Rock around the clock

Materialist historians see economic conditions as the main instigators of innovation, but the Bible emphasizes the significance of individuals. Judges, for example, is mostly a series of capsule biographies, not a chart of how many plows the Israelites had.

When we look at late 19th and early 20th century American history, we can learn a lot from the lives of key individuals like John D. Rockefeller, Booker T. Washington, Grover Cleveland, and Theodore Roosevelt. I’ve already written a lot about Booker T. Washington for WORLD, so on the first Saturday each month from now through July, I’ll have something about the other three in our Saturday Series.

Let’s start in 1859. John Brown’s raid at Harpers Ferry, W.Va., received big headlines, but another event that year also had great long-run significance. The successful drilling for oil at Titusville, Pa., set off a rush for “black gold” throughout western Pennsylvania. Just as in the California gold rush 10 years before, entrepreneurs and fools both rushed in, and fortunes came and disappeared easily. One journalist wrote, “Almost everybody you meet has been suddenly enriched or suddenly ruined (perhaps both within a short space of time), or knows plenty of people who have.”

Newspapers printed stories of money and sex. Edwin Drake, the discoverer of Titusville oil, lost all he had and plodded the streets of New York in an old coat, while others with sudden oil riches shopped in brothels until they dropped. One farm owner, “Coal-Oil Johnnie,” used the proceeds from oil wells on his property to load his shirtfront with diamonds and his hands with hundred-dollar bills for tips to chorus girls. In three years, he tossed away half a million dollars (the equivalent of tens of millions today) and was virtually bankrupt.

The record for the most rapid rise and fall probably went to Henry R. Rouse, who so enjoyed viewing his gusher that he lit a cigar to celebrate. When a spark suddenly set the pooled oil on fire, he ran through the flames and, severely burned, fell near the edge of the inferno, but with the presence of mind to fling his wallet outside the fire. Rouse’s friends dragged him out. He retained consciousness long enough to dictate his will.

Accidents like these did not keep away speculators. They built hurriedly and haphazardly, not worrying about inefficiencies and losses because the potential gains were so great. Those who thought about God at all while the good times rolled typically saw Him as a great sugar daddy who gave and gave without asking for responsible behavior. Once the fury diminished, however, there would be room for someone who did not take God’s abundance for granted, and who paid close attention to details.

Once the fury diminished … there would be room for someone who did not take God’s abundance for granted, and who paid close attention to details.

John D. Rockefeller was such a person. Born in upstate New York in 1839, he grew up in a torn household where he regularly saw acute evidences of sin. His father, “Big Bill” Rockefeller, styled himself a businessman but was really a gambler and con man who flashed a roll of bills when he made a financial killing and ran away each time he lost his latest haul. Big Bill was indicted for rape in 1849 but avoided arrest and moved his family to another New York town and then on to Cleveland.

The abrupt moves left his wife and children not only morally but also financially embarrassed. Frugality and saving became not only a moral imperative but a physical necessity as well. John’s churchgoing mother held the family together and taught all her children to be steady rather than spectacular. She “never tolerated any wasteful thing,” Rockefeller recalled many years later. She also required attendance at Sunday school and services. Big Bill did not go, for, as his son put it, he “was not a Christian man.”

Rockefeller was baptized at the Erie Street Baptist Church in Cleveland in 1854, quickly started teaching Sunday school, and “was contented and happy. … I thank God for it!” In no other place beside home, Rockefeller said, did he feel so at ease. He also had to earn a living, so at age 16 he spent a sweltering summer fruitlessly knocking on doors of firms throughout Cleveland. He finally gained a clerk’s position on Sept. 26, 1855, and for the rest of his life celebrated that day as his turning point.

Rockefeller loved life as a clerk because he prized order, system, and measuring. A childhood schoolmate later recalled how young Rockefeller had played in ball games if needed, but “what he really like to do was to keep the tally sticks, cutting a notch in the stick for every run that came in. … He never made a mistake.” At work he demonstrated similar thoroughness, scrutinizing every bill: “The bill had to be accurate in every detail before I OK’d it to be paid.”

Rockefeller’s first partner, Maurice Clark, said Rockefeller “was methodical to an extreme, careful as to details and exacting to a fraction. If there was a cent due us he wanted it. If there was a cent due a customer he wanted the customer to have it.”

