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John D  Rockefeller & The History of Standard Oil

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For the Rockefellers, giving has been a central family value that has spanned three centuries.

The strong belief of early generations that wealth comes with great responsibility continues to inform the philanthropy of current generations, helping to shape their priorities and perspectives on giving. The family is now entering its seventh generation and has maintained its tradition of giving within each generation.

Inspiration

John D. Rockefeller, Sr. (JDR) was born with the entrepreneurial spirit of his father, a farmer and patent medicine salesman, and the religious-driven generosity of his mother, Eliza Davison Rockefeller. Mrs. Rockefeller was a pious Baptist who taught her children to tithe, a tradition of giving 10 percent of one's income to the church, that was passed down to subsequent generations. JDR was heavily influenced by his mother's charitable practices and began his own giving the very first year that he started working, when he made just $45 a year.

JDR became involved in the petroleum industry, soon founding Standard Oil, which would become the dominant oil company in the United States. With the great success of Standard Oil, JDR explored new purposes for his unprecedented wealth. In addition to making many investments in different sectors of the American economy, he also allocated a significant portion to charity.

From 1855, when JDR gave his first philanthropic gift, until almost the turn of the 20th century, Rockefeller's giving was spread across many individuals and institutions and largely focused on the Baptist church itself and universities founded as Baptist institutions, such as the University of Chicago and Spelman College. While this religious-driven giving certainly highlights JDR's strong ties to the church, it also signifies the early state of the nonprofit sector at the time: There were few other secular organizations that he could have given to.

Guiding Principles

There are several central themes in the Rockefeller family's giving that could be applied to other families hoping to develop thoughtful, planner multigenerational philanthropy:

The family shares a sense of duty to improve the common good and a responsibility to humanity.

Family traditions play a critical role in the transmission of these values from generation to generation.

The family recognizes that philanthropy becomes more meaningful when personal experiences create opportunities to give to a cause that resonates with family values.

Action

Although JDR's giving was, at first, very narrow, he was soon overwhelmed by the sheer volume of request letters that he received from individuals all over the country. When founding the University of Chicago, JDR met Frederick Gates, an ordained Baptist minister who also had a flair for salesmanship. JDR asked Gates to work for him to assist him with his charitable giving. An organizational genius, Gates quickly transformed JDR's giving and helped him to organize it "as though it were a business." He discovered that many of the organizations that JDR had been supporting were dubious. As a minister, Gates shared JDR's strong Christian imperative to engage with society and to help to solve its problems. But Gates had lost his faith and felt that much of what he had been taught, and, in fact, had himself preached, was simply not true. He felt that JDR's giving to date did not address the underlying social problems with which this country was confronted:

Poverty

Ignorance

Disease

Racism

Gates helped JDR to redirect his giving into a more fundamental kind of charity. This is the beginning of a move toward modern philanthropy.

Addressing Social Issues

Gates convinced JDR to begin creating organizations to address social issues rather than continue to work through other organizations. The Rockefeller University (originally the Rockefeller Institute for Medical Research, 1890), the General Education Board, the Rockefeller Foundation (founded in 1913) and also JDR personally, began to provide a great deal of money to create and improve medical education in the United States. These efforts produced a number of people who were scientifically trained in a discipline and could actually effect change. It was an extremely important long-term investment and an unusual choice for JDR, who lived a relatively healthy 97 years, favored homeopathy and had no great faith in medicine himself.

Philanthropy's Unexpected Obstacles

As requests for grants poured into the office, Gates and John D. Rockefeller, Jr. (Junior), who had recently graduated from Brown University and begun working in his father's office, tried repeatedly to refine the system by which they sorted and contemplated the multitude of requests received. When JDR traveled to Europe, he returned with trunks full of letters and requests for financial assistance. Junior and Gates tried to answer every credible request. They soon realized they needed a separate organization to read and answer the letters and to take proper action. By 1910 or so, JDR had $1 billion in assets. Gates famously said to him, "Your wealth is building up, and if you do not make arrangements for it, it is going to overwhelm your descendants. You must do something to organize all of it."

The increasing volume of requests and JDR's great wealth led to the creation of the Rockefeller Foundation. The Foundation had very specific programs:

Medical education

Public health

Labor relations in the United States

The Rockefeller Foundation was not met with tremendous popular acclaim at the time. In fact, it was met with the opposite- tremendous suspicion. What are the Rockefellers up to now? This led JDR and Junior to understand that they had to operate the foundation in such a way that it would gain not only the grudging acceptance but also the trust of the American people.

Involving the Next Generation

Recognizing that Junior shared his sense of obligation to engage with society for positive change, JDR transferred approximately $500 million to his son and stepped down from his involvement with all of the major philanthropies. Under the guidance of Junior as chairman from about 1915 until the late 1930s, the Rockefeller Foundation began to expand its programs and activities.

Impact

Many families develop philanthropy programs out of the desire to give back to society in return for their own good fortune. Families successful in business wish to repay the society that helped to generate this success. The first two generations of the Rockefeller family were among the small group of individuals who created modern philanthropy by attempting to deal with the root causes of poverty, disease and ignorance rather than simply ameliorating their symptoms through charity. Current philanthropic programs pursued by family members, such as urban revitalization, youth employment and economic development, benefit various segments of the American population. As reflected in the case studies above, personal life experiences can also impact a family's philanthropy.

Inter-generational collaboration

Another issue that many philanthropic families face is the distribution of resources over a growing number of children in each successive generation. Unless a family's fortune continues to grow significantly, children will likely have fewer resources to contribute to philanthropy than their parents did. To have the same impact as earlier generations, families often find that members must collaborate with each other.

Collaboration among groups of siblings, cousins and inlaws can be a great opportunity for sharing values, increasing impact, and developing richer programs. The formation of the Rockefeller Brothers Fund (RBF) was the first example of Rockefeller family members sharing their philanthropic resources. The five sons of John D. Rockefeller, Jr., known as the "Brothers" generation, created the foundation before World War II, when they found their individual resources strained, and all were receiving requests for support from the same organizations. They decided to pool their funds designated for giving and to make collective decisions, as a more effective and meaningful way to give. The current programs of the RBF are strategic and reflective of the family's central values. The New York City program demonstrates the family's ongoing loyalty to the city, while RBF's international development programs show the interconnectedness of different nations and cultures.

Personal endeavors

Individual Rockefeller family members also maintain their own funds for personal giving. On a smaller scale, members of David Rockefeller's family collaborate with each other to manage the DR Fund, from which grants are allocated with active participation by his children and grandchildren. These family members rotate into governance roles of the Fund, which allows them to carry on their family's tradition of philanthropy and also develop their own personal interest in giving.

About 10 years ago, following some highly successful collaborative projects of the fourth generation (commonly known within the family as the "Cousins"), the young adult members of the fifth generation conducted a poll to identify areas of common interest. The environment and education emerged as the leading issues, and fifth generation family members chose to focus on community gardens in New York City.

