The Most Successful Businessman Of America
Titan is the biography of John D. Rockefeller, founder of Standard Oil, a company that played the largest role in establishing the oil sector in the United States using both controversial strong-arm tactics and brilliant business foresight. The book starts from John’s childhood and makes its way to his death, finely detailing his life, family, and business experiences, giving you a personal look into one of the most notorious figures in American history.
We first learn of John’s childhood. His father Bill was a snake oil salesman who would sell his cancer and pain cures at inflated prices to naive townsfolk. Other times he would arrive into small towns acting deaf and dumb to unload his stock of novelties. He was also a philanderer who would cavort with other women, eventually settling into a bigamist marriage in another state, leaving John, his siblings, and his mother little money to fend for themselves in Ohio.
Before long, Big Bill roughly disabused Eliza [John's mother] of any high-flown romantic notions she might have had about matrimony. Far from renouncing his girlfriend, Nancy Brown, he brought her into the cramped house as a “housekeeper” and began having children, alternately, by wife and mistress. In 1838, Eliza gave birth to their first child, Lucy, followed a few months later by Nancy’s first illegitimate daughter, Clorinda.
Perhaps out of a self-protective instinct, Bill taught his children to be wary of strangers and even of himself. When John was a child, Bill would urge him to leap from his high chair into his waiting arms. One day, he dropped his arms, letting his astonished son crash to the floor. “Remember,” Bill lectured him, “never trust anyone completely, not even me.”
His disciplinarian and religious mother gave him many tools to be a good businessman by the time he was a teenager (he was in charge of several household responsibilities due to the absence left by his father). When it was time for him to look for a job at 16, he cold-called nearly every respectable firm in Cleveland.
Despite incessant disappointment, he doggedly pursued a position. Each morning, he left his boardinghouse at eight o’clock, clothed in a dark suit with a high collar and black tie, to make his rounds of appointed firms. This grimly determined trek went on each day— six days a week for six consecutive weeks— until late in the afternoon. The streets were so hot and hard that he grew footsore from pacing them. His perseverance surely owed something to his desire to end his reliance upon his fickle father. At one point, Bill suggested that if John didn’t find work he might have to return to the country; the thought of such dependence upon his father made “a cold chill” run down his spine, Rockefeller later said. Because he approached his job hunt devoid of any doubt or self-pity, he could stare down all discouragement. “I was working every day at my business— the business of looking for work. I put in my full time at this every day.”
…the job prospects were momentarily bleak. “No one wanted a boy, and very few showed any overwhelming anxiety to talk with me on the subject,” said Rockefeller. 29 When he exhausted his list, he simply started over from the top and visited several firms two or three times. Another boy might have been crestfallen, but Rockefeller was the sort of stubborn person who only grew more determined with rejection.
He began working as an accountant, learning the double-entry bookkeeping system that would later be important in helping him understand which parts of his oil business were gaining or losing money. He was a natural at it…
Despite his youth, Rockefeller soon came to feel that he was being underpaid. When Tuttle quit in January 1857, Rockefeller was elevated to chief bookkeeper, performing, at the age of seventeen, all the tasks formerly discharged by the departed partner.
He never felt appreciated at his firm, so he took a 10% interest loan from his father and started a partnership at the age of 18 that bought groceries and produce in bulk before selling to stores. By the age of 20, he had gained more business experience and wisdom than those 10 years his senior.
When he rested his head on the pillow at night, he warned himself, “Because you have got a start, you think you are quite a merchant; look out, or you will lose your head— go steady. Are you going to let this money puff you up? Keep your eyes open. Don’t lose your balance.”
Having discarded several older partners, the young man had no real business mentors, heroes, or role models and was beholden to no one. John D. Rockefeller was not only self-made but self-invented and already had unyielding faith in his own judgment.
With fluctuating market conditions, he sometimes needed to send shipments to New York with great dispatch and personally rushed down to the railroad tracks to motivate his freight handlers. “I shall never forget how hungry I was in those days. I stayed out of doors day and night; I ran up and down the tops of freight cars when necessary; I hurried up the boys.”
Twenty-nine-year-old John D. Rockefeller demanded that seventy-four-year-old Commodore Vanderbilt, the emperor of the railroad world, come to him. This refusal to truckle, bend, or bow to others, this insistence on dealing with other people on his own terms, time, and turf, distinguished Rockefeller throughout his career.