Rockefeller’s early job habits stayed with him for a lifetime. When he was almost 80, he exclaimed, “How many times I have dreamed … I was still trying to collect those old bills! I would wake up exclaiming: ‘I can’t collect So-and-So’s account.’” Rockefeller kept precise records of his contributions as well. From December 1855 to April 1856 he received close to $95 for four months work and dispensed $5.88 in charity, some to church members (“to a poor man in church, .25 … to a poor woman in church, .50”) and some to missions, including 12 cents to the Five Points Mission in New York City.

Rockefeller also gave his money directly to the Euclid Avenue Baptist Church in Cleveland. He considered contributions to church a good investment, because, as he wrote to a friend, he needed “good preaching to wind me up, like an old clock, once or twice a week.” Rockefeller most enjoyed hearing sermons with precise lists of obligations and restrictions. He was less interested in talk of God’s grace.

Rockefeller most enjoyed hearing sermons with precise lists of obligations and restrictions.

Love and discipline are both needed in the raising of a child who feels comfortable with himself but not so comfortable that aspirations disappear. It is not clear how much love Rockefeller received, but he did receive discipline and later disciplined himself by, among other things, abstaining from tobacco, alcohol, and caffeinated products. Rockefeller avoided debt and bought inexpensive “clothing such as I could pay for, and it was a good deal better than buying clothes that I could not pay for.”

Some of Rockefeller’s cost shavings became legendary. He did not miss a train, even when he had to bolt from a railroad station’s dining room because “the boss with the lantern on his arm shouted ‘All aboard.’ But before going I’d stuff my cheeks with food (I always had a good big mouth), then spend a long time after I got aboard the train eating what I had carried away.”

Rockefeller prided himself on obeying the letter of the law, whether that law was Biblical or congressional. He loved skating, and in winter flooded the yard beside and behind his home to turn it into an ice rink. One Sunday, the weather turned cold and Rockefeller wanted to flood a pond to create a smooth surface for the next day’s skating, but he did not want to have such work done on the Sabbath. Rockefeller’s employees did the flooding, under his direction, in bitter cold shortly after midnight.

Rockefeller’s devotion to following the law was not casual. Neither was his attention to detail. Since Cleveland was close to the oil fields, those seeking quick fortunes in the 1860s patched together refineries here and in a dozen other cities. Rockefeller in 1863, having paid for a substitute to take his place in the Civil War, organized a partnership for fighting the oil wars. Even during the oil boom’s most rapturous moments, when money flowed and others thought it foolish to pay attention to economy, he wasted not and later wanted not.

Economy: When a refinery needed new installations and repairs, Rockefeller bought pipes and joints himself rather than contracting out to a plumber—and saved half the cost. Economy: When more barrels were needed, he had employees make top-notch, well-glued white oak barrels for $1 each rather than buying them for $2.50. When dozens of new barrels were needed quickly, Rockefeller himself came to the shop at 6:30 a.m. to help out.

Rockefeller’s company not only built its own barrels but also manufactured its own sulfuric acid, recovering it after use. At a time in Cleveland when small refiners let their gasoline—the major oil product was kerosene used for lamps, and in the pre-auto age gasoline was a by-product—run into the Cuyahoga River, Rockefeller’s company found ways to use all their by-products in fuel or lubrication. Rockefeller wasted no food in traveling. He wasted nothing at home.

Rockefeller scorned producers who kept no books and tossed aside expensive equipment that could have been fixed. “The Oil Region was a mining camp” that needed to become a business, he concluded: “It has always been my rule in business to make everything count.” His goal was to make small but steady gains, avoiding large gains in one transaction followed by large losses.

His goal was to make small but steady gains, avoiding large gains in one transaction followed by large losses.

From 1868 to 1873, oversupplies of oil relative to market demand sent prices plummeting. Only those refiners who had learned to be provident rather than prodigal could survive. Rockefeller began to buy up small Cleveland refineries in an economically rational way that benefited owners ready to relinquish ownership but did not please those who wished to remain independent. Entrepreneurs who accepted stock in Rockefeller’s new company, Standard Oil, often became rich. Those who would not cooperate lost out.

