This month's ARI speaker Alex Epstein provided a very interesting presentation on JD Rockefeller. I’ve been intrigued by the robber-barons for years. And JD Rockefeller is near the top of my list of intriguing figures. For people who may not know, JD Rockefeller cut a figure much like “Mr. Burns” in the Simpsons.
Rockefeller went from running a neighborhood grocery store in Cleveland to controlling 90% of the world’s oil markets in a 20 year period. Rockefeller’s is a truly amazing success story.
Mr. Epstein emphasizes the efficiencies recognized by the Standard Oil Trust. He places many of the efficiencies realized during that time at the feet of the great man. But from what I’ve read many of these developments were brought into the fold by many of the member’s of the trust.
What Mr. Epstein avoids in the story is the structure and growth strategy of the Standard Oil Trust. When Rockefeller entered the business there were hundreds of oil refiners and distributors. Rockefeller brought many of these companies into the Trust. But typically Standard Oil only brought a few competitors into the Trust from each local market. Once they achieved a sufficient local momentum the Trust would use leverage to drive the remaining competitors out of business.
Absolute secrecy of Standard Oil Trust policies and practices was one of Rockefeller’s conditions for Trust members. I’ve not found any good references for the internal policies and practices of the Trust. Given his success, it appears Rockefeller could write the book on success within competitive markets. But much like Houdini, Rockefeller’s magic tricks were not publically revealed.
Is it fair to characterize Rockefeller as a robber baron?
JD Rockefeller
JD Rockefeller
Keep your sharpened steel sword, this wooden one will be all I need!
