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John D. Rockefeller

By: History.com Editors

Updated: December 19, 2023 | Original: April 9, 2010

John D. Rockefeller (1839-1937), founder of the Standard Oil Company, became one of the world’s wealthiest men and a major philanthropist. Born into modest circumstances in upstate New York, he entered the then-fledgling oil business in 1863 by investing in a Cleveland, Ohio refinery. In 1870, he established Standard Oil, which by the early 1880s controlled some 90 percent of U.S. refineries and pipelines. Critics accused Rockefeller of engaging in unethical practices, such as predatory pricing and colluding with railroads to eliminate his competitors in order to gain a monopoly in the industry. In 1911, the U.S. Supreme Court found Standard Oil in violation of anti-trust laws and ordered it to dissolve. During his life Rockefeller donated more than $500 million to various philanthropic causes.

John D. Rockefeller: Early Years and Family

John Davison Rockefeller, the son of a traveling salesman, was born on July 8, 1839, in Richford, New York . Industrious even as a boy, the future oil magnate earned money by raising turkeys, selling candy and doing jobs for neighbors. In 1853, the Rockefeller family moved to the Cleveland, Ohio , area, where John attended high school before briefly studied bookkeeping at a commercial college.

Did you know? One of the charitable organizations established by John D. Rockefeller, Sr. was the Rockefeller Sanitary Commission, founded in 1909. Less than 20 years after its creation, the Commission had achieved its primary goals, the successful eradication of hookworm disease across the southern United States.

In 1855, at age 16, he found work as an office clerk at a Cleveland commission firm that bought, sold and shipped grain, coal and other commodities. (He considered September 26, the day he started the position and entered the business world, so significant that as an adult he commemorated this “job day” with an annual celebration.) In 1859, Rockefeller and a partner established their own commission firm. That same year, America’s first oil well was drilled in Titusville, Pennsylvania . In 1863, Rockefeller and several partners entered the booming new oil industry by investing in a Cleveland refinery.

In 1864, Rockefeller married Laura Celestia “Cettie” Spelman (1839-1915), an Ohio native whose father was a prosperous merchant, politician and abolitionist active in the Underground Railroad . (Laura Rockefeller became the namesake of Spelman College, the historically black women’s college in Atlanta, Georgia , that her husband helped finance.) The Rockefellers went on to have five children, four daughters (three of whom survived to adulthood) and one son: John D. Rockefeller, Jr., Edith Rockefeller McCormick, Elizabeth Rockefeller Strong, Alta Rockefeller Prentice and Alice Rockefeller, who died when she was 13 months old.

John D. Rockefeller: Standard Oil

In 1865, Rockefeller borrowed money to buy out some of his partners and take control of the refinery, which had become the largest in Cleveland. Over the next few years, he acquired new partners and expanded his business interests in the growing oil industry. At the time, kerosene, derived from petroleum and used in lamps, was becoming an economic staple. In 1870, Rockefeller formed the Standard Oil Company of Ohio, along with his younger brother William (1841-1922), Henry Flagler (1830-1913) and a group of other men. John Rockefeller was its president and largest shareholder.

Standard Oil gained a monopoly in the oil industry by buying rival refineries and developing companies for distributing and marketing its products around the globe. In 1882, these various companies were combined into the Standard Oil Trust, which would control some 90 percent of the nation’s refineries and pipelines. In order to exploit economies of scale, Standard Oil did everything from build its own oil barrels to employ scientists to figure out new uses for petroleum by-products.

Rockefeller’s enormous wealth and success made him a target of muckraking journalists, reform politicians and others who viewed him as a symbol of corporate greed and criticized the methods with which he’d built his empire. As The New York Times reported in 1937: “He was accused of crushing out competition, getting rich on rebates from railroads, bribing men to spy on competing companies, of making secret agreements, of coercing rivals to join the Standard Oil Company under threat of being forced out of business, building up enormous fortunes on the ruins of other men, and so on.”

In 1890, the U.S. Congress passed the Sherman Antitrust Act, the first federal legislation prohibiting trusts and combinations that restrained trade. Two years later, the Ohio Supreme Court dissolved the Standard Oil Trust; however, the businesses within the trust soon became part of Standard Oil of New Jersey , which functioned as a holding company. In 1911, after years of litigation, the U.S. Supreme Court ruled Standard Oil of New Jersey was in violation of anti-trust laws and forced it to dismantle (it was broken up into more than 30 individual companies).

John D. Rockefeller: Philanthropy and Final Years

Rockefeller retired from day-to-day business operations of Standard Oil in the mid-1890s. Inspired in part by fellow Gilded Age tycoon Andrew Carnegie (1835-1919), who made a vast fortune in the steel industry then became a philanthropist and gave away the bulk of his money, Rockefeller donated more than half a billion dollars to various educational, religious and scientific causes through the Rockefeller Foundation. Among his activities, he funded the establishment of the University of Chicago and the Rockefeller Institute for Medical Research (now Rockefeller University).

In his personal life, Rockefeller was devoutly religious, a temperance advocate and an avid golfer. His goal was to reach the age of 100; however, he died at 97 on May 23, 1937, at The Casements, his winter home in Ormond Beach, Florida . (Rockefeller owned multiple residences, including a home in New York City , an estate in Lakewood, New Jersey and an estate called Kykuit, old Dutch for “lookout,” set on 3,000 acres near Tarrytown, New York.) He was buried at Lake View Cemetery in Cleveland.

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John D. Rockefeller

(1839-1937)

Who Was John D. Rockefeller?

American industrialist John D. Rockefeller built his first oil refinery near Cleveland and in 1870 incorporated the Standard Oil Company. By 1882 he had a near-monopoly of the oil business in the United States, but his business practices led to the passing of antitrust laws. Later in life, Rockefeller devoted himself to philanthropy. He died in 1937.

Early Years

Born in Richford, New York, on July 8, 1839, John Davison Rockefeller moved with his family to Cleveland, Ohio, at the age of 14. Unafraid of hard work, he embarked on a number of small-business ventures as a teenager, landing his first real office job at age 16, as an assistant bookkeeper with Hewitt & Tuttle, commission merchants and produce shippers.

By the age of 20, Rockefeller, who'd thrived at his job, ventured out on his own with a business partner, working as a commission merchant in hay, meats, grains and other goods. At the close of the company's first year in business, it had grossed $450,000.

A careful and studious businessman who refrained from taking unnecessary risks, Rockefeller sensed an opportunity in the oil business in the early 1860s. With oil production ramping up in western Pennsylvania, Rockefeller decided that establishing an oil refinery near Cleveland, a short distance from Pittsburgh, would be a good business move. In 1863, he opened his first refinery, and within two years it was the largest in the area. It didn't take much further success to convince Rockefeller to turn his attention full-time to the oil business.

Standard Oil

In 1870, Rockefeller and his associates incorporated the Standard Oil Company, which immediately prospered, thanks to favorable economic/industry conditions and Rockefeller’s drive to streamline the company’s operations and keep margins high. With success came acquisitions, as Standard began buying out its competitors.

Standard’s moves were so quick and sweeping that it controlled the majority of refineries in the Cleveland area within two years. Standard then used its size and ubiquity in the region to make favorable deals with railroads to ship its oil. At the same time, Standard got into the business itself with the purchase of pipelines and terminals, setting up a system of transport for its own products. Controlling (or owning) almost every aspect the business, Standard’s grip on the industry tightened, and it even bought thousands of acres of forest for lumber and drilling and to block competitors from running their own pipelines.

Standard’s footprint got bigger as well, and it bought up competitors in other regions, soon pursuing ambitions of being an industry player both coast-to-coast in the U.S. and abroad. In just over a decade since Standard Oil was incorporated, it had a near monopoly of the oil business in the U.S. and consolidated each division under one giant corporate umbrella, with Rockefeller overseeing all of it. Everything Rockefeller had done to this point had led to the first American monopoly, or “trust,” and it would serve as a guiding light for others in big business following behind him.

Antitrust Issues

With such an aggressive push into the industry, the public and the U.S. Congress took notice of Standard and its seemingly unstoppable march. Monopolistic behavior was not kindly regarded, and Standard soon became the epitome of a company grown too big and too dominant, for the public good. Congress jumped into the fray with both feet in 1890 with the Sherman Antitrust Act, and two years later the Ohio Supreme Court deemed Standard Oil a monopoly that stood in violation of Ohio law. Always eager to be a step ahead, Rockefeller dissolved the corporation and allowed each property under the Standard banner to be run by others. The overall hierarchy remained chiefly in place, though, and Standard’s board maintained control of the web of spun-off companies.

Just nine years after the company broke itself into pieces in the face of antitrust legislation, those pieces were again reassembled in a holding company. In 1911, however, the U.S. Supreme Court declared the new entity in violation of the Sherman Antitrust Act and illegal, and it was again forced to dissolve.

Later Years, Death & Legacy

Rockefeller was a devout Baptist, and once retired from the daily operations of running one of the world’s largest businesses (in 1895, at age 56), he kept himself busy with charitable endeavors, becoming one of the more respected philanthropists in history. His money helped pay for the creation of the University of Chicago (1892), to which he gave more than $80 million before his death. He also helped found the Rockefeller Institute for Medical Research (later named Rockefeller University) in New York and the Rockefeller Foundation. In total he gave away more than $530 million to various causes.

