THE STANDARD OIL COMPANY

Random Reminiscences of Men and Events, by John D. Rockefeller is part of the HackerNoon Books Series. You can jump to any chapter in this book here. Chapter III : THE STANDARD OIL COMPANY

Chapter III. THE STANDARD OIL COMPANY

It would be surprising if in an organization which included a great number of men there should not be an occasional employee here and there who acted, in connection with the business or perhaps in conducting his own affairs, in a way which might be criticized. Even in a comparatively small organization it is well-nigh impossible to restrain this occasional man who is over-zealous for his own or his company's advancement. To judge the character of all the members of a great organization or the organization itself by the actions of a few individuals would be manifestly unfair.

It has been said that I forced the men who became my partners in the oil business to join with me. I would not have been so short-sighted. If it were true that I followed such tactics, I ask, would it have been possible to make of such men life-long companions? Would they accept, and remain for many years in positions of the greatest trust, and finally, could any one have formed of such men, if they had been so browbeaten, a group which has for all these years worked in loyal harmony, with fair dealing among themselves as well as with others, building up efficiency and acting in entire unity? This powerful organization has not only lasted but its efficiency has increased. For fourteen years I have been out of business, and in eight or ten years went only once to the company's office.

In the summer of 1907 I visited again the room at the top of the Standard Oil Company's building, where the officers of the company and the heads of departments have had their luncheon served for many years. I was surprised to find so many men who had come to the front since my last visit years ago.

Afterward I had an opportunity to talk with old associates and many new ones, and it was a source of great gratification to me to find that the same spirit of coöperation and harmony existed unchanged. This practice of lunching together, a hundred or more at long tables in most intimate and friendly association, is another indication of what I contend, slight as it may seem to be at first thought. Would these people seek each other's companionship day after day if they had been forced into this relation? People in such a position do not go on for long in a pleasant and congenial intimacy.

For years the Standard Oil Company has developed step by step, and I am convinced that it has done well its work of supplying to the people the products from petroleum at prices which have decreased as the efficiency of the business has been built up. It gradually extended its services first to the large centres, and then to towns, and now to the smallest places, going to the homes of its customers, delivering the oil to suit the convenience of the actual users. This same system is being followed out in various parts of the world.

The company has, for example, three thousand tank wagons supplying American oil to towns and even small hamlets in Europe. Its own depots and employees deliver it in a somewhat similar way in Japan, China, India, and the chief countries of the world. Do you think this trade has been developed by anything but hard work?

This plan of selling our products direct to the consumer and the exceptionally rapid growth of the business bred a certain antagonism which I suppose could not have been avoided, but this same idea of dealing with the consumer directly has been followed by others and in many lines of trade, without creating, so far as I recall, any serious opposition.

This is a very interesting and important point, and I have often wondered if the criticism which centred upon us did not come from the fact that we were among the first, if not the first, to work out the problems of direct selling to the user on a broad scale. This was done in a fair spirit and with due consideration for every one's rights. We did not ruthlessly go after the trade of our competitors and attempt to ruin it by cutting prices or instituting a spy system. We had set ourselves the task of building up as rapidly and as broadly as possible the volume of consumption. Let me try to explain just what happened.

To get the advantage of the facilities we had in manufacture, we sought the utmost market in all lands—we needed volume. To do this we had to create selling methods far in advance of what then existed; we had to dispose of two, or three, or four gallons of oil where one had been sold before, and we could not rely upon the usual trade channels then existing to accomplish this. It was never our purpose to interfere with a dealer who adequately cultivated his field of operations, but when we saw a new opportunity or a new place for extending the sale by further and effective facilities, we made it our business to provide them.

In this way we opened many new lines in which others have shared. In this development we had to employ many comparatively new men. The ideal way to supply material for higher positions is, of course, to recruit the men from among the youngest in the company's service, but our expansion was too rapid to permit this in all cases. That some of these employees were over-zealous in going after sales it would not be surprising to learn, but they were acting in violation of the expressed and known wishes of the company. But even these instances, I am convinced, occurred so seldom, by comparison with the number of transactions we carried on, that they were really the exceptions that proved the rule.

Every week in the year for many, many years, this concern has brought into this country more than a million dollars gold, all from the products produced by American labour. I am proud of the record, and believe most Americans will be when they understand some things better. These achievements, the development of this great foreign trade, the owning of ships to carry the oil in bulk by the most economical methods, the sending out of men to fight for the world's markets, have cost huge sums of money, and the vast capital employed could not be raised nor controlled except by such an organization as the Standard is to-day.

