Railroads, factories, refineries…In the 19th century it became possible for a few people to control a few critical chokepoints of commerce and exploit them for all they were worth.
To some, these people were “captains of industry” to the worker on the street they were often known as “robber barons.”
Once one of them dominated a key commodity or transport system they could wield monopolistic powers with impunity.
Many people believed that “free” markets would naturally lead to the optimal public good, the regulations that could have stopped the near destruction of competition in the economy didn’t yet exist.
John D. Rockefeller grew up poor in rural America, his father absent most of the time womanizing and plying money-making schemes, his mother overworked at home on the farm.
Because they never knew when people would come calling to collect debts incurred by the father, they always had money in reserve and kept close track of finances.
When Rockefeller got his first job in Cleveland he started keeping a personal ledger poetically named “Ledger A” that he used to keep track of every penny that passed through his hands.
To put this worship of order and precision in perspective, Ledger A became Rockefeller’s personal Rosebud, a sacred artifact he later had locked away in one of his private vaults.
It was with this methodical spirit that Rockefeller continued to accumulate wealth and assets. He saw commerce itself and the accumulation of capital as a sacred mission.
Realizing that drilling for oil itself tended towards booms and busts, Rockefeller had the brains to focus on refineries that could bring in steady profits whether or not there were localized surges or shortages.
He also leveraged his growing economy of scale to get discount rates from the railroads which allowed him to sell his product cheaper than the competition. Soon everyone had to push for these discounts or go out of business. To a few victors who could push the railroad transport prices lowest went the spoils.
This price war over the railways is why today we have interstate commerce laws. Because Rockefeller could use railroads to help him sell more cheaply than the competition wherever he went, no one else stood a chance.
State governments and the feds tried to make regulations to prevent companies like Standard Oil from operating across state borders without having to answer to any set of local laws. Soon,companies had to operate under the laws of a single state.
Standard Oil simply split up into nominally separate companies, one for each state and all were governed from a seemingly innocuous holding company.
As government continued to try to restrict the reach of robber barons, men like Rockefeller kept finding ways to honor the letter of the law while circumventing its spirit.
Rockefeller responded to concern over the growing size of his company by maintaining every appearance of competition.
Companies he bought out would keep their old names and management. No one would even know anything had changed except for a few people at the top of the hierarchy.
He also allowed an insignificant sliver of the industry to remain somewhat independent so he could always make the claim that some competition existed.
Because of these stealthy tactics, few people realized just how big Standard Oil had become until it was too late. Whereas other Robber Barons liked to behave like celebrities, Rockefeller kept quiet operating largely behind the scenes. He didn’t truly become a household name until long after he had taken over.
Perhaps more than anyone, Rockefeller invented the modern corporation with its precisely organized state-sized bureacracies.
Because Rockefeller found himself in charge of so much, much of his effort was spent simply figuring out how to delegate tasks.
He also invented much of the modern corporate culture even becoming one of the first executives to organize much of his social life around holes of golf.
Like many magnates of his time, Rockefeller seemed to feel a certain tie to a homeland and people that today’s borderless tycoons would be hard-pressed to understand.
That Rockefeller retained some kind of moral vision and notion of a higher purpose even as he gained absolute power seems unthinkable after all the horrors of the 20th century and the dominance of disconnected kleptocrats in the 21st century.
It truly is amazing in retrospect that he actually tried to build things and give back to the society that gave him his wealth rather than relentlessly hoarding everything he had by running his operations out of multiple countries.
Indeed in the 21st century, today’s Robber Barons have transcended obsolete nation states.
They play the laws of one zone against the other for their gain much as Rockefeller once did with the laws of different U.S. states.
As unpopular as the notion of some kind of world governing system is, some kind of international commerce system may become necessary to stem the depredations of billionaires who reap all the benefits of playing a game of arbitrage within the current decrepit and outdated international system: If one nation objects to being exploited by them, they simply take their money somewhere else with a government more amenable to their desires.
If particular countries try to enforce regulations, elites can simply split different operations into different countries all under different names just like Rockefeller used to do in the states with bits and pieces of Standard Oil.
In our age of multi-national corporate entities effectively acting outside of the laws of nation states, we would do well to pay attention to the lessons we can learn from men like John D. Rockefeller.
Titan: The Life of John D. Rockefeller Sr.