Rockefeller Exits: 1892-1897

During 1891-92 all the evidence suggests that Rockefeller had a partial nervous breakdown from overwork. He lost all of his hair, including his eyebrows, and suffered from ill health in the early 1890s.

During this period Rockefeller's wealth had increased to such an extent that his major problem was what to do with it all. He solved this problem by hiring Frederick T. Gates in September of 1891 as a full-time manager of his fortune. By this time, Rockefeller was literally inundated with appeals from individuals and charities for funds. Gates not only removed this burden; he also oversaw all of Rockefeller’s investments, which were becoming huge in their own right. For example, by 1897 Rockefeller owned large holdings of the Missabe iron range in Minnesota, a railroad to carry the ore to Lake Superior, and a fleet of huge ore-carrying lake steamers. In 1901 Rockefeller sold his iron ore-related business to J.P. Morgan for $80,000,000 with an estimated profit of at least $50,000,000 -- a huge fortune in its own right, but it was just one of his investments. Morgan added the Rockefeller properties to the U.S. Steel Corporation.

By 1896, Rockefeller stopped going to his office daily and in 1897 he retired, at the age of 58. He took part in some management activity until 1899 but none to speak of thereafter. John Archbold ran Standard Oil from the mid-1890s onward. Archbold disliked prominence and asked Rockefeller to remain as the nominal president of Standard. Not publicly announcing his retirement was a great mistake on Rockefeller's part. Rockefeller had resisted the temptation to exploit the Standard's near-monopoly position by raising prices "too" much. Although Rockefeller's pricing policies did result in some "monopoly profits" for the Standard, they were fairly mild. Not so Archbold. He raised prices aggressively, and the dividends rolled in. The consequence was that Rockefeller got all the blame for the policies even though he had almost no further role in management.

Retirement and Philanthropy

It is commonly assumed that the philanthropy of John D. Rockefeller was a belated act of atonement, a tardy attempt to fumigate a malodorous fortune. In fact, Rockefeller never sought to exploit the publicity value of his largess, and allowed recipients to announce gifts if they so chose. Rockefeller was congenitally incapable of guilt or regret, and frequently said that his greatest gift to humanity was not his giant corporate philanthropies but Standard Oil, which had provided steady employment for tens of thousands of workers and bestowed cheap kerosene upon the masses.

Though we may view Rockefeller as an implausible blend of predatory monopolist and benevolent philanthropist he saw his own life as all of a piece and shaped by the same high-minded principles that he had absorbed in the Baptist church. “I remember clearly when the financial plan, if I might call it so, of my life was formed,” he reminisced in later years. “It was out in Ohio under the ministration of a dear old minister who preached, ‘get money, get it honestly, and then give it wisely.’ I wrote that down in a little book.”

The enigmatic Rockefeller was no less zealous in giving away money than in making it, with both the devil and angel in his nature perhaps making common cause. As an impoverished 16-year-old clerk in a Cleveland produce house, Rockefeller gave away 6 percent of his wages to charity, boosting that to 10 percent by age 20. Despite a bias toward Baptist causes, the 20-year-old Rockefeller also contributed money to a black man in Cincinnati in 1859 so that he could buy his wife out of slavery. The next year he gave to a black church, a Methodist church, and a Catholic orphanage. Rockefeller attributed his success as a philanthropist to the fact that he had been in training since adolescence. He didn’t wait until retirement to dream up ways of returning his money to society. He was extraordinarily charitable, long before he was notorious.

Rockefeller was a business prodigy. People remember the spindly little old man from the newsreels handing out dimes. So one tends to imagine that somehow Rockefeller was born at around the age of 75 or so. In fact, he was no less a boy wonder of the business world than Bill Gates. By his late thirties Rockefeller controlled 90 percent of the world’s oil refining, much as Gates by his late thirties controlled 90 percent of all the operating systems sold in new personal computers.