By Larry Holzwarth
John D. Rockefeller, whose name remains synonymous with money, was the wealthiest American in history, and one of the richest men of all time. Adjusted for inflation, his fortune at the time of his death in 1937 was about $409 billion, roughly 2% of the total economy of the United States. That doesn’t take into account the vast fortunes he gave away, which included founding the University of Chicago and establishing the Rockefeller Foundation. A deeply religious man throughout his life, a trait he inherited from his mother, he was the son of a grifter who eventually built the Standard Oil Company into one of the most powerful businesses in history. Here is just part of his story, in forty facts.
1. His father was a con man and a philanderer of note
John Rockefeller was born in Richford, New York, the son of a man known throughout the community and its environs as a con whom they called “Devil Bill”. Bill was an infrequent presence in the family home, preferring life on the road, which he claimed was an essential part of his job as a lumber salesman, later a marketer of patent medicines. He had other children out of wedlock in addition to those with his wife Eliza. John was the second of six children who were raised in the family home. Bill was known to cheat his sons out of the money they made through chores and odd jobs, claiming that he did so as part of their education in business matters.
2. John’s mother was a devout Baptist who held the family together
Bill’s less than savory business practices and the belief that there were better opportunities on the other side of the hill led the family to move several times in John’s youth, eventually settling in Strongsville, Ohio. John was educated at a Cleveland high school followed by a ten-week business class where he learned the rudiments of bookkeeping, giving him an opportunity for gainful employment. Though he shaped his studies towards business, he had a passion for music, which he considered as a career at one stage. He also gained the reputation as a formidable foe in the debate, with a gift for expressing his opinions and beliefs with clarity and exactness. From his mother, he inherited a religious fervor (Baptist) which remained part of his character for the remainder of his life.
3. John Rockefeller’s first job was as a bookkeeper for a produce company
Although John had held odd jobs as a boy, such as selling turkeys and vegetables to townsfolk, his first full-time employment was as a bookkeeper for a company brokering produce. John rapidly developed a skill that would serve him well throughout his career – the ability to reduce the cost of shipping products to markets, enhancing profits. He learned to negotiate shipping costs previously believed to be fixed by ship owners and freight managers, and through the use of rebates with preferred shippers, he developed long term business relationships which remained relatively free of the influence of changing market conditions. He worked as an apprentice, for a period of three years, the last of which saw him compensated at the rate of $58 per month.
4. In 1859 Rockefeller entered into his first business partnership
After three years as an apprentice, Rockefeller and business partner Maurice Clark started their own product selling business, buying and selling from farmers on a commission basis. Rockefeller lacked sufficient cash to buy half the business, needing $2,000 for the deal and having been able to save only $800 during his apprenticeship. The rest came in the form of a loan from his father, at a rate of interest of 10%. The start of the business was timely when the Civil War erupted in 1861 Rockefeller and Clark joined in the rush of contractors sending their products to the Union Army. Rockefeller was drafted to serve in the Army, a problem he resolved through hiring substitutes to serve in his stead, and as the war drew towards a close began to consider investing his sizable profits in the business of refining crude oil for kerosene, the main means of lighting at the time.
5. Rockefeller entered the oil business at the precisely right time
During the 1860s, government subsidies drove the price of oil to over $13 per barrel, up from 35 cents when the war began. The price the government paid for oil led to the first wave of wildcatters drilling oil wells, and by the end of the war, oil glutted the markets. Prior to the Civil War, most kerosene was extracted from coal (coal oil) and it was soon evident that crude oil could be a cheaper source of kerosene. At the same time, the establishment of a refinery was relatively inexpensive, as were the costs of operating one. Rockefeller observed that the most expensive cost of refining crude oil was shipping it to the refinery, and then shipping the finished kerosene to market. Shipping was an area in which he was already expert at managing costs.
6. Rockefeller and Clark exited the produce business in 1863
While the Civil War was at its height, and profitability from shipping food to the armies was peaking, Rockefeller and Clark left the produce business and built an oil refinery in an area of Cleveland known as “The Flats”. With them were additional partners, including two of Clark’s brothers and a chemist, Samuel Andrews. The refinery was wholly owned by the partnership. With the help of the chemist, the partners learned how to keep the gasoline which was a byproduct of the refining process (and which most refiners simply burned off) and use it to provide operating power for the plant. The remaining leftovers, again discarded for the most part by competitors, were manufactured into other petroleum products such as paraffin and lubricating oils.
7. Rockefeller exhibited the thrift he learned from his mother
During his childhood, when his usually absent father left behind hungry children his mother was forced to feed, Rockefeller learned the value of thrift. Nothing was wasted in the house in which he grew up, even table scraps were recycled as fertilizer in the family gardens. Rockefeller applied the same principle to the refining business, with all potential products from crude oil prepared and sold. Tar from sludge was sold to paving and roofing suppliers. When Rockefeller saw the price of wooden barrels go up, he cut off his suppliers, purchased raw lumber, and hired coopers to build his own, reducing costs from more than two dollars per barrel to less than one. Rather than hiring third party pipefitters and plumbers, Rockefeller included them in his own labor force, paying them an hourly wage rather than a set fee for a particular job.
8. Before the Civil War ended Rockefeller owned the company himself
In February 1865 Rockefeller, certain that the market for whale oil for lighting would never recover after the war ended, bought out his partners (though he retained chemist Andrews). Abraham Lincoln had been a proponent of the Transcontinental Railroad, and Rockefeller was certain that the cross-country line, as well as the railroads of the South, would be built following the war. A boom in oil-based products was forthcoming, and John D. positioned himself, through stock manipulation, borrowing money at low rates of interest and maximizing his profits, to be a leader in the oil-based economy which was certain to follow the war. Coal was still the primary source of fuel to create steam, which was the engine that drove the economy. Rockefeller foresaw coal being supplanted by oil, and he was determined to be ready.
9. Rockefeller entered into additional partnerships in the 1860s
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Immediately following the Civil War Rockefeller joined with his brother William in a partnership that built a second refinery in Cleveland. In 1867 Henry Flagler joined the partnership and the refineries operated as the Rockefeller, Andrews, and Flagler Company. By 1868 the two Cleveland refineries and a subsidiary in New York made the partnership the world’s largest oil refining business. The company was noted for its profits per barrel, which consistently outpaced those of its competitors, despite its main consumer product – kerosene for lighting – being sold for less than average on the market. Rockefeller’s thrift ensured that the refineries operated at a substantial profit, with little waste product discarded as a result of the refining process.