[S3E8] Titan: The Life of John D. Rockefeller, Sr.

Welcome to Business Books and Company. Every month we read great business books and explore how they can help us navigate our careers. Read along with us so you can become a stronger leader within your company or a more adept entrepreneur. This month we read Titan the Life of John D. Rockefeller by Ron Chernow. Rockefeller was the founder of Standard Oil, a company that was notorious for its monopolization of the oil industry in the late 19th century. An adept businessman and talented strategist, rockefeller was demonized throughout his career for his sometimes brutal tactics. During the latter half of his life, Rockefeller became America's foremost philanthropist, establishing a pattern of giving that has been emulated by many later tycoons. In this episode, we'll discuss John D. Rockefeller's life work, the economics of the late 19th century oil industry, and the lasting legacy of Standard Oil. But before we get into the book, let's introduce ourselves.

I'm David Short, I'm a product manager.

I'm Kevin Hudak, chief research officer at a commercial real estate research and advisory services firm.

And I'm David Kopeck. I'm an associate professor of computer science at a teaching college. Okay, let's start out with the author, the very highly regarded Ron Chernow. Who is Ron Chernell?

Yeah. So Ron Chernow was born in Brooklyn in 1949. His father owned a discount store and later a stock brokerage, and his mother was a bookkeeper. He graduated from Yale and Cambridge with degrees in English Literature and began his career as a freelance journalist, as a biographer. He's probably best known for his biography of Alexander Hamilton, which Lynn Manuel Miranda cited as his inspiration for the Hamilton musical. And he also won the Pulitzer Prize in 2011 for his biography of Washington, A Life.

Now, John D. Rockefeller had a very colorful upbringing. Let's go back to his early life. Where did he grow up? What was his family life like and how did he receive his education?

Yeah, definitely happy to talk through that, Dave, and add some color where you can, as I know that you are very interested in his early life, but essentially he was born to Eliza and William Avery Rockefeller in upstate New York, and he was part of a fairly large Baptist family. I would say they moved around quite a bit. I'll explain why in a few seconds. But they were very godly. They were economical, spendthrift, living what I would say conservative lives for the most part, outside of his father big Bill, right? William, or Devil Bill, as Chernobyl terms him, who was a noted con man. He was a snake oil salesman, philanderer in some ways as well. Going back to young John D. Rockefeller, he definitely had that early predilection for math, budgets, bookkeeping, the economies of the world. His mother, and then later his wife, obviously, both of whom he's actually buried in between, supported him with that great Baptist upbringing, encouragement, elevation, discipline and support that served him well. So later in life, but going back to his father, as Churnau describes him, devil Bill or Big Bill, he definitely had that gregarious, big personality, right. But he was also very inventive in his scams. He would often leave the family for months at a time pursuing these oddball business schemes with partners from here to there. At one point, they were selling curative medicine that could address everything from stomach upset to cancer. He would pose as a doctor or Rockefeller wherever he would go. These are things that would embarrass his family. The thought of that, and particularly John later in his life, he was a bigamist. He had an entirely different family for about 50 years when he was going under the name of Dr. William Levingston. And this actually became the subject of a national search and national coverage later in John D. Rockefeller's life. But I'd also say some of that Rockefeller clan, they still loved visits from their father or later their grandfather. And Devil Bill did loan John D. Rockefeller some much needed funds in some of his first business ventures. But otherwise, in terms of John D's early schooling, it was largely focused around what he was learning at the home and then also in some of the small classrooms in some of those upstate New York towns, later Cleveland towns that they went back and forth from. It should be noted that he never went and had a college diploma that he went into 16, which I'm sure we'll talk about, into his first job.

Yeah, that was really great, Kevin. And I think that is really notable. It wasn't super common to go to college back then, but there certainly was a preponderance of white collar folks who were going to college. And John D. Rockefeller was truly a self made man. He did have the loan from his father, but this wasn't like at the time, the equivalent of today, a million dollar loan. This was a loan that was significant, but not so large that it probably would have totally changed the outcome of his life if he hadn't had it. But it helped him start his first partnership. Yeah.

And I'd also say in terms of his education, remember at one point he was also responsible for constructing and planning the family home. He often taught at Sunday school at the various Baptist churches that they were involved in. And his father actually charged him rent in some ways. Right? So speaking of being self made, despite that loan that he got, there was a lot of internal exchanges of funds going on that Rockefeller family from the start. So John D definitely made his own way.

And I just thought it was crazy that John D. Rockefeller, the richest person in history or whatever, his father was a literal snake oil salesman. It's just such a perfect counterpoint to the story and I am amazed I didn't know it. It's just crazy that there was this nationwide search with Hearst sponsoring people to track him down and everything. It was a really colorful part of the story.

And when it comes down to it as well, short. It's great you bring that up, because in sure Now's book, you can see him weaving together different episodes at which John D was more like his mother Eliza, but also elements and times when he was more like his father, when some of that devil Bill would seep into his both business affairs and personal affairs. So already from the start, it was a very, very interesting book.

I thought the other interesting thing was really the relationship between the father and son. Devil Bill would lend money to his son, but he would lend it to him at an aggressive interest rate. Devil Bill also had this obsession with money that he really translated to John D. Rockefeller. Always concerned about every last dollar, always very proud of the dollar bills and tens of dollar bills in his pockets. And he would carry actually $1,000 bills on him at any time, which at that time was a huge amount of money. We're talking about the mid 19th century. So this kind of obsession with money was a personality trait that really got translated. But then John D. Rockefeller also tried really hard to avoid some of those negative, immoral characteristics of the father. Okay, let's go to the start of his first business or his first job in business. Let's go even further back. How did John D. Rockefeller get his start in business?

Yeah, it's a classic tale where, at 16 years old, rockefeller headed into Cleveland and decided to find himself a job. And he made a business out of it. Every day he would walk to the different businesses that he thought had a good credit and where he could learn something and present himself as an able bodied clerk and bookkeeper. And after months of toiling away at this, he finally succeeded and he landed a job at Hewitt and Tuttle. So that was his first job at 16. He worked there for about three years, and they called them commission merchants and produce shippers, which, honestly, the book didn't go too much into what exactly that business was. But I get that it's basically some kind of trading partners. They would probably bring in goods, move goods from place to place in order to get some kind of arbitrage on the value of something in one place relative to another. And he was very successful from the start. So it moved up very rapidly within that firm to really become the right hand man of the founders and really very valuable to them very rapidly.

So he was very successful there, but it wasn't enough for him. He really wanted to have his own firm. How did he go about creating his own firm and who were his first partners?

Yeah, so it's a pretty funny story. Rockefeller actually claims that he went to Hewitt and Tuttle and told them he needed a raise to $800 a year. And they like Hemmed and Hawed and eventually said they could give him 700, but that was the most that they could give. And he just knew what he was worth and it was 800. And if they had matched the 800 he says he would have stayed, actually. And who knows how long that would have been for. I don't think Rockefeller really would have stayed for too much longer, but because of that unwillingness to meet the price that he thought he was worth, he set off with Clark and they formed Clark and Rockefeller. He was 18 years old at the time, and as was mentioned before, he was able to join based off of some money he'd saved, as well as $1,000 loan from his father, which was at 10% interest above the market rates at the time. But it was something Rockefeller absolutely needed in order to be able to go off on his own. From there, he pretty rapidly changes businesses and I honestly don't remember all the details, so if others want to chime in as well, feel free to. But I know he hopped from first Clark and Rockefeller to then just a year later gardener joined and was much older than Rockefeller. And so Rockefeller actually agreed to take his name off. So it became Clark Gardner and Company. Then shortly thereafter that it became Andrews Clark and Company. And that was actually a refining business. So moving from the trade into actually getting in the oil business, he later then tricked the Clark brothers out of their share of this business. He kind of laid a plan where he was going to inspire the Clark guy to offer to sell his shares and Rockefeller immediately took him up on it. From there he later formed Rockefeller and Company, rockefeller, Andrews and Flegler, and then finally what he's best known for, standard Oil. So, yeah, lots of different businesses, but ultimately going from trade into the refining and oil businesses.

