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date: 21 November 2019

Rockefeller, John D.free

(08 July 1839–23 May 1937)
  • Kenneth W. Rose

John D. Rockefeller

Photograph by Arnold Genthe, 1918.

Courtesy of the Library of Congress (LC-G4085- 0398 P&P).

Rockefeller, John D. (08 July 1839–23 May 1937), industrialist and philanthropist, was born John Davison Rockefeller in Richford, New York, the son of William Avery Rockefeller and Eliza Davison. The family moved several times during his youth: to Moravia in 1843, to Owego in 1850, and to Ohio in 1853, settling in Strongsville, then in Parma in 1855, and finally in Cleveland. His father, an itinerant businessman, dealt in horses, lumber, salt, patent medicines, and herbal remedies and often lent money at profitable rates of interest. He gave his son practical training in business, but the father’s frequent, long absences burdened young Rockefeller with larger responsibilities within the family and helped foster a close relationship with his mother, a devout Baptist whose emphasis on proper moral conduct, discipline, thrift, and hard work would remain with her son.

Rockefeller’s formal education began at what he later called a “good country school” in Owego, followed by the Owego Academy in 1852. During 1853–1855 he boarded in Cleveland and attended Central High School. After taking a series of business courses at Folsom’s Commercial College in Cleveland, followed by a six-week job search, Rockefeller began his business career on 26 September 1855 as a clerk and bookkeeper in the wholesale produce commission house of Isaac L. Hewitt and Henry B. Tuttle. In the spring of 1859, unhappy with his salary, Rockefeller resigned and, with a $1,000 loan from his father at 10 percent interest, formed a partnership with Maurice B. Clark to establish their own commission house. Clark & Rockefeller was profitable from the beginning and flourished during the Civil War.

Rockefeller was an earnest, disciplined, and ambitious young businessman in a growing city, and his pious upbringing provided a source of both strength and self-doubt. He used aphorisms to remind himself to follow the road of proper conduct. “Keep your own accounts. Speak evil of no man,” he wrote on the front of an account book in January 1857. He later recalled holding nightly “intimate conversations” with himself, cautioning against the sins of greed, pride, and overambition. “I was afraid I could not stand my prosperity,” he wrote later in Random Reminiscences, “and tried to teach myself not to get puffed up with any foolish notions.” The Baptist church also helped fortify his faith and moral discipline. Baptized at the Erie Street Baptist Church in Cleveland in 1854, he took an active role in the leadership of the church.

Rockefeller’s partner in church affairs was Laura Celestia Spelman, a former teacher in the Cleveland schools whom he married in 1864. The couple had three daughters and a son. Although he struck many of his business acquaintances as quiet, cold, and reserved, Rockefeller exhibited a patient, warm, and sociable personality at home and among friends. His recreations included driving and racing his horses, winter sleighing, ice skating, and later, bicycling.

In 1863 Rockefeller and Clark entered the oil-refining business in partnership with Samuel Andrews, an acquaintance of Clark’s who was an expert in refining crude oil into illuminating oil. Andrews managed the technical operations while Rockefeller and Clark handled the firm’s business affairs. By 1865 Andrews, Clark & Company had the largest refinery in Cleveland, but tensions had arisen over Rockefeller’s plans to expand the business. This would not be the only time in his career that his expansive plans for the business—and the borrowing and risk they entailed—put him at odds with more cautious colleagues. In February 1865 Rockefeller bought out Clark’s interest for $72,500, and he and Andrews continued the business as Rockefeller & Andrews. He and Clark soon dissolved their commission merchant partnership as well, and Rockefeller entered the oil industry full time. Rockefeller’s buyout of Clark represented “the beginning of the modern oil industry,” according to industry historian Daniel Yergin (p. 35), for it began a process that ultimately brought order to the chaotic industry in the form of the Standard Oil Company.

