.png){kind=small}
Titan: The Life of John D. Rockefeller, SR.
by Ron Chernow
November 27, 2007
Through the details of his illustrations, one must admit Ron Chernow had done extensive researches to capture such memorable portrait of one of the first American industrial capitalist. The descriptions of Rockefeller’s character are invaluable to those who appreciate and wish to model his life. The following were mostly recapped in author’s own words.
Rockefeller and His family
Born in 1839 John D. was sandwiched between two illegitimate sisters Clorinda and Cornelia from Nancy brown of their “house keeper.” The rightful children of William Avery Rockefeller and Eliza Davison are, in chronicle order, Lucy, John, William, Frank, and Frances, twin to Frank but died short of second birthday.
On September 8, 1864, Rockefeller, 25, wedded Laura Celestia Spelman, “Cettie,” 24, who have strong evangelical belief and shared his devotion to duty and thrift and never questioned or criticized in those she loved. Their kids: Elizabeth or Bessie, Alice, who died a year later after birth, then Alta, Edith, and John Jr.
1868 moved to 424 Euclid Ave, 1837 he invested in 79 acres at Forest Hills. Main office that was known for was at 26 Broadway.
His father traveled around for much of John’s life and seldom at home, he was known as Devil Bill to a few and under the name of Dr. William Levingston, he performed malicious medical practices “herbal doctor.” On June 12, 1855, he married Margaret Allen in Nichole, New York, while his first family still in Owego, thereafter started a clandestine life as bigamist that persist for the rest of his days.
John along with his siblings lived closely with their mother. Under her influence of altruism and frugality, which Ron suggested, was the genesis to Rockefeller’s personality and philanthropy.
John was a slow learner but patient and persistent, had a terrific head of math. He exemplified the frugal cultural of Puritan New England that he was born in. Of all the lessons he absorbed from his father, none surpass the importance of keeping meticulous accounts. He often proclaimed that he would make millions since early of his life.
Rockefeller was a strong activist in church, at early life, took on the tasks of all church’s finance activities and became the second most important figure in congregation.
Rockefeller and Business
He began his career on September 26, 1855 with Hewitt and Tuttle, commission merchants and produce shippers. For rest of his life, he honored this day as “Job Day” and celebrated with more brio than his birthday. With this starling life in the business world, he liberated himself from “Big Bill.” There, he wrote letter, kept books, paid bills and served as one-man collection agent for Hewitt’s rental properties. Taking a similar approach onto this personal life, in September 1855, he paid a dime for a small red book, anointed Ledger A, in which he minutely recorded his receipts and expenditures, and for remainder of this life, Rockefeller treated this Ledger A as his most sacred relic. Following his work at Hewitt, he joined Clark and started “Clark and Rockefeller” in their own produce shipper and merchants. First year, he netted $4,400 tripling his salary at Hewitt’s. In April 1, 1859, George W. Gardner join the firm as a partner, due to Gardner’s status in the elite Cleveland Family, they drop Rockefeller name in the business and renamed Clark, Gardner and company. Rockefeller was uneasy but he pretended to accept with equanimity. Eventually Rockefeller clashed with Gardner and Clark due to their work energy and excess in their expenditures.
In August 28, 1859, when Colonel Edwin Drake struck oil in Titusville, it infused the oil industry with an instant spark. In early 1860, a friendship between Maurice Clark and Samuel Andrews, a self-taught chemist drew Rockefeller into the Oil business. After digesting the current affair, he realized that refining was the critical point where he could exert maximum leverage over the industry. Due to the sharply divergent views about oil’s future and the desirable peace of expansion, Rockefeller threw in the straw carried out a tactic, where in the end their partnership were dissolved on March 2, 1865, and Rockefeller won the auction of re-purchase their business at $72,500 and renamed their business Rockefeller & Andrews.
