Life of John D. Rockefeller and his legacy - Term Paper Example

?Life of John D. Rockefeller and his legacy The life of John Davies Rockefeller (1839-1937) has been continuously celebrated in American history. This is because his life has been colorful and controversial at the same time. It is also celebrated because his existence bequeathed a precious legacy of philanthropy that benefitted a lot of people in America and abroad. In the hearts of many Americans, his life is seen as worth emulating primarily because he was one of the first to get very rich during the years when a lot of people were poor and when it was probably difficult to earn a lot of money as opportunities were limited, there was no internet, and no global quick transactions that can make one rich overnight. One may criticize John D. Rockefeller for many things, like being one of the first to have started a monopoly or oligopoly businesses, yet when his services or assistance to communities and nations are taken into accounted, one can also say that his legacy of sustained philanthropy is probably unmatched for longevity and volume of assistance of assistance rendered. Yet not only is his own life is criticized for his role in history but the role of his descendants. John D. Rockefeller’s Standard Oil John D. Rockefeller Sr. , former school dropout and who became perhaps the richest person during his time, is the Rockefeller patriarch or the seed that produced other Rockefellers of great significance and who have equally created their own legacy by sustaining the legacy of John D. Rockefeller Sr. (PBS, 2000). The other Rockefellers who have contributed their important legacies or who have sustained the John D. Rockefeller Sr. Legacy are John D. Rockefeller, Jr. (1874-1960), son of John D. Rockefeller, Sr., and the Rockefeller brothers John III (1906-78), Nelson (1908-1979), Laurance (1910-2004), Winthrop (1912-1973), and David Rockefeller (1915-?), sons of John D. Rockefeller, Jr. The patriarch was “twenty-three years old and already a success in his profitable commission business when he decided to risk $4,000 in a speculative oil refinery operation in Cleveland” (Armentano, 1981, p. 58). This was probably in 1862. When John D. Rockefeller began his business, both the Petroleum industry and the Standard Oil Company were “inchoate” (Montague, 1904, p. 4). However, according to Armentano (1981, p. 58), “the firm quickly prospered under the technical direction of Samuel Andrews, and a second refinery was constructed in 1866.” In a short while, “Maurice Clark, one of the original partners in the firm, was bought out (for $72,500), and Rockefeller brought in his brother William for entrepreneurial know-how and his shrewd and wealthy friend, Henry Flagler, for additional capital” (Armentano, 1981, p. 58). It was only in 1868, however, that John D. Rockefeller deployed his “complete and undivided attention” to the petroleum business (Armentano, 1981, p. 58). Armentano (1981, p 58) asserted that “the firm of Rockefeller, Andrews, and Flagler prospered quickly in the intensely competitive industry by the economic excellence of its entire operations.” The firm implemented a business that is relatively unique in the industry during the period. Armentano (1981, p. 58) revealed that “instead of buying oil from jobbers, they made the jobbers’ profit by sending their own purchasing men into the oil region.” Further, “they made their own sulfuric acid, their own barrels, their own lumber, their own wagons, and their own glue” (Armentano, 1981, p. 58). Armentano documented that that firm “kept minute and accurate records of ever item from rivets to barrel bungs” (1981, p. 58). In short, what Armentano has tried to narrate is that the firm organized by John D. Rockefeller Sr. implemented vertical integration as well as good management practices. Breakup of Standard Oil and Development Larson (1969) explained that from 1882 to 1950, the Standard Oil Company founded by John D. Rockefeller had been keen on vertical integration. Luck and shrewdness mattered but the oil firm practiced good business strategy and management. One important legacy that John D. Rockefeller Sr. has established is that for philanthropy to be viable, the philanthropy must be built on a business empire that has good business strategy and management. Allen (1976) reported that John D. Rockefeller had considered competition as a “sin” and indicated the latter had been keen on building a monopoly. Tarbell (1904) had documented that as early as 1872, the Standard Oil Company led by John D. Rockeller had been laying the foundations of a trust, something which has been the subject of United States anti-trust laws from late 1800s to early 1900s (Federal Trade Commission, 2008). Antitrust laws are laws aimed at preventing the control of industry by one or only a few companies. Josephson (1952) documented that Tarbell narrated that John D. Rockefeller had even hired Mexican brigands to put on fire his competitors’ oil wells. Among the anti-trust laws that were formulated from the late 19th century to the early years of the 