Rockefeller proceeded with his plans for expanding the business, building a second refinery and in 1866 organizing a company in New York, managed by his brother William Rockefeller, to handle both the eastern trade and the export of kerosene. The company was reorganized in 1867 as Rockefeller, Andrews & Flagler after Henry M. Flagler and Stephen V. Harkness invested in it. Harkness remained a silent partner, but Flagler and Rockefeller developed a close personal friendship and a strong working relationship. Between 1867 and 1870, as increasing crude production drove down oil prices and as the railroads engaged in periodic rate wars, Flagler negotiated with the competing railroads to secure lower freight rates for his firm. He used the greater efficiency and capacity of his firm’s refineries to guarantee a volume of freight that other refiners could not match. These lower rates helped mitigate against the advantages enjoyed by refiners in other areas who were closer to either the sources of crude oil or the markets for refined oil. Although such discounts and rebates were common in the railroad industry, many of Rockefeller and Flagler’s competitors viewed the preferential rates as an unfair advantage.

To attract new capital for further expansion, the partnership was reorganized in January 1870 as the Standard Oil Company, a joint stock corporation with Rockefeller, the largest stockholder, as president. Worried about the overproduction of crude oil, excess refining capacity, and falling prices, Rockefeller began to develop a plan to bring order to the volatile industry. He envisioned a cooperative alliance of refiners, with a strong Standard Oil at the nucleus of the organization; such a combination of refiners, he believed, could effectively coordinate the industry to the mutual benefit of refiners, producers, and railroads. In January 1872 the capitalization of the Standard was increased from $1 million to $2.5 million as Rockefeller and Flagler began to acquire other Cleveland companies and implement their plan.

At the same time Rockefeller lent his support to the South Improvement Company, a plan launched by the railroads that aimed to end price wars, restore transportation rates to a profitable level, and guarantee each oil-carrying line an equitable share of the traffic while offering preferential rates to member refiners. Oil producers rebelled against the plan when it became public in February 1872. Especially troublesome was the provision for drawbacks, by which the participating railroads would pay to member shippers a portion of the higher rates charged to nonmember shippers. The producers vowed to boycott anyone associated with the scheme, and Standard’s supplies of crude oil quickly dried up. In April the South Improvement Company was dissolved, and the boycott ended.

Rockefeller’s reputation among the oil producers was severely damaged by his association with the South Improvement scheme, but he continued to implement his own plan for organizing the industry. By the end of 1872 he had acquired thirty-four former rivals, consolidated Standard’s control of refining in Cleveland, and made inroads among New York’s refiners. At the same time Flagler secured even lower shipping rates, and the Standard began to increase the products it manufactured beyond kerosene to include lubricants, candles, paints, and dyes.

Attempts by both refiners and producers to bring order to the industry continued without success in 1872–1873. In August 1872 Rockefeller became president of the National Refiners Association, an effort to allocate crude oil among member refiners and thus control production and prices, but the refiners’ association lasted less than a year. In the meantime Rockefeller continued to expand the Standard. Acquisitions in 1873 increased its role in the retail trade, and it entered the pipeline business in 1874–1876, consolidating its holdings into the United Pipe Lines in 1877, one of the three major systems in the industry. Between 1874 and 1876 the Standard acquired major refiners in Philadelphia, Pittsburgh, New York, the oil regions of Pennsylvania, and Parkersburg, West Virginia. These new Standard firms were acquired secretly, no announcement was made, and they continued to be operated under their previous names by the old owners, now Standard stockholders, who were in a strategic position to learn about the plans of Standard’s competitors and report them to Rockefeller and Flagler.

In 1877 Rockefeller and the Standard defeated a major challenge to its growing power. The Empire Transportation Company, a subsidiary of the Pennsylvania Railroad, entered the oil-refining business and sought to put together a network of independent refiners and producers. Rockefeller and his colleagues canceled the Standard’s contract with the Pennsylvania, lowered the price of kerosene in markets served by the Empire and its allies, and persuaded Standard’s allied railroads, the Erie and the New York Central, to reduce shipping rates to cut into their rival’s business and profits. The rate war and the railroad strike of 1877 led to serious financial problems for the Pennsylvania, and in October 1877 the Standard bought the refining assets of the Empire, which went out of business. That same month the Standard acquired a major pipeline system and, in a new agreement with the railroads, became the refiner responsible for allocating oil shipments among the roads according to an agreed-upon formula in exchange for reduced rates. Over the next two years the Standard pushed its advantage and made other acquisitions. By 1879 Standard Oil controlled 90 percent of the nation’s oil-refining capacity and dominated both the transportation of refined oil and the piping and storage of crude oil in Pennsylvania’s oil regions. Rockefeller’s plan for bringing discipline and order to the chaotic industry had been successfully, and profitably, implemented.

