John D. Rockefeller: The Principles Behind The Greatest Fortune in History

0:00Every year on September the 26th, an old man flew a flag. He put on his good clothes, played around a golf, and received visitors at his estate. And if you asked him exactly what he was celebrating, his voice might even crack when he told you. September the 26th wasn't his birthday. It wasn't even his wedding anniversary. September the 26th was a day a merchant in Cleveland, Ohio, back in 1855,

0:33looked down at a desperate 16-year-old in a dark suit who'd been pounding the pavement for weeks, and said to him, we'll give you a chance. From then on, he called it Job Day, and he celebrated it every single year for the rest of his life. That first job paid just 50 cents a day. A few days after he started, the boy walked into a shop and bought a small red notebook for 10 cents. In it, he recorded every penny he earned, every penny he spent, and every penny he gave away.

1:06He called it Ledger A, and would keep it in a safety deposit box for the rest of his life, like it was a birth certificate or a deed to something sacred. He would later say that's where it all started, with a 10-cent notebook. Decades later, when he was the richest man on the planet, he still called Cleveland home. His mother was a Baptist, devout, unyielding, and iron-willed. She ran her household like a fortress to survive her husband's long absences. She kept her own strict ledger, teaching her five children that every single dollar must

1:41be accounted for down to the very last penny. His father was a traveling snake oil salesman who sometimes went under different aliases from town to town, selling fraudulent remedies to desperate people. At home, his philosophy of fatherhood announced loud and proud was, I cheat my boys every chance I get. I want to make them sharp. That was the home he grew up in. And somehow, out of that home came a man who would one day control roughly 9 out of every

2:1310 barrels of oil refined in the United States. A man who would be vilified as the most hated corporate monster in his country, only to become, just a few decades later, its most generous. A man whose company the Supreme Court would eventually take 9 years to break apart. And who would get richer when they finally did. At the peak of his power, his company employed tens of thousands of people. His net worth, adjusted for the size of the economy he operated in, has likely never been

2:46matched before or since. He sat at a desk at 26 Broadway in Manhattan, and the men who came through his door knew he could end their business with a single word. Sometimes he did. This was the same man that got down on his knees every night and prayed. He taught Sunday school at the same church for decades. He tithed from his very first paycheck. When he was making a dollar a day, he was giving away pennies. When he was making more, he gave away more.

3:17A lot more. He built universities and medical laboratories with the same intensity that he built an entire industry. In his old age, he walked around with a pocket full of dimes and handed them out to everyone he met. Caddies, porters, waiters, children on the street. Here, a dime from the richest man in the world. Over the course of his life, he gave away something like 30,000 dimes. People today still leave dimes on his grave.

3:48Who was this man? That's what this episode is all about. And I want to warn you, we're not going to answer that question with a simple, tidy narrative because he was not a simple man. He was the young clerk with a 10-cent notebook who, through focus and determination, became the most powerful private citizen the United States has ever produced. He was a man who loved Cleveland until the city turned on him and yet chose to be buried there anyways.

4:19And he was a man whose philanthropy has improved the quality of life of most people on the entire planet. He was born in 1839. He died in 1937. He lived almost a century. And now, nearly a hundred years after his death, the question of who he really was is still very much open. This is Outliers. I'm your host, Shane Parrish. And this is the story of John D. Rockefeller. You might think you know his story, but you don't.

4:54John D. Rockefeller's family had been moving his entire childhood, drifting from town to town across New York before heading down into Ohio. It was an unstable existence of shifting addresses. Finally, in the fall of 1853, the 14-year-old boy arrived in downtown Cleveland. His father dropped him off at a boarding house near the Erie Street Baptist Church, opened a small bank account for him, and left him defend for himself and disappear.

5:25Cleveland in the 1850s was a boomtown of 25,000 people. Situated on the south side of Lake Erie, it sat at the perfect convergence of water and rail, making it an ideal base for commerce of all kinds. The city boasted three daily newspapers, a library association, and even a small university. But none of it could really disguise Cleveland for what it truly was. A young, muddy city, just a single generation removed from the frontier, filled with people

6:00hustling in every direction at once. And young John D., this quiet, serious, thin-lipped boy, was on his own in the middle of it. He didn't fit in. At Central High School, he was the country boy among the children of Cleveland's wealthiest merchants and professionals. He hid his upbringing and avoided making close friends. One classmate later remembered him as the best debater in the whole class, but noted he spoke so quietly that most people didn't even notice him.

6:34He didn't play sports with the other boys and instead kept score on the sidelines with a notch stick. Like, if he noticed anyone in those years, it was a girl who would later be their class valedictorian, a composed, serious girl named Laura Spellman. And we're going to come back to her. The only place where the young Rockefeller truly fit was the Erie Street Baptist Church. Singing hymns beside the city's working class, he found something his father had never provided. Solid ground. He was baptized there by immersion in 1854 and began attending services twice a day on

7:11Sundays and prayer meetings on Friday nights. That church was where his mother's distinct habits found a home in his adult life. How well I remembered then, as I remember now, he once said, the words of my dear mother, willful waste makes willful want. That was one of his favorite sayings, and he had gotten it directly from her. His mother, Eliza Davidson Rockefeller, ran her household with the rigid efficiency of an army under siege. With her husband constantly on the road, with no indication of when or if he would return,

7:48she was left entirely alone to manage. She lived in houses she didn't choose and in towns she didn't pick, and yet the heavy work of the homestead happened regardless. The meals were always on the table, the accounts stayed light, and the clothes were meticulously mended. Big Bill, John D.'s father, was the family's sole volatile source of income. When he vanished, the household finances were limited to whatever cash he had chosen to leave

8:19behind, which was often dangerously little. Eliza stretched every penny out of sheer necessity. In her household, careful money management was not a personal preference, it was an absolute survival mechanism. She was a devout Baptist who always tied her household income, no matter how small, and expected her children to do the same. She kept her own ledger, and she taught her children that every dollar was held in trust whether anyone was watching or not.

8:51John D. would tell a story about her for the rest of his life. He told it to his children and to interviewers who asked. He wrote it in his memoir at age 69 when he tried to explain to the world where he had come from. His mother had started in on whipping him for something she assumed he had done when he swore up and down that he did not. He protested loudly as she started. When she kept on with the whipping despite his innocence, he asked her why. And she said the line that her son would repeat with affection later.

9:24Never mind, we've started in on this whipping, and it will do for the next time. It was, in his telling, the right way to raise a child. The infraction will be punished this time or some other time. She had a system, and once in motion, she stuck to it. There were five children in the chaotic Rockefeller household, but John D. absorbed these lessons earliest. As the eldest son, he spent his youth beside her running the farm. Along the way, he picked up her mental habits the way a child naturally adopts an accent.

9:58From her, he inherited an unbreakable internal discipline, an intense frugality, an unwavering conviction that a promise was an ironclad debt. What she gave him most was a psychological frame, a way to see the world with your daily work to be done front and center. She taught him how to view a dollar through the lens of stewardship, and how a promise was supposed to weigh on a man once it was made. She left him one phrase above all, and he carried it into every negotiation of his later

10:32life. We will let it simmer, she would routinely say. It was her standing counsel against deciding anything in haste, and John D. Rockefeller would use those exact words to outmaneuver and outweigh Wall Street tycoons and independent refiners for the next 70 years. Before he was anyone's father, Big Bill was a traveling con artist, and one of his favorite routines was to work a town as a deaf-mute peddler.

11:03He hung a small slate around his neck with, I am deaf and dumb chalked across it, and with it he went door-to-door selling cheap trinkets, scribbling his half of every conversation. People spoke freely in front of a man they thought couldn't hear. He later boasted that the act let him flesh out every secret in town. It was while running some version of this con that he first turned up at the farmhouse of a prosperous Baptist named John Davidson. Davidson had a daughter named Eliza, who was devout, sheltered, and altogether unprepared

11:39for a man like Big Bill. She was taken with him before she ever learned the truth. I'd marry that man, she said out loud, if he were not deaf and dumb. He could hear her perfectly well. Eliza's father saw straight through the act and tried to wave his daughter off the match, but she married him anyway in 1837. And in the towns they passed through after that, people came up with their own name for the charming stranger she'd chosen. They'd call him Devil Bill.

12:09After marriage and the children came, Big Bill continued to be a snake oil salesman, peddling fraudulent miracle cures to the vulnerable and hopeful. He'd be gone from family for long stretches without much accounting for it. What he did on those trips was not always what he told his family. When home he came to his sons with lessons and platitudes of his own. He told them to keep clear of crowds. He told them to tend to their own business. He drilled them on the sanctity of a contract.

