Sunday, March 24, 2013

John D. Rockefeller

John D. Rockefeller

1839 - 1937

Founder Standard Oil

John Davison Rockefeller was born July 8, 1839 on a farm in Richmond, New York.  He was the second child of six born to William Avery and Eliza Davison Rockefeller.  The family lived modestly, John’s father being a “pitch man” charging up to $25.00 for treatments for cancers.  His father traveled and was gone for months at time and John’s upbringing fell mainly on his mother, who was very religious and disciplined.  She taught her children to work, to save and to give to charities.  After moving to Moravia and later to Owego, New York, the family moved to Ohio in 1853.  They bought a house near Cleveland, in Strongsville, Ohio and John attended Central High School in Cleveland. John left high school in 1855 and took a six-month business course at Folsom Mercantile College.  He completed the course in three months and began searching for a job as a bookkeeper or clerk in Cleveland.  In 1855, business in Cleveland was adverse and John had trouble finding a job.  After six weeks, Hewitt & Tuttle, a small company of produce shippers and commission merchants employed him as an assistant bookkeeper.  Rockefeller worked hard and impressed his employers, arranging complicated transportation deals moving freight by railroad, canal and lake boats.  He began to trade for his own account and his combination of caution; precision and resolve brought him to the attention of the Cleveland business community.

By: Stanley Yavneh Klos
Edited By: Naomi Yavneh Klos, Ph.D.

  • First United American Republic: United Colonies of North America: 13 British Colonies United in Congress was founded by 12 colonies on September 5th, 1774 (Georgia joined in 1775)  and governed through a British Colonial Continental Congress.  Peyton Randolph and George Washington served, respectively, as the Republic's first President and Commander-in-Chief;
  • Second United American Republic: The United States of America: 13 Independent States United in Congress was founded by 12 states on July 2nd, 1776 (New York abstained until July 8th), and governed through the United States Continental CongressJohn Hancock and George Washington served, respectively, as the Republic's first President and Commander-in-Chief; 
  • Third United American Republic: The United States of America: A Perpetual Union was founded by 13 States on March 1st, 1781, with the enactment of the first U.S. Constitution, the Articles of Confederation, and governed through the United States in Congress Assembled.  Samuel Huntington and George Washington served, respectively, as the Republic's first President and Commander-in-Chief; 
  • Fourth United American Republic: The United States of America: We the People  was formed by 11 states on March 4th, 1789 (North Carolina and Rhode Island joined in November 1789 and May 1790, respectively), with the enactment of the U.S. Constitution of 1787. The fourth and current United States Republic governs through  the U.S. House of Representatives and Senate in Congress Assembled, the U.S. President and Commander-in-Chief, and the U.S. Supreme Court.  George Washington served as the Republic's first President and Commander-in-Chief.

In 1859, several months before his 20th birthday, Rockefeller entered into business for himself, forming a partnership with a neighbor, Maurice Clark.  Each man put up $2,000, John had $1,000 he had saved and he borrowed the other $1,000 from his father.  Due to Rockefeller’s natural business abilities, Clark & Rockefeller earned a small profit their first year in business and the company became very successful.  Their business expanded rapidly during the Civil War and the company continued earning a profit for the two partners.  In 1863, Rockefeller and Clark entered the oil business as refiners.  Cleveland had become a major refining center for the booming new oil industry.  Together with a new partner, Samuel Andrews who had experience in oil refining, and two of Maurice Clark’s brothers, they built Andrews, Clark & Co.  The five partners disagreed about financing the company’s expansion and in 1865, Rockefeller bought the interest of the Clarks for $72,500 and with Andrews, formed Rockefeller & Andrews.  Rockefeller, at the age of 24, leveraged the business and expanded intensely.  He plowed all his profits back into the business and took decisive steps to strengthen his company.  In 1866, John brought his brother William into the business to manage the New York City office and handle the export business.

In 1870 he organized The Standard Oil Company with his brother William, Samuel Andrews, Henry M. Flagler, Stephen V. Harkness and O. B. Jennings.  Rockefeller felt the state of the oil business was in disarray.  Entry costs were low and the market was glutted with oil and a resulting high level of waste.  He felt the inefficiency of the smaller firms, in their attempts to survive, drove the prices down below the production costs and hurt the larger more efficient firms like his own.  His solution was one large company, vertically integrated, controlling the refining and storage of oil, and the manufacturing of ancillary products such as paint and glue.   By 1872, Standard Oil had purchased and controlled nearly all the refining firms in Cleveland.  Standard Oil prospered and all its properties were merged in 1882 into the Standard Oil Trust, which was effectively one giant company. 