During the 1880s the Standard fended off challenges to its domination of the industry, continued to expand its domestic and export sales, and, at Rockefeller’s insistence, aggressively acquired crude supplies in the Lima oil fields in Ohio and Indiana. His plan was vindicated in 1888 when Standard chemist Herman Frasch developed a method for adequately refining the sulfur-based oil from these fields, making the acquisitions highly profitable.

Rockefeller and his colleagues struggled to devise both an efficient management system and a satisfactory legal organization for their growing business. An innovative system of committees evolved during the 1870s to oversee specific aspects of the daily operations, with an executive committee directing the entire operation. This system permitted greater efficiency through the detailed analysis of operations and the coordination of the work among geographically dispersed plants. As an Ohio corporation, however, Standard Oil could not legally own property in other states or hold stocks in other companies. During the 1870s various Standard officials were designated as trustees and given responsibility for particular stocks in Standard subsidiaries, but this system grew unwieldy, and in 1879 Standard officials named three trustees to hold the stock of the various companies allied with the Standard of Ohio.

Problems with the trustee device led to a new innovation in 1882, the Standard Oil Trust agreement, which created the first modern trust in American business history. It established a nine-member board of trustees that held the stock of the Ohio company as well as that of its subsidiaries, and the trustees issued to the former stockholders certificates that entitled them to a proportionate share of the stock dividends. In 1890 the Ohio attorney general challenged this arrangement in court, and after the Ohio Supreme Court annulled the charter of the Ohio corporation in 1892, Standard officials moved control of the trust to the Standard Oil (New Jersey) and several other units coordinated by interlocking directorates. By 1899, however, officials realized that this arrangement also was unstable legally, and they reorganized the Standard Oil (New Jersey) as a holding company for all Standard Oil stock.

The methods by which Rockefeller and his associates gained control of the industry made them many enemies, who believed that Standard Oil’s collusion with the railroads on freight rates, its secret acquisitions of other companies, and its use of threats and cutthroat price cutting to induce competing refiners to sell or join its combination were unfair and unethical manipulations of the marketplace. Beginning in the late 1870s Rockefeller and his colleagues faced a series of court challenges and legislative inquiries into the Standard’s policies and practices. The first public revelations about Standard’s business practices came in 1879 as a result of the New York legislature’s investigation of railroad practices, led by Alonzo B. Hepburn. The findings of such investigations aroused public sentiment for both the Interstate Commerce Act of 1887, which prohibited discriminatory rates and practices in interstate shipping, and the Sherman Antitrust Act of 1890, which prohibited the restraint of free trade. The press also turned its attention to the Standard Oil, beginning with Henry Demarest Lloyd’s “The Story of a Great Monopoly” in the March 1881 Atlantic Monthly. Although he testified at various hearings and in court, Rockefeller refused to respond in the press to public attacks on his business and his character, and many people believed his silence confirmed the accuracy of the charges.

In the 1890s the stress and strain of business, the growing demands on his philanthropy, and the public attacks began to affect Rockefeller’s health, and in 1901 he lost all of his hair. In 1897 Rockefeller retired from the daily management of Standard Oil, relinquishing his duties to John D. Archbold. But his retirement was not announced publicly, and Rockefeller continued to personify the Standard Oil Company for its many critics and the general public during a period of intense investigation and publicity. He retained the title of company president until the end of 1911, when the Standard Oil trust was dissolved and reorganized into thirty-eight companies in compliance with the U.S. Supreme Court’s antitrust decision of 15 May 1911.

As the Standard’s largest stockholder, Rockefeller amassed a fortune that is estimated to have peaked at $900 million in 1913, making him one of the wealthiest men of the industrial era. He donated much of his wealth to charity and the philanthropic foundations he created. During his lifetime his philanthropic gifts totaled $540 million, 82 percent of which went to the endowment of the Rockefeller Institute for Medical Research (1901; renamed Rockefeller University in 1965) and three grant-making philanthropies: the General Education Board (1903), the Rockefeller Foundation (1913), and, in memory of his wife, who had died in 1915, the Laura Spelman Rockefeller Memorial (1918). Rockefeller thus became a pioneer in the development of a new entity in American society, the privately endowed general-purpose foundation.