With his wife, Laura, Rockefeller had five children, including a daughter, Alice, who died in infancy.

Rockefeller passed away on May 23, 1937, in Ormond Beach, Florida. His legacy, however, lives on: Rockefeller is considered one of America's leading businessmen and is credited for helping to shape the U.S. into what it is today.

His only son, also named John, served by his father’s side as a philanthropist while the elder Rockefeller was still alive and would continue his father’s legacy of giving. During World War II he helped establish the United Service Organizations (USO), and after the war he donated land for the United Nations New York City headquarters. He also donated $5 million for the Lincoln Center for the Performing Arts in New York City, helped in the restoration of colonial Williamsburg, Virginia, and provided funding for the Museum of Modern Art.

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Quick facts.

• Name: John Davison Rockefeller
• Birth Year: 1839
• Birth date: July 8, 1839
• Birth State: New York
• Birth City: Richford
• Birth Country: United States
• Gender: Male
• Best Known For: John D. Rockefeller was the head of the Standard Oil Company and one of the world's richest men. He used his fortune to fund ongoing philanthropic causes.
• Business and Industry
• Astrological Sign: Cancer
• Nacionalities
• Death Year: 1937
• Death date: May 23, 1937
• Death State: Florida
• Death City: Ormond Beach
• Death Country: United States

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CITATION INFORMATION

• Article Title: John D. Rockefeller Biography
• Author: Biography.com Editors
• Website Name: The Biography.com website
• Url: https://www.biography.com/business-leaders/john-d-rockefeller
• Access Date:
• Publisher: A&E; Television Networks
• Last Updated: August 10, 2020
• Original Published Date: April 2, 2014
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John D. Rockefeller, 1839-1937

John Davison Rockefeller (JDR) was the guiding force behind the creation and development of the Standard Oil Company, which grew to dominate the oil industry and became one of the first big trusts in the United States, thus engendering much controversy and opposition regarding its business practices and form of organization. JDR also was one of the first major philanthropists in the United States, establishing several important foundations and donating a total of $540 million to charitable endeavors.

John D. Rockefeller was born on July 8, 1839, on farm in Richford, New York, the second of the six children of William A. and Eliza Davison Rockefeller. The family lived in modest circumstances. When he was a boy, his family moved often, arriving in Ohio in 1853. JDR attended Central High School in Cleveland and joined the Erie Street Baptist Church, which later became the Euclid Avenue Baptist Church. Active in its affairs, he became a trustee of the church at the age of 21.

JDR left high school in 1855 to take a business course at Folsom Mercantile College. He completed the six-month course in three months and became the assistant bookkeeper with Hewitt & Tuttle, a small firm of commission merchants and produce shippers. A few months later he was promoted to cashier and bookkeeper.

In 1859, with $1,000 he had saved and another $1,000 borrowed from his father, JDR formed a partnership in the commission business with Maurice B. Clark. That same year, the first oil well was drilled at Titusville in western Pennsylvania, giving rise to the petroleum industry. Cleveland soon became a major refining center of the booming new industry, and in 1863 Rockefeller and Clark entered the oil business as refiners. Together with Samuel Andrews, they built and operated an oil refinery, Andrews, Clark & Co. The firm also continued in the commission business, but in 1865 the partners disagreed about the management of their business affairs and decided to sell the refinery to the partner who bid the highest. JDR bought it for $72,500, sold out his other interests and, with Andrews, formed Rockefeller & Andrews.

The Standard Oil Company

JDR’s stake in the oil industry increased as the industry itself expanded, spurred by the rapidly spreading use of kerosene for lighting. In 1870 he organized The Standard Oil Company with his brother William, Andrews, Henry M. Flagler, Steven V. Harkness, and others. It had a capital of $1 million.

By 1872 Standard Oil had purchased nearly all the refining firms in Cleveland, plus two refineries in metropolitan New York. Before long the company was refining 29,000 barrels of crude oil a day and had its own cooper shop manufacturing wooden barrels. It also had storage tanks with a capacity of several hundred thousand barrels of oil, warehouses for refined oil, and plants for the manufacture of paints and glue.

Standard Oil prospered and in 1882 all its properties were merged in the Standard Oil Trust. It had an initial capital of $70 million. There were originally 42 certificate holders, or owners, in the trust.

After ten years the trust was dissolved by a court in Ohio. The companies that comprised the trust later joined in the formation of the Standard Oil Company (New Jersey), since New Jersey had adopted a law that permitted a parent company to own the stock of other companies. It is estimated that Standard Oil owned 75 percent of the U.S. petroleum business in the 1890s.

In addition to being the head of Standard Oil, JDR owned iron mines and timberland and had invested in manufacturing, transportation, and other industries. Although he held the title of president of Standard Oil until 1911, JDR retired from active leadership of the company in 1896. In 1911 the U.S. Supreme Court found the Standard Oil trust to be in violation of the antitrust laws and ordered the dissolution of the parent New Jersey corporation. The 38 companies it controlled were separated into individual firms. JDR at that time owned 244,500 of the company’s 983,383 outstanding shares.

PHILANTHROPY

JDR was 57 years old in 1896 when he decided that others should take over the daily leadership of Standard Oil. He now focused his efforts on philanthropy, giving away the bulk of his fortune in ways designed to do the most good as determined by careful study, experience, and the help of expert advisers.

From the time he began earning money as a child, JDR had given a share of his income to his church and charities. His philanthropy grew out of his early family training, religious convictions, and financial habits. During the 1850s, he made regular contributions to the Baptist church, and by the time he was 21, he was supporting other denominations along with religious institutions and African-American education.

The University of Chicago

As his wealth grew in 1880s, JDR came to favor a cooperative and conditional system of giving in which he would support a project if others interested in it also provided substantial financial support. Thus he participated in the founding of the University of Chicago with the American Baptist Education Society by offering $600,000 of the first $1 million for the endowment only if the remainder was pledged by others within 90 days. The university was incorporated in 1890, and over the next 20 years JDR continued to contribute, always with the condition that others join him. In 1910 he made a farewell gift of $10 million, which brought his total contributions to the university to $35 million.

Corporate Philanthropy

JDR recognized the difficulties of wisely applying great funds to human welfare, and he helped to define the method of scientific, efficient, corporate philanthropy. To help manage his philanthropy, he hired the Rev. Frederick T. Gates, whose work with the American Baptist Education Society and the University of Chicago inspired JDR’s confidence. With the advice of Gates and his son, John D. Rockefeller Jr., he established a series of institutions that are significant in the history of American philanthropy, science, medicine, and public health.

The Rockefeller Institute for Medical Research

In 1901 JDR founded the Rockefeller Institute for Medical Research (now The Rockefeller University) for the purpose of discovering the causes, manner of prevention, and the cure of disease. A few of the noted achievements of its scientists are the serum treatment of spinal meningitis and of pneumonia; knowledge of the cause and manner of infection in infantile paralysis; the nature of the virus causing epidemic influenza; blood vessel surgery; a treatment for African sleeping sickness; the first demonstration of the preservation of whole blood for subsequent transfusion; the first demonstration of how nerve cells flow from the brain to other areas of the body; the discovery that a virus can cause cancer in fowl; peptide synthesis; and the identification of DNA as the crucial genetic material.

The General Education Board (1902-1965)

In 1902 JDR established the General Education Board (GEB) for the “promotion of education within the United States without the distinction of race, sex or creed.” Between 1902 and 1965, the GEB distributed $325 million to improve education at all levels, with emphasis upon higher education, including medical schools. In the south, where there was special need, the GEB helped schools for both white and African-American students. Out of the Board’s work with children’s clubs in the farm arena grew the 4-H Club movement and the federal programs of farm and home extension.

Rockefeller Sanitary Commission (1909-1915)

In 1909 JDR combined his special interest in the U.S. south with his interest in public health to create the Rockefeller Sanitary Commission for the Eradication of Hookworm Disease. Its purposse was to fund a cooperative movement to cure and prevent hookworm disease, which was especially devastating in the southern states. The commission launched a massive campaign of public education and medication in 11 states. It paid the salaries of field personnel, who were appointed jointly by the states and the commission, and it sponsored public education campaigns and the treatment of infected individuals. As part of this program, more than 25,000 public meetings were attended by more than 2 million people who were educated about hookworm and its prevention.

The Rockefeller Foundation

In 1913 JDR established the Rockefeller Foundation to “promote the well-being of mankind throughout the world.” In keeping with this broad commitment, the foundation has given important global assistance to public health, medical education, improved food production, scientific advancement, social research, and the arts.

The foundation’s International Health Division expanded the work of the Sanitary Commission worldwide, working against various diseases in 52 countries, bringing international recognition about public health and environmental sanitation. Its early field research on hookworm, malaria, and yellow fever provided the basic techniques to control these diseases and established the pattern of modern public health services. The foundation built and endowed the world’s first school of hygiene and public health, at The Johns Hopkins University, and spent $25 million to develop public health schools globally.

Its agricultural development program in Mexico led to the Green Revolution in the advancement of global food production, and the foundation provided significant funding for the International Rice Research Institute in the Philippines. Thousands of scientists and scholars from throughout the world have received fellowships and scholarships for advanced study. The foundation helped found the Social Science Research Council and has provided significant support for such organizations as the National Bureau of Economic Research, the Brookings Institute, and the Council on Foreign Relations. In the arts the foundation helped establish or support the Stratford Shakespearean Festival in Ontario, Canada; the American Shakespeare Festival in Stratford, Connecticut; Arena Stage in Washington, DC; Karamu House in Cleveland; and Lincoln Center for the Performing Arts in New York.

