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All right gang, it's time to reach up to your closet shelf, dust off your favorite board game, and join me for a history lesson, Parker Brothers style. We're playing Monopoly, and we're playing with John D. Rockefeller, the nation's most notorious monopolizer. So choose your lucky game piece carefully -- the top hat, shoe, or dog -- just be sure to leave that gleaming car for John D. (since it's his oil that fuels automobiles, after all). I'll deal out some start-up money to the players, and we'll begin. The object of the game is to make as much money as possible by bankrupting your opponents and gobbling up all the property on the board that you can. You've got to act quickly -- and ruthlessly -- because John knows what he's doing. He plays this game in real life, too, where the stakes are truly fortunes and his opponents have no hope for survival. Daphne and I got a job!
Do we stand a chance against this man who created "the greatest, wisest, and meanest monopoly known to history?" Probably not. But after taking a look at some of his business practices, you might not even want to play the game. How'd he get so "good" at this destructive competition? Well, Rockefeller (b. 1839) started young. In the ultimate version of a "rags-to-riches" tale, he grew up very poor. With dreams of wealth dancing before his eyes, Rockefeller dropped out of school to begin working when he was still a teenager. Through smart business transactions, he made a good amount of money for himself, and entered the new United States oil industry with enthusiasm. By the time he was 30 years old, in 1870, Rockefeller had created his own oil company, called Standard Oil. At that time, he controlled 10 percent of the oil refineries in America. Rockefeller realized that, "by taking a central position in the newly developing [oil industry]," he could control it. So, rather than stop there, he continued to accumulate other people's oil refineries through a company called the South Improvement Company, which brought his oil together with three of the major eastern railroads, to work together for each other's gain. Under the South Improvement Company name, Rockefeller was able to gather up competing oil companies, adding them to Standard Oil to create one huge company that had a monopoly (or total control) on the oil refining industry. In his dealings, Rockefeller would approach other oil companies with two choices: either sell their company to him, or be crushed out of production completely. Most eventually agreed to sell, but the ones that refused found that no railroad would transport their oil, which meant that they couldn't sell or distribute their product. Their oil became useless. One refiner, John H. Alexander, remembers that, "unless we went into the South Improvement Company, we were virtually killed as refiners; that if we did not sell out, we should be crushed out." Today, this business practice is known as a "hostile takeover," variations of which you can see in movies like "Sabrina" and "Who Framed Roger Rabbit?" In Rockefeller's day, his techniques were known in more simple terms as "competitive cruelty unparalleled in industry." John was cold-hearted. He was mean. It did not matter to him that hard-working people had spent their lives building their own oil businesses. He wanted total control, and did whatever he had to to get it. In what was to become known as the Cleveland Massacre, Rockefeller digested 22 of Cleveland's 26 oil refineries into the body of Standard Oil in less than two months. When he moved on to Pittsburgh, Rockefeller bought out half of its refineries in two hours, and took over all but one of the remaining refineries over the course of the next two years. By his 38th birthday, John D. Rockefeller controlled 90 percent of America's oil refining capabilities, and was making millions of dollars in profit. After his retirement, journalist Ida Tarbell published a series of articles exposing the unfair tactics Rockefeller used to destroy his competition, disclosing his railroad rebates and bribery of government officials. Her work helped people understand in what terrible ways this tycoon had gathered power. Rockefeller defended his monopoly by claiming it was in the public's best interest that he control the entire market, since Standard Oil actually kept the price of oil very low. Because his company was so enormous and far-reaching, he was able to keep oil prices reasonable (which kept people happy) and still make a humungous profit. So what's the problem with one man owning all the oil refineries in the United States? It removes competition from the market. In the board game, people who control all the properties on one block can build houses and hotels, and bankrupt the rest of us when we land on their turf. Their monopoly on that block means that nothing can keep them from charging sky-high rents to people who want to or have to use that space. When Rockefeller then kicks money over to the other players to form a coalition against you, you don't stand a chance. Although the Sherman Anti-Trust Act had been passed in 1890 to prevent monopolies like Standard Oil from existing, the United States government did not decide to enforce this law until a decade later, when Theodore Roosevelt stepped into the White House. Roosevelt was sick of the government looking the other way while Big Business broke the law and tried to run the show. In 1906 he brought Standard Oil to court, and the company was finally forced to break up into 32 smaller companies. This ended Standard Oil's reign as king of the oil market, but it didn't affect Rockefeller's unbelievable wealth. He had already retired from running the company at this point (he was in his 50's), richer than anyone in our nation's history. Now comes the strange part. This man, who had been so consumed with tearing others down to build his own fortune into unbelievable riches, set out to give most of it away. Like Andrew Carnegie, J.P. Morgan, and the other men termed "robber barons" in his day, Rockefeller believed he was a "trustee" of the people. Now that he'd made his fortune, he felt that it was his duty to give it back to Americans in a way that would enable people to help themselves. So he gave incredible amounts of money to schools like the University of Chicago, and to medical research centers, to education endowments, and to groups like the YMCA. Rockefeller's name is most often heard today connected to the buildings or research centers his money helped create. Rockefeller's name is also heard today in connection with another well-known billionaire, Bill Gates (of Microsoft). People often compare the two men, and argue that Microsoft is a modern-day monopoly, every bit as unacceptable as Standard Oil was 100 years ago. There are some eerie similarities between Gates and Rockefeller. Bill Gates is a Harvard dropout who created a software company in a new industry and "dominated the revolution of his time." Where Rockefeller dominated 90 percent of the oil market during the "gilded age," Microsoft Windows runs 90 percent of today's personal computers. Both men preferred to buy out rather then battle their competitors, and both men argued that their market control has been good for the public because they have kept prices in their industries low. And, of course, both men have given away more money from their fortunes than I can even comprehend. While Rockefeller distributed $550 million in his lifetime, Gates has promised to give away 90 percent of his own wealth before he dies. Some historians argue that these comparisons are unfair, and that Gates has not caused the same horrible working conditions and exploitation of his employees as the ruthless Rockefeller did. On the other hand, there are many people who believe that these men are bookends of our century, with Bill Gates ending it exactly as Rockefeller began it. Well, the Monopoly board is set up, and the dice are ready to roll. Now that you know a bit more about your opponent, you can expect that John will grab up the railroads immediately. We won't be able to travel around the board without landing on one of his spaces, so we'll be forced to sell whatever land we accumulate or go completely bankrupt. If we can make it past "Go" we'll collect $200, but we'll be stuck without any options, just like Cleveland's refineries were over 100 years ago. We can't possibly win, but we can hope that he'll kick back some charity to us when the game is over. Rockefeller's ready, and it seems Gates will go next. Still want to play?
Rebecca
Please email me at:
rebecca@ustrek.org
Daphne - Philanthropy's dirty little secret |