The Worldly Philosophers, Vol.1, Number 16 August 27 2007 THE Worldly Philosophers Club For Individualists Who Seek Worldly Wisdom

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John D. Rockefeller   JOHN D. ROCKEFELLER: THE WORLD'S RICHEST MAN By Mark Skousen In this issue . . . - His single most important habit:  The A Ledger How Rockefeller excelled in achieving America’s motto:  "cheaper and better" America’s Greatest Entrepreneur or Robber Baron? My interview with David Rockefeller at famed Room 5600 Rockefeller’s real legacy:  "I Believe"  "If you want to succeed you should strike out on new paths, rather than travel the worn paths of accepted success."                                       -- John D. Rockefeller  Dear Worldly Philosophers,   John D. Rockefeller did not become the world’s richest man by being an inventor like Thomas Edison, but by being a producer and manager.  He was a capitalist-entrepreneur.    He founded the Standard Oil Company (largely today’s Exxon/Mobil, but also Chevron and Amoco), which by 1900 had captured 90 percent of America’s oil refining. Benjamin Silliman, Jr., a professor of chemistry at Yale, was the discoverer of how crude oil could be distilled and purified into kerosene. But it was Rockefeller who transformed the oil industry from a volatile, risky business into an orderly, expanding market. He took control of the refining end of the oil business, cut production and transportation costs, raised capital and built bigger and better equipment to produce gasoline and other petroleum products. Rockefeller’s goal was to provide "cheap and good" gasoline for the consumer, "the best...at the lowest price." His capitalistic methods reduced the price of gasoline from 58 cents to 8 cents a gallon, and made Rockefeller the richest man in the world.  His key to success was leverage:  "I would rather earn 1% off a 100 people's efforts than 100% of my own efforts. America’s Greatest Entrepreneur or Robber Baron? His exploits were scandalized by the muckraker Ida Tarbell and Marxist historian Matthew Josephson.  Ida Tarbell’s History of Standard Oil Company, based on her famous nineteen-part series in McClure’s Magazine from 1901 to 1903, was high critical of Rockefeller’s empire.  Her view reflected Balzac’s famous refrain, "behind every great fortune is a crime."  Her bitter appraisal hastened the breakup of Standard Oil in 1911.   Since then, her historical accuracy has been challenged.  Historian Charles Morris concludes, "The great power of Tarbell’s prose conceals the holes in her argument."  Her accusation that the railroad rebates Rockefeller engineered were "secret, unjust and illegal" were in fact neither secret, illegal, nor unjust.  "There was no law against rebates, on either the federal or state level, and they were standard practice among all carriers," states Morris in his book, The Tycoons:  How Andrew Carnegie, John D. Rockefeller, Jay Gould, and J. P. Morgan Invented the American Supereconomy (New York: Times Books, 2005).  So it turns out, despite complaints at the time, the Cleveland refiners who were pressured to sell to Rockefeller were in reality offered a fair price, and those who accepted Standard Oil stock became quite wealthy.  (I highly recommend Morris’s history as a fair and balanced view of the great 19th century barons of business.)    Matthew Josephson wrote his classic work, The Robber Barons, in 1934, during the depths of the Great Depression.  It is still in print, published by Harcourt, and now rated "the classic account" of the captains of industry.  Josephson’s bias is apparent in his frequent citations of Thorstein Veblen, Charles A. Beard, and Karl Marx.  Although written in excellent prose and an entertaining style, his history is cleverly prejudiced against the creators of industry by highlighting peculiar personal habits (for example, he claims that Rockefeller had a "queer habit of talking to his pillow") and their misdeeds and deceptions, while religiously avoiding references to their positive contributions.  In his chapter on J. P. Morgan, Josephson emphasizes Morgan’s imperial wizardry at 23 Wall Street, where he conspired to monopolize and unify the transportation business of Vanderbilt, Gould, Huntington, and Hill, and create the world’s first billion-dollar company, US Steel.  Yet he conveniently leaves out Morgan’s vital role in twice saving the U. S. Treasury from the gold drains and near bankruptcy of the 1890s, and his role as quasi-central banker in restoring order during the Panic of 1907.  These omissions are a fatal flaw in Matthew Josephson’s work.  Rockefeller:  Strictly business?  Rockefeller was rich beyond his wildest dreams, but was he a worldly philosopher?  Socrates said, "The unexamined life is not worth living."  Did Rockefeller show any interests beyond his famed A ledger?    