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John D. Rockefeller, Sr.

 
Who2 Biography: John D. Rockefeller, Sr., Industrialist / Philanthropist
John D. Rockefeller, Sr.
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  • Born: 8 July 1839
  • Birthplace: Richford, New York
  • Died: 23 May 1937
  • Best Known As: Standard Oil tycoon and big-time philanthropist

One of the richest Americans in history, John D. Rockefeller was the founder of the Standard Oil Company and, later, a philanthropist whose wealth bankrolled the Rockefeller Foundation. Hard-working and meticulous, Rockefeller started out small and then made his fortune via hard-nosed and sometimes controversial business tactics, which have since made him an entrepreneurial hero to some, a greedy fiend in the eyes of others. He started in the oil business, and by the end of the century the Standard Oil Trust controlled so many other interests that it fell afoul of anti-trust laws. In 1911 the U.S. Supreme Court called Standard Oil a monopoly and forced the Trust to separate into competing companies. By that time Rockefeller himself was no longer involved in running the business, having devoted himself completely to philanthropy since 1896. He gave away millions to schools, health organizations and civic projects through the Rockefeller Foundation, which endures today.

John D. Rockefeller, Jr. was in the family business only briefly before devoting himself to philanthropy with the Rockefeller Foundation... the elder Rockefeller's grandson, Nelson Rockefeller, was a four-time governor of New York and vice president of the United States from 1974-77 under Gerald Ford.

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Britannica Concise Encyclopedia: John Davison Rockefeller
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(born July 8, 1839, Richford, N.Y., U.S. — died May 23, 1937, Ormond Beach, Fla.) U.S. industrialist and philanthropist. He moved with his family to Cleveland, Ohio, in 1853, and in 1859 he established a commission business dealing in hay, grain, meats, and other goods. In 1863 he built an oil refinery that soon was the largest in the area. With a few associates he incorporated Standard Oil Co. (Ohio) in 1870. He bought out competitors to control the oil-refinery business in Cleveland (1872) and in the U.S. (1882). He placed the stock of the company and its affiliates in other states under control of a board of trustees, establishing the first major U.S. business trust company. As a result of antitrust proceedings, he later converted the trust into a holding company. In the 1890s he turned his attention to philanthropy. He founded the University of Chicago in 1892, the Rockefeller Institute for Medical Research (later Rockefeller University) in 1901, and the Rockefeller Foundation in 1913. He donated over $500 million in his lifetime, and his philanthropy continued through donations by his son, John D. Rockefeller, Jr. (1874 – 1960), and other descendants.

For more information on John Davison Rockefeller, visit Britannica.com.

Biography: John Davison Rockefeller
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John Davison Rockefeller (1839-1937), American industrialist and philanthropist, founded the Standard Oil Company, the University of Chicago, and the Rockefeller Foundation.

John D. Rockefeller was born on July 8, 1839, in Richford, N.Y. His father owned farm property and traded in many goods, including lumber and patent medicines. His mother, a straitlaced puritanical woman, brought up her large family very strictly. The family moved west by degrees, reaching Cleveland, Ohio, in 1853, when it was beginning to grow into a city. John graduated from high school there and after three months of commercial college found his first job at the age of sixteen clerking in a produce commission house. In 1859, when he was nineteen, he started his first company with a young Englishman: Clark and Rockefeller. They grossed $450,000 in the first year of trading. Clark did the fieldwork; Rockefeller controlled office management, bookkeeping, and relationships with bankers.

Early Businesses

From the start Rockefeller revealed a genius for organization and method. The firm prospered during the Civil War. With the Pennsylvania oil strike (1859) and the building of a railroad to Cleveland, they branched out into oil refining with Samuel Andrews, who had technical knowledge of the field. Within two years Rockefeller became senior partner; Clark was bought out, and the firm Rockefeller and Andrews became Cleveland's largest refinery. A second refinery, the Standard Works, was opened in 1865 by another firm established by Rockefeller in his brother William's name; and a sales office was opened in New York City in 1866.

With financial help from S. V. Harkness and from a new partner, H. M. Flagler, who also secured favorable railroad freight rebates, Rockefeller survived the bitter competition in the oil industry. The Standard Oil Company, chartered in Ohio in 1870 by Rockefeller, his brother, Flagler, Harkness, and Andrews, had a capital of $1 million and paid a dividend of 40 percent a year later. Standard Oil controlled one-tenth of American refining, but competitive chaos remained. The chief bottleneck was the transporting of the oil. Out of this situation came the controversial South Improvement Company scheme of 1872 - a defensive alliance of Cleveland refiners to meet the bitter opposition of the oil producers of Pennsylvania. The sweeping freight rebate agreements in this scheme brought public opposition, and the plan was outlawed by the Pennsylvania Legislature. Meanwhile, a looser organization, a refiners' pool, also failed (1873).

Rockefeller still hoped to impose order on the oil industry. He bought out most of the Cleveland refineries, then acquired others in New York, Pittsburgh, and Philadelphia. He turned to new transportation methods, including the railroad tank car and the pipeline. By 1879 he was refining 90 percent of American oil, and Standard used its own tank car fleet, ships, docking facilities, barrel-making plants, draying services, depots, and warehouses. Strict economy and planning were enforced throughout. Rockefeller came through the Panic of 1873 still urging organization on the part of the refiners. As his control approached near-monopoly, he fought a war with the Pennsylvania Railroad in 1877, which created a refining company to try to break Rockefeller's control, but the bloody railroad strikes that year forced them to surrender to Standard Oil. Rockefeller's dream of order was near completion.

America's First Trust

By 1883, after winning control of the pipeline industry, Standard's monopoly was at a peak. Rockefeller created America's first great "trust" in 1882; since laws forbade one company's ownership of another's stock, ever since 1872 Standard had placed its acquisitions outside Ohio in the hands of Flagler as "trustee." All profits went to the Ohio company while the outside businesses remained nominally independent. In 1882 this was regularized. Nine trustees of the Standard Oil Trust received the stock of 40 businesses and gave the various shareholders trust certificates in return. The trust had a capital of about $70 million; it was the world's largest and richest industrial organization.

