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‘Liquid gold’ made John D. Rockefeller the richest man in the world

Posted in America, Historical articles, History, Industry, Philanthropy, Trade on Wednesday, 31 July 2013

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This edited article about John D. Rockefeller originally appeared in Look and Learn issue number 355 published on 2 November 1968.

Rockefeller and Andrews, picture, image, illustration

Rockefeller and Samuel Andrews, a candlemaker, saw the future in refining petroleum from wells

John D. Rockefeller was not a particularly bright boy. But he was what we call a plodder and, by applying his energies with steadiness to one problem at a time, he outstripped many of his more brilliant but less persevering rivals.

In fact, John D. Rockefeller plodded along to become the richest man in the world, and to be called “as rich as Rockefeller” was a compliment indeed.

He also became the world’s greatest philanthropist. Nobody before or since ever gave so much money away.

John Davison Rockefeller was born in the small village of Tichford in the County of Tioga, New York, on July 8, 1839. He was the second child of William Avery Rockefeller and his wife Eliza. He had an elder sister Lucy and a younger brother, William.

John’s father was a colourful character who dressed flashily (he loved fancy waistcoats), drank a lot, did not believe in religion, and was extremely sharp in business. He ran a farm, lent money at interest, and travelled around selling quack medicines.

By contrast, Eliza, John’s mother, was abstemious in habits and fervently religious. She saw to it that her children were brought up in the strict Baptist faith. She was also a stern disciplinarian. Once in the middle of a severe whacking, John yelled that he hadn’t done anything. “Never mind,” said his mother, “it will do for the next time.”

Father Rockefeller was good company when he was at home. He played on the melodeon (a variety of organ) and went rowing and swimming with his children.

It was from his sharp-witted father that John learned that, if money is saved carefully, and invested carefully, it earns more money.

In 1855, after studying at Owega Academy, a high school for the children of well-to-do parents, John got his first job as an assistant bookkeeper. The pay was less than £1 a week, but the experience was valuable because he was on the spot when the partners in the firm discussed business. It was a firm of merchants and shippers, and also owned property. JDR learned all about bills, collecting rents, claims, investments, and shipment by rail, canal or steamer.

John and his brother were great churchgoers. John managed the church accounts, and at 21 became a trustee and Sunday-school teacher.

From the moment he started work he gave a proportion of his earnings to charity. His first ledger. “Ledger A”, commenced in 1855, shows that he gave 10 cents to a “missionary cause” and 12 cents to the “poor of New York.”

When he became 21, he gave to all kinds of causes, whatever their religion – to Methodist churches, Black churches or “Catholic orphans.”

In 1856, the Rockefeller family moved to Cleveland, a rapidly-growing city and centre of a freedom movement for slaves. John lived with his family, paying for his board. With $1,000 borrowed from his father, at an interest of ten per cent, he went into partnership with Maurice Clark, in the wholesale grain, meat and salt business.

John D. continued to give money away. In 1859, he gave a Black American money to buy back his wife, who had been taken into slavery. He supported George Washington in his stand against slavery, and cheered him when he spoke in Cleveland on his way to Washington in 1861, the year the Civil War began.

Rockefeller’s firm prospered. In its first year it made $4,400. Then the war boosted its business, and in one month (March 1861) the profits rocketed to $17,000, of which Rockefeller’s share was $6,000.

In 1862, JDR had become so prosperous that his problem was how to invest his surplus wealth. He didn’t drink, dance, play cards or spend very much at all. And he hated to see money idle.

Then he met Samuel Andrews, a candlemaker working in a Cleveland refinery which made oil from coal and shale. The oil boom had begun, and the two men talked of the prospects of refining the petroleum that came gushing from the wells.

Rockefeller went into the oil refinery business, and his shrewd, even harsh business methods (he gave money to charity, but always drove a hard business bargain) soon began to make him a fortune. He cut out the middle-man to make more profit, buying oil on the actual site instead of through jobbers; building his own wagons instead of paying for transport; making his own sulphuric acid for refining the oil; buying forest land for the timber to make the staves used in the manufacture of oil barrels; building his own cooperage plant for the making of barrels.

He cut out waste. Most oil companies dumped the left-overs from refining into the rivers. From the same sort of surplus, Rockefeller extracted turps, for paints and varnishes, paraffin for lamps, petroleum jelly, lubricating oils and dyes.

He still lived frugally, and worked so hard that he always stank of oil; so much so that, in the boarding-house where he had gone to live, they made him eat in the kitchen!

The oil boom meant prosperity for America. In 1861, Britain imported only 300 barrels, In 1866, Britain took 6,250,000 barrels, and France took 4,250,000.

Oil was liquid gold, and Rockefeller knew it.

By the time he married Laura Spelman, daughter of a Cleveland business man, in 1864, Rockefeller was already rich.

In due course, he acquired his own firm of refiners, which became the biggest in Cleveland, with a capital of $1,000,000. In 1870, he reorganised this firm as the Standard Oil Company of Ohio. He then began to force the smaller refiners to sell out to him by ensuring that the railways charged his rivals more money for transporting oil than they charged Standard Oil.

By such means, which were strongly criticised and made him many enemies Rockefeller acquired 21 of Cleveland’s 26 refineries. By 1879, he had built a nation-wide monopoly, owning 95 per cent of the entire country’s refining capacity.

JDR now began to give money away. The ten cents he gave when he started work had grown to $7,000 a year by 1872 and to $65,000 a year by 1882. In 1896, he was giving in millions. He gave $10,000,000 to Chicago University (which had gone broke) and the students sang joyfully when he visited them:

John D. Rockefeller
Wonderful man is he
Gives all his spare change
To the U of C

As the world’s use of refined oil increased, so did Rockefeller’s wealth and benefactions. In 1909, he gave 72,000 shares in Standard Oil (worth millions of pounds) as a basis of the Rockefeller Foundation, whose purpose was “to promote the well-being of mankind throughout the world”. After a Bill had been passed by the American Senate authorising its formation, the Foundation was incorporated formally in 1913.

JDR continued to give away larger and larger sums. Nobody has ever reckoned accurately how much he gave away, but he gave the equivalent of at least £100 million to Chicago University during his lifetime.

He continued to live simply, eating sparingly, playing golf, reading his Bible and planning his philanthropies. But he now lived on an estate which had 70 miles of private roads, and which cost over £20,000,000. It had orchards, groves, and fantastic gardens.

Rockefeller died in 1937, at the age of 97. His son, John D. Rockefeller Junior, who was born in 1874 and died in 1960, carried on his father’s fantastic philanthropy.

Other countries besides America have reason to be grateful to the Rockefeller fortune. Rockefeller money has been given generously to University College and its Hospital in London, as well as to the Universities of London, Oxford, Edinburgh and Bristol. The site of the United Nations building on the East River in New York was bought with Rockefeller money for $8,500,000.

Starting in Virginia and North Carolina early in the century, the Rockefeller Foundation declared war on hookworm, a disease caused by poor sanitary conditions. It carried its health programme into every country in the world, fighting malaria, yellow fever and other causes of human misery. Countries threatened with occasional famine through crop failures have been helped to reorganise their agriculture – just as Mexico was saved from starvation in 1941 by an ambitious Rockefeller-financed programme for improving and extending crops, irrigation and agricultural methods.

The Rockefeller fortunes are used to further every kind of good cause, from ballet schools to fostering peace. The family investments continue to make money, which is continually given away.

John D. Rockefeller’s wish that his money should benefit mankind has certainly been achieved.

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