Profiles in Personal Finance: John D. Rockefeller

I thought it might be interesting from time to time to learn about and profile some of the most interesting and influential characters in the world of money. Who better to begin with than the man considered to be the richest man of all time, John D. Rockefeller.

John Davison Rockefeller, Sr. was an American industrialist and philanthropist. Rockefeller believed since he was a child that his purpose in life was to make as much money as possible, and then use it wisely to improve the lot of mankind.

In 1870, Rockefeller founded the Standard Oil Company and by 1872 Standard Oil had purchased and thus controlled nearly all the refining firms in Cleveland, plus two refineries in the New York City area.

One of the business problems that Rockefeller encountered was the high cost of transporting his oil to his Cleveland refineries (40 cents a barrel) and the refined oil to New York ($2 a barrel). Rockefeller negotiated an exclusive deal with the railway company where he guaranteed sixty car-loads a day. In return the transport prices were reduced to 35 cents and $1.30. The cost of his oil was reduced and his sales increased dramatically.

Rockefeller now turned his attentions to controlling the oil industry throughout the United States. His competitors were given the choice of being swallowed up by Standard Oil or being crushed. By 1890 Rockefeller’s business had swollen into an immense monopoly which could fix its own prices and terms of business because it had no competitors. It is estimated that Standard Oil owned three-fourths of the petroleum business in the U.S. in the 1890s.

President Theodore Roosevelt, who had been elected on a program that included reducing the power of large corporations, attempted to use the Sherman Anti-Trust Act to deal with Rockefeller’s monopoly of the oil industry. This was largely ineffective and it was not until 1911 that the Supreme Court dissolved the Standard Oil monopoly.

Rockefeller was 57 years old in 1896 when he decided that others should take over the day-to-day leadership of Standard Oil. He kept his stock and as gasoline grew in importance, his wealth soared and he became the world’s richest man and first billionaire. His wealth in today’s terms would be well over $200 billion.

As ruthless as he was at making his money, he was just as generous giving it away. He began to focus his efforts on philanthropy, giving away the bulk of his fortune in ways designed to do the most good as determined by careful study, experience and the help of expert advisers.

He used his fortune to create the modern systematic approach of targeted philanthropy with foundations that had a major impact on medicine, education, and scientific research. His foundations pioneered the development of medical research, and was instrumental in the eradication of hookworm and yellow fever.

His philanthropy grew out of his early family training, religious convictions, and financial habits. “I believe it is every man’s religious duty to get all he can honestly and to give all he can,” he once wrote. In 1913 Rockefeller established the Rockefeller Foundation (RF) to “promote the well-being of mankind throughout the world.” He transferred $235,000,000 to it by 1929.

Oddly enough, Rockefeller was probably best known in his later life for the practice of giving a dime to children wherever he went.

When Rockefeller died, on May 23, 1937, his estate totaled only $26,410,837. He had given away most of his property to his philanthropies and to his son and other heirs. But, because his reputation was so sullied he had never received the credit that he was due for his great acts on behalf of humankind.

If you like business, politics and wealth, then do yourself a favor and get his biography, Titan: The Life of John D. Rockefeller, Sr.