In the 1880s the nature of Rockefeller's business began to change; he moved beyond refining oil into producing crude oil itself and moved his wells westward with the new fields opening up. He pioneered in this by acquiring oil land in Ohio before it was certain that this sulfuric oil could be refined successfully; then he employed the scientist Herman Frasch, whose process (1886-1889) made these fields yield an enormous profit. Standard also expanded its marketing facilities and entered foreign markets in Europe, Asia, and Latin America. From 1885 a committee system of management was developed to control Standard Oil's enormous empire.

Attacking the Trust

Public opposition to Standard Oil grew with the emergence of the muckraking journalists; in particular, Henry Demarest Lloyd and Ida Tarbell published harsh exposés of the oil empire. Rockefeller was condemned for various alleged practices: railroad rebates (a system he did not invent and which many refiners used); price discrimination; industrial espionage and bribery; crushing smaller firms by unfair competition, such as cutting off their crude oil supplies or restricting their transport outlets. Standard Oil was investigated by the New York State Senate and by the U.S. House of Representatives in 1888. The rising tide of reform sentiment brought in the Sherman Antitrust Act (1890). Two years later the Ohio Supreme Court invalidated Standard's original trust agreement. Rockefeller formally disbanded the organization; though the trustees handed in their trust certificates, in practice the organization remained unified, and the four presidents of the state firms (John D. Rockefeller for Standard of Ohio, William Rockefeller for New York, Flagler for New Jersey, and J.A. Moffett for Indiana) still met regularly to fix overall policy. In 1899 Standard was recreated legally under a new form as a "holding company;" this merger was dissolved by the U.S. Supreme Court in 1911, long after Rockefeller himself had retired from active control in 1897.

Perhaps Rockefeller's most famous excursion outside the oil industry began in 1893, when he helped develop the Mesabi iron ore range of Minnesota. By 1896 his Consolidated Iron Mines owned a great fleet of ore boats and virtually controlled Great Lakes shipping. Rockefeller was now an iron ore magnate in his own right and had the power to dictate to the steel industry. He made an alliance with the steel king, Andrew Carnegie, in 1896: Rockefeller agreed not to enter steelmaking and Carnegie agreed not to touch transportation. In 1901 Rockefeller sold his ore holdings to the vast new merger created by Carnegie and J. P. Morgan, U.S. Steel. In that year his fortune passed the $200 million mark for the first time.

Philanthropic Endeavors

From his first employment as a clerk, Rockefeller sought to give away one-tenth of his earnings to charity. His benefactions grew with his income, and he also gave time and energy to philanthropic causes. At first he depended on the Baptist Church for advice; the Church wanted its own great university, and in 1892 the University of Chicago opened under the brilliant presidency of a man Rockefeller much admired, William Rainey Harper. The university was Rockefeller's first major philanthropic creation. He gave it over $80 million during his lifetime and left the university entirely independent under Harper. Rockefeller chose New York City for his Rockefeller Institute of Medical Research (now Rockefeller University), chartered in 1901. Among the institute's many achievements were yellow fever research, discovery of serums to combat pneumonia, advances in experimental physiology and surgery, and work on infantile paralysis. In 1902 he established the General Education Board.

The total of Rockefeller's lifetime philanthropies has been estimated at about $550 million. Eventually the amounts involved became so huge (his fortune reached $900 million by 1913) that he developed a staff of specialists to help him; out of this came the Rockefeller Foundation, chartered in 1913, "to promote the wellbeing of mankind throughout the world."

Rockefeller's personal life was fairly simple and frugal. He was a man of few passions who lived for his work, and his great talent was his organizing genius and drive for order, pursued with great single-mindedness and concentration. His life was absorbed by business and later by organized giving. In both areas he imposed order, efficiency, and planning with extraordinary success and sweeping vision. He died on May 23, 1937, in Ormond, Fla.

Further Reading

Rockefeller's Random Reminiscences of Men and Events (1909) remains interesting and important. The definitive life of Rockefeller is Allan Nevins, Study in Power: John D. Rockefeller (2 vols., 1940; rev. ed. 1953). A sympathetic account is Jules Abels, The Rockefeller Billions (1965).

For general economic history see the readings in Peter d'A. Jones, The Robber Barons Revisited (1968). The history of Standard Oil of New Jersey is treated in R. W. and M. E. Hidy, History of Standard Oil Company: Pioneering in Big Business, 1882-1911, vol. 1 (1955), and Standard is considered comparatively in Alfred D. Chandler, Jr., Strategy and Structure: Chapters in the History of Industrial Enterprise (1962). Standard's history in California to 1919 is described in Gerald T. White, Formative Years in the Far West (1962). For a broader history see Harold F. Williamson and Arnold R. Daum, The American Petroleum Industry (2 vols., 1959-1963).

US History Companion: Rockefeller, John D.
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(1839-1937), industrialist and philanthropist. Rockefeller was the primary force behind the establishment of the Standard Oil Company and thus of the American petroleum industry.

Rockefeller was born in Richford, New York, and moved with his family to Cleveland, Ohio, where he finished high school in 1855. He began his business career as a bookkeeper-clerk in a commission house the same year. The first successful drilling for oil took place in western Pennsylvania in 1859, and Rockefeller realized that Cleveland was ideally suited to exploit this new resource. He built his first refinery in 1863 in partnership with others.

The early oil business was chaotic and hazardous, with barrel prices rising as high as $13.75 and falling as low as ten cents during the 1860s, but Rockefeller, a born executive, kept his firm consistently profitable and growing. In 1870 he, Henry Flagler, and others formed the Standard Oil Company, with Rockefeller owning 26.7 percent of the stock. Using such then-legal tactics as railroad rebates and predatory pricing, Standard Oil steadily increased its hold over the American oil industry until by 1880 it controlled fully 90 percent of it.

The corporate structure of this expanding enterprise had become unwieldy, and state corporation laws made it difficult to rationalize what had become a nationwide company. In 1882, Standard Oil's legal counsel devised the trust form of organization. Standard Oil thus became both the first and the largest of the "trusts," one of the great bogeymen of American politics ever since.

As such, it necessarily became a major target of reformers. Although he played the game hard, Rockefeller never operated outside the law or sought an absolute monopoly. Rather, he wanted Standard Oil to be large enough to enforce "order" in the oil business and prevent a return to the chaos that had marked the industry's early years. And despite Standard's near monopoly position, the price of oil and oil products fell drastically between 1870 and 1900. In 1883, Rockefeller moved the company's headquarters to New York.

