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John D. Rockefeller is by far the world’s richest man to have ever lived. He has monopolized the oil empire in the 19th century, making it both far more accessible and affordable. This may sound strange, because when you think about the world’s wealthiest people alive today, topping the charts are tech billionaires, such as Jeff Bezos, Mark Zuckerberg, and Bill Gates. However, the wealthiest businessman to have ever lived died almost a century ago. After decades of technological progress, no one has been close to matching Rockefeller’s success.
It was just one century ago that the climate of jobs, commerce, and our industry were changed for the better. Rockefeller at the height of his power was worth more than developing countries, showing just how much he was valued at. One might ask, how does someone even try to attain the status of the worlds richest man? Continue reading and you will soon understand how Rockefeller created his empire by hand.
The humble beginnings of John D.
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Rockefeller begin in upstate New York on July 8th, 1839. He was the eldest son of a traveling merchant who identified himself as a “botanic physician”, but in reality was selling a 19th century equivalent to homeopathic medicine, he was really more of a traveling witch doctor. His father would spend weeks away from home and even had several children with other women. His father even brought them back to his first so that they could all live together. Because of this very unusual household, John learned how to hustle for his money and always get the best deal possible.
His family would rarely stay in one place for long meaning John lived a nomadic lifestyle starting at the tender age of 3.To help his family John would work every job possible, ranging from raising turkeys to doing odd jobs for neighbors. In 1854 when John was 15 the Rockefeller family moved to Cleveland, Ohio and John were finally able to go to school and seek a proper education. However, after only half a year into school, John decided to drop out and work as a bookkeeper for a local produce broker. He would earn $.50 a day( that would only be $14 in 2019. In order to compensate John would also help other companies on the side. After 2 years of hard work his bosses still refused to give John a raise. In order to stick it to his bosses, John decided to quit his job and start his own Produce Brokerage. Thanks to his good reputation with people and finances he was able to get a loan for $4,000($120,000 in 2019) which was a giant some. He started trading hay, grain, and various meats. In his first year alone he had recorded sales of $500,000. This seems like an outrageous number but John only got a fraction of that number as his portion of the commission, regardless it was still a huge success. Every bank in Cleveland was begging John to borrow money, and the most shocking thing about this is that he was barely 18 years old!
In 1859 something happened that would change the young Rockefellers’ life forever. Just 100 miles from Cleveland, the first American oil well had been discovered and this marked the beginning of the Pennsylvania oil rush. Within a year a whopping 4.5 thousand barrels of oil had been produced. To put into perspective, back then oil was not quite as valuable, there was not a massive car market like today, nor an industry ready to be powered by oil. The oil field did manage to stir up the economy, for instance, it would create a rise in kerosene lamps. This was 20 years before electricity was invented and the mass production of these lamps ended the darkness in people’s lives. A handheld lamp gave rise to more possibilities, people learning, reading books at night, people were more effective overall by this creation.
John realized that the biggest process to be had was not in drilling for oil, but instead refining it. He noticed many people going bust and failing before striking oil so he ruled out that hard, sketchy business opportunity. Instead, John let other people go through the hassle of finding the oil and he would buy it off their hands. John had to wait until 1863 for the government to build a rail line connecting the Pennsylvanian oil field to Cleveland but when the line was built John was ready with his many partners and banks backing him up. In addition to a financial team, he also assembled a team of seasoned chemists, engineers, and scientists, who not only optimized the refining process but also discovered various uses for the product of refined petroleum. Early refineries in Cleveland could only operate at about 60 percent efficiency but John not only increased that percentage he also started selling all the byproducts. The byproducts included Paraffin wax( used for spa treatments and candles), Tar( used in the medical field as well as for roads and cigarettes), and Naphtha( used to create lighter fluid ). Within two years the Rockefeller refinery was worth over $70,000 and was among the largest in Cleveland. But John was not done, 2 years later in 1865 there were 26 competing refineries, but within 5 years john had dwindled and acquired all but 4. By this point, his business was getting too big to handle as a partnership so in 1870 he incorporated as Standard Oil of Ohio. In order to convince what was left of his few remaining competitors in Cleveland John would simply invite them over to show them his books, his enormous profits, and revealing that he can operate at a loss for longer than the remaining company could stay alive. In exchange for a good buyout price, John offered his competitors positions in his own company. Thus placing the best and brightest minds in the industry under his control. Of course, not everyone would give up immediately and John knew just what to do. Over time John eroded the price of oil and kerosene, sometimes by as much as 80 percent in order to strangle competitors, people would go to the incredible cheap gas and kerosene driving his competitors with no profit. Unsurprisingly his strategy worked because who would pay more for something that is a fraction of a price?
