him. He was a slow learner but patient and persistent and, like J. P. Morgan and Jay Gould, exhibited a terrific head for math.
He invited Warden to come to Cleveland and inspect the Standard Oil books. When Warden later examined them, he was taken aback: Rockefeller could manufacture kerosene so inexpensively that he could sell below Warden’s production costs and earn a profit.
“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.”
One Cleveland society woman, a friend, told a story of sitting beside him on a streetcar when the conductor came to collect fares. When Rockefeller handed him a quarter, the conductor deducted two nickel fares, assuming he would pay for the lady, and gave him fifteen cents change. “My change is five cents short,” Rockefeller declared. “Why, no. I took out two fares and gave you back fifteen cents,” explained the conductor. “But I did not tell you to take out two fares,” Rockefeller retorted. “Let this be a lesson to you, and never assume that a passenger is paying for two people unless he says so.”
He once referred to himself as “a socialist-anarchist-communist-individualist-collectivist-cooperative-aristocratic-democrat”—and that was just for starters.
When he stepped down from Standard Oil, he was probably worth about $200 million—$3.5 billion today—whereas, thanks to the internal-combustion engine, his fortune soared to $1 billion by 1913—surely history’s most lucrative retirement, and one that must have softened the sting of press vituperation.
“You know, boys go to college and come back knowing everything about business and everything else.”
But nothing further was said. It was a vintage Rockefeller performance: The true lesson lay in what he did not say and what he did not do. Rockefeller sensed that his insecure son had castigated himself so unmercifully that bitter reproaches were superfluous.
In 1917, asked by B. C. Forbes to name the greatest businessman he had ever encountered, Rockefeller startled readers by skipping Flagler and Archbold—not to mention Henry Ford and Andrew Carnegie—and naming Frederick T. Gates.
A connoisseur of the good life, he loved cocktails, gambling, fast-trotting horses, hunting, fishing, opera, theater, and yachts. His Fifth Avenue mansion faced Alva Vanderbilt’s French limestone château, and he frequented her costume balls.
Rockefeller was fortunate to have applied his money at the precise moment that medical research matured as a discipline and offered unbounded opportunities. None of the titan’s other philanthropies was perhaps such an unqualified success. Bowing to a serviceable division of labor, Andrew Carnegie ceded medicine to Rockefeller. Once approached about building medical facilities, he smiled shrewdly and said, “That is Mr. Rockefeller’s specialty. Go see him.”
When history passes its final verdict on John D. Rockefeller, it may well be that his endowment of research will be recognized as a milestone in the progress of the race. For the first time, science was given its head; longer term experiment on a large scale has been made practicable, and those who undertake it are freed from the shadow of financial disaster. Science today owes as much to the rich men of generosity and discernment as the art of the Renaissance owes to the patronage of Popes and Princes. Of these rich men, John D. Rockefeller is the supreme type.37
A few weeks later, Gates weighed in with a letter that must rank as a seminal document in American philanthropy. It argued that a donor’s highest ideal should be to give birth to an institution that would then enjoy a life totally independent of him. Gates noted that many schools—technology, agriculture, forestry, and others—were still needed to complete the university but that the money for them would not issue from other sources so long as Rockefeller was the university’s patron.
“something bordering on the superhuman—perhaps the inhuman—in this unbroken, mathematical perfection of schedule. It was uncanny.”4
Rockefeller engaged in strenuous rituals of austerity, and he grimly sought to simplify his life and reduce his wants. 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.”
For Rockefeller, it was dogma that prices should reflect true market values, not the buyer’s ability to pay, and nothing upset him more than the notion that a rich man should pay a premium on his hard-earned wealth.
Nobody was more daunted by this prospect than Junior himself, who felt trapped in the iron cage of dynastic expectation.
n November 18, 1906, the federal government filed suit in Missouri to dissolve Standard Oil under the Sherman Antitrust Act, naming as defendants Standard Oil of New Jersey, sixty-five companies under its control, and a pantheon of chieftains, including John and William Rockefeller, Henry Flagler, Oliver Payne, John Archbold, and Henry Rogers. They were charged with monopolizing the oil industry and conspiring to restrain trade through a familiar litany of tactics: railroad rebates, the abuse of their pipeline monopoly, predatory pricing, industrial espionage, and the secret ownership of ostensible competitors.
Once again, the press found it hard to believe that this amiable old gent with his sudden memory lapses and fuzzy logic was the fearsome raptor of Standard Oil. “Now that Mr. Rockefeller has emerged from his seclusion and is seen in the fierce light of a public inquiry, he appears no such monster as the public fancy has painted,” observed one paper. “He is affable to the point of cordiality.”40 Said another: “If Rockefeller has been playing a part, he has done so in a way that would do credit to Uriah Heep. If not, it is barely possible that the curious old man has been misrepresented … and that the world owes him an apology.”41 Perhaps if Rockefeller had made himself available at the beginning of his career as he now did at the end, he might not have been sitting in the witness stand.
Yet as chief executive of Standard Oil, Archbold stooped to a far rougher style of combat than Rockefeller had, and he freely bribed elected officials. Rockefeller, of course, was no stranger to such skulduggery, but he engaged in payoffs more reluctantly, if only because he so disliked politicians. Archbold had fewer scruples, and as government regulation intruded deeper into business, he decided that the trust needed permanent representation in the U.S. House and Senate.
