John D. The Founding Father Of The Rockefellers

“John D. remembered Big Bill as the best of fathers. He did not drinkTHe taught the boys early to swim and shoot. In later years when John D. wanted to praise a man for his forthrightness or honesty he used words like “virile” and “manly,” characteristics Big Bill admired and sought to develop in his sons.”

“When John D. was still only a boy, the father began to train him to be head of the family during his long absences. The early responsibility perhaps helped to make him the abnormally serious youngster neighbors later recalled. “He used to walk slowly along, and often seemed to be thinking as he went.” When the family went calling on relatives, John D. drove the buggy, unharnessed and fed the horse after they reached their destination, and while Eliza and the grownups chatted “he told the other children what to do.””

“He was a loner. “Never mind the crowd,” he would tell John D. “Keep away from it. Tend to your own business.” When he returned from one of his mysterious trips with a fat roll of money, many were suspicious, some jealous. He was too good-natured to hate, but his swaggering ways were provoking.”

“Occasionally Big Bill took John D. on a business trip, once to Syracuse where they stayed in “a first-class hotel” that charged a dollar a day and had a marble-tiled floor in the lobby. The father would have seen to it the boy knew the cost of the room, for he talked constantly of the importance of money —to the point where young John D. seemed obsessed with it. As a child he bought candy by the pound and then sold it piece by piece to his brothers and sisters at a profit. He saved what he made. “I can still see upon the mantel the little box with the lattice top that I kept my money in, silver and gold. It was safe there. I had loaned out money and got interest on it before I was fourteen years old. And I knew well how to make out a note. My father taught me these things.””

“The father threw the boy into the world of business early on. He “used to dicker with me and buy things from me; taught me how to buy and sell.” Big Bill put the matter more bluntly: “I cheat my boys every chance I get. I want to make ’em sharp. I trade with the boys and I just beat them to be sharp traders.” He showed John D. what “a cord of good solid beech and maple was,” then sent the boy out to buy one for the family, warning him not to let the seller slip “any limbs in or any ‘punky’ wood. That was good training for me.””

“He taught John D. the rules that governed all transactions involving money. Debts were to be paid off and loans called in when due.”

“As a buyer he should be meticulous to demand what he paid for. As a seller he should get the best possible deal he could. Once a sale had been made both sides must live up to the letter of the agreement; a sale was a private contract that must be strictly observed.”

““Father Was Very Remarkable ” 13 agreed to do in all his business affairs.”

“Fidelity to a contract, or covenant as John D. preferred to call it, was the sign of a real man.”

““I know I have been pretty close in my dealings,” a contemporary of Big Bill’s once remarked, “but a bargain or promise once made by me has ever been regarded sacred and to be kept inviolable; no waver, no temptation to dishonesty, has ever assailed me, or ever crossed my mind as a suggestion.””

““These were men,” a modern spokesman for Big Bill’s generation has said, “who really believed that social contract was the basis of human society, that manhood was a state of social responsibility, that to be a man was not just to be a virile adult male but a male credited by a community of other males with being honest in their ceaseless mutual business dealings. Thus the contract principle was at once an ego ideal and a theory of society.””

“Big Bill also taught John D. that sentiment must not influence business relations. When he loaned one of his boys money, he demanded the going rate of interest and reciprocated if he borrowed from them. “We imbibed these ideas with our daily food, and where we did not emphasize them enough this wise, able and positive man found ways, without difficulty and very readily, to re-enforce his teachings,” the son said years later. “By the time I was a man—long before it — I had learned the underlying principles of business and the rules of business as well as many men acquire them by the time they are forty. I needed no one to advise me about the nature of transactions which I had been carrying on since childhood.””

““I WAS AFTER SOMETHING BIG””

“John D. made no close friends at Central High. Most of the students were from Cleveland’s elite. Few people then, except the most ambitious or the well-to-do, sent their children to high school. Among these city-bred youngsters John D. hid his country upbringing behind a “studious, grave and reserved” mien. Except in mathematics, where “his answer always was ready instantly,” the lessons came hard to him. His essays in English were, for a youngster, strikingly clear and direct without being brilliant. One schoolmate remembered him as the best debater in the school, but another recalled that at the weekly rhetoricals “his declamations were so quietly given that they were quite unemotional, one might say unimpressive.””

“The art of living, as John D. saw it, consisted of facing problems and solving them. “It has been that way all my life,” he said in old age, “find a problem, work at it, solve it as well as I can, put the administration in good hands, and then go on to the next.””

“i8 JOHN D. confidence and determination. He did not need to read an item in the local press to know it was “a most deplorable fact that a great many young men can find nothing to do.””