Once this focus area was identified, the group operated as a collaborative "foundation." They requested proposals, conducted site visits, participated in the public policy/advocacy process and made joint funding decisions. The fifth generation's achievements were honored in the fall of 2004 by New Yorkers for Parks, an advocacy organization in support of open, public spaces.

Ripple effects

The ripple effects of this initiative continue to influence younger Rockefellers. Allison Whipple Rockefeller, an active participant in the community gardens collaborative, established the Cornerstone Parks Fund, which seeks to rehabilitate abandoned gas stations in New York State into parks and community centers that will provide access to educational programs, local crafts and farmers' markets. More recently, 89 members of the Rockefeller family's fifth and sixth generations have come together with the intention of sharing their resources and talents in a new initiative. A governing council with rotating teams allows the group to maintain the central values on which they were founded, while allowing new members to develop their interests and have an impact on the organizations they support. In this way, the philanthropic values of the family are carried on to the next generations, allowing family traditions to be reinterpreted. As Rockefeller Philanthropy Advisors' president Melissa Berman states, "values, not views" are passed down through the generations of the Rockefeller family. Each new generation applies the family's values to their own collaborative philanthropic programs that are personally meaningful.

Combining the talents and skills of many different family members can also help expand grantmaking. Pooling resources allows family members to contribute to more sizable grants, and some of the issues addressed in family collaborations are broad enough to require diverse experience and skills.

Emerging Trend: Venture Philanthropy

The Rockefellers' entrepreneurial founding of nonprofit organizations has qualities in common with the recent trend of venture philanthropy. In both models, donors examine an issue or trend, commit themselves to effecting change and have a direct hand in the work of the organizations their grants support. But the Rockefeller value of personal investment and interest in the causes they support contrasts with typical venture philanthropists. The Rockefellers place trust in the grantee organization, combined with a personal commitment to be involved in the life of the organization. It is often the personal experience of the donor that has inspired their interest in the first place. Also, while the Rockefeller spirit of entrepreneurship has informed their business practices and their giving, they do not operate their nonprofit organizations as though they were businesses. In philanthropy, it is important to engage both the heart and the mind, and so to become personally involved in thoughtful and reflective giving. The impact and continuity of the Rockefeller family's philanthropy draws on four important forces:
Thoughtful transmittal of values, including obligation, opportunity, collaboration and personal investment, through family traditions and organized meetings; Consistent adherence to a long-term perspective that focuses on root causes, understanding the time horizon and balancing patience with accountability; Genuine confidence in the nonprofit sector to creatively solve problems that neither government nor business can address through strong and sustainable organizations; and Clear understanding of how organizations thrive, including the role of operating support, governance vs. management and shared decision-making.
These principles and practices, now reaching the seventh generation of Rockefellers, with more than 150 descendants of John D. Rockefeller, Sr., have transformed the landscape of philanthropy over the last century- and form a solid platform for continued innovation in giving.

David Rockefeller

David Rockefeller, of the third generation, recalls two personal anecdotes that raised his awareness about the importance of recognizing opportunities to give. As a boy, he traveled with his family to Williamsburg, Virginia, where they visited an early American building undergoing restoration. This smallscale project inspired David's father, John D. Rockefeller, Jr., to create Colonial Williamsburg. In another life-shaping childhood experience, his family traveled to France in the 1920s. The family saw the damage that had occurred during World War I, and John D. Rockefeller, Jr. decided to provide funds to repair the great monuments of France, including Chartres Cathedral, the Palace of Versailles and Fontainebleau. These philanthropic examples taught David to recognize an immediate need for generosity and to respond with grants that have great meaning because of their connection to personal experience.

Peter O'Neill

As part of his involvement in running a capital campaign at International House, Peter O'Neill, a member of the fifth generation of the Rockefeller family, developed his skills as a fundraiser. This new perspective of asking for grants gave O'Neill greater insights into the other side of philanthropy. These skills make O'Neill an especially important asset to his generation group. His experiences also help his family members understand how effective fundraising is central to an organization's sustainability and success.

John D. Rockefeller 3rd

The eldest son of John D. Rockefeller, Jr. and Abby Aldrich Rockefeller, JDR 3rd (as he was known) balanced the stewardship of a major philanthropic organization, the Rockefeller Foundation, with an equally strong program of personal philanthropy. As the only brother to pursue philanthropy as his primary interest, he had wide-ranging interests in the arts, education, agricultural development, and in the improvement of U.S. relations with Asia. However, for four decades he focused his work and giving on the danger of excessive global population growth. He believed that lowering population growth to sustainable levels would "improve the quality of people's lives, and help make it possible for individuals everywhere to develop their full potential." JDR 3rd pioneered the development of effective contraceptives and sought to implement public policies that would enhance the roles and status of women both in the U.S. and around the world.

Laura Chasin

Ms. Chasin, the eldest daughter of Laurance S. Rockefeller and Mary French, is a social worker and family therapist. She is also founder and board chair of the Public Conversations Project (PCP). Founded in 1989 to explore the potential of adapting methods used with families in conflict to disputes in the public arena, PCP has worked worldwide to "promote conversations and relationships among those who have differing values, world views, and positions related to divisive public issues." PCP aims to reduce the rancor in public squares and promote effective communication within organizations and communities. A notable accomplishment has been a dialogue on abortion among Pro-Life and Pro-Choice Leaders in Boston that PCP has facilitated. After the 1994 fatal shootings at two women's health clinics in Brookline, Massachusetts, the Governor and the Archdiocese of Boston asked that PCP facilitate an ongoing conversation to prevent further violence. Over the next six years, PCP and Laura Chasin designed and facilitated meetings that encouraged communication and dialogue and helped to protect the safety of participants which, as reported in the Boston Globe, led to a lessening of hate-filled rhetoric and conflict.

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The Rockefellers: A Legacy of Giving | Rockefeller Philanthropy Advisors

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For the Rockefellers, giving has been a central family value that has spanned three centuries. The strong belief of early generations that wealth comes with great responsibility continues to inform the philanthropy of current generations, helping to shape their priorities and perspectives on giving.

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After starting life in humble circumstances, John Rockefeller came to dominate the burgeoning petroleum industry by the time he was 40 years old. He became the richest man of his time, and indeed has a good claim to perhaps being the richest self-made man who ever lived. At its peak, Rockefeller's net worth was around 1.5 percent of the country's total annual economic output-the equivalent of about $280 billion today, or about three times the wealth controlled by Bill Gates.

He was equally distinguished as a philanthropist. A natural businessman with a strong moral sense and intense religious convictions, he dedicated unprecedented resources to charity. Within his lifetime, Rockefeller helped launch the field of biomedical research, funding scientific investigations that resulted in vaccines for things like meningitis and yellow fever. He revolutionized medical training in the United States, and built China's first proper medical school. He championed the cause of public sanitation, creating schools of public health at Johns Hopkins and Harvard, and helped lead major international public-health efforts against hookworm, malaria, yellow fever, and other maladies. He vigorously promoted the cause of education nationwide, without distinction of sex, race, or creed. He created the University of Chicago, virtually from scratch, and within a decade turned it into one of the world's leading universities.