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.
Thanks to this staggering appreciation, Rockefeller’s net worth reached a lifetime peak of $900 million in 1913—more than $13 billion in 1996 dollars. (To put that $900 million in perspective, the total accumulated national debt of the United States stood at $1.2 billion that year, equivalent to 3 percent of the gross national product; federal spending was a mere $715 million.)
Beyond his talents as a businessman, Rockefeller benefited from a large dollop of luck in his life, making more money in retirement than on the job.
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.
Rockefeller categorically denounced this innovation. “When a man has accumulated a sum of money, accumulated it within the law, the Government has no right to share in its earnings,” he complained to a reporter in 1914.17 As taxes became steeper and more progressive in the coming decades, it became a daunting task for any businessman to amass the money that Rockefeller had earned in a laissez-faire world devoid of antitrust laws.
Through its catalytic role, the Rockefeller Foundation played an integral part in the rise of American medicine to the pinnacle of world leadership.
Of the $530 million he gave away during his lifetime, $450 million went directly or indirectly into medicine. He had dealt a mortal blow to the primitive world of nineteenth-century medicine in which patent-medicine vendors such as Doc Rockefeller had flourished. He had also effected a revolution in philanthropy perhaps no less far-reaching than his business innovations. Before Rockefeller came along, rich benefactors had tended to promote pet institutions (symphony orchestras, art museums, or schools) or to bequeath buildings (hospitals, dormitories, orphanages) that bore their names and attested to their magnanimity. Rockefeller’s philanthropy was more oriented toward the creation of knowledge, and if it seemed more impersonal, it was also far more pervasive in its effect.
It is difficult to assess whether Ivy Lee had a beneficial effect upon the Rockefellers. His instructions to Junior sounded commendable enough: “Tell the truth, because sooner or later the public will find out anyway. And if the public doesn’t like what you are doing, change your policies and bring them into line with what people want.”50 Excellent advice, to be sure, but did it reflect Lee’s own behavior?
Edith’s liaisons managed to skirt scandal until a young Austrian named Edwin Krenn came onto the scene. A man of shadowy antecedents—Edith described him as the son of a famous European painter—he was short, blond, chubby, and always foppishly attired. When he arrived in Switzerland and entered analysis with Edith, he did not have any apparent means of support. Edith not only financed him but helped him to obtain Swiss citizenship. She was convinced that he was an architect of genius, and they became constant companions, driving together in the afternoons, attending theater in the evening, then retiring to her hotel suite for private dinners. According to Emile Ammann, Jung warned her of the scandal that might erupt from this love affair.
Edith dear, the financial question, while important, is not important when compared to the other question—the great question of your being present with your children. And how sadly they need your presence, and how very solicitous we are all for them! In this connection I may add that you could have been a great comfort and help to your mother and me. But this sinks into insignificance also, when we consider the dear children.… I am not lecturing. I am not scolding. I love you, Edith dear; and I am still hoping.
Still persuaded of her business acumen, Edith started a real-estate venture in late 1923, headed by her European companions and called Krenn and Dato. Once again, she proved as gullible and impulsive as Rockefeller had feared. To float the venture, Edith deposited $5.23 million ($45 million in today’s money) in an entity called the Edith Rockefeller McCormick Trust, naming Krenn and Dato as cotrustees. Seeing Edith about to step off another cliff, Rockefeller wrote to her, “I shall expect later on that you will have great disappointment in connection with these real estate transactions, and it would give us all great humiliation to find a duplication of the experience which you have already had in your business adventures with foreigners.”
“It is conceded today that the whole performance from beginning to end was one of the most remarkable, if not indeed the most remarkable, in the annals of commercial undertakings of all times.”30 Never once in the three-year interview did Rockefeller refer to the 1911 dismemberment, and he bizarrely talked of Standard Oil as if the trust still existed.
I have never squandered money on horses, yachts, automobiles or other foolish extravagances. A fondness for these porcelains is my only hobby—the only thing on which I have cared to spend money. I have found their study a great recreation and diversion, and I have become very fond of them. This hobby, while a costly one, is quiet and unostentatious and not sensational.
“Dear Son: I am this day giving you $65,000,000 par value of United States Government First Liberty Loan 3½% bonds. Affectionately, Father.”
An unexceptional man thrust into exceptional circumstances, he accepted his fate with reluctance. As Frederick Gates said, “He would have preferred … to cut loose from his father’s fortune and make for himself like other men a wholly independent career. But he was an only son, the heir of colossal wealth, dedicated from his birth to overwhelming burdens, not to be evaded.”
approve of them.”38 Many things about modern art—including the sometimes garish colors, dreamlike imagery, and violent or distorted forms—disconcerted this inhibited man. “I am interested in beauty and by and large I do not find beauty in modern art,” Junior said, preferring the classic beauty of, say, Chinese porcelains.
Abby’s work gave the family an important presence in art patronage that it had largely lacked to date because of Senior’s conspicuous indifference to painting, inherited by his son.
“The 90 makes my 21 seem mighty small and insignificant,” he wrote his parents, “just like a little sapling standing by a mighty fir. But the sapling still has time to grow and develop and someday it might itself turn into a tree of some merit. Who knows?”