by Elizabeth Williams
Biographical Highlights
John D.Rockefeller(1839-1937)iswidelyconsidered to be the wealthiestmanand most prominent philanthropistin United Stateshistory. Hismonopoly of theAmerican oil industry,though raisingseveralethical questions,made him millions. As the founder of Standard Oil,Rockefellercontrolled90% of the oil refineries andpipelines in the United States.He was rigorously hard working and ruthlessly entrepreneurial,attributingthe success of his company to “its consistent policy of making the volume of its business large through the merit and cheapness of its products…”(Latham).
In 1890, the U.S.Court past the Sherman AntitrustAct.Rockefeller’sStandard Oil was dissolved two years later. Retired from his day to day experiences,Rockefellerdonatedmore than $500 million dollarsto various educational, religious, and scientific causesthrough the Rockefeller Foundation. He funded the establishment of the University of Chicago and the Rockefeller Institute, among many other philanthropic endeavors.
Historical Roots
John D.Rockefeller was born July 8, 1839 in Richford, New York. His father, William,wasatraveling doctorwith questionable ethics.Williamwas gone for months at a time, selling homemade remedies to disadvantaged communities, claiming they would cure many diseases – including cancer. Rockefeller’s mother, Eliza, was devoutly religious, strict, and disciplined. WhileRockefeller’sfather taught himsavvybusiness strategies, his mother taught him the value of working, saving, and charity (PBS, 2019).
In 1853, the Rockefeller family moved to Cleveland, Ohio for William’scon-artistmedicalcareer.Rockefellerwas in high school – excelling at math and public speaking. In 1855,Rockefellerdropped out of high school, took a short course on bookkeeping at Folsom’s Commercial College, and began looking for a job.The job marketwas bad in Cleveland, butRockefeller’spersistence, seriousness, and charisma eventually won him a job as an assistant bookkeeper with Hewitt and Tuttle -commission merchants that handled produce shipping. He was amodelemployee, excelling in his job and donating much of his limited income to churches and charities.Rockefeller’sfirst day of work was on September 16, 1855 – a day he would remember and reference for the rest of his life.
Shortly before his twentieth birthday,Rockefellerdecided to go into business for himself. Together with Maurice Clark – his neighbor at the time –Rockefellerbegan Clark & Rockefeller, a commission merchant company that shipped miscellaneous goods such as grain, hay, and meat. Though this was a competitive industry, Clark & Rockefellergrewdue toRockefeller’sbusiness abilities and calculated financial tactics.However, following the Civil War,Rockefellerrealized that the future of theagricultural transportationindustry was limited.He predicted that the emerging Midwest railroad system would become the primary means for agricultural transportation and that Cleveland’s location–accessible to both rail and water transportation –was best positioned forindustrialcommodities.Following a frenzied “oil boom” and the creation of the Atlantic and Great Western Railroad, Rockefeller saw his chance. In 1863,Rockefeller, Maurice Clark, and Samuel Adams (who had experience with oil refinery) started a newoil refineryfirm – Andrews, Clark, & Company.A year later, Rockefeller married Laura Spelman (1839-1915) whose father was a merchant, politician, and active abolitionist.Together,theRockefellershad five children – four of whom survived into adulthood.Towards the end of his life, Rockefeller’s only son – John D.Rockefeller, Jr.– would become one of the managers of his estate.
In 1865,Rockefeller bought out Clarkandacquired complete control of Andrew, Clark, & Company. He spared no expense, believing that the attention to details made businesses successful. He borrowed money aggressively, rapidly expanding his enterprise.Rockefellerthen brought his brother, William Rockefeller, and former acquaintance, Henry Flager, into his business.Dueto their precision and foresight, “Rockefeller, Andrews, & Flagler” soon becamelargest oil refinery in the world (Ibid).
In1871,Rockefeller and Flagler’s unrivaledsuccess was interrupted by a scandal intheoil industry – The South Improvement Scheme. Created by Tom Scott of the Pennsylvania Railroad, the South Improvement Scheme was a plan to create an agreement between all rail roads and oil producers that would eliminate price-cutting and restore railroad freight charges to a profitable level.Companieswere motivated by partial refunds if they joined the scheme, and drawbacks if they didn’t. This business practice created a public relations disaster and, though the plan was never implemented, the reputation of those who had participated were tarnished. Rockefeller was not the originator of this plan, buthis involvementcaught the attention of one journalist in particular – Ida M Tarbell. From 1872 – 1898, Tarbell’s19-part expose“The History of the Standard Oil Company”focused on indicting and condemning the practices of Standard Oil Company. Rockefeller’s silence in this matter“encouraged the wildest romancers to spread wild tales about him”. Hewould be known for shrewdness, ruthlessness, and ambition for the rest of his career.This reputation would even affect his philanthropy in later years, raising ethical questions over his character and his money(Tarbell, 1905).
