The Rockefeller name is one so deeply entrenched in different spheres across the United States that it is perhaps unlike any other legacy the world’s largest economy has ever known. From the oil industry and banking to Wall Street, higher education, medical research and the arts, the Rockefellers have had an unquestionable impact on the spheres in which they worked.
Today, there may still be residues of criticism surrounding the Rockefellers – certainly with regard to the methods that the first in the family, John Davinson Rockefeller (John), employed in order to become the world’s first billionaire – but it is impossible to deny the positive impression made by him, his son John Davinson Rockefeller Jr (John Jr), and his grandchildren Abby, John Davinson III (John III), Nelson, Laurance, Winthrop and David in the worlds of business, politics and philanthropy.
Following the passing of David Rockefeller – John’s youngest grandchild and the world’s oldest billionaire at the grand age of 101 – in March, World Finance takes a look at his family’s fascinating history and the legacy left by the Rockefellers.
The first Rockefeller
As with all great stories, this one starts with a great character. John was born into a poor family, and to this day there are any number of rumours surrounding the identity of his father: that he was a thief, a crook, a gambler, a peddler. In any case, struggling to make ends meet, the family moved from Richford, New York, to Cleveland, Ohio in search of better prospects when John was 14.
John Rockefeller said the rich man shouldn’t die rich, the rich man should die having done good things with the wealth he has created
Signs of ambition became evident from a young age as John, the second of six children, embarked on various business ventures during his teen years. At 16, he got his first job as an assistant bookkeeper for a merchant firm called Hewitt & Tuttle. John had a natural flair for the job and rose to the role of cashier and bookkeeper within a matter of months. After four years at Hewitt & Tuttle, John set out in pursuit of his own dreams; together with a partner, he founded a commission merchant company that dealt with meat, hay and grains. By the end of its first year, the business had grossed $450,000.
Sensing the oil boom that was soon to take the country by storm, John decided to instigate his next venture – one that would change history. With the rate of oil production in Pennsylvania accelerating, he opened a refinery near Pittsburgh in 1863. Within just two years, it had become the largest in the area.
In 1870, John and his business partners incorporated the Standard Oil Company. Owing much to the favourable economic conditions at the time and John’s talent at streamlining operations, profit margins at Standard Oil remained consistently high from its early days. Motivated by the company’s rapid growth, John began an aggressive takeover strategy that would propel the company into a league of its very own.
Within just two years, Standard Oil controlled almost all refineries in the Cleveland area. John’s next move involved forging partnerships with railroad companies in order to transport his oil as economically as possible, while also buying up pipelines and oil terminals. By owning nearly every aspect of the business, Standard Oil’s control of the industry tightened – the company even bought up land to prevent rivals from establishing their own transportation infrastructure.
“He was very, very effective in integrating the totality of oil – foremost its extraction, and then its transportation, and then its retail and whole selling”, said Professor Michael Cox, Emeritus Professor of International Relations at the London School of Economics. “So it made Standard Oil, which became this extraordinary corporation even by the end of the 19th century, almost a virtual monopoly in terms of oil in the US… Given the increasing importance of oil in the world and for the American economy, it gave the Rockefellers, and [John] in particular, an extraordinary position of power, and of course of great wealth accumulation.”
But as John’s wealth and power mushroomed, criticism grew in correlation, intensified further by the fact that the numerous divisions involved in his enterprise were all consolidated under Standard Oil, with John overseeing absolutely everything. Congress soon took note.
Cox told World Finance: “The critics thought that the methods John employed were deeply immoral, and also ran against something else – it was not just that they were pretty grim in terms of getting the outcomes you wanted, some critics in Congress suggested very strongly that by creating an effective monopoly, [John] actually undermined competition in the United States as well. So his monopolistic practices were viewed by many of his critics as not only rather strong arm, but they also ended up creating a monopoly, and a monopoly was basically bad for America, and bad for American capitalism.”
John Jr was embroiled in controversy, but continued
his philanthropic work, rebuilding his reputation one good deed at a time
In response, Congress introduced the Sherman Antitrust Act in 1890, making any attempt to monopolise commerce in the US illegal. By 1892, the Ohio Supreme Court had ruled Standard Oil was in violation of state law, causing John to dissolve the company and hand over the management of each subsidiary.
Nonetheless, the company’s hierarchy remained intact, with control of all divisions staying in the hands of a board run by John himself. What’s more, in an audacious move nine years later, he reassembled the various companies into one holding group. Congress re-intervened in 1911, forcing it to dissolve once more.
“For those who are defenders of masses of wealth, he just did what every other businessman did, but maybe slightly on the ruthless side”, said Cox. “Others would say he was very ruthless, as were the methods he used. But again, in the context of the late 19th century, everybody was doing it; he just did it rather more successfully than everybody else. It was the age of the robber baron.
“It was in an age of what you might call Wild West frontier methods in order to achieve the outcomes you wanted… It was an extraordinary period of economic growth and the transformation of America, which made it into a world economic power, even before the beginning of the First World War. So I’d see it as part of that larger dynamic of how America became the America it was to become.”