In 1896, Rockefeller decided to give up leadership of the day-to-day business of Standard Oil and focused his efforts on philanthropy.  Ever since he was a boy following his mother’s teachings, he had contributed to his church and other charities, and from the mid 1890’s until his death in 1937, Rockefeller’s activities were all philanthropic.  Rockefeller hired the Reverend Frederick T. Gates who had worked with the American Baptist Education Society and the University of Chicago to help him manage his philanthropy.  In 1897, his son, John D. Rockefeller, Jr. assisted Gates and with their advice, Rockefeller established a series of institutions that are important in the history of American philanthropy, science, medicine and public health that continues today.

Rockefeller died on May 23, 1937 at the age of 97.  He is buried in Lakeview Cemetery in Cleveland.

John D. Rockefeller

By: Trentwell Mason White - 1920

JOHN D. ROCKEFELLER'S first business experience was at the age of eight, when he became the owner of a few turkeys. At once he was confronted with certain hard realities of life that had never occurred to him. He had no money — yet he had to supply the birds with food! It was in a way an amusing predicament he was in — for his livestock threatened to turn out a white elephant. His mother, however, came to the rescue, presenting him with the curds from the milk to feed them. This solved the boy's problem, and, as he took care of the birds himself, their keep cost him nothing. After a while he sold his turkeys in a businesslike way, the money he received for them being all profit.

John was only a little boy when he conducted this, his first commercial transaction, but it was a valuable lesson in business, for he learned that capital is necessary to conduct any kind of business. This gave him some idea of the value of money (capital), and led him into habits of thrift. Later on in life when asked, at his fine home at Pocantico, how he managed to buy such a large and fine estate, he replied:

"By saving my pennies."

The richest man in the world's earliest philanthropic work was in lifting the mortgage from his home church. His parents were Baptists and, from his earliest age, John had taken a great interest in church work. He was a constant attendant, and soon became a leader among the young people. When only eighteen he was elected a trustee of his church. For some years the church had been struggling along under a debt of $2,000. One Sunday, to John's horror, the minister announced that the mortgage was about to be foreclosed, and that unless the congregation quickly raised $2,000 they would lose their church building.

The announcement made a profound impression upon the youth, and, after the service, he posted himself at the church door, and buttonholed the worshipers as they came out, insisting upon getting from each one of them a promise of a contribution toward canceling the debt. He continued his campaign for some months, and a proud day it was for John D. Rockefeller when he collected the last cent, and the mortgage was burnt amid general rejoicings. This was, Mr. Rockefeller said once, the hardest work he ever did!

As a boy the future Oil King was brought up in the good old-fashioned way. "Spare the rod, spoil the child," was his mother's motto, and she proved a "good deal of a disciplinarian," upholding the standard of the family with a birch switch whenever it showed a tendency to deteriorate.

He was, for example, once soundly whipped for something he didn't do. After the whipping, when he was able to explain, his mother said: "Never mind, we have started in on this whipping, and it will do for the next time."

On another occasion, John and the boys with whom he used to play went skating by moonlight — something he was forbidden to do. No sooner had they got started than they heard a cry for help, and found a neighbor who had broken through the ice and was nearly drowned. By pushing a pole to him, the boys saved his life, restoring him safe and sound to his grateful family.

John and his brother William thought that because of this episode, the saving of this man's life, they would be "let off " and not punished for their disobedience. But, to their dismay, the idea proved to be erroneous! The birch was had in requisition as usual.

In this way was the habit of absolute obedience sternly drilled into the Rockefeller children.
Mr. Rockefeller is a native of Tioga County, New York, his grandfather, Godfrey, coming from Massachusetts and settling in Richford. In this village John Davison Rockefeller was born on July 8, 1839. While a child his father, William A. Rockefeller, drifted here and there, finally settling in Cleveland, Ohio, where he built a house for the family.

By this time, John, his eldest son, was a lad of fourteen and had had about the same boy-experience that falls to the lot of most boys. He had attended district school and done such work as chopping wood, taking care of horses, milking cows, weeding the garden, raising chickens and turkeys. He was, however, a silent, secretive sort of boy and never mixed with other youths. He went about things in a somewhat earnest and solemn way, but, whatever he had to do, he usually did well.