20th century include the Sherman Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914 (Federal Trade Commission, 2008). The Sherman Act prohibited competitors “to make agreements with each other that would limit competition” (Federal Trade Commission, 2008, p. 1). Under the Sherman Act, firms are prevented to commit price fixing or making an agreement on the price of the product in the market or else they will be fined heavily under the law (Federal Trade Commission, 2008). The Sherman Act responded to the situation that as firms were being broken up, the firms found a way to evade the penalties of the Sherman Act by forming mergers: the Sherman Act stopped mergers or acquisitions that can stifle competition (Federal Trade Commission, 2008). Under the Federal Act of 1914, a federal commission was established “to investigate and stop unfair methods of competition and deceptive practices” (Federal Trade Commission, 2008, p. 1). Kovacic and Sherman (2000) added that another important law of the early 20th century is the Clayton Act of 1914. The Clayton Act of 1914 “reduced judicial discretion by specifically prohibiting certain tying arrangements, exclusive dealing agreements, interlocking directorates, and mergers achieved by purchasing stock” (Kovacic and Shapiro, 2000, p. 46). However, mergers continued to be built even after the Clayton Act of 1914. Based on the anti-trust laws, the United States had been filing several anti-trust cases against several firms from the later 19th century to the early part of the 20th century (Kovacic & Shapiro, 2000). The Standard Oil trust was one of the two most famous trusts or “monopolies that controlled the supply of their product----as well as the price” (Federal Trade Commission, 2008, p. 1). In the U.S. Supreme Court decision of 1911 on the Standard Oil Company, “the Court treated Standard’s 90 percent share of refinery output as proof of monopoly” (Kovacic and Shapiro, 2000, p. 45). Kovacic and Shapiro (2000, p. 45) reported that from thereon, succeeding cases “would use high market share as proxies for monopoly power.” The Supreme Court decision also recorded how Rockefeller’s Standard Oil exercised her power as a monopoly. The U.S. Supreme Court 1911 decision ruled that “Standard Oil’s selective, below-cost price cuts and buyouts of rivals illegally created and maintained the firm’s dominance” (Kovacic and Shapiro, 2000, p. 45). In short, the U.S. Supreme Court decision provided a glimpse on how the Rockefellers achieved business success and the associated fame or notoriety that went with the success. As a result, “in 1911, the dissolution of the Standard Oil Company was ordered by the Supreme Court” (Josephson, 1952, p. 68). Kovacic and Shapiro (2000, p. 45) reported that “despite Standard’s dire (and unfulfilled) prediction of industrial collapse, the Court broke the firm into 34 parts.” The decision was the era’s best known U.S. Supreme Court decision (Kovacic and Shapiro, 2000). Yet, Josephson (1952) reported that as of 1915, Standard Oil continued to dominate the oil industry by controlling 1/3 of oil production. Josephson (1952) reported that the Rockefeller and Standard Oil expanded overseas during the 1920s, possibly as a response to the anti-trust laws in the United States. Standard Oil continued to grow and allied itself with the Royal Dutch and Shell in 1925 and on that year “even proposed the purchase of the entire output of all the Russian fields for a period of three to five years” (Josephson, 1952, p. 212). Josephson also reported several dirty tricks committed allegedly by the Rockefellers but are not reported in this work because of a lack of corroborating reliable materials that are immediately accessible. Years later, locum (2007, p. 412) would report that the Standard Oil Trust has been rising again because of “lax regulatory oversight.” Related to this, Slocum (2007, p. 414) reported that “contrary to some public opinion, oil prices are not set by the Organization of Petroleum Exporting Countries (OPEC); rather prices are determined by the action of investment banks, hedge funds and oil company energy traders in the energy markets.” Slocum (2007, p. 414) added that “historically, most crude oil prices has been purchased through either fixed-term contracts or on the ‘spot’ market.” Yet, at the same time, despite the title of Slocum’s work as “Standard Oil Rises Again,” there is nothing in Slocum (2007) report that would directly suggest that Rockefellers continue to play a dominant role in the 21st century world oil industry even if indeed western oil companies are the ones calling the shots in the price and output of oil instead of the OPEC. Of course, it is highly likely that the stockholdings of the Rockefellers in the oil industry has remained large even if they are relatively invisible in their role in the oil industry compared to their more visible roles in the past. Nevertheless, one can argue that the current image of the oil industry reflects a legacy of the oil trust which at least the earlier generations of Rockefeller had sought. Slocum (2007, p. 431) reported