. . . and John D. Rockefeller

This post was put together quickly to supplement then one on Carnegie and Rhodes…
Which post on Carnegie and Rhodes came to pass recently as I am noticing a certain set of associations attempting to monopolize the platform on “Our Broken Family Courts” (an oxymoron), possibly made easier by the fact of who has been running our basic education for the past generations, i.e., dumbing us down about what’s most important to learn in life. See “Carnegie Foundation for the Advancement of Teaching” and US Department of Education, etc….

Mostly, I just want us to remember the history of the major institutions we feel so obligated to take orders from, particularly in the form of educational institutions and their hired professional experts on all areas of life — and how to disburse the governmental billions (while losing trillions) according to budget.

It’s also interesting history to keep in mind.

One reason this caught my attention, other than you can’t walk too far in America without running into something influenced by JDR here, was that I keep remembering the “Bentley 500” largest owners of the world’s infrastructure starts out:

1. The United States of America (FEDERAL government
2. Exxon Oil.

In 2011, EXXON was #3, and 2010 (when this list was started), it was #5.

EXXON (or its predecessors) used to be part of Standard Oil, and for Standard Oil, you can spell that Rockefeller.

[WIKIPEDIA]: Bentley Infrastructure 500 [1] is a worldwide ranking of infrastructure owners around the world compiled by the CAD software company Bentley Systems. It was first published in 2010. The index ranks the combined infrastructure assets in the hands of the biggest public and private organisations in the world.
In [contrast] to the Forbes Global 2000 ranking, the Bentley Infrastructure 500 ranks companies according to their reported tangible fixed assets (or other comparable noncurrent physical assets such as buildings or fixed structures, land, and machinery) – and is a direct measure of the infrastructure owned and operated by an organization. The aim of the ranking is to help global constituents appreciate and explore the magnitude of investment in infrastructure and the potential to continually increase the return on that investment. The Infrastructure 500 index also takes into consideration governments and states.

[[I notice that California was #16 and Texas #19 on a recent list…]]

From the Wikipedia on “Standard Oil” we see that Exxon was from one of the dissolved companies (Sherman Antitrust act of 1890 finally got to Standard in 1911. However, it just goes to show that it’s not very easy to outwit people who have the smarts, and clout, and associations, to form monopolies to start with, even though people were definitely protesting it at the time….

On May 15, 1911, the US Supreme Court upheld the lower court judgment and declared the Standard Oil group to be an “unreasonable” monopoly under the Sherman Antitrust Act, Section II. It ordered Standard to break up into 34 independent companies with different boards of directors, the biggest two of the companies were Standard Oil of New Jersey (which became Exxon) and Standard Oil of New York (which became Mobil).[35]

Standard’s president, John Rockefeller, had long since retired from any management role. But, as he owned a quarter of the shares of the resultant companies, and those share values mostly doubled, he emerged from the dissolution as the richest man in the world.[36]

The Dismantling of Standard Oil Trust.” Concise, but very well-written summary of John D. Rockefeller and Standard Oil, and many issues it raises. I note that JDR was encouraged to drop out of high school early, and take courses that would eventually help his business success…
This info is courtesy the Linux Information Project, co. 2004-2006

John D. Rockefeller

John Davidson Rockefeller was born the second of six children into a working class family in Richford, (upstate) New York in 1839. In 1853, the family moved to a farm in Strongsville, Ohio, near Cleveland. Under pressure from his father, Rockefeller dropped out of high school shortly before commencement and entered a professional school, where he studied penmanship, bookkeeping, banking and commercial law.

In 1859 Edwin Drake struck oil in Titusville, in western Pennsylvania. This triggered an oil rush to the region and marked the start of oil as a major industry in the U.S. Coincidentally, this was the same year that Charles Darwin’s On the Origin of Species was published, a work that had a great influence not only on the sciences, but also on business and society in general.

It was also in 1859 that Rockefeller started his first business. With $1,000 he had saved and another $1,000 borrowed from his father, and in partnership with another young man, Maurice B. Clark, he set up a commission business that dealt with a variety of products including hay, grain and meats.