Following the collapse of the South Improvement Scheme, Rockefellerdevelopedadifferentplan that would shape the industrial sector for years to come. He determined that, by consolidating all oil refineries into one firm, he could eliminate excess capacity and price cutting.His plan was simple – he appraised rival refineries, broughtthebest managers into Standard Oil management, and paid them better wages. By 1872, Rockefeller had merged with almost all refineries in Cleveland. This strategy was kept as secret as possible, and Standard Oil continued to rapid expand while other oil refineries were unaware.Though others “have had similar increases in the value of their properties”, Standard Oil’s ‘old-fashioned and conservative notions” enabled greater success.The trust set up a nationwide distribution system and nearly 80% of American towns were served by Standard Oil by 1904. Standard Oil continued to be aggressive in their marketing and, though successful, became vastly unpopular.Yet, Rockefeller always argued defensively for the ethics of Standard Oil. “There is nothing strange or miraculous in all this” he once wrote, “It was all done through this natural law of trade development”(Ibid).
Following the Sherman Antitrust Act in 1890, Standard Oilwas ruled as amonopoly andwas dissolved on March 21, 1892.Standard Oil was divided into 20 smaller companies and each trustee was given a share of stock and management role.During this time, Rockefeller’s personal wealth had increased to a paralyzing amount. His investments in the oil industry, along with his investments in iron, railroads, and steel, had made him the wealthiest man in history. By 1897, he had retired from Standard Oil and some suggest he had a partial nervous breakdown from years of overwork.
From his retirement until his death, Rockefeller channeled his drive and business savvy into philanthropy. By 1912, though he had given away hundreds of millions of dollars, Rockefeller’s fortune still totaled $900,000,000. His son, John D. Rockefeller, Jr.and Frederick T.Gates became the managers of his fortune.Inspired by his contemporary Andrew Carnegie, Rockefeller’sbiggest investments included the University of Chicago – to which he gave $75,000,000, the Rockefeller Institute for Medical Research (Rockefeller University) and the General Education Board – both of which he gave $50,000,000.By 1927, the Rockefeller Sanitary Commission had eradicated the hookworm disease.Rockefeller established The Rockefeller Foundation, and transferred $235,000,000 into it by 1912.By the time of his death, his estate amounted to only $26,410,837. He had given most of his fortune away.However, not all of his money was accepted with open hands. His religious giving was especially questioned due to the reputation propagated by muckraking journalists. Once, in light of a gift of $100,000, Rev. Washington Gladden remarked that “The good that is done by lowering our ethical standard might best be left undone”. In response, Rockefeller simply said – “God gave me my money” (Ibid).
John D, Rockefeller,a man of personal piety, was an unpopular entrepreneur.Though hishigh quality and affordableproducts made the lives of ordinary Americans better, Standard Oil was too aggressive to be viewed favorably.Yet, it is undeniable that Rockefeller’s philanthropic contributions in his later years reveal him to be, first and foremost, one of the greatesthumanitarians in the 20th century.
Importance
Rockefeller was arevolutionary entrepreneur whose creation of the modern oil industrychanged "the stream of the allocation of resources over time by introducing new departures into the flow of economic life". Hisemphasis on size, efficiency,andthe use of modern chemistryresulted in themanynewdevelopments.Heushered in the age of the automobile in America, made electricity affordable,and pioneered new, effective business models.Moreover, Rockefeller setthe standard for philanthropy. His son – John D Rockefeller, Jr.–continuedhis father’s philanthropic legacy, leaving an effect that can be seen today (Grimm, 2002).
Ties to the Philanthropic Sector
In his personal life, Rockefeller was deeply religious,an abolitionist, andan advocate of the temperance movement.He encouraged others to “think of giving not as a duty but as a privilege.” Though he was an unashamed businessman, his philanthropy in later life proved himto be a man of generosity as well. Rockefeller’s contributions to education and medicinewere of unrivaled magnitude,creating a kind of philanthropynever seen before. Moreover, his investments andgivingstrategies perpetuated the modern foundationmodelestablished by Andrew Carnegie.
Key Related Ideas
- The level of business savvy and philanthropy magnitude displayed by John D.Rockefeller changed American for-profit and non-profit landscape far beyond his own life. His endeavors resulted in the first efforts towards monopoly and trust laws. His philanthropy, following Andrew Carnegie, propelled the modern foundation and set a new standard for philanthropy among the elite class.
- Monopoly:A monopoly is characterized by a lack of competition, which can mean higher prices and inferior products. Rockefeller’s Standard Oil is rightly a monopoly because they became the only affordable provider of oil in the United States by 1904.
- Trust Laws:TheSherman Antitrust Act was passed in 1890 in response tothe public outcry to check the price-fixing abuses of monopolies.This act banned trusts and monopolistic combinations thatpreventedinterstate and international trade.Later, in 1914, the Clayton Act was introduced to set specific examples of practicesthat substantially lessened the competition in the market and were thus prevented.
- Foundations:A foundation is a charitable organization that was pioneered by Andrew Carnegie and John D Rockefeller as the first kind of large scale private – philanthropy.Today, there are distinctions between charitable foundations, private foundations, and community foundations.