Other Rockefeller Philanthropic Support

In addition to creating several corporate philanthropies, JDR continued to make personal donations to the following: theological schools; the Palisades Interstate Park Commission; victims of the 1906 San Francisco earthquake; the Anti-Saloon League; Baptist missionary organizations; various YMCAs and YWCAs; parks in Cleveland; and colleges and universities, including Brown, Bryn Mawr, Columbia, Harvard, Spelman, Vassar, Wellesley, and Yale.

Family Life

John D. Rockefeller married Laura C. Spelman, a teacher, on September 8, 1864, in Cleveland. They had five children: Bessie, Alice, Alta, Edith, and John Jr., who inherited much of the family fortune and continued his father’s philanthropic work.

In the 1870s, JDR began to make business trips to New York, and soon he started bringing his family for lengthy stays. In 1884, he bought a large brownstone house at 4 West 54th Street, the land of which is now part of the garden of the Museum of Modern Art. Beginning in the 1890s, the family spent part of their time at their home Pocantico Hills, about 25 miles north of Manhattan, but during the summer they returned to their Forest Hill home in East Cleveland. After Laura died, JDR spent several months each year at his homes in Lakewood, New Jersey, and Ormond Beach, Florida.

John D. Rockefeller died on May 23, 1937, at The Casements, his home in Ormond Beach. He was 97 years old. He is buried in Lakeview Cemetery in Cleveland.

American Experience

Biography: john d. rockefeller, senior.

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Youth John D. Rockefeller was born July 8, 1839, in Richford, New York, about midway between Binghamton and Ithaca. His father, William Avery Rockefeller, was a "pitch man" — a "doctor" who claimed he could cure cancers and charged up to $25 a treatment. He was gone for months at a time traveling around the West from town to town and would return to wherever the family was living with substantial sums of cash. His mother, Eliza Davison Rockefeller, was very religious and very disciplined. She taught John to work, to save, and to give to charities.

By the age of 12, he had saved over $50 from working for neighbors and raising some turkeys for his mother. At the urging of his mother, he loaned a local farmer $50 at 7% interest payable in one year. When the farmer paid him back with interest the next year Rockefeller was impressed and said of it in 1904: "The impression was gaining ground with me that it was a good thing to let the money be my servant and not make myself a slave to the money…"

From 1852 Rockefeller attended Owego Academy in Owego, New York, where the family had moved in 1851. Rockefeller excelled at mental arithmetic and was able to solve difficult arithmetic problems in his head — a talent that would be very useful to him throughout his business career. In other subjects Rockefeller was an average student but the quality of the education was very high.

In 1853, the Rockefellers moved to Cleveland, Ohio, and John attended high school from 1853 to 1855. He was very good at math and was on the debating team. The school encouraged public speaking and even though Rockefeller was only average, it was a skill that would prove to useful to him.

Early Business Career: 1855-1863 In the spring of 1855 Rockefeller spent 10 weeks at Folsom's Commercial College — a "chain College" — where he learned single- and double-entry bookkeeping, penmanship, commercial history, mercantile customs, banking, and exchange. From his father he had learned how to draw up notes and other business papers. His father was very meticulous in matters of business and believed in the sacredness of contracts.

In August of 1855, at the age of 16, Rockefeller began looking for work in Cleveland as a bookkeeper or clerk. Business was bad in Cleveland at the time and Rockefeller had problems finding a job. He was always neatly dressed in a dark suit and black tie. Cleveland was not a large city in 1855 and Rockefeller could easily visit every business in under a week's time. He returned to many businesses three times. Finally, on September 26, 1855, he got a job as an assistant bookkeeper with Hewitt & Tuttle, commission merchants and produce shippers.

Rockefeller soon impressed his employers with his seriousness and diligence. He was very exacting and scrupulously honest. For example, he would not write out a false bill of lading under any circumstances. He went to great lengths to collect overdue accounts. He was pleasant, persistent, and patient, and he got the company's money from the delinquents. (For all this work, he was not well paid. But whatever he was paid, he always gave to his church and local charities.)

By 1858, Rockefeller had more responsibilities at Hewitt & Tuttle. He arranged complicated transportation deals that typically involved moving a single shipment of freight by railroad, canal, and lake boats. He began to engage in trading ventures on his own account. He was naturally cautious and only undertook a business venture when he calculated that it would be successful. After he carefully weighed a course of action, he would then act quickly and boldly to see it through to fruition. He had iron nerves and would carry through very complicated deals without hesitation. This combination of caution, precision, and resolve soon brought him attention and respect in the broader business community in Cleveland.

On March 1, 1859 -- several months before his 20th birthday — Rockefeller went into business for himself, forming a partnership with a neighbor, Maurice Clark. Each man put up $2,000 and formed Clark & Rockefeller — commission merchants in grain, hay, meats, and miscellaneous goods. At the end of the first year of business, they had grossed $450,000, making a profit of $4,400 in 1860 and a profit of $17,000 in 1861. The commission merchant business was very competitive and Clark & Rockefeller's success was due in large part to Rockefeller's natural business abilities.

During the Civil War their business expanded rapidly. Grain prices went up and so did their commissions. Most of their selling was done on commission, so Clark & Rockefeller took no risks from price fluctuations. Rockefeller's style was very precise and calculated. He was not a gambler but a planner. He avoided speculation and refused to make advances or loans.

Rockefeller was extremely hard working. He traveled extensively, drumming up business throughout Ohio, and then would go to the banks and borrow large sums of money to handle the shipments. This aggressive style built the business up every year.

However, by the early 1860s, Rockefeller realized that the future of the commission merchant business in Cleveland was going to be limited. He had become convinced that the railroads were going to become the primary means of transportation for agricultural commodities. This would be to the disadvantage of Cleveland, because its position as an important Lake Erie port was its primary transportation advantage. He saw that the rising grain output of the Midwest and the Northwest of J. J. Hill would change the nature of the business for good. The huge elevators on Lake Michigan and the flour-millers of Minneapolis would be the dominant players in the business. Rockefeller came to believe that the future of Cleveland lay in the collection and shipment of raw industrial materials -- not agricultural commodities. This would allow Cleveland to exploit its geographical advantages -- mid-way between the Eastern seaboard and Chicago -- and accessible to both rail and water transportation. He saw his chance in 1863 -- oil.

Oil Refining 1863-65 On August 27, 1859, Edwin Drake struck oil near Titusville, Pennsylvania, setting off a frenzied oil boom in what soon became known as the "oil regions" of northwestern Pennsylvania. Drake was the employee of a group of New Haven, Connecticut, investors in the Pennsylvania Rock Oil Company. They had obtained a sample of the Pennsylvania oil and had a Yale University chemist analyze it. The chemist determined that the Pennsylvania oil was of very high quality and could be refined into a variety of useful products.

The technology used by Drake was not new. What was new was the idea of drilling for oil -- the idea that you could pump oil out of the ground like you could pump water.

The technology for drilling wells was quite advanced by 1859. To that time, wells were drilled for either water or salt (more accurately, brine which would be refined to get the salt). In the process of drilling for salt all over the United States in the early 19th century it was not uncommon -- especially in the Pennsylvania area — to get oil seepage into the salt well. Most of the time this was regarded as a nuisance, but some enterprising merchants went into the business of selling the oil in small bottles as a "Natural Remedy" or "Curative Agent."

The technology for refining oil was also known by the early 1850s. Doctor Abraham Gesner, a Canadian, in August 1846 patented a method for distilling kerosene (a name he invented from the Greek "keros" — wax — and "elaion" — oil) from coal. In 1850, a Scottish industrial chemist, James Young, patented a method of obtaining "burning oils" from petroleum through destructive distillation. In 1852 two Boston chemists, Luther and William Atwood, began making lubricants from coal tar. Finally, in 1856, Samuel Downer, a whale-oil merchant, bought out the Atwoods and boosted production to 650,000 gallons of refined oil a year. By 1861, coal-oil lamps were widespread and coal-oil was even made in Cleveland.

Rockefeller began investigating the feasibility of entering the oil refining business in 1862 and the firm of Andrews, Clark & Company was formed in 1863. (Samuel Adams had experience with shale-oil refining, and Clark brought in his brothers.) Probably figuring in Rockefeller's decision to enter the business was the entry into Cleveland later that year of the long-planned Atlantic & Great Western Railroad. The A&GW line went east to Meadville, Pennsylvania, then northeast to Corry, Pennsylvania, and then across the border into New York state, where it connected to the Erie Railroad. The A&GW also had branches into the heart of the oil regions -- Titusville and Franklin. This gave Cleveland two routes to New York City -- the New York Central-Lake Shore system, and the A&GW-Erie connection. This immediately gave Cleveland a transportation advantage over Pittsburgh, which was dominated by the Pennsylvania Railroad.

The Pennsylvania oil was of high quality. One barrel yielded 60-65% illuminating oil, 10% gasoline, 5-10% benzoyl or naphtha (a volatile inflammable liquid used as a solvent in dry cleaning, varnish making, etc.), with the remainder tar and wastes.