12:39And more than anything else, he taught them to be, in his words, sharp. I cheat my boys every chance I get, he said to one neighbor. I want to make them sharp. I trade with the boys and I just beat them to be sharp traders. He taught his sons by example. He loaned them money at the going rate of interest, showing them that they could do it too. But then, after they absorbed that lesson and tried it out for themselves, he'd go one step further and call in his loans to them suddenly, when they least expected it, just to see how

13:12they would react. He treated parenting as a series of small, unannounced examinations. He taught distrust as a physical lesson too. When John D. was small, Big Bill would stand him on a high chair and hold out his arms, coaxing the boy to jump. John D. would jump and Big Bill would catch him. But then one day, when John D. was a little older, Big Bill let his arms drop and let his son crash to the floor. Remember, he told him, never trust anyone completely, not even me.

13:45In old age, John had this to say about his father. I confess that this little discipline should have done me good, and perhaps it did, but I was not particularly pleased with his application of tests. By the age of eight, John D. could milk a cow and drive a horse and buggy on his own. Before he was a teenager, he had saved enough money to buy candy by the pound and then sell it piece by piece to his siblings at marked-up prices, keeping his profits in a little box on the mantle.

14:15It was safe there, he said. He added with some pride that he had loaned out money and got interest on it before he was 14 years old, and I knew well how to make out a note. My father taught me these things. These lessons culminated in the first little red notebook for John D., which he remembered fondly, writing, From early boyhood, I kept a little book, which I remember I called Ledger A, containing my receipts and expenditures, as well as an account of small sums that I was taught to give away regularly.

14:46The entire architecture of his life sits within that single sentence, recording the receipts, balancing the expenditures, and on the exact same page, accounting for the sums that he gave away. He learned the earning of money from his father and the giving it from his mother, and before he was an adult, he had both running on the same page. Back in Cleveland, those two inheritances were a boat to collide. The Erie Street Baptist congregation where young John D. felt most at home was small.

15:18Its members were not wealthy, each giving only what they could. But the church building carried a mortgage of $2,000 for which John D. discovered they had no realistic plan for paying off. When the note came due and the church could not pay, the individual that held it began to prepare for foreclosure. The minister sadly told his congregation that the doors would close if the mortgage was not paid. So the congregation began to scrape.

15:48They took up pledges and counted what they thought they could give, but it was soon clear that it would not be enough. The problem was that many of the pledges that had been made were not in the end being paid. What the church needed was someone who would stand at the door after the service ended and not let anyone forget what they had promised to give. John D. stepped up to the task. He was still a teenager, but he took to the work as if the building belonged to him. He stationed himself at the church door and spoke to each member as they went out, asking

16:23for pledges from each and every one. And then he wrote each pledge down in a book of his own. He told the people who had pledged that he would be back next Sunday to ask after it. And the next Sunday, of course, he was there for both services. He chased the small sums and nickels and dimes and quarters from people who had little despair. And then he chased the larger ones at their places of business during the week. He did not stop for anything, and he did not take no for an answer.

16:53This campaign went on for weeks, and as a result, the full sum was raised. The mortgage got paid, and the church, the place John D. felt the most comfortable, did not close. That same congregation would, in the prosperous years to come, follow Cleveland's money eastward and be reborn as the Euclid Avenue Baptist Church, a new address for the same families and John D.'s spiritual home for the rest of his life. In his memoir, decades later, he set down what the experience had done to him in one line.

17:26My first ambition to earn more money was aroused by this. He had contributed what little money he could and regretted that he could not give more. Somewhere in those years, a minister handed him the sentence that he would build his life on. Get money, get it honestly, the man preached, and then give it away wisely. I wrote that down in a little book, John D. said. When he finished at Central High School, he didn't even bother to attend graduation or pick up his diploma. Instead, he paid $40 for a course at Folsom's Commercial College. The course was mostly

18:01accounting and bookkeeping, and he took to it like a fish to water. It was fascinating, he said later, to know at all times the resources and the liabilities to keep an exact record of just how a business stood. He completed the course in mid-summer of 1855. Soon after, he turned 16, and he started looking for work. I did not guess what it would be. He reminisced about that summer's plans to find work, but I was after something big. What followed was six weeks of pounding the pavement. He took down

18:35a copy of the Cleveland City Directory and made a list of every firm in town that he felt was worth approaching. Then he put on his best clothes, and after breakfast each morning started walking. He had no letters of introduction and did not know a single person of consequence in the city. He walked into banks and railroad offices and commission houses and shipping firms, and at each one he asked to see whoever was in charge. He stayed at it until the offices closed for the day. He did this six days a week

19:08that summer. When he reached the bottom of his list, and he still had no job, he went back to the top and worked his way down it a second time. He could have landed a clerkship or a messenger position. Other young boys did. But he would not lower his standards. He had told himself that the right beginning mattered more than an easy one, and he was not going to give up just because he was tired. I was not discouraged, he later said. He refused to count those weeks as idle. I was working every

19:39day at my business, he said, the business of looking for work. I put in my full time at this every day. But the strain must have begun to show, because at some point in those early weeks, his father offered him a way out. It's all right, John. You go out to the country, and I'll take care of you. The thought of staying dependent on his father, John Dee later said, sent a cold chill down his spine. So he continued his search. On September 26, 1855, he stopped again at a commission house

20:12called Hewitt and Tuttle. The junior partner, Henry Tuttle, interviewed him. Come back after dinner, Tuttle said after speaking with him. We may have a chance for you then. John Dee composed himself and left the office walking until he was out of sight of the windows. Then, with no one watching, he began to skip with joy. Six weeks of serious composure had finally given out. He returned later and met the senior partner, Isaac Hewitt. Hewitt looked at a sample of his handwriting, which was,

20:44of course, excellent, and delivered the verdict. We'll give you a chance. In old age, John Dee set the moment down in his own words. This was September 26, 1855. I joyfully went to work. The memory never lost its charge. Even as an old man, he would go quiet over it. All my future seemed to hinge on that day, he said. And I often tremble when I asked myself the question, what if I had not got the job? For the rest of his life, every September the 26th, a flag flew over his house. Job day.

21:44The work itself was bookkeeping, and the stereotypical picture of the profession was a man on a high stool hunched over a ledger doing tedious work. John Dee didn't argue with the picture. But he did

22:15argue with the idea that the work was tedious. He called the work simply delightful. It wasn't a job, it was a position. More than that, he called it a gentleman's position. In a small firm like Hewitt and Tuttle, the title of bookkeeper was misleading. He was soon doing a lot more than just posting the books. A commission house bought and sold goods on commission. Grain, beef, granite, pork. It didn't matter. Whatever was moving through the Great Lakes that month was on their table. And the business was

22:49made possible mostly by two specific tools, the railroad and the telegraph. The telegraph gave the merchant news of price changes in distant markets, and the railroad let them chase those prices before the swing closed. Hewitt and Tuttle was small enough that John Dee, now 17 years old, could touch and understand all of it. Within a year, his boss, Tuttle, left the business. So John Dee started running the office and posting the books. And soon he was handling the cash, collecting debts, and even writing the

23:22checks. People along the waterfront started to call him Mr. Rockefeller. Well, just a clerk, he worked as though he owned the firm. I scrutinized every bill, he said later. If it had so many items, I went over each one, verified it, and carefully added the totals. The bill had to be accurate in every detail before I okayed it to be paid. The reason he gave for strictness was striking, coming from a teenager. He had trained himself to understand that his check on a bill was, quote,

23:56the executive act which released my employer's money from the till. The release of the funds to him was almost sacred. Every penny was to be watched, tracked, and accounted for. One day, a schooner captain came in with a bill that did not match the cargo the man had unloaded, and Rockefeller would not approve it. Now look here, captain, he told the man. I can't make out the bill for that amount. It just doesn't tally with the actual cargo. Come, come, young man. You make it out the way I say.

