John Davison Rockefeller: Oil Tycoon and Philanthropist
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Research Report #24 August 2015 John Davison Rockefeller: Oil Tycoon and Philanthropist Jacqulean Salib Chien-Chung Huang Rutgers University This case study explores the impact John Davison Rockefeller had on America. Rockefeller was a man who came from humble beginnings and worked hard to build an empire. He developed the oil industry and the John D. Rockefeller Foundation. In this case study, we review the scrutiny that Rockefeller faced while building his empire and the dilemmas he faced with his foundation. In addition, we examine the milestones that Rockefeller accomplished, which made him one of the most prominent figures in America and around the world. He is known as both a businessman and an individual who donated much of his money and time to make significant changes domestically and globally. 1 Introduction later he received a little over $3 in in- thropy. From her he learned economy, John Davison Rockefeller Sr. was terest which is equivalent to about $90 thrift, and other qualities that factored born on July 8, 1839 in Richford, New today. Rockefeller quoted this as being into his success (Hamen, 2011). Al- York, to William Avery Rockefeller the point in which he realized you though John’s father wasn’t around and Eliza Davison. Rockefeller was have to make money a slave to you much, he also taught John valuable born into modest circumstances, how- instead of being a slave to money. His lessons like to ever, through hard work he became other business activities included rais- always honor a contract and pay debts one of the greatest industrialists and ing turkeys that he captured, then sell- (Segall, 2001). philanthropists in the United States. ing them for profit and field work for John Rockefeller attended Fol- Rockefeller built one of the biggest oil neighbors such as digging up potatoes som’s Commercial College, in which empires with his company Standard for thirty seven and a half cents. The he took a short course on bookkeeping Oil, later creating one of the first major Rockefeller family moved around after completing the course, John business trusts, making him one of the quite a bit. At a young age, John and would walk from place to place han- first billionaires in America. In 1913, his family moved to Moravia, New ding out his resume. Eventually John Rockefeller created the Rockefeller York, where he attended a one room found work at Hewitt and Tuttle as a foundation in which he donated his school house that his father estab- bookkeeper. In the three years spent wealth to charities worldwide that in- lished. In 1853 the family moved to there, he acquired skills on how to clude but is not limited to religious Owego where he attended Owego commission houses and how railroads causes, health related issues, art and Academy. The family finally decided and barges worked together. In the agriculture. His impact on the world is to settle in Strongsville, Ohio where midst of all that he developed his own everlasting, and his legacy lives on John finished his high school educa- style of collecting debt. When it came with many of his family members to- tion (Chernow, 2007; Hamen, 2011; to working, John was very precise and day (Schweikart, 2008). Rockefellers Segal, 2001). honest to the penny when it came to mark on American history signifies the Rockefeller wasn't the brightest of bill payments. He never rounded up or importance of examining this case children; however he was good with down. Not only did he keep an eye on study, in which we explore his life, oil numbers. Whatever he lacked under- funds at work, he also kept an eye on empire and his foundation. standing in, he worked diligently and his own funds. John kept a detailed Early Beginnings hard to try and excel in it (Chernow, ledger in which he recorded every dol- 2007). He constantly questioned his lar he spent, including charitable gi- John was the second of six chil- teachers long and hard and double ving. When Mr. Tuttle retired, John dren. John’s father was of English and checked the answers they came up took over and helped run the com- German descent and his mother of with (Segall, 2001). John never did pany. At that point John was making Scottish and Irish decent. John’s father anything without thinking. He thought about six hundred dollars a year. William was a charlatan; he travelled of every possibility and outcome be- Shortly after John left Hewitt and from town to town under the alias Dr. fore he made a move, which would Tuttle to pursue a business of his own, William Levingston with elixirs that he later play a key role in his success Hewitt and Tuttle went out of business claimed could “cure” cancer. William (Chernow, 2007). Since John’s father (Hamen, 2011; Flynn, 1932; Chernow, charged exorbitant amounts for the spent most of his time away, his mo- 2007). treatments. John’s father left his mo- ther Eliza had to play both roles. When ther with all the children for months at The Standard Oil Company John’s father would come back, he’d a time, leaving Eliza to raise their six In 1859, before he turned twenty, play the part of the more laid back and children and tended to the farm on her Rockefeller decided to start his own playful parent, leaving Eliza to play own (Flynn, 1933; Chernow, 2007). business with Maurice Clark, a class- the role of the disciplinarian parent. At a young age, John learned the mate he met in Folsom. Maurice and She was very stern with John and his value of working and making money. John agreed to put in $2,000 each to siblings however, she never raised her As a child, he bought large amounts of start the business. At the time, John voice at them. Eliza used to always candy, portioned them out and sold only had $1,000 that he saved from take John and his sibling to church and them to his brothers and sisters. He working at Hewitt and Tuttle. His fa- have them donate some of their also discovered the power of lending ther advanced him $1,000 that he had earnings to the church (Chernow, money and charging interest, while intended to give him for his 20th birth- 2007). Rockefeller noted his mother’s lending money to a neighbor. A year day. John was a natural when it came altruism as the origin of his philan- 2 to running a business and making it 2007; Granitz & Klein, 1996: Folsom, peal, however, in 1911 they were successful. It was no surprise that in 1988). found guilty and told they had six the first year, the business turned a Standard Oil Trust and Legal month to dissolve the company (Boyd, profit. Their business grew even more Issues 2001; Larson, 1955). Due to the scruti- during the Civil War era. In 1863, In 1881, along with the Standard ny and several legal issues Standard when the oil business was still very Oil Company, Rockefeller owned forty Oil faced, many were skeptical about new, Rockefeller started investing in companies. In 1882, in order to gain accepting money that Rockefeller do- the Cleveland Ohio refinery with sev- cost advantages and to appear more nated. In one particular case, Rockefel- eral partners. John and Maurice joined legitimate, Rockefeller combined all ler had donated $100,000 to The Amer- with two of Maurice's brothers as well his companies into one, The Standard ican Board of Commission for Foreign as experienced oil refiner Samuel An- Oil Trust. The trustees were given con- Missions of Congregational church. drews to form Andrews, Clark & Co. trol over all Standard Oil properties, One of the leading ministers did not The following year Rockefeller mar- and properties that were affiliated with want to accept the donation, stating ried Laura Celestia Spelman (Beatty, Standard Oil. Each shareholder of that the money was tainted. However, 1998; Poole, n. d.). Standard Oil was given shares, with the board of the organization decided In 1865, due to finance disagree- Rockefeller holding the majority of the to accept it (Boyd, 2001; Larson, 1955). ments, John decided to barrow money shares. Standard Oil Trust controlled By 1914, Rockefeller’s net worth and buy out the Clark brothers. He about 90% of all kerosene produced in was well over $1 billion, equivalent to created a new business with Samuel the United States (Chandler, 2001; what is currently about $13.8 billion. Andrews named Rockefeller & An- Boyd, 2001). Several oil companies today, such as drews. By the age of 24, Rockefeller Although Standard Oil Trust ap- BP, Chevron and Exon-Mobil, are the leveraged the business and expanded peared to be legal on paper, it was an products of the companies that Stand- intensely. Rockefeller put all profits Ohio company controlling out of state ard Oil broke up into (Hylton, 1992). back into the business and continued interests, which was illegal. In 1892, Foundation Beginnings to strengthen it. In 1866, John had his the Supreme Court dissolved the trust. In 1896, at the age of 57, Rockefel- Brother William come into business The eighty-four companies in the trust ler retired from leadership of Standard with him to help manage the New were reorganized into twenty constitu- Oil in order to focus on philanthropy. York office (Chernow, 2007; Beatty, ent companies. In 1899, the business Impressed by Andrew Carnegie in the 1998; Poole, n. d.). became a part of Standard Oil of New late 1800’s, Rockefeller wrote to him, “I In 1870, Rockefeller founded the Jersey, which functioned as a holding would that more men of wealth were Standard Oil Company with his broth- company.