Rockefeller abhorred waste and devoted considerable energy to increasing the efficiency of his refining business. He believed that the secret of success was attention to detail — to wringing little efficiencies out of every aspect of his business. He hired his own plumber and bought his own plumbing supplies. He built his own cooperage shop and made his own barrels for the oil. He bought tracts of white-oak timber for making the barrels. Instead of transporting the freshly cut green timber directly to the cooperage shop, he had kilns built on the timber tracts to dry the wood on site, to reduce the shipping weight of the lumber. He bought his own wagons and horses to transport the wood to the cooperage shop in Cleveland. (We would call this "vertical integration" today.)

Oil Refining 1865-1870 In February 1865, at the age of 24, Rockefeller bought out the Clark brothers (Maurice Clark had brought his brothers into the refining business) for $72,500 and gained complete control of the business. The Clarks had resisted borrowing money to expand and Rockefeller was convinced of the correctness of his course. He immediately moved to greatly extend his enterprise. He borrowed heavily and plowed all his profits back into the business in order to expand it further, and took decisive steps to strengthen and increase the efficiency of all aspects of the firm.

In 1866, John D. brought his brother William Rockefeller into the partnership and they built another refinery in Cleveland which they named the Standard Works. They also opened a New York City office with William Rockefeller in charge, to handle the export business, which eventually became larger than the domestic business.

Henry M. Flagler In 1867, Henry M. Flagler (1830-1913) became a partner, and Rockefeller, Andrews & Flagler was formed. Flagler had left school at age 14. Not wanting to burden his poor family any further, he walked to the Erie Canal in 1844 and took it to Lake Erie, and then went to Ohio via a lake steamer. Flagler and Rockefeller had met years earlier in Bellevue, Ohio, when Rockefeller was buying grain for his commission house and Flagler was a grain merchant. Flagler had gone into the salt well business but went broke in 1865. He began to recoup his fortune in 1865 in Cleveland as a manufacturer of oil barrels and had an office in the same building as Rockefeller. Flagler and Rockefeller were very much alike -- ambitious and shrewd, with a taste for expansion. Flager's wife's uncle, Stephen V. Harkness, became a silent partner and made substantial investments in the partnership, though he never took an active part in running the business. These investments by Harkness and Flagler were used to expand the business even further.

By 1868, Rockefeller, Andrews & Flagler was the largest refiner in the world. Flagler and Rockefeller understood that the only way to make profits consistently in oil refining was to make the business as large as possible and to utilize all their "waste" products. The refining process during this early period was very primitive -- refining consisted simply of cooking the oil and purifying it somewhat. The physical plant was simple: some large vats, stills, the piping, and a few chemicals. A small refinery could be set up with just $10,000, and a large one with $50,000. In modern language, the barriers to entry were very, very low. It would be like setting up a small business in today's business climate.

Consequently, if the price of kerosene was high, even the small and inefficient refiners could make good money. So, even when the price of kerosene fell sharply, driving some refiners out of business, the entry costs were so low that when times were good many small operators could enter the business cheaply, making it a very competitive market.

It was the logic of this competitive structure that determined Rockefeller and Flagler's course of action.

• They built high-quality, larger, better-planned refineries. They built permanent facilities using the best materials available.
• They owned their own cooperage (barrel making) plant, their own white-oak timber and drying facilities, and bought their own hoop iron. Consequently, they cut the cost of a barrel from about $3.00 to less than $1.50.
• They manufactured their own sulfuric acid (which was used in the purification process) and devised technology to recover it for re-use.
• They owned their own drayage service, consisting of at least 20 wagons in 1868.
• They owned their own warehouses in New York City and their own boats on the Hudson and East Rivers to transport their oil.
• They were the first to ship oil via tank cars (albeit big wooden tubs mounted in pairs on flat cars -- later to evolve into the modern form of a tank car). And they owned their own fleet of tank cars.
• They built huge holding tanks near their refineries for storing crude and refined oil, with the equipment for drawing off the oil from the tank cars into the holding tanks.
• Their huge size made it economical to build the necessary physical plant to handle all the "waste" products from the refining of kerosene. They began manufacturing high quality lubricating oil that quickly replaced lard oil as a lubricant for machinery. Gasoline, which many refiners surreptitiously dumped into the Cuyahoga River at night (the river often caught fire), Rockefeller and Flagler used as fuel. They manufactured benzene (used as a cleaning fluid; a solvent for fat, gums, and resin; and to make varnish), paraffin (insoluble in water, used for making candles, waterproofing paper, preservative coatings, etc.), and petrolatum (used as a basis for ointments and as a protective dressing; as a local application in inflammation of mucous membrane; as an intestinal lubricant, etc. -- white petrolatum later marketed under the brand name Vaseline). They shipped naphtha (volatile inflammable liquid used as a solvent in dry cleaning and in wax preparations, varnish and paint making, burning fluid for illumination, and as a fuel for motors) to gas plants and other users. 

In short, nothing was left to chance, nothing was guessed at, nothing left uncounted and measured. Efficiencies down to the smallest detail of the business were the order of the day. Economy, precision, and foresight were the cornerstones of their success.

The sheer size of the business and the fact that Cleveland was served by two railroad systems -- the New York Central (via the Lake Shore) and the Erie (via the Atlantic & Great Western -- which Jay Gould bought in 1868) -- and had access to the Lake for water-borne shipping, gave Rockefeller and Flagler tremendous leverage with the railroads. Consequently, Flagler was able to negotiate big rebates from the railroads. The combination of size, efficiency, and the rebates gave Rockefeller and Flagler an advantage over other refiners that they would never relinquish.

The railroad situation benefited not only Rockefeller and Flagler; other Cleveland refiners also benefited at the expense of the refiners in Pittsburgh. Pittsburgh was a prisoner to the Pennsylvania Railroad, which had a monopoly in that city. The Pennsylvania Railroad wanted to ship everything to Philadelphia because it meant more money for them. Consequently, Cleveland refiners had a built-in advantage over Pittsburgh. In this regard, the railroads — the Erie and New York Central -- were not "victims" of the "crooked" refiners; rather, the railroads looked upon the refiners as associates and co-workers. They had a commonality of interests.

The Standard Oil Company: 1870-1882 On January 10, 1870, the Standard Oil Company of Ohio was created by John D. Rockefeller (30%), William Rockefeller (13.34%), Henry Flagler (16.67%), Samuel Andrews (16.67%), Stephen Harkness (13.34%), and O. B. Jennings (brother-in-law of William Rockefeller, 10%). It held about 10% of the oil business at the time of its formation.

In Rockefeller's eyes, the state of the oil business was chaotic. Because entry costs were so low in both oil drilling and oil refining, the market was glutted with crude oil with an accompanying high level of waste. In his view, the theory of free competition did not work well when there was a mix of very large, efficient firms and many medium and small firms. His view was that the weak firms, in their attempts to survive, drove prices down below production costs, hurting even the well-managed firms such as his own.

Although his economics may be suspect in modern eyes, his solution -- a market with a few (maybe one!) large, vertically integrated firms — in effect an oligopolistic market -- was what other industrial sectors eventually evolved into. What makes oil stand out is that it happened by design -- as the result of a plan formulated by a single person — John D. Rockefeller.

During 1871, Rockefeller formulated his plan for consolidating all oil refining firms into one great organization with the aim of eliminating excess capacity and price-cutting. Although no written records exist, both Rockefeller and Flagler 30 years later claimed this was when they worked out the master plan, which they later implemented. The claim that the plan was formulated in 1871 is evidenced by the fact that all the major Cleveland banks joined the Standard Oil organization in 1871 and later backed Rockefeller and Flagler to the hilt in their rapid expansion.

The South Improvement Scheme What interrupted Rockefeller and Flagler's careful planning was the emergence of the South Improvement scheme of 1871. Tom Scott of the Pennsylvania Railroad came up with the idea. The scheme was inspired by the Anthracite Railroad combination of 1868-71 in which five railroads and two coal companies bought up all the coal pits along the five railroads in order to control output and prices.

The South Improvement Company had been created by the Pennsylvania Legislature in 1870 and its charter allowed the Company to hold the stocks of other companies outside the state. This was an unusual power at the time and made it ideal for Scott's scheme. Scott arranged for the purchase of the charter by a group of Philadelphia and Pittsburgh refiners with Scott in the background.

The scheme was essentially a plan to unite the oil-carrying railroads in a pool; to unite the refiners in an association, the South Improvement Company; and to tie the two elements together by agreements which would stop "destructive" price-cutting and restore railroad freight charges to a profitable level.

To enforce the cooperation of refiners, a set of rebates was agreed to for participating refiners. This alone would have undoubtedly forced all the refiners into the combine, but the scheme did not stop there. In what turned out to be a public relations disaster, the participants decided to add a drawback on every barrel shipped by a non-participant equal to the ordinary rebate. In effect, this would be a tax on non-participants, the proceeds of which would be transferred to the participating oil refiners.

What the planners forgot, however, was to include the producers in the scheme as well. Despite efforts to reassure the drillers in the Oil Regions that the scheme would benefit them as well by keeping prices up, the Oil Regions Men revolted and organized an effective boycott of all the refiners and railroads they suspected of being part of the scheme. Consequently, the scheme collapsed in 1872 before it was ever implemented.