On March 4, 1867, Henry Morrison Flagler joined their partnership and formed a new partnership. Flagler was the associate Rockefeller needed to share his dreams, endorse his plans and stiffen his resolved. They discovered their remarkable affinity as businessmen. Started with Flagler’s recruitment, Rockefeller assembled a team of capable executives who would transform the Cleveland refiner into the world’s strongest industrial company. Unlike Clark, both men were prepared to go as far and as fast as marketplace place allow.
Between 1869 and 1870, Rockefeller started his campaign to replace competition with cooperation in industry and began to buy out every refinery within his grasp. The money was funded through incorporation and selling stocks. On January 10, 1870 the partnerships was abolished and replaced by a joint-stock firm called the Standard Oil Company.
Rockefeller long realized railroads were severally intertwined with the oil industry as its main logistics. He began negotiate for deals and lobby with railroads. Using a scheme devised by Tom Scott, they created South Improvement Company, SIC, a shell organization to create special favors for its members. One of the mostly deadly innovations was the drawbacks, where SIC members receive drawbacks on shipment made by rival refiners. With increase of drawbacks, it greatly reduced rival profit margins and increase its own on nearly every barrels of oil its competitors make. The drawback was called by one of Rockefeller’s biographer as “an instrument of competitive cruelty unparalleled in industry.” As he takes unparalleled measures in rising price forcing out his competition, mobs protested in bitter denunciations. He remained silent in the face of criticism, he thought he was seem confident and secure in his integrity – in fact, he seemed guilty and arrogantly evasive. Only in twilight of his life Rockefeller realize how poorly his taciturnity had served him.
In April 1874, after he had conquered the majority of oil industry, Standard Oil moved to a four-story building at 43 Euclid Avenue. As his wealth skyrocketed, so was his infamous fame. Hunted by large publicists and many indictments linked to conspiracies and monopolies, in 1879 he began a thirty year career as fugitive from justice. In the late 1880’s, Standard captured nearly 80 percent of world markets in oils. On May 1, 1885, Standard Oil moved to 26 Broadway in Manhattan.
In 1897, Rockefeller stop going to 26 Broadway all together, succeeded by John D. Archbold and around same time Jr. joined the firm. He himself continued to dedicate his life to philanthropy. He named Frederick T. Gates as his chief in philanthropy and money distributions. Over his lifetime, he had endowed Rockefeller Institute for Medical Research (RIMR) later called Rockefeller University, funded University of Chicago led by Dr. Harper, John Hopkin Medical School, General Education Board, Rockefeller Foundation who setup china Medical Board which constructed the Peking Union Medical College and opened in 1921. Of the $530 millions he gave away during his lifetime, $450 Millions went to medicine.
In November 18 1906, when Fed filed suit in Missouri to dissolve the Standard Oil under Sherman Antitrust Act, the Standard were marketed 89 percent of domestic kerosene and more than 20 times than its next competitor, Pure Oil. At 4pm on May 15, 1911, Chief Justice Edward White delivered the final verdict that ended the 41 years of existence of the Standard Oil. The Standard oil were eventually break into, Standard Oil of New Jersey (Exxon), Standard Oil of New York (Mobil), Standard Oil of Indiana (Amoco), Standard Oikl of California (Chevron), Atlantic Refining (ARCO and later the Sun), Continental Oil (Conoco), today a unit of DuPont.
Eventually Rockefeller’s remaining money went into funds: ”The descendants of William Rockefeller were identified with Nation City (Citi), the progeny of John D. were always associated with Chase.”
His Character
Rockefeller was the sort of stubborn person who only grew more determined with rejection.
He listened closely to what people said and filed away as much information as he could, repeating valuable information to himself until it was memorized.
Had an unfailing knack for knowing who would help or hinder him in his career.
He responded to critics or enemies with sangfroid and courage.
He wanted to be surrounded by trustworthy people who could inspire confidence in customers and bankers alike.
His formula: daring in design, cautious in execution. Frugality and Prodigality
One of his cardinal rules was never to seem too eager to borrow. By stalling, Rockefeller believed, he pinned down the deal on the most favorable terms.