Always active in the Baptist church, Rockefeller early began the practice of making substantial charitable contributions. As his resources grew, so did his philanthropy. He had largely retired from Standard Oil by 1897 and devoted much of his energy to looking for creative ways to give his money away. He was often guided by Baptist ministers and others, and he established an organization to investigate carefully before giving. Once he had made up his mind, however, he gave with wholly unprecedented generosity. In 1889 he gave $600,000 to establish the University of Chicago (the family would ultimately give it more than $80 million), and in the final decades of his long life he gave away an estimated $550 million to worthy causes. He also established the Rockefeller Institute, the General Education Board, the Rockefeller Foundation, and the Laura Spelman Rockefeller Memorial Foundation.

Bibliography:

Peter Collier and David Horowitz, The Rockefellers: An American Dynasty (1977); Allan Nevins, Study in Power (1953).

Author:

John Steele Gordon

See also Oil Industry; Philanthropy; Robber Barons.


 
Columbia Encyclopedia: John Davison Rockefeller
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Rockefeller, John Davison, 1839-1937, American industrialist and philanthropist, b. Richford, N.Y. He moved (1853) with his family to a farm near Cleveland and at age 16 went to work as a bookkeeper. Frugal and industrious, Rockefeller became (1859) a partner in a produce business, and four years later, with his partners, he established an oil refinery, entering into an industry already thriving in Cleveland.

In 1870 he and his associates-including S. V. Harkness, H. M. Flagler, and his brother William-organized the Standard Oil Company of Ohio, capitalized at $1 million. By enforcing strict economy and efficiency, through mergers and agreements with competitors, by ruthlessly crushing weaker competitors, and by accumulating large capital reserves, Rockefeller soon dominated the American oil-refining industry. Rebate agreements, which he forced from the railroads, and the control of pipeline distribution of refined oil strengthened the near monopoly of the Standard Oil Company.

In 1882 the diverse holdings of the various members of Rockefeller's combination were tied together into the Standard Oil trust. Court action compelled the trust to dissolve 10 years later, but in a few years the Standard Oil Company of New Jersey was chartered as a holding company, with a capitalization of $110 million. Rockefeller was also prominent in the affairs of railroads and banks, being second only to J. P. Morgan in the domain of finance. When the United States Steel Corporation was formed (1901), Rockefeller was one of the directors. In 1911 a decision of the U.S. Supreme Court required the holding company to dissolve and its directors to relinquish their control over the numerous subsidiaries. Rockefeller personally ruled over his enormous petroleum business until 1911, when he retired with a fabulous fortune.

Intensely religious, Rockefeller had an interest in philanthropy as deep as his interest in business. He gave generously to the Baptist Church, to the YMCA, and to the Anti-Saloon League. He also founded (1892) the Univ. of Chicago. The most prominent of the philanthropic enterprises to which he eventually turned over some $500 million were the Rockefeller Institute for Medical Research, founded (1901) in New York City and since 1965 known as Rockefeller Univ.; the General Education Board, organized (1902) to make gifts to various educational and research agencies; the Rockefeller Foundation, established (1913) to promote public health and to further the medical, natural, and social sciences; and the Laura Spelman Rockefeller Memorial, founded (1918) in memory of his wife, for the furthering of child welfare and the social sciences. He wrote Random Reminiscences of Men and Events (1909).

Son and Grandsons

His son John Davison Rockefeller, Jr., 1874-1960, b. Cleveland, grad. Brown, 1897, took over active management of his father's interests in 1911 and engaged in numerous philanthropies. Riverside Church in New York City was built through his gifts. He also gave vast sums for religious projects, for scientific investigation, and for the restoration of historic monuments. Among his most notable philanthropies were the restoration of colonial Williamsburg, Va., and the donation of the site for the United Nations headquarters in New York City. He founded (1931) and helped plan Rockefeller Center in New York City, which the Rockefeller interests completed in 1939. John D. Rockefeller, Jr., had six children, and his five sons all became famous in various fields of endeavor.

His eldest son, John Davison Rockefeller 3d, 1906-78, b. New York City, grad. Princeton, 1929, was active in the management of family interests as well as art collecting and the support of numerous civic and philanthropic ventures, such as Lincoln Center for the Performing Arts, the United Negro College Fund, and the Population Council.

His second son was Nelson Aldrich Rockefeller.

Laurance Spellman Rockefeller, 1910-2004, b. New York City, grad. Princeton, 1932, was noted for his involvement in conservation and the protection of wildlife. He funded the expansion of Grand Teton National Park and promoted creation and expansion of numerous other national parks. An astute investor, he was the principal backer of Eddie Rickenbacker when the latter founded Eastern Airlines in the 1930s, and was subsequently an early underwriter of a number of successful companies.

Winthrop Rockefeller, 1912-73, b. New York City, attended (1931-34) Yale and then went into investment management. Interested in agriculture, he became the owner of a farm in Arkansas noted for its experiments in animal husbandry. A Republican, he served as governor of Arkansas from 1967 to 1970.

David Rockefeller, 1915-, b. New York City, grad. Harvard, 1936, Ph.D. Univ. of Chicago, 1940, joined what became the Chase Manhattan Bank in 1948 and headed it from 1969 until his retirement in 1981. He acted as spokesman for the U.S. business community on several occasions. His Memoirs were published in 2002.

Jay Rockefeller (John Davison Rockefeller 4th), 1937-, b. New York City, son of John D. Rockefeller 3d, was elected governor of West Virginia as a Democrat in 1976; reelected in 1980, he was then elected to the U.S. Senate in 1984 and reelected in 1990, 1996, 2002, and 2008. He has chaired the committees on veterans' affairs (1993-1995; 2001-3) and commerce, science, and transportation (2009-) and the select committee on intelligence (2007-9).

Bibliography

See biographies of J. D. Rockefeller by A. Nevins (rev. ed. 1959), J. Abels (1965), and R. Chernow (1998); J. T. Flynn, God's Gold (1932, repr. 1971); W. Inglis, John D. Rockefeller Interview, 1917-1920 (1989); studies by D. Frost (1987) and J. Harr and P. Johnson (1988); biography of J. D. Rockefeller, Jr., by R. B. Fosdick (1956) and of Laurance Rockefeller by R. Winks (1997).

Economics Dictionary: John D. Rockefeller
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An American businessman of the late nineteenth and early twentieth centuries; a founder of the Standard Oil Company. Rockefeller was the richest man in the world at his retirement and was noted for founding many charitable organizations.

