An embodiment of the philosophy "rags-to-riches," John D. Rockefeller was not born into a life of luxury and wealth. Rather, he was the son of a con man, making money by raising turkeys and selling candy throughout his childhood. Born on July 8, 1839, he grew up in the lower middle class, living similar to the other factory workers he would go on to preside above.
He and his family moved to Cleveland, Ohio from Richard, New York, in 1853, where he attended high school. His first job was as an office clerk at a Cleveland commission firm that bought, sold, and shipped grain, coal, and other goods. Finding this job not profitable enough, he decided to invest in the oil industry along with several other partners in 1863. They invested in a Cleveland refinery, predicting a boom in this new industry in the coming few years.
In 1865, Rockefeller bought out many of his partners using a loan to take control of the refinery, which had then become the largest oil refinery in all of Cleveland. After assuming control, he continued to expand his power and business interests by acquiring new partners and eventually forming the Standard Oil Company of Ohio. The oil industry had just started taking off, as a derivative of petroleum, kerosene, was becoming an economic staple and used widely in lamps. John Rockefeller placed himself as the president and largest shareholder of this new oil company.
Standard Oil quickly made a name for itself by using a unique strategy developed by Rockefeller himself: buying out rival companies to eliminate competition. By doing so, he made sure the majority of resources and profits went to himself and his company, not others. He also began developing companies solely for distributing and marketing its products, which were consolidated in to the Standard Oil Trust. The trust, a system where companies would trade stocks for shares in the Standard Oil Trust gave Rockefeller huge power over a number of different companies, which allowed him to earn millions in profit for himself. By standardizing the refining process and controlling it beginning to end, he was able to cut costs by not having to employ other businesses in the process.
Rockefeller was able to make millions, eventually making himself the richest man in the world. However, this enormous wealth made him a target of politicians, journalists ,and others who saw him as a monopolist rather than innovator. He was accused of stooping to unpopular tactics to fight his way up to the top, such as bribing men to spy on competing companies, making secret agreements to coerce rivals to join the Standard Trust, and threatening to force companies out of business. His trust was widely unpopular as it was viewed as a "dirty" way to make a fortune through an illegal monopoly of the oil business.
In 1890, Congress passed the Sherman Antitrust act, effectively dissolving the Standard Oil Trust. The businesses were dismantled and over 30 individual companies emerged. By this point, Rockefeller had retired from business operations of Standard Oil, instead focusing on giving away his money which he had amassed from the oil industry. He took inspiration from Andrew Carnegie, choosing to project the image of himself as a philanthropist and funding various educational, religious, and scientific causes. He founded the University of Chicago and Rockefeller University, building numerous buildings and libraries as well.
http://www.history.com/topics/john-d-rockefeller
Julia, your post was very useful in describing Rockefeller's early life and explaining how he was able to become so rich and powerful. I found it interesting how Rockefeller was able to integrate both vertically and horizontally in order to create a monopoly and generate the maximum amount of profit. One question I had was why other oil companies didn't copy his strategies in order to compete with him. Did the other companies not react in time to prevent him from taking control, were they unaware of how he was successful, or was it due to some other factor that they couldn't do so?
ReplyDeleteJulia, I thought you pointed out something super important about Rockefeller which may have been his second largest contribution to society besides his foundation: regulations. After the Sherman Anti-Trust Act in 1890, the US government has made it a mission to make sure that that corporations could never reach the scope that existed back in Rockefeller's time. While the government provides many services to businesses, such as financial advisement, the government's job is to protect the consumer, and preventing monopolies like Standard Oil protects the consumer's right to choose.
ReplyDeleteSource: http://www.investopedia.com/articles/economics/11/government-regulations.asp
Julia, I thought your article was really interesting, especially with your choice to describe details of Rockefeller's early life. I think that because Rockefeller came from such simple origins, he became one of the key figures in the "rags to riches" theory. While this idea faded away in the eyes of the masses eventually, it still serves as an important reminder of what the average American could do if they found the right opportunity. Doing further reading, I found that the Standard Oil was not dissolved (by action of the Supreme Court) until 1911- although, as you mentioned, "In 1890, Congress passed the Sherman Antitrust act, effectively dissolving the Standard Oil Trust." Why do you think it took 21 years for the company to be dissolved? Do you think it was a result of Rockefeller's financial and social power- or the government's hesitance to get rid of so many jobs?
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