With such an aggressive push into the industry, the public and the U. Congress took notice of Standard and its seemingly unstoppable march. Monopolistic behavior was not kindly regarded, and Standard soon became the epitome of a company grown too big and too dominant, for the public good.
Congress jumped into the fray with both feet in with the Sherman Antitrust Act, and two years later the Ohio Supreme Court deemed Standard Oil a monopoly that stood in violation of Ohio law. Always eager to be a step ahead, Rockefeller dissolved the corporation and allowed each property under the Standard banner to be run by others.
Just nine years after the company broke itself into pieces in the face of antitrust legislation, those pieces were again reassembled in a holding company. In , however, the U.
Supreme Court declared the new entity in violation of the Sherman Antitrust Act and illegal, and it was again forced to dissolve. With his wife, Laura, Rockefeller had five children, including a daughter, Alice, who died in infancy. Rockefeller passed away on May 23, , in Ormond Beach, Florida.
His legacy, however, lives on: Rockefeller is considered one of America's leading businessmen and is credited for helping to shape the U. We strive for accuracy and fairness. He created the General Education Board in , charging it with a ranging mission that included improving rural education for both whites and blacks, modernizing agricultural practices, and improving public health, primarily through efforts to eradicate hookworm, which debilitated many Southerners and dragged down productivity of all sorts.
The General Education Board helped establish hundreds of public high schools throughout the South, promoted institutions of higher education, and supported teacher-training efforts for African Americans.
Starting in , the campaign against hookworm was exported globally. It was soon followed by similar efforts against malaria, scarlet fever, tuberculosis, and typhus, all under the auspices of the Rockefeller-funded International Health Commission. Rockefeller created the first school of public health and hygiene at Johns Hopkins University in , which he then duplicated at Harvard in Rockefeller took a special interest in China, second only to the United States as a destination for his funding , and the China Medical Board he created can be credited with first introducing the country to modern medical practices.
Throughout the first decade of the 20th century, Rockefeller was thinking seriously about founding a perpetual grantmaking foundation.
It was not the first such foundation, but it quickly became the largest. The foundation was a pioneer funder of the Green Revolution, which dramatically increased agricultural yields across the developing world, and may have saved as many as one billion lives. For decades, the Rockefeller Foundation distributed more foreign aid than the entire U.
As impressive as the legacy of the Rockefeller Foundation is, however, it is not clear that it has yet caught up with the accomplishments of its founding donor.
John D. Contact Us Search. The Roundtable. Philanthropy Magazine. The Almanac. Because entry costs were so low in both oil drilling and oil refining, the market was glutted with crude oil with an accompanying high level of waste.
In his view, the theory of free competition did not work well when there was a mix of very large, efficient firms and many medium and small firms. His view was that the weak firms, in their attempts to survive, drove prices down below production costs, hurting even the well-managed firms such as his own. Although his economics may be suspect in modern eyes, his solution -- a market with a few maybe one!
What makes oil stand out is that it happened by design -- as the result of a plan formulated by a single person — John D. During , Rockefeller formulated his plan for consolidating all oil refining firms into one great organization with the aim of eliminating excess capacity and price-cutting. Although no written records exist, both Rockefeller and Flagler 30 years later claimed this was when they worked out the master plan, which they later implemented.
The claim that the plan was formulated in is evidenced by the fact that all the major Cleveland banks joined the Standard Oil organization in and later backed Rockefeller and Flagler to the hilt in their rapid expansion. Tom Scott of the Pennsylvania Railroad came up with the idea. The scheme was inspired by the Anthracite Railroad combination of in which five railroads and two coal companies bought up all the coal pits along the five railroads in order to control output and prices.
The South Improvement Company had been created by the Pennsylvania Legislature in and its charter allowed the Company to hold the stocks of other companies outside the state. This was an unusual power at the time and made it ideal for Scott's scheme. Scott arranged for the purchase of the charter by a group of Philadelphia and Pittsburgh refiners with Scott in the background. The scheme was essentially a plan to unite the oil-carrying railroads in a pool; to unite the refiners in an association, the South Improvement Company; and to tie the two elements together by agreements which would stop "destructive" price-cutting and restore railroad freight charges to a profitable level.
To enforce the cooperation of refiners, a set of rebates was agreed to for participating refiners. This alone would have undoubtedly forced all the refiners into the combine, but the scheme did not stop there. In what turned out to be a public relations disaster, the participants decided to add a drawback on every barrel shipped by a non-participant equal to the ordinary rebate.
In effect, this would be a tax on non-participants, the proceeds of which would be transferred to the participating oil refiners. What the planners forgot, however, was to include the producers in the scheme as well. Despite efforts to reassure the drillers in the Oil Regions that the scheme would benefit them as well by keeping prices up, the Oil Regions Men revolted and organized an effective boycott of all the refiners and railroads they suspected of being part of the scheme.
Consequently, the scheme collapsed in before it was ever implemented. Subsequent historians repeated the view of many at the time that Rockefeller had been one of the originators of the South Improvement Scheme.