Quotes By: John D. Rockefeller
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Quotes:

"Every right implies a responsibility; Every opportunity, an obligation, Every possession, a duty."

"I would rather earn 1% off a 100 people's efforts than 100% of my own efforts."

"I had no ambition to make a fortune. Mere money-making has never been my goal, I had an ambition to build."

"The person who starts out simply with the idea of getting rich won't succeed; you must have a larger ambition. There is no mystery in business success. If you do each day's task successfully, and stay faithfully within these natural operations of commercial laws which I talk so much about, and keep your head clear, you will come out all right."

"If your only goal is to become rich, you will never achieve it."

"It is wrong to assume that men of immense wealth are always happy."

See more famous quotes by John D. Rockefeller

Wikipedia: John D. Rockefeller
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John Davison Rockefeller

John D. Rockefeller in 1885
Born July 8, 1839(1839-07-08)
Richford, New York, USA
Died May 23, 1937 (aged 97)
The Casements, Ormond Beach, Florida, USA
Occupation Chairman of Standard Oil Company; investor; philanthropist

John Davison Rockefeller (July 8, 1839 – May 23, 1937) was an American industrialist. Rockefeller revolutionized the petroleum industry and defined the structure of modern philanthropy. In 1870, he founded the Standard Oil Company and aggressively ran it until he officially retired in 1897.[1] Standard Oil began as an Ohio partnership formed by John D. Rockefeller, his brother William Rockefeller, Henry Flagler, chemist Samuel Andrews, and a silent partner, Stephen V. Harkness. As kerosene and gasoline grew in importance, Rockefeller's wealth soared, and he became the world's richest man and first American billionaire.[2] He is often regarded as the richest person in history.[3][4][5][6]

Rockefeller spent the last 40 years of his life in retirement. His fortune was mainly used to create the modern systematic approach of targeted philanthropy with foundations that had a major effect on medicine, education, and scientific research.[citation needed]

His foundations pioneered the development of medical research, and were instrumental in the eradication of hookworm and yellow fever. He is also the founder of both the University of Chicago and Rockefeller University. He was a devoted Northern Baptist and supported many church-based institutions throughout his life. Rockefeller adhered to total abstinence from alcohol and tobacco throughout his life.[7]

He had four daughters and one son; John D. Rockefeller, Jr. "Junior" was largely entrusted with the supervision of the foundations.

Contents

Early life and business career

Rockefeller was the second of six children born in Richford, New York, to William Avery Rockefeller (November 13, 1810 – May 11, 1906) and Eliza Davison (September 12, 1813 – March 28, 1889). Genealogists trace his roots back to French Huguenots who later fled to Germany in the 1600s.[8][9] His father, first a lumberman, then a traveling salesman, billed himself as a “botanic physician” and sold dubious elixirs. The locals referred to the mysterious but fun-loving man as "Big Bill," and "Devil Bill".[10]He was a sworn foe of conventional morality who had opted for a vagabond existence and who returned to his family infrequently. Throughout his life, William Avery Rockefeller expended considerable energy on tricks and schemes and avoided plain hard work.[11] Eliza, a homemaker and devout Baptist, struggled to maintain a semblance of stability at home as William was frequently gone for extended periods. She also put up with his philandering and his double life, which included bigamy. [12] Thrifty by nature and by necessity, she taught her son that "willful waste makes woeful want".[13] Young Rockefeller did his share of the regular household chores, and earned extra money raising turkeys, selling potatoes and candy, and eventually loaning small sums of money to neighbors. He followed his father’s advice to "trade dishes for platters" and thereby always get the better part of any deal. Big Bill once bragged, "I cheat my boys every chance I get. I want to make ‘em sharp."[14]

In spite of his father’s absences and frequent moving, Young Rockefeller was a well-behaved, serious and studious boy. His contemporaries described him as reserved, earnest, religious, methodical, and discreet. He was an excellent debater, and expressed himself precisely. He also had a deep love of music, and even dreamed of it as a possible career.[15] Early on, he displayed an excellent mind for numbers and detailed accounting.

When he was a boy, his family moved to Moravia, New York and, in 1851, to Owego, New York, where he attended Owego Academy. In 1853, his family bought a house in Strongsville, a suburb of Cleveland. In September 1855, when Rockefeller was sixteen he got his first job as an assistant bookkeeper, working for a small produce commission firm called "Hewitt & Tuttle". Though he worked long and hard hours, he delighted, as he later recalled, in “all the methods and systems of the office”. [16] He was particularly adept at calculating transportation costs, which served him well later in his career. The full salary for his first three months' work was $50 (50 cents a day).[17] Almost from his first pay, he displayed a philanthropic verve, donating about 6% of his earnings to charity, which increased to 10% by the age of twenty.[18]

In 1859, Rockefeller went into the produce commission business with a partner, Maurice B. Clark, and they raised $4,000 in capital. Thrilled to be his own employer, Rockefeller went steadily ahead in business from there, never having a losing year during the rest of his career.[19] They began their trade in wholesale foodstuffs but then built an oil refinery in 1863 in "The Flats", then Cleveland's burgeoning industrial area. The refinery was directly owned by Andrews, Clark & Company, which was composed of Clark & Rockefeller, chemist Samuel Andrews, and M. B. Clark's two brothers. The commercial oil business was in its infancy. Whale oil had become too expensive for the masses, and a cheaper, general-purpose illuminant was desperately needed.[20]

While his brother Frank fought in the Civil War, Rockefeller tended to his thriving business and hired substitute soldiers to fight in his place. He also gave money to the Union cause, as did many rich Northerners who avoided combat.[21] In February 1865, in what was later described by oil industry historian Daniel Yergin as a "critical" action, Rockefeller bought out the Clark brothers for $72,500 at auction, and established the firm of Rockefeller & Andrews. Rockefeller himself said, "it was the day that determined my career."[22] Rockefeller was now well-positioned to take advantage of post-war prosperity and the great expansion westward fostered by the growth of railroads and an oil-fueled economy. He borrowed astutely and heavily, reinvested profits, adapted rapidly to changing markets, and fielded observers to keep a watchful eye over the quickly expanding industry.[23]

