Note: Sample below may appear distorted but all corresponding word document files contain proper formattingExcerpt from Term Paper:
B. Jennings - 10% (Poole 2000).
Rockefeller believed that because entry costs were so low in oil drilling and refining, the market was glutted with crude oil with high levels of waste. Accordingly, the theory of free competition did not work well when there was such a mix of large, medium and small firms, believing that the weak ones drove prices below production costs, thus hurting even large firms (Poole 2000). His solution was a market with a few vertically integrated firms, "in effect an oligopolistic market," which is what other industrial sectors eventually evolved into (Poole 2000).
Keith Poole, Professor of Political Science at the University of Houston, writes, "What makes oil stand out is that it happened by design - as the result of a plan formulated by a single person - John D. Rockefeller" (Poole 2000). It was during 1871, that Rockefeller devised his plan for consolidating all the refining firms into one organization, and while there are no written records, Rockefeller and Flagler both admitted some thirty years later that this was indeed when they designed their master plan (Poole 2000). Moreover, it was in 1871 when all the major banks in Cleveland joined the Standard Oil organization and loaned Rockefeller and Flagler whatever they needed to expand (Poole 2000).
By December 1871, Rockefeller and Flagler began buying up all their competitors in Cleveland, beginning with the strongest refineries first. Rockefeller believed that by buying the weak ones first, he would later be confronted with high prices and stiffer resistance, thus he first approached the strongest ones first (Poole 2000). Rockefeller's technique was always the same:
The merger would be effected by an increase in the capitalization of The Standard Oil. The rival refinery would be appraised and the owners would be given Standard Oil stock in proportion to the value of their property and good will and they would be made partners in Standard Oil. The more talented owners would also be brought into the Standard Oil management.
If they insisted upon cash they received it (Poole 2000).
Although some owners later complained that Rockefeller had treated them unfairly, the evidence is overwhelming that they were all paid fair, even generous, prices for their property, and if they had been smart enough to take Standard Oil stock, they would have ended up very rich (Poole 2000).
Rockefeller moved swiftly, and by spring of 1872, he had bought and/or merged with almost all the refineries in Cleveland. The poorly constructed refineries were dismantled, and the better one were upgraded to Rockefeller's standards (Poole 2000).
Jabez A. Bostwick was brought into the company along with his oil refineries on Long Island and on New York Harbor, and in 1873, he acquired Devoe Manufacturing Company on Long Island, and Chess, Carley and its distribution system in Louisville, Kentucky (Poole 2000). By 1874, Standard started building its own pipeline system using Bostwick and Company (Poole 2000).
Although the teamsters, who drove commercial horse-drawn wagons, fought the pipelines, they lost simply because it was cheaper and easier to send the crude through pipes than wagons (Poole 2000). The next logical step was to extend the pipelines directly to the refineries, thus Rockefeller made a deal with the Erie Railroad, gaining control of important terminal facilities in New York harbor in exchange for shipping half of Standard's oil on the Erie (Poole 2000). They then expanded into Pennsylvania and gained control of the Imperial Refinery, bringing J.J. Vandergrift into the Standard's management, and when two large refineries in Titusville joined Standard, John Archbold was also brought into management (Poole 2000). Standard then expanded into Pittsburgh, merging with Warden, Frew and Company, and Lockhard, Frew and Company, a move which gave them half of the refining capacity of Pittsburgh (Poole 2000). They then bought the largest refinery in Philadelphia. Standard continued buying more pipelines and by 1877 had merged them all into the United Pipe Lines. They negotiated a deal with the railroads: the Pennsylvania Railroad would carry 51% of Standard's shipments; the Erie - 20%; the New York Central - 20%; and the Baltimore and Ohio - 9% (Poole 2000).
By 1879, the Standard Oil Company was responsible for roughly 90% of the refining in the United States, with about 70% being exported overseas. Rockefeller was only 40 years old, and the business was so large and complex that he only dealt with major problems and the large outlines of affairs (Poole 2000). Tidewater Pipe-Line Company was his only serious competitor, with approximately 10% of the market in 1888 (Poole 2000).
