John D. Rockefeller



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John D. Rockefeller



John Davidson Rockefeller (July 8, 1839 – May 23, 1937) was an American capitalist most known for his role in the early oil and the founding of Standard Oil (ExxonMobil is the largest of its descendants). Through a number of widely-criticized business tactics, Rockefeller built Standard Oil into the largest oil refining business in the world, and was for a time himself the richest man in the United States—adjusting for inflation, some have measured him as the richest human being ever. Much of this wealth was then given away, resulting in his legacy as a great philanthropist.

Background:

John Davidson Rockefeller was born in Richford, New York. In 1853 his family moved to Cleveland, Ohio, where the family bought a house in Strongsville, near Cleveland. While he was a student he rented a room in the city and joined the Erie Street Baptist Church.

He left high school in 1855 to take a business course at Folsom Mercantile College. John D. Rockefeller, started out as a bookkeeper. Rockefeller was not paid until after he had worked there three months, when Hewitt gave him $50 (3.57 a week) and told him that his salary was being increased to $25 a month.

Standard Oil


By age 21 he was a partner in a wholesale business, and he soon decided to start an oil-refining company. By 1870 Rockefeller's Standard Oil Company was the country's largest oil refiner. Like Carnegie, Rockefeller used vertical integration(owning the businesses involved in each step of a manufacturing process) to improve production and profits. Standard Oil made its own barrels and controlled most of the pipelines, tank cars, and storage buildings it used. Many railroads offered lower rates to Standard Oil to attract its valuable shipping business. At times Rockefeller even got railroads to agree not to provide service to his competitors.

Rockefeller's company also used horizontal integration—owning all the businesses in a certain field. By 1880 he controlled some 90 percent of the oil-refining businesses in the United States. This level of control gave Rockefeller's companies a monopoly on the American oil-refining industry. Rockefeller used consolidation to cut his costs. He also formed a trust—a grouping together of a number of companies under one board of directors. To earn higher profits, trusts often tried to get rid of competition in their industry and to control production. These practices resulted in higher prices for buyers. Rockefeller explained, "The day of combination [trusts] is here to stay. Individualism has gone, never to return."


Monopoly


Standard Oil gradually gained control of 90% of the oil production in America, a monopoly. Rockefeller himself retired from active business in 1895, though he retained his title as president until 1911. By 1901, he was worth about $900 million and is believed to have been the world's richest man at the time. In 2001, it was estimated that in contemporary money Rockefeller would be worth $200 billion.

Philanthropy


On March 3, 1910 Rockefeller announced his retirement from managing his businesses and devoted his attention to philanthropy. By the time of his death he had given away an estimated $500 million (well over $5 billion in today's dollars), and his public image had become better. His gift of $5 million dollars helped found the Great Smoky Mountains National Park.


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