His father was tall and fine-looking, with a dominating personality, a great hunter and an unusually fine shot. He was, too, a very shrewd, practical man and Mr. Rockefeller has often acknowledged owing a great debt to his father for training him in practical ways. He was engaged in numerous enterprises, large and small, about which he used to talk very freely to his son John, explaining their significance; in addition, he tutored him in the principles and methods of business.

As a result of his early business training, the boy kept a little book, which he called "Ledger A," in which he used to set down all the money he made and all the money he spent, and also all sums he had given away in charity — for he had been taught to give regularly a certain percentage of his receipts to charitable objects. This little ledger is still in Mr. Rockefeller's possession and he is said to prize it above rubies.

It was the intention of his parents to send John to college, but he was anxious to go to work, so when he reached the age of sixteen he was taken from the high school where he had almost finished his course and sent to a commercial college in Cleveland. Here he was taught bookkeeping and some of the fundamental principles of commercial transactions, and this training, though lasting only a few months, proved of great value to him.

John's education being finished, the next thing for him to do was get a job. This was by no means easy, however. "I tramped the streets for days and weeks," Mr. Rockefeller relates, "asking merchants and storekeepers if they didn't want a boy." But no one seemed to need a boy, and "very few showed any overwhelming anxiety to talk with me on the subject. At last one man on the Cleveland docks told me that I might come back after the noonday meal."

He was in a fever of anxiety lest he lose this opportunity, but when, betimes, he presented himself to his prospective employer, he said: "We will give you a chance." This was on September 26, 1855, and no word was said about pay.

John went to work joyfully and with much energy and enthusiasm. When January came, his employers, Hewitt & Tuttle, gave him $50.00 for three months' work. These were his first real wages and the amount, $50.00, seemed to the boy almost a fortune. The firm was a wholesale produce commission and forwarding concern and John's work was clerical, in the office, under a bookkeeper who was a fine executive and disciplinarian and who received $2000.00 a year in lieu of the profits of the firm of which he was a member.

Beginning with the new year, John's salary was raised to $25.00 a month and when at the end of the year the bookkeeper left he took his position and did the work at a salary of $500.00 a year.

As the firm's business was general and very extensive, young Rockefeller got an unusually valuable experience in business. It was not long before he began to audit accounts and make himself useful in all sorts of business negotiations. In the passing of bills, collecting rents, adjusting railroad, canal and other claims, he met all sorts of people, against some of whom he often had to pit his own shrewdness, and all this increased his business knowledge and efficiency.

The next year he was offered a salary of $700.00, but considered that he was worth $800.00. When April came, this salary matter not having been settled, he resigned because of an opportunity he saw to go into the same business for himself. This opportunity came about in this way: Among the merchants in Cleveland, whose acquaintance he had made, was a young Englishman, M. B. Clark, who at this time wanted to enter business for himself and was looking for a partner. He had $2000 and was looking for a man with a like sum. Young Rockefeller had been very thrifty, jut he had only saved about $800, and didn't know where to get the balance. On talking over the matter at home, however, his father told him he had always intended to give each of his children $1,000 when they reached twenty-one. He offered to give John his share then and there if he would pay him interest at the rate of ten per cent. until he was twenty-one.

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Needless to say, John gladly accepted his father's offer, and the new firm of Clark & Rockefeller was launched. "It was a great thing to be my own employer," Mr. Rockefeller once said. "Mentally I swelled with pride — a partner in a firm with $4000 capital!"

Young Rockefeller was junior partner and had charge of the finances and books. Mr. Clark attended to the buying and selling. The firm at once began to do a large business, dealing in carload lots and cargoes of produce, and before long needed more capital to handle their growing business.

Mr. Rockefeller, as financial head of the firm, had now to negotiate his first loan. In some fear and trembling he asked the president of the bank for $2,000. His reply was: "All right, Mr. Rockefeller, you can have it. Just give me your own warehouse receipts; they're good enough for me."

The fact that a bank was willing to loan him $2000 greatly elated the young merchant, and he began to feel himself of some importance in the community. He was a business man!

Mr. Rockefeller now began to go out and solicit business, something he had never done before. In the course of his drumming, he pretty well covered Ohio and Indiana. To the surprise of the young partners, business increased so rapidly they could scarcely take care of it, and their first year's sales amounted to half a million dollars.