In 1882, the Standard Oil Trust was formed, with a Board of Trustees established and all the Standard holdings placed in its hands (Poole 2000). Each stockholder received 20 Trust certificates for each share of Standard Oil stock, and all the profits of the companies were sent to the nine trustees who determined the dividends. The trustees also elected the directors and officers of each of the component companies (Poole 2000). Although the true value of the Trust was roughly $200 million, it was conservatively valued at $70 million (Poole 2000). Of the 35,000 shares, the nine Trustees controlled 23,314 and Rockefeller held 9,585 shares (Poole 2000). The Trust was formally dissolved in 1892 when the Attorney General of Ohio brought suit against the Trust.
By 1904, roughly 80% of towns throughout the United States were served by Standard Oil carts that brought various products to businesses and homes. Its determination to dominate even the smallest market is cited as the main reason Standard Oil was so disliked by the public. The company was aggressive and tried to force all grocery and hardware stores to sell only Standard products, such as kerosene and lubricants (Poole 2000). This policy not only made Standard Oil unpopular, but it increased its vulnerability to political attack (Poole 2000).
During the early 1890's, Rockefeller suffered a nervous breakdown from overwork, resulting in the loss of all of his hair, including his eyebrows. His wealth had increased to such an extent that he hired Frederick T. Gates in 1891 to manage his fortune. In 1897, Rockefeller retired, and left the running of Standard Oil to John Archbold (Poole 2000). His wealth peaked in 1912 at approximately $900 million, although by that time he had already given away hundreds of millions of dollars. In 1897, his son John Jr., joined Gates in the full time management of his father's fortune (Poole 2000).
Rockefeller is responsible for establishing the University of Chicago, by donating some $75 million by 1932. He founded the Rockefeller Institute of Medical Research with donations totaling some $50 million by the 1930's (Poole 2000). In 1903, he founded the General Education Board, later called the Rockefeller Foundation, which helped establish high schools throughout the South by offering free professional advice on education instruction, and in 1919, donated $50 to the Board to raise academic salaries (Poole 2000). And when the Rockefeller Foundation was officially established in 1913, some $235 million was transferred to it by 1929 (Poole 2000). In 1909, the Rockefeller Sanitary Commission was established to help eradicate hookworm in the South (Poole 2000).
John D. Rockefeller was a deeply religious man. In his 1998 book, Titan: The Life of John D. Rockefeller, Sr., Ron Chernow writes that Rockefeller never wavered from his belief that his career was divinely favored and asserted, "God gave me my money" (Chernow 1998). Rockefeller believed that God has singled him out because of "his own adherence to the doctrine of stewardship, the notion of the wealthy man as a mere instrument of God, a temporary trustee of his money, who devoted it to good causes" (Chernow 1998). When he was in his seventies, he said, "It has seemed as if I was favored and got increase because the Lord knew that I was going to turn around and give it back" (Chernow 1998). Rockefeller believe that the power to make money was a gift from God, just as others have talents in music and the arts, and that it was his duty to make money and use it for the good of his fellow man (Chernow 1998). Although many claim he was a ruthless businessman, none can argue with his generosity. By the time of his death on May 23, 1937, he had given the majority of his property to his philanthropies and heirs. At his death, his estate totaled just over $26 million (Poole 2000).
For all his wealth, Rockefeller never flaunted his riches. In fact, Standard Oil started out in a modest suite of offices in a four-story building known as the Cushing Block on the Public Square (Chernow 1998). The office he shared with Flagler was somber and austere, furnished with funereal dignity with a black leather couch and four black walnut chairs, and a fireplace for warmth in the winter (Chernow 1998). Chernow writes, "Rockefeller never allowed his office decor to flaunt the prosperity of his business, lest it arouse…[continue]
"John D Rockefeller Sr John" (2007, January 02) Retrieved October 28, 2016, from http://www.paperdue.com/essay/john-d-rockefeller-sr-40758
"John D Rockefeller Sr John" 02 January 2007. Web.28 October. 2016. <http://www.paperdue.com/essay/john-d-rockefeller-sr-40758>
"John D Rockefeller Sr John", 02 January 2007, Accessed.28 October. 2016, http://www.paperdue.com/essay/john-d-rockefeller-sr-40758
Frankfurter landed on the Harvard law faculty, thanks to a financial contribution to Harvard by Felix Warburg and Paul Warburg..." (Viereck, 1932; as cited by Mullins, 1984) In the "Federal Reserve Directors: A Study of Corporate and Banking Influence" as cited by The World Newsstand publication is that chart one "...reveals the linear connection between the Rothschilds and the Bank of England, and the London banking houses which ultimately control