Great. Thanks a lot for that, David. So the oil industry gets started in the mid 19th century in Pennsylvania. Oil gets discovered. Let's talk about that early energy industry. What was it like when oil was discovered and what was that early oil used for?

So when we think about oil before what was called Drake's Discovery, and I'll talk all about that in a second, but it was previously used in much more expensive and rarer forms. So for example, whale oil was used to light the lanterns of the very wealthy and it just wasn't available to much of the population. It was also used as lubricants as well in machinery. And I'd also say that when you look at other sources it would come from seep, some of which were located in Oil Valley already. Sometimes even as byproducts of salt drilling, you would have some of the salt drillers find this smelly byproduct, which was really the oil and petroleum. And really a lot of this action was located in specific areas, particularly in Pennsylvania, Oil Valley and Titusville. Before I go on to the first discovery, I'd also say what was surprising for me was that some even used oil for medicinal and health purposes as well. And Native American tribes were using it as part of their rituals. And I just never had known that at some point. And that's where I imagine snake oil salesman comes from, that it was used in such a fashion. But really, the oil rush in the US. Began with Drake's Discovery in Titusville, Pennsylvania. And that was when Colonel Edwin Drake in 1859 basically struck black gold. I mean, the town and its environs were quickly swarmed by Opportunists producers, speculators, refiners. The book paints a picture of a bit of a black oily hellscape that Rockefeller actually visited at one point and shrugged through and saw this environment take shape around him. Cities sprung up in what they were calling Oil Valley in Pennsylvania, along with those producers, the speculators and the barrel cooperages Rockefeller, he saw unparalleled opportunity in this commodity. And, you know, funny enough, I think it interesting when we hear about stats on oil production and refining, drake really started with a wood pump. There's a picture of it in the book. And really just about 15 barrels per day in the first year of production. It goes to show you how much this just blew up. Once you started getting more producers and refiners there to work with the capacity, that's great.

And there were many different components to the oil industry. There were, of course, the wells where the oil came from. There were the refineries where it got turned into kerosene and other substances. Can you tell us a bit about wells, a bit about refineries? And also, how did it get from one to the other? How was oil transported and then ultimately transported to retail locations for distribution?

Yeah, I mean, the biggest takeaway from this well one, obviously, Drake's well was considered the first modern well domestically. They call it drake number one. Previously, there was some oil extracted from coal, rock oil, et cetera. I mentioned the salt mines as well. But really, when you think about it, you have those oil wells, the producers, the first ones were built of wood. They would pump the oil from the wells and then ship them to refiners. For example, Standard Oil was eventually in Cleveland, and they would be using rail lines, river traffic, boat traffic as well. Then, at the site of the refining, the oil would essentially be, quote, unquote washed. Right. And refined via both chemical processes, but also intense heating that's used to separate the different products and byproducts the usable oil from what would be sort of the unusable garbage just for a time being. Some of that was actually gasoline, right? Gasoline was actually considered before the advent of the automobile, a byproduct that was unusable. And then obviously from the refineries, it would be shipped predominantly via rail, but also via boat as well to local distributors and wholesalers. I'd emphasize that at that time it was more on that wholesale side. It was more direct to the wholesalers who then would sell it in their local regions. But again, it was all via rail car. At one point it was literal barrels, hence the cooperages. And eventually, as we'll explore that, turned into tank cars and more modern, efficient ways of transporting the oil, which is something that Standard Oil was so good at.

And I just want to provide a little bit of chronological context for our listeners. We're talking at this point about the 1860s, and this is before the invention of the electric light bulb. So people are getting their artificial light from kerosene lamps, and that's why kerosene was so important. And for those that aren't so familiar with technological history, we're still also about 30 or 40 years away from the automobile. So that gasoline is really not useful for a pretty long time. That's that byproduct of the oil refining process.

And Dave, there were ways in which members of the middle class were lighting their homes. But for example, there was one, I believe called Illuminate, which cost eighty cents per gallon. Ultimately, Standard Oil would be delivering kerosene, which was a warmer, brighter burning fuel, for about five cents per gallon. So back then it was achievable, but more expensive and lower quality.

And as bad as oil ultimately was for the environment, it also was good for getting rid of whale oil, of course, too, which was a pretty negative practice of destroying all the whales on earth. Okay, so let's get to Standard Oil. Standard Oil is created by John D. Rockefeller and his partners. Why and how?

Yeah, so it started as a partnership between Rockefeller, his brother William Henry Flagler, later of Flager College in St. Augustine, who also revolutionized travel throughout Florida. There's also a chemist, Samuel Andrews, who really masterfully refined the refining process, and then a few others as well. It was incorporated in Ohio at first and then grew through sales. So, for example, the standard in Standard Oil referred to that standard of quality and service and then through acquiring refineries throughout the state and was largely situated in Cleveland right at the beginning.

It's all in Cleveland. There's a few refineries in other places, and over time they spread out to other population centers. Okay, how did Standard Oil go about taking the refineries that are popping up and consolidating them all together into one large trust?

Yeah, when I think about Standard Oil and the way that Chernobyl depicts the early history of Standard Oil, there's three really important elements there. So one, they were super quick to absorb competitors in the refining community in Ohio. At one point, they called it the cleveland massacre, standard Oil consumed 22 of the 26 competitors that were out there. Many of those acquisitions were tinged in threats that those refineries would be either driven out of business, the lives of their founders would be ruined. At one point, Rockefeller just had to merely show his potential competitors his books. Remember that he was an incredible bookkeeper going back to age 16, and they would relent just seeing the force that could be applied to them and the eventuality of defeat, essentially. And sometimes those competitors, the acquired companies, were actually bound in silence, so that no one was any the wiser of that new business arrangement, not even some of the high level employees of those companies. So there was this idea of consolidation fueling that early growth. The second part I'd say is it's really the idea of rebates and price relief, and sometimes just Standard Oil controlling or having ownership stakes in some of the key transporters of crude and refined product. So primarily that was done via the railroads. And we'll talk about some of the railroad rebates later in the show. But really there was such a small handful of those major players that it was easy to negotiate those rates and really form a very efficient transportation network. I'd also say that in addition to the railroads, the pipes were important. Ultimately. Ultimately, those oil pipes crisscrossed all those production regions. And Standard Oil, more than any of the other refiners at the time, and any of those other firms, they were brutally efficient in installing pipes and pressuring those producers and wells into working with them just because the infrastructure was ready. And then the third element of Standard Oil's early success that I've mentioned is this idea that they skipped the middleman. I mentioned those wholesalers before, some of those traditional, whether it was the corner shop or larger sources of goods, they skipped the middlemen by showing up in towns and cities with their Standard Oil tanker trucks, and they would market their product themselves, right. At one point, they had eleven market regions. As they were growing larger, they were able to control both the quality of the product as well as their brand and the distribution of the product. So ultimately, the Standard Oil Trust, which is what it became, it really allowed centralized control of these disparate companies across dozens of states and was all centrally coordinated by the group of executives, right? They called it the lunch table, ultimately at 26 Broadway. And it was in some of this early consolidation that the government started taking notice, and the media as well, which would become thorns in the side of Rockefeller and his colleagues in the future.