As well known as John is for his part in helping to create the great American economy, he is perhaps just as famous for his philanthropic work. Among the most notable instances of such efforts was his contribution to the creation of the University of Chicago. Cox explained: “He was basically the funder – it was his money in the 1890s that laid the basis for the creation of the great University of Chicago.”
The estimated net worth of the Rockefeller family today
John D Rockefeller’s net worth today if adjusted for inflation
The number of heirs to the Rockefeller fortune
The age at which David died, making him the world’s oldest billionaire
The value of Chase Bank when David Rockefeller joined in 1946
value in assets by 1981
John then went on to found the Rockefeller Institute of Medical Research (now called Rockefeller University) to spur the study of disease and its prevention. Numerous techniques born from the institution have since transformed biochemistry and medicine, including the treatment of pneumonia and spinal meningitis.
Another momentous act came in 1902, when John established the General Education Board in a bid to support education in the US “regardless of race, sex or creed”, with a specific emphasis on promoting higher education. Then, of course, came the Rockefeller Foundation, an institution John established in 1913 to “promote the wellbeing of mankind throughout the world”. It has done exactly that, donating millions to promote education, public health, scientific advancement, the arts, social research and more. The list of organisations and causes helped by the foundation is nothing short of astounding.
Despite the criticisms that enshrouded John’s career – including various accusations of tax evasion – his habit of charitable giving was one that started long before he became rich. From his very first paycheque, John began making regular donations to his local Baptist church, a Sunday school and an African-American church. It is therefore hard to deny it was his religious beliefs (rather than, say, a quest to elude taxation) that
drove his altruism.
“Maybe we live in such a secular age that we don’t understand the kind of Christianity that he adhered to”, Cox explained. “Let’s put it rather crudely: you earn $10, you give away your first three, and that started very early in his life as a young man, as he was beginning to build up his fortune. I think he genuinely did believe that it was the duty of the wealthy man in the Christian sense to disperse his fortune – and in useful ways – to help others.
“He embodied what many people would call the prime virtues of Protestantism – you know, hard work, getting up early, only having one wife, a standard family, religious, and also with a strong sense of philanthropy. He talked about this quite a lot: that the rich man shouldn’t die rich, the rich man should die having done good things with the wealth that he has created.”
Down the line
Born on January 29, 1874, John Jr was to follow in his father’s footsteps and make his own sizeable mark upon the world. Raised in Cleveland alongside his three sisters, John Jr was little fazed by his father’s vast wealth. After graduating from Brown University, he worked at the Standard Oil headquarters during a time of considerable upheaval. Consequently, feeling disenchanted, John Jr took a leap and left the business world behind to focus solely on philanthropy.
Despite his dedication to altruism, the oft-changeable tide of public opinion began to turn in 1913 when around 9,000 coal miners working for the Rockefeller-owned Colorado Fuel and Iron Company decided to strike, demanding better wages, hours and accommodation. The affair soon turned violent, with workers’ families evicted from their homes and forced to live in makeshift tents during a harsh winter. By 1914, tragedy struck as more than 40 people, including 11 children, were shot and killed by private security forces.
Blame was placed on John Jr; slated by the newspapers, the heir soon found himself in front of Congress, and the Rockefeller name suffered perhaps its biggest blow. For years after, John Jr was embroiled in controversy, but continued his philanthropic work with gusto, focusing on rebuilding his reputation one good deed at a time. Some such deeds include creating the world famous Rockefeller Centre, donating the land that would later be transformed into the United Nations headquarters, and restoring Colonial Williamsburg. However, in addition to making incredibly generous contributions to various causes, perhaps John Jr’s most profound imprint on the world came through the work of his children.
A family like no other
While Abby Rockefeller pursued charitable work out of the public limelight, her five brothers each carved a reputation in their own right, weaving through the interconnected spheres of business, politics and philanthropy in a manner unlike that of any family in US history.
The eldest of the brothers, John III, devoted his life to foreign affairs and philanthropy. Inspired by a trip around the world following his graduation, John III developed a deep interest in Asia that resulted in the creation of the Asia Society and the Council on Economic and Cultural Affairs. John III was also responsible for the Population Council, the first such organisation to bring issues of overpopulation to the fore, and the Lincoln Centre, now one of the world’s leading performing arts centres. John III also founded and supported numerous NGOs before his untimely death in a car crash in 1978.
Nelson was perhaps the most high profile of the siblings. Despite his father’s efforts to instil in him the values of restraint and modesty, Nelson always had grand plans and spoke about becoming president from childhood. After a stint at Chase Manhattan Bank, he went on to lead the development of the Rockefeller Centre through a tumultuous economic period, eventually serving as its president. Nelson then entered politics, transforming the New York skyline through the numerous construction projects he instigated while serving as Governor of New York for four terms between 1953 and 1973. He then served as Vice President of the US under President Gerald Ford between 1974 and 1977.
