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Amazing Business Story: John D. Rockefeller

by Valentine Ogbamebor

John D. Rockefeller is regarded by many as the richest man and the greatest philanthropist in known history to have lived. He was a co-founder and president of Standard Oil; a massive oil giant that at its peak refined nearly 90% of the world’s oil. Through his Rockefeller foundation and other charitable organization, John D. also gave out over $100 billion of today’s money during his lifetime.

John Davison Rockefeller was born to William Avery Rockefeller and Eliza Davison Rockefeller on July 8, 1839. He was the second of six children. His father, William, also known as ‘Big Bill’, was a travelling salesman as well as a con artist. He regarded himself a ‘botanic physician’ although he didn’t possess any medical qualifications. He was also an unrepentant philanderer, having children with his housekeeper and later with another woman whom he married. Due to his frequent travels he was hardly home, and Eliza had to train the children alone, mostly. Eliza was a devout Christian and taught John and his siblings to be religious. She also taught them how to manage money properly. These two lessons will remain with John for the rest of his life and would play a pivotal role in the development of his business empire.

In 1853, William moved his family to Cleveland, Ohio, where John attended Central High School. Two years into his studies, John dropped out and entered into the Folsom Mercantile College; a commercial college. He completed his business course in three months, after which he secured a job as a bookkeeper with Hewitt & Tuttle. In four years John D. was able to save $1000 from his booking keeping job, to which he added another $1000 which he got as a loan from his father and together with Maurice Clark began their produce commission company.

A few years after this, the pair moved into the young but promising oil business, together with another partner; Samuel Andrews. Andrews was a chemist who had built a refinery, but didn’t know about business or transportation. Two of Maurice Clark’s brothers would later join the partnership making them five in number. There were often intense disagreements on how the company was to be run, so finally, in February of 1865 John D. bought out the Clark brothers for $72,500 and established Rockefeller & Andrews; according to John, that was the day that determined his career.

John brought his brother, William, into the partnership as well as Andrews’ brother. And then in 1867 Henry M. Flagler also became a partner, and the business became Rockefeller, Andrews & Flagler. The business kept growing and earning more success, and then on January 10, 1870 it was incorporated as the Standard Oil Company with John D. Rockefeller as the president.

In 1871, Standard Oil and a few other refineries and railroads formed a cartel called South Improvement Company (SIC). The railroad operators gave preferential treatment by way of discounts to Standard Oil and other refineries that were part of the cartel, but increased freight rates for other smaller refineries that were not part of the cartel. Although this scheme was later discovered and there was a large scale protest against it and it was later stopped, a severe harm had already been done.

In what will be termed ‘The Cleveland Massacres’ Standard Oil acquired 22 of its 26 competitors in the Cleveland area. In the end John and his partners had no major competition in the city and were refining 25% of the country’s oil.

One of the smaller oil companies that suffered during the South Improvement Company’s scheme belonged to the father of Ida Tarbell, a muckraking writer, who would later write a damning 16-part expose of Standard Oil, titled; The History of Standard Oil. The expose would do more harm to John and his company than any other media bashing throughout its existence.

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The company continued to grow and expand into other cities like New York and Pennsylvania, and in the process acquiring more and more of its competitors. Its major weapons were secret transportation rebates, undercutting competitors and selling even below cost just to enter a market. Although Standard Oil was acquiring all its competitors and turning itself into a monopolistic monster, it was, up to a great extent, fair in this dealing. Most of its competitors were acquired at very generous figures, turning its owners into very rich individuals, or their owners were given stocks in Standard Oil, or were given generous positions within the Standard

Oil Empire. Roger, of Roger & Pratt; one of Standard Oil’s bitter opposition became John D’s key man in the formation of the Standard Oil Trust in 1896, while Pratt’s son, Charles Milliard Pratt, became secretary of Standard Oil.

Another strategy Standard Oil was using to get more profit and fight its competitors was to cut away its middlemen. It developed its own pipelines so it didn’t need railroads again, it began manufacturing its barrels and tanks to store oil, as well as developing tank cars to supply the kerosene directly to retailers. In the end it became majorly independent, thus eliminating any form of outsourcing. John also hired scientists to carry out researches on the uses of petroleum by-products. It was from these researches that Petroleum Jelly, Paraffin wax, machine lubricants and chemical cleaners were discovered. By 1897 Standard Oil was refining 90% of the country’s oil.