Once Rockefeller gained dominance in Cleveland, he offered merger deals to leading companies in other cities. Stating he had nothing to hide, Rockefeller allowed owners of those companies to inspect Standard’s books, analyze the economies he had effected, and then realize Standard could undersell them and drive them from business. Many owners sold out to Rockefeller in return for a bloc of Standard stock, at fair prices but loss of pride. It was inevitable, Rockefeller argued: The market system had to reward ruthlessly those who attained the greatest efficiency and cast on the scrap heap of production those who fell short.

Rockefeller’s wage record was satisfactory, given the economics and poverty of the era. The salaries he paid were at or better than the going rate. After his initial years in business, Rockefeller faced no strikes. He paid his bills exactly on time and gained a good reputation with suppliers. As his agent T.H. Wheeler put it, Rockefeller “wanted everyone who dealt with him to make a profit and be satisfied.”

Rockefeller’s economy and efficiency made a huge difference in the lives of American consumers. Before the 1870s, nighttime meant bedtime for all but the rich. Abraham Lincoln, the stories went, educated himself by the flickering light of the fireplace, but many people did not even have that opportunity much of the time. Whale oil and candles were too expensive to use for ordinary activities such as reading. In the 1870s, however, with the lowered price of kerosene meaning 1 cent per hour could dispel darkness, middle- and working-class people could let there be light.

Why, then, did some people consider Rockefeller to be a prince of darkness? Envy played a factor, but concerning his business competitors, Rockefeller’s “rising tide lifts all boats policy” was only for boats that made him captain. He took secret railroad rebates he said were reasonable because large shippers rightfully should receive “more consideration than the smaller and less regular shippers.”

Rockefeller was flabbergasted by those who argued the rates should be the same for all. He asked, “Who can buy beef the cheapest—the housewife for her family, the steward for a club or hotel, or the commissary for an army?” Then, the logical parallel: “Who is entitled to better rebates from a railroad, those who give it for transportation 5,000 barrels a day, or those who give 500 barrels or 50 barrels?” If the family went meatless or the small company could not compete, so be it.

The market system had to reward ruthlessly those who attained the greatest efficiency and cast on the scrap heap of production those who fell short.

Once Rockefeller succeeded in largely unifying and increasing the efficiency of American production, he set out to beat the world. In the 1870s, Arabian oil still lay untouched under the desert and the United States had virtually a monopoly on the production of oil for Western Europe and Asia. During that decade, U.S. exports of kerosene almost quadrupled to 367 million gallons, with Standard Oil the standard carrier. The export surge owed much to Standard’s ability to stand by its name and set the standard in quality for world markets.

Here’s where another aspect of Rockefeller’s consistency became crucial. Petroleum had long been known for its usefulness in lamps because it “gives a clear, brisk light,” as S.P. Hildreth wrote in the American Journal of Science in 1826. The problem, however, was that petroleum needed to be purified, and purification was erratic. Kerosene (“coal oil”) on the eve of the Civil War was three times less expensive than whale oil, but poorly refined kinds were known to blow up. “Beware of cheap oils,” one newspaper article noted. Consumers worldwide yearned for reliability.

This Rockefeller provided: Laboratories established in each Standard refinery tested the oil repeatedly. A central laboratory in New York checked samples of all exports. If tests showed any problems, executives scolded the refinery that had made the oil, and Standard quickly replaced any sub-Standard oil. The 1880s brought competition from Russia, but quality assurances, plus repeated lowering of prices, helped to beat back the threat. European consumers found oil from Baku did not burn as brightly or as long as Standard’s.

Do away with more lamps, more refills! Buy Standard! The 1890s brought competition from Burma and the Dutch East Indies, but from 1880 to 1900 American kerosene exports doubled again, to 740 million gallons. Some people had scorned Rockefeller’s tally-stick mentality. But without close accounting, without sorting through even the sweepings from his factory for tin shavings and solder drops, without using the waste (culm) from coal heaps to fuel his factories, he would not have been able to sell oil at close to a nickel per gallon, and by doing so create and then preserve hundreds of thousands of jobs for Americans. Even with Standard’s quality leadership, a rise of 1 cent per gallon would have lost it much of the world market.

As Standard was bestriding the earth like a colossus, however, a new question was arising: Did America want a colossus? How disciplined should the economy be? Efficiencies created lower prices, but they also could lead to decreased workforces. Most Americans approved the trade-off because those whose work was rendered superfluous could find other jobs where they would be more productive—but those left out complained.

