John D. Rockefeller

John D. Rockefeller

John Davison Rockefeller was the guiding force behind the creation and development of the Standard Oil Company, which grew to dominate the oil industry and became one of the first big trusts in the United States, thus engendering much controversy and opposition regarding its business practices and form of organization. Rockefeller also was one of the first major philanthropists in the U.S., establishing several important foundations and donating a total of $540 million to charitable purposes.

Rockefeller was born on farm at Richford, in Tioga County, New York, on July 8, 1839, the second of the six children of William A. and Eliza (Davison) Rockefeller. The family lived in modest circumstances. When he was a boy, the family moved to Moravia and later to Owego, New York, before going west to Ohio in 1853. The Rockefellers bought a house in Strongsville, near Cleveland, and John entered Central High School in Cleveland. While he was a student he rented a room in the city and joined the Erie Street Baptist Church, this later became the Euclid Avenue Baptist Church. Rockefeller started to work at the age of 16 as a clerk in a small produce firm. After that he formed a partnership in a grain commission house. Cleveland was a good place to organize something big in the oil business. There were two major east-west railroads in Cleveland. Also, Cleveland was on Lake Erie, which was big enough for large ships to harbor. This made it possible to transport the oil easily. Rockefeller was determined to make Cleveland the center of oil business. Before he was able to accomplish this feat, he would eventually create the largest oil company in the world in Cleveland, titled Standard Oil.

Starting with a small sum of money Rockefeller bought a small oil refinery in Cleveland. He then bought up other refineries in Cleveland and oil wells in Pennsylvania as well. As result of Rockefeller’s efforts taking over the oil industry, other oilmen went out of business. Consequently, the railroads that carried the oil needed Rockefeller’s freight more than ever. Rockefeller was a very intelligent businessman. He arranged for two very big railroads passing through Cleveland to compete for his large business. He did this by bargaining and threatening one or the other railroad, telling them that he might give all of his business to the other. This method worked. He finally forced the railroads to charge him lower prices than they charged anybody else. By confidential dealings he pretended to pay the regular rates. Then later the railroads gave him back a rebate, which was a refund on each barrel of his oil that they had hauled. Shortly, they even gave him rebates on what opposing oil companies shipped. After he perfected these tactics, he went to the small refineries in other parts of the country, and asked them to sell their companies to him.

He would say, If you don’t sell your property it will be valueless, because we have advantages with the railroads. Rockefeller would then offer them a much lower price for the refinery then the owners thought it was worth. Still the refineries would sell because they knew the mass power that Rockefeller had and how he could put them out of business easily. After a while it became cheaper to pump oil through pipelines instead of packaging it in barrels. As a result, Rockefeller created his own pipeline.