John D. Rockefeller And Standard Oil
( Originally Published 1939 )
THE story goes according to that well known news commentatetor, Edwin C. Hill, that S. H. Bissell, a young Dartmouth graduate, with a yen for chemistry, was forced to seek shelter under the canopy of a Broadway drug store one rainy afternoon. While standing there, to escape the blinding fury of the rain-storm, he saw displayed in the drug store window, many bottles of a dark, black, greasy fluid, advertised to cure anything from tooth-ache to bunions.
Young Bissell was possessed with a priceless curiosity, so he purchased a bottle of this magic fluid and carried it home to analyze. He was anxious to find out the ingredients of something which was so brazenly advertised to cure practically everything in the medical nomenclature.
His painstaking research convinced him that he had stumbled upon the one lubricant the world needed. He returned to the drug store, and, after shrewd inquiries, ascertained front what source they were getting their supply.
Boarding a train, he went over in Western Pennsylvania, and, upon investigation, found that the Indians and a few settlers were skimming the top of springs and pools for the so-called magic fluid. Bissell reasoned that the source of supply was buried in the earth, and that the spring waters seeping through it carried a certain quantity to the top. To bore down and tap the source was his mission.
Bissell had no money, but he succeeded in interesting a hard-headed and two-fisted railroad conductor, by the name of Edward L. Drake. Together they went over near Titusville, Pennsylvania, and started to drill for oil. Their efforts were, at first, not only ridiculed but harshly censored. Gray-haired patriarchs called down the wrath of God upon those interlopers who would dare interfere with the workings of the Almighty. Thousands upon thousands of sightseers flocked in to witness the absurd attempt of extracting oil from the ground. The drilling went on and on, the promoters blind and heedless to all attempts to stop them. A wave of indignation swept over the country. Their efforts were denounced from the pulpits of several churches in the large cities of the East. But Drake kept at it, and, eventually, his efforts were successful. The first oil well in the history of the world came spouting forth, giving birth to one of the world's largest industries.
This new industry attracted the attention of a young commission merchant in Cleveland, Ohio, by the name of John D. Rockefeller. Going over the fields for a first hand investigation, he was impressed with what he saw, and discerning the possibilities of this new, black fluid, which later was called "liquid gold", he gave up his commission business and turned his entire attention to the new and young industry. He was joined in this new field by a young man named Maurice Clark.
The first endeavours in this newly-found industry were naturally amateurish and haphazard. A great deal of wild-tatting was done, and thousands of dollars wasted. Everything was in a highly chaotic state, as the industry fought for its existence. Competition between local companies, of small means, was ruthless. Fires were also a great hazard. Finances were hard to get; and there was no system whatsoever governing the production and distribution.
Rockefeller, with his usual keen sagacity, decided there was more money in the refining and distribution of the product than there was in the production, and he thus interested Henry M. Flagler, later a railroad magnate, and Stephen Harkness. They set to work and built the first refinery at Cleveland. This was the forerunner of the Standard Oil of Cleveland, which was organized in 1870. Step by step they kept acquiring small refineries and consolidating them into the company. Rockefeller's dream was to group and consolidate all of the units of this young industry under one leadership, and to use their combined strength and control to bring about economies and improvements.
He also dreamed of ultimately controlling supply, and stabilizing prices. His dreams and efforts were to have far reaching results, for the Standard Oil Company was the first great American combination to be completely successful, and, encouraged by its example, furthered- the trend of others toward consolidation and monopoly.
The spectacular success of the company can be attributed to a large extent to the South Improvement Company, which was an association of the leading refiners, formed in 1872. These associates prevailed upon the Pennsylvania, the Erie, and New York Central Railroad to grant them twenty-five to fifty percent rebates on all of the oil shipped for, or by members of the association. In addition to this, to give them drawbacks on any, and all, oil trans-ported for their competitors.
This distinct transportation advantage gave them a decided tool for suppressing competition, and they then approached all refineries in Cleveland and urged them to sell. They offered either cash or stock. Twenty-one of the twenty-six companies of Cleve-land joined in the combine.
Public opinion eventually forced the railroads to repudiate their unfair agreement. In fact it was repudiated within three months after it was made, nevertheless, the Standard Oil had obtained their objective. They were already in possession of the Cleveland refineries, and Rockefeller was now master of about one-third of the refining business of the Nation.
After 1900, they expanded rapidly, both as refiners and producers. So enormous had their young giant grown that they made a number of vain attempts to purchase the Carnegie steel empire, so they could command and manufacture their own steel, to make pipe casings and other products which were essential to the oil industry. In addition, the Carnegie interests held numerous miles of railroad, river and lake steamers, which the Standard needed to further consolidate its interests. The negotiations fell through, and it was here that Rockefeller made the first big mistake of his business career. He refused to pay Carnegie his price of one hundred million dollars, and five years later Carnegie sold to the Morgan interests for four hundred and seventy-two million dollars.
Rockefeller remained at the head of his industries until 1911, when he turned them over to his son, John D., Junior. As late as 1928, however, despite their enormous wealth, which was estimated to be over one thousand million dollars, marking him as the richest man in the world, the combined holdings of his son and himself was estimated to be only about fifteen percent of the industry which he had created.
It is said that Rockefeller had given to four of his foundations, prior to 1927, over five hundred millions of dollars. Chief among them is the Rockefeller Institute, whose influence in the advancement of science and eradication of disease has been felt over the four corners of the globe.
The Standard Oil, and its subsidiaries, has not only contributed materially to the development and advancement of a nation, but, the wealth which Rockefeller wrested from the earth and re-distributed through the Rockefeller Institute, has justified the brazen advertisement which appeared in a Broadway drug store:
"The Cure All".