Warren Buffet may come to mind. You might think of Bill Gates. But one name comes to everyone’s mind when people think of the super rich. His name has been synonymous with wealth for generations.

Not only is he the most famous of the world’s super rich, he also sported a mustache. So, John D. Rockefeller is perfect for this episode of Great Mustaches in History.

Early Life

Eliza & William Rockefeller, parents of John D. Rockefeller.

Eliza & William Rockefeller, parents of John D. Rockefeller

John Davison Rockefeller was born on a farm in Richford, New York on July 8, 1839. William Rockefeller was his father. Most people called William Rockefeller “Big Bill” but some people called him “Devil Bill.” William Rockefeller traveled a lot and was known to be involved in shady business deals. He was kind of a jerk because he treated people bad and did immoral things that really ended up hurting his family.

John was closer to his mother, Eliza, who took care of the family’s six children. She was a devout Baptist. She was thrifty and taught her kids to work hard.

John learned from both parents. He learned to work hard and be thrifty from his mom but his father often bragged that he even cheated his sons in deals to keep them sharp. John learned how to make shrewd deals.

As John Grew Up

John grew to be a responsible and serious young man. Because he was the oldest son he was kind of the man of the family because his father would go traveling or spend time away from the family doing bad stuff. John had to learn quickly about discipline and hard work.

In 1853, the Rockefellers moved to Cleveland, Ohio. That is where John went to high school. He was good at math, music, and was a good debater. John dreamed of going to college but his father made him get a job to help support the family. John was able to take a short business course in bookkeeping at a local commercial college.

Early Career

When John was just sixteen, he got his first full-time job as a bookkeeper. He liked it and learned all he could about business.

He was a born business man so he soon decided that he knew enough to start his own produce business in 1859 with his friend Maurice Clark. John knew how to watch the bottom line, knew how to make shrewd deals, and enjoyed working hard. The business was a successful in the very first year.

Oil Business

John D. Rockefeller at age 18

John D. Rockefeller at age 18

Of course, nobody thinks of fruits and vegetables when they think of Rockefeller. We all think of oil. John D. Rockefeller started a new business in 1863. He started his oil business.

Now this was not like starting a gas station or selling motor oil. This was before electricity and oil was used mainly in lamps. Whale oil was the most popular oil to use but whales were over-hunted and whale oil was getting more and more expensive.

Rockefeller had a knack for reading trends and saw that whale oil would not be around much longer so he focused on kerosene. Rockefeller and his partner from the produce business Maurice Clark started their own oil refinery business to make kerosene for lamp oil. In 1865, Rockefeller bought out Clark for $72,500.

Rockefeller was good at this business too. He kept costs down and reinvested every penny he could back into his business. His thrift, hard work, and shrewd business dealings soon helped him have the largest refinery business in Cleveland and one of the biggest in the United States.

Standard Oil

Standard Oil Trust Certificate 1896

Standard Oil Trust Certificate 1896

Rockefeller set his sights high. He formed  Standard Oil in 1870. His goal was not just to have a bigger refinery. He wanted to take over the entire oil refinery business. He began to buy out his competitors. He would buy a refinery but then he would put his business skill to work to make improvements. Most of the time the refinery became more efficient and profitable.

He was not always nice about it when he bought a competitor. He would often tell his competitors that he would have their business either way. They could sell to him for what he thought was a fair price or he would run them out of business. Most of his competitors had no choice but to sell to him.

Monopoly

Of course by this time oil was used for transportation fuel and not just for lamp oil. Rockefeller saw that oil would be the most important commodity in the world one day and he wanted to control it. In fact, Rockefeller wanted to control all of the oil business in the entire world.

If he controlled it all there would be no competition and he could make as much money as he wanted. He also knew that there was a lot more money to be made in addition to refining oil. Standard Oil began to got into oil pipelines, timberland, iron mines, train cars, barrel making factories, and delivery trucks.

By the 1880s, Standard Oil refined around 90 percent of the world’s oil. He had a lot of companies all over in different states and in different parts of the oil business. In 1882, Rockefeller formed the Standard Oil Trust which put all of his companies in many different states under one management. It was the largest company in the world.

Fig3_StandardOilLogosMany people thought Standard Oil’s business was unfair.  Individual states began to issues laws to try to increase competition and reduce Standard Oil’s power but the company was in too many states for that to work. In 1890, the Sherman Antitrust Act was passed by the U.S. government to prevent monopolies from using unfair business practices.

It still took over 20 years, but in 1911, the company was found in violation of the antitrust laws and was divided up into a number of different companies.

Here are just a few of the companies that came from Standard Oil:

  • Standard Oil of New Jersey became Esso and was later renamed Exxon, now part of ExxonMobil.
  • Standard Oil of New York later became Mobil, now part of ExxonMobil.
  • Standard Oil of California became Chevron.
  • Standard Oil of Indiana became Amoco and is now a part of BP.
  • Standard Oil of Kentucky acquired by Standard Oil of California and is currently Chevron.
  • The Ohio Oil Co. is now known as Marathon Petroleum.

And this list just starts to scratch the surface.

Richest Man Ever?

John D. Rockefeller's painting by John Singer Sargent in 1917

John D. Rockefeller’s painting by John Singer Sargent in 1917

In 1916, John D. Rockefeller became the world’s first billionaire. He was retired but his investments and wealth continued to grow. In today’s money he would be worth over $350 billion. It is hard to judge who the richest person who ever lived was. For example, a long time ago a king technically could own the entire nation, a Caesar would own the empire of that spanned the world. But many historians believe that in personal wealth acquired, Rockefeller was the richest man in the history of the world.

Philanthropy

In his later life. Rockefeller was very generous with his money. He gave away his money in order to do good in the world. He donated to medical research, education, science, and the arts. In total he gave away over $550 million of his wealth to charity. His foundation continues to give money and has given billions and billions of dollars.

Death and Legacy

Rockefeller died on May 23, 1937. He was 97 years old. His legacy has lived on through his charitable giving and the Rockefeller Foundation.

Interesting Facts about John D. Rockefeller

  • Rockefeller became well known in his later life for giving dimes to adults and nickels to children wherever he went. He even gave dimes as a playful gesture to wealthy men, such as tire mogul Harvey Firestone
  • At one point his wealth was equal to 1.5% of the total United States gross domestic product (GDP).
  • He helped to fund a college in Atlanta for African-American women that later became Spelman College.
  • He gave $35 million to the University of Chicago, turning a small Baptist college into a major university.
  • He never smoked or drank alcohol.
  • He was married to Laura Spelman in 1864. They had five children including one son and four daughters.

Great Mustache in History

John D. Rockefeller did not have a mustache in later life but while he was building his empire he sported a mustache. His impact on the economy, business, and charitable giving ensure his place as a great mustache in history.


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