After the outbreak of the Civil War in 1861, Rockefeller hired a substitute to avoid conscription, as was not uncommon among Northerners in those days. Although the war initially disrupted the economy, it soon began to stimulate development in the North, and this appears to have been an important factor in Rockefeller’s sudden and spectacular success.

The Titusville discovery led to the swift ascent of a major new industry based largely on the use of kerosene for lighting. Oil refining became largely concentrated in Cleveland because of its proximity to the oil fields of Western Pennsylvania, its excellent (and competitive) railroad service, its availability of cheap water transportation (on adjacent Lake Erie) and its abundant supplies of low cost immigrant labor.

Rockefeller was immediately attracted to the oil business, and in 1863, at the age of 24, he established a refinery in Cleveland with Clark and a new partner, Samuel Andrews, a chemist who already had several years of refining experience. Fueled by the soaring demand for oil and Rockefeller’s ambition, this refinery became the largest in the region within a mere two years, and Rockefeller thereafter focused most of his attention on oil for the next three decades.

This nice Baptist guy with a business vision used many cut-throat techniques to centralize control, while tithing regularly and helping out education:

Several explanations have been proposed for the massive public service and charitable activities of the great corporate robber barons. Many contemporaries of Rockefeller and Carnegie believed that they were really just egotists who craved the favorable attention that they received from donating money and delighted in having prestigious institutions and thousands of buildings named after them.

Another explanation is that these activities were largely a public relations ploy and thus a good business investment. That is, they were techniques for deflecting attention from the harmful effects of the monopolies and for staving off the increasingly serious attempts to curtail their power or even break them up.

Still another explanation is that such activities were a form of atonement for their feelings of guilt about their business activities. This is certainly consistent with the apparent religious convictions of Rockefeller and others and with their possible consequent fear of eternal punishment in an afterlife. Perhaps there is some truth to all of these explanations.


Standard Oil Company

In 1870, Rockefeller, together with his brother William, Henry M. Flagler and Samuel Andrews, established the Standard Oil Company of Ohio. This occurred while the petroleum refining industry was still highly decentralized, with more than 250 competitors in the U.S.

The company almost immediately began using a variety of cutthroat techniques to acquire or destroy competitors and thereby “consolidate” the industry. They included:

(1) Temporarily undercutting the prices of competitors until they either went out of business or sold out to Standard Oil.

(2) Buying up the components needed to make oil barrels in order to prevent competitors from getting their oil to customers.

(3) Using its large and growing volume of oil shipments to negotiate an alliance with the railroads that gave it secret rebates and thereby reduced its effective shipping costs to a level far below the rates charged to its competitors.

(4) Secretly buying up competitors and then having officials from those companies spy on and give advance warning of deals being planned by other competitors.

(5) Secretly buying up or creating new oil-related companies, such as pipeline and engineering firms, that appeared be independent operators but which gave Standard Oil hidden rebates.

(6) Dispatching thugs who used threats and physical violence to break up the operations of competitors who could not otherwise be persuaded.

By 1873 Standard Oil had acquired about 80 percent of the refining capacity in Cleveland, which constituted roughly one third of the U.S. total. The stock market crash in September of that year triggered a recession that lasted for six years, and Standard Oil quickly took advantage of the situation to absorb refineries in Pennsylvania’s oil region, Pittsburgh, Philadelphia and New York. By 1878 Rockefeller had attained control of nearly 90 percent of the oil refined in the U.S., and shortly thereafter he had gained control of most of the oil marketing facilities in the U.S.

Standard Oil initially focused on horizontal integration (i.e., at the same stage of production) by gaining control of other oil refineries. But gradually the integration also became vertical (i.e., extended to other stages of production and distribution), mainly by acquiring pipelines, railroad tank cars, terminal facilities and barrel manufacturing factories.

2 thoughts on “. . . and John D. Rockefeller

  1. Pingback: A Stunning Validation by Jeffrey Moussaieff Masson: The Assault on Truth, The Origins of Psychoanalysis « Let's Get Honest Blog

  2. Pingback: Private Equity Winds Changing their Tack? Private Equity = Government Policy, so Pay Attention! | Let's Get Honest! Blog

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