Born in upstate New York in 1839, Rockefeller was the son of a strait-laced, deeply devout Baptist mother and a boisterous, fun-loving father who called himself a travelling salesman but was really a flimflam man. (Amidst his many long business trips, Rockefeller's father would eventually contract a bigamous second marriage and have a second family while still returning periodically to his first.) The young Rockefeller, serious and somewhat humorless by nature, was much more influenced by his mother. A lifelong adherent of the northern Baptist church, he neither drank nor smoked.

As a boy, his family moved frequently. In 1853 they settled in Strongsville, Ohio, a suburb of rapidly expanding Cleveland. Rockefeller attended a local high school and took a 10-week course in bookkeeping. At age 16 he got his first job, as a bookkeeper at a brokerage of fresh produce. From the beginning, he gave six percent of his salary (which at first was a mere 50¢ per day) to charity. He was soon tithing to the Baptist church.

In 1859, Edwin Drake drilled the first oil well, in northwest Pennsylvania, and one of the world's greatest industries was born. That year Rockefeller and a partner opened a brokerage of their own, Rockefeller and Clark, that traded not only produce but petroleum products as well. Cleveland, with its proximity to the Pennsylvania oil fields and its excellent transportation network, quickly became the center of petroleum refining. In 1863, Rockefeller and partners opened their own refinery.

In 1865 Rockefeller bought out his partners and established a new firm with the chemist Samuel Andrews. Needing capital, he approached Stephen Harkness, who invested $100,000 and became a silent partner in the firm, requiring that his relative, Henry Flagler, be taken in as a partner as well to oversee the Harkness interests. Flagler proved an inspired choice, with organizational and creative business skills that neatly matched Rockefeller's careful money management.

In 1870, Flagler convinced Rockefeller to transform the partnership of Rockefeller, Andrews, and Flagler into a corporation named Standard Oil. Standard Oil expanded rapidly, both horizontally by buying up other oil refining companies, and vertically by acquiring oil wells and transportation routes and selling products at the retail level. Standard Oil pursued a monopoly position, pursuing many techniques-such as secret rebates from railroads and predatory pricing-that are today illegal but were not then. It also invented the trust form of organization in order to circumvent out-of-date incorporation laws. It paid a fair price for the companies it wanted to acquire, often paying in Standard Oil stock and taking in valued executives. By 1880, Standard Oil controlled 90 percent of the oil business in America.

Rockefeller had a clear conscience about how he won his fortune. "God gave me the money," he often said. Believing that, he felt a profound obligation to put the money to good use. By the early 1880s, he was receiving thousands of letters a month asking for help. Rockefeller regularly gathered his family after breakfast to review the merits of the petitions. "Four-fifths of these letters," Rockefeller noted years later, were "requests of money for personal use, with no other title to consideration than that the writer would be gratified to have it."

In these first years of large-scale philanthropy, Rockefeller favored a few causes close to his heart. He was the single-most generous donor to the northern Baptist conventions, and he underwrote the work of missionaries and relief workers at home and abroad. He also took a deep interest in higher education for African Americans. In 1882, he began a series of gifts to the Atlanta Baptist Female Seminary, a struggling school for African-American women. As Rockefeller's contributions grew, the school took the maiden name of Rockefeller's wife: Spellman. Similar gifts were soon directed to two other black colleges-the Tuskegee Institute and Morehouse College.

"About the year 1890 I was still following the haphazard fashion of giving here and there as appeals presented themselves. I investigated as I could, and worked myself almost to a nervous breakdown," Rockefeller noted in his 1909 memoirs. "There was then forced upon me the necessity to organize and plan this department of our daily tasks on as distinct lines of progress as we did with our business affairs." It marked an important turning point in his career as a philanthropist.

Rockefeller made his fortune through canny consolidation, careful cost management, and economies of scale. Those instincts were reflected time and again in his charitable giving. Rather than make thousands of small, scattershot contributions, he preferred to make large donations to institutions that he believed had great promise. "The best philanthropy," he wrote, "is constantly in search of finalities-a search for a cause, an attempt to cure evils at their source."

Higher education was the first major beneficiary of Rockefeller's more focused philanthropic efforts. A project of lifelong interest to him was the creation of a distinguished Baptist university. Rockefeller considered several options before pairing with William Rainey Harper to establish the University of Chicago. In 1890, he made his first contribution-for $600,000-to the school. Over the rest of his life, he would give it a total of $35 million, making it possible for the upstart school to instantly rank among the world's leading institutions of higher learning. Rockefeller insisted that his name not be used anywhere on campus, even rejecting an image of a lamp on the university seal, lest it be taken as a suggestion of the influence of Standard Oil. The University of Chicago, he later said, was "the best investment I ever made."

At the urging of Frederick T. Gates, perhaps his most trusted philanthropic adviser, Rockefeller became increasingly devoted to medical research. In 1901, he funded the Rockefeller Medical Research Institute in New York City. Modeled on the Institut Pasteur in France and the Robert Koch Institute in Germany, it was the country's first biomedical institute, soon on a par with its European models. The results were dramatic. Within a decade, it created a vaccine for cerebrospinal meningitis and had supported the work of America's first winner of a Nobel Prize in medicine. Today, known as the Rockefeller University, it is one of the leading biomedical research centers in the world. Twenty-four Nobel Prize winners have served on its faculty.

Like many wealthy industrialists of his era, Rockefeller was scandalized by the poverty and deprivation that still afflicted the American South nearly half a century after the conclusion of the Civil War. He created the General Education Board in 1902, charging it with a ranging mission that included improving rural education for both whites and blacks, modernizing agricultural practices, and improving public health, primarily through efforts to eradicate hookworm, which debilitated many Southerners and dragged down productivity of all sorts. The General Education Board helped establish hundreds of public high schools throughout the South, promoted institutions of higher education, and supported teacher-training efforts for African Americans.

Rockefeller's work to eliminate hookworm was related to a broader effort to improve public health generally. Starting in 1913, the campaign against hookworm was exported globally. It was soon followed by similar efforts against malaria, scarlet fever, tuberculosis, and typhus, all under the auspices of the Rockefeller-funded International Health Commission. Rockefeller created the first school of public health and hygiene at Johns Hopkins University in 1918, which he then duplicated at Harvard in 1921. In all, he spent $25 million introducing public health programs at scores of universities across the globe. Rockefeller took a special interest in China, (second only to the United States as a destination for his funding), and the China Medical Board he created can be credited with first introducing the country to modern medical practices.

Throughout the first decade of the 20th century, Rockefeller was thinking seriously about founding a perpetual grantmaking foundation. By 1909, he had given away $158 million of personal funds to various causes. That year he donated 73,000 shares of Standard Oil, worth $50 million, as a first installment to establish what would become the Rockefeller Foundation. It was not the first such foundation, but it quickly became the largest. It was chartered by New York State in 1913 with a mission "to promote the well-being of mankind throughout the world."