24:28No one's ever gonna know. Why everybody allows a margin like that. I'm sorry to say no, but if the weight and price are a certain amount, I must make my entries accordingly. If I'm going to do right by you, I can't begin by doing wrong for someone else, can I? If I did, you would soon be afraid that I would cheat you too. Isn't that so? Nonsense, you're too strict, the captain exclaimed. That strictness held to the end of his life. Decades later, as an old man with yearly income well past $3 million, or more than $50 million today,

25:05Rockefeller caught an error of $10.08 in a railroad's payment to him. He had his secretary write a letter asking for the missing payment. A week later, he turned up an error in the opposite direction where a payee had shortchanged himself by $8. He sent the $8 back right away. Everything had to balance in the ledger. Nothing more, nothing less. There's a story he told about those years behind the ledger that explains something about all the years that came after. One day, his employer took in

25:38a banknote for $4,000, an unimaginable sum to a young man earning 50 cents a day. He showed it to him and then locked it in the safe. The moment the man left the office, Rockefeller opened the safe back up. He lifted the note out and just stared at it, he said, with open eyes and mouth, and then locked it away again. He couldn't leave it alone. Many times during the day, he remembered, did I open that safe to gaze longingly at the note. Around the same time, he got hold of a book,

26:12the published diary of a New England merchant named Amos Lawrence, who had given away more than $100,000 in his life. John Dee read it the way other boys read adventure stories. What stayed with him wasn't the size of the fortune. It was the giving. Crisp bills, he said. I could see and hear them. I made up my mind that if I could manage it, someday I would give away crisp bills too. He learned one lesson in particular at the commission house that he tucked away for later, very quietly. The official bill on

26:47a railroad shipment always showed a fixed rate, the same rate the railroad printed on the public schedule for everyone to see and what Rockefeller assumed, at first, everyone would pay. But the right kind of shipper, after he had moved enough volume across months, could receive a rebate at the end of the month against that fixed public rate. The size of that rebate could be substantial. The posted rate was the public rate, the real rate, the one that applied to the men whose volume the railroad needed

27:21was agreed to behind closed doors. In 1857, a sharp depression hit the country and nearly took Hewitt's firm with it. The doors stayed open, but as Rockefeller would later put it, they were bankrupt. Hewitt was carrying on too many things at once, giving more time and attention to land deals and lawsuits than to the commission business that it was supposed to be funding at all. Hewitt sent Rockefeller out to collect on their bad debts, and he learned to deal with each defaulter as if he were

27:53an opponent across a chessboard. One of the names on his collection list was a man named Whelan. When Rockefeller arrived, Whelan opened with the line you always heard from someone who didn't want to pay. You come around next month. That's what you always say, Mr. Whelan. I still insist that we settle today. It won't hurt Hewitt to wait a little longer, the man's reply. But you know very well Mr. Hewitt has been waiting a long time already. I simply can't go back to him without the money. Worn down, Whelan eventually pushed the money across the table and told Rockefeller he had never met such

28:30a pestering collector. Rockefeller was just 19 years old. In the spring of 1859, Hewitt raised Rockefeller's salary to $700 a year. Rockefeller pressed for $800, and Hewitt said he would think about it. Time passed, and Hewitt did nothing. So, without a fuss, Rockefeller resigned. The next month, three months short of his 20th birthday, he opened a commission house of his own. He partnered

29:02with a man he had known since the bookkeeping course, a 28-year-old Englishman named Maurice Clark. As the older man, they put Clark's name first on the door, but they were equal partners. The firm became known as Clark and Rockefeller. In its first year, they did nearly half a million dollars in revenue and netted $4,400. In the second year, it was $17,000. Rockefeller was now 20. He was thrilled to be his own boss.

29:32It was a great thing to be my own employer, he remembered. Mentally, I swelled with pride, a partner in a firm with $4,000 in capital. That first night, he went home, knelt on the floor, and asked God to bless the new firm. A Clark and Rockefeller circular went out across the Midwestern states in their second year of business. It said the firm was prepared to make liberal advances on consignments of produce, etc. The most important word in that line is liberal.

30:03In the 1850s, Midwest farmers were desperate for cash. They only got paid when they harvested their crops, which meant borrowing money the rest of the year. This is where commission houses came in, giving cash advances to farmers and taking delivery of product later on. But farming was a risky business, and most firms only gave small advances. So Clark and Rockefeller began offering larger advances and earlier in the year than others. This set them apart.

30:34But to make those advances, the firm had to borrow heavily. Rockefeller's father, Big Bill, initially helped, but his purse didn't even begin to meet his son's growing needs. And those needs were growing fast. The gap between what they had and what they needed was enormous. Every bushel of grain sitting in a warehouse was waiting for a buyer. Every shipment on a canal boat that hadn't reached its destination. Every advance they'd made to a farmer who hadn't paid them back yet.

31:07All of it was capital tied up. And the faster the business worked, the more money it consumed. There seemed as though there was no end to the money needed, Rockefeller said later. He did not say it with complaint. He had already figured out that if the return on borrowed money exceeded the cost of the loan, then the rational move was to borrow more. Interest was just the price of growth. And the more you grew, the more you could borrow again. That logic would carry him

31:37a very long way. So Rockefeller went to the banks. He passed over the smaller banks, of course, and went straight to the most prominent banker in the city, a man named Truman P. Handy. Handy was president of the Commercial Branch Bank and its principal stockholder. He had arrived in Cleveland from Buffalo in 1832 and in the decades since had built himself up to be the center of civic and cultural life. In Cleveland, in those years, an endorsement from Truman P. Handy was a passport to borrowing from

32:12anyone. And Rockefeller, of course, knew this. That's why he picked him. If Handy said yes, every other door in the city would open. He knocked on Handy's office door one morning, sat across from him, and laid out the particulars of his business in his usual simple and forthright way. He then asked for a loan. How much do you want? Handy asked. $2,000. All right, Mr. Rockefeller, you can have it. Just give me your warehouse receipts. They're good enough for me.

32:43Rockefeller never forgot how that felt. Just think of it, he said. A bank had trusted me for $2,000. I felt that I was now a man of importance in the community. It looked from the outside like the easiest thing in the world. A 20-year-old walks into the office of the most important banker in Cleveland and walks out with $2,000. But Handy hadn't made that decision on instinct alone. It was years in the making. Handy was active in the young man's Christian association.

33:17Recently, so had been John D. Rockefeller. And as a member of the board of school managers, Handy had taken to visiting nearby Central High School to observe the progress of its pupils. Rockefeller had been one of them just four years earlier. And for the past couple of years, Handy had watched the young man walk into his bank at regular intervals to make deposits into a savings account. Always small amounts, but put away steadily month after month. So when Rockefeller sat down that morning and asked for a loan, Handy already knew who he was lending to.

33:51In those days in Cleveland, Rockefeller later observed, everybody knew almost everybody else. After that morning, the doors of Cleveland's banks were open to him. But not always as warmly as Handy's. Rockefeller was younger than any of the men he was asking, and he asked with a directness that many found grating. He was often told no. What if the president of a bank refused to make me a loan, he said later. That was nothing. He might lecture me on the folly of making a loan,

34:21for the purpose of which I was seeking it. That made no difference to me. Simply meant that I must look elsewhere until I got what I wanted. Like many outliers, John D refused to quit after someone said no. Next, he began pressing the railroads for more cars during peak shipping season to handle the growing amounts of inventory he was buying. They too would rebuff him. But Rockefeller kept pressing. That was where the firm was at the end of August 1859. Rockefeller was still just 20 years old,

34:53but already you can start to see something is different about him. That very same month, in a township in western Pennsylvania, a man named Edwin Drake struck oil. Drake had been hired by a small group of New Haven, Connecticut that suspected there were large amounts of crude petroleum in the rock under the Pennsylvania creeks. They wondered if drilling for it, like they did for water, might just work. It turned out they were right. Drake's well, the first commercial oil well in the United States, hit at 69 and a half feet underground. By the next morning, a barrel and a half of crude

35:29sat in a tub at the foot of the well. That's when the chaos started. In a short time, it seemed like every man with a horse and shovel and a bit of money to risk became a wildcatter. Butchers became drillers. Bankers became drillers. Land that had been worth a dollar an acre was changing hands now at thousands. Wells were going in along the creeks faster than anyone could count them. Prices for crude spiked and then crashed and then spiked again. Fortunes were made and lost inside of a

36:01week. And John D. Rockefeller was watching from a desk in nearby Cleveland. He was 20 years old. He owned half a commission house that handled produce from one of the most productive farm regions in North America. He had a reputation along the waterfront for paying his bills. He had a banker who had lent him money on a growing pile of warehouse receipts. And he had a partner who was beginning to grow nervous about all of that borrowing. And he was watching an infant oil industry that had no idea where it was going or what was coming next. Rockefeller watched the oil frenzy for

36:38three years and didn't move. He saw the pattern. Drillers would punch holes in the ground and pray. When or if they hit, they flooded the market and the price of crude oil collapsed. Many of the men who had to borrow to drill then went broke. A few months later, the survivors and any newcomer started the whole cycle all over again. But the refining of oil was a different beast. A refiner bought crude oil at the market price and turned it into kerosene, a product people needed to light

37:13their homes. When crude was cheap, the refiner's margins got better. The refiner was a step removed from the chaos. They didn't gamble on geology. The refiner had control sitting at the choke point between the raw material and the customer. Rockefeller observed and thought this was the best place to get in. The man who helped him get there was named Samuel Andrews. Andrews was a chemist that Rockefeller had come to know from the Erie Street Baptist Church, the church he still

37:43attended and had been baptized at a decade earlier. Andrews had learned to refine crude oil into kerosene better and cheaper than almost anyone else in Cleveland, and he was convinced that this cheap kerosene would soon light the world. Rockefeller heard him out. The numbers were incredible. Crude averaged $2 a barrel, while refined kerosene sold for $13. And a refinery could be built for $1,000 and run with just a handful of men. He soon made his decision to enter. In 1863, him and his partner