Of course, they had to keep on borrowing money as their business expanded, and young Rockefeller's loans from his father*were many. Once in a while — usually at very awkward times — his father would suddenly "call" a loan, saying: "My son, I find I have got to have that money."

"Of course, you shall have it at once," John would cheerfully answer.

His father did not need the money, but was simply applying a wholesome test, and in a week or two would offer it back again. John was not particularly pleased, however, with his father's tests to discover if his financial ability was equal to such shocks.

But it was very difficult in those days to raise money for business enterprises, and John was glad to pay his father the ten per cent. interest he charged him. This was the ruling rate in those days, though considered too high by many.

Meantime, the produce business of Clark & Rockefeller went on very prosperously and in the early sixties they organized a new firm to refine and deal in oil. It was composed of James and Richard Clark, Samuel Andrews and the firm of Clark & Rockefeller, who were the company. Mr. Andrews, who had mastered the process of cleansing (refining) crude oil with suphuric acid, was the practical man in the concern in charge of the manufacturing. In 1865, however, the partnership was dissolved and after settling the concern's indebtedness and collecting the money due it, it was decided to auction off the plant and good will.

By this time, young Rockefeller had waked up to petroleum possibilities. With the intuition of genius, he divined in a flash the wonderful opportunities all around him in the refining of oil. He saw the number of oil wells rapidly increasing and a great and growing business springing up in oil. So he was seized with the desire to pull out of his produce business, buy this oil plant and go into partnership with Mr. Andrews.

The day of the auction arrived and the bidding started in at $500.00. Young Rockefeller at once bid $1000, and then the bidding slowly mounted to $72,000. Mr. Rockefeller, although he didn't exactly know where he could get such a large sum from, at once bid $72,500. Upon which, Mr. Clark, who headed the other faction, said: "I'll go no higher, John; the business is yours."

"Shall I give you a check for it now?" asked Mr. Rockefeller.

To which Mr. Clark replied: "No, I'm glad to trust you for it; settle it at your convenience."
And so, as Mr. Rockefeller so modestly narrates in his recent book, "The firm of Rockefeller & Andrews was then established and this was really my start in the oil trade. It was my most important business for about forty years until, at the age of about fifty-six, I retired."
The oil business turned out to be for a long time a precarious and highly speculative business. The business of refining oil was a comparatively easy one, and soon every Tom, Dick and Harry was in the business. There was, too, an over-supply of petroleum and prices went down and down. This over-production raised some great problems and one of the most important and probably most difficult was to find foreign markets.

So the new oil firm found itself under the necessity of increasing its capital, of securing the best talent and experience obtainable, of buying the largest and best refining concerns, and of centralizing the management to secure greater economy and efficiency and at the same time a wider market.

Notwithstanding occasional setbacks, the business of the enlarged firm grew at an unexpected rate, necessitating branch refineries, storage tanks, agencies and large stocks at the most important seaboard cities and later on came the tremendous feat of establishing pipelines, through which the oil was pumped to markets at a great distance. These pipelines, upon which the entire oil business is dependent, were followed by other revolutionary improvements such as tank-cars and tank ships, the latter, vessels especially constructed for the transportation of oil in bulk to tropical and other countries.

In 1867, William Rockefeller & Co., Rockefeller & Andrews, Rockefeller & Co., and S. V. Harkness & H. M. Flagler united in forming the firm of Rockefeller, Andrews & Flagler, and this was really the starting point of the Standard Oil Co. Their reason for thus combining was to secure greater economy and efficiency and a larger business. As time went on and the vast possibilities of the oil industry became clearer, they induced others to put in money, and organized the Standard Oil Co. with a capital of one million dollars. This capital was increased in 1872 to $2,500,000 and two years later to $3,500,000. At the present time the total capital of the Standard Oil Co. and its subsidiaries or allied corporations probably exceeds a billion dollars.

A great many people have been lost in wonder at the amazing growth of the Standard Oil Co. and some people have not been backward in accusing it of unfair business methods. Mr. Rockefeller himself only a few years ago said that he ascribed the success of the Standard Oil Co. to "its consistent policy of making the volume of its business large through the merit and cheapness of its products. It has spared no expense in utilizing the best and most efficient method of manufacture. It has sought for the best superintendents and workmen and paid the best wages."