The benefactions of the Rockefeller Foundation have been many and varied, from funding the research that led to the yellow-fever vaccine, to the Montreal Neurological Institute, to a new building that holds five million books at Oxford's Bodleian Library. The foundation was a pioneer funder of the Green Revolution, which dramatically increased agricultural yields across the developing world, and may have saved as many as one billion lives. For decades, the Rockefeller Foundation distributed more foreign aid than the entire U.S. government.

As impressive as the legacy of the Rockefeller Foundation is, however, it is not clear that it has yet caught up with the accomplishments of its founding donor. John D. Rockefeller gave away $540 million (unadjusted for inflation) before his death in 1937 at the age of 97. With that money, he created two of the world's greatest research universities, helped pull the American South out of chronic poverty, educated legions of African Americans, jumpstarted medical research, and dramatically improved health around the globe. It is not surprising that his biographer Ron Chernow concluded that Rockefeller "must rank as the greatest philanthropist in American history."
~ John Steele Gordon
Further reading:

Ron Chernow, Titan: The Life of John D. Rockefeller, Sr. (Random House, 1998)

Raymond Fosdick, The Story of the Rockefeller Foundation (Transaction Publishers, 1989)

John D. Rockefeller, Random Reminiscences of Men and Events (Doubleday, 1909)

Return to the Philanthropy Hall of Fame.

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After starting life in humble circumstances, John Rockefeller came to dominate the burgeoning petroleum industry by the time he was 40 years old. He became the richest man of his time, and indeed has a good claim to perhaps being the richest self-made man who ever lived.

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The Rockefellers | Article

John D. Rockefeller, Sr. Rockefeller Archive Center.

Youth
John D. Rockefeller was born July 8, 1839, in Richford, New York, about midway between Binghamton and Ithaca. His father, William Avery Rockefeller, was a "pitch man" - a "doctor" who claimed he could cure cancers and charged up to $25 a treatment. He was gone for months at a time traveling around the West from town to town and would return to wherever the family was living with substantial sums of cash. His mother, Eliza Davison Rockefeller, was very religious and very disciplined. She taught John to work, to save, and to give to charities.

By the age of 12, he had saved over $50 from working for neighbors and raising some turkeys for his mother. At the urging of his mother, he loaned a local farmer $50 at 7% interest payable in one year. When the farmer paid him back with interest the next year Rockefeller was impressed and said of it in 1904: "The impression was gaining ground with me that it was a good thing to let the money be my servant and not make myself a slave to the money..."

From 1852 Rockefeller attended Owego Academy in Owego, New York, where the family had moved in 1851. Rockefeller excelled at mental arithmetic and was able to solve difficult arithmetic problems in his head - a talent that would be very useful to him throughout his business career. In other subjects Rockefeller was an average student but the quality of the education was very high.

In 1853, the Rockefellers moved to Cleveland, Ohio, and John attended high school from 1853 to 1855. He was very good at math and was on the debating team. The school encouraged public speaking and even though Rockefeller was only average, it was a skill that would prove to useful to him.

Early Business Career: 1855-1863
In the spring of 1855 Rockefeller spent 10 weeks at Folsom's Commercial College - a "chain College" - where he learned single- and double-entry bookkeeping, penmanship, commercial history, mercantile customs, banking, and exchange. From his father he had learned how to draw up notes and other business papers. His father was very meticulous in matters of business and believed in the sacredness of contracts.

In August of 1855, at the age of 16, Rockefeller began looking for work in Cleveland as a bookkeeper or clerk. Business was bad in Cleveland at the time and Rockefeller had problems finding a job. He was always neatly dressed in a dark suit and black tie. Cleveland was not a large city in 1855 and Rockefeller could easily visit every business in under a week's time. He returned to many businesses three times. Finally, on September 26, 1855, he got a job as an assistant bookkeeper with Hewitt & Tuttle, commission merchants and produce shippers.

Rockefeller soon impressed his employers with his seriousness and diligence. He was very exacting and scrupulously honest. For example, he would not write out a false bill of lading under any circumstances. He went to great lengths to collect overdue accounts. He was pleasant, persistent, and patient, and he got the company's money from the delinquents. (For all this work, he was not well paid. But whatever he was paid, he always gave to his church and local charities.)

By 1858, Rockefeller had more responsibilities at Hewitt & Tuttle. He arranged complicated transportation deals that typically involved moving a single shipment of freight by railroad, canal, and lake boats. He began to engage in trading ventures on his own account. He was naturally cautious and only undertook a business venture when he calculated that it would be successful. After he carefully weighed a course of action, he would then act quickly and boldly to see it through to fruition. He had iron nerves and would carry through very complicated deals without hesitation. This combination of caution, precision, and resolve soon brought him attention and respect in the broader business community in Cleveland.

On March 1, 1859 -- several months before his 20th birthday - Rockefeller went into business for himself, forming a partnership with a neighbor, Maurice Clark. Each man put up $2,000 and formed Clark & Rockefeller - commission merchants in grain, hay, meats, and miscellaneous goods. At the end of the first year of business, they had grossed $450,000, making a profit of $4,400 in 1860 and a profit of $17,000 in 1861. The commission merchant business was very competitive and Clark & Rockefeller's success was due in large part to Rockefeller's natural business abilities.

During the Civil War their business expanded rapidly. Grain prices went up and so did their commissions. Most of their selling was done on commission, so Clark & Rockefeller took no risks from price fluctuations. Rockefeller's style was very precise and calculated. He was not a gambler but a planner. He avoided speculation and refused to make advances or loans.

Rockefeller was extremely hard working. He traveled extensively, drumming up business throughout Ohio, and then would go to the banks and borrow large sums of money to handle the shipments. This aggressive style built the business up every year.

However, by the early 1860s, Rockefeller realized that the future of the commission merchant business in Cleveland was going to be limited. He had become convinced that the railroads were going to become the primary means of transportation for agricultural commodities. This would be to the disadvantage of Cleveland, because its position as an important Lake Erie port was its primary transportation advantage. He saw that the rising grain output of the Midwest and the Northwest of J. J. Hill would change the nature of the business for good. The huge elevators on Lake Michigan and the flour-millers of Minneapolis would be the dominant players in the business. Rockefeller came to believe that the future of Cleveland lay in the collection and shipment of raw industrial materials -- not agricultural commodities. This would allow Cleveland to exploit its geographical advantages -- mid-way between the Eastern seaboard and Chicago -- and accessible to both rail and water transportation. He saw his chance in 1863 -- oil.

Oil Refining 1863-65
On August 27, 1859, Edwin Drake struck oil near Titusville, Pennsylvania, setting off a frenzied oil boom in what soon became known as the "oil regions" of northwestern Pennsylvania. Drake was the employee of a group of New Haven, Connecticut, investors in the Pennsylvania Rock Oil Company. They had obtained a sample of the Pennsylvania oil and had a Yale University chemist analyze it. The chemist determined that the Pennsylvania oil was of very high quality and could be refined into a variety of useful products.

The technology used by Drake was not new. What was new was the idea of drilling for oil -- the idea that you could pump oil out of the ground like you could pump water.

