FORTUNE FROM OIL

Evening Post, Volume CXXIII, Issue 121, 24 May 1937, Page 9

FORTUNE FROM OIL

RISE FROM CLERKSHIP

ORGANISING GENIUS

, Mr. John D. Rockefeller, sen., was born at Richford, New York, in 1839. His father was a poor itinerant salesman of patent medicines, and the boy had to help the home by working for neighbouring farmers. Soon he discovered that he 'could obtain as much in interest on small loans as by work-, ing for some days, and he embarked on his career by lending sums i.'om his savings to men who employed him to dig potatoes. When lie was fourteen years old his family moved to Cleveland, Ohio, and there he attended school. He was already living a life of piety, careful saving, and nar-; row interests, and though his, pay as a bookkeeper* in a commission house was only £10 for the first three months and never rose very high, he continued to accumulate money, and when he was 19 had. saved enough to launch out as partner in a commission firm. He soon made an impression on local business men, and when the oil scramble began he was sent away to look over new fields to report on their possibilities as an investment. He made an adverse report, but some time later, when conditions were somewhat more settled, he and his partner became associated with Samuel Andrews,

who had devised a system of cleaning crude oil which was more efficient than that already in use, and they started a business, with a capital of only £800, which was to become the gigantic Standard Oil Corporation. This move was made when Rockefeller was still only 23, and progress was rapid. In seven years they were doing onefifth of the total oil refining business of Cleveland, which was then; the principal oil refining centre in the United States, and in January, 1870, after long and patient but ruthless negotiation, he organised the first Standard Oil Company. The weapon which he used to force tlie amalgamation was secret rebates on freight rates'which he had succeeded in obtaining from- the railway companies. Rival concerns.were told that competition was useless, and, as was shown at a public hearing some time later, the most efficient of them, were amazed at the profits which Rockefeller was. making. The oil leader pointed out that resistance would result in the destruction of the obstructing company. STABILITY DESIRED. This railway concession was obtained because of the fact that the industry was still in a state of flux. Railway loadings oscillated in a remarkable manner and provided problems of traffic and heavy losses for the transit companies. They were quick to see the advantage of combination, and granted Rockefeller their aid, which proved strong enough for him to make his corporation the most powerful factor in the oil business in the United States within tlie next ten years. Rockefeller's idea was the grouping of all units in the industry under one leadership, the use of the greater strength 'to bring about economies and improvements, and the controlling of supply and stabilisation of prices. With the assistance of the South Improvement Company, an as-1 sociation of leading refiners which had | been formed in 1872, and with the substantial aid of the Pennsylvania, Erie, and New York Central railways, which granted freight rebates of from 25 to

50 per cent., and also gave "drawbacks" on all oii-transported by competitors, 21 ot the 20 companies in Cleveland accepted the offer to purchase their stock for cash or by.stock in the new corporation. This was a £200,000 (1,000,000 dollars) concern, with Rockefeller as its president, and though the rebate system lasted only three months by that time Rockefeller was the master cf one-third of the refining business of the country. By 1875 he had merged large refineries in New York, Pennsylvania, and Pittsburg, and by 1878 he had control of nine-tenths of the refineries in the United States. His next move was to improve the marketing machinery and to acquire the chief terminals of the distribution system, gathering in the pipe-lines which had been laid by his competitors. PUBLIC ALARMED. This was achieved without strife. There were public protests over the growth of this new industrial giant, the South ' Improvement Company was compulsorily dissolved in 1872, a Congressional investigation took place, and the ruthlessness rf the methods of the big corporation, which extended as far as the use of dynamite against competitors, resulted in indictment of some of its directors for criminal conspiracy. The public attitude was one of suspicion and hostility, and the processes of the law were frequently used against the company. Another investigation in 1888 revealed how Rockefeller had met the new situation created by the dissolution nf the South Improvement Company., A resourceful lawyer had conceived the creation ofan organisation which had no legal existence, fi board of trustees which held in "trust" the shares of the various companies. It was to add a new word to the language. When formed, this trust, the beginnings of which had been a mere t £800, had a capital of £ 14,000,000; subsequently the capital rose to more than £20,000,000; the assets were greater still. But in 1892 the Ohio Supreme Court declared the trust illegal, and in 1899 ,jt was dissolved. The Standard Oil interests were then reorganised as the Standard Oil Company of New but in 1911 the United States 'declared this a violation of the Sherman Anti-trust Act and ordered its dissolution. PHILANTHROPY AFTER RETIRE- ..■■■■• . .MENT. : ;.: Mr. Rockefeller : remained president of the Standard Oil Company of New Jersey until 1911, when he retired and turned the control of his business interests over to his son. Mr. John D. Rockefeller, jun. The concern dissolved and distributed to its shareholders the stock in its 37 separate companies. In 1892 the Rockefeller family owned 256,000 shares in the 972,000 shares of the capitalisation of the trust. In 1928 the average holding in the various companies was about 15 per cent. Before his retirement Rockefeller had become the wealthiest man in the United States, possessing a fortune which, Recording to some, stood at £200,000,000. The disposal of these riches became his chief problem. A large portion of them went back into industry; increasingly he chose industries not connected with oil—iron ore lands in Minnesota, coal lands in Colorado, and stocks in many railways. From 1890 he organised a system of philanthropy, distributing the largest group of gifts ever made for the promotion of the well-being of mankind. By the cr.d of 1927 he had given away £100,000,000, nearly four-fifths to the four benevolent institutions which he had created—the Rockefeller Foundation, which has co-operated with the Governments of the world to control hookworm, malaria, and yellow fever, and has given aid in the; development of public health organisation and medical and nursing education; the Laura Spelman Rockefeller Memorial Foundation, which has worked for child welfare and assisted work in the social sciences; the. Rockefeller Institute of Medical Research in New York, which conducts investigations into hygiene, medicine, and surgery; and the General Education Board, which 1 promotes education in the United ' States. ! In recent, years the old_ industrial 1 leader has lived quietly on his estate ;, at New Jersey and at his winter home, 1 The Casements, Ormorid, four: miles 1 from Daytona Beach, rising at 10 a.m., taking a frugal breakfast, attended by two male nurses, while newspapers were read to him, enjoying the sun, and sleeping after lunch, then taking a short motor drive on a drive specially built within the boundaries of his estate. Until the' end he maintained interest in the reports of the stock market, dictating letters to his secretary, and then being read to after dinner until his bedtime at 9 p.m. For years he played a quiet game of golf, and each birthday he distributed dimes and good advice to the-children about his estate.