In 1864, Rockefeller married Laura Celestia "Cettie" Spelman. They would have four daughters and one son. He admitted later, "Her judgment was always better than mine. Without her keen advice, I would be a poor man."[24] He became a lifelong member of the then new Republican Party, and a strong supporter of Lincoln and the party’s abolitionist wing. He also became a faithful church go-er, taught Sunday school, and was a trustee, clerk, and occasional janitor for the modest Erie Street Baptist mission church.[25] Religion would continue to be a guiding force throughout his life and Rockefeller believed it to be the source of his success. As he bluntly stated later, "God gave me money", and he felt no apology was necessary for how he acquired it. He felt entirely at ease and righteous following John Wesley’s dictum, "gain all you can, save all you can, and give all you can."[26] In 1866, John D. Rockefeller's brother, William, built another refinery in Cleveland and John was brought into the partnership. In 1867, Henry M. Flagler became a partner, and the firm of Rockefeller, Andrews & Flagler was established. By 1868, with Rockefeller continuing to borrow heavily and reinvest most of the profits while controlling cost and utilizing his refineries' waste, the company owned two Cleveland refineries and a marketing subsidiary in New York, and it was the largest oil refinery in the world.[27][28] Rockefeller, Andrews & Flagler was the predecessor of the Standard Oil Company.

Standard Oil

John D. Rockefeller ca. 1875

By the end of the American Civil War, Cleveland was one of the five main refining centers in the U.S. (besides Pittsburgh, Philadelphia, New York, and the region in northwestern Pennsylvania where most of the oil originated). In June 1870, Rockefeller formed Standard Oil of Ohio, which rapidly became the most profitable refiner in Ohio. Standard Oil grew to become one of the largest shippers of oil and kerosene in the country. The railroads were fighting fiercely for traffic and, in an attempt to create a cartel to control freight rates, formed the South Improvement Company, in collusion with Standard and other oil men outside the main oil centers.[29] The cartel received preferential treatment as a high-volume shipper, which included not just steep rebates of up to 50% for their product, but also rebates for the shipment of competing products.[30] Part of this scheme was the announcement of sharply increased freight charges. This touched off a firestorm of protest from independent oil well owners, including boycotts and vandalism, which eventually led to the discovery of Standard Oil's part in the deal. A major New York refiner, Charles Pratt and Company, headed by Charles Pratt and Henry H. Rogers, led the opposition to this plan, and railroads soon backed off. Pennsylvania revoked the cartel’s charter and equal rates were restored for the time being.[31]

Undeterred, though vilified for the first time by the press, Rockefeller continued with his self-reinforcing cycle of buying competing refiners, improving the efficiency of his operations, pressing for discounts on oil shipments, undercutting his competition, making secret deals, raising investment pools, and buying rivals out. In less than four months in 1872, in what was later known as the "Cleveland Conquest" or "Cleveland Massacre", Standard Oil had absorbed 22 of its 26 Cleveland competitors.[32] Eventually, even his former antagonists, Pratt and Rogers, saw the futility of continuing to compete against Standard Oil: in 1874, they made a secret agreement with their old nemesis to be acquired. Pratt and Rogers became Rockefeller's partners. Rogers, in particular, became one of Rockefeller's key men in the formation of the Standard Oil Trust. Pratt's son, Charles Millard Pratt became Secretary of Standard Oil. For many of his competitors, Rockefeller had merely to show them his books so they could see what they were up against, then make them a decent offer. If they refused his offer, he told them he would run them into bankruptcy, then cheaply buy up their assets at auction. He saw himself as the industry’s savior, "an angel of mercy", absorbing the weak and making the industry as a whole stronger, more efficient, and more competitive.[33] Standard was growing horizontally and vertically. It added its own pipelines, tank cars, and home delivery network. It kept oil prices low to stave off competitors, made its products affordable to the average household, and to increase market penetration, sometimes sold below cost if necessary. It developed over 300 oil-based products from tar to paint to Vaseline to chewing gum. By the end of the 1870’s, Standard was refining over 90% of the oil in the U.S.[34] Rockefeller had already become a millionaire.[35]

Standard Oil Trust Certificate 1896

In 1877, Standard clashed with the Pennsylvania Railroad, its chief hauler. Rockefeller had envisioned the use of pipelines as an alternative transport system for oil and began a campaign to build and acquire them.[36] The railroad, seeing Standard’s incursion into the transportation and pipeline fields, struck back and formed a subsidiary to buy and build oil refineries and pipelines.[37] Standard countered and held back its shipments, and with the help of other railroads, started a price war that dramatically reduced freight payments and caused labor unrest as well. Rockefeller eventually prevailed and the railroad sold all its oil interests to Standard. But in the aftermath of that battle, in 1879 the Commonwealth of Pennsylvania indicted Rockefeller on charges of monopolizing the oil trade, starting an avalanche of similar court proceedings in other states and making a national issue of Standard Oil’s business practices.[38]

Monopoly

Standard Oil gradually gained almost complete control of oil refining and marketing in the United States through horizontal integration. In the kerosene industry, Standard Oil ruthlessly replaced the old distribution system with its own vertical system. It supplied kerosene by tank cars that brought the fuel to local markets and tank wagons then delivered to retail customers, thus bypassing the existing network of wholesale jobbers. [39] Despite improving the quality and availability of kerosene products while greatly reducing their cost to the public (the price of kerosene dropped by nearly 80% over the life of the company), Standard Oil's business practices created intense controversy. Standard’s most potent weapons against competition were underselling, differential pricing, and secret transportation rebates.[40] The firm was attacked by journalists and politicians throughout its existence, in part for these monopolistic methods, giving momentum to the anti-trust movement. By 1880, according to the New York World, Standard Oil was "the most cruel, impudent, pitiless, and grasping monopoly that ever fastened upon a country."[41] To the critics Rockefeller blandly replied, "In a business so large as ours…some things are likely to be done which we cannot approve. We correct them as soon as they come to our knowledge.”[42]

At that time, many legislatures had made it difficult to incorporate in one state and operate in another. As a result, Rockefeller and his associates owned separate corporations across dozens of states, making their management of the whole enterprise rather unwieldy. In 1882, Rockefeller's lawyers created an innovative form of corporation to centralize their holdings, giving birth to the Standard Oil Trust.[43] The "trust" was a corporation of corporations, and the entity's size and wealth drew much attention. Nine trustees, including Rockefeller, ran the 41 companies in the trust.[44] The public and the press were immediately suspicious of this new legal entity, but other businesses seized upon the idea and emulated it, further inflaming public sentiment. Standard Oil had gained an aura of invincibility, always prevailing against competitors, critics, and political enemies. It had become the richest, biggest, most feared business in the world, seemingly immune to the boom and bust of the business cycle, consistently racking up profits year after year.[45]