that “mergers between giant oil companies---such as Exxon and Mobile, Chevron and Texaco, Conoco and Phillips---have resulted in just a few companies controlling a significant amount of America’s gasoline.” Slocum (2007, p. 432) narrated that although the U.S. Government Accountability Office had revealed that “over 2,600 mergers in the United States petroleum industry have been approved since the 1990s,” the “mergers between giant oil companies---such as Exxon and Mobile, Chevron and Texaco, Conoco and Phillips---resulted in only a few companies controlling a significant amount of America’s gasoline, squelching competition.” Slocum (2007, p. 433) pointed out that five largest oil companies operating in America are controlling the world’s oil industry and “consumers are paying more at the pump than they would if they had access to competitive markets.” It is not immediately possible to confirm the Rockefeller interest in the oil industry today (as stated earlier, five oil firms are dominating the industry) but there are several indications of the dominance or at least of the significant investments of the Rockefellers in the oil industry. First, several news reports have indicated that the Rockefellers continue to play an influential role in Exxon, one of the firms identified as a major player in the industry through the merger Exxon and Mobile. Second, the Rockefeller Organization (2000) through a website known as the http://johndrockefeller.org/ identified that some of the 34 successor firms of the Standard Oil with the 1911 breakup include the “Continental Oil, which became Conoco, now part of ConocoPhillips; Standard of Indiana, which became Amoco, now part of BP; Standard of California, which became Chevron; Standard of New Jersey, which became Esso (and later, Exxon), now part of ExxonMobil; Standard of New York, which became Mobil, now part of ExxonMobil; and Standard of Ohio, which became Sohio, now part of BP.” According to the Rockefeller Organization (2000), “Rockefeller who had rarely sold shares, owned substantial stakes in all of them.” At least three of the largest oil firms we have earlier identified are among the successor firms of the original 34 successor firms of Standard Oil, the oil company built by John D. Rockefeller Sr. Rockefeller Philanthropy and Continuing Legacy Based on the official statements of the Rockefeller Foundation (2012a), “John Davison Rockefeller (1839-1937) embraced philanthropy early in life.” During his teenage years, John Davison Rockefeller “was regularly donating money from his first job to his Sunday school and other activities of his Baptist church” (Rockefeller Foundation, 2012a). The Rockefeller Foundation (2012a) noted that in response to an 1889 essay of Andrew Carnegie, John D. Rockefeller wrote, “The time will come when men of wealth will more generally be willing to use it for the good of others” and John D. Rockefeller wrote the piece during the year that he “began his own philanthropic work in earnest, making the first of what would become $35 million in gifts, over a period of two decades to found the University of Chicago.” However, according to the Rockefeller Foundation (2012a), the foundation itself began in 1913 “with the founder’s 39-year old son, John D. Rockefeller Jr., as its president.” During that time, the first donation of the foundation was for the American Red Cross to buy a property for its head office in Washington, D.C. It must be pointed out however that Rockefeller support through foundations started much earlier or in 1909 with the Rockefeller Sanitary Commission for Eradication of Hookworm Disease which John D. Rockefeller Sr. endowed with a US$ 1 million grant (Brown, 1976). When the Rockefeller Foundation was established, “the United States was 137 years old and President Woodrow Wilson was President” (Rockefeller Foundation, 2012a). By this time, John D. Rockefeller Sr. must have been 74 years old and his son John D. Rockefeller Jr. must be the top lieutenant of the foundation and the senior might be operating indirectly or through broad directives rather than operating the foundation directly. It may be the junior or John D. Rockefeller Jr. who may have been operating the family businesses and the foundation directly. Early in its establishment, the Rockefeller Foundation supported several scientists, scholars, and economists in their search for solutions to world problems (Rockefeller Foundation, 2012a). According to the foundation, it has been a supporter of the work of Albert Einstein, giving the latter US$1,000 when he requested for only $500. In 1954, the Rockefeller Foundation reported that it has financially supported experimental research in biology, biochemistry, and biophysics. In addition, it has supported research and teaching in agriculture as well as provided grants related to long-range food supply. The 1954 foundation report revealed it has supported studies in political science and theory, strengthening of international relations, and assisted the development of talents in the social sciences. In the field of humanities, the foundation