38:18Clark formed a new firm with a new name, Andrews Clark and Company. Samuel Andrews would run the refinery and Rockefeller and Maurice Clark would handle the money. 24-year-old Rockefeller called this a little bit of a side hustle to their main commodity business. It would not remain this way. They found a three-acre site in Cleveland along the river, right where the Atlantic and Great Western Railroad met the waterway. The rails could bring crude oil from the oil regions in Pennsylvania,

38:50and water or rail could bring the oil they refined to the eastern markets of New York. The location proved to be of critical importance because they could play one transportation method against the other. The refinery was called Excelsior Works. Andrews ran the equipment, Rockefeller would run everything else. He threw himself into it, and his own family got a daily view of the obsession. In the pre-dawn dark, Samuel Adams and a growing group of men would gather the Rockefeller house and wait in the dining room while John ate his breakfast. At night, John would nudge

39:24his brother William awake in the room they shared and say, I've been thinking out a plan to do so-and-so. Now, what do you think of this scheme? Keep your ideas till morning, William would groan at him. I want to sleep. His schemes kept coming anyway. The year was 1863, and all of this was happening during the middle of the Civil War. The war was terrible for the country, but good for many of its businesses. Union soldiers wrote letters home by the light of kerosene lamps. General Grant was

39:56drafting his dispatches by one in his tent. Demand for kerosene kept climbing, even as prices swung wildly. And through all of it, the drills in Pennsylvania rarely stopped. They paused exactly once, only when General Lee invaded the state and the oil men put down their tools briefly to help defend it. The new firm made money in refining every single year of the war. This only seemed to accelerate Rockefeller's appetite for growth. But Clark, his original partner, began to get cold feet.

40:29When Clark looked at the same numbers that Rockefeller did, he only saw the risk. And he wasn't alone. Many people thought the Pennsylvania oil fields were a fluke. They would give out soon, they said, just like so many gold mines did at O. West. It took two years, but the tension between Rockefeller and Clark finally came to a head. We have been asking too many loans in order to extend this oil business, Clark told Rockefeller one morning. Altogether, we have borrowed a hundred thousand dollars. Rockefeller replied calmly, and not for the first time. We should borrow whenever we can

41:04safely extend the business by doing so. If that's the way you want to do business, we better dissolve and let you run your own affairs to suit yourself, Clark said, walking out. It was not the first time he said this, nor would it be the last time. But Rockefeller had had enough of the disagreements. Their other partner, Samuel Andrews, walked in, and Rockefeller put it to him straight. Sam, we are prospering. We have a future before us, a big future. Will you come in with me? Yes, said Andrews. So Rockefeller calculated. He had Andrews on his side. It was 1865, and the Civil

41:39War was now winding down. This would likely end the wartime buying that had been propping up their commodity business. But new oil wells were still coming in across Pennsylvania, making the crude supply look safe for now. The demand for kerosene seemed instatiable. Last, he checked his credit with the banks, and then he baited Maurice Clark. They met one evening in February. Clark, assuming that Samuel Andrews was on his side, called for a dissolution of the business. And Rockefeller agreed.

42:10Then he ran a notice in the Cleveland press the next day announcing the news. By the time Clark learned that Andrews was actually with Rockefeller, it was too late. They had agreed to auction the oil business between them. The bidding opened at $500 and climbed past $10,000, past $50,000. Clark said $72,000. And Rockefeller countered again with no sign of stopping. The business is yours, Clark told him. Rockefeller was now 25. He owned the majority of a refining business in a city he had arrived at

42:45at the age of 14 with almost nothing. It was one of about 30 refineries in Cleveland at the time. Two months after the auction, Robert E. Lee surrendered, ending the Civil War. On a spring morning that April, the funeral train carrying Abraham Lincoln's body stopped in Cleveland, Ohio. Then the country put down its grief and turned, with an almost guilty hunger, to the business of getting rich. One banker later said of the years that followed, it was such a period as seldom occurs, and hardly ever more than once in anyone's lifetime.

43:18Returning soldiers wanted what the young businessmen at home had gotten. Everyone, it seemed, was chasing a fortune all at once. Shortly before he took over the oil business from Maurice Clark, Rockefeller got married. Her name was Laura Celestia Spellman, and she was a schoolteacher. He called her SETI. They had met years before as students at Cleveland Central High School, where SETI was the valedictorian of their class. She stood out to Rockefeller then and later when they met again while taking similar commercial courses. Upon their high school graduation, the title

43:53of her address to the class tells you most of what you need to know about her. I can paddle my own canoe. She came from an abolitionist household, and not the quiet kind. Her father had run a station on the Underground Railroad, hiding men and women fleeing north and helping them on towards Canada. And her mother gave herself over to the temperance cause, advocating for complete abstinence from alcohol. Theirs was a home where faith meant action. At 22, SETI was an assistant principal, real authority for a woman of her time.

44:29Even though the Spellman family was a rung above the Rockefellers economically in Cleveland, they valued a young man with ambition and sound Christian character. And SETI was above all else practical. She saw something in Rockefeller earlier than almost anyone else. A friend of hers put it this way, she saw that he was ambitious and she thought that he was honest, which probably appealed to her more than anything else. She was short and slender with a round face, dark brown eyes,

45:00and chestnut hair parted down the middle. Like Rockefeller, she was soft in voice and manner, but that softness sat on top of something hard. Her own sister called her gentle and lovely but resolute with an indomitable will. She was never known to lose her temper, something she shared with the man she would marry. She'd be more than just a spouse, though. She would be a silent partner in everything he did. They were two quiet people, each with a core of iron. His courtship started in high

45:33school, where he'd walk her home at the day's end. When he started his own commodity house, he'd come by her house and describe his business to her, and she'd listen with delight. He recorded everything in his ledger. The bouquets of flowers he bought her, the lectures they attended together. And in April 1864, he recorded a diamond ring. That fall, they were married. Rockefeller was 25. They were a perfect match of temperament. Both were convinced that life was for duty rather than

46:05enjoyment. In those first years of marriage, Rockefeller carried the company's books home at night and went over all the figures with SETI at the table. She came to know the state of business almost as well as his partners did. From the start, she studied his career and even began to coach it. With Maurice Clark gone, Rockefeller did exactly what his ex-partner had feared. He borrowed and he grew, plowing every dollar of profit back into oil. The schemes he had once tested on a half-asleep William now had real money behind them. Rockefeller wasn't just borrowing to buy more crude oil,

46:40he was borrowing to save on costs, building a shop right next to the refinery to make their own barrels. Barrels were one of the biggest costs in the trade. With other refiners paying $3 a barrel, Rockefeller was soon building his own for $1.50. Then he hired a plumber by the month, instead of calling one for each repair job. These were small things, but as they grew their business, they compounded. The borrowing carried a private cost, though, that few ever knew about. Rockefeller often went to bed worrying about how he would ever repay the loans, and then he woke up in the morning

47:15refreshed by his sleep, determined to borrow even more. It was in these years that he began a habit that he would keep for the rest of his life. At night, head on his pillow, he would deliver little sermons to himself. The subject was usually the same, reminding himself to stay the course. You've got a fair fortune. You have a good property now, but suppose the oil fields gave out. At the office, he never showed a flicker of doubt, but on the pillow, he would rehearse disaster nightly. The best-known example of his cost obsession came a few years later on a plant inspection.

47:50Rockefeller stopped at a line where men were sealing kerosene cans with solder, and he asked how many drops it took to seal one. 40, he was told. Have you tried 38? The men tried 38. A few cans leaked. They tried 39. None leaked. 39 drops became the standard across every plant the company owned. One drop of solder multiplied across what was eventually millions of cans easily saved hundreds of thousands of dollars. His partner Andrews kept improving the

48:21refining process, and soon they were squeezing more kerosene out of each barrel of crude than anyone in Cleveland. And then they started working on how to sell those byproducts that other refiners just threw away. That instinct to use what everyone else threw away had always been a habit of Rockefeller's. And it pulled the company towards something the oilmen distrusted. Science. The first men in oil worked by smell and luck. Rockefeller hired chemists instead and would, in time, put a working laboratory inside every refinery he built and owned. The patient-measured

48:56application of science became an integral part of how they grew. Within a year of the Clark auction, their profits founded a secondary refinery, which they simply called Standard Works. Rockefeller's brother William was put in charge of it. Rockefeller was 26 years old, running two refineries, and still hungry for capital. What he needed next was a partner with access to real money. Aside from his wife, Rockefeller was closest to his brother William and to one other man,

49:27Henry Flagler. The two of them went back to the grain trade before there was any oil between them. They'd met when Flagler shipped carloads of wheat through Rockefeller's commission house. He had gotten rich doing so and then moved into the salt trade and lost it all. He came back to Cleveland broke and looking for the next big thing. Oil looked to be that thing. He took an office in the same building as Rockefeller, and an old acquaintance soon turned into something closer. Flagler was eight years older than Rockefeller, and he was everything Clark

