From a young age, Rockefeller discovered that money well spent generates capital and insisted on looking for his own opportunity. Discipline, organization and lots of energy were some of the traits of the man who became one of the most powerful in the world, someone for whom making money was a natural talent.
John D. Rockefeller was an American industrialist, born in Richford (New York), on July 8, 1839. He attended several public schools in Cleveland (Ohio). At 16, he got a position as a librarian in Cleveland.
In 1862 he partnered with Samuel Andrews, inventor of a revolutionary process for refining crude oil. After a rapid expansion process, the company was absorbed in 1870 by the Standard Oil Company, founded by Rockefeller, his brother William and several others.
In early 1872, Rockefeller helped create the South Improvement Company, a partnership that included the Cleveland’s main oil refineries, making deals with railway companies to obtain large discounts for members of the association. These agreements were legally annulled three months later thanks to popular protests, but by then almost all of Rockefeller’s competitors had been forced to sell or to associate with him. In 1878 Rockefeller controlled 90% of the oil refineries in the United States and soon he had a monopoly of distribution channels.
In 1882 Rockefeller created the Standard Oil Trust, -the world’s first-, which was declared as an illegal monopoly and forced to dissolve by the Supreme Court of Ohio in 1892, but did not do so until 1899. That year, Rockefeller established the Standard Oil company in New Jersey, and became its president until his retirement in 1911. That same year the company was divided into several corporations by order of the Supreme Court of the United States.
It is estimated that Rockefeller’s personal fortune reached $1,000 million. His philanthropic contributions totaled 550 million. Of these, 80% went to four charitable organizations created by Rockefeller: the Rockefeller Foundation, the General Education Board, the Rockefeller Institute for Medical Research (now the Rockefeller University) and the Laura Spelman Rockefeller Memorial, created in 1918 and absorbed by the Rockefeller Foundation in 1929. Rockefeller died on May 23, 1937 in Ormond Beach, Florida.
A curious fact
Since a very young age, John D. Rockefeller expressed his talent for financial transactions. Installed with his family in Cleveland, around 1853, he sold stones of different colors and shapes to his schoolmates, and the little money he made from these sales would be kept inside a blue faience bowl, his “first safe” in his own words. It was not long until he made his first $50, which would determine the boy’s future direction.
A nearby farmer needed precisely that amount to pay an urgent debt. John lent him the money with a 7% interest rate. After a year, he discovered that the loaned capital returned to his pocket with $31.02 of interest. From that day on, as he’d recall later, he would “make the money work” for him.
From then on all of his earnings would be carefully recorded in a book he called “Ledger A”. John D. was born in a farm west of New York in 1839. His father, William Avery, was not precisely a marital fidelity role model or a good example for his six children. Away from the family for long periods, when he returned his pockets were usually full of money and he would unfailingly return laden with gifts for his wife and children. Much later, John discovered that his father was nothing but an impostor, visiting Indian reservations and selling its inhabitants all kinds of worthless objects. His next strategy was much more profitable: pharmaceuticals, which he would sell as a miraculous cure for cancer. From his mother, Eliza, John inherited not only some of her physical features, but also a strict Calvinist morality. His innate taste for business was encouraged by the Cleveland Central High School, from where he graduated at age 16. That same year he got his first job at a brokerage and grain merchants firm, where he worked happily without keeping track of time, lost in that sea of numbers that he found fascinating. At night, in bed, he would mentally review the financial operations of the day, trying to discover how he could have increased the profits.
Strength and timing
The outbreak of the Civil War in 1861 was the key to his fortune. Two years earlier, with the drilling of the first oil well, he realized that he could make his fortune grow with transportation and refining than with exploitation. In 1863 he knew the time was right. He was 23 and invested $4000 as a limited partner in the new firm Clark, Andrews & Co. Refineries were booming in Cleveland and his enthusiasm for “black gold” made him abandon the grain trade. His partner Clark refused to the expansion of the firm, so they decided to auction the company. On February 2nd, 1865, bets rose quickly and Clark, dejected, offered $72,000. Rockefeller, unruffled, offered $ 72,500 and kept the company. The business, which would be called Rockefeller and Andrews since then, was Cleveland’s largest refinery, with a capacity of 500 barrels per day and earnings of one million dollars per year, which would double the following year. Thus he was able to negotiate preferential rates with the railroad company, and that discount was essential to found, in 1870, a new company, with $1 million in capital: The Standard Oil.