revealed that it has also supported intercultural studies, humanistic research, and the arts (Rockefeller Foundation, 1954). In 2004, the Rockefeller Archive Center described the philanthropies of the foundation to have covered arts and restorations, conservation and the environment, economic development, education, medicine and public health, religion, and social welfare. In contrast, Wooster (2005, p. 1) described the Rockefeller fortune to be funding “anti-capitalist causes.” As Wooster (2005, p. 1) portrayed it, the Rockefeller Brothers decides on what causes to fund but the funds that support the causes are tapped “from the estate of John D. Rockefeller.” Yet, there seems to be nothing that would suggest that the Rockefeller Foundation has turned anti-capitalist or leftist as philanthropy essentially espouses support for the marginalized. Wooster (2005) alleged that “by 1920, the ties between the Rockefeller family and the Rockefeller Foundation had been largely severed.” According to Wooster’s (2005, p. 1) narration, “John D Rockefeller Jr. began to transfer his wealth to his sons in 1937, and in 1940 they formed the Rockefeller Brothers Fund.” Wooster (2005, p. 2) premised his view on the supposed veer to the left of the Rockefeller brothers from 1968 speech attributed to John D. Rockefeller III that “instead of worrying about how to suppress the youth revolution … we of the older generation should be worrying about how to sustain it.” Yet, Wooster (2005) himself described that John III philanthropic interest had been on sex education, which is far from being leftist but which Wooster (2005, p. 2) described as the “new left” perspective following the Nelson Rockefeller’s description of John III’s orientation. Except for John III, Nelson Rockefeller described the Rockefeller brothers as “liberal ‘Rockefeller Republicans”” and this was the ideology that supposedly determined their inclination on what projects and programs to fund. Wooster (2005, p. 2) described that “for about 25 years, the Rockefeller Brothers Fund largely pursued the philanthropic interests of the brothers.” In particular, “Laurance continued his father’s interests in conservation” (Wooster, 2005, p. 2). Simultaneously, “Nelson continued his mother’s interest in contemporary art, so the Rockefellers Fund was one of the most generous patrons of the Museum of Modern Art” (Wooster, 2005, p. 2). John III pursued a specific interest and has been recognized as “one of the pioneers of population control, so the fund was a major patron of the Population Council.” Thus, despite “left” portrayal of the sons of John D. Rockefeller Jr., there is nothing leftist in their works. In 1999, the Rockefeller Brothers “was a beneficiary of a philanthropic merger” and acquired funding from Coca-Cola Bottling Company which added $208 million to the Rockefeller Brothers Fund endowment which was $457 million (Wooster, 2005). The Rockefeller Brothers has been active in the on climate change and “peace and security” and related to this had declared that its mission is to promote global security by the “creation of a safe, equitable, and just global community” (Wooster, 2005, citing a statement of the Rockefeller Brothers). Wooster (2005, p. 1) reported that the six children of John D. Rockefeller Jr. had 24 children and the generation also wanted to be philanthropists and this led to the establishment of the Rockefeller Family Fund in 1967 “to serve the Rockefeller cousins’ philanthropic projects. Perhaps it is this wing of the Rockefeller family that will be vulnerable to accusations of being left-leaning because in 2004, “the Rockefeller Family Fund signed on to a movement to require large corporations to list their ‘environmental liabilities’ as part of their corporate balance sheets (Wooster, 2005, p. 5). Further, “the Rockefeller Family Fund also gave substantially to groups challenging Bush administration environmental policies” including to a group known as the Friends of the Earth Foundation (Wooster, 2005, p. 5). Arnold (2005) exposition of the Rockefeller Family Fund is worst: it is supposedly a puppet master for leftist front groups but an alternative perspective to the current thrust of the Rockefeller Family Fund is that it is nothing more than an attempt to influence businesses to practice corporate social responsibility, a cause adhered by the more responsible business groups and need not be associated with a leftist leaning. In 1974, the Winthrop Rockefeller Foundation was established to “improve the quality of Arkansans by funding programs and projects that improve education, economic development, and economic, racial, and social justice” (Winthrop Rockefeller Foundation, 2007, p. 57). In 2007, the Winthrop Foundation reported that it has awarded US$121 million in grants consistent with its mission. The Rockefeller Foundation 2009 Annual Report identified the most recent priorities of the foundation has been on building disease networks in the developing world, climate change resilience, employing models to source and distribute capital, improve global health, creating new