49:59as a business partner had not been. He was as bold as he was impatient. He was a born dealmaker who could talk a railroad president into almost anything. His motto? Do unto others as they would do unto you, and do it first. Flagler brought to the table a network of wealthy connections, and with their money, he joined the firm, which was now named Rockefeller, Andrews, and Flagler. Overnight, they were able to outspend every other refiner in Cleveland. Rockefeller and Flagler lived

50:31just a few doors apart from one another and began walking to work side by side each morning, then home again for lunch, and back to the office, and then home again at night. They did their thinking and planning on those walks, and by the time they'd reached the office, the thing was usually decided. One historian called it the partnership's parliament of two. At the office, their desks sat back to back. Letters would pass between them again and again until the wording was exact. And Flagler, Rockefeller remembered, drew particularly all of our contracts. Rockefeller was the systems

51:07man, bringing relentless cost discipline, patience mixed with a willingness to act, and a temperament to bring everyone in line. Flagler, on the other hand, was, as Rockefeller remembers, always on the active side of every question. He fought the railroads constantly and pushed to always build bigger and more permanent. Flagler put it this way, a friendship founded on business is a good deal better than a business founded on friendship. That was their partnership in a nutshell. With Flagler, they took

51:38one profitable oil refinery and rebuilt it as a business vehicle for swallowing up their Cleveland rivals. And later, once Flagler drew up the legal forms and the incorporations that would allow them to become the Standard Oil Trust, they were able to reach across state lines and do the swallowing of other business entities whole. Years later, when asked who designed the structure of the early Standard Oil, Rockefeller did not hesitate. No, sir. I wish I had the brains to think of it. It was Mr. Henry M.

52:11Flagler. Rockefeller was Baptist down to the bone, watchful and suspicious of anything that announced wealth too loudly. Flagler started out that way but drifted the other way, toward the bold and expansive and finally the gilded. Standard Oil was an exhibit of both at once. Rockefeller's economy of self-command and Flagler's hunger to build something grand and visible. Their friendship, Rockefeller said, ran a lifetime without a single interruption. Later in life, Flagler ordered his Standard Oil

52:42correspondence burned. Almost everything he wrote in the company's early years went up in smoke. What survives comes mostly from other men's letters and from testimony he gave under oath. He was trying to disappear and it worked. Ask anyone today who built Standard Oil and people will say Rockefeller. They should say Rockefeller and Flagler. The company could not have grown nearly as large without both of them. On paper, Cleveland didn't look like the best place to refine oil. The raw crude came from Pennsylvania, a hundred miles to the southeast. A city like Pittsburgh made sense as it was closer

53:18to the oil. And then New York City was closer to the customers and the ships that could bring the refined product to the world. For these reasons, many thought Cleveland would have a short life as a refining town. But Cleveland had something important, water. It sat on Lake Erie, with the Erie Canal feeding east and the Great Lakes opening west. And water freight was cheap, far cheaper than rail. When the canal and the lake were open, Rockefeller could float his oil to market for something close to half of what a railroad charged. And the railroads knew it. So when they quoted Rockefeller our rate,

53:54they were really quoting against the water. Rockefeller had first learned this at his job at the commission house. Rockefeller played them both against each other. When the water was open, they shipped more by boat and let the railroads watch their traffic float away. When the winter came, the canal iced over and the lake went to a gray slab. They moved everything onto rail and the railroads, who had spent months hungry for traffic, were glad to have the business back. When one road dropped its rate, the firm shifted its cars to it. When the others matched, they shifted again. They built

54:26themselves into a position where they could not be pinned down by anyone. A competing refiner in Pittsburgh, on the other hand, had only one option, the Pennsylvania Railroad. They had no other way to move their oil. So they paid whatever rate the railroad set. And they shipped only when the railroad said so. Rockefeller never wanted to be at the mercy of others. He and his partner sitting in Cleveland, in what was supposed to be one of the worst of the three refining locations, had the most options of anyone in the trade. And the more they grew, the more each carrier valued them as a customer and

55:01the harder they competed to keep them. Flagler turned that logistical advantage into a weaponized system. He used a piece of knowledge Rockefeller had learned from his teenage days at the commission house, that the posted railroad rates were a fiction. The real rate for shippers with enough volume was negotiated behind closed doors. Flagler went to the railroads and negotiated rebates their smaller competitors couldn't get. And the more standard oil shipped, the bigger that rebate grew, which meant

55:31more reinvested into their business, which meant lower costs, more capacity to refine. That made it easier to undercut competitors, which brought in more customers, which meant more volume, which meant a bigger rebate the next time. It was a flywheel. And once Flagler set it spinning, it was almost impossible for anyone outside of it to compete. It might sound unfair, but it's not. If I wanted to ship one case of soda from the east to the west coast, I'm going to pay more per case than if I wanted to ship 10,000 cases.

56:03The new balance of power showed in how Rockefeller carried himself. In 1868, he was 29. In that year, the richest man in America was Cornelius Vanderbilt, who was 74. Vanderbilt owned many of the railroads, and one day Vanderbilt sent word that he wanted a meeting with this up-and-coming Cleveland refiner. Rockefeller didn't go. He wrote to his wife about this. We were sent for by Mr. Vanderbilt yesterday at 12 o'clock and did not go. He's anxious to get our business. We sent our card by messenger that

56:35Vanderbilt might know where to find our office later. The emperor of the railroads could come to him. By the late 1860s, Rockefeller's Anders and Flagler were well on their way to becoming the largest oil refining operation in the world. It had happened in just a few years of borrowing, building, vertically integrating, and squeezing costs out of every link in the chain. They made their own sulfuric acid, ran their own wagons. They were building massive storage tanks to buy up crude cheap and hold it and wait out depressed prices. And Rockefeller read his success the way he read

57:10everything through his faith. A few days before Christmas, in 1867, he had missed a train that later wrecked and killed many of its passengers. He wrote to his wife at once, I do regard the thing as providence of God, the Lord, he was increasingly sure, was watching over his enterprise and approving. And yet, in 1869, for the first time since entering oil, Rockefeller was afraid. A disaster had arrived, just not the one he had been rehearsing on his pillow. The oil fields

57:43had not given out. In fact, the opposite had happened. Refining had become so profitable that new people kept piling in, exactly the way drillers had once when oil was struck a decade before. In came the tinkerers and the tailors and the boys who followed the plow, Rockefeller reminisced decades later, all eager for this large profit. By 1870, the country's refineries actually had the capacity to process three times more crude oil than was being pumped out of the ground. And this made the price

58:15of kerosene sink so low that by Rockefeller's estimate, nine out of ten refineries in the country were actually losing money. His own brother saw it firsthand. Refined cheaper than crude, William wrote to him one day from New York, meaning he'd seen the price of kerosene fall below the price of crude oil it was made from. Refiners sold at a loss just to keep their plants running and service their debts. And this is where Rockefeller arrived at the idea that it would drive everything he did for the rest

58:47of his life. He had built one of the most efficient refiners in the world, but saw that it wouldn't save him because the very industry he was in was now broken. The way he saw it, every man struggling hard to get all the business brought nothing but disaster to himself and everyone else. To Rockefeller, the solution was cooperation. Bring the refiners under one roof, he reasoned, cut down the excess capacity, steady the prices, and run the whole system the way he'd run his business. He gave the idea the grandest possible framing. It was the battle of the new idea of cooperation

59:23against competition. He watched the chaos eat the industry and concluded that he personally should be the one to organize it. This was the momentous shift. He stopped thinking of himself as an individual refiner competing in a market and started thinking of the entire oil industry as one giant interrelated machine. A machine that one person, him, needed to run. There was a problem though. Buying up refineries on that scale would require an enormous amount of money. And he and Flagler did not want

59:55to give up control to get it. The solution was to incorporate. On January 10, 1870, the partnership became the Standard Oil Company of Ohio. The name was chosen to advertise kerosene of a uniform standard quality. The new company had a million dollars in capital and 10,000 shares. Rockefeller held the largest allotment. He was 30 years old. Older businessmen told him the scheme was reckless. One called it a rope of sand that would collapse like attempts before it had. But Rockefeller didn't

1:00:29bat an eye. Around Cleveland, he began telling people exactly what he intended. The Standard Oil Company will someday refine all of the oil and make all of the barrels. Almost nobody took him literally. In the last days of November 1871, Rockefeller checked into a hotel in New York City and disappeared into a series of meetings with the most powerful railroad men in America. He was 32 years old at the time and he would be gone for weeks. He wrote home to his wife almost daily. The letters show a man

1:01:02who knew he was walking a line. A man who succeeds in life, he wrote to her, must sometimes go against the current. Here's what was being drawn up behind those closed doors. There were three railroad lines now carrying oil east. They were the Pennsylvania, the Erie, and the New York Central. And they could not stand each other. They were forever at war over rates, each cutting prices to steal the other's traffic. Sometimes one would haul freight at a loss just to keep a rival from getting it. Then,