Once he moved into the oil refining business, a big constraint on his profits became railroad shipping costs. He was able to gain rebates since he shipped so much (the rebates were essentially bulk discounts), but this received criticism for being unfair and was soon declared illegal because railroads were seen as “common carriers” that should serve the public interest. Whether you need to ship 1 barrel of oil or 1000, the cost per unit should be the same. John argued against this, stating that shipping 1000 barrels should have a cheaper unit price, but the public did not agree, even though bulk pricing is quite the rule today with business.
Even after rebates were made illegal, John still partook in them with handshake deals. It was the source of much of the attacks he received for being a monopolist robber baron. The rebates were effective, however, in squeezing out his smaller competitors until he controlled over 70% of the oil business in America.
Economic historians often cite the exuberance of Gilded Age businessmen, their red-blooded faith in America’s future, without noting the constant uncertainty that lurked underneath. As Rockefeller’s story shows, many of the age’s most controversial business practices were forged in a desperate spirit of self-preservation. “It was forced upon us,” Rockefeller said of Standard Oil’s genesis. “We had to do it in self-defence. The oil business was in confusion and daily growing worse. Someone had to make a stand.”
For his admirers, 1872 was the annus mirabilis of John D. Rockefeller’s life, while for his critics it constituted the darkest chapter. The year revealed both his finest and most problematic qualities as a businessman: his visionary leadership, his courageous persistence, his capacity to think in strategic terms, but also his lust for domination, his messianic self-righteousness, and his contempt for those shortsighted mortals who made the mistake of standing in his way. What rivals saw as a naked power grab, Rockefeller regarded as a heroic act of salvation, nothing less than the rescue of the oil business.
If he didn’t buy out his competitors outright, he would temporarily undercut their prices so that they wouldn’t eventually drag down his own business. He wanted to bring stability to the industry by cooperating with other firms, not only to save on freight through rebates, but to limit production and keep oil prices high so that refining remained profitable in the turbulent period of early oil exploration.
If, as he asserted, Standard Oil was the efficient, low-cost producer in Cleveland, why didn’t he just sit back and wait for competitors to go bankrupt? Why did he resort to the tremendous expense of taking over rivals and dismembering their refineries to slash capacity? According to the standard textbook models of competition, as oil prices fell below production costs, refiners should have retrenched and padlocked plants. But the oil market didn’t correct itself in this manner because refiners carried heavy bank debt and other fixed costs, and they discovered that, by operating at a loss, they could still service some debt. Obviously, they couldn’t lose money indefinitely, but as they soldiered on to postpone bankruptcy, their output dragged oil prices down to unprofitable levels for everybody.
Rockefeller and his associates had long been haunted by two antithetical nightmares: Either the oil would dry up, starving their network of pipelines and refineries, or they would drown in a sea of cheap oil that would drag prices below their overhead costs. At one panicky executive-committee meeting in the early 1880s, it was even suggested that Standard Oil should exit the business and enter something more stable. After listening quietly to such defeatist talk, Rockefeller stood up, pointed skyward, and intoned, “The Lord will provide.” Rockefeller tended to see a heavenly design in all things and was convinced that the Almighty had buried the oil in the earth for a purpose.
He was essentially the sole reason that anti-trust regulation came into being…
With his customary thoroughness, Rockefeller had devised an encyclopedic stock of anticompetitive weapons. Since he had figured out every conceivable way to restrain trade, rig markets, and suppress competition, all reform-minded legislators had to do was study his career to draw up a comprehensive antitrust agenda.
Standard Oil had taught the American public an important but paradoxical lesson: Free markets, if left completely to their own devices, can wind up terribly unfree. Competitive capitalism did not exist in a state of nature but had to be defined or restrained by law. Unfettered markets tended frequently toward monopoly or, at least, toward unhealthy levels of concentration, and government sometimes needed to intervene to ensure the full benefits of competition.
He had dedicated critics attacking him and the Standard Oil trust. It was known as a “trust” because he collected independent entities under the Standard Oil banner without micromanaging their business. He didn’t have a 100% stake in every subsidiary of Standard Oil.
