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In 1870, he created “Standard Oil”. Together with Henry Flagler, his friend and business partner, he began to unite the scattered oil production factories and refineries in a single powerful oil trust. Rivals could not compete with him, Rockefeller made them choose: to join him or go bankrupt. Where there weren’t enough convictions, the dirtiest methods were used.
For example, Standard Oil reduced prices in the competitor’s local market, forcing the latter to work at a loss. Or Rockefeller managed to stop oil supplies to disobedient processors. For this purpose, front companies, which were, in fact, part of a Standard Oil group, were used. Many processors were not even aware that local rivals putting pressure on them were actually part of a growing Rockefeller’s empire.
Standard Oil Horse Drawn Wagon, early 20th century
For such operations to be successful they were held in the strictest confidence. Standard Oil agents exchanged encrypted dispatches with the parent company. Even visitors of Standard Oil should not see each other. The company used an extensive system of industrial espionage to gather information on competitors and market conditions.
Standard Oil database had information about each buyer of oil in the country, the use of each barrel sold by independent dealers, and even information about where each grocer bought kerosene from the Isle of Man to California.
By the 1879 ” predatory war” was actually over. Standard Oil controlled 90% of refining capacities in the United States. Rockefeller himself took this victory dispassionately – as an obvious necessity.
In 1890 the Sherman Antitrust Act was passed, aimed at combating monopolies. Prior to 1911 Rockefeller and his partners had managed to circumvent the law, but then “Standard Oil” was divided into thirty-four companies (almost all of today’s major US oil companies originate from “Standard Oil”).
Rockefeller was married to Laura Celestine Spelman, whom he met while still a student. Being religious like her husband, Laura Spelman, a teacher yet had practical mind. Rockefeller once said: “Without her advice, I would have remained a poor man.”
J. D. Rockefeller and his wife, Laura Celestia Spelman, June 1911
His biographers write that Rockefeller was teaching his children to work, to be modest and unpretentious. John created an original model of market economy at home: he appointed his daughter, Laura as “director” and told the children to keep detailed ledgers. Each child received a few cents for a dead fly, for sharpening a pencil, music lessons per hour, for a day without sweets. Each child had a bed in the garden where they were paid for taking off. But they were fined for being late for breakfast.
In 1917, the personal fortune of John Davison Rockefeller was estimated at between $ 900 million to $ 1 billion, representing 2.5% of GDP of the United States of those times. In the modern equivalent Rockefeller owned about $ 150 billion. So far, he has remained the richest man in the world. By the end of his life apart from his shares in each 32 “daughter” companies of Standard Oil Rockefeller’s owned 16 railway and six steel companies, nine banks, six shipping companies, nine real estate firms and three orange groves. In 1903 Standard Oil premises covered about 400 enterprises, 90 thousand miles of pipelines, 10 thousand rail tankers, 60 ocean tankers, 150 river steamers. The company transported and processed more than 80% of crude oil extracted in the United States. The Standard Oil’s share in world oil trade exceeded 70%.
Rockefeller’s donations for his life accounted for more than $ 500 million. Of this, about $ 80 million was given to the University of Chicago, at least $ 100 million – the Baptist church. Also, John D. Rockefeller created and funded the New York Institute for Medical Research, the Council on General Education and the Rockefeller Foundation.