1:01:35exhausted and broke, they would all shake hands and agree to hold rates steady, dividing the traffic evenly. But soon after, someone would always cheat and the war would start again. A railroad has enormous fixed costs. Track and cars must be paid for whether they run full or empty. And this is why guaranteeing volumes was so important to them. What the railroads needed was one customer big enough to hand them each an agreed share of the oil traffic, month after month, and make the piece stick. No customer had

1:02:06ever been large enough to make that work. Standard Oil, though, had now grown big enough to be that customer. So the railroad men proposed a scheme and it came with a shell company that had a deliberately boring name. They called it the South Improvement Company. A handful of the biggest refiners would join. Standard Oil would be by far the dominant member, with Rockefeller and his circle holding the largest block of the new company's stock. The members would agree to guarantee the railroads steady

1:02:37traffic. And in exchange, the railroads would grant the refiners three things. First, they would give them rebates. The railroads would publicly double all of their freight rates, but then they would secretly hand the members half the rate back. Only companies not in the South Improvement Co would pay retail. Second, and this was the real innovation, something called drawbacks. The railroads would also pay members an additional cut of what their competitors paid in freight. On one route, for example,

1:03:11Standard Oil would collect as a rebate 40 cents for every barrel it shipped. And then they'd receive another 40 cents for every barrel its competitors shipped. Rivals would partly be funding the war chest of the very company crushing them. And the biggest rivals would be funding them the most. Third, it gave them information. The railroads would also report the members' competitors' shipments. Every shipper, every barrel, every destination would be reported almost in real time. This information

1:03:45was something Rockefeller valued more than money. If he knew his rival's numbers, he wouldn't really be competing with them anymore. He would basically be managing them. And it would make buying them a whole lot easier. All members were sworn to secrecy. You can hear Rockefeller talk himself into the scheme in the letters home to his wife. The project grows on me, he wrote to her. He was stuck in New York, and he hated it. The city was full of sham, flattery, and deceptions, he wrote, while at home was a haven of rest and freedom. He missed her badly. One night, the homesickness followed him into sleep. I dreamed last

1:04:21night of the girl Celestia Spellman, he wrote, calling her by her maiden name. They had been married for seven years. So here was the shape of his days. By daylight, he sat in a closed room with a handful of men, drawing up a secret plan to bend the entire oil industry to their will. And by night, he lay in a hotel bed and dreamed of his high school sweetheart. When the talks dragged into January and he was desperate to get home, the other men would not let him leave. They knew how badly they needed him.

1:04:52They are nervous and lean on me, he wrote his wife. I feel like a caged lion and would roar if it would do any good. The plan was for the new raids to take effect quietly on the industry. But instead, in late February 1872, a railroad freight agent, not knowing the new raids were to be kept secret for the present, posted them early. The next morning, the people of the Pennsylvania oil regions work up to read that freight rates had doubled overnight. The region exploded. 3,000 people stormed the

1:05:24Titusville Opera House waving banners that read, Down with the Conspirators. The producers organized overnight and refused to sell a single barrel of crude to any member of the scheme. A local paper began printing the conspirators' names every day on its front page in a black box like a death notice. Mobs defaced Standard's blue barrels with skulls and crossbones. Men tore up railroad tracks and raided tank cars and spilled the oil into the dirt. And it was here, in these furious weeks,

1:05:58that the wider world first learned the name John D. Rockefeller. The boycott was no joke. It starved his refineries of crude oil, and he had to temporarily lay off 90% of his workers. Along Oil Creek, mothers took to scolding their children with his name like a boogeyman. Run, children, or Rockefeller will get you. Back in Cleveland, he had to start posting policemen outside of his office and his home. He even began keeping a revolver by his bed. But he said nothing publicly. Not one word in his own

1:06:31defense. He believed that his silence would look like confidence. But instead, many assumed the silence meant guilt. It was a mistake he would repeat again and again for the next 40 years. He summed up his attitude in a single line. You can abuse me. You can strike me so long as you let me have my own way. Years later, he would regret his silence. The letters home show what he was telling himself through these weeks. We will do the right thing and not be troubled about what the papers say, he wrote to SETI, in the middle of the boycott.

1:07:05I want to act perfectly, conscientiously, and fearlessly in the matter and feel confident of good results. A week later, he wrote again, We know a few things the people generally may not. At all events, we know our own intentions, and they are right and only so. In a town along Oil Creek, Pennsylvania, a 14-year-old girl watched her father, an oil producer, come home one night with a grim look on his face. He had signed a pledge to he told his family that he would not sell out to the Cleveland ogre known as Standard Oil. Her name

1:07:40was Ida Tarbell, and hers was a name that Rockefeller would come to know very well in a few decades. Because of the public outcry, the South Improvement Company died before it ever started. Despite what was happening, Rockefeller was steadfast, but the railroad, sensing the political winds, caved within weeks and canceled all the contracts. The Pennsylvania legislature next revoked the company's charter. A congressional committee branded the whole thing as the most gigantic and daring conspiracy ever to

1:08:11confront a free nation. By April 1872, the South Improvement Company was officially dead, and Rockefeller himself wired the other producers to say all the contracts were void. For the rest of his life, he protested that the company had never done any business at all. There was never a shipment made or a rebate or a drawback collected under the South Improvement Plan. And all of that was completely true. It was also besides the point because Rockefeller and Standard Oil hadn't actually needed the scheme to succeed as a business to prove valuable.

1:08:46The idea that it existed put fear into the heart of every refiner in Cleveland. The independent refiners of Cleveland had spent that winter hearing a variety of rumors. Rumors that Standard Oil and the railroads were cooking up some secret pact. That refiners outside of it would be cut off from crude entirely. That any resistance to this would mean their ruin. 1871 had already been a terrible year for all the refiners in the city as kerosene prices, already low, dropped another 25%. And now this hung over them.

1:09:24Think about what it was like to be one of those refiners. You've been in the business five or ten years. Maybe you've made money in the early good years and scraped through the recent bad ones. But now a quiet young man in a dark suit arrives offering to buy your business. Rockefeller came to see them all, one by one. And he brought his books with him. He showed them Standard Oil's finances and exactly why the industry had to consolidate. We went to one concern at a time, he recalled, and finished with them before we took up the next. He started with the largest and deepest pocketed firm

1:09:58in the city. Rockefeller invited its lending partner, who happened to be an old high school classmate of his, to the parlor of a downtown bank and made his pitch for an oil industry under Standard Oil's control. The man listened and then wanted to see Standard's books. Examining the ledgers, he was thunderstruck by the profits. Let us get the appraisers in, he finally said, and see what the plant is worth. They negotiated and soon sold out to Standard for $400,000. Rockefeller felt that he had overpaid,

1:10:30but couldn't resist as the deal would make it easier to acquire the others. His pitch to the rest of the refiners, pierced together afterward from sworn testimony of some of the men who heard it, went like this. This scheme is bound to work. It means an absolute control by us of the oil business. There's no chance for anyone outside of it. But we're going to give everybody a chance to come in. You are to turn over your refinery to my appraisers, and I will give you Standard Oil Company stock or cash, as you prefer, for the value we put on it. I advise you to take the stock.

1:11:06Frank Rockefeller, Rockefeller's own brother, later told Congress that the hard version sounded like, if you don't sell your property to us, it will be valueless because we've got advantages with the railroads. Among the men who came to him was Isaac Hewitt, who was now one of the partners in a rival refinery. Hewitt, remember, was the man who gave John D. Rockefeller his first position as a bookkeeper. And now he came to his former clerk's house on Usled Avenue, hat in hand, to plead for his

1:11:37business. Together they strolled down the avenue where Rockefeller told his old boss bluntly that his firm would not survive, that he should take the deal. Then Rockefeller added a sentence that entered Rockefeller folklore. I have ways of making money you know nothing about. And he was right. Another refinery, John Heisel, claimed that he got the same pitch. But after he heard it, he told Rockefeller that he wasn't afraid of him. To which Rockefeller responded, you may not be afraid to have your hand

1:12:10cut off, but your body will suffer. In four weeks, between mid-February and mid-March 1872, Standard Oil bought out 22 of Cleveland's 26 refineries. During one 48-hour stretch in early March, they bought six. Historians would call it the Cleveland Massacre. Each refiner was offered cash or Standard Oil stock. Rockefeller recommended that they take the stock. Most took the cash. The few who took stock and held it

1:12:42would become some of the wealthiest men Cleveland had ever known. Rockefeller understood exactly why most of them took the cash instead of the stock. He explained it himself years later, and the explanation has lost none of its edge. They knew that the oil business under the existing conditions was doomed. But they lacked faith in me. They didn't believe I could succeed in what I was undertaking. So when I offered them either spot cash outright for their property or stock in the new

1:13:12company, they took my money and laughed in their sleeves at my folly. They didn't see how I could succeed. They believed I was doomed to failure. So they took my money and scorned the stock. Later, when the company did succeed and the stock which I had offered them and they declined to accept took a value vastly greater than the money I had paid them, they heaped censure upon me for their short-sightedness and accused me of having tricked them. These were not strangers. These were his fellow

1:13:43Clevelanders. Some sat in the same church as him and had for decades. He had known these men and their families, and he absorbed their businesses anyway. Rockefeller didn't see a contradiction. To him, it was simple. The industry was overbuilt. He was offering them a way out of the failing businesses. The only way out is he saw it. He later described Standard Oil in biblical terms as an angel of mercy, reaching down from the sky and inviting the struggling refiners into the ark he

1:14:13had built. All of these purchases of refineries he wrote in his memoir were conducted with the utmost fairness and good faith on our part. Decades later, when he was no longer in the business, Rockefeller was asked to reflect on those moments. He had no regrets. It was right, he said. I knew it as a matter of conscience. It was right before me and my God. If I had to do it tomorrow, I would do it again in the same way. Do it a hundred times. The interviewer next asked him an obvious question.

