Most people love stories of self-made billionaires who started “working alone in the family’s garage” or “selling lemonade on the street”. That’s why it’s often disappointing when we found out that most of those self-proclaimed self-made billionaires actually started with several million dollars from their parents. One of the few true examples of this kind, however, is John D. Rockefeller – America’s original oil magnate and monopolist and a man who truly came from humble beginnings.
The richest man in human history (at least until November 2021 when he was overtaken by Elon Musk), Rockefeller’s rise is truly inspiring and his wealth and influence mind-boggling. Here’s his story.
Son of a Conman and A Fervently Religious Housewife
John Rockefeller was born in 1839 in Richford, New York. Rockefeller’s father was a snake oil salesman who traveled from town to town, peddling his wares and sleeping with any of the several mistresses he had in most towns along his trade route. William Rockefeller, often called Big Bill or Devil Bill, was far from ashamed of his trade. Every time he was home, he even boasted about how he’d teach his son John to hustle and swindle.
Instead of traveling with his father, John Rockefeller spent his childhood with his mother, brothers, and sisters in Richford. Eliza Rockefeller didn’t have much income to work with so she quickly taught her six children not only to help her around the house but also how to make a living – doing chores for their neighbors, selling treats to their schoolmates, and so on. Eliza was also a devout Christian, so she did her best to teach John and his siblings to be honest, well-mannered, and hard-working.
Raised by these two extremely different parents, John managed to pick up several key qualities from both his father and his mother. He learned the value of being a good salesman, but he also understood that just swindling people with snake oil was not enough for a successful or fulfilling life.
Looking at his father, another thing John realized was that working day by day all your life was not how he wanted to live. So he began saving what little he made working as a child, instead of spending it on anything. By the time he was 12, Rockefeller had collected $50 – the equivalent of around $1,400 today. He then followed his mother’s advice to lend the money to a local farmer for a yearly 7% interest. It was on that day that Rockefeller realized the power of interest.
Or, as he put it later in his life: The impression was gaining ground with me that it was a good thing to let the money be my servant and not make myself a slave to the money.
It wasn’t long before Rockefeller began planning for the future. He was still a teenager when he set some lofty goals for himself – to one day manage to make $100,000 or about $3 million of today’s money and to live to be a hundred years old. He reached and surpassed the first goal and he came very close to the second goal as he lived to the ripe age of 97!
Moving Out and Moving on Up
John Rockefeller’s family didn’t stay in Richford for long. The young boy was still in his pre-teen years when his mother took all of the children and moved to Moravia, New York. Unfortunately, the move was necessitated after John’s father became involved in a rape scandal. It also wouldn’t be their last move.
In New York, John studied briefly in the Oswego Academy. A couple of years later, the Rockefellers moved out of state, this time to Strongsville near Cleveland, Ohio.
Cleveland was a rapidly growing city at the time, thanks to the recent railroad construction there and the family finally settled in. John didn’t really settle into the local school system, however, as he spent the next 6 years repeatedly attending and dropping out of school. He did take a business class at the Folsom Mercantile College but aside from that, he didn’t seem to value school much.
A few years later, he acquired his first official job as an assistant bookkeeper at a publishing company, Hewitt & Tuttle. Thanks to his experience with trading and lending from an early age, as well as his natural intelligence and cunning, John turned out to be an excellent bookkeeper. He earned 50 cents a day at his job at Hewitt & Tuttle. Nevertheless, John Rockefeller was famously very happy and grateful for that job, and he continued celebrating the 26th of September – the day he landed the bookkeeping job – as “Job Day” for the rest of his life.
Rockefeller didn’t really look for a second job, nor did he wait long before he started his first enterprise – a commission business for grain, hay, meats, and other such goods. He established the business with what little he had saved along the way, thanks to his careful and thrifty habits regarding money. He’s even famous for keeping an expenses journal called Ledger A which further helped him optimize all his finances, a practice he began as a child.
To start this business, Rockefeller made use of his savings, but he still needed more money to get the business up and running. He was partly backed by his younger brother and now-business-partner William Avery Rockefeller Jr. and had taken a loan from his father.
Rockefeller had also managed to get a bank loan for a total of $4,000 starting capital – the equivalent of $100,000 today. But once Rockefeller started his own business, he quickly made it profitable with his entrepreneurial genius.
Rockefeller’s frugal nature with money wasn’t the only thing he inherited from his devout Christian mother. He also knew the value of charity and it was around this time that he started giving away 10% of his earnings – a habit that stayed with him for decades until his death.
Getting Into Oil – A Fateful Decision
Rockefeller’s commission business was the first major commercial success in his life, but then he decided to sell and instead turned his sights to oil. The railroads weren’t the only thing bringing untold prosperity to Ohio – the oil reserves in the state and in nearby Pennsylvania at the time were among the largest in the world. Rockefeller didn’t need any nudging to realize that he had to get into the oil business.
Using the capital from his commission business, Rockefeller built his first oil refinery near Cleveland in 1863, together with fellow entrepreneur Henry Morrison Flager. Rockefeller specifically chose refining oil over drilling for oil, as he deemed it to be the safer, more stable, and consistent plan for a business. And he was right. He built the refinery right next to a newly made railroad track and his business was the first to start making and distributing kerosene to Cleveland.