Subsequent historians repeated the view of many at the time that Rockefeller had been one of the originators of the South Improvement Scheme. In fact he had not been, but he and Flagler did agree to participate, and worked hard to set up the scheme. Rockefeller's most important error of his career was to not go public at the time with his side of the story. This was the first time that a broad public became aware of Rockefeller and the episode was to forever tarnish his reputation. He said of it later, "Our silence encouraged the wildest romancers to spread wild tales about us;" and on another occasion, "I shall never cease to regret that at that time we never called in the reporters."

In December 1871, during the dust-up over the South Improvement Scheme, Rockefeller and Flagler set in motion their plan to consolidate the industry. They began by buying up all their competitors in Cleveland. The strategy and tactics were Rockefeller’s and he handled the negotiations with the rival refiners personally. He began with the strongest refineries first. He believed that if he had bought up the weak refineries first then he would be faced with higher prices later and stiffer resistance. Consequently, he approached the strongest first and bought them out.

His technique was always the same. The merger would be effected by an increase in the capitalization of The Standard Oil. The rival refinery would be appraised and the owners would be given Standard Oil stock in proportion to the value of their property and good will and they would be made partners in Standard Oil. The more talented owners would also be brought into the Standard Oil management. If they insisted upon cash they received it.

Later some owners who had been bought out complained to the press that they had been treated unfairly. The evidence is overwhelming that the Standard’s rivals were paid fair -- even generous -- prices for their property, and if they had the wisdom to take Standard Oil stock, they ended up very rich indeed.

By March or April 1872, Rockefeller had bought up and/or merged with almost all the refineries in Cleveland. The inefficient and poorly constructed refineries were dismantled, while the better-quality ones were upgraded to Rockefeller and Flagler’s standards.

After the conquest of Cleveland, the Standard inexorably expanded. All the transactions were kept as secret as possible. The leaders of the Standard were so successful in this secrecy at times that many rival independent refiners were totally unaware of what was going on.

In 1872, Jabez A. Bostwick was brought into the Standard along with his important oil facilities on Long Island and on New York Harbor. In 1873, Standard acquired Devoe Manufacturing Company (Long Island) and Chess, Carley and its important distribution system in the Kentucky region (Louisville, KY). In 1874, Standard began building its own pipeline system using Bostwick & Co.

The teamsters, men who drove commercial wagons drawn by horse-teams, fought pipelines tooth and nail, but were destined to lose because it was so much cheaper and easier for the producers to send their crude through pipes as opposed to wagons. It was a short logical step to extend those pipelines directly to refineries. Rockefeller made a deal with the Erie Railroad and gained control of important terminal facilities in New York harbor in exchange for shipping half of Standard’s oil on the Erie.

The Standard expanded into the Pennsylvania Oil Regions, gaining control of the Imperial Refinery near Oil City and bringing J.J. Vandergrift into the Standard management. Two large refineries in Titusville joined the Standard and John Archbold (later the President of Standard Oil) was brought into the management. The Standard expanded into Pittsburgh by merging Warden, Frew & Co. and Lockhart, Frew & Co., thereby acquiring half the refining capacity of Pittsburgh. The Standard expanded into Philadelphia by buying the largest refinery.

In 1875, the Standard bought more pipelines and firms in the oil buying business and merged them all into the United Pipe Lines in 1877. Flagler and Rockefeller negotiated an agreement with the railroads: the Pennsylvania Railroad would carry 51% of Standard Oil shipments; the Erie 20%; the NY Central 20%; and the Baltimore & Ohio 9%; and obtained rebates from all the railroads for being an "evener" (that is, the Standard was charged with making certain that the railroads all got their "fair" share).

In 1875-76, Johnson N. Camden (later a senator from West Virginia) came into the Standard secretly and moved to buy up all the West Virginia oil supply to squeeze the Pittsburgh independents. By 1876 Camden gained control of most of the West Virginia refineries.

In 1877, Standard bought the Columbia Conduit Co. of PA and gained control of its pipelines and refineries. Columbia had tried to bypass the Pennsylvania Railroad by building a pipeline from the Oil Regions down to the new B&O railroad line near Pittsburgh. The Pennsylvania Railroad used armed guards to prevent them from laying a pipeline under its right-of-way north of Pittsburgh. The Standard gained control of most of the property of the Empire Transportation Company -- a subsidiary of the Pennsylvania Railroad that had its own fleet of tank cars, pipelines, lake steamers, and terminals in New York harbor. The Empire had briefly threatened the Standard, but Rockefeller built 600 new tank cars, cut prices, and cancelled all his shipments over the Pennsylvania Railroad. The railroad capitulated and sold Rockefeller the Empire's assets.

In 1877-78, the Standard and the trunk lines agreed on a new split: Pennsylvania Railroad 47%; NY Central 21%; Erie 21%; B&O 11%. New York City was to get 63% of the total traffic and Baltimore and Philadelphia 37%. On refined oil, non-Standard companies shipping from Cleveland, Pittsburgh, and Titusville paid $1.44.5 per barrel while the Standard paid $.80!

In 1878, the Standard forced the railroads to pay a drawback of 20-35 cents a barrel of crude oil shipped by any other party. In effect, this was a tax levied by the Standard upon its competitors. This combination of rebates and "taxes" (some authors dub this a "drawback" -- but that term is also used to refer to a specific type of rebate) is what forced the remaining independent refiners to capitulate to the Standard. Production increased in the Pennsylvania Oil Regions because of a large discovery in the Bradford area. Standard was forced to frantically build as many large holding tanks as possible to hold the market glut of oil.

By 1879, the Standard Oil Company did about 90 percent of the refining in the United States, with almost 70 percent being exported overseas. The business had become so large and so complex that Rockefeller only dealt with the major problems and the larger outlines of his affairs. Rockefeller was only 40 years old.

The Standard’s only serious competitor — the Tidewater Pipe-Line Company (later the Tidewater Oil Company) — emerged in 1879-83. It took Rockefeller by surprise and succeeded in building a pipeline from the Oil Regions east across northern Pennsylvania to Williamsport, where the oil was transferred to the Reading Railroad. The Reading then took the oil down to a refinery at Chester, Pennsylvania on the Delaware Bay. Rockefeller tried to gain control of Tidewater but failed, and his rival had about 10% of the market in 1888.

The Standard Oil Trust: 1882-1892 On January 2, 1882 the Standard Oil Trust was formed. Attorney Samuel Dodd came up with the idea of a trust. A Board of Trustees was set up and all the Standard properties were placed in its hands. Every stockholder received 20 Trust certificates for each share of Standard Oil stock, and all the profits of the component companies were sent to the nine trustees who determined the dividends. The nine trustees elected the directors and officers of all the component companies.

The Trust was capitalized quite conservatively at $70,000,000 — the true value was about $200,000,000 (no stock watering at the Standard). The nine Trustees controlled 23,314 of the 35,000 shares with J.D. Rockefeller holding 9,585 shares.

Rockefeller, at age 43, was the leader of the Trust because he was "primus inter pares" (first among his peers), not a dictator. As such, he could not dictate policy even when he felt strongly that he was right. An example of this was the Lima Oil field in Ohio. The field had been discovered in the early 1880s. The problem was that the oil was "sour" -- that is, it had a very high sulfur content so it smelled like rotten eggs. Even worse, when it was refined into kerosene and used in lamps it produced too much soot, which coated the lamp chimneys. Rockefeller wanted to buy up as much of the oil as possible and worry about solving the sulfur problem later. The other directors were unenthusiastic about this policy and John Archbold began quietly selling some of his Trust shares in the Standard. By 1888, the Standard owned 40,000,000 barrels of the Lima oil, which were stored in huge tank farms at the fields. Rockefeller hired a great chemist, Herman Frasch, who, with the aid of talented Standard engineers, devised a process using copper oxides to remove the sulfur from the oil. The result was a bonanza for the Standard, vindicating Rockefeller’s judgement.

By 1890, The Standard had set up an elaborate nationwide distribution system that reached nearly every American town. By 1904, 80% of American towns were served by Standard Oil carts that delivered the various products directly to businesses and homes. Standard Oil’s campaign to dominate even the smallest of the retail markets is probably the single most important reason that company became so disliked by the American public. The Standard was aggressive in its marketing practices and tried to force all grocery and hardware stores that sold kerosene and lubricants to sell only Standard products. This policy — though successful in the short run — made the Standard widely unpopular and simply increased its vulnerability to political attack.

On March 21, 1892 the Trust was formally dissolved. The Attorney General of Ohio had brought suit against the Trust in 1890 and it lost in 1892. Each trust certificate was to be exchanged for the proportioned share of stock in the 20 component companies of the Standard. The irony is that this had no practical effect on the Combination. The same men were still in charge, only now they were simply the majority shareholders of all the component companies.

Rockefeller Exits: 1892-189 7 During 1891-92 all the evidence suggests that Rockefeller had a partial nervous breakdown from overwork. He lost all of his hair, including his eyebrows, and suffered from ill health in the early 1890s.

During this period Rockefeller's wealth had increased to such an extent that his major problem was what to do with it all. He solved this problem by hiring Frederick T. Gates in September of 1891 as a full-time manager of his fortune. By this time, Rockefeller was literally inundated with appeals from individuals and charities for funds. Gates not only removed this burden; he also oversaw all of Rockefeller’s investments, which were becoming huge in their own right. For example, by 1897 Rockefeller owned large holdings of the Missabe iron range in Minnesota, a railroad to carry the ore to Lake Superior, and a fleet of huge ore-carrying lake steamers. In 1901 Rockefeller sold his iron ore-related business to J.P. Morgan for $80,000,000 with an estimated profit of at least $50,000,000 -- a huge fortune in its own right, but it was just one of his investments. Morgan added the Rockefeller properties to the U.S. Steel Corporation.