And I think it's worth mentioning that even though Rockefeller was very aggressive and pushy in forcing other companies to sell to Standard Oil, he was also pretty generous in the price that he would pay, at least according to Chernow's research. And he would oftentimes also give these other executives at these companies that got absorbed relatively cushy roles at Standard Oil itself and generous stock options sometimes that ended up being very lucrative to them in the long term.

And remember, at the head of that lunch table, it was an amusing anecdote that sure now presents. Rockefeller never sat at the head of that lunch table. He was just one face on the side of the table. Everyone knew he was the perhaps most important face, but I believe it was actually one of his early competitors named Pratt, who sat at the head of that table. And just like you mentioned, Dave, he did give them fair prices and he did give them a seat at the table, literally and figuratively going forward.

Yeah, it's a really important point because although his business practices, as we'll get into, were very controversial and he was kind of cheap in his personal life, he was not cheap about the price that he paid for these companies that he kind of forced to sell to him. Okay. There was a big controversy around something he was trying to set up along with his partners called the Southern Improvement Company. What was the Southern Improvement Company? And why was it controversial?

So, Dave, I think it's interesting that you made the same mistake as a prosecuting attorney who was trying to take Rockefeller on. When he asked Rockefeller, do you know of the Southern Improvement Company? And Rockefeller truthfully and without perjuring himself, responded, no, I don't, because it's actually called the South Improvement Company.

You're absolutely right. I wrote it incorrectly in our show notes for the episode, for context of the audience. And it actually worked out great.

It did. And it proves one of the things that Rockefeller, he was always unflappable under some of this scrutiny, particularly when he was on the witness stand. He was his lawyer who thought that he was a diminished older gentleman in some of the different testimonies he would have to give later in life, was amazed and said he had found the best pine and the best witness that he had ever seen. But going back to the South Improvement Company, so mistakenly, it's thought to be started by Rockefeller, by some, but he actually joined it. It was the I believe it was the Pennsylvania Railroad Company CEO, the one that, you know, from the monopoly tile who actually spearheaded it. And it started as an alliance between the railroads and the largest oil companies to really make the rail lines more profitable and help those oil companies grow. It was a formal scheme by which some of the largest companies that were transporting crude and refined product ended up getting large rebates. So essentially, imagine the railroads would continue raising prices for smaller and mid sized producers and refiners, but then the larger companies would get rebates, which ultimately brought their prices down and made them even more efficient in that rising rate environment. Ultimately, though, it only existed for a short time, and I believe they said it actually never really ended up resulting in the transportation of mass quantities. It was sort of killed in the cradle by some of the negative attention it was getting. But still, the railroad rebates went on just under a different name, under different auspices.

Let's get more into those. So what were the railroad rebates?

So I think railroad rebates took a lot of different particular incarnations. The basic idea is that instead of the headline rate that Rockefeller and Standard Oil were paying, there was ultimately some kind of kickback that would happen down the line. So on the books, they would say Rockefeller was paying similarly to his competitors, but in reality, the railroad would then give some amount of that money back to them, or give them credit towards future purchases, et cetera. So there were all these different structures that they put that ultimately just gave a cheaper price for oil delivery to Rockefeller than to any of its competitors, which is really critical to the ultimate success of Standard Oil and its ability to provide cheap oil to the masses. The most interesting part about it, I think, is that, well, there's a lot that's interesting, so feel free to chime in from others. Was that tanker cars were actually a really critical component of this as well. Which was that the Rockefeller companies would actually own the tanker cars and then lease them to the railroad companies and use that in order to get all kinds of kickbacks as well, including they would get charged the same. Amount to move a tanker car of oil as a regular car full of barrels of oil would get charged. Even though you're moving dramatically more oil in that tanker car. So anyway, it was a lot of cool little tricks of the trade.

Yeah, and I had two thoughts too, Dave, since you invited us in for some commentary. One, when we think about anti competitive practices, lack of transparency with the railroad rebates on the first hand, there's definitely a strong argument to be made that there were some significant cost savings and efficiencies for the railroads in working with standard versus competitors.

Right.

So you would think in some ways these rebates could be considered fairly legitimate. But I would also say it's really tough to prove that the size of that cost saving actually matched the size of the rebates. Right. And that's where we get into the deeper discussion. And then one thing I just mentioned, in looking at the scale and scope of Rockefeller's business operations, eventually they moved into pipes and the railroads were not nearly as involved as they used to be. But it's amazing how the negativity towards the railroad rebates was always an arrow in the quiver of his opponents. Right. Much of the negativity going into the trust busting pointed back to the railroad rebates, even though largely the pipelines had taken over most of their transportation. And for me, one of the business lessons I took from that is you really just need to look far down the field when you are planning out your business, understand that this small cost saver early on could create such a mess later on. And it brought me back to when we were looking at the Schwarzman book, the idea of management debt. Right? And that was a little bit of management debt it seems like Rockefeller took early on and that I don't think it created his company. It did not make it as big as it was railroad rebates alone, but it was an advantage. Was it worth it in the end?

I think that goes along with the South Improvement Company. The South Improvement Company actually never happened. The railroad rebates were actually totally legal. And as you mentioned, Kevin, they were really temporary because ultimately pipelines replaced railroads. And yet these are the things that he was most lambasted for. I mean, his career was much longer than the South Improvement Company that was a blip in it, and the railroad rebates were just for really a temporary point for the industry until pipelines took over. And yet that's what he had to answer for in biographies 30, 40 years later. So it's interesting how kind of the media can run with a story that might have been controversial, but might not have actually had that much impact on the long term operations of the business. David, I'm curious about your opinion. The rebates were legal, but do you think that they were unfair? Should they have been illegal when they happened?

I struggle with it. I think it gets especially complicated when Rockefeller is ultimately the largest shareholder of some of these railroads. So I think in those cases, some fair play and not giving advantage to the owners relative to other customers are things that I think start to make sense. And even just acting in the best interests of the shareholders of the company, beyond that core owner start to be reasons why you might think you should change. But to Kevin's point, they had infrastructure that actually made it a lot easier to operate with Standard Oil. So I think charging them less in those cases totally makes sense. I mean, FedEx and Ups charge differentiated rates and they're going to give you a deal if you're moving a lot more volume with them. So I don't think there's anything fundamentally wrong with that. But I think it yeah, it gets a little bit complicated when the shared ownership gets involved.

You can correct me if I'm wrong, but I think in economics that's called first degree price discrimination, where you actually charge something different to just a different customer instead of a different market. If I remember correctly, a different market is like second degree price discrimination. You can correct me if I'm wrong, but anyway, let's move on. Do you believe that. Standard Oil and Rockefeller's tactics, including both the South Improvement Company, the aggressive consolidation of the industry, the railroad rebates, and maybe we can get into some more tactics that he used too. Did they deserve the demonization that they received in his time?

Do you think?

He was an unethical business person?

Yeah. So, again, there's a lot of fuzziness. I mentioned before with Chernow and how he paints the picture of Rockefeller. I think that there's no doubt that viewed through the modern lens, the modern context, that some of Rockefeller's tactics were definitely unethical. Right. I mentioned before we started recording that there was this idea, though, at that point that this was the Wild West. Rockefeller was the architect of one of the first major monopolies.

Right.

And there weren't regulations that spoke in that language just yet when he was first forming the company. Did he deserve that much demonization? I don't think so, based on my reading of Chernow.

Right.

