Late 19th century American industrialists were latter day robber barons, amassing great wealth through unfair and anti-competitive business practices.
At least, that’s how they are routinely portrayed by radicals, opportunists, and sore losers.
Consider the case of John D. Rockefeller, Senior. Rockefeller made a fortune producing and distributing kerosene for household lighting in the 1870s. Rockefeller was a devoted member of his church, vowed to give away 10% of his earnings from the time he landed his first job, and was always looking for ways to cut costs. Though some believe he was the richest man in history, he and his wife Cettie lived relatively simple lives. Rockefeller was a great philanthropist—as skilled in donating money for the benefit of mankind as he was at earning it.
Rockefeller had a hugely positive impact on education, medical research, and the welfare of disadvantaged Americans. He transformed a small college into a world-class university (the University of Chicago). He founded the Rockefeller Institute for Medical Research (now Rockefeller University). Growing up in the 1850s, he found slavery repugnant, and educating African Americans became a life-long cause. Rockefeller started an organization that eradicated hookworm disease in the southern U.S. He gave generously to Johns Hopkins University in Baltimore and Peking Union Medical College in China.
Rockefeller is accused of being a monopolist who conspired to crush competitors in order to drive up prices. That is simply not true. Rockefeller did leave competitors in the dust—by developing more efficient means of drilling oil, refining it, and distributing kerosene and other products. Though he dominated the market for many years, he had substantial competition. By the time efforts to break up Standard Oil got into gear, the company was losing share in a changing market. Ironically, the breakup drove up the value of Rockefeller’s stock holdings, making him richer than before.
Rockefeller’s detractors were motivated by more than just a sense of fairness. His first vocal critic, Henry Demarest Lloyd, once referred to himself as a “socialist-anarchist-communist-individualist-collectivist-cooperative-aristocratic-democrat.” Rockefeller’s most effective critic, Ida Tarbell, was hardly in a position to be objective: her father entered the oil production and refining business just as Rockefeller’s business was taking off. Though Tarbell did not paint Rockefeller as all bad, she accused him of cheating the widow of a small lubricant manufacturer when he purchased her husband’s business. Actually, out of charity Rockefeller knowingly paid more than the business was worth. After receiving an accusatory letter from the widow, Rockefeller offered to return the business for a refund. She did not accept his offer.
The Rockefeller Institute for Medical Research (RIMR) was founded in 1901 to conduct biomedical research. Though Rockefeller favored homeopathic remedies for himself, he was convinced by Frederick T. Gates of the need for a scientific institute along the lines of the Pasteur Institute in France and Koch Institute in Germany. RIMR went on to become the home of more than 20 Nobel Prize winners. One of the Prize recipients was Alexis Carrel, who developed a standard technique for suturing blood vessels and collaborated with Charles Lindbergh on research that led to open heart surgery and organ transplants.
Was Rockefeller a business cheat? Certainly he was a tough businessman and some of his tactics are now considered anti-competitive. However, there were few rules at the time, and it’s hard to see how teaming up with others to drive down prices paid by consumers was such a bad thing. Perhaps Rockefeller’s biggest mistake was delegating authority to less fastidious employees.
Rockefeller did not give away money just to deflect criticism. He devoted tremendous time and energy to ensure his philanthropic enterprises met their goals. Yes, he built an oil empire and became extremely wealthy. But he gave back to society even more.