Rockefeller was very proud of his business and the contribution it made to the lives of people in Cleveland. He called kerosene “The poor man’s light” because of how affordable it was and how easily accessible his business made it for people.
It took just about two years for him to make his enterprise the largest oil refinery in the area. Seeing the tremendous success and income the oil business had proven to be, Rockefeller decided to devote himself exclusively to oil and set other business ventures and ideas aside.
Standard Oil – A Roaring Success
As the oil refinery’s success grew, tensions and differing opinions between Rockefeller and Flager started to develop. The two decided to part ways and the 31-year-old Rockefeller bought Flager’s share of the company for the staggering sum of $72,500 – about $2 million today. Since then, Rockefeller has often said that this was the day that “determined my career”.
This buy-out forced Rockefeller to borrow even more money from banks, but it also led to the official creation of Standard Oil in 1870 – the soon-to-be largest petroleum company in the world.
The story of how Rockefeller made Standard Oil such a success is not without its controversies. While he had built the company to its initial success using nothing but his entrepreneurial genius and a couple of well-planned loans, after 1870, Rockefeller began employing business “techniques” that would be seen as unethical today. In fact, many of them have been outright illegal for decades thanks, in large part, to Rockefeller.
The lack of any significant governmental regulations at the time helped successful businessmen like Rockefeller to muscle out any competition. At the time, income tax hadn’t yet been introduced; that only came into existence in 1909 with the 16th amendment. Anti-monopoly laws were similarly non-existent. Even the labor movement was still young and largely unsupported by the government.
Rockefeller spent the four decades between 1870 and 1911 using every dirty trick possible to undermine, buy out, or drive out his competition from the petroleum business, until Standard Oil became, not only the biggest, but the only major oil company in the United States. He even made secret deals with railroad companies to give him premium prices and to make their services untenable to the competition in exchange for large bulk shipments from Standard Oil and a bigger cut of the profits.
Rockefeller quickly turned Standard Oil into a monopoly. In a way, he “pioneered” anti-monopoly walls, as most of the regulatory action the US took in the early 20th century was in response to Standard Oil.
Rockefeller was unapologetic about his business practices. He frequently said that he saw it as his job to control the entire oil industry, as he believed that he was the best person to manage it. In a way, he was likely right, as he was the most successful businessman of his time. He cited altruistic reasons for his goal, as he wanted to make kerosene as affordable and accessible as possible for everyone in the US and around the world.
He was still giving away 10% of his income to charity, so he saw his drive to amass immeasurable wealth as something done “for the greater good”. From his point of view, he was literally giving light to the people and was then redistributing their wealth in “the right way”.
With such goals in sight, Rockefeller naturally saw competition as something to be stamped out. His competitors were making his job harder, were wasting money, and didn’t have the pure aspirations that he did. He once stated, “Competition is sin”.
Entire books have been written about Rockefeller’s business practices at the time, such as Ida Tarbell’s 1904 book “The History of Standard Oil”. As the daughter of a former oil refiner from Ohio whom Rockefeller had driven out of business, Ida was one of many who tried to show the world the destruction caused by monopolies.
All this can be seen as a blemish on Rockefeller’s legacy.
In fact, many other Rockefeller family members put in a lot of effort to “cleanse” the family name in the following decades because of the reputation received from John D. Rockefeller’s ruthless business practices.
The counterargument to all that would be that Rockefeller did everything according to the existing laws at the time. Did he have an authoritarian view of the industry, seeing himself as the only one fit to control all the oil in the US? Sure. But he also proved himself as the best businessman of his time.
Life After Standard Oil
Eventually, Standard Oil had to be broken into numerous smaller and “unrelated” companies to comply with the newly minted US anti-monopoly laws. This didn’t stop Rockefeller from pulling the strings of most of these companies, of course. In essence, all oil companies that came to be from Standard Oil were controlled by the same nine men that once were a part of Rockefeller’s Standard Oil Trust.
With age, Rockefeller began to slowly retreat away from the business and let Standard Oil’s “child companies” live their own life. Today, we know some of those former fragments of Standard Oil as Exxon, BP, Chevron, and ConocoPhillips.
John D. Rockefeller didn’t hide from the world after 1911 – instead, he invested himself even more in philanthropy and charity work. While many of his other family members did so in an attempt to clear the family name, Rockefeller did it for the same reason he had been doing charity before – he believed it was his duty. He never felt that what he had done with his business was unethical.
So, after the company’s formal “end”, he simply proceeded on to becoming a philanthropist. Listing all his contributions would be next to impossible as he and his son – John D. Rockefeller Jr. – created many major philanthropic institutions over the years. A few notable ones to mention would be the Rockefeller Institute for Medical Research later renamed Rockefeller University, the Rockefeller Foundation, the General Education Board in 1902, the University of Chicago, and many others.
Over the course of his life, it’s estimated that Rockefeller gave away about $35 million. That’s unadjusted for inflation and without counting all the other major charity work done by the other members of the Rockefeller family.
Rockefeller passed away in 1937 from a heart attack. He was 97 at the time and very close to 98. While he didn’t quite reach his dream to live to a hundred, he definitely surpassed his dream of one day making $100,000.
Rockefeller remained the undisputed richest person in history – a position he maintained well into the 21st century – long after his death. His streak finally ended in November 2021 when Elon Musk overtook him as the world’s richest man.