By 1896, Rockefeller stopped going to his office daily and in 1897 he retired, at the age of 58. He took part in some management activity until 1899 but none to speak of thereafter. John Archbold ran Standard Oil from the mid-1890s onward. Archbold disliked prominence and asked Rockefeller to remain as the nominal president of Standard. Not publicly announcing his retirement was a great mistake on Rockefeller's part. Rockefeller had resisted the temptation to exploit the Standard's near-monopoly position by raising prices "too" much. Although Rockefeller's pricing policies did result in some "monopoly profits" for the Standard, they were fairly mild. Not so Archbold. He raised prices aggressively, and the dividends rolled in. The consequence was that Rockefeller got all the blame for the policies even though he had almost no further role in management.

Retirement and Philanthropy From the mid-1890s until his death in 1937, Rockefeller’s activities were philanthropic. Rockefeller's fortune peaked in 1912 at almost $900,000,000, but by that time he had already given away hundreds of millions of dollars. His son, John D. Rockefeller, Jr. in 1897 joined Gates in the full time management of the fortune.

The University of Chicago — which Rockefeller was largely responsible for creating — alone received $75,000,000 by 1932.

He set up, at the urging of his son, the Rockefeller Institute for Medical Research (now Rockefeller University) and his gifts to it totaled $50,000,000 by the 1930s.

He founded the General Education Board in 1903 (later the Rockefeller Foundation). The General Education Board helped to establish high schools throughout the South by providing free professional advice on improving instruction and education. The effort was a cooperative one, and local money was used to build the high schools. In 1919, Rockefeller donated $50,000,000 to the Board to raise academic salaries, which were very low in the wake of WWI.

The Rockefeller Foundation was officially established in 1913 and Rockefeller transferred $235,000,000 to it by 1929.

In 1909, Rockefeller established the Rockefeller Sanitary Commission which was largely responsible for eradicating hookworm in the South by 1927.

When Rockefeller died, on May 23, 1937, his estate totaled only $26,410,837. He had given most of his property to his philanthropies and to his son and other heirs.

Rockefeller was a Schumpeteran entrepreneur. He clearly changed "the stream of the allocation of resources over time by introducing new departures into the flow of economic life" by creating the modern oil industry. His emphasis on size and efficiency and the use of modern chemistry resulted in the development of a wide variety of new products that made the lives of ordinary people better as a consequence. He made light cheap for untold millions and his great creation was ready, willing, and able to provide the cheap gasoline when it was needed, thus ushering in the age of the automobile in America.

Last, but not least, he set the standard for philanthropy. Just the eradication of hookworm in the South alone would merit his place as one of the great humanitarians of the 20th Century. But his reputation was so sullied that he never received the credit that he was due for this great act on behalf of humankind.

[This biography of John D. Rockefeller Sr. was written by Keith Poole, Professor of Political Science at the University of Georgia, as part of a course on Enterpreneurs and American Economic Growth.]

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John D. Rockefeller Biography

Born: July 8, 1839 Richford, New York Died: May 23, 1937 Ormond, Florida American industrialist and philanthropist

John D. Rockefeller, an American industrialist (a person who owns or oversees an industrial corporation) and philanthropist (a person who works to help mankind), founded the Standard Oil Company, the University of Chicago, and the Rockefeller Foundation.

John Davison Rockefeller was born on July 8, 1839, in Richford, New York, the second of six children. His father owned farm property and traded in many goods, including lumber and patent medicines. His mother, who was quite the opposite of his father's fun-loving ways, brought up her large family very strictly. After living in Oswego, New York, for several years, the family moved to Cleveland, Ohio, in 1853, when it was beginning to grow into a city. John graduated from high school there and excelled in mathematics.

After graduation Rockefeller attended a commercial college for three months, after which he found his first job at the age of sixteen as a produce clerk. In 1859, at age nineteen, he started his first company, Clark and Rockefeller, with a young Englishman. They grossed (money earned before expenses) four hundred fifty thousand dollars in the first year of trading. Clark did the fieldwork while Rockefeller controlled office management, bookkeeping, and relationships with bankers.

Expanding businesses

From the start Rockefeller showed a genius for organization and method. The firm prospered during the Civil War (1861–65), when Confederate (Southern) forces clashed with those of the Union (North). With the Pennsylvania oil strike (1859) and the building of a railroad to Cleveland, they branched out into oil refining (purifying) with Samuel Andrews, who had technical knowledge of the field. Within two years Rockefeller became senior partner; Clark was bought out, and the firm Rockefeller and Andrews became Cleveland's largest refinery.

With financial help from S. V. Harkness and from a new partner, H. M. Flagler (1830–1913), who also secured favorable railroad freight rebates, Rockefeller survived the bitter competition in the oil industry. The Standard Oil Company, started in Ohio in 1870 by Rockefeller, his brother William, Flagler, Harkness, and Andrews, had a worth of one million dollars and paid a profit of 40 percent a year later. While Standard Oil controlled one-tenth of American refining, the competition remained.

Rockefeller still hoped to control the oil industry. He bought out most of the Cleveland refineries as well as others in New York, Pittsburgh, and Philadelphia. He turned to new transportation methods, including the railroad tank car and the pipeline. By 1879 he was refining 90 percent of American oil, and Standard used its own tank car fleet, ships, docking facilities, barrel-making plants, depots, and warehouses.

Rockefeller came through the Panic of 1873, a severe financial crisis, still urging organization of the refiners. As his control approached near-monopoly (unfair control over an industry), he fought a war with the Pennsylvania Railroad in 1877 which created a refining company to try to break Rockefeller's control. But bloody railroad strikes (workers' protests) that year forced them to surrender to Standard Oil. Rockefeller's dream of order was near completion.

America's first trust

In the 1880s the nature of Rockefeller's business began to change. He moved beyond refining oil into producing crude oil itself and moved his wells westward with the new fields opening up. Standard also entered foreign markets in Europe, Asia, and Latin America. From 1885 a committee system of management was developed to control Standard Oil's enormous empire.

Attacking the trust

Public opposition to Standard Oil grew with the emergence of the muckraking journalists (journalists who expose corruption), in particular, Henry Demarest Lloyd (1847–1903) and Ida Tarbell (1857–1944) who published harsh stories of the oil empire. Rockefeller was criticized for various practices: railroad rebates (a system he did not invent and which many refiners used); price fixing; and bribery (exchanging money for favors); crushing smaller firms by unfair competition, such as cutting off their crude oil supplies or restricting their transportation outlets. Standard Oil was investigated by the New York State Senate and by the U.S. House of Representatives in 1888. Two years later the Ohio Supreme Court invalidated Standard's original trust agreement. Rockefeller formally disbanded the organization and in 1899 Standard was recreated legally under a new form as a "holding company," (this merger was dissolved by the U.S. Supreme Court in 1911, long after Rockefeller himself had retired from active control in 1897).

Perhaps Rockefeller's most famous excursion outside the oil industry began in 1893, when he helped develop the Mesabi iron ore range of Minnesota. By 1896 his Consolidated Iron Mines owned a great fleet of ore boats and virtually controlled Great Lakes shipping. Rockefeller now had the power to control the steel industry, and he made an alliance with the steel king, Andrew Carnegie (1835–1919), in 1896. Rockefeller agreed not to enter steelmaking and Carnegie agreed not to touch transportation. In 1901 Rockefeller sold his ore holdings to the vast new merger created by Carnegie and J. P. Morgan (1837–1913), U.S. Steel. In that year his fortune passed the $200 million mark for the first time.

Philanthropic endeavors

Rockefeller, from his first employment as a clerk, sought to give away one-tenth of his earnings to charity. His donations grew with his fortune, and he also gave time and energy to philanthropic (charity-related) causes. At first he depended on the Baptist Church for advice. The Church wanted its own university, and in 1892, the University of Chicago opened. The university was Rockefeller's first major philanthropic creation, and he gave it over $80 million during his lifetime. Rockefeller chose New York City for his Rockefeller Institute of Medical Research (now Rockefeller University), chartered in 1901. In 1902 he established the General Education Board.

The total of Rockefeller's lifetime philanthropies has been estimated at about $550 million. Eventually the amounts involved became so huge (his fortune reached $900 million by 1913) that he developed a staff of specialists to help him. Out of this came the Rockefeller Foundation, chartered in 1913, "to promote the well-being of mankind throughout the world." He died on May 23, 1937, in Ormond, Florida.

Rockefeller's personal life was fairly simple. He was a man of few passions who lived for his work, and his great talent was his organizing genius and drive for order, pursued with great single-mindedness and concentration. His life was absorbed by business and family (wife Laura and four children), and later by organized giving. He created order, efficiency, and planning with extraordinary success and sweeping vision.

For More Information

Chernow, Ron. Titan: The Life of John D. Rockefeller, Sr. New York: Random House, 1998.

Coffey, Ellen Greenman. John D. Rockefeller, Empire Builder. Englewood Cliffs, NJ: Silver Burdett, 1989.

Harr, John Ensor, and Peter J. Johnson. The Rockefeller Century. New York: Scribner, 1988.