As the trusts’ power rippled through society, he said, it corrupted every corner of American life. The noble experiment of American democracy was being undermined by businessmen who had grown more powerful than the state and controlled its elected representatives. “Our system, so fair in its theory and so fertile in its happiness and prosperity in its first century, is now, following the fate of systems, becoming artificial, technical, corrupt.”
He was mercilessly vilified in the press. One of the reasons for it was that he had a rule never to talk to them. Back in the days before public relations, corporations didn’t know how to deal with the media in a way that would make them appear favorable. Unfortunately for John, this allowed them to set the narrative of his business dealings in the worst way possible. The public was all aboard when Teddy Roosevelt came in to break up Standard Oil. Only problem is that it made John even richer.
Those who had seen the Standard Oil dissolution as condign punishment for Rockefeller were in for a sad surprise: It proved to be the luckiest stroke of his career. Precisely because he lost the antitrust suit, Rockefeller was converted from a mere millionaire, with an estimated net worth of $ 300 million in 1911, into something just short of history’s first billionaire. In December 1911, he was finally able to jettison the presidency of Standard Oil, but he continued to hold on to his immense shareholdings. As the owner of about one quarter of the shares of the old trust, Rockefeller now got a one-quarter share of the new Standard Oil of New Jersey, plus one quarter of the thirty-three independent subsidiary companies created by the decision.
Rockefeller’s stepchildren would be everywhere: Standard Oil of New Jersey (Exxon), Standard Oil of New York (Mobil), Standard Oil of Indiana (Amoco), Standard Oil of California (Chevron), Atlantic Refining (ARCO and eventually Sun), Continental Oil (Conoco), today a unit of DuPont, and Chesebrough-Ponds, which had begun by processing petroleum jelly. Three offspring— Exxon, Mobil, and Chevron— would belong to the Seven Sisters group that would dominate the world oil industry in the twentieth century; a fourth sister, British Petroleum, later took over Standard Oil of Ohio, then known as Sohio. It was certainly not their intention, but the trustbusters helped to preserve Rockefeller’s legacy for posterity and unquestionably made him the world’s richest man.
His religious upbringing didn’t encourage much in the way of vice…
Since evangelicals abstained from dancing, cards, and theater, Rockefeller restricted his private life to church socials and picnics, where he could play blindman’s buff and engage in other innocent pastimes. As a model Baptist, he was sought after by the young ladies. “The girls all liked John immensely,” said one congregant. “Some of them came dangerously near to being in love with him. He was not especially attractive in his person and his clothes were strenuously plain and well worn. He was thought much of by these spiritual minded young women because of his goodness, his religious fervor, his earnestness and willingness in the church, and his apparent sincerity and honesty of purpose.”
Women back then were made of a different stock, using the church to guide their lives and family. They had values that were primarily concerned with being a good wife and mother instead of careerism and attention seeking. His wife, Cettie, was unquestionably faithful to him for their entire marriage. Not until she was dead did he let loose a little…
Rockefeller increasingly used the afternoon drives as opportunities for hanky-panky. Wearing thick black or amber goggles to screen out the sun, he sometimes borrowed a veil from one of the lady passengers and laced it dramatically across his face and wound it around his ears. He sat tightly wedged in the backseat between two buxom women, usually neighbors or visitors, with their laps covered by a blanket, and he became notorious for his hot schoolboy hands roving under the blanket. The man who had been a model of self-mastery now seemed, on occasion, an itchy-fingered old satyr. Tom Pyle, the head gardener and gamekeeper at Pocantico, steered the second car in the daily motorcade and was often astonished at his employer’s outrageous behavior. When Rockefeller’s car stopped one afternoon at a traffic light, a young woman riding in the backseat with him suddenly burst forth and scrambled back to Pyle’s car. “That old rooster!” she said. “He ought to be handcuffed.” Pyle noted that some local matrons enjoyed the hot seat and frequently returned for more. “I never decided whether different women received different treatment or whether some found it acceptable to be pinched by a ninety-year-old multimillionaire.”
His thoughts on business…
“Often the best way to develop workers— when you are sure they have character and think they have ability— is to take them to a deep place, throw them in and make them sink or swim”
As Rockefeller instructed a recruit, “Has anyone given you the law of these offices? No? It is this: nobody does anything if he can get anybody else to do it.… As soon as you can, get some one whom you can rely on, train him in the work, sit down, cock up your heels, and think out some way for the Standard Oil to make some money.”