And based on the contemporaries, his contemporaries and their tactics that existed at the time. So it becomes a tough question, and I really do think that when you look at pro Rockefeller, folks would likely say that the whole is greater than the sum of its parts, that the negatives of Rockefeller, the small companies that were dismantled or acquired, were outweighed by his positives.

Right.

But one thing I thought was interesting is that when you think about the Standard and Standard Oil post the bust, the sum of Standard ended up being greater than the whole.

Right.

Because as we later seen, we can later discuss in the show, we see that there was more money to be made as 20 plus different companies than as them together. Right. I wonder if a more ethical Rockefeller in contemporary terms could have achieved the same outcome. So, for example, when you think about Standard, it at different point, had different points, had many innovators, right. When they started using sulfuric acid in the early refining process, that was one of his business partners. And in their efforts to make the Limo Hyo crude, less caustic and higher quality for some of their customers, he brought in scientists from around the world. In one instance, to rise to these challenges on the charitable side of Rockefeller, he made a science of philanthropy. He added a methodology to it. He professionalized it in such a way that he's impacted millions, if not billions, today. So really what it comes down for me and the demonization of Rockefeller is that if Standard Oils business acumen, these points of real innovation they brought up, what if they started there, right? What if they had resorted to more ethical in contemporary lenses, tricks to get to that same result? Could they have done that? Right? If anything, he should be demonized for not necessarily starting at that point and going straight to some of the aggression and some of the low hanging fruit for his opponents that thought he was being unethical, but it's easy to say that in hindsight. And who knows what would Standard Oil have been if they relied on simple innovation?

Personally, I didn't actually have a problem with the aggressive buying out of competitors, especially when he was doing it with a very fair price. I think if you're paying somebody a lot and you're saying to them, hey, look, if you keep competing with me, I'm so big you're going to end up losing, but I'm willing to actually pay you above market rates and you can be sold to me in a period when that was not illegal. I don't actually find a big ethical concern with that. The railroad rebates being secret again on its own, I don't find completely concerning because, again, it was legal. So if I can have a competitive advantage by not sharing my agreement with another company to my competitors, why would I not do that? Where I had real ethical concerns with Rockefeller was where he was paying off politicians, and it seems like he wasn't doing it always directly. And so I'm not sure that Chernobyl was able to completely implicate him. In all of the cases, it would be other people at Standard Oil who were making those payments to the politicians. But I think that's really where he crossed the line. I mean, that was illegal even in the 19th century. And it's of course, immoral right to subvert the political process by using money to buy votes in the US Senate and the US House of Representatives.

Well, Dave, you've convinced me when it comes to the transparency around the offers for acquisition, for sure. I was just going where you went right there. Part of it was John Rockefeller made some of those bribes and payments. In fact, he almost made them just to taint the politicians themselves. It seemed like really where things turned a bit more unethical was in his delegation to his protege, John Archbold. And when you read about Archbold, Rockefeller took a bit of plausible deniability. Even though he likely stayed in tune with everything Archbold was doing. He was a bit of a rogue.

Right.

Archbold really stepped in and went to new lows. So, for example, he was increasing domestic kerosene prices and keeping them artificially low overseas for market share. When you look at Rockefeller, he had always prided himself on cheaper, better kerosene, literally. The company was called Standard Oil and it's one of the first anecdotes that Chernoby houses. In his book, you mentioned the elected officials. Archbold was freely bribing elected officials left and right and was even more aggressive on that front. Right. It was political, it was not polite, it was not representative of what Rockefeller had earlier tried to embody and deliver through the lens of his Baptist upbringing. At one point, Archbold bribed officials to the tunes of dozens of thousands apiece over two years. That would be like giving a politician today $1.4 million in bribes over two years. And what you mentioned, Dave, not only did the book say that Rockefeller didn't often bribe public officials, but he was loathe to do that. That was his last resort.

Right.

At the same time, Chernow also says, literally, archbold had studied corruption at his master's feet. So it's definitely a gray area in the book and in Rockefeller's life, for.

Sure, kevin, I think it's a step too far, even if the corruption is the last resort, and I'm sure you agree, but it went beyond just business. It went even into his personal life. I believe he had his son, John Jr. He encouraged a marriage between John Jr. And the daughter of a Senator Aldridge. Senator Aldridge was known to be a very corrupt senator from Rhode Island, and he used that connection to try to influence the US. Senate and its policies towards Standard Oil.

Yeah.

And this is really an example where you start to see the different faces of John D. Rockefeller, right? Whether it's the dedicated Sunday school teacher who would enjoy going back to the church of his Baptist upbringing versus the ruthless businessman versus the fairly typical businessman, and then the family man as well. And sometimes it would bridge all those golfs. And it comes back to Chernobyl's focus on the Devil Bill qualities of Rockefeller and his family versus the Eliza qualities of Rockefeller and his family.

Yeah, this really is the key to the whole book. And I think what makes it so interesting is that dichotomy within Rockefeller the good and the evil, and that I think he really was a, you know, harsh businessman who believed in cutting corners to get things done, although he probably felt like he was doing what had to be done, even with the political corruption. I agree it's wrong, but I think in his own mind, I think he did believe it was like, this is just what had to be done to get the business done. While at the same time, ultimately, as we're going to talk a lot about dedicating so much of his life, to philanthropy, to religion, not drinking. He was very fixed in his morals in a lot of ways. And he, I think, did believe he was doing the right thing and that he needed to succeed in business, to do God's will ultimately, and all these other ways. But I think that ultimately the tactics he took were not legitimate. I think you need to look on it in that way, ultimately. But I am really pleased with the way Chernobyl presented it, really giving you both sides, because I think we tend to think of him more as this corrupt businessman who ultimately got busted up by Teddy Roosevelt. I feel like that's like the dime store modern version of Rockefeller.

And for our listeners who are familiar with kind of the modern world, I think there's a lot of parallels there with Bill Gates bill Gates did a lot of business practices that some people feel are unethical. Ultimately, his company was also challenged by the US government as potentially being a monopoly. And ultimately he also became a great philanthropist. And he also might have felt when he was using those harsh business practices, that it was justified by the necessities of the business and that ultimately was better for the industry and for the customers in the long run. So I think there's some great parallels there between John Rockefeller and Bill Gates. Okay. Standard Oil really controlled the oil industry at one point having as much as 90% market share, but who were its competitors?

So I'm going to take a little bit of a different angle here. And in sure now's book, there is about 200 pages, maybe not that much, where he does go through all of the different companies that were acquired, the refineries that were acquired by Rockefeller. And I would say that would do best in terms of a scorsese film with a great montage and some great audio in the background. I don't really consider them his competitors. He was so ready and able to acquire and absorb those companies. I don't really consider them that notable. I think about the macro competitors. When I think about the macro competitors as Standard Oil matured, it was really the government, it was the antitrusters, it was the media. I would say seven years before the trust Busters came to dismantle Standard Oil, there were some notable competitors, right, rising due to new production in Russia and overseas. On the West Coast, there was a company called Pure Oil Company, which actually had some nemeses and enemies of Rockefeller on their board and in leadership, and had about 30 refiners, if I'm remembering correctly. But really the main competition was public perception at different points, and public authorities and the media. And I would say, too, when you think about some of those smaller refiners who either put out of business or acquired or maybe alienated, a lot of them came back later in life to haunt him, right? And not only that, some people say, well, it's not personal, it's business. A lot of those refiners came back in some of these proceedings, testimonies, subpoenas, et cetera. And it was really more, it's not business, it's personal now. And that's when you started seeing some of the cracks in Standard Oil. It's public perception, which really weren't fixed until John D. Rockefeller came out on the public stage a bit more. And he was actually not just respected, but admired when they hired Ivy Lee as the first corporate PR specialist to join Standard Oil. But that was really the early competition, the early perception of Standard Oil.