Harr, John Ensor, and Peter J. Johnson. The Rockefeller Conscience: An American Family in Public and in Private. New York: Scribner, 1991.

Nevins, Allan. Study in Power: John D. Rockefeller, Industrialist and Philanthropist. Norwalk, CT: Easton Press, 1989.

Segall, Grant. John D. Rockefeller: Anointed With Oil. New York: Oxford University Press, 2001.

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Who Was John D. Rockefeller?

Standard Oil founder Rockefeller was one of the greatest Wall Street magnates

Billionaire John D. Rockefeller (July 8, 1839 to May 23, 1937) continues to rank as one of the richest men in modern times. He rose from modest beginnings to become the founder of Standard Oil in 1870 and ruthlessly set about destroying his competitors to create a monopoly of the oil industry . He branched out to ancillary businesses such as iron, steel, and copper—but also railroads, general stores, and newspapers. His quest for total control ran afoul of the U.S. government, which passed the Sherman Antitrust Act in 1890 to break up Standard Oil, sparking a running battle that the government finally won in 1911.

Rockefeller retired in 1896, leaving his only son to run his company, and pursued a second career as a philanthropist, donating hundreds of millions of dollars to worthy causes. His hard-edged public persona was softened by his practice of handing out dimes to children. Dying just six-and-a-half weeks before his 98th birthday, Rockefeller remains one of the great figures of Wall Street—reviled as a villain, applauded as an innovator and a benefactor, and universally recognized as one of the most powerful men in history.

Investopedia / Lara Antal

Rockefeller’s father, William Avery Rockefeller, led a nomadic life as a snake-oil salesman who called himself a physician, while his mother raised their six children. After his family eventually took root in Strongsville, Ohio, a suburb of Cleveland, Rockefeller dropped out of high school and found work as a commission house clerk at the age of 16. He left that position in order to form a business partnership with oil driller Maurice Clark and built his first oil refinery in Cleveland in 1863. Rockefeller and Clark would in 1870 become Rockefeller, Andrews, and Flagler, a company that focused on oil refineries rather than drilling.

In 1864 he married Laura Celestia “Cettie” Spelman (1839 to 1915), who would bear him four daughters (one of whom died at the age of 13 months) and one son, John D. Rockefeller Jr., who would eventually follow in his father’s footsteps and take over his business.

Strategic focus

In 1870 Rockefeller, Andrews, and Flagler incorporated into Standard Oil, which in a mere two years controlled all the oil refineries in Cleveland. Rockefeller keenly understood ways of managing risk . While he knew oil speculators could potentially reap huge profits if they hit a deposit, he also knew that they faced substantial financial loss if they failed in that effort. For this reason, he strategically narrowed his focus to the refining business, where profits were smaller but more stable.

An innovative trust

In 1881, Standard Oil was placed under the control of a nine-trustee board, with Rockefeller at its head. He and his partners innovated this first-of-its-kind trust, wherein they swapped their individual holdings for shares in the trust. Rockefeller now wielded centralized control and veto power on all of the corporate boards within his conglomerate . The immediate benefits included even lower costs, lower kerosene prices, and standardization across the industry. Rockefeller’s company now had the assets and wherewithal to build or acquire pipelines and other infrastructure on a scale that was previously unthinkable.

Research and development

Standard Oil employed chemists who developed ways of increasing the types and quality of combustible fuels and created methods of converting waste into usable substances. This meant that the petroleum coming out of the ground was refined into various products, such as diesel fuel, varnish, Vaseline, and toothpaste.

As these new products became cheaper to produce, the company increased its global economy of scale . Also, through robust research and development , Rockefeller discovered ways to exploit the traditionally discarded oil byproducts by using them to create lubricating oils, petroleum jellies, paraffin wax, and other useful items.

Eventual diversification

Standard Oil had a hand in many ancillary industries, such as railroads, shipping, gas, iron, copper, steel, and banks and trust companies. It also grew its presence in more unexpected areas, such as general stores. Rockefeller forced shops to carry his kerosene alone by supplying the stores that only sold Standard Oil kerosene with meat, sugar, and other products at artificially low prices, thereby driving shop owners who sold other kerosene brands out of business. Standard Oil likewise planted stories in newspapers to promote its version of events.

Creating a monopoly

Rockefeller saw the cutthroat competition in the oil industry as a ruinous influence and began methodically stamping it out. He used major profits to buy out competitors, starting in a six-week period in 1872 known as “the Cleveland Massacre,” when he acquired 22 of 26 rival refineries at very low prices. In addition to wielding his large cash reserves, Rockefeller struck a secret deal with the three major railroads serving Cleveland known as “the South Improvement Company.”

Standard Oil agreed to divide its oil shipments among the railroads into negotiated amounts in return for the railroads charging exorbitant rates to its competitors. The company would not only receive rebates on the cost of transporting its oil; it would also get a cut of the money generated by the high rates charged to its competitors. News of the agreement leaked and panic ensued, with the rival companies fearing bankruptcy and selling to Rockefeller to avoid total ruin. Due to a hue and cry, the agreement was dissolved without ever actually being implemented.

In the ensuing years, Rockefeller’s offers to purchase competitors were usually readily accepted, though he also had ways of persuading holdouts, which included the following measures:

• Buying up all the oil barrels to cause a shortage that crippled smaller companies
• Buying up land to prevent other companies from building pipelines
• Orchestrating price wars between wholly owned subsidiaries, forcing holdouts to sell at losses
• Secretly bribing legislators
• Limiting the number of trains available for shipment by leveraging his close relationship with the railroad companies
• Purchasing all of the equipment and the equipment suppliers, then refusing to sell replacement parts to holdouts

By 1882, Standard Oil had a near-monopoly of the oil business in the United States.

Losing a monopoly

The government took issue with Standard Oil's near-total monopoly and passed the Sherman Antitrust Act in 1890 to break it up. In response, Standard Oil’s legal team quickly converted the trust into a holding company , which functioned like a trust but was outside of a trust's legal definition. The government adjusted its legislative attack accordingly and broke up the holding company in 1911, again through a Supreme Court ruling.

Standard Oil was carved up into smaller but still sizable chunks under the government’s supervision. Although their names have changed over the years, Chevron ( CVX ), Exxon Mobil ( XOM ), and ConocoPhillips ( COP ), among others, all share a Standard Oil pedigree. These companies had the advantage of Standard Oil’s research and development and infrastructure, so they easily made the transition to gasoline producers when kerosene sales dropped as a result of Edison’s invention of the electric light bulb.

A devout Baptist, Rockefeller believed that God had blessed him with the ability to make money and saw no contradiction between his ruthless business methods and his faith. Indeed, he thought the division of the world into rich and poor was part of God’s plan. Or, in his own words, “It has seemed as if I was favored and got increase because the Lord knew that I was going to turn around and give it back.”

And that he certainly did. Rockefeller channeled his energies toward philanthropic causes after retiring in 1896, donating hundreds of millions of dollars during the latter years of his life. He was also known for the practice of carrying nickels and dimes on his person and distributing them to children. With his son’s help, he created the Rockefeller Foundation in 1913 to carry on his work after he was gone. When he died in 1937, his assets equaled 1.5% of the total U.S. economic output for that year (in comparison, in 2018, Bill Gates’ wealth was 0.45% of the gross domestic product for that year).

Certainly one of Rockefeller’s main legacies is federal antitrust legislation, as well as laws strengthening unions. During his lifetime (and after), many people understandably faulted Rockefeller for the radical means through which he cultivated his fortune. Still, his business practices and charities have benefited millions of people. The Rockefeller Foundation continues today to follow its stated mission to “promote the well-being of humanity throughout the world.” In addition, he established the University of Chicago and the Rockefeller University (originally the Rockefeller Institute for Medical Research).

His legacy also lived on through his offspring. John D. Rockefeller Jr. built the famous art deco Rockefeller Center in Manhattan, which continues to house business offices to this day, as well as popular enterprises such as Radio City Music Hall and the Rockettes, the Rainbow Room, an open-air skating rink, a famous annual towering Christmas tree, and the television studios for Saturday Night Live and The Tonight Show . Rockefeller’s grandson Nelson Aldrich Rockefeller served as a four-term Republican governor of New York State and as the 41st vice president of the United States under President Gerald Ford, in addition to running for the Republican presidential nomination three times.

John D. Rockefeller was born into modest circumstances in 1839, the son of an itinerant snake-oil salesman who called himself a physician and his highly religious and disciplined wife, who raised him in the Baptist Church. The family eventually settled in the suburbs of Cleveland, Ohio, where John dropped out of high school and got his first job, working as a bookkeeper, at age 16. His first business trafficked in hay, grain, meats, and other goods; he then chose to go into the oil business due to the expansion of oil production in western Pennsylvania in the early 1860s.

Rockefeller, along with his associates Samuel Andrews and Henry M. Flagler, founded Standard Oil in 1870. Within two years, the company had a monopoly on the refinement of oil in the Cleveland area. In 1881, the company was reorganized as a first-of-its-kind trust, allowing it to quickly expand by either building or buying up oil pipelines and other infrastructure. By 1882, it had a virtual monopoly on the oil business in the U.S.

The federal government disapproved of the situation, and Congress passed the Sherman Antitrust Act in 1890 to break up Standard Oil. A running battle ensued, which the government finally won in a Supreme Court ruling in 1911. Thus, Standard Oil essentially existed as a national monopoly for 19 years.

