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Breaking Through

When J D Rockefeller learned that his Standard Oil had failed in its bid to avoid its breakup he was playing golf; the sport he took up after his retirement from active business. In the leadup to the court case Rockefeller had managed to lead prosecutors across the nation as they attempt to locate him and serve him papers. By the time of the court enforced breakup of Standard Oil its market share had been reduced by around a third. New competitors arose, notably Marcus Samuel [Shell] and Henri Deterding [Royal Dutch], and they did it by teaming up.

In the book The Tycoons, its author Charles R. Morris paints a portrait different to the muckraker journalists of the day. Morris paints him as “a man of quiet charisma,” in contrast to “having the soul of a bookkeeper.” His stance is not inconsistent with a forward to the Chernow biography. Morris credits Rockefeller as paying fair prices for the businesses that fell to his control before inviting their owners onto his team. He did this by way of a trust that was the brainchild of his legal counsel. According to Morris “he [Rockefeller] didn’t need to cheat” … “he was simply better at business”[1]. The government thought otherwise and forced the disassembly of the magnate’s empire.

J. D. Rockefeller’s genius lay not only in setting up the world’s first integrated production, marketing, and distribution operation but also in his frugality. Unlike other refiners of the day who dumped gasoline as a by-product of kerosene production, Rockefeller sought its alternative uses and this positioned Standard Oil perfectly to capitalize on an emerging automobile industry. Against gasoline, steam and electricity were uncompetitive resulting in Henry Ford and other early car manufacturers abandoning these alternatives. The near tireless inventor Thomas Edison too abandoned an electric vehicle that he developed.

Rockefeller’s demeanour compares with that of the gruff J. P. Morgan. Common to Rockefeller and Morgan is that they sought to rationalise their competition. Neither attracted public empathy. Morgan, a third-generation banker of immense personal energy, delegated much of the work to his partners; many of whom crumbled under the stress despite becoming very rich. By contrast, Rockefeller was a man of athletic proportions who would pitch in with his men. When Morgan once visited a physician, feeling unwell, the advice was that any exercise might kill him.[2] He was a man who worked with his head and not his hands.

An important observation of authors who have studied billionaire wealth creators is that their subjects radiate high energy and have a competitively driven zest for taking large risks and enduring sixteen-to-eighteen-hour workdays. Of the Gilded Age titans none match the physicality of Cornelius Vanderbilt. A product of brutal physical competition for transporting passengers across the Hudson River, the “Commodore,” as he was known, relaxed by racing his prized horses down New York streets. A story, probably myth, recounted by biographer T. J. Stiles, involves the titan at the age of fifty dismounting from his horse to bludgeon “the greatest boxer of the day” near senseless after the taunter tugged at his mount’s reigns.[3]

Today, without the brutality, UK billionaire Richard Branson aligns his physicality with his Virgin brand. Others to express their identity through sports include Bernie Ecclestone’s founding Formula 1 racing. Media baron Rupert Murdoch, whose Fox Sports dominates global sports broadcasting, launched a rival competition to an entrenched Australian rugby league establishment. His competitor on home soil the late Kerry Packer, who wasn’t shy of a street fight in his youth, launched World Series Cricket and literally introduced color to a game where players historically wore only white. So too CNN founder Ted Turner usurped J. P. Morgan’s New York Yacht Club’s establishment by winning the 1977 America’s Cup.

[1] Charles R. Morris, The Tycoons How Andrew Carnegie John D. Rockefeller, Jay Gould, and J.P. Morgan Invented the American Supereconomy, (New York: Owl Books, 2006). 19-20

[2] 1. John K. Winkler, Morgan the Magnificent: The Life of J. Pierpont Morgan (1837-1913) (New York: The Vanguard Press, 1931), 18.

[3] T. J. Stiles, The First Tycoon: The Epic Life of Cornelius Vanderbilt (New York: Vintage Books, 2010), 148.