Laurance also had a big impact on New York, but via Wall Street, as a pioneer in venture capitalism. During his decades on the New York Stock Exchange, Laurance invested in hundreds of start-ups that focused on electronics, aviation, computers and biotechnology. Laurance had a talent for sensing the next big thing, as can be seen in his early investments in Apple and Intel. He was also a keen environmentalist and was instrumental in establishing and expanding numerous national parks throughout the US, from Wyoming to Hawaii.
Lessons in modesty worked for Winthrop, who was unwilling to merely waltz his way to the top based on his family name alone. Instead, he started his career as an apprentice working in his family’s oilfields. After the Second World War, Winthrop went into politics and became famous for the profound cultural and economic change he propelled in the state of Arkansas while serving as governor between 1967 and 1971. He introduced the state’s first minimum wage and the freedom of information law, and tightened insurance legislation, to name but a few examples.
The youngest brother, David, was a powerful force on Wall Street, as well as an incredibly influential individual who traversed the highest echelons of society. After graduating from the London School of Economics, David went on to gain a PhD from the University of Chicago in 1940. David’s first job, which involved writing letters for the Mayor of New York, came to a grinding halt – like so many others – as a result of the Second World War. Choosing to forgo the use of his family name, David enlisted as a private, rising to the rank of captain during his service in the US Army.
The Rockefellers changed the nature of doing business, establishing efficiency as the baseline and waste as anathema for any enterprise
After the war, David joined the company in which he would stay for the entirety of his professional career: Chase Manhattan Bank. Given that his uncle Winthrop Aldrich was chairman of the bank and his father and grandfather were its largest shareholders, David was unsurprisingly deemed to be nothing more than a spoiled rich kid upon arrival. However, he soon proved his worth, while his habit of getting the public subway to work every day helped to chip away at the spoiled status. His hard work saw him make his own way to the top, becoming co-CEO in 1960 and sole CEO in 1969.
During his time at the helm, David used his worldwide network to increase the bank’s foreign branches from 11 to 73, with Chase Bank becoming the first western bank to open branches in China and Russia, securing its position as a truly global institution. David was also responsible for re-energising the bank from within, creating HR, planning and marketing departments with the help of none other than the ‘father of management’, Peter Drucker. Though the 1970s proved difficult, David held the role of CEO until retiring in 1981.
When David joined Chase Bank in 1946, it was a $4.8bn institution. By 1981, it was worth $76.2bn in assets. “Well, he was the banker of all bankers”, Cox commented. As a result of two vast mergers, the bank is today the biggest in the US.
Changing the world
There are questions to be asked about how one man – or family – can possibly come to accumulate such incredible wealth as that of the Rockefellers. And yes, there are aspects of John’s strategy that were aggressive and uncompetitive. However, this approach to making mergers and acquisitions is one that has since become a standard business practice – he was just the first to do it with such success. Through his willingness to do things differently, John laid the groundwork for an industry that is integral to the global economy, and an area of commerce that has spurred the development and innovation of countless others.
At a time when oil was expensive and much of it was wasted, John made the production process far more efficient and cost effective, thereby making kerosene affordable for the masses – so much so that it soon overtook whale and coal oil (and even electricity for some time) as fuels, lighting up America street by street. John’s resourcefulness also prompted the development of some 300 oil by-products, ranging from paints and lubricating oils to anaesthetics. In this respect, he changed the nature of doing business, establishing efficiency as the baseline and waste as
anathema for any enterprise.
“He didn’t come from the establishment. He was in very many ways – I suppose this makes the story rather heroic – a self-made man”, said Cox. Indeed, John was the archetypal embodiment of the American Dream. And while he revolutionised business strategy and the oil industry, his grandsons, specifically Laurance and David, went on to shape the US financial market through their keen sense of forward thinking.
More remarkable still is the impact the Rockefellers had on education, medical research, equality, social science and the arts. Their support has trickled down to so many different organisations, helping millions upon millions along the way. John alone gave away $540m throughout his lifetime, but the true cost of the family’s ongoing philanthropy is simply unknown.
Key events in the Rockefeller family history:
1839: John D Rockefeller was born on a farm in Richford, New York on July 8
1859: With $2,000 in funds, John formed a partnership with Maurice B Clark
1863: The two partners entered the oil business, creating a company called Andrews, Clark & Co
1870: The Standard Oil Company was created with a capital of $1m
1874: John Rockefeller’s son, John Jr, was born in Cleveland, Ohio
1890: John’s donation of $600,000 helped fund the establishment of the University of Chicago
1901: The Rockefeller Institute for Medical Research (now Rockefeller University) was founded
1906: John III, John Jr’s son, was born in New York City on March 21
1911: The Supreme Court ordered the dissolution of the Standard Oil Company
1915: David Rockefeller, the youngest child of John Jr, was born in New York City
1946: David joined Chase Bank as an assistant manager in the foreign banking department
1969: David was named Chairman of the Board of Directors and CEO of Chase Manhattan Bank
1994: The David Rockefeller Centre for Latin American Studies opened at Harvard University
2000: The Rockefeller family’s ownership of Rockefeller Centre ended after being sold for $1.85bn
2017: David died at the age of 101 in Upstate New York with a net worth of $3.3bn