So we've been kind of dancing around the central issue with Standard Oil, which was that it was a monopoly, at least considered to be a monopoly ultimately by the US government and by most commentators of the time. So I'm curious how the book made you feel about monopoly. And one thing I found interesting in the book was Rockefeller's opinion on monopoly. There's actually a whole chapter where Chernow really gets into this, and he says that Rockefeller argued that monopoly is actually a natural organizational structure that reduces inefficiencies. And if you've ever taken an industrial organization and an economics degree, there is a lot of talk about that, that there's actually some benefits to monopolies. And Rockfeller himself sought as a system that's somewhere between free market competition and socialism. And as you might imagine, being the richest man in the world, he was not a fan of socialism. So he was a pretty big fan of how can we consolidate and have power without going fully into socialism. Monopolizing also may have actually saved the oil industry in the early 1870s, when it was still very nascent, it was still developing, and there was so much competition that prices got very depressed. So depressed that it was no longer profitable to actually produce kerosene. And so the consolidation that Standard Oil enabled actually was able to keep prices high enough that the industry could survive this crisis. So it's possible that without Standard Oil, the oil industry would have taken a lot longer to fully develop. Did you find Rockefeller's arguments that were pro monopoly compelling? And how do you feel about monopoly as a whole after reading this book?

Yeah. So in some ways, it's almost like Chernow, at different points in the book, is torn on monopolies as well. So moving from the extremely coercive ways that Rockefeller drove competing refineries to sell, to all the maladies we spoke about earlier to, like you said, Dave Lauding, the efficiency, the solvency of the Standard Monopoly during some tough pricing times, and that brought the early industry through that storm. I definitely support free markets, but I would say this was the Wild West of monopolies. Like I mentioned before, this was one of the first ever. And I think the combination of coercion, those secret and unannounced deals with competitors, the railroad rebates, the bribing of elected officials, definitely made this monopoly less palatable than ones that may come forward. There's the efficiencies, though, like you mentioned, I said before, that lighting your home went from an 80 cent per gallon proposition to gallon. I think that Rockefeller definitely had a point that it's important for organizations and trusts to transact in states that aren't their own.

Right?

I completely agree there. And that's ultimately what Standard Trust was doing. And even then, Roosevelt himself, who later went on to contribute to the dismantling of the monopoly and busting the trust, he distinguished between the good trusts, those that had fair prices and good service, and then bad trusts, the ones that gouged consumers. I'm a little bit hesitant towards that because then who is really judging the good trusts versus the bad trust? It's government, it's regulators.

Right?

It's not necessarily the consumers that are speaking with their wallets. So, just like Chernow, I'm a little fuzzy and in the gray area when it comes to standard oil, but it definitely was a great education in some of the dynamics of monopolies. The most important one that I think of is ultimately when there was that partnership between Carnegie and Rockefeller in steel and iron ore, when they start expanding into those realms, when you have a monopoly, not just monopolize one market, but then go into many others. Remember, Rockefeller was also going to natural gas. I think about the impact that the monopoly had on that one market and a lot of those participants who wanted to enter a free market. And I start to be discouraged about what that would have looked like if it expanded and grew even more. And that's where we start to get into trouble when we're judging which monopolies are appropriate and good trust, which are bad trusts. So, very complex question, did not answer it completely, but I think Chernobyl really addressed it well and it was an education.

I think that it is a really hard question and I don't think anyone has like a golden perfect answer. But what I found interesting about all of it was Rockefeller's basic perspective is that the only way the animal instincts of the oil markets could be tamed was through a monopoly. We didn't have this. This industry wouldn't work at all. You would never be able to provide reliable oil to people because there's constant booms and busts as new supply gets uncovered. People rush in, they take too much of it out rapidly. That creates a glut in the market that leads to price crashes, which then leads to the collapse of all the companies. And he has good examples of all of that happening in the industry that he took over. And so I think he's probably right that oil kind of does naturally lead itself towards more and more monopolization. It's a commodity product that has a lot of like highly specialized technology, et cetera, that having more and more concentration and can obviously have economies of scale that can bring down prices and all of those sort of classic economic concepts we see about the potential benefits of monopoly. That being said, I think Rockefeller did a lot of things that were not pure action of monopolistic success. Like he did actually do things to put people out of business in a way that were not just because of the efficiencies that he was going to be able to build. He didn't just charge less than everyone broadly and force them out through that. He did a lot of specific things to mess with their rates, with other companies, et cetera, in order to cause his competition to fail. So I think those are the things that start to verge on criminal activity and the things that ultimately he's known for in a lot of ways. So I guess my perspective is I don't think government determination of what is and is a monopoly is going to effectively allocate resources in an economy, but at the same time, when they are acting in criminal ways with that monopoly power, you definitely need to enforce at that point. So I don't know, it's a hard thing to think through.

And I also think about where would folks like Archbold and later leaders have really taken the company as well? And that's what I mentioned at the end of my comments. But when you think about projecting this forward, what would Standard Oil have looked like if it would have been allowed to have remained together? And for the first 20 years after that, it pretty much did still operate in lockstep.

I think an interesting way of framing this question is by thinking about whether you're looking at it through the lens of competitors or customers. And I read a book a few years ago called The Abolition of Antitrust that studied a lot, the whole Standard Oil debacle. And they made the case in that book that really Standard Oil was delivering a better product at a lower cost for consumers than you would have seen in the alternative world where they didn't exist. And so who was really clamoring for the breakup of Standard Oil? Was it the consumer who was getting low cost, high quality kerosene? Or was it the competitors who couldn't compete with it? And I think you'll find that there was a lot of special interests amongst the competitors who actually were clamoring for antitrust laws, not just in the oil industry, but in other industries as well. So who should government be looking out for? Should government actually be encouraging a monopoly that's bringing a high quality product at a low cost to consumers in a very standardized way? When you think about it through that lens, it kind of can change your opinion on antitrust. That said, I'm not arguing that the company shouldn't have been broken up. Obviously, they were abusing their monopoly power, doing illegal activities through that monopoly power beyond just being a big company in the first place.

Yeah, one of the other interesting things that came out in the book was that while Rockefeller was in charge, they were providing a great cheap product, but that after he had stepped back, his successor, who I'm blanking on his name and someone should fill it in if they can.

That was Archbald. Sure, yeah.

Archbald. He then did start raising prices, and so he was providing really cheap oil globally because there was competition there and he was dealing with Royal Dutch Shell and the Russians and the other European oligarchs in global trade. Standard Oil continued to be this brand of the cheapest, most reliable thing. But because they did have such incredible dominance in the US. Market, they did start to milk the US customers in order to be able to undercharge in the rest of the world. That being said, it was still much, much cheaper than the alternative. So customers were still getting a great deal relative to anything else they possibly could have done. But I think it sort of crept up from those five cent prices when they first were really launching.

Yeah, absolutely. And again, I'm not arguing that they should have kept Standard Oil around, but at the same time, it's hard to say what the counterfactual would have been. And I think there's also good monopolies and there's bad monopolies. Standard Oil under Rockefeller might have been a good monopoly in terms of for consumers. I mean, not in terms of their tactics. And maybe Standard Oil under archball was a bad monopoly, but there's also ways of regulating monopoly. So perhaps you can regulate it and ensure that prices stay at a certain level. Not always a good idea to have price controls, but if you think about it, a lot of the energy industry today is municipal energy companies that are effectively government monopolies that are supposed to be benevolent monopolies. Right. And what's better, a private company that's a monopoly that's regulated or a government monopoly where no competitors could even ever rise up because it's controlled by the government? Yeah.