The technology for drilling wells was quite advanced by 1859. To that time, wells were drilled for either water or salt (more accurately, brine which would be refined to get the salt). In the process of drilling for salt all over the United States in the early 19th century it was not uncommon -- especially in the Pennsylvania area - to get oil seepage into the salt well. Most of the time this was regarded as a nuisance, but some enterprising merchants went into the business of selling the oil in small bottles as a "Natural Remedy" or "Curative Agent."

The technology for refining oil was also known by the early 1850s. Doctor Abraham Gesner, a Canadian, in August 1846 patented a method for distilling kerosene (a name he invented from the Greek "keros" - wax - and "elaion" - oil) from coal. In 1850, a Scottish industrial chemist, James Young, patented a method of obtaining "burning oils" from petroleum through destructive distillation. In 1852 two Boston chemists, Luther and William Atwood, began making lubricants from coal tar. Finally, in 1856, Samuel Downer, a whale-oil merchant, bought out the Atwoods and boosted production to 650,000 gallons of refined oil a year. By 1861, coal-oil lamps were widespread and coal-oil was even made in Cleveland.

Rockefeller began investigating the feasibility of entering the oil refining business in 1862 and the firm of Andrews, Clark & Company was formed in 1863. (Samuel Adams had experience with shale-oil refining, and Clark brought in his brothers.) Probably figuring in Rockefeller's decision to enter the business was the entry into Cleveland later that year of the long-planned Atlantic & Great Western Railroad. The A&GW line went east to Meadville, Pennsylvania, then northeast to Corry, Pennsylvania, and then across the border into New York state, where it connected to the Erie Railroad. The A&GW also had branches into the heart of the oil regions -- Titusville and Franklin. This gave Cleveland two routes to New York City -- the New York Central-Lake Shore system, and the A&GW-Erie connection. This immediately gave Cleveland a transportation advantage over Pittsburgh, which was dominated by the Pennsylvania Railroad.

The Pennsylvania oil was of high quality. One barrel yielded 60-65% illuminating oil, 10% gasoline, 5-10% benzoyl or naphtha (a volatile inflammable liquid used as a solvent in dry cleaning, varnish making, etc.), with the remainder tar and wastes.

Rockefeller abhorred waste and devoted considerable energy to increasing the efficiency of his refining business. He believed that the secret of success was attention to detail - to wringing little efficiencies out of every aspect of his business. He hired his own plumber and bought his own plumbing supplies. He built his own cooperage shop and made his own barrels for the oil. He bought tracts of white-oak timber for making the barrels. Instead of transporting the freshly cut green timber directly to the cooperage shop, he had kilns built on the timber tracts to dry the wood on site, to reduce the shipping weight of the lumber. He bought his own wagons and horses to transport the wood to the cooperage shop in Cleveland. (We would call this "vertical integration" today.)

Oil Refining 1865-1870
In February 1865, at the age of 24, Rockefeller bought out the Clark brothers (Maurice Clark had brought his brothers into the refining business) for $72,500 and gained complete control of the business. The Clarks had resisted borrowing money to expand and Rockefeller was convinced of the correctness of his course. He immediately moved to greatly extend his enterprise. He borrowed heavily and plowed all his profits back into the business in order to expand it further, and took decisive steps to strengthen and increase the efficiency of all aspects of the firm.

In 1866, John D. brought his brother William Rockefeller into the partnership and they built another refinery in Cleveland which they named the Standard Works. They also opened a New York City office with William Rockefeller in charge, to handle the export business, which eventually became larger than the domestic business.

Henry M. Flagler
In 1867, Henry M. Flagler (1830-1913) became a partner, and Rockefeller, Andrews & Flagler was formed. Flagler had left school at age 14. Not wanting to burden his poor family any further, he walked to the Erie Canal in 1844 and took it to Lake Erie, and then went to Ohio via a lake steamer. Flagler and Rockefeller had met years earlier in Bellevue, Ohio, when Rockefeller was buying grain for his commission house and Flagler was a grain merchant. Flagler had gone into the salt well business but went broke in 1865. He began to recoup his fortune in 1865 in Cleveland as a manufacturer of oil barrels and had an office in the same building as Rockefeller. Flagler and Rockefeller were very much alike -- ambitious and shrewd, with a taste for expansion. Flager's wife's uncle, Stephen V. Harkness, became a silent partner and made substantial investments in the partnership, though he never took an active part in running the business. These investments by Harkness and Flagler were used to expand the business even further.

By 1868, Rockefeller, Andrews & Flagler was the largest refiner in the world. Flagler and Rockefeller understood that the only way to make profits consistently in oil refining was to make the business as large as possible and to utilize all their "waste" products. The refining process during this early period was very primitive -- refining consisted simply of cooking the oil and purifying it somewhat. The physical plant was simple: some large vats, stills, the piping, and a few chemicals. A small refinery could be set up with just $10,000, and a large one with $50,000. In modern language, the barriers to entry were very, very low. It would be like setting up a small business in today's business climate.

Consequently, if the price of kerosene was high, even the small and inefficient refiners could make good money. So, even when the price of kerosene fell sharply, driving some refiners out of business, the entry costs were so low that when times were good many small operators could enter the business cheaply, making it a very competitive market.

It was the logic of this competitive structure that determined Rockefeller and Flagler's course of action.

1. They built high-quality, larger, better-planned refineries. They built permanent facilities using the best materials available.

2. They owned their own cooperage (barrel making) plant, their own white-oak timber and drying facilities, and bought their own hoop iron. Consequently, they cut the cost of a barrel from about $3.00 to less than $1.50.

3. They manufactured their own sulfuric acid (which was used in the purification process) and devised technology to recover it for re-use.

4. They owned their own drayage service, consisting of at least 20 wagons in 1868.

5. They owned their own warehouses in New York City and their own boats on the Hudson and East Rivers to transport their oil.

6. They were the first to ship oil via tank cars (albeit big wooden tubs mounted in pairs on flat cars -- later to evolve into the modern form of a tank car). And they owned their own fleet of tank cars.

7. They built huge holding tanks near their refineries for storing crude and refined oil, with the equipment for drawing off the oil from the tank cars into the holding tanks.

8. Their huge size made it economical to build the necessary physical plant to handle all the "waste" products from the refining of kerosene. They began manufacturing high quality lubricating oil that quickly replaced lard oil as a lubricant for machinery. Gasoline, which many refiners surreptitiously dumped into the Cuyahoga River at night (the river often caught fire), Rockefeller and Flagler used as fuel. They manufactured benzene (used as a cleaning fluid; a solvent for fat, gums, and resin; and to make varnish), paraffin (insoluble in water, used for making candles, waterproofing paper, preservative coatings, etc.), and petrolatum (used as a basis for ointments and as a protective dressing; as a local application in inflammation of mucous membrane; as an intestinal lubricant, etc. -- white petrolatum later marketed under the brand name Vaseline). They shipped naphtha (volatile inflammable liquid used as a solvent in dry cleaning and in wax preparations, varnish and paint making, burning fluid for illumination, and as a fuel for motors) to gas plants and other users.