By 1880 he had acquired refineries all across the northeastern United States and was refining over 90 percent of the entire country’s oil. At this point, John was so powerful that he could simply invite the owners of big railway companies and personally negotiate rebates for using their trains. At the time and even today, most industrial goods were transported via rail and many big industrialists got worried that John’s abuse of transportation rebates could result in similar monopolization in their industry of the railroad. This less than proper practice of negotiating backroom deals really got the business world upset. Over the next decade businessmen, politicians, and the media would attack standard oil with increasing intent. Legislators in Ohio began drafting Antitrust regulations to bring down Rockefeller, but he was one step ahead of the. In 1882 John reincorporated in New Jersey, this time creating the Standard Oil trust, which in turn held stakes in over 40 local companies. Then to showcase his success John built an impressive headquarters for his company on Broadway, the Rockefeller tower which is now building number 26 in downtown Manhattan, New York. This moment was the highpoint of Rockefeller’s standard oil. He owned 20,000 oil wells, 4,000 miles of pipelines, and employed over 100,000 people.
With this much success, one must figure the giant will fall eventually, you would be correct, John’s grip on the oil industry was finally beginning to loosen both domestically and abroad. Massive oil deposits have been discovered in Russia and Asia and were being developed by the Rothschild family. They spared no energy in getting that oil to America. Worst yet in 1890 the federal government finally passed the Sherman Antitrust Act (outlawing trusts and monopolies to increase economic competitiveness) which finally gave the government some teeth to finally go after Standard oil trust itself. The complex legal structure behind all the companies was very difficult to investigate, which is why the government couldn’t actually break up standard oil until 1911. By that point, however, Rockefeller had already cashed in and was not actively managing the company. In the final 20 years of his companies existence, he had paid out half a billion dollars in dividends. By some estimates, the true worth of standard oil at its peak was 1 trillion dollars if accounted for our modern-day inflation.
In 1911 the supreme court found standard oil guilty of anticompetitive practice and broke the company into 34 separate entities. This did not stop Rockefeller however because he kept his stake in those companies until his death. The break up was the most profitable event in his life. Over time many of the 34 companies merged back with one another. Today most of Standard Oil is part of Exxon Mobil, chevron, Bp, or marathon. All of them in their own rights had become extremely wealthy and successful companies. Johns’ ownership in these companies makes him the richest businessman to ever live with an estimated net worth of over 400 billion dollars. Even today no one has beaten Rockefeller with Jeff Bezos only at 115 billion, but even that seems very unlikely to be surpassed.
To conclude, John D. Rockefeller began with humble roots. He worked for everything that he needed and truly embodied the mean of the American dream. The monopoly of the oil empire lead to Rockefeller becoming the world’s richest man but it also leads to numerous technological advances. For instance, without the affordable gas, the Rockefeller created the creation of automobile would have been delayed and mass-produced later in the future. Who would want an already expensive car if they need to put even more expensive gasoline in it? The popularization of cars has also aided in the creation of the United States Highway System being an advisor to some professionals. John was no scrooge with his money, during his lifetime he had donated over 50 percent of all his earnings to charitable causes, national parks, building roads and housing, and colleges such as the University of Chicago and Rockefeller University. Genius businessman, philanthropist, and a man that changed the economic landscape of the United States forever. The United States’ most influential man and the world’s wealthiest individual, John D. Rockefeller.
The Story Of Success And Fails Of John D. Rockefeller. (2024, Feb 09). Retrieved from https://studymoose.com/the-story-of-success-and-fails-of-john-d-rockefeller-essay
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