Titans of Industry: John D. Rockefeller

Next up is perhaps one of the most iconic of American capitalists, the oil tycoon, John D. Rockefeller. To this day he is listed as the wealthiest American in history. His name is synonymous with American business, and many of his family members have gone on to become significant businessmen or politicians in their own right. It's a name I have always been quite familiar with however do not know much about his story and how he was able to dominate the oil industry.

John D. Rockefeller built his fortune in the oil business as it boomed in the Gilded Age. The key to his success was that he controlled the refinement of the oil rather than the drilling process. In controlling the refinery he was able to control the market. His is another very interesting rags-to-riches story, as he was able to climb the industrial ranks to become one of the most powerful men in America at the turn of the century. His ambition was driven by what he considered a divine cause, and he is the utmost example of achieving the American dream through the free-market.

Early Life of John D. Rockefeller

He was born in 1839 in Richford, New York to a working class family. His father began as a lumberman, but eventually became a salesman and con artist referred to as "Devil Bill". He traveled frequently and was rarely at home during John's childhood. John thus had to do his part in helping provide for the family and took more after his religious mother. In 1853 his family moved to Strongsville, Ohio where John attended Cleveland Central High School and later studied business and bookkeeping at Folsom's Commercial College.

John acquired a sharp skill for business during his teenage years when he worked as an assistant bookkeeper for a produce firm called Hewitt & Tuttle. He was known as a very focused, serious, religious, and clever kid who set a goal early on that he wanted to amass a large fortune and live for a long time. In 1859 he partnered with Maurice Clark on a new bookkeeping firm for produce commissions of which he began to gain significant profit. By the outbreak of the Civil War, he was able to buy his way out of military service and instead offered food and supplies to the Union Army.

Oil Refinery Business

In 1863 John and his business partner Maurice shifted their focus to crude oil and built a oil refinery in "the flats" of Cleveland. The two partners were able to enlist a chemist, Samuel Andrews, who specialized in the distillation of oil into kerosene. Kerosene was the latest tool in providing light for the general public. Rockefeller later bought out this firm and established his own firm with Samuel Andrews as his partner in 1865. He also partnered with his brother, William Rockefeller, who also had an oil refinery of his own.

As the war was ending, John began making aggressive business moves to capture a stronghold on this new market. By 1867 the Rockefellers brought on another business partner, Henry Flagler, which became the beginning of Rockefeller's oil empire. It was during this time that John partnered with business magnate Cornelius Vanderbilt to transport his oil at a fair price. By 1870 Cleveland had become the center of the oil refinement business and Rockefeller disbanded his previous partnership to establish Standard Oil Trust.   

Standard Oil Empire and Monopoly

Rockefeller continued expanding his business thru his work ethic and competitive nature. He was able to ship his product at a fair price thru various railroad deals of bulk shipments. Thru his efficient management he was able to provide affordable kerosene for the entire nation, which before was only a luxury for the wealthy. By 1872, in what has become referred to as the "Cleveland Massacre" Rockefeller ruthlessly bought out his competition to control the refinery market and make Standard Oil the undisputed king of oil in the nation.

At this point Rockefeller began controlling every aspect of the oil market, from the drilling, to the refinement, to the disruption in what was perhaps one of America's first significant monopolies. He began gathering much opposition from the press, businesses, and even the government for what they saw as a man with too much power. Rockefeller however felt he was doing's Gods work, and believed that business was ultimately the survival of the fittest. By the end of 1870 Standard Oil was refining 90% of the nation's oil and Rockefeller was a millionaire.

His first significant opposition came in 1877 from Thomas A. Scott, a Pennsylvania Railroad president who was threatened by Rockefeller's latest pipeline initiatives. Scott felt that Rockefeller was essentially eliminating the need of oil to be transported via railway, and in response he began buying and building his own oil refineries. Rockefeller's competitive nature once again was in full effect as he began a price war against the Pennsylvania Railroad system which led to labor unrest.

While Rockefeller was ultimately able to win the standoff with Thomas A. Scott, it was only the beginning of a series of disputes targeting Rockefeller's monopoly on the market.  By 1880 Standard Oil was labeled by the press as the most grasping monopoly the country had ever experienced. At it's height Rockefeller's empire included 20,000 oil wells, 4000 miles of pipeline, 5,000 tank cars, and 100,000 employees. However during this time competition from European oilfields was emerging as well as the invention of the light bulb made kerosene less desirable.

Final Years in New York City

In 1884, Rockefeller moved his business headquarters to New York City and became a prominent figure in the city. He still continued to expand his business empire, despite all the opposition and changes in the oil market. In 1890 he began investing in the iron and ore industries which lead to new opposition with steel magnate Andrew Carnegie. Their competition became major fodder for the New York news media. Rockefeller was able to become a member of US Steel's board of directors along side JP Morgan Chase and Andrew Carnegie. However the inquisition into his empire continued from President Roosevelt as well as  "muckracker" journalists such as Ida Tarbell, which forced him into early retirement at the age of 63.

In 1911 Rockefeller's Oil Empire took its largest hit when the Supreme Court of the United States found Standard Oil in opposition of the Sherman Antritrust Act, which ultimately ruled the organization as an illegal monopoly. In response Rockefeller had to break up his oil empire into 34 separate companies, which included notable businesses that still dominate today such as ExxonMobile, ConoccoPhilips, Chevron, and Pennzoil to name a few. Rockefeller spent his final years living in leisure, often suffering from anxiety and depression. While he climbed the mountaintop to become the wealthiest man in American history he was ultimately an unhappy person.