1:14:46With all of Standard Oil's advantages, why bother taking in the weak firms it competed with? Why not just let them fail? His answer is the plainest account he ever gave of his own logic and reveals something about competition that a lot of people miss. It is to be remembered that oftentimes the most difficult competition comes not from the strong, intelligent, conservative competitor, but from the man who is holding on by the eyelids, is ignorant of his costs, and anyway has got to keep

1:15:16running or bust. Oft times if a man is doing business to a disadvantages where to close down his works and throw up his hands, it would be a notice to his bankers and other creditors that he could not do business anymore at a profit. He must keep up or they would close in on him. He would lose all if he stops, and he will probably lose all anyhow. Rockefeller wanted to eliminate irrational competition. It was the same idea that he had formed in 1869, watching refined oil sell for less

1:15:49than crude. But now the idea was fully grown and tested in battle. He had bet everything he had on cooperation, beating competition, and in Cleveland, in just four weeks, it had. Late in his life, he compressed the whole philosophy into two sentences that could stand as the epitaph of the era he created. The day of combination is here to stay. Individualism has gone, never to return. The refiners who had refused Standard's offer found out what happened next. With the additional scale,

1:16:21Standard's cost advantages widened. As a result, Standard could easily lower their prices and force the others to lower theirs to compete. Most of the holdouts went broke within 18 months. And then, after absorbing a competitor, Standard would keep the old company's name on the door. The exact same sign, as if nothing at all had changed. A man who wanted to sell his oil to an independent Cleveland refiner could walk into a building and negotiate what he thought was a good deal Standard Oil would have no part of, and never know he was still selling to Standard Oil.

1:16:54Standard Oil did this deliberately. They were designed to be invisible. And at night, after a day of buying up refineries and assembling what was becoming the largest industrial operation in the country, Rockefeller still got into bed and gave himself a nightly sermon. He'd been preaching to that pillow for years, but the text had changed. The man who now owned Cleveland warned himself about something else. Now, a little success. Soon you will fall down. Soon you will be overthrown.

1:17:24Look out. Go steady. He was warning himself against complacency and pride. The same man who had absorbed 22 refineries in just six weeks was telling himself every night to keep going steady. He wasn't even close to being done yet. While the oil regions were starting to burn his name and tear up railroad tracks, Rockefeller went home each night, usually at the same hour, but now to a brick house at 424 Euclid Avenue.

1:17:55Euclid Avenue had become Cleveland's showpiece. It was a wide street under a canopy of elm trees that locals had started calling Millionaire's Row. The new fortunes in oil as well as iron and the railroads had built mansions there that looked like castles. The Rockefeller house looked like none of them. It was solid, two stories tall, but deliberately plain. A pedestrian walking past might have guessed its owner was a moderately successful

1:18:25dry goods merchant. And that was precisely the impression that Rockefeller wanted to give. I hate frills, he later said. Useful things, beautiful things are admirable, but frills, affectations, more pretenses of being something very fine bore me very much. Inside that plain house, a family was growing. Bessie had come first in 1866, and then came the second daughter, Alice, born in 1869. Sadly, she lived just a year. And then Alta in 1871, and Edith in the summer of 1872, just months after

1:19:05the Cleveland Massacre vaulted Standard into being the largest oil refiner on the planet. And then, on a January morning 1874, Rockefeller arrived at the Standard Oil office and told Henry Flager the news with tears in his eyes. Said he had given birth to a boy. They had named him John Jr. The family would call him Jr. all of his life. How glad we were that that baby was a boy, said he wrote, and that he was perfectly formed. So, picture the household of the most hated man

1:19:36in the oil regions in the mid-1870s. Three little girls, and now a baby boy. They'd say morning prayers before breakfast where a latecomer would have to pay a one-cent fine. As the children grew, they developed a homemade economy that ran on daily chores. Rockefeller faced a problem his own parents had never had. How do you raise children atop a growing fortune without ruining them? His answer was to hide the fortune. The children never once visited his office or the

1:20:08refineries. They wore hand-me-downs. John Jr. would wear his sister's dresses for years. And at home, Rockefeller had built a make-believe market where Setti was the general manager. He had each child keep an account book of their own tiny replica of the Ledger A he had kept since he was a boy. They would tally their income and expenses. They could earn two cents for killing flies or ten cents for sharpening pencils. In the summer, they'd be paid a penny for every ten weeds

1:20:40pulled from the vegetable garden. Throughout the year, he'd pay them two cents a day for abstaining from candy, with a bonus for each consecutive day of abstinence. The children of the now richest man in Cleveland grew up with about the same creature comforts their father had known. Setti went even a step farther than her husband. When the children got old enough to want bicycles, Rockefeller suggested buying one for each of them. No, said Setti. We will buy just one for all of them. But my dear, Rockefeller protested, tricycles do not cost much. That is true, she replied. It's not the cost. But if

1:21:17they have just one, they will learn to give up to one another. So the four children shared a single bicycle. Setti also ran the moral side of the house, and she ran it with a firmness that could take your breath away. She once told a neighbor, I am so glad my son has told me what he wants for Christmas, so now it can be denied him. But her economy was hardest on herself. She wore patches on her clothes her whole life, and once shocked an acquaintance by insisting that a young woman needed just two dresses in her wardrobe. She did much of the housework herself, along with two maids,

1:21:52when the household could have afforded an army of servants. With the children, she was hardest on John Jr. because he was the most like her. Obedient, dutiful, and almost too eager to please. When people complimented Rockefeller on his son, he protested truthfully. It was his mother who developed him. She developed Rockefeller too. Later in life, he said a thing about her he never quite said about anyone else. Her judgment was always better than mine. Without her keen advice,

1:22:23I would be a poor man. He did not deal in overstatement, so from him that was the highest kind of praise possible. And she may well have been the reason he could do what he did all day and still sleep at night. When it came to money, Seti's focus was on how it was used. The way it was made, she left to her husband. Rockefeller himself was, by every account, the gentle one. Junior could not recall a single instance of his father's anger. Not one in his entire childhood. He was a beloved

1:22:57companion, Junior said. He had a genius with children. He never told us what to do or what not to do. He was one with us. It turns out the famously cold, silent man in public was at home a performer. He balanced fine china plates on the tip of his nose at dinner. He played blind man's bluff with his kids with real cunning, with feints and sudden turns and always whooping around the room if he won. He taught the children to swim and skate and ride horses. He had a telegraph wire run

1:23:31between his office and his house so he could spend three or four afternoons a week at home, planting trees and playing with his kids. All the while, he kept one of the largest companies on earth humming along down the road. It was a warm home, but an insulated one. The children had no school friends because there was no school, only governesses. Visitors were the carefully screened children of fellow church families. The Rockefeller children were being raised inside a fortress of certainty,

1:24:01and the world outside its walls was depicted as a place of saloons, card games, and sin. Two more figures completed the household picture. The first was Rockefeller's mother, Eliza, who spent her summers with the family. The woman who had once held the farm together while her husband vanished for months now sat next to her son at the table, and Rockefeller would hold her hand lovingly throughout the meal. Grandmother trusted father absolutely junior remembered. The second figure appeared

1:24:32less often and without warning. Once or twice a year, an old man with a red beard and a diamond stick pen would turn up behind a fine team of horses and ride grandly up Euclid Avenue. Rockefeller's father, Big Bill. His grandchildren adored him. He gave them rifles and taught them to shoot. He played the fiddle and told tall tales. But after a few uproarious days, he would vanish again, giving no hint of where he was going or when he would be back. The children had no idea that their jolly grandfather was now

1:25:07living under a false name in Illinois with a second wife who knew nothing of their existence. Rockefeller never wrote to his father and never spoke a word publicly against him. To strangers, he described him only as a fine, upstanding man. But he had spent his whole life becoming that man's exact opposite. A husband who came home at the same hour every night to the same wife forever. Their household on Euclid Avenue with its prayers and its penny fines and its account books was many things.

