John Davison 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 became a librarian in Cleveland. He is the patriarch of the Rockefeller family, which to this day is still powerful and one of the wealthiest ones in the world.
In 1862 he partnered with Samuel Andrews, inventor of a revolutionary process for refining crude oil. After a rapid expansion, the company was taken over 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 major oil refiners of Cleveland, reaching agreements with railway companies to obtain large discounts for members of the association. This agreement was annulled legally three months later, over the protests of the people, but by then almost all of the competitors of Rockefeller had been forced to sell or to associate with him. In 1878, Rockefeller controlled 90% of the oil refineries in the US and soon after had a monopoly of distribution channels.
In 1882, Rockefeller created the Standard Oil Trust, which was the first trust in the world, deemed as an illegal monopoly and forced to disband by the Supreme Court of Ohio in 1892 but, in fact, it was not dissolved 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 Superior Court of the United States.
It is estimated that Rockefeller’s personal fortune came to reach $1 billion. 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 Rockefeller University) and the Laura Spelman Rockefeller Memorial, created in 1918 and absorbed by the Rockefeller Foundation in 1929.
Rockefeller was a descendant of German-Jews who immigrated to the United States in 1733. During his modest beginnings as an accountant of the firm Hewitt and Tuttle, young John Davison began writing a sort of economic journal which he entitled “Ledger A”. That curious record, which is currently still preserved, and annotations contained in his autobiographical book “Random Reminiscences of Men and Events”, offer a masterly sketch of his personality.
From a young age, John D. Rockefeller displayed a talent for financial transactions. With his family in Cleveland, around 1853, he sold stones of different colors and shapes to his schoolmates and the income accrued from these sales was kept in a bowl of blue faience, his first “safe”. It was not long before he earned $50, which would determine the future direction of the boy.
A nearby farmer needed precisely that amount to pay an urgent debt. John lent him the money with an interest rate of 7% After a year, he discovered that the loaned capital returned to his pocket with about $31 of interests. From that day on, he decided to make the money “work for him”.
From then on all of his earnings would be religiously recorded in the “Ledger A”.
His father, William Avery, was not an example of marital fidelity nor a role model for his six children. He’d be away from the family for long periods, and when he returned his pockets were usually full of money and he’d unfailingly return laden with gifts for his wife and their children. Much later, John discovered that his father was nothing but an impostor, visiting Indian reservations and selling its inhabitants all kinds of useless objects. His next business was much more profitable: pharmaceuticals, which he sold as a cure for cancer. From his mother, Eliza, John inherited not only the looks but also her strict Calvinist morality. At age 16 he got his first job at a brokerage and grain merchants firm, where he worked without looking at the clock, lost in that sea of figures that had him so fascinated. At night, in bed, he would mentally review the financial operations of the day, trying to discover the ways in which he could have earned higher profits.
The code of his life
Discipline, order and a faithful record of debit and credit was since the code of his life. The outbreak of the Civil War in 1861 was key to his fortune. Two years earlier, with the drilling of the first oil well, he realized that he could make a greater fortune with transportation and refining than exploitation. When in 1863 the railway company extended its line to Cleveland, putting the city in direct contact with New York through the oil region, he knew it was time. He was 23 years old and invested $4000 as a limited partner in the new firm Clark, Andrews & Co. Refineries emerged in Cleveland and enthusiasm for the black gold made him leave the grain trade. His partner Clark rejected the expansion of the firm, so they decided to auction the company. In February 1865 Rockefeller kept the company. The business, which would henceforth be called Rockefeller and Andrews, 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, and that discount was essential to found, in 1870, a new company, with $1 million in capital: The Standard Oil.
An empire is born
In 1870, it was one of the largest refineries in the central United States. In 1872, along with two of the largest refiners of Pittsburgh and Philadelphia, they could handle at their will the rates with the railways. In three months, Rockefeller had bought 22 of the 25 refineries in Cleveland. Standard Oil refined a quarter of all oil production in the country. Step by step they’d eliminate their competitors, and Standard Oil became a powerful trust, which refined 95% of the country’s total capacity. His management team was formed by a group of the most experienced financiers of the country. All of them were millionaires. For Rockefeller, the staff had always been an important ingredient; so he elected the most capable and enthusiastic ones.
Rockefeller died on May 23, 1937, in Ormond Beach, Florida.