And this leads to the question that I know that we want to cover, really, should Standard Oil have been broken up? And we're already answering that in some ways. But I also want to produce a few more points, too. So, for example, Mark Twain is involved in the Chernobybook, right? Because he was friendly with John D. Rockefeller, Jr. As well as Rogers at Standard Oil. Obviously was a contemporary of John D. Rockefeller senior as well. But what Mark Twain noted was, quote, the Standard Oil chiefs cannot be altogether bad or they would oppress their 65,000 employees from habit and instinct if they are so constituted that it's instinctive with them to oppress everybody else. Right. So he was almost defending the monopoly and opposing the busting of the trust. I mean, when you look at IDA Tarbell, who was one of Rockefeller and Standard Oil's biggest adversaries, not necessarily most impactful adversaries, raising public perception, but not a market competitor. Also, IDA Tarbell did have a bit of a chip on her shoulder based on her upbringing near Titusville.

Right.

Rockefeller and his activities put her father out of business, but she hated Rockefeller and Standard Oil. But even she said, quote, the legitimate greatness of the Standard Oil Company, there was not a lazy bone in their organization, not an incompetent hand, not a stupid head. Right. They never played fair, though, and that ruined the greatness for me. So it's interesting how even in those contemporary times, they were not necessarily struggling, but having this very same debate, not debate per se, but discussion that we're having today. And just when it comes to Standard Oil being broken up, I found it so interesting that Chernow started one of the chapters with an anecdote or a vignette of the Ohio Attorney General, William Cook. And as you know, and listeners of our podcast know, I always love those cinematic moments. But he wandered into a small bookstore and he found a book. It was called Trust the Recent Combinations in Trade, an older book, and it had Standard Oils trustee reproduced in the book as an example. Right. And he noticed that Standard Oil had violated their own state charter in Ohio by transferring control of the organization to mostly out of state trustees in New York. So when we think about Standard Oil being broken up, in addition to the media attention, the government attention, part of it came from a bookstore in Ohio with the Attorney General of Ohio finding their charter and actually reading it for the first time.

Yeah. And just a little side note for context for our listeners. IDA Tarbell wrote probably the most popular biography of Rockefeller of the early 20th century. I think it was 19 419, five it came out. And it was very critical of Rockefeller. And as turnout finds in his research, actually a lot of things in the biography were inaccurate. But it created such a storm around Rockefeller and his family that it's implied in the Chernow book that it actually caused them all kinds of medical maladies from all the stress of having to deal with what the public thought of them after the Tarbel book came out. Okay, let's move on. So ultimately, of course, Standard Oil is broken up. What's the result of that breakup?

It's really fascinating. Ultimately, the constituent companies basically get broken into different pieces. I don't have at the tip of my fingers the total numbers, but it was many different companies, but they allowed the same ownership to continue. And so actually, what ends up happening is that these same groups of people now just own dozens of different businesses. And now that these businesses are broken up and are traded separately, they actually end up being worth a lot more money than Standard Oil was originally. So after all of this, the net output is that Rockefeller becomes the richest he ever is in his life. Shortly after the breakup of the company, and ultimately, at the time of the writing of the book, four out of the 50 largest companies in the world were formerly pieces of Standard Oil, ExxonMobil, Chevron, and I forgot what the fourth one is. But funny thing is, since this book was written in 96, exxon and Mobile merged back together. So even the former constituent parts of Standard Oil are now coming back together as well.

And for our listeners, I think it's important to note that this actually rose to the level of the Supreme Court right? And to Dave's Shorts .1 of the key reasons why all of the stock prices and the profitability and the success of the now spun off components of Standard oil. One reason it happened was because the removal of now the regulatory challenges that came by just being separated into their different constituents. So it's an interesting, self fulfilling prophecy, and I doubt that many of Rockefeller's opponents foresaw that or had hoped that that would happen.

In this episode, we've mostly concentrated on the business life of John D. Rockefeller because that's what our podcast is about. But Rockefeller also became one of the foremost American philanthropists of his time. What were some of his biggest philanthropic achievements? Do you think his philanthropic strategies made sense? Were there any that you disagreed with?

Yeah. So just as a primer on some of his biggest philanthropic achievements, in addition to founding the University of Chicago, one notable element of that is he never even had a building named for him there until after his death. Right. That was one of his key precepts. He wasn't about buildings and naming them like Carnegie would be. He was more about the outcomes that funding that charity would enable. He also supported the Spellman College, which was named after his wife's maiden name, essentially in her family. It was designed for the education of Southern black women. I would also say that three of his other bigger achievements would be the General Education Board, which promoted educational institutions at all levels. There was the Rockefeller Institute for Medical Research, rimr, and the Rockefeller Foundation, which was committed to public health initiatives in collaboration with the government. Even so, it's funny. On one hand, he's under attack by the government. On the other hand, he created the Rockfeller Foundation, which was almost like a public private partnership to address some of the emerging sanitary and health related challenges of the day. When you think about his full investment in contemporary dollars, it was about $540,000,000. And really, his philanthropic commitment originated in being so overwhelmed with appeals for help as his prominence rose and reports of his net worth were disseminated. Right. He needed to find a way that was feasible and aligned with his Baptist Christian background to actually help people. And what I took away from this is he really did this in an approach like the Teach Amanda Fish right approach for Spellman's Seminary, which ultimately became Spellman College. For example, he never wanted to give them enough that they were too comfortable. He always wanted them to be creative in their approach, creative in their fundraising from others. Right. And I love this idea too, that he went into this not thinking that he was trying to fix his reputation by doing this. He also didn't think that he was really doing anything wrong. But Chernow quotes, you know, Rockefeller felt no need to cleanse his reputation and rebelled against any insinuation that his charity was selfishly motivated, and he would turn away from the door anyone who came in and said this was an opportunity to fix his reputation. When you think about his charitable giving, what I. Saw in Rockefeller and what I think is important, it was the first example of adding a business methodology to philanthropic activities, adding a methodology to it where those institutions wouldn't depend on him, but outgrow him. And I thought that was unique for the time. He even had a head of his portfolio, Frederick Gates, right. His portfolio manager and philanthropic advisor, who he called his secret weapon. Right. I love this quote from Churchill.

Right?

Quote, the founder of the Standard Oil Company would not have felt the need of paying hush money to heaven. It really put some of his objectives and his drivers, particularly with the medical charities as well. When it comes to the medical charities that he either built or invested in, his idea was he wanted to strengthen the recipients of his charity better, prepare them for evolutionary struggle, in his words, equip them to compete, but don't tamper with the outcomes. And it was the first example, I think, of preventative charitable work versus direct relief. One other notable thing is it really started more sectarian with his Baptist upbringing. And so he was always donating to Baptist causes and organizations, and then obviously it moved to less sectarian.

Right.

You Chicago started as a more sectarian school and then he ultimately moved away from it and removed the requirement that they do be a leader in Baptist teaching.

Right.

And so, as I said before, versus a Carnegie or others of his times, his philanthropy wasn't about the naming of the buildings. It was not about the sustaining of physical infrastructure. It was about the creation of knowledge. And true to that, I believe the Rockefeller Foundation and other charities that still exist to this day really do carry on that objective and that brand.

