John D. Rockefeller, the First Oil King

John D. Rockefeller was the American businessman who founded Standard Oil and became the first American billionaire. The son of a travelling salesman, he started work as an assistant bookkeeper at 16 and took over a refinery at auction when he was 25. Thirty years later, most of the country's oil business was in his hands. He spent the second half of his life giving his money away.

1839-1855The Salesman's Son

Rockefeller was born on a farm at Richford, New York, on 8 July 1839, the second of six children. His father, William, called himself a doctor and sold herbal remedies from town to town, and was rarely home. He had entered a second marriage under another name and left the family for good around 1855. The household was held together by his mother, Eliza, a devout Baptist.^[1][4] At seven he earned his first money by raising and selling turkeys.^[2]

The family moved to Ohio in 1853, and he boarded in Cleveland to attend high school. In 1855 he left school for Folsom's commercial college and finished the six-month course in three.^[1][3]

1855-1863From Assistant Bookkeeper to Partner

In September 1855, at 16, he started as an assistant bookkeeper at Hewitt & Tuttle, a commission firm in Cleveland that handled grain and goods moving through the Great Lakes. Here he learned about invoices, freight and who earned how much. He marked 26 September, the day he began, every year of his life. His habit of giving part of his earnings to his church also dates from these years.^[1][3]

In March 1859, at 19, he set up his own commission firm with Maurice Clark. He had saved $1,000 of his share and borrowed the other $1,000 from his father. That same year Edwin Drake's well struck oil at Titusville, Pennsylvania. The Civil War also swelled the food trade, and the firm began to do well.^[1][4]

1863-1870Why Oil, and Why Refining

Oil was then used mainly to make kerosene, the leading lamp fuel, as homes moved to this cheap light from whale oil and candles. Drilling, though, was a gamble, with prices shooting up one month and crashing the next. Rockefeller saw that and put his money into the plant, not the ground. In 1863 he went into a Cleveland refinery with Clark and the chemist Samuel Andrews. The city had rail and lake links to both the oil region and the East Coast, and that gave it a transport advantage.^[1][2]

The partners disagreed about the future. Rockefeller wanted to grow and Clark to be cautious. In February 1865 they bid against each other in an office. Bids started at $500, Clark went up to $72,000, Rockefeller said $72,500, and Clark stopped there. Rockefeller was 25, and later said his success began that day.^[1][2] His new firm, Rockefeller & Andrews, soon became the largest refinery in Cleveland. He had married the teacher Laura Spelman in September 1864.

Two important partners followed. In 1866 he opened a New York firm under his brother William to handle sales and exports. In 1867 the grain merchant Henry Flagler joined. Flagler's great contribution was his bargaining with the railroads, and secret rebates in return for high volume would become the company's strongest weapon.^[2][4]

1870-1896At the Head of Standard Oil

The Standard Oil Company was founded on 10 January 1870 with $1 million in capital, and 2,667 of its 10,000 shares were Rockefeller's. In early 1872, as the South Improvement scheme caused an uproar, he bought 22 of his 26 Cleveland rivals in under four months. The company's story from founding to break-up is told in the second part of this story.^[2][5]

By 1880 his company held about 90% of US refining capacity.

Personally he was unshowy. He bought a house in New York in 1884, and the next year the trust's headquarters moved to 26 Broadway. Senior managers ate lunch together every day in a private room on the top floor. In long meetings Rockefeller would lie on a couch and join the discussion from there. He stayed exact with money, and is said to have billed a guest $600 after a six-week stay at his Cleveland home.^[2]

Hard work cost him his health. During the busy 1890s he developed alopecia and lost his hair and eyebrows for good, which explains the hairless face in later photographs. In 1896, at 57, he withdrew from daily management, though he stayed president on paper until 1911.^[1][2]

1891-1913Giving It Away

As his wealth grew, so did the requests for money, until answering them one by one became impossible. In 1891 he handed the task to the Baptist minister Frederick T. Gates, who steered the money to lasting institutions and not to individual petitioners. Rockefeller gave $600,000 of the first $1 million for the new University of Chicago, on condition that the rest be raised within 90 days. His total gift to the university eventually reached $35 million.^[1]

In 1901 he founded the Rockefeller Institute for Medical Research in New York, and in 1902 the General Education Board. The Rockefeller Sanitary Commission, active from 1909 to 1915, fought hookworm in 11 southern states. The Rockefeller Foundation, set up in 1913, later worked in 52 countries. The Rockefeller Archive Center puts his lifetime giving at $540 million.^[1]

1902-1937Final Years

Public opinion did not soften easily. Ida Tarbell's series, begun in 1902, badly damaged his name. In August 1907 a federal judge fined Standard Oil of Indiana $29,240,000. Rockefeller got the news while playing golf in Cleveland, and that day shot his personal best. On 15 May 1911 the Supreme Court ordered the company broken up. He held 244,500 of its 983,383 shares, and the value of the pieces mostly doubled within a short time. The break-up made him richer still, and in 1913 his fortune was put at $900 million.^[2][4]

His ties with Cleveland ended in 1913. When his wife's illness kept them at Forest Hill past 1 February, local officials sent him a $1.5 million tax bill. He did not pay and never returned to the house. Laura Spelman died in 1915. He spent most of his last years at The Casements in Ormond Beach, Florida, known for handing dimes to adults and nickels to children. He died there on 23 May 1937, aged 97, and was buried at Lake View Cemetery in Cleveland.^[3][4]

Frequently asked questions

Who was John D. Rockefeller?

John D. Rockefeller (1839-1937) was the American businessman and philanthropist who founded Standard Oil.

How did Rockefeller make his fortune?

He went into refining and not drilling, bought his rivals, took secret railroad rebates and controlled the chain from transport to sales.

When did Rockefeller die?

He died on 23 May 1937, aged 97, at Ormond Beach, Florida.

Sources

1. Rockefeller Archive Center. John D. Rockefeller Sr. biography.
2. Daniel Yergin. The Prize: The Epic Quest for Oil, Money and Power, chapter 2, 1991.
3. Encyclopedia of Cleveland History, Case Western Reserve University. Rockefeller, John D.
4. Wikipedia. John D. Rockefeller.
5. Wikipedia. Standard Oil.