1:25:39But underneath them all, it could be seen as a 30-year argument with his father. On a Thursday morning in September 1873, the largest bank in America failed. J. Cook & Company was the bank that had sold the bonds that financed the Union side of the Civil War. Most Americans considered it as solid as the U.S. government itself. But Cook had lately sunk enormous sums into building a second transcontinental railroad that wasn't paying off. When the money ran out, the bank had to shut its doors.

1:26:12And the news set off a run on all the banks. Depositors rushed to pull their savings out of every bank until those failed too. The stock exchange in New York closed its doors for 10 whole days, something that had never happened before. It would become known as the Panic of 1873. And that panic would become a depression that ground on for six long years. The price of crude oil sank to 48 cents a barrel, which in some towns made it cheaper than water.

1:26:46For any of the remaining struggling oil refiners, the depression was the end. For Standard Oil, it was the clearance sale. As Rockefeller would later say, the strong feed during depressions. Standard had the largest cash reserves, the lowest costs, and massive storage capacity to buy out his struggling competitors for pennies on the dollar. And seeing the news, Rockefeller even cut their dividend to pile up more cash. Refiners who had held out against him in good

1:27:18times simply couldn't during this slump. And when the cash did grow scarce, Standard could simply pay with its own stock. After the Cleveland massacre, the Standard Oil Consortium went national, and it went fast. In the summer of 1874, Rockefeller invited two prominent oil refiners to meet him and Henry Flagler at Saratoga. The men were William Warden from Philadelphia and Charles Lockhart from Pittsburgh. They had breakfast together, then they talked for six hours in a pavilion while resort guests strolled

1:27:52outside. Rockefeller laid out what he'd already done in Cleveland. In the last year alone, he told them that he'd shipped over 700,000 barrels and earned over a million dollars. He showed them his books, and then he made his pitch. Wharton and Lockhart would transfer their Philadelphia and Pittsburgh refineries to him in exchange for Standard Oil stock. They would both come work for him, and he would in turn start absorbing their neighboring refineries as rapidly as persuasion or other means could bring

1:28:24it about. They would keep the same names on all the doors. Nobody outside that room would know. Wharton and Lockhart agreed. Next, in October 1874, Standard brought in Charles Pratt and Company of New York, the New York Oil Company. New York had the best market for oil and was the gateway to the world's exports. It was the last major piece of the puzzle. Fully nine of ten barrels of oil refined in the

1:28:55United States was now passing through Standard Oil. And here's the part his enemies would never give him credit for. As Standard swallowed the chaos of the industry and squeezed the waste out of the trade, the price of kerosene fell and kept falling until the light that had once been a luxury was something almost any family could afford. And true to their name, the product had gotten safer. Kerosene had long been dangerously inconsistent, with bad, over-volatile batches turning lamps into bombs that

1:29:28could burn a house down. A barrel that carried the word Standard increasingly became a promise. This oil would burn clean and not blow up the lamp. On July 8, 1879, John D. Rockefeller turned 40. He was now one of the 20 richest men in America, and almost nobody in America knew it. And that was just the way he liked it. When a newspaper that year guessed his fortune, it said $5 million. And he didn't correct them. He never did. But we know now that a Standard Oil stock alone at the time was

1:30:04worth about $18 million. The press had really only just discovered Rockefeller. The year before, the New York Sun ended his obscurity with the first real profile of him ever printed. Exposing his monopoly, it called him one of the great commercial intellects of the country. But it also concluded that his success rested on some secret bargain with the railroads that people could sense but never quite prove. That double image of genius and suspect would follow him to the grave. The cost of building the

1:30:36machine was starting to show. He had been losing weight and was now lean to the point of gaunt, and his family had to remind him to buy a new suit when his old one got shiny. I'm eating celery, he wrote to his mother in 1878, which I understand to be very good for nervous difficulty. Decades later, as the richest man in the world, he admitted what those years had actually been like for him. For years on end, I never had a solid night's sleep worrying about how it was to come out. All the fortune that I have made has not served to compensate for the anxiety of that period.

1:31:12His wife said he was paying too. In 1876, the doctors diagnosed her as consumptive, and the family began organizing itself around her fragile health. Which is part of how they came to by an estate called Forest Hill. Rockefeller had bought the land in 1873. It was 79 wooded acres on a hill east of the city of Cleveland, with ravines and gullies and a view of Lake Erie. Starting in 1877, the family began spending whole summers there, partly in the hope that the lake air

1:31:45would do saidy good. It was a rambling house that had been built as a hotel, and critics would later mock it as a monument of cheap ugliness. Rockefeller didn't care. Oh, I like Forest Hill very much better than any other home, he remarked. Forest Hill became his favorite place in the world, the place he started spending more and more time at. One summer, he dammed a stream to make two lakes, one for boating and one for swimming. And on hot days, he swam the mile-long circuit with a straw hat perched on his head

1:32:17to keep the sun off. Then, in winters, he flooded a pond for skating, and as many as 50 people, many of them strangers from the neighborhood, would skate on it. Since his faith would not allow the pond to be flooded on this Sabbath, he sometimes rose after midnight on Sunday to direct the workmen in preparing the ice for Monday. One of the richest men most Americans had never heard of, knee-deep in January, supervising a skating pond at one in the morning. That was Rockefeller at 40. At Standard Oil,

1:32:50by the mid-1870s, the fight had moved out of the refineries into the oil fields again. A new threat had emerged. It was a pipe. The industry had evolved. Crude oil no longer traveled from a well to a railroad in barrels on a teamster's wagon, as it had 20 years before. Barrels were now barely even used. Crude oil now traveled through short pipelines to trains where it was loaded onto tanker cars. Standard Oil had bought and built its way into control of nearly all of these short pipelines.

1:33:25When a driller stuck oil, a Standard Oil crew would swoop in to connect the new well to their system immediately. Almost all Pennsylvania crude now began its journey above ground in Rockefeller pipe and finished it on a railroad whose rates Rockefeller had carefully arranged. In late 1877, the desperate remaining independent refiners crowded into Titusville, Pennsylvania for what they called a Petroleum Parliament. They were all hunting for a way out from under the Standard Oil machine.

1:33:58The idea they landed on sounded close to impossible, a massive pipeline designed to move crude oil long distances over 100 miles. At the time, the longest pipeline ran just 30 miles, and nobody knew whether crude oil could be pumped over such a distance at all. The independent refiners proposed to find out. They called it the Tidewater Pipeline. The plan was audacious. It would be a 6-inch pipe running from the Pennsylvania oil fields up and over the Allegheny Mountains to a railhead owned by Philadelphia's

1:34:34Reading Railroad. It was one of the few railroads not yet under Standard Oil's thumb. It would carry the oil the rest of the way. If they could do it, they wouldn't need to pay any rebates to Standard Oil. If it worked, the freight advantages Standard Oil used to control in the industry would be worth nothing. Inside Standard Oil, the first reaction to hearing this was laughter. One of Standard's lieutenants wrote to Rockefeller that he was greatly amused by this pipeline scheme. Rockefeller wasn't laughing,

1:35:06though. He wrote back cautiously. They're quite likely to have some disappointments, yet, he predicted, before consummating all of their plans in that direction. Then he said about manufacturing those disappointments himself. Standard Oil fought in every direction at once. They bought up massive strips of land running in straight lines across Pennsylvania. These became known as deadlines that the pipe would not be able to legally cross. Bewildered Pennsylvania farmers woke

1:35:37up rich as Standard Oil agents swept through their sleepy towns paying extravagant sums for farmland that had been worth just a fraction of the sum the week before. Not being able to buy all the land, though. Standard Next planted stories in local papers warning farmers that a pipeline could leak and poison their crops. Then they started offering cut rates to any refiner who was tempted to become a Tidewater Pipeline customer. Then they went even a step further and simply bought many of the refineries that were thinking of signing on. And they also had help. The railroads, the other party

1:36:14greatly threatened by a pipeline, stepped in and refused the pipe permission to cross their tracks. But the pipeline was being built anyway. When it was near completion, Rockefeller quietly offered $300,000 just to buy his own stake in the project. He was refused. In May 1879, the great pumps word to life and the oil started its journey east. Nobody knew if it could climb the mountains. For seven full days, the whole oil world tracked its slow crawl across Pennsylvania up over the mountains.

1:36:50Then finally, the first oil sputtered out at the far end, 109 miles away. The oil regions erupted in jubilation. The newspaper ranked the pipeline among the great engineering feats of the age. The damn thing worked. Inside Standard Oil, there was silence. One Standard Oil executive wrote to Rockefeller that I feel extremely satisfied that the Tidewater Pipeline can be stopped and torn up if it is thought best to do it. I think that the sooner the Tidewater knows this, the better.

1:37:26Rockefeller vetoed this idea. He had something more elegant in mind. He reached for his old playbook. Standard Oil cut its rates and the railroads cut theirs to levels one freight agent said barely covered the wheel grease on the railroads. This price war soon had the new pipeline running at