“After visiting every important firm in the city, he began the rounds again. He still refused “to go to any small establishment” or even to consider a stopgap job as clerk or messenger boy. “I was not discouraged,” he said later, but he must have shown signs of wilting, for at one point his father said, “It’s all right, John. You go out to the country, and I’ll take care of you.” When John D. thought of remaining dependent on his father, “a cold chill [ran] down my spine” and stiffened his resolve.”

“The date was September 26, and John D. ever after celebrated it as though it were a national holiday. On that day the flag always flew over the house. Years later, when rich and famous and while riding with a friend around Cleveland, he caught sight of a three-story brick building along the waterfront. “Look! Look!” he said. “Look at that rectangular building! I commenced my career there at four dollars a week.””

“The stereotype picture of a bookkeeper shows a man wearing an eyeshade and paper cuffs. He sits on a high stool hunched over a ledger. It is clear his job is tedious and dull- John D. could not argue with the picture but he could with the implications drawn from it. He found bookkeeping and all “the method and system” that went with it “delightful.” Nor did he see it as a “job”; it was a “position.” More than that, it was a “gentleman’s position.” And the title was misleading, at least in a small firm like Hewitt & Tuttle. The partners expected him to do a lot more than post the books.”

“Within a year after John D. had been hired Tuttle quit the business. Soon John D. was in charge of the office and “working side by side” with his employer. He posted the books, handled all cash, wrote the checks, paid the bills. “I soon became known as reliable in business.” People along the waterfront generally called him “Mr. Rockefeller,” although he was still in his teens. He worked as though he owned the firm. “I scrutinized every bill. If it had ever 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.” When someone questioned his conception of what was right, he could not be budged. One day the captain of a schooner gave him trouble.”

“Once he tried to check his obsession. “I have this day covenanted with myself not to be seen in No. 45 after 10 o’clock p.m. within thirty days.” Such promises were in vain and John D. soon had to admonish himself, “Don’t make any more such covenants.””

“He did not put in the long hours for money. During his three-month apprenticeship he got $16 a month. In his first full year he received $31 a month, then was raised to $50, and in his third and final year he got $58. Not the money but a fascination with business that can only be called a passion held him to the office. Figures in the ledgers were to him like words to a poet. The yearly account books resembled volumes of history. “I used to go over the old books,” he said once, and soon he knew more about the firm than Hewitt did and more about the commission business, past and present, than probably anyone in Cleveland.”

“JHewjtt & Tuttle’s ledgers, combined with experience, revealed something that neither the courses at Folsom’s Commercial College nor his father had taught him. “My eyes were opened to the business of transportation.””

“A large part of his time went to dealing with freight agents, schooner captains, barge canal owners. He learned more than how to negotiate settlements with them when shipments arrived late or damaged; in time he saw that posted rates, supposedly fixed, could also be negotiated. All was not as it seemed on the outside. A bill of lading might give the fixed rate, but a favored shipper at the end of the month would receive a rebate on that rate that could amount to a substantial sum.”

“John D. once said that the “three and a half years of business training I had in that commission house formed a large part of the foundation of my business career.” One of the things he learned was how not to run a business.”

“John D. passed impressions of the firm on to his father. Big Bill had loaned Hewitt a thousand dollars, and when the son made clear that the business was in trouble, he knew it was time to collect. He came to the office and demanded immediate payment —and got it. “When father looked at a man like that, the man was apt to do what he told him.””

““You come around next month” was a typical debtor’s gambit, to which John D. responded: “That’s what you always say, Mr. Wheelan. It isn’t fair; I still insist that we settle today. Then I shan’t have to come again, and you won’t have to be troubled.” “It won’t hurt Hewitt to wait a little longer.” “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.” The palaver would meander on for an hour or more, until the exhausted debtor would finally say, “Here it is. I never saw such a pestering collector.””

“In April 1859, three months short of his twentieth birthday, John D. opened his own commission house with a partner, Maurice B. Clark. Clark was twenty-eight years old, an immigrant from England who had met John D. at Folsom’s Commercial College. The idea of the partnership was his. He had saved $2,000, and he said that if John D. could ante up a similar sum, they would have enough capital to go into business for themselves. John D. had saved $800 —about half his salary over the past three and a half years. (The savings were not all from salary; he had made a few modest but profitable speculations in pork and flour.) “I talked the matter over with my father. He told me he had always intended to give each of his children $1,000 when they reached the age of twenty-one.” He would be glad to advance John D. the money at 10 percent interest until he came of age, when the debt would be wiped out. “I accepted gladly my father’s offer.””

“Borrow money in the present, Big Bill believed, in order to accumulate a fortune in the future. John D. practiced that philosophy. He was, Clark said later, “the greatest borrower I ever saw.” Though Clark’s name came first on the company’s calling cards, it was Rockefeller’s strategy that dominated the firm’s operations.”