He was a stickler for the truth in presenting facts, never fudged or equivocated in discussing problems, and promptly repaid loans.
He always moved into battle backed by abundant cash, he kept plentiful reserves and won many bidding contests simply because his war chest was deeper.
This refusal to truckle, bend, or bow to others, this insistence on dealing with other people on his own terms, time and turf, distinguished Rockefeller throughout his career
John: “The zest of the work is maintained by something better than the mere accumulation of money.”
John drew strength by simplifying reality and strongly believed that excessive reflection upon unpleasant but unalterable events only weakened one’s resolve in the face of enemies.
John: “… it was a good thing to let the money be my slave and not make myself a slave to money.”
One of Rockefeller’s strengths in bargaining situations was that he figured out what he wanted and what the other party wanted and then crafted mutually advantageous terms.
Rockefeller: A man who succeeds in life must sometimes go against the current.”
Like the Marxists, he believe that the competitive free-for-all eventually gave way to monopoly and that large industrial-planning units were the most sensible way to manage an economy.
From an early age, he had learned both to use and to abuse religion, to interpret and to misinterpret Christian doctrine to suit his purpose.
”… his preference for outright fusion rather than an unwieldy federation of firms.”
Black Thursday of September 18, 1873, due to financing problem in Northern Pacific Railway, it led to stock exchange shutdown, bank failures, and railroad bankruptcies. In midst of this panic, Standard oil slashed dividends to increase its cash reserve and weathered the 6 year depression.
Rockefeller was capable of extraordinary ferocity in compelling submission from competition.
Rockefeller: “A man has no right to occupy another man’s time unnecessarily.”
He trained his face to be a stony mask so that when underlings brought him telegrams, they couldn’t tell from his expression whether the news was favorable or not.
Two of his most cherished maxims were “Success comes from keeping the ears open and the mouth closed.” And “A man of words and not of deeds is like a garden full of weeds.”
Rockefeller: “Do not many of us who fail to achieve big things…fail because we lack concentration—the art of concentrating the mind on the thing to be done at the proper time and to the exclusion of everything else?”
That Rockefeller placed scientists, not lay trustee, in charge of expenditures was thought revolutionary.
Many employees said he never lost his temper, raised his voice, uttered a profane or slang word, or acted discourteously.
So highly did Rockefeller value personnel … he hired talented people as found, not as needed.
He exerted a magnetic power over workers and especially prized executives with social skills. “The ability to deal with people is as purchasable a commodity as sugar or coffee, and I pay more for that ability than for any other under sun.”
At first, he tested them exhaustively, yet once he trusted them, he bestowed enormous power upon them and didn’t intrude unless something radically misfired.
Numbers gave Rockefeller an objective yardstick
”Rockefeller prevailed at Standard Oil because he had mastered a method for solving problems that carried him far beyond his native endowment. He believed there was a time to think and them a time to act. He brooded over problems and quietly matured plans over extended periods. Once he had made up his mind, however, he was no longer troubled by doubts and pursued his vision with undeviating faith. Unfortunately, once in that state of mind, he was all but deaf to criticism. He was like a projectile that, once launched, could never be stopped, never recalled, never diverted.
Rockefeller to son: “John, never lend money to your friends; it will spoil your friendships.”
Rockefeller: “… I was satisfied with cold water and skimmed milk, and enjoyed my sleep. What a pity that more men did not enjoy these simple things!”
Rockefeller: “a man’s wealth must be determined by the relation of his desires and expenditures to his income. If he feels rich on ten dollars, and has everything else he desires, he really is rich.”
Rockefeller “assumed every tradesman was an extortion artist.”
For Rockefeller, it was dogma that prices should reflect true market values, not the buyer’s ability to pay, and nothing upset him more than the notion that a rich man should pay a premium on his hard-earned wealth.
Others
The Pennsylvania barrel = 42 gallons, remains today’s standard.