The fact that Rockefeller’s most notable philanthropic gifts occurred after 1900 has overshadowed his long and conscientious tradition of charitable giving. His correspondence and account books, beginning with Ledger A in 1855, reveal the extent of his giving to churches, missions, temperance work, old age homes, hospitals, schools and colleges, Young Men’s Christian Associations, and other charitable societies. The Baptist church was at the heart of Rockefeller’s philanthropic network, although he often gave to churches of other denominations. Between 1864 and 1903 in the Cleveland area alone he made charitable gifts totaling more than $1.6 million to 136 organizations and eighteen individuals. During the 1880s and 1890s, as his national reputation grew, requests for aid came from farther away, and he became desperate in his attempt to keep up with the flood of appeals. In the early 1880s he turned to the American Baptist Home Mission Society (ABHMS) for help in evaluating appeals and in dispensing his charity. The head of the ABHMS, the Reverend Henry L. Morehouse, was especially concerned with the development of Baptist higher education, particularly for African Americans, and channeled more of Rockefeller’s support toward these purposes. In early 1884, for example, Morehouse was influential in securing support from Rockefeller that allowed an Atlanta school for African-American women to preserve its single-sex status, and the founders renamed the school Spelman Seminary (Spelman College in 1924) in honor of Rockefeller’s abolitionist in-laws.

In the late 1880s the wealthiest Baptist was caught up in the debate about where to locate the great Baptist university that denominational leaders advocated. In May 1889 the head of the new American Baptist Education Society (ABES), the Reverend Frederick T. Gates, persuaded Rockefeller to pledge $600,000 toward a $1 million endowment to establish the university in Chicago; by 1910 Rockefeller’s contributions to the University of Chicago totaled $35 million. Between 1890 and 1914 Rockefeller also supported Baptist education more broadly, using the ABES to channel more than $800,000 to thirty-four different schools.

In 1891 Rockefeller hired Gates away from the ABES and brought him to New York to organize and oversee his philanthropic work. He soon entrusted Gates with the resolution of a number of problematic investments, including his holdings in the Mesabi iron range in Minnesota. Gates’s astute management of the iron-ore interests enabled Rockefeller to sell his holdings to J. P. Morgan’s U.S. Steel Corporation in 1901 for $88.5 million, with an estimated profit of $50 million.

Both Gates and John D. Rockefeller, Jr., who joined his father’s office in 1897, played significant roles in shaping Rockefeller’s twentieth-century philanthropy. The Rockefeller Institute for Medical Research, led by Simon Flexner, was the first institution in the United States devoted solely to biomedical research. Its earliest work was conducted through grants-in-aid to researchers in various laboratories, but by 1906 it had constructed its own laboratory in New York City and assembled a distinguished staff of investigators. The General Education Board worked for “the promotion of education within the United States, without distinction of race, sex, or creed,” and it spent $324 million before ceasing operations in 1964. Rockefeller also established the Rockefeller Sanitary Commission for the Eradication of Hookworm Disease (1909), giving it $1 million for an aggressive five-year public health campaign in the South, led by Wickliffe Rose. In 1913 the commission’s work was expanded to combat additional diseases worldwide with the creation of the International Health Board of the Rockefeller Foundation. The purpose of the foundation, incorporated in New York after public criticism thwarted attempts to obtain a congressional charter, was “to promote the well-being of mankind throughout the world.” It focused on medicine and public health in its early years and in 1914 established the China Medical Board, which built the Peking Union Medical College to develop modern western medicine in China.

For all of the criticism Rockefeller received for unethical business practices, it was the controversy aroused by one of his philanthropic gifts that prompted him to abandon his policy of silence in the face of public criticism. In 1905 Washington Gladden denounced as “tainted money” Rockefeller’s gift of $100,000 to the Congregational Board of Foreign Missions. The controversy abated following the revelation that the board had solicited the donation. At the urging of Gates and his son, Rockefeller began to increase his public presence, granting more interviews, appearing more frequently in public, and dispensing dimes to people he met. Between 1917 and 1920 he gave a series of interviews to journalist William O. Inglis that was to form the basis of a friendly biography, but the book was never published.