means of global insights and analysis, improving economic security, accelerating mobile health revolutions, promoting sustainable transportation, and transforming crises into opportunities. Finally, in assessing its work, the Rockefeller Foundation believes that one of its important impacts is felt strongly in the field of health (Rockefeller Foundation, 2012a). The foundation reports that the foundation’s impact is most felt in the area because the foundation has been supporting public health initiatives for about a hundred years. In particular, the foundation has supported the development of public health schools, elimination of epidemics, uses of ehealth technologies and establishment of monitoring systems or surveillance of disease (Rockefeller Foundation, 2012). Moreover, the foundation has “critically” focused on climate change resilience and adaptation and provided “the groundwork” through its agricultural programs in Mexico of what was to be the “groundwork” of a movement that has been known as the “green revolution” (Rockefeller Foundation, 2012a). Concluding Statement In sum, what we are seeing now is that the old philanthropy or legacy of John D. Rockefeller (1839-1937) has been reshaped by history: from money giving to the church and to the poor, that philanthropy is actively changing history through commitment in medicine, research, development, and environment and climate change. In addition, from only one foundation in the early 20th century, the legacy of John D. Rockefeller is now being carried out through mainly four foundations: the Rockefeller Foundation, the Rockefeller Brothers Foundation, the Rockefeller Family Foundation and the Winthrop Rockefeller Foundation. Each foundation has a unique emphasis in funding priorities and each foundation is a product of the time into which succeeding generations of the John D. Rockefeller were born in. On the business side, the legacy of Rockefeller’s inclination to build monopolies or trust to sustain business success is also being continued by the Standard Oil Company which he built despite the legal obstacles that society has built. At the same time, it can also be validly pointed out that one continuing legacy of the Rockefellers is the continuous build-up of monopoly and oligopoly in the oil industry, despite their being contrary to American law. It can also be interpreted that the establishment of the charity foundations by the Rockefellers after the breakup of the Standard Oil which they built into 34 firms constitute an attempt by the Rockefellers to maintain good public relations given the growing criticism against their firms. Nevertheless, although the Rockefellers may or may not have been sincere in their charities, one cannot deny that a lot of people have benefitted from their charities. References Allen, G. (1976). The Rockefeller file. California: ’76 Press. Armentano, D. T. (1981). The petroleum industry: A historical study in power. Cato Journal, v. 1 n. 1, 53-85. Arnold, R. (2005). The Rockefeller Family Fund: Puppet Master for Left Front Groups. Foundation Watch, January, 6-9. Brown, E. (1976). Public health in imperialism: Early Rockefeller programs at home and abroad. American Journal of Public Health, v. 66 n. 9, 897-903. Federal Trade Commission. (2008). Antitrust laws: A brief history. FTC Fact Sheet. Washington: Federal Trade Commission. Josephson, Emmanuel. (1952). Rockefeller Internationalist: The man who misrules the world. New York: Chedney Press. Kovacic, W. & Shapiro, C. (2000). Antitrust policy: A century of economic and legal thinking. Journal of Economic Perspectives, v. 14 n. 1, 43-60. Larson, H. (1969). Contours of change: Standard oil company (New Jersey), 1882-1850. Nebraska Journal of Economics and Business, v. 8 n. 3, 3-19. Montague, G. (1904). The rise and progress of the Standard Oil Company. Kitchener: Batoche Books, 2003. PBS. (2000). Rockefellers timeline. Retrieved September 20, 2012, from http://www.pbs.org/wgbh/amex/rockefellers/timeline/index.html Rockefeller Archive Center. (2004). Select Rockefeller philanthropies. New York: The Rockefeller Archive Center. Rockefeller Foundation. (1954). The Rockefeller Foundation Annual Report, 1954. New York: The Rockefeller Foundation. Rockefeller Foundation. (2009). 2009 Annual report. New York: The Rockefeller Foundation. Rockefeller Foundation. (2012). Our history. Retrieved September 14, 2012, from http://www.rockefellerfoundation.org/who-we-are/our-history Rockefeller Organization. (2000). John D. Rockefeller. Retrieved September 23, 2012, from http://johndrockefeller.org/ Slocum, T. (2007). Standard oil rises again: How eroding legal protections and lax regulatory oversight harm consumers. Loyola Consumer Law Review, v. 19 n. 4, 412-446. Tarbell, I. (1904). The history of the Standard Oil Company. Volume 1. New York: McClure, Phillips & Co. Winthrop Rockefeller Foundation. (2007). Winthrop Rockefeller Foundation 2007 Annual Report. Arkansas: Winthrop Foundation. Wooster, M. (2005). The Rockefeller Brothers Fund and Rockefeller Family Fund. Foundation Watch, January, 1-5. Appendix Read More