“A circular Clark & Rockefeller spread among potential customers throughout the Midwest obliquely highlighted the Big BillJohn D. business philosophy. The firm was “prepared to make liberal advances on consignments of produce, etc.” In a day before commodity loans, farmers were often desperate for a quick return on what they had shipped to market. A firm that promised “liberal advances” not when the consignment had been sold but when the bill of lading had been received was bound to attract customers. All commission houses gave advances, but the word “liberal” set Clark & Rockefeller apart. In order to make those large advances the company must borrow, and borrow heavily, during its two busiest seasons, spring and fall. Big Bill helped out as much as he could — at io percent interest, of course—but his purse did not begin to meet his son’s needs.”

“From then on John D. was a familiar face at all Cleveland banks. The visits were not always pleasant. Older men resented his youth, his persistence. They suspected his judgment and often turned down his request for money. “What if the president of a bank refused to make me a loan? That was nothing. He might lecture me on the folly of making a loan for the purpose for which I was seeking it. That made no difference to me; simply meant that I must look elsewhere until I got what I wanted.””

“That persistence, always low-keyed but relentless, was especially annoying, and not just to bankers”

“In the first year Clark & Rockefeller did nearly a half million dollars in business and netted $4,400. The second year they netted $17,000. Their profits soared with the outbreak of the Civil War when the Union Army called for massive amounts of food and supplies. Within two years the firm had, for the day, become a big business. An advertisement in 1863 listed only a few of the commodities in the company warehouse at the moment: 1,300 barrels of salt, 500 bushels of clover seed, 800 bushels of timothy”

“The circulars in which the firm promised “liberal advances” also said it was prepared for “the management of any business.” In the latter part of 1859 a new one had come into being when Colonel Edwin L. Drake struck oil in western Pennsylvania. It is likely that the firm of Clark & Rockefeller, alert for any business, handled on consignment some of the crude that began to reach Cleveland early in i860 —and also the kerosene distilled from i”

“Samuel Andrews, whom both Clark and John D. knew, distilled a barrel of kerosene from crude oil —the first produced in Cleveland, Andrews later boasted. The cost was a fraction of that of the kerosene extracted from coal. Andrews believed that kerosene made from this new, cheap source would one day light the world.”

“The price of crude in the beginning was $20 a barrel. But as new wells came in the price plummeted and in 1863 fell to an average of $2 a barrel. The price of refined that year was around $13 a barrel. The cost of refining the oil was slight compared to other expenses. Freight charges were the heaviest. Oil was moved in barrels, and they were costly. In addition, a government caught in the midst of war had levied a tax of twenty cents a gallon on the refined product. Yet when all these costs were calculated, the profit margin was still huge, possibly as much as $5 to $8 a barrel on the refined product.”

“Little wonder that oil quickly came to be called black gold. And these miraculous profits could be reaped on a small capital investment: The cost of a refinery varied from around $1,000 to $1,500, and it took only a few men to run it. Still, refining oil was a speculative business; no one knew how long the supply of crude would last. Many thought that the discoveries in Pennsylvania were a fluke of nature that would soon end, much as coal mines or the silver and gold lodes in the West gave out. But while the bonanza lasted men rushed to share in it, as others had in the gold rush of ’49.”

“In early 1863 the inevitable came to be: the firm of Andrews, Clark & Company was formed. The Clark was Maurice’s brother James, who would go to the oil regions and concentrate on buying crude at the lowest possible prices. John D. and Maurice were the Company; they would preside over financial matters, transportation, and marketing. John D. entered into the arrangement nonchalantly, “thinking this was a little side issue, we retaining our interest in our business as produce merchants.’’”

““We have been asking too many loans in order to extend this oil business,” Maurice Clark said. “And the commission business, too. Why, altogether we have borrowed a hundred thousand dollars.” “We should borrow whenever we can safely extend the business by doing so.” “If that’s the way you want to do business we’d better dissolve and let you run your own affairs to suit yourself.””

“John D. had Andrews with him. He checked his credit rating with the banks. That done, he created a situation that backed the Clarks into a corner. The four partners met one evening in February 1865. The Clarks, assuming that their fellow Englishman Andrews was with them, once again called for a dissolution of the company. John D. agreed, and the Clarks left happy that they would soon be running the company bereft of Rockefeller, who would, of course, return to give full time to the commission house. The next day a notice of dissolution appeared in the Cleveland press. Then the astounded Clarks learned that Andrews was not with them. But the public announcement made it impossible for them to retreat from the proposal to dissolve. Reluctantly, they agreed that the firm should be auctioned off between competing parties. The bidding opened at $500 and soon reached $70,000. Maurice Clark said $72,000. John D. said $72,500 and appeared prepared to go still higher. “The business is yours,” Clark said. John D. offered to pay with a check, but Clark affably said there was no hurry, that he trusted John D.”