Rockefeller, winning worldwide, began having serious trouble at home in 1878, when a Clarion County, Pa., grand jury indicted him and eight other Standard officials for conspiring to achieve a monopoly. Specially, Standard was accused of working out secret rebates with railroads so it could ship product more cheaply than competitors could. Standard settled the case out of court in 1880 by agreeing to full publicity for all rates and an end to rebates.

The great journalistic attack commenced in 1881 when Chicago writer and lawyer Henry Demarest Lloyd blistered Rockefeller in an Atlantic Monthly lead article. The article had many factual errors, but its major indictment was chilling to those who believed government should promote the survival of endangered species of companies. “How seldom I had an unbroken night’s sleep, worrying about how it all was coming out,” Rockefeller said in 1906. “Work by day and worry by night, week in and week out, month after month. If I had foreseen the future I doubt whether I would have had the courage to go on.”

Lloyd began his attack on showing how major railroads secretly granted lower rates to Standard and other large corporations. He went on to detail how the competitive advantage allowed by those rates enabled Standard to knock out smaller competitors and establish a virtual monopoly. Lloyd then charged Standard and similar companies with holding onto their power by bribing journalists and legislators. He also attempted to show state governments to be so corrupt that only Washington’s intervention could set things right.

Rockefeller agreed with only one part of Lloyd’s analysis: Yes, Standard had battered its competitors. To use today’s language, Rockefeller acknowledged that a heavyweight boxer had roughed up a bantamweight—not a pretty sight. But, Rockefeller insisted, Standard did not hit below the belt. It broke no laws. It did throw around its economic weight, but the only reason it could do so was because Standard stressed efficiency and frugality.

Rockefeller insisted, Standard did not hit below the belt. It broke no laws. It did throw around its economic weight, but the only reason it could do so was because Standard stressed efficiency and frugality.

Rockefeller also noted he was the victor and others could have been. He emphasized that Standard itself had faced a squeeze from the Pennsylvania Railroad and associated freight lines in the 1870s but had moved quickly to develop new pipeline technology and lay down lines. Others that were agile could have done the same, acquiring a fortune considered outrageous but nevertheless earned through hardworking days and sleepless nights. Why should they now suffer slings and arrows?

This was Rockefeller’s question—Bill Gates might ask similar ones now—but cold logic did not make winners popular among the envious or fearful. Rockefeller denied he had used the power of government to suppress potential competitors. He differentiated Standard from corporations that were always asking government for special favors such as tariff increases, subsidies, land grants, and tax underassessments. Standard, he pointed out, merely wanted to be left alone to throw its weight around—and why not, since each pound of muscle was hard-earned? To maintain independence, Standard used lobbying tricks, sure, but its goal in relation to government was defense, not offense.

Rockefeller also noted Standard’s need to protect itself from legislators who had found out that blackmail could pay, and pay well. Other testimony from the time supports this concern. When Theodore Roosevelt was in the New York legislature during the early 1880s, he estimated a third of his colleagues were corrupt. He cited bills corporate backers had paid them to sponsor, with ambiguous wording that could confuse honest legislators. But Roosevelt also noted that for every rotten bill invented by corporate interests at least 10 attempted to restrict those interests. Their sponsors even received favorable publicity for introducing them, but “had not the slightest intention of passing them: [they] wished to be paid not to pass them.”

A public relations expert might have found a way to have Rockefeller phrase his argument in politically potent, Jeffersonian language: Government, hands off our yeoman handiwork! But Rockefeller could not honestly play that game, because, in his experience, small business was not the hero. Given international competition, he believed concentration in the oil industry was inevitable. He saw Standard, with its quality control and frequent lowering of prices, as a public servant.

Rockefeller, above all, had a vision of efficiency. From childhood through old age, in business and in church activities, he wanted to show in his records that nothing was wasted, much was constructed, and the bigger the better: “Mere money-making has never been my goal … an ambition to build” motivated him. In building, Rockefeller’s goal was never to beggar his neighbor, but to buy him out on the road to maximum production discipline.

Editor’s note: Read Part 2 of Marvin Olasky’s biography of John D. Rockefeller.