To give a true picture of the early conditions, one must realize that the oil industry was considered a most hazardous undertaking, not altogether unlike the speculative mining undertakings we hear so much of to-day. I well remember my old and distinguished friend, Rev. Thomas W. Armitage, for some forty years pastor of a great New York church, warning me that it was worse than folly to extend our plants and our operations. He was sure we were running unwarranted risks, that our oil supply would probably fail, the demand would decline, and he, with many others, sometimes I thought almost everybody, prophesied ruin.

None of us ever dreamed of the magnitude of what proved to be the later expansion. We did our day's work as we met it, looking forward to what we could see in the distance and keeping well up to our opportunities, but laying our foundations firmly. As I have said, capital was most difficult to secure, and it was not easy to interest conservative men in this adventurous business.

Men of property were afraid of it, though in rare cases capitalists were induced to unite with us to a limited extent. If they bought our stock at all, they took a little of it now and then as an experiment, and we were painfully conscious that they often declined to buy new stock with many beautiful expressions of appreciation.

The enterprise being so new and novel, on account of the fearfulness of certain holders in reference to its success, we frequently had to take stock to keep it from going begging, but we had such confidence in the fundamental value of the concern that we were willing to assume this risk. There are always a few men in an undertaking of this kind who would risk all on their judgment of the final result, and if the enterprise had failed, these would have been classed as visionary adventurers, and perhaps with good reason.

The 60,000 men who are at work constantly in the service of the company are kept busy year in and year out. The past year has been a time of great contraction, but the Standard has gone on with its plans unchecked, and the new works and buildings have not been delayed on account of lack of capital or fear of bad times. It pays its workmen well, it cares for them when sick, and pensions them when old. It has never had any important strikes, and if there is any better function of business management than giving profitable work to employees year after year, in good times and bad, I don't know what it is.

Another thing to be remembered about this so-called "octopus" is that there has been no "water" introduced into its capital (perhaps we felt that oil and water would not have mixed); nor in all these years has any one had to wait for money which the Standard owed. It has suffered from great fires and losses, but it has taken care of its affairs in such a way that it has not found it necessary to appeal to the general public to place blocks of bonds or stock; it has used no underwriting syndicates or stock-selling schemes in any form, and it has always managed to finance new oil field operations when called upon.

It is a common thing to hear people say that this company has crushed out its competitors. Only the uninformed could make such an assertion. It has and always has had, and always will have, hundreds of active competitors; it has lived only because it has managed its affairs well and economically and with great vigour. To speak of competition for a minute: Consider not only the able people who compete  in refining oil, but all the competition in the various trades which make and sell by-products—a great variety of different businesses. And perhaps of even more importance is the competition in foreign lands. The Standard is always fighting to sell the American product against the oil produced from the great fields of Russia, which struggles for the trade of Europe, and the Burma oil, which largely affects the market in India.

In all these various countries we are met with tariffs which are raised against us, local prejudices, and strange customs. In many countries we had to teach the people—the Chinese, for example—to burn oil by making lamps for them; we packed the oil to be carried by camels or on the backs of runners in the most remote portions of the world; we adapted the trade to the needs of strange folk. Every time we succeeded in a foreign land, it meant dollars brought to this country, and every time we failed, it was a loss to our nation and its workmen.

One of our greatest helpers has been the State Department in Washington. Our ambassadors and ministers and consuls have aided to push our way into new markets to the utmost corners of the world.

I think I can speak thus frankly and enthusiastically because the working out of many of these great plans has developed largely since I retired from the business fourteen years ago.

The Standard has not now, and never did have a royal road to supremacy, nor is its success due to any one man, but to the multitude of able men who are working together. If the present managers of the company were to relax efforts, allow the quality of their product to degenerate, or treat their customers badly, how long would their business last? About as long as any other neglected business. To read some of the accounts of the affairs of the company, one would think that it had such a hold on the oil trade that the directors did little but come together and declare dividends. It is a pleasure for me to take this opportunity to pay tribute to the work these men are doing, not only for the company they serve, but for the foreign trade of our country; for more than half of all the product that the company makes is sold outside of the United States.

If, in place of these directors, the business were taken over and run by anyone but experts, I would sell my interest for any price I could get. To succeed in a business requires the best and most earnest men to manage it, and the best men rise to the top. Of its origin and early plans I will speak later.

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John D. Rockefeller. (2005). Random Reminiscences of Men and Events. Urbana, Illinois: Project Gutenberg. Retrieved September 2022 from https://www.gutenberg.org/files/65377/65377-h/65377-h.htm

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