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Adjusted for modern inflation,
John D. Rockefeller was worth around 300 to 400 billion dollars.
Some estimates put this price higher, some lower.
But universally, everyone agrees he was very very wealthy.
This kind of wealth doesn’t come from sheer luck.
Generally, the wealthiest figures in history were conquerors and kings.
So a captain of industry amassing this much money,
must have come with an interesting story.
John D. Rockefeller, along with several others during the Gilded Age,
used knowledge, willpower, and brutal business tactics
to become the richest man in the last 600 years,
only being surpassed by Mali King Mansa Musa
and Augustus Caesar of Rome.
So how did he manage this impressive feat?
That’s what I want to take a look at today.
Born in 1839,
John’s business aspirations began in Cleveland,
starting out with business partner Maurice Clark.
The two found potential in the oil market,
which was not uncommon at the time.
The oil boom in Pennsylvania was going on,
and everyone wanted something from it.
Unexperienced and ill-conceived plans to drill for oil
made the market saturated.
But the two partners had a better plan.
Rather than focusing on the drilling itself,
they would put their efforts in oil refining.
This would turn the crude oil pumped out of the ground
into a number of oil based products.
Most importantly, kerosene.
You see, back in the 1860s,
the oil market was very different than it is today.
Prior to drilling, oil was gained by killing whales
and boiling their skin to fuel lamps.
The primary use of oil for the public was lamps,
which had allowed people to see after dark with relative ease.
By the late 1850s, oil was discovered in Pennsylvania.
With this, the production and demand for oil for lamps increased substantially.
But we’re getting ahead of ourselves.
As the two partners continued the refining business,
Rockefeller’s thrifty mindset began to show its benefits.
Competitors would throw out a good chunk of the oil refined,
as it was the useless gasoline and lubricants.
Rockefeller used these byproducts of the refining process
to power the refining process
along with making a profit on other byproducts.
Rockefeller also began his attempt to control
every aspect of the refining process.
Transportation of oil required wooden barrels.
And instead of buying pre-made barrels, he made his own.
And instead of buying the wood to make the barrels,
he bought a forest.
By this point far more partners were involved than just Rockefeller and Clark,
including Clark’s brothers
and a chemist named Samuel Andrews.
Rockefeller decided to buy out the Clark brothers shares,
and from here it was just Rockefeller and Andrews.
Soon after, Rockefeller’s brother William started his own refinery.
The two along with Andrews and Henry Pfleger,
I know, a lot of names,
were all in a major partnership that
now included the biggest oil refinery of the time.
Of course, this was not even close to where the story ends.
By 1870, Standard Oil was formed
to replace the prior partnership.
And it was here that Rockefellers wealth
began to truly soar.
Being the largest oil refinery,
certain privileges were held to Standard Oil
when transporting products on the trains.
After all, they had a lot of product
and that can only be good for the railroad companies.
This meant cheaper prices for Standard Oil than the competition,
meaning that prices could be lower while still maintaining profits.
The problem: no other refinery could possibly compete.
These early monopolistic practices would only grow.
Rockefeller made sure to buy out every competitor in the area.
Those who refused would become the subject of
Standard Oil’s infamous price wars.
The prices Standard Oil would offer would become so cheap
that they themselves would lose money.
Consumers would begin to buy Standard Oil exclusively
and the competition couldn’t keep up.
Standard Oil had so much money that they could afford to lose profits for a while,
just to keep competition out.
Well, not yet at least.
The aforementioned positive feedback loop would only grow
until Standard Oil accounted for 90% of the nation’s oil.
This was, of course, a monopoly.
Public animosity toward Standard Oil began to grow.
One company controlling so much didn’t sit well with the general public.
But at the same time Standard Oil had enough money
to easily bribe politicians into looking the other way.
Luck seemed to have ran out in 1890
with the Sherman Antitrust Act though.
A trust is basically just a monopoly.
A company with a massive percentage of market share
that effectively kills all competition.
A monopoly cannot be competed against,
since an effective monopoly can buy competition
or outpace them in price nearly every time.
Monopolies, especially as Monopolies, especially as industry advanced,
would allow men like Rockefeller to gain
inconceivable levels of wealth and power.
The Sherman Antitrust Act,
laid a groundwork to abolish trust.
But competing with a company with such levels of wealth,
can be a long and complicated process.
While initially the Sherman Act seemed like
a great step in the right direction,
politicians were still being constantly bribed by Standard Oil,
along with other major monopolies of the day,
which I would love to cover some other time.
This would mean that it would take a politician who couldn’t be bought.
That man was Teddy Roosevelt.
President Roosevelt wasn’t solely going out and killing monopolies
with a single whack of his big stick,
but instead started a long needed conversation on the federal level.
Monopolies had gained so much power.
They could effectively control the government.
And public anger demanded that these monopolies be dissolved.
So finally in 1909,
the Justice Department accused Standard Oil of monopolistic actions,
largely based around the benefits they had with the railroad companies.
The evidence was rather clear and well documented,
and it was only a matter of time before the government would take severe action.
In May of 1911,
the Supreme Court ruled that Standard Oil had been
in violation of the Sherman Antitrust Act
over twenty years after it had been passed.
The ruling broke up Standard Oil,
and now would be 90 separate companies.
These companies would become entities
like Exxon Mobil and Chevron
But during Rockefeller’s life,
this breakup would only further his wealth.
As Rockefeller still had stock within these companies,
all these separate entities saw their stock prices double.
This finally would lead Rockefeller to his three to four hundred billion dollar mark,
and cement him as the richest American of all time.
Rockefeller can be easily seen as an evil industrialist trying to get every dime.
But in reality, he was quite a charitable man.
Some could say, “Well, what else would you do with all that money?”
But keep in mind, he began donating
6% of his earnings to charity when he was just 16.
Well, before he acquired that much money.
He was actually a progressive for the time,
being a staunch abolitionists and donating to African American groups.
He continued philanthropy throughout his entire life,
contrasting with the public image of him as a greedy evil man.
His business actions cost many their jobs,
livelihood and potential for greatness.
That, in itself, can easily see him written off as immoral,
if not heartless.
But just remember,
in the end, that’s all it was business.
This video was inspired by a lecture,
which was featured in an online video service
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John D. Rockefeller and Standard Oil
taught by Professor Patrick N. Alan.
In this course he goes through the exploration of the man himself
in much more detail than I did today.
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