Flagler’s dictum: “a friendship founded on business was superior to a business founded on friendship.”
As Cettie told to her Children: “He who conquers self is the greatest victor.” And “The secret of sensible living is simplicity.”
Benjamin Franklin’s father to son: “Seest thou a man diligent in his business? He shall stand before kings.”
John Wesley’s Dictum: “If those who ‘gain all they can’ and ‘save all they can.’ Will likewise ‘give all they can,’ then the more they will grow in grace.”
Max Weber: “Unlimited greed for gain is not in the least identical with capitalism, and is still less in spirit. Capitalism may even be identical with restraint, or at least a rational tempering, of this irrational impulse.”
Great Awakening began around 1739 was upsurge of religious fervor create great number of Baptist church in the New England. The second Awakening wave was from 1800 to 1830 and hit the New England and Mid-Atlantic.
When John left his romance with a farmer’s daughter Melinda Miller, it was said the failure of this relationship was fortunate, for he ended up with a woman of much greater social standing and intellectual attainment who would provide him with the strong, stable home life and religious certitude that he craved.
In capital-intensive refining business, sheer size mattered greatly because it translated into economies of scale.
Joseph A. Schumpeter, conservative economist: contended that monopolies might prove beneficial during depressions or in new, rapidly shifting industries.
Philosopher Herbert Spencer: “A business partnership, balanced as the authorities of its members may theoretically be, presently becomes a union in which the authority of one partner is tacitly recognized as greater than that of the other or others.”
Rockefeller: “It is chiefly to my confidence in men and my ability to inspire their confidence in me that I owe my success in life.”
the secret to unifying the dozens of affiliated concerns proved to be the committee system patented by Standard Oil. They controlled and approved the funds. A vitally important point is the committee encouraged rivalry among local units by calculating performance figures and encouraging them to compete for records and prices. Gave the freedom to each employee, once a year, to come before committee and argue for higher salary.
Marcus Samuel renamed his company Shell transport in 1897 honoring his family’s old seashell-box business.
Rockefeller: “This fact the Standard Oil Company always kept in mind: that they must render the best service and be content with largely increasing volume of business, rather than increase the profit so as to tempt others to compete with them.” “we want to continue, in reason, that policy which will give us the largest percentage of the business.”
Like Karl Marx, Rockefeller believed in the inevitable collapse of capitalism, which he thought corrupt and predatory. Also, .. competition led to monopoly.
Lloyd: “Liberty produces wealth, and wealth destroys liberty.”
Gates on philanthropy: “If you find big with gift do not rush him too eagerly to the birth. Let him take his time, with gentle management. Make him feel that he is giving, not that it is being taken from his with violence.” “Appeal only to the noblest motives. His own mind will suggest to him the lower and selfish ones.”
”Roosevelt artfully manipulated the press to demonized his foes.”
it was easier to launch a charitable commitment than to end it.
Ivy Lee to Jr.: “Tell the truth, because sooner or later the public will find out anyway. And if the public doesn’t like what you are doing, change your policies and bring them into line with what people what.”
Jr., his turning point: “I should hope that I could never reach the point where I would not be constantly progressing to something higher, better – both with reference to my own acts and … to the general situation in the company. My hope is that I am progressing. It is my desire to.”
Ivy Lee on Sr.: “as a man of superior judgment who was far more adept in reacting to ideas than in initiating them… he was required to list all opposing arguments. Faced with two sides of any question, according to Lee, Rockefeller had a unerring ability to make the right choice.”
As Sr. told to his grandchildren: “what would hurt grandfather a great deal? To know that any of you boys should become wasteful, extravagant, careless with his money… Be careful, boys, and then you’ll always be able to help unfortunate people. That is your duty, and you must never forget it.“
Rockefeller main nemesis and writer was Ida Tarbell whose father lose job to one of Rockefeller’s take-over and credited in turning Rockefeller into the most hateful man in America at one time.