In short, nothing was left to chance, nothing was guessed at, nothing left uncounted and measured. Efficiencies down to the smallest detail of the business were the order of the day. Economy, precision, and foresight were the cornerstones of their success.

The sheer size of the business and the fact that Cleveland was served by two railroad systems -- the New York Central (via the Lake Shore) and the Erie (via the Atlantic & Great Western -- which Jay Gould bought in 1868) -- and had access to the Lake for water-borne shipping, gave Rockefeller and Flagler tremendous leverage with the railroads. Consequently, Flagler was able to negotiate big rebates from the railroads. The combination of size, efficiency, and the rebates gave Rockefeller and Flagler an advantage over other refiners that they would never relinquish.

The railroad situation benefited not only Rockefeller and Flagler; other Cleveland refiners also benefited at the expense of the refiners in Pittsburgh. Pittsburgh was a prisoner to the Pennsylvania Railroad, which had a monopoly in that city. The Pennsylvania Railroad wanted to ship everything to Philadelphia because it meant more money for them. Consequently, Cleveland refiners had a built-in advantage over Pittsburgh. In this regard, the railroads - the Erie and New York Central -- were not "victims" of the "crooked" refiners; rather, the railroads looked upon the refiners as associates and co-workers. They had a commonality of interests.

The Standard Oil Company: 1870-1882
On January 10, 1870, the Standard Oil Company of Ohio was created by John D. Rockefeller (30%), William Rockefeller (13.34%), Henry Flagler (16.67%), Samuel Andrews (16.67%), Stephen Harkness (13.34%), and O. B. Jennings (brother-in-law of William Rockefeller, 10%). It held about 10% of the oil business at the time of its formation.

In Rockefeller's eyes, the state of the oil business was chaotic. Because entry costs were so low in both oil drilling and oil refining, the market was glutted with crude oil with an accompanying high level of waste. In his view, the theory of free competition did not work well when there was a mix of very large, efficient firms and many medium and small firms. His view was that the weak firms, in their attempts to survive, drove prices down below production costs, hurting even the well-managed firms such as his own.

Although his economics may be suspect in modern eyes, his solution -- a market with a few (maybe one!) large, vertically integrated firms - in effect an oligopolistic market -- was what other industrial sectors eventually evolved into. What makes oil stand out is that it happened by design -- as the result of a plan formulated by a single person - John D. Rockefeller.

During 1871, Rockefeller formulated his plan for consolidating all oil refining firms into one great organization with the aim of eliminating excess capacity and price-cutting. Although no written records exist, both Rockefeller and Flagler 30 years later claimed this was when they worked out the master plan, which they later implemented. The claim that the plan was formulated in 1871 is evidenced by the fact that all the major Cleveland banks joined the Standard Oil organization in 1871 and later backed Rockefeller and Flagler to the hilt in their rapid expansion.

The South Improvement Scheme
What interrupted Rockefeller and Flagler's careful planning was the emergence of the South Improvement scheme of 1871. Tom Scott of the Pennsylvania Railroad came up with the idea. The scheme was inspired by the Anthracite Railroad combination of 1868-71 in which five railroads and two coal companies bought up all the coal pits along the five railroads in order to control output and prices.

The South Improvement Company had been created by the Pennsylvania Legislature in 1870 and its charter allowed the Company to hold the stocks of other companies outside the state. This was an unusual power at the time and made it ideal for Scott's scheme. Scott arranged for the purchase of the charter by a group of Philadelphia and Pittsburgh refiners with Scott in the background.

The scheme was essentially a plan to unite the oil-carrying railroads in a pool; to unite the refiners in an association, the South Improvement Company; and to tie the two elements together by agreements which would stop "destructive" price-cutting and restore railroad freight charges to a profitable level.

To enforce the cooperation of refiners, a set of rebates was agreed to for participating refiners. This alone would have undoubtedly forced all the refiners into the combine, but the scheme did not stop there. In what turned out to be a public relations disaster, the participants decided to add a drawback on every barrel shipped by a non-participant equal to the ordinary rebate. In effect, this would be a tax on non-participants, the proceeds of which would be transferred to the participating oil refiners.

What the planners forgot, however, was to include the producers in the scheme as well. Despite efforts to reassure the drillers in the Oil Regions that the scheme would benefit them as well by keeping prices up, the Oil Regions Men revolted and organized an effective boycott of all the refiners and railroads they suspected of being part of the scheme. Consequently, the scheme collapsed in 1872 before it was ever implemented.

Subsequent historians repeated the view of many at the time that Rockefeller had been one of the originators of the South Improvement Scheme. In fact he had not been, but he and Flagler did agree to participate, and worked hard to set up the scheme. Rockefeller's most important error of his career was to not go public at the time with his side of the story. This was the first time that a broad public became aware of Rockefeller and the episode was to forever tarnish his reputation. He said of it later, "Our silence encouraged the wildest romancers to spread wild tales about us;" and on another occasion, "I shall never cease to regret that at that time we never called in the reporters."

In December 1871, during the dust-up over the South Improvement Scheme, Rockefeller and Flagler set in motion their plan to consolidate the industry. They began by buying up all their competitors in Cleveland. The strategy and tactics were Rockefeller's and he handled the negotiations with the rival refiners personally. He began with the strongest refineries first. He believed that if he had bought up the weak refineries first then he would be faced with higher prices later and stiffer resistance. Consequently, he approached the strongest first and bought them out.

His technique was always the same. The merger would be effected by an increase in the capitalization of The Standard Oil. The rival refinery would be appraised and the owners would be given Standard Oil stock in proportion to the value of their property and good will and they would be made partners in Standard Oil. The more talented owners would also be brought into the Standard Oil management. If they insisted upon cash they received it.

Later some owners who had been bought out complained to the press that they had been treated unfairly. The evidence is overwhelming that the Standard's rivals were paid fair -- even generous -- prices for their property, and if they had the wisdom to take Standard Oil stock, they ended up very rich indeed.

By March or April 1872, Rockefeller had bought up and/or merged with almost all the refineries in Cleveland. The inefficient and poorly constructed refineries were dismantled, while the better-quality ones were upgraded to Rockefeller and Flagler's standards.

After the conquest of Cleveland, the Standard inexorably expanded. All the transactions were kept as secret as possible. The leaders of the Standard were so successful in this secrecy at times that many rival independent refiners were totally unaware of what was going on.

In 1872, Jabez A. Bostwick was brought into the Standard along with his important oil facilities on Long Island and on New York Harbor. In 1873, Standard acquired Devoe Manufacturing Company (Long Island) and Chess, Carley and its important distribution system in the Kentucky region (Louisville, KY). In 1874, Standard began building its own pipeline system using Bostwick & Co.

The teamsters, men who drove commercial wagons drawn by horse-teams, fought pipelines tooth and nail, but were destined to lose because it was so much cheaper and easier for the producers to send their crude through pipes as opposed to wagons. It was a short logical step to extend those pipelines directly to refineries. Rockefeller made a deal with the Erie Railroad and gained control of important terminal facilities in New York harbor in exchange for shipping half of Standard's oil on the Erie.