And I think an important aspect of it is he made it sustainable by having great people around him on the philanthropic side, like you mentioned Gates, people who were really just as shrewd in philanthropy as the people that worked for him in business were. And he also trained his family to continue the legacy, including his son, John Rockefeller Jr. And we'll get more to that in a later question, probably. I do have one quote around this area. This is from chapter 23, and it's actually chernobyl quoting Rockefeller. So this is a Rockefeller quote. It says, the failures that a man makes in his life are due almost always to some defect in his personality, some weakness of body, mind or character, will or temperament. It is my personal belief that the principal cause for the economic differences between people is their difference in personality, and that it is only as we can assist in the wider distribution of those qualities that go to make up a strong personality that we can assist in the wider distribution of wealth. Basically speaking to the idea that he believes that it's important to try to improve people, not just to build buildings, and I think that speaks to how a lot of his charitable causes were around health or education.

One final thing I just wanted to add is that a lot of people probably look at this cynically and think it was kind of a whitewashing of the terrible history of Standard Oil. I think what convinced me that this was a genuine aspect of Rockefeller was the fact that he was charitable from a very young age. So it wasn't that. It was once he became the richest man in the world, then he decided, oh, I've got to start donating to schools and finding ways to make people think I'm doing good things with the money. Even when he wasn't making very much money, he was donating to his church, he was spending time there. He was donating to needy families within the church. It was always something where he was seeking out ways to contribute to the community. And that was always part of his persona. Even before he became this incredible success.

He wasn't typing, he was giving 20% or so, if I'm quoting sure, now correctly, of his income to those causes. Shorts that's a great point.

Yeah, that's a really great point. Let's talk a bit about Rockefeller's personal life. What were some of his habits? How was he on an individual level?

So I found this part really interesting. Rockefeller, I think, changed quite a bit over time, honestly. When he was younger, he was really having to fill in for Devil Bill and be the man of the house. So he was quite stern as a child, and he kind of missed out on his childhood as a result of kind of needing to raise the family while his father had abandoned them to go engage in his various nefarious pursuits. And so as a young man, he was known as very serious, very involved in the church, very stern, very focused on his faith and his ethics. But then in his retirement, he really came full circle and sort of becomes this Benjamin Button kind of character where he experiences his childhood in his old age. And he was known as a real jokester. He was playing golf all the time. That was basically like all he wanted to do for decades of his life in retirement. But he really was very involved with his grandchildren, with any children they talk about, even sort of as he was approaching death's door. It was the daughter of his chauffeur that he would just light up with and spend tons of time talking to her, teaching her things, helping her understand how the world worked and seeing things from her perspective, but really getting on the level with the children and really playing with them in their own way. And so we kind of talked about this a bit, because Devil Bill had that same dynamic where he really was able to really engage with children, especially his grandchildren. I guess that was the other interesting dynamic was. It seemed like while he was still engaged in business, he was very serious. The way he treated John Rockefeller Jr. I think was kind of as a business partner from a very young age, preparing him for his legacy. But with the grandchildren, he was really able to open up and just be a fun grandfather that they could hang out with and who never really talked about business or any of these things.

He seemed like a great person in the book, like a really personable person, especially in his old age. He was always carrying around nickels and dimes that he would just hand out to people. And at that time that was actually like real money. But at the same time, there was one little incident that was mentioned in the book that troubled me. And I don't know if I was just reading too much into it or if the two of you also found it a little questionable. So it mentioned that he would take young women on rides with him in his car and he would sometimes inappropriately touch them during the ride. And I was like, what? I was like, that sounds like almost like a me too kind of thing. And I'm wondering if because this book was written in 96, it wasn't like a big thing that Chernow made a big issue out of. But I think it was pretty shocking when I read it. What did the two of you think?

Yeah, and Copec, wasn't that in the caption of one of the pictures that Chernow includes too? I don't remember even seeing that in the text of the book. It was in a caption of a photo. And that really caught me off guard as well. And I definitely agree with you that it's a bit of a troubling insertion there. And today it probably would have been viewed very differently and covered very differently by Chernow.

I think it is in the book. And it's covered, I think that this idea of the creepy old man thing was like it was like kind of a common trope that like, oh, like, you know, old men, they'll just pinch girls or whatever and now we're just like, oh, my God, that is so messed up. Who would possibly allow that? But I think in the whatever it is, 1920s actually turnoff even goes through it and says some women continue to show up. So I guess they didn't mind it while others were shocked and would never ride with him again. So, yeah, it was a very shocking aside.

Yeah, I found it very shocking and something that maybe deserved further exploration by Chernout. Anyway, going on from that difficult topic. For a long time, Rockfeller was the wealthiest person in the world. How did he approach being so wealthy? Because he was wealthier than anybody had ever been before, both in terms of absolute terms and relative terms, at least within the history of the united States. That's crazy for the media at the time. And they made a circus of his life. And how did he handle all that exposure?

Yeah, well, the short answer is he gave away all of his money, right? No. To charity and public trust. Well, in fact, he actually passed away with only about $26 million. Right. So part of his way of dealing with being the wealthiest person in the world was also contributing to these great causes that we discussed. In all seriousness, though, from his early childhood, he was very thrift, detailed, budget oriented. As an early young professional and early millionaire, he decried the ostentatiousness of some of his business partners. So remember, particularly those who got yachts. And really, his Baptist upbringing, described by Chernow is almost more puritan was a backbone of the way that he presented himself in public and how he spent his money. He personally oversaw and recorded all expenditures, whether it was the landscaping, keeping less ostentatious properties and homes on those properties. I loved one anecdote where one of his estates sold trees to another. The former was credited in his books, the latter was obviously debited. And his quote was, we are our own best customers. The idea that even within a transaction in the family, you still record it, you still turn a profit, and we are our own best customers. And it was part of his family life as well.

Right.

Part of his coping mechanism, almost, with this public attention, particularly before he grew older and was painted a bit more favorably in the media, was his family. Right. He would pay his family kind of meager sums essentially for household chores. He would keep his kids on strict allowances. Junior tried to do the same thing, but ultimately his kids wrote him back a collective letter urging him for more allowance. Right. And so he presented himself in person to the media, for example, as spendthrift. He wouldn't necessarily his suits would sometimes get shiny, as they said in the book. He started a bit more introverted and not so much out there, but towards the end of his life, as Short mentioned, he became more prominent in the media. He had some friends in the media as he grew older, and he became more of this idea of, like you said, the fun loving grandpa who would have witty retorts and very introspective things to share. You know, one anecdote I loved about his thriftness and his interaction with his family, despite being the wealthiest person in the world. It was Christmas 1908, and the quote from Chernow is when Junior defying custom gave Rockefeller a fur coat and cap for Christmas in 1908, it elicited the following humorous reply from Rockefeller I thank you a thousand times for the fur coat and cap and mittens. I did not feel I could afford such luxuries, and I'm grateful for a son who was able to buy them for me. Part of the, you know, interesting, fascinating nature of Rockefeller was what he said and also what he didn't say.

Right.

And this is just his witticisms, and that's a great example of it. What he's saying in that letter back to Junior absolutely.

And talking about his family, is there anything that was interesting about the way that he brought up his children?