Some historians have painted the oil tycoon as strictly business, famous for his intense, cold, piercing eyes.  He was known for working 12-15 hour days.  When other young men were playing sports or reading novels, the young Rockefeller kept Ledger Book A, tracking the progress of his life in columns of dollars and cents, including the cost of an engagement ring to his fiancé Laura Spelman.  He married in 1864, and had four daughters and one son.  He passed along these sound financial principles to his only son, John D. Rockefeller, Jr., and his five grandsons.      My interview with David Rockefeller   In the early 1990s, I interviewed David Rockefeller, in the family office Room 5600 of the RCA Building (now the GE Building where NBC is headquartered).  It was a remarkable experience as David, the youngest and sole survivor of the third generation, told me how Rockefeller’s heirs had all gone into politics, the arts, and philanthropy--everything except business!  "Not a single one of my children have gone into my profession of banking," he lamented.    Oddly enough, David Rockefeller told me he considered himself a "free-market economist."  He earned his Ph. D. in economics from University of Chicago and took a class in economics from Friedrich Hayek at the London School of Economics.  (But Hayek once said that David Rockefeller was one of his worst students!)    Outside Interests in his Old Age   Yet John D. was not all work and no play, at least near the end of his life.  He later said, "I know of nothing more despicable and pathetic than a man who devotes all the hours of the waking day to the making of money for money's sake."   He was a practicing Baptist since childhood, where he learned strict rules of order, piety, honesty, and thrift.  He considered himself a Christian businessman and tithed 10 percent of his income to the Baptist Church (by 1905, his tithes approached $100 million).    He showed considerable interest in contributing to religious and educational causes:  He founded the University of Chicago in 1892, established the Rockefeller Institute for Medical Research (later the Rockefeller University) in 1901, and the Rockefeller Foundation in 1913.  In addition to giving away half a billion dollars in gifts, he financed the restoration of Williamsburg (my wife and I celebrated our honeymoon there) and donated the site for the United Nations building.    In his final years, he made a habit of playing golf and giving away shiny silver dimes whenever he went.  Before he died at the old age of 98 in 1937, he had distributed over 30,000 dimes.    The next time you come to New York, be sure to visit Rockefeller Plaza.  Just east of the ice-skating rink is John D. Rockefeller’s beliefs etched on a granite stone.  They are well worth heeding:    I Believe By John D. Rockefeller    I believe in the supreme worth of the individual and in his right to life, liberty, and the pursuit of happiness.   I believe that every right implies a responsibility; every opportunity, an obligation; every possession, a duty.   I believe that the law was made for man and not man for the law; that government is the servant of the people and not their master.   I believe in the dignity of labor, whether with head or hand; that the world owes no man a living but that it owes every man an opportunity to make a living.   I believe that thrift is essential to well ordered living and that economy is a prime requisite of a sound financial structure, whether in government, business or personal affairs.   I believe that truth and justice are fundamental to an enduring social order.   I believe in the sacredness of a promise, that a man’s word should be as good as his bond; that character — not wealth or power or position — is of supreme worth.   I believe that the rendering of useful service is the common duty of mankind and that only in the purifying fire of sacrifice is the dross of selfishness consumed and the greatness of the human soul set free.   I believe in an all-wise and all-loving God, named by whatever name, and that the individual’s highest fulfillment, greatest happiness, and widest usefulness are to be found in living in harmony with His will.   I believe that love is the greatest thing in the world; that it alone can overcome hate; that right can and will triumph over might.   Good living, AEIOU,   Marcus Aurelius P. S.  FreedomFest, the conference for worldly philosophers, on YouTube!  Go to http://www.youtube.com/watch?v=LdVclheDHgg.  The entire Big Debate on US foreign policy between Dinesh D'Souza and Larry Abraham (the conservatives) and Congressman Ron Paul and Doug Casey (the libertarians) is now also available to watch at http://www.youtube.com/view_play_list?p=6861D09D3C4BC901.  For more information about next year's great conference, July 10-12, 2008, in Las Vegas, go to www.freedomfest.com