The Standard expanded into the Pennsylvania Oil Regions, gaining control of the Imperial Refinery near Oil City and bringing J.J. Vandergrift into the Standard management. Two large refineries in Titusville joined the Standard and John Archbold (later the President of Standard Oil) was brought into the management. The Standard expanded into Pittsburgh by merging Warden, Frew & Co. and Lockhart, Frew & Co., thereby acquiring half the refining capacity of Pittsburgh. The Standard expanded into Philadelphia by buying the largest refinery.

In 1875, the Standard bought more pipelines and firms in the oil buying business and merged them all into the United Pipe Lines in 1877. Flagler and Rockefeller negotiated an agreement with the railroads: the Pennsylvania Railroad would carry 51% of Standard Oil shipments; the Erie 20%; the NY Central 20%; and the Baltimore & Ohio 9%; and obtained rebates from all the railroads for being an "evener" (that is, the Standard was charged with making certain that the railroads all got their "fair" share).

In 1875-76, Johnson N. Camden (later a senator from West Virginia) came into the Standard secretly and moved to buy up all the West Virginia oil supply to squeeze the Pittsburgh independents. By 1876 Camden gained control of most of the West Virginia refineries.

In 1877, Standard bought the Columbia Conduit Co. of PA and gained control of its pipelines and refineries. Columbia had tried to bypass the Pennsylvania Railroad by building a pipeline from the Oil Regions down to the new B&O railroad line near Pittsburgh. The Pennsylvania Railroad used armed guards to prevent them from laying a pipeline under its right-of-way north of Pittsburgh. The Standard gained control of most of the property of the Empire Transportation Company -- a subsidiary of the Pennsylvania Railroad that had its own fleet of tank cars, pipelines, lake steamers, and terminals in New York harbor. The Empire had briefly threatened the Standard, but Rockefeller built 600 new tank cars, cut prices, and cancelled all his shipments over the Pennsylvania Railroad. The railroad capitulated and sold Rockefeller the Empire's assets.

In 1877-78, the Standard and the trunk lines agreed on a new split: Pennsylvania Railroad 47%; NY Central 21%; Erie 21%; B&O 11%. New York City was to get 63% of the total traffic and Baltimore and Philadelphia 37%. On refined oil, non-Standard companies shipping from Cleveland, Pittsburgh, and Titusville paid $1.44.5 per barrel while the Standard paid $.80!

In 1878, the Standard forced the railroads to pay a drawback of 20-35 cents a barrel of crude oil shipped by any other party. In effect, this was a tax levied by the Standard upon its competitors. This combination of rebates and "taxes" (some authors dub this a "drawback" -- but that term is also used to refer to a specific type of rebate) is what forced the remaining independent refiners to capitulate to the Standard. Production increased in the Pennsylvania Oil Regions because of a large discovery in the Bradford area. Standard was forced to frantically build as many large holding tanks as possible to hold the market glut of oil.

By 1879, the Standard Oil Company did about 90 percent of the refining in the United States, with almost 70 percent being exported overseas. The business had become so large and so complex that Rockefeller only dealt with the major problems and the larger outlines of his affairs. Rockefeller was only 40 years old.

The Standard's only serious competitor - the Tidewater Pipe-Line Company (later the Tidewater Oil Company) - emerged in 1879-83. It took Rockefeller by surprise and succeeded in building a pipeline from the Oil Regions east across northern Pennsylvania to Williamsport, where the oil was transferred to the Reading Railroad. The Reading then took the oil down to a refinery at Chester, Pennsylvania on the Delaware Bay. Rockefeller tried to gain control of Tidewater but failed, and his rival had about 10% of the market in 1888.

The Standard Oil Trust: 1882-1892
On January 2, 1882 the Standard Oil Trust was formed. Attorney Samuel Dodd came up with the idea of a trust. A Board of Trustees was set up and all the Standard properties were placed in its hands. Every stockholder received 20 Trust certificates for each share of Standard Oil stock, and all the profits of the component companies were sent to the nine trustees who determined the dividends. The nine trustees elected the directors and officers of all the component companies.

The Trust was capitalized quite conservatively at $70,000,000 - the true value was about $200,000,000 (no stock watering at the Standard). The nine Trustees controlled 23,314 of the 35,000 shares with J.D. Rockefeller holding 9,585 shares.

Rockefeller, at age 43, was the leader of the Trust because he was "primus inter pares" (first among his peers), not a dictator. As such, he could not dictate policy even when he felt strongly that he was right. An example of this was the Lima Oil field in Ohio. The field had been discovered in the early 1880s. The problem was that the oil was "sour" -- that is, it had a very high sulfur content so it smelled like rotten eggs. Even worse, when it was refined into kerosene and used in lamps it produced too much soot, which coated the lamp chimneys. Rockefeller wanted to buy up as much of the oil as possible and worry about solving the sulfur problem later. The other directors were unenthusiastic about this policy and John Archbold began quietly selling some of his Trust shares in the Standard. By 1888, the Standard owned 40,000,000 barrels of the Lima oil, which were stored in huge tank farms at the fields. Rockefeller hired a great chemist, Herman Frasch, who, with the aid of talented Standard engineers, devised a process using copper oxides to remove the sulfur from the oil. The result was a bonanza for the Standard, vindicating Rockefeller's judgement.

By 1890, The Standard had set up an elaborate nationwide distribution system that reached nearly every American town. By 1904, 80% of American towns were served by Standard Oil carts that delivered the various products directly to businesses and homes. Standard Oil's campaign to dominate even the smallest of the retail markets is probably the single most important reason that company became so disliked by the American public. The Standard was aggressive in its marketing practices and tried to force all grocery and hardware stores that sold kerosene and lubricants to sell only Standard products. This policy - though successful in the short run - made the Standard widely unpopular and simply increased its vulnerability to political attack.

On March 21, 1892 the Trust was formally dissolved. The Attorney General of Ohio had brought suit against the Trust in 1890 and it lost in 1892. Each trust certificate was to be exchanged for the proportioned share of stock in the 20 component companies of the Standard. The irony is that this had no practical effect on the Combination. The same men were still in charge, only now they were simply the majority shareholders of all the component companies.

Rockefeller Exits: 1892-189 7
During 1891-92 all the evidence suggests that Rockefeller had a partial nervous breakdown from overwork. He lost all of his hair, including his eyebrows, and suffered from ill health in the early 1890s.

During this period Rockefeller's wealth had increased to such an extent that his major problem was what to do with it all. He solved this problem by hiring Frederick T. Gates in September of 1891 as a full-time manager of his fortune. By this time, Rockefeller was literally inundated with appeals from individuals and charities for funds. Gates not only removed this burden; he also oversaw all of Rockefeller's investments, which were becoming huge in their own right. For example, by 1897 Rockefeller owned large holdings of the Missabe iron range in Minnesota, a railroad to carry the ore to Lake Superior, and a fleet of huge ore-carrying lake steamers. In 1901 Rockefeller sold his iron ore-related business to J.P. Morgan for $80,000,000 with an estimated profit of at least $50,000,000 -- a huge fortune in its own right, but it was just one of his investments. Morgan added the Rockefeller properties to the U.S. Steel Corporation.