In fact he had not been, but he and Flagler did agree to participate, and worked hard to set up the scheme. Rockefeller's most important error of his career was to not go public at the time with his side of the story.
This was the first time that a broad public became aware of Rockefeller and the episode was to forever tarnish his reputation. He said of it later, "Our silence encouraged the wildest romancers to spread wild tales about us;" and on another occasion, "I shall never cease to regret that at that time we never called in the reporters.
In December , during the dust-up over the South Improvement Scheme, Rockefeller and Flagler set in motion their plan to consolidate the industry. They began by buying up all their competitors in Cleveland. He began with the strongest refineries first. He believed that if he had bought up the weak refineries first then he would be faced with higher prices later and stiffer resistance. Consequently, he approached the strongest first and bought them out. His technique was always the same.
The merger would be effected by an increase in the capitalization of The Standard Oil. The rival refinery would be appraised and the owners would be given Standard Oil stock in proportion to the value of their property and good will and they would be made partners in Standard Oil. The more talented owners would also be brought into the Standard Oil management. If they insisted upon cash they received it. Later some owners who had been bought out complained to the press that they had been treated unfairly.
After the conquest of Cleveland, the Standard inexorably expanded. All the transactions were kept as secret as possible. The leaders of the Standard were so successful in this secrecy at times that many rival independent refiners were totally unaware of what was going on. In , Jabez A. The teamsters, men who drove commercial wagons drawn by horse-teams, fought pipelines tooth and nail, but were destined to lose because it was so much cheaper and easier for the producers to send their crude through pipes as opposed to wagons.
It was a short logical step to extend those pipelines directly to refineries. Vandergrift into the Standard management. Two large refineries in Titusville joined the Standard and John Archbold later the President of Standard Oil was brought into the management. The Standard expanded into Philadelphia by buying the largest refinery. In , the Standard bought more pipelines and firms in the oil buying business and merged them all into the United Pipe Lines in In , Johnson N. Camden later a senator from West Virginia came into the Standard secretly and moved to buy up all the West Virginia oil supply to squeeze the Pittsburgh independents.
By Camden gained control of most of the West Virginia refineries. In , Standard bought the Columbia Conduit Co. The Pennsylvania Railroad used armed guards to prevent them from laying a pipeline under its right-of-way north of Pittsburgh.
The Standard gained control of most of the property of the Empire Transportation Company -- a subsidiary of the Pennsylvania Railroad that had its own fleet of tank cars, pipelines, lake steamers, and terminals in New York harbor. The Empire had briefly threatened the Standard, but Rockefeller built new tank cars, cut prices, and cancelled all his shipments over the Pennsylvania Railroad.
The railroad capitulated and sold Rockefeller the Empire's assets. In , the Standard forced the railroads to pay a drawback of cents a barrel of crude oil shipped by any other party. In effect, this was a tax levied by the Standard upon its competitors. This combination of rebates and "taxes" some authors dub this a "drawback" -- but that term is also used to refer to a specific type of rebate is what forced the remaining independent refiners to capitulate to the Standard.
Production increased in the Pennsylvania Oil Regions because of a large discovery in the Bradford area. Standard was forced to frantically build as many large holding tanks as possible to hold the market glut of oil. By , the Standard Oil Company did about 90 percent of the refining in the United States, with almost 70 percent being exported overseas.
The business had become so large and so complex that Rockefeller only dealt with the major problems and the larger outlines of his affairs. Rockefeller, Jr. In , Rockefeller borrowed money to buy out some of his partners and take control of the refinery, which had become the largest in Cleveland. Over the next few years, he acquired new partners and expanded his business interests in the growing oil industry.
At the time, kerosene, derived from petroleum and used in lamps, was becoming an economic staple. In , Rockefeller formed the Standard Oil Company of Ohio, along with his younger brother William , Henry Flagler and a group of other men.
John Rockefeller was its president and largest shareholder. Standard Oil gained a monopoly in the oil industry by buying rival refineries and developing companies for distributing and marketing its products around the globe.
In order to exploit economies of scale, Standard Oil did everything from build its own oil barrels to employ scientists to figure out new uses for petroleum by-products. Congress passed the Sherman Antitrust Act, the first federal legislation prohibiting trusts and combinations that restrained trade. Two years later, the Ohio Supreme Court dissolved the Standard Oil Trust; however, the businesses within the trust soon became part of Standard Oil of New Jersey , which functioned as a holding company.
In , after years of litigation, the U. Supreme Court ruled Standard Oil of New Jersey was in violation of anti-trust laws and forced it to dismantle it was broken up into more than 30 individual companies.
Rockefeller retired from day-to-day business operations of Standard Oil in the mids. Inspired in part by fellow Gilded Age tycoon Andrew Carnegie , who made a vast fortune in the steel industry then became a philanthropist and gave away the bulk of his money, Rockefeller donated more than half a billion dollars to various educational, religious and scientific causes through the Rockefeller Foundation.
Among his activities, he funded the establishment of the University of Chicago and the Rockefeller Institute for Medical Research now Rockefeller University. In his personal life, Rockefeller was devoutly religious, a temperance advocate and an avid golfer.
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