Its vast American empire included 20,000 domestic wells, 4,000 miles of pipeline, 5,000 tank cars, and over 100,000 employees.[46] Its share of world oil refining topped out above 90% but slowly dropped to about 80% for the rest of the century.[47] Ironically, in spite of the formation of the trust and its perceived immunity from all competition, by the 1880’s Standard Oil had passed its peak of power over the world oil market. Rockefeller finally gave up his dream of controlling all the world’s oil refining, he admitted later, “We realized that public sentiment would be against us if we actually refined all the oil.”[48] In reality, foreign competition and new finds abroad eroded his dominance. In the early 1880’s, Rockefeller created one of his most important innovations. Rather than try to influence the price of crude oil directly, Standard Oil had been exercising indirect control by altering oil storage charges to suit market conditions. Rockefeller then decided to order the issuance of certificates against oil stored in its pipelines. These certificates became traded by speculators, thus creating the first oil-futures market which effectively set spot market prices from then on. The National Petroleum Exchange opened in Manhattan in late 1882 to facilitate the oil futures trading.[49]

Even though 85% of world crude production was still coming from Pennsylvania wells in the 1880’s, overseas drilling in Russia and Asia began to reach the world market.[50] Robert Nobel had established his own refining enterprise in the abundant and cheaper Russian oil fields, including the region’s first pipeline and the world’s first oil tanker. The Paris Rothschilds jumped into the fray providing financing.[51] Additional fields were discovered in Burma and Java. Even more critical, the invention of the light bulb gradually began to erode the dominance of kerosene for illumination. But Standard Oil adapted, developing its own European presence, expanding into natural gas production in the U.S. then into gasoline for automobiles, which until then had been considered a waste product.[52]

Standard Oil moved its headquarters to New York City at 26 Broadway and Rockefeller became a central figure in the city’s business community. He bought a personal residence in 1884 on 54th street near the mansions of other magnates such as William Vanderbilt. Despite personal threats and constant pleas for charity, Rockefeller took the new elevated train to his downtown office daily.[53] In 1877, Congress created the Interstate Commerce Commission which was tasked with enforcing equal rates for all railroad freight, but by then Standard was depending more on pipeline transport. More threatening to Standard’s power was the Sherman Antitrust Act of 1890, originally used to control unions, but later central to the breakup of the Standard Oil trust.[54] Ohio was especially vigorous in applying its state anti-trust laws, and finally forced a separation of Standard Oil of Ohio from the rest of the company in 1892, the first step in the dissolution of the trust.[55]

In the 1890’s, Rockefeller expanded into iron ore and ore transportation, forcing a collision with steel magnate Andrew Carnegie, and their competition became a major subject of the newspapers and the cartoonists.[56] Rockefeller also went on a massive buying spree acquiring land for crude oil production in Ohio, Indiana, and West Virginia, as the original Pennsylvania oil fields began to play out.[57] Amidst the frenetic expansion, Rockefeller began to think of retirement. The daily management of the trust was turned over to John D. Archbold and Rockefeller bought a new estate, Pocantico Hills, north of New York City, turning more time to leisure activities including the new sports of bicycling and golf.[58]

Upon his ascent to the presidency, Theodore Roosevelt initiated dozens of suits under the Sherman Antitrust Act and coaxed reforms out of Congress. In 1901, U.S. Steel, now controlled by J. Pierpont Morgan, having bought Andrew Carnegie’s steel assets, offered to buy Standard’s iron interests as well. A deal brokered by Henry Clay Frick exchanged Standard’s iron interests for U.S. Steel stock and gave Rockefeller and his son membership on the company’s board of directors. In full retirement at age 63, Rockefeller earned over $58 million in investments in 1902.[59]

One of the most effective attacks on Rockefeller and his firm was the 1904 publication of The History of the Standard Oil Company, by Ida Tarbell, a leading muckraker. She documented the company’s espionage, price wars, heavy-handed marketing tactics, and courtroom evasions.[60] Although her work prompted a huge backlash against the company, Tarbell claims to have been surprised at its magnitude. “I never had an animus against their size and wealth, never objected to their corporate form. I was willing that they should combine and grow as big and wealthy as they could, but only by legitimate means. But they had never played fair, and that ruined their greatness for me.” (Tarbell's father had been driven out of the oil business during the South Improvement Company affair.)

Rockefeller responded by calling her “Miss Tarbarrel” in private but held back in public saying only, “not a word about that misguided woman.”[61] Instead Rockefeller began a publicity campaign to put his company and himself in a better light. Though he had long maintained a policy of active silence with the press, he decided to make himself more accessible and responded with conciliatory comments such as, “capital and labor are both wild forces which require intelligent legislation to hold them in restriction.”[62] He wrote and published his memoirs beginning in 1908.

Rockefeller as an industrial emperor, 1901 cartoon from Puck magazine

Critics found his writing to be sanitized and disingenuous and thought that statements such as “the underlying, essential element of success in business is to follow the established laws of high-class dealing” seemed to be at odds with his true business methods.[63]

Rockefeller and his son continued to consolidate their oil interests as best as they could until New Jersey, in 1909, changed its incorporation laws to effectively allow a re-creation of the trust in the form of a single holding company. Rockefeller retained his nominal title as president until 1911 and he kept his stock. At last in 1911, the Supreme Court of the United States found Standard Oil Company of New Jersey in violation of the Sherman Antitrust Act. By then the trust still had a 70% market share of the refined oil market but only 14% of the U.S. crude oil supply.[64] The court ruled that the trust originated in illegal monopoly practices and ordered it to be broken up into 34 new companies. These included, among many others, Continental Oil, which became Conoco, now part of ConocoPhillips; Standard of Indiana, which became Amoco, now part of BP; Standard of California, which became Chevron; Standard of New Jersey, which became Esso (and later, Exxon), now part of ExxonMobil; Standard of New York, which became Mobil, now part of ExxonMobil; and Standard of Ohio, which became Sohio, now part of BP. Pennzoil and Chevron have remained independent.[65]

Rockefeller, who had rarely sold shares, held over 25% of Standard’s stock at the time of the breakup.[66] He, as well as all stockholders, received proportionate shares in each of the 34 companies. In the aftermath, Rockefeller’s control over the oil industry was somewhat reduced but over the next ten years, the breakup also proved immensely profitable for him. The companies’ combined net worth rose fivefold and Rockefeller’s personal wealth jumped to $900,000,000.[67]

Philanthropy

From his very first paycheck, Rockefeller tithed ten percent of his earnings to his church. As his wealth grew, so did his giving, primarily to educational and public health causes, but also for basic science and the arts. He was advised primarily by Frederick T. Gates after 1891, and, after 1897, also by his son.