“And I rejoice also that we are charitable and sweet-spirited to these jealous, small men who made it the business of their lives to try to pull us down because their vision did not extend beyond the ends of their noses.”
As the organization grew, he continued to operate by consensus, taking no major initiative opposed by board members. Because all ideas had to meet the supreme test of unanimous approval among strong-minded men, Standard Oil made few major missteps. As Rockefeller said, “We made sure that we were right and had planned for every contingency before we went ahead.”
The committees encouraged rivalry among local units by circulating performance figures and encouraging them to compete for records and prizes. The point is vitally important, for monopolies, spared the rod of competition, can easily lapse into sluggish giants.
A recurring theme in the book is that men who made decisions out of anger or irritation often suffered large downfalls (one man sold out to a young Rockefeller in anger for $1 million when his share would have ended up being worth $900 million). John always remained his cool, never once suffering a monumental business blunder. He was also a secretive man who did not like displaying his wealth, going out of his way not to show off (compare that to the behavior of Jay Z, whose record company Roc-a-fella is named after John).
Schooled in secrecy, he trained his face to be a stony mask so that when underlings brought him telegrams, they couldn’t tell from his expression whether the news was favorable or not. Rockefeller equated silence with strength: Weak men had loose tongues and blabbed to reporters, while prudent businessmen kept their own counsel. Two of his most cherished maxims were “Success comes from keeping the ears open and the mouth closed” and “A man of words and not of deeds is like a garden full of weeds.”
Never dazzled by New York, Rockefeller was insulated from the beau monde that threw costly dinners and costume balls and frequented the theater, opera, and clubs. He had no interest in debauchery, and it is hard to picture him milling about with portly men smoking cigars or women wearing expensive furs and jewels. The newspapers noted his total boycott of social functions. As one periodical said, “He never entertains notables, his home is never given to entertainment, and he follows the policy of self-effacement at all times and in all places.” Although he joined the Union League Club, Rockefeller did not feel comfortable with the splendor of the Astors and Vanderbilts.
“Great wealth is a great burden, a great responsibility. It invariably proves to be one of two things— either a great blessing or a great curse.”
He liked to say that “a man’s wealth must be determined by the relation of his desires and expenditures to his income. If he feels rich on ten dollars, and has everything else he desires, he really is rich.”
Nonetheless, wealth did bring him isolation and loneliness…
Rockefeller had few, if any, real friends and was isolated by his wealth. Visiting Rockefeller at a southern hotel around 1910, Gates found him rather lonely and forlorn and suggested he contact some cultivated local men. “Well, Mr. Gates,” said Rockefeller, “if you suppose I have not thought about the matter you are mistaken. I have made some experiments. And nearly always the result is the same— along about the ninth hole out comes some proposition, charitable or financial!”
“I have lent and given people money, and then seen them cross the street so that they would not have to speak to me.”
This scenario would be repeated for his son, who was essentially a slave to the massive fortune that his father gave him.
In his later years, John focused on philanthropy. His donations eliminated hookworm in the South, spurned development of high school education, upgraded teaching standards of medical universities, and introduced scientific research at the advanced level of what was happening in Europe.
“Instead of giving alms to beggars, if anything can be done to remove the causes which lead to the existence of beggars, then something deeper and broader and more worthwhile will have been accomplished.”
Is John D. Rockefeller a man who should be celebrated or reviled? He was viciously anti-competitive, putting many men out of business, though he did have a price stabilizing effect on oil which was beneficial for consumers. At the same time, his associates bribed public officials to eliminate competition and prevent anti-trust legislation. Perhaps to atone for these sins, he gave away most of his wealth by the time he died.
I see him as a brilliant but morally gray man. While I don’t agree with much of his actions, I don’t see him worse than the business elite we’re forced to endure today, especially in the American finance sector. It’s no surprise that stripping away finance regulation has led to many of the abuses we saw in John’s time but on a more technologically advanced level.
Even though the timeline was all over the place, this was an excellent book that painted a clear picture of the man and what made him a business success, while offering enough personal details that you felt like you knew him. Highly recommended.
Read More: “Titan” on Amazon