Beginning Oil Refining
In 1862, John Rockefeller began to seriously consider entering the oil industry. In 1863, he decided to lead his friends into the business of refining oil. Rockefeller, Maurice Clark and his brothers, and Samuel Adams formed Rockefeller, Andrew, Clark & Company. Around this time, the A&GW railroad was completed, giving Cleveland two routes to New York City. This was part of the reason Rockefeller entered the oil industry, because now there were multiple ways to transport oil.
Rockefeller was very meticulous. He paid attention to every small detail and was also very honest. Waste was avoided if at all possible and Rockefeller was devoted to increasing the efficiency of the operation. He built his own barrels with his own timber and his own iron and wood. Everything was about efficiency and attention to detail.
In 1865, after an argument, Rockefeller bought out the Clark brothers for $72,500 and gained leadership of the company. He hired his brother, William Rockefeller, and built another refinery and a New York office, to handle the export business. Headed by William, the export business became bigger than the domestic business.
In 1867, Henry Flagler joined the newly renamed Rockefeller, Andrews, and Flagler. Flagler was very alike to Rockefeller and had a similar sense of order. By 1868, Rockefeller, Andrews, & Flagler was the biggest oil refiner in the world. Part of their success was due to the differences that set them apart from other refiners. Many other refiners wasted the by-products of oil refining, but Rockefeller used everything.
In 1862, John Rockefeller began to seriously consider entering the oil industry. In 1863, he decided to lead his friends into the business of refining oil. Rockefeller, Maurice Clark and his brothers, and Samuel Adams formed Rockefeller, Andrew, Clark & Company. Around this time, the A&GW railroad was completed, giving Cleveland two routes to New York City. This was part of the reason Rockefeller entered the oil industry, because now there were multiple ways to transport oil.
Rockefeller was very meticulous. He paid attention to every small detail and was also very honest. Waste was avoided if at all possible and Rockefeller was devoted to increasing the efficiency of the operation. He built his own barrels with his own timber and his own iron and wood. Everything was about efficiency and attention to detail.
In 1865, after an argument, Rockefeller bought out the Clark brothers for $72,500 and gained leadership of the company. He hired his brother, William Rockefeller, and built another refinery and a New York office, to handle the export business. Headed by William, the export business became bigger than the domestic business.
In 1867, Henry Flagler joined the newly renamed Rockefeller, Andrews, and Flagler. Flagler was very alike to Rockefeller and had a similar sense of order. By 1868, Rockefeller, Andrews, & Flagler was the biggest oil refiner in the world. Part of their success was due to the differences that set them apart from other refiners. Many other refiners wasted the by-products of oil refining, but Rockefeller used everything.
Standard Oil
The Standard Oil Company was created in 1870, by John and William Rockefeller, Andrews, Flagler, and others. Some things that set Standard Oil apart were that rather than making deals with other companies for making things they needed, they simply made their own.
Rockefeller believed that the oil industry was in chaos. Since the entry costs were low in both refining and drilling, the market had a lot of crude oil accompanied by high levels of waste. His solution was to have a market with a few very large, highly efficient plants to organize the oil business; an oligopolistic market. This is what most other industries evolved into, but oil's transition stands out because it was led by one man: John Rockefeller. Throughout 1871, Rockefeller formulated his plan for combining all oil refineries into one huge organization/company with the objective of ending overcapacity and price-cutting.
Rockefeller's magnificent plan began with representatives (and he himself) going to his strongest competitors first, offering Standard Oil stock, partnership, jobs, and cash. By 1872, almost all refineries in Cleveland had been bought or merged and the inefficient facilities were rebuilt to Rockefeller's standards.
The company was expanded massively, but most competitors were unaware of this. Its owners were extraordinarily good at keeping transactions secret. Rockefeller began merging with even more refineries, many of which in the New York City area.
Standard Oil controlled 90% of the oil industry by 1879, and almost 70% of his oil was being exported overseas. Rockefeller was forty years old at this time. In 1882, the Standard Oil Trust was formed. A Board of Trustees was created, with Rockefeller as the leader. The nine Trustees held 23,314 of the 35,000 shares, with Rockefeller having 9,585 of those shares. The Trustees controlled about forty corporations.
Since Standard Oil endeavored to sell to every retail market (which it did), it was incredibly unpopular with everyone. Consumers and business-owners alike despised the company and its practices. As a result, Standard Oil became a target of political attack. A lawsuit filed against Standard Oil forced the Trust to be dissolved.
Rockefeller began to show signs of extreme overwork from 1891-1892, and he left his company to the hands of others and retired in 1897.
The Standard Oil Company was created in 1870, by John and William Rockefeller, Andrews, Flagler, and others. Some things that set Standard Oil apart were that rather than making deals with other companies for making things they needed, they simply made their own.
Rockefeller believed that the oil industry was in chaos. Since the entry costs were low in both refining and drilling, the market had a lot of crude oil accompanied by high levels of waste. His solution was to have a market with a few very large, highly efficient plants to organize the oil business; an oligopolistic market. This is what most other industries evolved into, but oil's transition stands out because it was led by one man: John Rockefeller. Throughout 1871, Rockefeller formulated his plan for combining all oil refineries into one huge organization/company with the objective of ending overcapacity and price-cutting.
Rockefeller's magnificent plan began with representatives (and he himself) going to his strongest competitors first, offering Standard Oil stock, partnership, jobs, and cash. By 1872, almost all refineries in Cleveland had been bought or merged and the inefficient facilities were rebuilt to Rockefeller's standards.
The company was expanded massively, but most competitors were unaware of this. Its owners were extraordinarily good at keeping transactions secret. Rockefeller began merging with even more refineries, many of which in the New York City area.
Standard Oil controlled 90% of the oil industry by 1879, and almost 70% of his oil was being exported overseas. Rockefeller was forty years old at this time. In 1882, the Standard Oil Trust was formed. A Board of Trustees was created, with Rockefeller as the leader. The nine Trustees held 23,314 of the 35,000 shares, with Rockefeller having 9,585 of those shares. The Trustees controlled about forty corporations.
Since Standard Oil endeavored to sell to every retail market (which it did), it was incredibly unpopular with everyone. Consumers and business-owners alike despised the company and its practices. As a result, Standard Oil became a target of political attack. A lawsuit filed against Standard Oil forced the Trust to be dissolved.
Rockefeller began to show signs of extreme overwork from 1891-1892, and he left his company to the hands of others and retired in 1897.