Rockefeller believed in the Efficiency Movement, arguing that

"To help an inefficient, ill-located, unnecessary school is a waste...it is highly probable that enough money has been squandered on unwise educational projects to have built up a national system of higher education adequate to our needs, if the money had been properly directed to that end."

He and his advisers invented the conditional grant that required the recipient to "root the institution in the affections of as many people as possible who, as contributors, become personally concerned, and thereafter may be counted on to give to the institution their watchful interest and cooperation."[68]

In 1884, he provided major funding for a college in Atlanta for African-American women that became Spelman College (named for Rockefeller's in-laws who were ardent abolitionists before the Civil War). The oldest existing building on Spelman's campus, Rockefeller Hall, is named after him. Rockefeller also gave considerable donations to Denison University and other Baptist colleges.

Rockefeller gave $80 million to the University of Chicago under William Rainey Harper, turning a small Baptist college into a world-class institution by 1900. His General Education Board, founded in 1902, was established to promote education at all levels everywhere in the country. It was especially active in supporting black schools in the South. Its most dramatic impact came by funding the recommendations of the Flexner Report of 1910, which had been funded by the Carnegie Foundation for the Advancement of Teaching; it revolutionized the study of medicine in the United States. Rockefeller also provided financial support to Yale, Harvard, Columbia, Brown, Bryn Mawr, Wellesley and Vassar.

Rockefeller and his son John D. Rockefeller, Jr. in 1915.

Despite his personal preference for homeopathy, Rockefeller, on Gates's advice, became one of the first great benefactors of medical science. In 1901, he founded the Rockefeller Institute for Medical Research in New York. It changed its name to Rockefeller University in 1965, after expanding its mission to include graduate education. It claims a connection to 23 Nobel laureates. He founded the Rockefeller Sanitary Commission in 1909, an organization that eventually eradicated the hookworm disease that had long plagued the American South. The Rockefeller Foundation was created in 1913 to continue and expand the scope of the work of the Sanitary Commission, which was closed in 1915. He gave nearly $250 million to the foundation, which focused on public health, medical training, and the arts. It endowed Johns Hopkins School of Hygiene and Public Health, the first of its kind. It built the Peking Union Medical College into a great institution, helped in World War I war relief, and it employed William Lyon Mackenzie King of Canada to study industrial relations. Rockefeller's fourth main philanthropy, the Laura Spelman Rockefeller Memorial Foundation, created in 1918, supported work in the social studies; it was later absorbed into the Rockefeller Foundation. However, all told, Rockefeller gave away about $550 million.

Oddly enough, Rockefeller became well known in his later life for the practice of giving dimes to adults and nickels to children wherever he went. He even gave dimes as a playful gesture to men like tire mogul Harvey Firestone.[69]

John D. Rockefeller's painting by John Singer Sargent in 1917

As a youth, Rockefeller allegedly said that his two great ambitions were to make $100,000 and to live 100 years. Rockefeller died of arteriosclerosis on May 23, 1937, two months shy of his 98th birthday,[70][71][72] at the Casements, his home in Ormond Beach, Florida. He was buried in Lake View Cemetery in Cleveland.

Legacy

Rockefeller had a long and controversial career in the industry followed by a long career in philanthropy. His image is an amalgam of all of these experiences and the many ways he was viewed by his contemporaries. These contemporaries include his former competitors, many of whom were driven to ruin, but many others of whom sold out at a profit (or a profitable stake in Standard Oil, as Rockefeller often offered his shares as payment for a business), and quite a few of whom became very wealthy as managers as well as owners in Standard Oil. They also include politicians and writers, some of whom served Rockefeller's interests, and some of whom built their careers by fighting Rockefeller and the "robber barons".

Biographer Allan Nevins, answering Rockefeller's enemies, concluded:

The rise of the Standard Oil men to great wealth was not from poverty. It was not meteor-like, but accomplished over a quarter of a century by courageous venturing in a field so risky that most large capitalists avoided it, by arduous labors, and by more sagacious and farsighted planning than had been applied to any other American industry. The oil fortunes of 1894 were not larger than steel fortunes, banking fortunes, and railroad fortunes made in similar periods. But it is the assertion that the Standard magnates gained their wealth by appropriating "the property of others" that most challenges our attention. We have abundant evidence that Rockefeller's consistent policy was to offer fair terms to competitors and to buy them out, for cash, stock, or both, at fair appraisals; we have the statement of one impartial historian that Rockefeller was decidedly "more humane toward competitors" than Carnegie; we have the conclusion of another that his wealth was "the least tainted of all the great fortunes of his day."[73]

Biographer Ron Chernow wrote of Rockefeller:

What makes him problematic—and why he continues to inspire ambivalent reactions—is that his good side was every bit as good as his bad side was bad. Seldom has history produced such a contradictory figure.[74]

Notwithstanding these varied aspects of his public life, Rockefeller may ultimately be remembered simply for the raw size of his wealth. In 1902, an audit showed Rockefeller was worth about $200 million—compared to the total national GDP of $24 billion then.[75] His wealth continued to grow significantly (in line with U.S. economic growth) after as the demand for gasoline soared, eventually reaching about $900 million on the eve of the First World War, including significant interests in banking, shipping, mining, railroads, and other industries. According to the New York Times obituary, “it was estimated after Mr. Rockefeller retired from business that he had accumulated close to $1,500,000,000 out of the earnings of the Standard Oil trust and out of his other investments. This was probably the greatest amount of wealth that any private citizen had ever been able to accumulate by his own efforts.”[76] By the time of his death in 1937, Rockefeller's remaining fortune, largely tied up in permanent family trusts, was estimated at $1.4 billion, while the total national GDP was $92 billion.[77] According to some methods of wealth calculation, Rockefeller's net worth over the last decades of his life would easily place him as the wealthiest known person in recent history. As a percentage of the United States' GDP, no other American fortune — including those of Bill Gates or Sam Walton — would even come close.

