Titan

RON CHERNOW

Reviewed by Jack

The metal titanium was named after the Titans, a mythological race of powerful Greek men. If we gave crude oil such a namesake today, we would call it Rockefeller, after the first man to transform this natural resource’s power into a worldwide commodity and wealth-amassing enterprise. John D. Rockefeller set the standard (no pun intended) for big business, and it is his story that esteemed biographer Ron Chernow tells in Titan.

Rockefeller was in the right place at the right time to make history: Cleveland, Ohio, in 1853. Cleveland was home to one of five major refinery areas in America, and the young Rockefeller, having moved to Cleveland with his family during his teenage years, became an expert in converting petroleum into kerosene to be used for lighting. His career grew spectacularly in the early days because of hard work and his ability to cut costs and understand the big picture. Petroleum traveled on the railroads in barrels, and Rockefeller discovered he could make his own barrels cheaper than outsourcing them, thereby saving $150 per barrel: just one small example of his thrift. He also had the unusual advantage of being able to secure loans from local bankers because of his trustworthy Puritan upbringing and his smart business sense. By 1868—just five years after he began—his plants’ refining capacity was greater than the next three largest refineries combined. In 1870, Standard Oil was born.

Chernow makes it clear in his retelling that Rockefeller was aggressive in his desire to maximize profits and change the industry. In 1871, the head of the Pennsylvania Railroad proposed a consolidation of the fragmented refining industry that would have benefitted Rockefeller greatly. The plan was never implemented because when word leaked out about the estimated 100 percent increase in shipping charges—the profits from which would be shared by Standard Oil and the railroads—some refiners in the East protested. Things got violent in a Pennsylvania oil field, and after the upheaval, the railroads backed off and lowered their rates. Still, Rockefeller tried another approach and started to buy oil refineries and strengthen his hold on refining. He used aggressive tactics like selling below cost to show the other owners that they needed to sell before he put them out of business. In 1872, he bought up twenty-two of the twenty-six Cleveland competitors in a mere six weeks.

Ten years later, Rockefeller had multiple businesses in multiple states, which proved unwieldy to manage, and so the Standard Oil Trust was created to bring control to the diverse businesses. Despite the fact that the price of kerosene—the major commodity—dropped by 80 percent over the life of the company, the Trust had severe public relations issues because of Rockefeller’s aggressive business practices. These business practices were not illegal since there were no laws in place to rein in this kind of big business. As a result, less than a decade later, the government ordered the breakup of Standard Oil. Very few organizations have been combated by acts of Congress, but the Sherman Antitrust legislation was created in response to the Standard Oil Trust. Today, you need only to look at the growth of Wal-Mart and Microsoft as contemporary examples of companies struggling against bad public relations and accusations of acting as a monopoly.

“He embodied all [of American life’s] virtues of thrift, self-reliance, hard work, and unflagging enterprise. Yet as someone who flouted government and rode roughshod over competitors, he also personified many of its most egregious vices.”

Chernow emphasizes that Rockefeller’s questionable tactics and towering successes were tempered by many years of philanthropy. This dichotomy makes for an intriguing biography, and the author’s passion for his subject is recognizable throughout. Chernow writes: “By the time Rockefeller died, in fact, so much good had unexpectedly flowered from so much evil that God might even have greeted him on the other side, as the titan had so confidently expected all along.”

Rockefeller was a deeply religious man who believed that he was put on the earth to make money, with which he was to make others’ lives better. He insisted that his greatest humanitarian accomplishment was not the philanthropic work he did in his later life, but the jobs he provided and the cheap kerosene he produced to light homes while he was making his money. But Rockefeller lived for ninety-eight years and spent more of his life giving money away than he did amassing it. While he didn’t participate in philanthropy in predictable ways—building libraries or music halls as Andrew Carnegie did—he gave money to promote research that would yield widespread results. He also gave large amounts of money to schools, including Spelman College for African American women in Atlanta, the University of Chicago, and what became Rockefeller University in New York City.

This titan of oil saw opportunity and went after his vision with everything he had. Today, we have seen the same titanic ambition in revolutionaries like Bill Gates and Sam Walton. When it comes to understanding how something as innovative as the personal computer or “big box” retailing came to exist, and how their success pushed the boundaries of what we know about business, it is always informative to look to the predecessors. Ron Chernow gives readers a complete picture of this forefather of big business. JC

Titan: The Life of John D. Rockefeller Sr., Vintage Books, Paperback Second Edition 2004, ISBN 9781400077304

WHERE TO NEXT? Here for the rebirth of an American industry Here for an understanding of the rules Rockefeller was leveraging Here for advice on competing with sharks like Rockefeller | EVEN MORE: The Prize by Daniel Yergin; Andrew Carnegie by David Nasaw; The People’s Tycoon by Steven Watts