The business spirit seems to have always inhabited John D. Rockefeller: as a boy, he bought candy by the pound, divided it into small protions, then sold it at a tidy profit to his siblings. With a talent for business anf mathematics, no wonder that after completing his high school education, at age 16, he started to work as a bookkeeper for Hewitt & Tuttle, a commission house in Cleveland, on September 26, 1855. Dissatisfied with his wages, he decided in 1858, with a partner Maurice Clark, to start up his own commission house. The business prospered, especially during the civil war (John D. hired a substitute to avoid to be drafted) as the price of commodities rose. In 1863, Sam Andrews, a new partner, convinced John D. to diversify his activities and to invest in the booming oil industry. John D. began to borrow heavily to expand the business (during all his career he benefited from a favorable credit rating with banks); however, for personal reasons, the Clarks (James joined Maurice as a partner in the early 1860s) distrusted the banks. Consequently, a tension aroused within the company.

In 1865, with the help of Andrews, John D. bought out the Clarks' shares and founded Rockefeller & Andrews Company. In 1866, he dispatched his brother William to New York City to launch the firm Rockefeller & Company. In 1867, Henry Flager, a young sharp businessman joined the company to help with legal concerns. The company started to be highly profitable; nevertheless, although he loved money, John D. always felt guilty when he accumulated it. As Maurice Clark said of him, "John had abiding faith in two things--the baptist creed and oil," since oil was generous to him, he decide to be generous as well and gave to charity, especially to baptist organizations.

The philantropic deeds probably eased his conscience as he decided to incorporate the company to make it more profitable. As a result, on January 10, 1870, the Standard Oil Company (S.O) was formed with the same partners and John D. as president. He planned immediately to unite the refiners of Cleveland into a single organization. To achieve this goal, S.O. bought 22 companies in 1872 (episode known as the Cleveland Massacre). Rockefeller's grand design soon became not only to control Cleveland's refineries, but also all the major refining centers in the USA. As a consequence, he started to integrate both vertically and horizontally (purchase of producers and distributors). To avoid suspicion and to circumvent certain state laws, he created hidden companies (e.g. Acme Oil Company) that took control of the competitors without apparent links to S.O. Between the years 1876-1878, S.O. bought 100 refineries in the country.

In 1879, a committee was formed by Alonzo Hepburn, chairman of the New York State Assembly, to investigate malpractices and the plausible existence of a monopoly in the oil industry. During the hearings, a witness testified that "nine-tenth of the refiners in the country were in "harmony" with Standard." The committee's report focused mainly on the railroad companies (RR) and their illegal favoritism to certain companies in terms of transportation of oil, but it also noted that Standard Oil was a "mysterious organization." Indeed, Rockefeller had managed to become one of the wealthiest man in America without attracting the attention of the public, unlike other industrialists such as Jay Gould who were despised by the American people.

In 1882, S.O. became a trust; introducing centralized control, S.O. influenced many other major American business organizations, and in all likelihood widely helped to lead to the Sherman Antitrust Act of 1890. Prior to this act, in 1887, the Interstate Commerce Act was passed by Congress, outlawing railroad pools and rebates, which were the result of negotiations between big trusts and RR to the disadavantage of smaller competitors. This Act was not a major threat to S.O. (they managed to find a way to circumvent it). However, in 1888, a widespread discontent towards trusts echoed during the elections, and big companies began to be investigated. This led on July 2, 1890 to the passage of the Sherman Antitrust Act, outawing "trusts and combinations in restraint of trade and subjected violators to fines up to $5,000 or a year's imprisonment or both." But the act was so vague (it was called the Swiss Cheese Act) that it remained a dead letter for many years. Ironically, Rockefeller supported the reelection of Senator Sherman, instigator of the Act, in 1891.

Nonetheless, in 1892, the State Supreme Court of Ohio ruled in the favor of the dissolution of the S.O. The trust was dissolved only in name, for the trustees kept their shares of S.O. Since the company could not be a trust anymore, it became a holding in June 1899: the Standard Oil of New Jersey. The holding had to fight its way through the courtroom more and more often, and on May 15, 1911, the US Supreme Court declared Standard Oil's holding company an "unreasonable" trust and ordered that it be dissolved.

By the time of the dismantlement of S.O., John D. was not running the company anymore (he officially retired in 1897) and his fortune was made; therefore, it had little impact on him. However, by that time, since Jay Gould was dead, John D. had inherited the title of "most hated man in the world," thanks mainly to the publiction of a book by Ida Tarbell: History of the Standard Oil. Nevertheless, when he died, in 1937, the newspaper obituaries seemed to have forgotten his incorporate greed, to retain the image of Rockefeller as the world's greatest philantropist.

His Life

John D. and the University of Chicago

Bibliography

Links to Rockefeller and SO on the internet:

John D. Rockefeller Page

John D. Rockefeller and the Standard Oil Company

For a comparison between monopoly giants Rockefeller and Microsoft Bill Gates see the following sites:

Rockefeller, Bill Gates show capitalism isn't competition

Oil's Rockefeller could be Gates' only competition

Return to 1890s America: A Chronology.