So I thought the anecdotes about the way the children were raised were really interesting. In particular, the frugality. Kevin touched on it a little bit, but the kids grew up with. And actually, I think this was maybe John Jr. But I'm not sure if it was John Jr. Or John D. Rockefeller that the children would get a 30 cent allowance, but they were expected to save a third of that. They were expected to spend a third of it on charity, and then they were only allowed to actually spend a third of it. And so I think a ten cent allowance probably wasn't like a completely meager sum to a child, but it was not something that the richest children in the world would ever have been expected to have. Their other friends had much more in order to buy things, and they would kind of complain. They would have handmedowns from their other siblings. They would be unable to spend in ways that the other wealthy did when they went off to college. They didn't have their own cars, they would ride a bicycle, things like that. Even though the Rockefeller family had this immense wealth, he was always very cautious about giving that away to the children and allowing them to become completely shiftless. I think the other thing that was probably less positive in the way he treated his children was the focus on John D. Rockefeller, Jr. To the expense of all of the other children. The fact that he gave the vast majority of his wealth to John D. Rockefeller, Jr. And as the book talks about, after that, they were the only Rockefellers, which is in part true, because his other children were daughters, and so they didn't have the Rockefeller name. But nevertheless, the Rockefeller family, really, even though they had this immense wealth, and they did grow up in ultimately some fairly fancy accommodations, they never really thought of themselves as the truly rich. There was one anecdote about John D. Rockefeller, Jr. That some child asked him if he could get a boat, and he said, what do you think were Vanderbilts? And at the time, they were wealthier than the Vanderbilts, but he had no idea. So the family really was sheltered to some degree from this vast wealth for a very long time.

I thought it was interesting, one anecdote about the adult, John Jr. And John Senior, and their interaction. At one point, John Jr. Was taking on more and more important roles in the business of Standard Oil and the business of the Rockefeller family. And that ended up not really suiting him as well. In one instance, he actually lost nearly a million dollars. So this is John Jr. Losing nearly a million dollars, which would have been about $17 million in 1996 terms, as part of a leather stock scam. So he had reacted quickly on a tip that was contrived for him, and he ended losing all that money. He dreaded reporting it to his father, and his father really didn't say much, sort of absolved him of the debt and paid him so that he could stand to that debt. And this was sort of Rockefeller's way, Rockfeller Senior, of influencing his kids, teaching them lessons. Right. Rockefeller really knew that it was more what he didn't say that imparted the real lesson. He knew that his son had been beating himself up over it, and he was fairly quiet on that. And as a result, he won Junior's loyalty forever. As Chernow writes, when you think about his kids in their adult stages, some of them remained more puritan. So Junior and Bessie and then others became a bit more opulent after they were sort of released from the family grip. And I'm thinking of Edith in that, even throwing balls and claiming that the Rockefellers came from French royalty. Right. So his parenting, his family life had mixed results. But in terms of John Jr. John Jr. Was very well equipped to carry on the philanthropy, and that went forward for several generations.

Yeah. And I have to say, I think he did a really great job bringing up his son, John Jr. And training him to have the responsibility of all of this wealth. And from everything we learn in the book, john Jr. Was very responsible about handling that responsibility his entire life. So I think there's something really to be said for somebody who does a good job raising their kids. Now, the other kids, it was a little more questionable, like you mentioned, David, and it was a little all over the place, how they all turned out. And it's hard to say how much of that is John Rockefeller's fault, and how much of that is just the natural differences between children, and how much of that is also the effects of being so wealthy in the first place. But certainly, I think he did a great job bringing up his son, John Jr. Is there anything else that we didn't talk about related to Titan that you'd like to bring up?

This is a really minor aside, but just one of the anecdotes that I found fascinating was when he forced Commodore Vanderbilt's hand, and at 29 years old, made Vanderbilt come to his office for a meeting and declined to go to meet with Vanderbilt. So I just thought that was a funny little tidbit as we see him through his whole age, that at 29, he was forcing the hand of the former richest man in the world.

Well, not only that, but he did the same thing to JP. Morgan and then Delegated JP. Morgan to John Jr.

Essentially, we didn't all get into the relationship between Rockefeller and his brothers, Frank and William, and that was pretty interesting in the book. But you'll have to read the book for it because it's really outside the scope of the other things we talked about in this episode.

Okay.

Thinking about the book as a whole with the two of you recommend it, and if you would recommend it, who should read the book?

I would definitely recommend it. It is very comprehensive. I guess that's the way I would politely talk about it. It's long, and I think it does go into more detail than I necessarily think you have to have about Rockefeller. So not having read other biographies, I can't really say, like, oh, it's the absolute best one, but I think it has to be the most comprehensive. I think turnout did an incredible job of combing through all the materials from the biography, the authorized biography that the Rockefeller family sort of thought about releasing and then never did. But, yeah, I think it gives really all of the detail that there is about his whole life story goes into all kinds of anecdotes that we didn't have time to cover here. I think the University of Chicago story alone went on for 80 pages, so there are a lot of pieces of this that maybe went into more detail than are necessary. But I found it really interesting. I learned a lot about it, and I feel like I really do know sort of the history of John D.

Rockefeller now, echoing Short, I would definitely recommend it for many of the same reasons. I particularly liked some of the cameos that we saw from the Carnegie's JPMorgan's. Charles Schwab's of the World that appeared throughout. In addition to what Short said, I also think that I would highly recommend it to folks who are in not for profit foundation, world public service, et cetera, just to see how this truly was. Just as John D. Rockefeller was the architect of one of the first and most important monopolies, he was also the architect of a new way of thinking about philanthropy and a methodology that, like I said earlier, likely amplified the philanthropic effects of his life to millions, if not billions of people. Right? And so I think it would be valuable for those folks. It's not so much a business self help book like what we've covered in the past. There's not many lessons you can take from a business sense from that environment in the 19th and early 20th centuries. But in terms of getting to know that environment, john D. Rockefeller, his family, their motivations, a family that shaped generations, it's super important, and I would definitely highly recommend it, with the caveat being that, as Short mentioned, it is quite long and comprehensive. So make sure to save yourself a couple of weeks to finish this one.

And I would recommend it too. I'm going to make a little bit more of a mild recommendation, of course. Chernow is a fantastic writer. I've read his other biographies on Grant, Washington and Hamilton. And maybe I didn't find this book quite as compelling just because the subject matter isn't quite as compelling to me. But there were parts of it I found very interesting, like Kevin mentioned the parts on philanthropy. I'm interested in Industrial Organization and this idea of is a monopoly, good or bad, in certain situations. So the chapters on that I thought were really great and really compelling. And I also think if you have any interest in the oil industry or you work in the oil industry, this book is great at telling the early history of the oil industry, which is still playing out today, as I think David mentioned with ExxonMobil and many other oil companies that exist today being actually descendants of Standard Oil. So from people who have interest in philanthropy, industrial Organization of the oil industry, I think it's a definite read for everyone else. I think you'll probably find it mildly interesting throughout, but you probably won't find it a page turner. Okay, so next month we're going to be reading a book called Layered Money. David, this is your pick. Do you want to tell us a bit about it?

Yeah, absolutely. So our next book, Layered Money from Gold and Dollars to Bitcoin and Central Bank Digital Currencies, is written by Nick Bhatia. It explains the evolution of monetary systems throughout history and the way in which layers have built up over time, distancing end consumers from the base money. So I'm really excited to read that with you all and looking forward to talking with you about bitcoin.

Great. And how can our listeners get in touch with the two of you?

You can follow me on Twitter at David G short and you can follow.

Me on Twitter at hoodaxbasement. H-U-D-A-K-S basement.

And I'm on Twitter at Dave Kopeck D-A-V-E-K-O-P-E-C. Don't forget to subscribe to us on your podcast player of choice. Want to welcome all of our new subscribers. We've had a lot in the last couple of months and don't forget to rate us too. Leave us a review on Apple podcast or on Spotify or whatever podcast player you use and we look forward to seeing you next month.