By 1896, Rockefeller stopped going to his office daily and in 1897 he retired, at the age of 58. He took part in some management activity until 1899 but none to speak of thereafter. John Archbold ran Standard Oil from the mid-1890s onward. Archbold disliked prominence and asked Rockefeller to remain as the nominal president of Standard. Not publicly announcing his retirement was a great mistake on Rockefeller's part. Rockefeller had resisted the temptation to exploit the Standard's near-monopoly position by raising prices "too" much. Although Rockefeller's pricing policies did result in some "monopoly profits" for the Standard, they were fairly mild. Not so Archbold. He raised prices aggressively, and the dividends rolled in. The consequence was that Rockefeller got all the blame for the policies even though he had almost no further role in management.

Retirement and Philanthropy
From the mid-1890s until his death in 1937, Rockefeller's activities were philanthropic. Rockefeller's fortune peaked in 1912 at almost $900,000,000, but by that time he had already given away hundreds of millions of dollars. His son, John D. Rockefeller, Jr. in 1897 joined Gates in the full time management of the fortune.

The University of Chicago - which Rockefeller was largely responsible for creating - alone received $75,000,000 by 1932.

He set up, at the urging of his son, the Rockefeller Institute for Medical Research (now Rockefeller University) and his gifts to it totaled $50,000,000 by the 1930s.

He founded the General Education Board in 1903 (later the Rockefeller Foundation). The General Education Board helped to establish high schools throughout the South by providing free professional advice on improving instruction and education. The effort was a cooperative one, and local money was used to build the high schools. In 1919, Rockefeller donated $50,000,000 to the Board to raise academic salaries, which were very low in the wake of WWI.

The Rockefeller Foundation was officially established in 1913 and Rockefeller transferred $235,000,000 to it by 1929.

In 1909, Rockefeller established the Rockefeller Sanitary Commission which was largely responsible for eradicating hookworm in the South by 1927.

When Rockefeller died, on May 23, 1937, his estate totaled only $26,410,837. He had given most of his property to his philanthropies and to his son and other heirs.

Rockefeller was a Schumpeteran entrepreneur. He clearly changed "the stream of the allocation of resources over time by introducing new departures into the flow of economic life" by creating the modern oil industry. His emphasis on size and efficiency and the use of modern chemistry resulted in the development of a wide variety of new products that made the lives of ordinary people better as a consequence. He made light cheap for untold millions and his great creation was ready, willing, and able to provide the cheap gasoline when it was needed, thus ushering in the age of the automobile in America.

Last, but not least, he set the standard for philanthropy. Just the eradication of hookworm in the South alone would merit his place as one of the great humanitarians of the 20th Century. But his reputation was so sullied that he never received the credit that he was due for this great act on behalf of humankind.

[This biography of John D. Rockefeller Sr. was written by Keith Poole, Professor of Political Science at the University of Georgia, as part of a course on Enterpreneurs and American Economic Growth.]

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Biography: John D. Rockefeller, Senior | American Experience | PBS

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By the age of 12, John had saved over $50 from working for neighbors and raising some turkeys for his mother

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John D. Rockefeller, in full John Davison Rockefeller, (born July 8, 1839, Richford, New York, U.S.-died May 23, 1937, Ormond Beach, Florida), American industrialist and philanthropist, founder of the Standard Oil Company, which dominated the oil industry and was the first great U.S. business trust.

Rockefeller was the eldest son and second of six children born to traveling physician and snake-oil salesman William ("Big Bill") Avery Rockefeller and Eliza Davison Rockefeller. He moved with his family to Moravia, New York, and, in 1851, to Oswego, New York, where he attended Oswego Academy. The family relocated to Strongsville, a town near Cleveland, Ohio, in 1853, and six years later-after attending and later dropping out of Cleveland's Central High School, taking a single business class at Folsom Mercantile College, and working as a bookkeeper-Rockefeller established his first enterprise, a commission business dealing in hay, grain, meats, and other goods. Sensing the commercial potential of the expanding oil production in western Pennsylvania in the early 1860s, he built his first oil refinery, near Cleveland, in 1863. Within two years it was the largest refinery in the area, and thereafter Rockefeller devoted himself exclusively to the oil business.

In 1870 Rockefeller and a few associates, a group that included American financier Henry M. Flagler, incorporated the Standard Oil Company (Ohio). Because of Rockefeller's emphasis on economical operations, Standard prospered and began to buy out its competitors until, by 1872, it controlled nearly all the refineries in Cleveland. That fact enabled the company to negotiate with railroads for favoured rates on its shipments of oil. It acquired pipelines and terminal facilities, purchased competing refineries in other cities, and vigorously sought to expand its markets in the United States and abroad. In 1881 Rockefeller and his associates placed the stock of Standard of Ohio and its affiliates in other states under the control of a board of nine trustees, with Rockefeller at the head. They thus established the first major U.S. "trust" and set a pattern of organization for other monopolies. By 1882 Standard Oil had a near monopoly on the oil business in the United States.

The aggressive competitive practices of Standard Oil, which many regarded as ruthless, and the growing public hostility toward monopolies, of which Standard was the best-known, caused some industrialized states to enact antimonopoly laws and led to the passage by the U.S. Congress of the Sherman Antitrust Act in 1890 ( see also antitrust law). In 1892 the Ohio Supreme Court held that the Standard Oil Trust was a monopoly in violation of an Ohio law prohibiting monopolies. Rockefeller evaded the decision by dissolving the trust and transferring its properties to companies in other states, with interlocking directorates so that the same nine men controlled the operations of the affiliated companies. In 1899 these companies were brought back together in a holding company, Standard Oil Company (New Jersey), which existed until 1911, when the U.S. Supreme Court declared it in violation of the Sherman Antitrust Act and therefore illegal. Standard Oil's questionable ethics were also taken to task by American journalist Ida Tarbell in her 19-part exposé and commentary called The History of the Standard Oil Company, which was released in installments by McClure's Magazine between 1902 and 1904.

A devout Baptist, Rockefeller turned his attention increasingly during the 1890s to charities and benevolence; after 1897 he devoted himself completely to philanthropy. He made possible the founding of the University of Chicago in 1892, and by the time of his death-from a heart attack in 1937, shortly before his 98th birthday-he had given it some $35 million. In association with his son, John D. Rockefeller, Jr., he created major philanthropic institutions, including the Rockefeller Institute for Medical Research (renamed Rockefeller University) in New York City (1901), the General Education Board (1902), and the Rockefeller Foundation (1913). Rockefeller's benefactions during his lifetime totaled more than $500 million.

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John D. Rockefeller | Biography, Industry, Philanthropy, Facts, & Death

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John D. Rockefeller, American industrialist and philanthropist, founder of the Standard Oil Company, which dominated the oil industry and was the first great U.S. business trust. Learn more about Standard Oil's reorganization in the face of antitrust actions and about Rockefeller's philanthropy.