John Davison Rockefeller, industrialist, philanthropist, and founder of The Standard Oil Company became the world’s first billionaire on this day in 1916.
Rockefeller was born on a modest farm in Richford, New York in 1839, the second child of William and Eliza Rockefeller. As a child he supposedly announced that his two great ambitions in life were to earn US$100,000 and to live 100 years. While he fell short of his lifespan ambition by two years, he made up for it by surpassing his monetary objective by well over a billion dollars.
After working for some years as a bookkeeper in a small Ohio firm of merchants and shippers, Rockefeller started his first enterprise in the commission business with a partner named Maurice Clark in 1859. He financed the business with US$1,000 of his own savings alongside a loan from his father for the same amount. This same year, in nearby Pennsylvania, the first oil well was drilled and Rockefeller sensed a business opportunity. In 1863 Rockefeller and Clark entered the oil industry.
By 1870 Rockefeller had established Standard Oil. The company purchased refineries in Ohio and New York and the profits began to pile up. In 1882 all the properties were merged into the Standard Oil Trust which would become one of the world’s biggest multinational companies. It prospered beyond belief and Rockefeller’s personal wealth ballooned.
Through dodgy tactics such as underpricing, by 1904 Standard Oil managed to control over 90 percent of oil production in the United States and 85 percent of final sales. The public was up in arms and a government report identified unfair practices and methods of competition. This all boiled up to a 1911 Supreme Court ruling declaring Standard in violation of the Sherman Antitrust Act, effectively labeling it a monopoly and dissolving the company. The company was broken into smaller “baby Standards” and these included, among others, what is now ExxonMobile and Chevron.
Needless to say, Rockefeller, who had already stepped down from the front office, wasn’t daunted. At the time of the break up, Rockefeller reportedly owned almost a quarter of the company’s shares–and as these were transferred to smaller companies the value grew. So much so that by 1916 he was declared the world’s first billionaire. He used much of his wealth for philanthropic purposes, founding the University of Chicago, the General Education Board, the Institute for Medical Research, and the Rockefeller Foundation amongst others.
The wealth that Rockefeller amassed was astounding. Recently, Fortune Magazine attempted to measure the richest Americans in history by comparing their total wealth as a fraction of the total GDP at the time of their death. Rockefeller whose fortune at death was said to be worth $1.4 billion topped the list with an estimated wealth/GDP of 1/65. By comparison, Bill Gates whose wealth was recorded in 2006 at US$8.2 billion was, at the time of publication, ranked number five on the list with a calculated wealth/GDP of 1/152.