Important People Related to the Topic
- John D.RockefellerJr.who was John D.RockefellerSr.’s only sonand the principal heir to his fortune. Much ofRockefellerJr.’s career was dedicated to managing his father’s philanthropic activities. He worked side by side with Frederick Gate’sto launch some of RockefellerSr’s most prominent philanthropic contributions. These include the Rockefeller Institute for Medical Research (1901), the General Education Board (1903), the Sanitary Commission for the Eradication of Hookworm (1909), and the Rockefeller Foundation (1913). In contrast to his father, JohnD.Rockefeller Jr.was known to be gentle, self-effacing, and “Christianish”. He used his own inherited fortune to promote conservation and art and, despite RockefellerSr.’s wealth, John D.RockefellerJr.was the reason the Rockefeller name became associated with philanthropy(Ibid).Frederick M.Gates,a Baptist preacher, fundraiser, and businessmen, was thesecondchief administer of John D.RockefellerSr.’s philanthropic activities.He served as a financial advisor to many of Rockefeller’s business enterprises as well – including railroads, mines, and manufacturing plants (Gates, 2002).
- In all of his philanthropic endeavors, Rockefeller Sr.was incredibly influenced by Andrew Carnegie– the creatorof the modern foundation.Carnegie, a fellow businessman, amassed great wealth due to his investments in the steel industry. In his later life, he challenged affluent peopleto consider their wealth as a responsibility and to contribute to social causes.This call resonated with Rockefeller and drew him to new levels of philanthropic activity.
Related Nonprofit Organizations
- Spelman University, founded in 1881 and named after Rockefeller’s wife(Laura Spelman),is a historically black college and a global leader in the education of women of African descent. It is “dedicated to academic excellence in the liberal arts and sciences and the intellectual, creative, ethical, and leadership development of its students” (www.spelman.edu
- TheRockefeller Foundation“advances new frontiers of science, data, policy, and innovation to solve global challenges related to health, food, power, and economic mobility”. They seek to affect large-scale human impact through their investments, with individual and organizational grants totally $17 million to date (https://www.rockefellerfoundation.org.
- University of Chicago was founded in 1890 by John D Rockefeller, who often said it was the “best investment he ever made”. It is an urban research university committed to “free and open inquiry” in the many fields including medicine, economics, education, and business. (https://www.uchicago.edu.)
- TheRockefellerUniversity (The RockefellerInstitute for Medical Research) was opened in 1910 following the death of Rockefeller Sr’s grandson. At the time of its founding, infectious diseases such as scarlet fever, tuberculosis, diphtheria, and typhoid were great threats to mankind. It is the first center for clinical research in the United States and is a place where researchers can “link laboratory investigations with bedside observations to provide a scientific basis for disease detection, prevention, and treatment” (https://www.rockefeller.edu
Related Websites
The “Clash of Titans” on the PBS Web site is found in a section of the site devoted to the American Experience television series. This article quotes the combative opinions of Ida Tarbell – the journalist who wrote about Rockefeller – and Rockefeller himself. By putting these quotes side by side, the complicated relationship between Tarbell and Rockefeller, and its influence on Rockefeller’s reputation, is more clearly understood. Find this at:https://www.pbs.org/wgbh/americanexperience/features/rockefellers-clash/
Reflection Question
John D Rockefeller, Sr.was one ofthe wealthiestpersons in the world. However, the ethics behind is work are often challenged. Should we question his philanthropy because of the ruthless business practices that made him millions?
Bibliography
- Latham,Earl, Editor. John D. Rockefeller, Robber Baron or Industrial Statesman. Boston, D. C. Heath and Co.
- Laughlin, Rosemary. 2001. “John D. Rockefeller: Oil Baron and Philanthropist.” John D. Rockefeller: Oil Barron & Philanthropist,January,8.https://search-ebscohost-com.proxy.ulib.uits.iu.edu/login.aspx?direct=true&db=b6h&AN=9771046&site=ehost-live.
- McGill, Sara Ann. 2017. “John D. Rockefeller.” John D. Rockefeller, August, 1.https://search-ebscohostcom.proxy.ulib.uits.iu.edu/login.aspx?direct=true&db=b6h&AN=17885726&site=ehost-live.
- Tarbell, Ida Minerva. The History of the Standard Oil Company. Vol. 1, William Heineman, 1905. The Making of the Modern World.Accessed 31 Oct. 2019.
- “Biography: John D. Rockefeller, Senior.” PBS. Public Broadcasting Service. Accessed December 3, 2019.https://www.pbs.org/wgbh/americanexperience/features/rockefellers-john/.
- Gates, Frederick T.” 2000. Hutchinson Encyclopedia of Biography, January. https://search-ebscohost-com.proxy.ulib.uits.iu.edu/login.aspx?direct=true&db=brb&AN=203008048&site=eds-live.
- Robert, Grimm, ed. Notable American Philanthropists: Biographies of Giving and Volunteering.Greenwood Publishing Group, Inc.2002. ISBN:1573563404
This briefing paper was authored by a student taking a philanthropic studies course in 2019 at The Lilly Family School of Philanthropy.