Rockefeller retired from business in 1896 and devoted his life to philanthropy. He donated hundreds of millions of dollars to charity during his lifetime and, along with his son, John Jr., set up the Rockefeller Foundation to continue that work after his death, which it still does. He founded the University of Chicago and the Rockefeller University . However, Rockefeller and Standard Oil Company were also responsible for antitrust legislation and laws strengthening unions, though not of their own volition.

Billionaire John D. Rockefeller was both admired and loathed, but there is no getting around the fact of his importance as both the principal founder of the Standard Oil monopoly and a world-class philanthropist. His legacy continues today thanks to the work of the Rockefeller Foundation, as well as ongoing institutions he founded such as the University of Chicago and the Rockefeller University (originally known as the Rockefeller Institute for Medical Research). A ruthless businessman who gave his competitors no quarter, he still ranks as one of the richest men of the modern world, a great figure of Wall Street, and one of the most powerful men in history.

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Case Western Reserve University. " Encyclopedia of Cleveland History, Rockefeller, John D ."

The University of Michigan Law School Scholarship Repository. " XIV. Standard Oil Trust Agreement ," Pages 177-180.

Constitutional Rights Foundation. " BRIA 16 2 b Rockefeller and the Standard Oil Monopoly ."

Matthieu Auzanneau. " Oil, Power, and War, A Dark History ," Pages 35-38. Chelsea Green Publishing, 2018.

Ida Minerva Tarbell. " The History of the Standard Oil Company, Volume 1 ," Page vii. Harvard University, 1904.

Ron Chernow. " Titan, The Life of John D. Rockefeller, Sr. ," Pages 208, 254. Knopf Doubleday Publishing Group, 2007.

Matthieu Auzanneau. " Oil, Power, and War, A Dark History ," Pages 27-29. Chelsea Green Publishing, 2018.

Matthieu Auzanneau. " Oil, Power, and War, A Dark History ," Page 51. Chelsea Green Publishing, 2018.

The Office of Law Revision Counsel, United States Code. "Fifty-First Congress, Sess. 1, CHS. 646, 647. 1890 ."

Matthieu Auzanneau. " Oil, Power, and War, A Dark History ," Pages 72-73, 79-80. Chelsea Green Publishing, 2018.

Daniel Yergin. " The Prize, The Epic Quest for Oil, Money & Power ," Pages 62-23, 94. Free Press, 2011.

Ron Chernow. " Titan, The Life of John D. Rockefeller, Sr. ," Pages 54-55. Knopf Doubleday Publishing Group, 2007.

Public Broadcasting Service. " Biography: John D. Rockefeller, Senior ."

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The Rockefeller University. " Our History ."

The University of Chicago. " Building for a Long Future, The University of Chicago and Its Donors, 1889-1930: John D. Rockefeller ."

Rockefeller Center. " History in the Making ."

National Governors Association. " Gov. Nelson Aldrich Rockefeller ."

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ROCKEFELLER, JOHN D.

ROCKEFELLER, JOHN D. (8 July 1839-23 May 1937), industrialist and philanthropist, rose from his position as an assistant bookkeeper for a Cleveland commission merchant to become one of the wealthiest men in the U.S. through his efforts in developing the STANDARD OIL CO . Born on a farm near Richford, NY. Rockefeller was the son of Wm. A. and Eliza Davison Rockefeller. He came to the Cleveland area with his family in 1853, settling in STRONGSVILLE . Boarding in Cleveland, he attended CENTRAL HIGH SCHOOL from 1853-55. After additional courses at a business college, he became assistant bookkeeper for commission merchants Henry B. Tuttle and Isaac L. Hewitt in Sept. 1855. In Mar. 1859, Rockefeller and Maurice B. Clark established their own commission business, which prospered during the CIVIL WAR .

In 1863, Rockefeller entered the oil business, and in 1865 left the commission business to work full-time in oil. He organized Standard Oil Co. as its largest stockholder in 1870, directing the company until he retired in 1896, but retaining the title of president until 1911. By 1880, Rockefeller was worth about $18 million. He was also involved in other business ventures, holding stock in the Cleveland Arcade Co., and in 1905 building the ROCKEFELLER BLDG . Rockefeller's business dealings necessitated increasingly more time in New York; he bought a home there in 1884 and eventually made that his legal residence. Nevertheless he maintained 2 homes in Cleveland and continued to summer at FOREST HILL until a tax dispute with local officials in 1913. His summer stays were usually short enough for him to avoid becoming liable for taxes, but his wife's illness had forced the Rockefellers to extend their stay in 1912. When the Rockefellers remained at Forest Hill past the February 1, 1913, tax deadline, county officials assessed Rockefeller with a tax bill of $1.5 million, which Rockefeller refused to pay. During the dispute, Rockefeller was under a subpoena that prevented him from entering Ohio. After the dispute was resolved, Rockefeller continued his support Cleveland-area institutions, but never returned to Forest Hill.

Rockefeller's charity, as well as business, began in Cleveland. In 1856 he donated $19.31 to local charities; his donations grew to $250,000 in 1887 and $1.35 million in 1892. Many institutions to which he belonged received donations, including Erie St. Baptist Church (later EUCLID AVE. BAPTIST CHURCH ), the WESTERN RESERVE HISTORICAL SOCIETY , EARLY SETTLERS ASSOC. , and YMCA . Rockefeller also supported the Ragged School (later Industrial School and CHILDREN'S AID SOCIETY ), BETHEL UNION , the WOMAN'S CHRISTIAN TEMPERANCE UNION , ALTA HOUSE , THE VISITING NURSE ASSOC. OF CLEVELAND , the DORCAS Invalids' Home, and Children's Fresh Air Camp. He donated more than $865,000 worth of land to the city for use as PARKS . Rockefeller established several organizations to handle his giving: the Rockefeller Institute for Medical Research (1901), the General Education Board (1902), the Rockefeller Foundation (1913), and the Laura Spelman Rockefeller Memorial (1918).

Rockefeller married Laura Celestia Spelman in 1864. They had four children: John D., Elizabeth, Edith, and Alta. Rockefeller died in Ormond Beach, Florida. He is buried in LAKE VIEW CEMETERY .

View more on Cleveland Historical

Chernow, Ron. Titan: The Life of John D. Rockefeller, Sr. (1998).

Izant, Grace Goulder. John D. Rockefeller (1972).

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John D. Rockefeller (1839-1937)

John D. Rockefeller was born in upstate New York on a farm not far from Binghamton in the southern tier, a landscape of hills that he dearly loved. He was a descendant of Johann Peter Rockefeller, who arrived in North America from the German Palatinate in 1723. JDR’s father, William Avery Rockefeller, was a trader dealing in such commodities as salt and timber. He married Eliza Davison in 1830, and John Davison Rockefeller was the couple’s second child and eldest son.

By the time he was a teenager, JDR had moved with his family to Cleveland, Ohio, where he was baptized at Erie Street Baptist Church. He began in business at the age of sixteen as a clerk accountant for two Cleveland wholesale and shipping merchants. In 1858, JDR and a partner began their own company, and by 1863 Rockefeller entered the oil refinery business. Petroleum had been discovered in Pennsylvania only four years earlier, and Cleveland, one of the early centers of oil refining, was on the brink of vast industrial expansion. In March 1864, Rockefeller married Laura Spelman, a young Cleveland woman with a strong political and religious background; her parents were staunch abolitionists and active in the Underground Railroad. In 1884, Spelman Seminary in Atlanta, for African American women, was named in honor of her parents; JDR provided substantial financial support to the institution.

By 1870, when Rockefeller and his partners incorporated themselves as the Standard Oil Company, their refinery was producing more than fifteen hundred barrels of kerosene a day, destined for street and indoor lamps all over the country. Even before the gasoline engine opened up a completely new and almost limitless demand for refined petroleum, Standard Oil and its competitors supplied a huge market. At the end of the decade, Standard Oil had bought out or merged with twenty-two of its twenty-five Cleveland competitors, and it produced 33 million of the 36 million barrels of oil then produced in the United States.

By 1884, when JDR moved to New York City, Standard Oil was well on its way to becoming one of the largest corporations of its day, and he was soon to become one of the wealthiest men in the world. Throughout, he remained a deeply religious man, worshipping all his life within the Baptist faith in which he had been reared. His mother, whose favorite motto was “willful waste makes woeful want,” instilled in her son a veneration for work and a profound sense of charitable obligation.

Charity was an essential part of JDR’s life from his youth; a strong religious impulse underlay and always informed his giving. Even when the affairs of Standard Oil demanded nearly his full attention, JDR spent more and more time on philanthropy. By his death in 1937 at the age of ninety-seven, he had given over half his fortune to various philanthropic programs, among them the University of Chicago (which he principally funded) and the Rockefeller Institute for Medical Research, now Rockefeller University (founded in 1901 in New York City). The institute’s program of attacking the most serious diseases of mankind gave JDR his first experience funding directly the long-term work of academically trained scientists and physicians. In 1913, Senior set up his greatest philanthropic endeavor, the Rockefeller Foundation, “to promote the well-being and to advance the civilization of the peoples of the United States…and of foreign lands in the acquisition and dissemination of knowledge, in the prevention and relief of human suffering, and in the promotion of any and all the elements of human progress.” Today, with an endowment in excess of $2 billion, The Rockefeller Foundation remains one of the ten largest foundations in the United States.

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