As a matter of fact, Mr. Rockefeller had faith in American oil, and was successful in bringing together vast sums of money to push it, against Russian and other competition, into every quarter of the world. He also utilized the by-products of the raw oil, building up a vast business in these alone, developing more than two hundred products of petroleum, such as Vaseline, candles, etc. Every kind of transportation — elephants, camels, burros, rafts, tank-vessels, Chinese and Indian coolies — helped in illuminating the remotest quarters of the world with Standard oil.

About 1893 — the panic year — Mr. Rockefeller became heavily interested in the iron-ore mines in the Northwest, later on building a fleet of ships on the Great Lakes to market his ore. Still later the whole immense properties were turned over to Mr. Carnegie's steel company at a good price.

Mr. Rockefeller was led to use his brain and money in these iron properties through the fact that he had, some years previously, made some investments in the stock of iron companies. These proving unremunerative, he got an associate, Mr. Gates, to go out there and report upon them. The report being unfavorable, as to management, financial condition, etc., he decided to buy out the owners, and operate the mines himself. His judgment as to their possibilities was as usual correct.

"Going over again in my mind," said Mr. Rockefeller once, the events connected with this ore experience that grew out of investments that seemed at the time to say the least, rather unpromising, I am impressed anew with the importance of a principle I have often referred to. If I can make this point clear to the young man — it may be benefit to him.

 The underlying, essential element of success in business affairs is to follow the established laws of high class dealing. Keep to broad and sure lines, and study them to be certain that they are correct ones. Watch the natural operations of trade, and keep within them. Don't even think of temporary or sharp advantages. Don't waste your effort on a thing which ends in a petty triumph unless you are satisfied with a life of petty success. Be sure that before you go into an enterprise you see your way clear to stay through to a successful end. Look ahead. Study diligently your capital requirements, and fortify yourself fully to cover possible setbacks, because you can absolutely count on meeting setbacks. There is no mystery in business success — there can be no permanent success without fair dealing that leads to widespread confidence in the man himself, and that is the real capital we all prize and work for."

Mr. Rockefeller believes that disinterested service is the road to success. To the boy or young man starting out in life, he says:

If you aim for a large, broad-gauged success, do not begin your business career, whether you sell your labor or are an independent producer, with the idea of getting from the world by hook or crook all you can. In the choice of your profession or your business employment, let your first thought be: Where can I fit in so that I may be most effective in the work of the world? Where can I lend a hand in a way most effectively to advance the general interests? Enter life in such a spirit, choose your vocation in that way, and you have taken the first step on the highest road to a large success.

The great fortunes made in this or other countries, Mr. Rockefeller believes, have come to those men " who have performed great and far-reaching economic services — men who, with great faith in the future of their country, have done most for the development of its resources."

As Mr. Rockefeller is doubtless the most successful business man that ever lived, the boy or young man starting out in life would do well to ponder seriously what so distinguished an authority has to say about getting on in the world. Some young men jump from one occupation to another in their anxiety to make a fortune rapidly and in the end get nowhere, have nothing. Mr. Rockefeller's advice is, "Don't change; just stick to one thing until you succeed at it ... do not be discouraged, and save, save, save! Unless you practice thrift, you can never become much. Lay aside every dollar you can, and after a while you will have enough to start in business."

Mr. Rockefeller early in life learned the value of money. He found that he could get as much money, in interest, for $50 loaned at seven per cent as he could by digging potatoes for ten days. "I thus learned," he says,  that it is a good thing to let money be my slave and not make myself a slave to money. . . . Make good bargains; save your money and let it work for you. Wed natural ability to hard work and you have a combination that nothing can defeat.

The most successful men in our country have been the men who have had confidence in the United States and its resources as well as confidence in their fellow man. It has been the optimist who has succeeded.

Political cartoon showing a Standard Oil tank as an octopus with many tentacles wrapped around the steel, copper, and shipping industries, as well as a state house, the U.S. Capitol, and one tentacle reaching for the White House. by Udo J. Keppler (1872-1956) artist,  Spublished by: J. Ottmann Lith, Co., Sept. 7th, 1904,lithograph, color.  

Mr. Rockefeller is no exception to this rule, for it was his faith in one of America's greatest natural resources — oil — plus his tremendous energy and courage, that placed our country in the first rank of petroleum producers and made him — John Davison Rockefeller — America's foremost business man and leader of industry as well as the world's richest man and greatest giver to philanthropy.

Capitals of the United States and Colonies of America

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Washington DC
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