Rockefeller

Rockefeller and the oil Industry 02/09/2010 Rockefeller and the Oil Industry John Davidson Rockefeller was in the business of the oil industry in the late 1800s; and 1900s. His business and wealth grew to dominate the oil industry. Spartacus (n.d) explains Rockefeller as “Rockefeller’s personal life was a model of Victorian decorum: he did not smoke, drink, or flaunt his wealth. His life revolved around his family, the Baptist church, and philanthropic activities.” However, Rockefeller endured much controversy and opposition because of his business practices. Rockefeller He was born in 1839 in Richford, New York. He was the second child of six in his family. His family moved to Moravia and later to Owego, New York before moving to Ohio in 1853. His family lived in Strongsville, near Cleveland where he attended high school at Cleveland Central High School. Rockefeller began working by the age of 16; he was a clerk in a commission house. Eventually he went into business with Maurice Clark; the company was called Clark and Rockefeller Produce and Commission. The company sold farm implements, fertilizers, and household products. The company was successful; however did not bring Rockefeller the wealth he desired. He sold his business and invested in Standard Oil with Samuel Andrews. Eventually Rockefeller bought out his partner Samuel Andrews. Rockefeller was facing issues with the cost of transporting his oil to Cleveland and New York refineries. Rockefeller was able to manipulate two large railroads passing through Cleveland to compete for his large business of transporting oil; he threatened the railroads that his business would go to the railroad with the lowest cost. Rockefeller convinced the railroads to lower the price of transporting his oil to gain his large amount of business. He guaranteed 60 cart loads a day; the price was reduced to thirty five cents instead of 40 cents to Cleveland and one dollar 35 cents instead of two dollars to New York. Rockefeller was then able to reduce the price of his oil and sales increased. Rockefeller also traveled to other small refineries, explaining his advantages of the railroads he was able to convince the smaller refineries to sell their companies to him. Believing they would eventually lose their business through competition, they sold their refineries at a much lower cost offered by Rockefeller than their worth. According to The Linux Information Project (2006) “By 1878 Rockefeller had attained control of nearly 90 percent of the oil refined in the U.S., and shortly thereafter he had gained control of most of the oil marketing facilities in the U.S.”(p 1) Negative and Positive effects of the 1800s Folsom (1988) explained “Some of the oil producers were unhappy, but American consumers were pleased that Rockefeller was selling cheap oil. Folsom (1988) further explains “Before 1870, only the rich could afford whale oil and candles. The rest had to go to bed early to save money. Chernow (n.d) explains “Chemists had learned to extract kerosene from oil with sulphuric acid. This was done in a fairly small still-like apparatus. Kerosene was found to have great potential in lighting which had heretofore been dominated with products like whale oil, alcohol, and another petroleum derivative camphene.” (p1). By the 1870s, with the drop in the price of kerosene, middle and working class people all over the nation could afford the one cent an hour that it cost to light their homes at night. Working and reading became after-dark activities new to most Americans in the 1870s.” In 1890 because other refineries had been bought out, and others bankrupt, Rockefeller had monopolized the oil industry and could fix his own prices and control all terms of business because his company had little competition. According to Spartacus (n.d.) “In 1896 Rockefeller was worth about $200 million.” (p.1) The Company continued to prosper and gain wealth. The company was able to conquer massive wealth because of the control of oil prices and the ability to pressure railroads into less expensive rates. Big Business Rockefeller was a key part of the transformations in the oil industry. Eventually Standard Oil was broken up by the Sherman Act. According to The Linux Information Project (2004)”The Court ordered the Standard Oil Trust to dismantle 33 of its most important affiliates and to distribute the stock to its own shareholders and not to a new trust.” Because of this decision the way was paved for new entrants into the oil industry; Gulf and Texaco was discovered and exploited petroleum in Texas. The competition then implemented an expansion of the oil industry. Industrialization and big businesses, such as Rockefeller’s massive oil industry and the tactics used to create his wealth changed lifestyles dramatically; jobs were plentiful and life improved for many; however factories grew and many were forced to accept low-paying jobs and long harsh working conditions. A cycle of boom and bust by many businesses afflicted the economy and the lives of many with layoffs. The positive affects of today’s business are a result of the Unions of the 1800s and 1900s; such as the American Federation of labor affected the system of wage labor and would bargain for better working wages and conditions. These laws and unions paved the way and affected the laws and regulation of today’s working force. Even though some historians disagree with his ruthless business tactics Rockefeller used to accumulate his wealth and massive company, most agree in the positive manner in which, he spent much of his fortune on scientific research, charities, medicine, and education. Rockefeller was responsible for the establishing of many charities and helped establish many schools. Rockefeller gave an estimate of five hundred million to establish charities. The Linux Information Project (2004) explains “His philanthropy helped found the University of Chicago and the Rockefeller Foundation, which gave aid to institutions working in the fields of public health, the arts, social research, and many others.” According to Poole (2000), “By 1896 Rockefeller stopped going to his office daily and in 1897 he retired, at the age of 58. He took part in some management activity until 1899 but none to speak of thereafter.” (p1). Further explained by The Freeman (2010) “Healing the sick and feeding the poor was also part of Rockefeller’s Christian mission not state aid, but Rockefeller philanthropy, paid teams of scientists who found cures for yellow fever, meningitis, and hookworm. The boll weevil was also a Rockefeller target, and the aid he gave in fighting it improved fanning throughout the South.” Today some of the business structures and laws are the result of the businessmen and businesses of the 1800s and 1900s; especially Standard Oil and Trust, founded by John D. Rockefeller. The oil industry was established in a time in which business had no laws or regulation, the monopolizing of businesses, such as the oil industry was a result. The discovery of new resources and growing businesses changed society and the world. This era of time in history was an important guidance to the laws and regulations of the business world today. Rockefeller’s goal was to control the oil industry. He was a brilliant business man but ruthless. His business tactics and monopolizing of the oil industry made society and the government realizes the importance of regulation and laws in business. Another one of Rockefeller’s goals was to live to be one hundred years old; however he only lived to be 97 years and died in his sleep May 23, 1937.