In 1882 the Standard Oil Trust was established. The Trust was an ingenious scheme by Standard Oil’s lawyers to bring all the companies different ventures that were located in different states under one umbrella. There were 41 companies in the trust. It was the first of its kind. There was a loud public outcry against the trust and against the continuous domineering growth of Standard Oil. So in 1892, the state of Ohio in its implementation of its anti-trust law forced a separation of Standard Oil of Ohio from the rest of the company. In 1911, the supreme court finally ruled that the Standard Oil Trust was illegal and ordered that it be disbanded into 34 different companies, some of which became; Chevron, Exxon, Mobil etc.

The breakup of Standard Oil actually turned profitable for John and other major stockholders; they all got proportionate shares in the 34 new companies. In the following ten years the 34 companies’ combined net worth rose ten folds and John’s personal wealth rose to $900 million; $660 billion in today’s money

John D. Rockefeller gave as much as he amassed. At the end of his life he had given about $100 billion to charity and to other worthy causes. Most notable of his philanthropy was the funding of the building of the University of Chicago, the founding of the Rockefeller Institute for Medical Research which later became Rockefeller University, the Rockefeller Sanitary Commission, an organization that helped eradicate the hookworm disease, and then the Rockefeller Foundation.

John D. Rockefeller married Laura Celestia Spelman in 1864, they were blessed with five children; a boy and four girls. Laura was actually the valedictorian of his high school and was an assistant principal as of the time of their marriage. Unlike John, Laura finished high school and went to college, and was the daughter of a successful businessman.When he was younger, John often said his two great ambitions were to earn $100,000 and to live till 100. He was able to achieve the former, but was two years short of achieving the latter. He died on May 23, 1937, less than two months to his 98th birthday.

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Three Lessons from John D. Rockefeller

A Good Name is Better Than Gold:

With a smeared name and battered business reputation John, at the age of 57, retired from the day to day running of his business empire to focus on philanthropy. He spent the next 40 years of his life torching people’s lives and giving as much as he had earned, and in the process redeemed his vilified reputation.

If it wasn’t for this act of selflessness and immense kindness he would not be celebrated or remembered as he is done today. And he certainly would not have made it into our Amazing Business Stories list. While crushing opposition, amassing wealth and making huge fortunes, it is pertinent to remember that what posterity has to say about us is what would matter most.

You will be remembered more for the lives that you torched than the wealth you amassed. The first time I learnt about John D. was in an encyclopedia when I read that he donated the land on which the United Nations headquarters is built in New York. Strive for business success, but never do it at the expense of your good name.

Your Partner, your helper:

John D. had this to say of his wife “Her judgment was always better than mine. Without her keen advice, I would be a poor man.” Coco Chanel, Mary Kay Ash, Sam Walton; these are a few of the great entrepreneurs whose partners played a vital role in the establishment of their business empires. Your partners are there to make things easy for you. A race that would have taken you 30 years to run alone will take you just 10 or 15 when you have the total support of your partner.

It is very important, particularly for men, to listen to the advice of their wives in any business endeavor. Women are naturally gifted with the ability of discernment and wisdom. John D. confessed to the number of times he consulted his wife for advice, and she never failed him. Even spiritually, there are certain successes that are in the hands of your partner, and will never get to you unless you approach and treat them with love and respect. This point is very valid, unless of course, you get married to the very wrong partner.

Leave them or Let them go:

This third point is more or less a continuation of the one stated above. A business partnership or a marriage can make you better, or make you worse, or in very few cases, leave you at the same spot. The partnership between John D. and the Clark brothers was a destructive one because each party had a different ideology on how to run the business. A similar case can be seen with Sam Walton and the Ben Franklin stores.

When there are two or more persons involved in any partnership there is bound to be a potpourri of suggestions and ideas, there is no problem with that. The problem arises when there is a sharp contrast in the ideologies of the constituting parties, and there is no way for them to agree. In that case one of these two has to happen; Leave them or you let them go.

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