The Rockefeller wealth, distributed as it was through a system of foundations and trusts, continued to fund family philanthropic, commercial, and, eventually, political aspirations throughout the 20th century. Grandson David Rockefeller was a leading New York banker, serving for over 20 years as CEO of Chase Manhattan (now part of JPMorgan Chase). Another grandson, Nelson A. Rockefeller, was Republican governor of New York and the 41st Vice President of the United States. A third grandson, Winthrop Rockefeller, served as Republican Governor of Arkansas. Great-grandson, John D. "Jay" Rockefeller IV is currently a Democratic Senator from West Virginia and a former governor of West Virginia, and another, Winthrop Paul Rockefeller, served ten years as Lieutenant Governor of Arkansas. John D. Rockefeller rests at Cleveland, Ohio's Lake View Cemetery.

Poem about his life

Rockefeller, at the age of eighty-six, penned the following words to sum up his life[78]:

I was early taught to work as well as play,

My life has been one long, happy holiday;

Full of work and full of play-

I dropped the worry on the way-

And God was good to me everyday.

See also

Bibliography

  • Bringhurst, Bruce. Antitrust
  • Chernow, Ron. Titan: The Life of John D. Rockefeller, Sr. Warner Books. (1998). ISBN 0-679-75703-1 Online review.
  • Collier, Peter, and David Horowitz. The Rockefellers: An American Dynasty. New York: Holt, Rinehart and Winston, 1976.
  • Ernst, Joseph W., editor. "Dear Father"/"Dear Son:" Correspondence of John D. Rockefeller and John D. Rockefeller, Jr. New York: Fordham University Press, with the Rockefeller Archive Center, 1994.
  • Folsom, Jr., Burton W. The Myth of the Robber Barons. New York: Young America, 2003.
  • Fosdick, Raymond B. The Story of the Rockefeller Foundation. New York: Transaction Publishers, Reprint, 1989.
  • Gates, Frederick Taylor. Chapters in My Life. New York: The Free Press, 1977.
  • Giddens, Paul H. Standard Oil Company (Companies and men). New York: Ayer Co. Publishing, 1976.
  • Goulder, Grace. John D. Rockefeller: The Cleveland Years. Western Reserve Historical Society, 1972.
  • Harr, John Ensor, and Peter J. Johnson. The Rockefeller Century: Three Generations of America's Greatest Family. New York: Charles Scribner's Sons, 1988.
  • Harr, John Ensor, and Peter J. Johnson. The Rockefeller Conscience: An American Family in Public and in Private. New York: Charles Scribner's Sons, 1992.
  • Hawke, David Freeman. John D: The Founding Father of the Rockefellers. New York: Harper and Row, 1980.
  • Hidy, Ralph W. and Muriel E. Hidy. History of Standard Oil Company (New Jersey : Pioneering in Big Business). New York: Ayer Co. Publishing, Reprint, 1987.
  • Jonas, Gerald. The Circuit Riders: Rockefeller Money and the Rise of Modern Science. New York: W.W. Norton and Co., 1989.
  • Josephson, Matthew. The Robber Barons. London: Harcourt, 1962.
  • Kert, Bernice. Abby Aldrich Rockefeller: The Woman in the Family. New York: Random House, 1993.
  • Klein, Henry H. Dynastic America and Those Who Own It. New York: Kessinger Publishing, [1921] Reprint, 2003.
  • Knowlton, Evelyn H. and George S. Gibb. History of Standard Oil Company: Resurgent Years 1956.
  • Latham, Earl ed. John D. Rockefeller: Robber Baron or Industrial Statesman? 1949.
  • Manchester, William. A Rockefeller Family Portrait: From John D. to Nelson. New York: Little, Brown, 1958.
  • Morris, Charles R. The Tycoons: How Andrew Carnegie, John D. Rockefeller, Jay Gould, and J. P. Morgan Invented the American Supereconomy . New York: Owl Books, Reprint, 2006.
  • Nevins, Allan. John D. Rockefeller: The Heroic Age of American Enterprise. 2 vols. New York: Charles Scribner's Sons, 1940.
  • Nevins, Allan. Study in Power: John D. Rockefeller, Industrialist and Philanthropist. 2 vols. New York: Charles Scribner's Sons, 1953.
  • Pyle, Tom, as told to Beth Day. Pocantico: Fifty Years on the Rockefeller Domain. New York: Duell, Sloan and Pierce, 1964.
  • Roberts, Ann Rockefeller. The Rockefeller Family Home: Kykuit. New York: Abbeville Publishing Group, 1998.
  • Rockefeller, John D.; Random Reminiscences of Men and Events. New York: Sleepy Hollow Press and Rockefeller Archive Center, 1984 [1909].
  • Rose, Kenneth W. and Stapleton, Darwin H. "Toward a "Universal Heritage": Education and the Development of Rockefeller Philanthropy, 1884; 1913 " Teachers College Record" 1992/93(3): 536–555. ISSN.
  • Sampson, Anthony. The Seven Sisters: The Great Oil Companies and the World They Made. Hodder & Stoughton., 1975.
  • Smith, Sharon. Rockefeller Family Fables Counterpunch May 8, 2008 http://www.counterpunch.org/sharon05082008.html
  • Stasz, Clarice. The Rockefeller Women: Dynasty of Piety, Privacy, and Service. St. Martins Press, 1995.
  • Tarbell, Ida M. The History of the Standard Oil Company 2 vols, Gloucester, Mass: Peter Smith , 1963. [1904].
  • Williamson, Harold F. and Arnold R. Daum. The American Petroleum Industry: The Age of Illumination,, 1959; also vol 2, American Petroleum Industry: The Age of Energy, 1964.
  • Yergin, Daniel. The Prize: The Epic Quest for Oil, Money, and Power. New York: Simon & Schuster, 1991.
  • Public Diary of John D. Rockefeller, now found in the Cleveland Western Historical Society

References

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  2. ^ Fortune Magazine lists the richest Americans, not by the changing value of the dollar but by percentage of GDP: Rockefeller is credited with a Wealth/GDP of 1/65. (accessed 20 August 2009).
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