In retirement Rockefeller traveled between his estates in Cleveland (until the house, “Forest Hill,” burned in 1917) and Pocantico Hills, New York, and homes in Lakewood, New Jersey, and Ormond Beach, Florida. His estates allowed him to indulge his interest in landscape architecture. After he took up golf in 1899, it became his favorite pastime. He died at his home in Ormond Beach and was buried in Lakeview Cemetery in Cleveland.

Although Standard Oil’s domination of the oil industry and Rockefeller’s enormous fortune made him one of the most controversial and hated men of the industrial age, Rockefeller’s legacy includes one of the first fully integrated modern business corporations, an influential biomedical research institute, one of the largest private foundations in the United States, and a tradition of family philanthropy that has extended over four generations.

Bibliography

Rockefeller’s papers, including correspondence, letterbooks, account books, ledgers, and scrapbooks, form part of the Rockefeller Family Archives at the Rockefeller Archive Center in Sleepy Hollow, N.Y. The Archive Center also holds the records of the philanthropies Rockefeller established: Rockefeller University, the General Education Board, the Rockefeller Sanitary Commission for the Eradication of Hookworm Disease, the Rockefeller Foundation, and the Laura Spelman Rockefeller Memorial. Significant portions of Rockefeller’s papers have been published in microform: The William O. Inglis Interview with John D. Rockefeller, 1917–1920, ed. David Freeman Hawke (microfiche, 1984; 2-vol. book, 1989); and Papers of John D. Rockefeller, Sr. (1991), a microfilm collection that includes incoming business correspondence, business investment correspondence, and office correspondence. Additional manuscript material has been published in “Dear Father”/“Dear Son”: Correspondence of John D. Rockefeller and John D. Rockefeller, Jr. (1994), ed. Joseph W. Ernst, former archivist for the Rockefeller family. Rockefeller’s autobiography was serialized in the World’s Work beginning in Oct. 1908 and was subsequently issued as Random Reminiscences of Men and Events (1909).

The standard biographies of Rockefeller remain the two works by Allan Nevins, John D. Rockefeller: The Heroic Age of American Enterprise (2 vols., 1940) and Study in Power: John D. Rockefeller, Industrialist and Philanthropist (2 vols., 1953). More recent appraisals of Rockefeller include Ron Chernow, Titan: The Life of John D. Rockefeller, Sr. (1998), John Ensor Harr and Peter J. Johnson, The Rockefeller Century (1988), and Hawke, John D.: The Founding Father of the Rockefellers (1980), a lively introduction for general readers.

The literature on Rockefeller and the Standard Oil Company is voluminous. For general readers, Daniel Yergin, The Prize: The Epic Quest for Oil, Money and Power (1991), offers a useful and readable introduction to Rockefeller’s leadership of the Standard; scholars seeking a thorough analysis of Rockefeller’s and Standard Oil’s role in the development of the oil industry should consult Harold F. Williamson and Arnold R. Daum’s two-volume history, The American Petroleum Industry, especially the first volume, The Age of Illumination, 1859–1899 (1959). The most detailed study of this period is Ralph W. Hidy and Muriel E. Hidy, Pioneering in Big Business: History of Standard Oil Company (New Jersey), 1882–1911 (1955). Edward N. Akin, Flagler, Rockefeller Partner and Florida Baron (1988), provides a detailed study of the Rockefeller-Flagler partnership and the early years of the Standard. Early critical works include Henry Demarest Lloyd, Wealth against Commonwealth (1894), and Ida M. Tarbell, The History of the Standard Oil Company (1904).

On specific aspects of Rockefeller’s philanthropy, see Florence Matilda Read, The Story of Spelman College (1961), Thomas W. Goodspeed, The Story of the University of Chicago, 1890–1925 (1925), and Richard J. Storr, Harper’s University: The Beginnings (1966). See also George W. Corner, A History of the Rockefeller Institute, 1901–1953: Origins and Growth (1964), Raymond B. Fosdick, Adventure in Giving: The Story of the General Education Board (1962) and The Story of the Rockefeller Foundation (1952), and John Ettling, The Germ of Laziness: Rockefeller Philanthropy and Public Health in the New South (1981).