First Billionaire In World History
In this post
Our barrel begins its life in the mud.
It is the 1860s, in a rough oil town in western Pennsylvania, where wooden derricks crowd the hillsides and the ground smells of petroleum. The modern oil industry had started nearby in 1859, when Edwin Drake drilled a well outside Titusville and struck oil. Now crude is pumped from the earth, ladled into a big wooden barrel, and loaded onto a wagon. The barrel is heavy, dirty and, on its own, almost worthless.
Follow it. By the end of its journey, this one barrel will explain how a single man became the first billionaire the world had ever seen.
The barrel goes looking for a refinery
Raw crude oil cannot light a lamp or grease a wheel. First it has to be refined, so barrels like ours travelled by wagon and then by rail toward refining cities, and one of the greatest of them was Cleveland, Ohio.
Waiting in Cleveland was a young businessman named John D. Rockefeller. Born in 1839, he had started work at sixteen as a bookkeeper, keeping careful records of every cent he earned and spent. In 1863 he joined partners in a Cleveland oil-refining business, and within about two years their refinery had grown into the largest in the area.
Rockefeller watched barrels arrive by the thousand, and he understood something early: the fortune would not go to the men who drilled lucky wells. It would go to whoever controlled what happened to the oil after it left the ground.
What came out of the barrel
Inside a refinery, crude oil was heated and separated into different products. In those years, one product mattered far above the rest: kerosene. Burned in lamps, kerosene gave a bright, steady light, and it quickly replaced whale oil and smelly tallow candles in homes across America and beyond. Until engines that burned fuel inside them were developed much later, oil was wanted almost entirely for lamp fuel. The chief treasure inside our barrel, in other words, was light itself.
Families who had once gone to bed at sunset could now read, sew, study and work after dark. Demand for kerosene seemed endless, and every barrel of crude that reached a refinery could be turned into evening hours for millions of people.
Rockefeller’s gift was squeezing more value out of each barrel than anyone else. He ran his refineries with fierce attention to cost, bought supplies in bulk, and steadily expanded. In 1870 he and his associates incorporated the Standard Oil Company in Ohio. Within two years, Standard controlled nearly all of Cleveland’s refineries.
One barrel becomes a river
From Cleveland, the river of oil widened. Standard bought up competing refineries in other cities. It built its own pipelines, so oil no longer depended only on railways, and it used its enormous size to win favourable shipping rates from the railroads it still needed. Rivals found themselves squeezed from every direction, and many sold their businesses to Standard simply because competing had become impossible.
In 1882, Rockefeller and his partners folded their companies into the Standard Oil Trust, a single structure guiding the whole empire. By then, Standard was refining somewhere between 90 and 95 percent of all the oil produced in the United States. Nearly every barrel in the country, including ours, passed through Rockefeller’s hands somewhere along the way.
Not everyone admired this. Writers such as Ida Tarbell, whose history of the company appeared in 1904, described hard tactics used against competitors, and many Americans began to fear that one private company had grown too powerful over something the whole nation needed.
The day the barrel’s empire was ordered apart
The government agreed with the critics. Ohio’s Supreme Court had already ordered the trust dissolved in 1892, but Standard shifted its holdings into connected companies and later gathered them under a New Jersey holding company, and the empire carried on. In 1906 the United States government sued under the Sherman Antitrust Act, and in 1911 the U.S. Supreme Court ruled that Standard Oil had broken federal antitrust law and had to be split up.
The giant was divided into 34 separate companies. Names that still fill petrol stations today trace their roots to that split: the New Jersey company eventually became Exxon, the California company became Chevron, and the Ohio company was later bought by British Petroleum, now BP. In 1999 Exxon and Mobil, two children of the old empire, merged again to form ExxonMobil.
Surely, people assumed, Rockefeller’s fortune would shrink with his company. They had it exactly backwards.
The twist that made him richer
Rockefeller owned about a quarter of Standard Oil. The breakup did not take that ownership away from him. Instead of holding shares in one enormous company, he now held shares in 34 independent ones, and those companies, freed to grow on their own, kept rising in value.
On 29 September 1916, newspapers reported that his fortune had passed one billion dollars, making him the world’s first billionaire. To be fair, nobody could count his wealth exactly; reporters estimated what he owned and what it might be worth, so the billion-dollar label was an educated guess. Even so, the direction was clear. When he died in 1937, his fortune was estimated at about 1.4 billion dollars, roughly 1.5 percent of the entire American economy. Measured as the same share of today’s far larger economy, it would come to hundreds of billions of dollars, beyond any fortune of our own time.
To my mind, the breakup is the most surprising turn in the whole barrel’s journey: the strongest punishment the government could deliver ended up multiplying the wealth of the man it was meant to restrain.
The giving years
Rockefeller had already stepped away from the daily running of his business during the 1890s, after illness forced him to slow down. By 1897 he had stopped going to the office altogether, and he nearly reached a private goal he had set as a young man: to live to one hundred. He died at ninety-seven.
Giving, though, had never waited for his retirement. As a teenage clerk earning very little, he recorded small gifts to charity in the notebook he called Ledger A, and he kept the habit for life. In his later years, giving became his main occupation. Over his lifetime he gave away more than 500 million dollars, a total often counted at around 540 million.
He helped found the University of Chicago, giving it some 35 million dollars by 1910. He funded the Rockefeller Institute for Medical Research in 1901, which later became Rockefeller University, and in 1913 he established the Rockefeller Foundation, whose work in public health carried campaigns against diseases such as hookworm and yellow fever around the world. The hookworm campaign alone helped cure nearly 500,000 people within five years, and foundation-supported scientists later developed a vaccine for yellow fever, the disease once called the terror of the western hemisphere. And in a small habit that people loved, the richest man on Earth liked to hand shiny new dimes to children and strangers he met; by report, he gave away some 35,000 dollars in dimes.
One barrel then, an ocean now
Our barrel’s world was a world of lamps. A barrel of crude meant light for reading after supper, and almost nothing else. Today’s world drinks oceans of oil: it moves cars, trucks, ships and aeroplanes, and it supplies fuel, lubricants, medicines, dyes and the plastics in nearly everything we touch. The industry our barrel helped to start grew far larger than Rockefeller himself could have pictured standing in that Pennsylvania mud.
Yet the shape of the story still feels familiar. One man saw that the real power lay not in owning a well but in controlling the path every barrel travelled, and he built a system so complete that a government had to cut it into 34 pieces. Then, in the strangest ending of all, those pieces made him the first billionaire in history, and he spent his final decades giving the money away, one foundation, one university and one dime at a time.
Questions people ask
Why is Rockefeller called the first billionaire? On 29 September 1916, newspapers reported that the rising value of his oil-company shares had pushed his fortune past one billion dollars. There was no exact official count, so the title rests on careful estimates, but no earlier fortune is known to have reached that figure.
How much of America’s oil did Standard Oil control? By the early 1880s, Standard was refining about 90 to 95 percent of all oil produced in the United States, and it also dominated pipelines, transport and marketing.
What did Standard Oil become after the breakup? It was divided into 34 companies in 1911. Several of today’s biggest energy firms descend from them, including ExxonMobil, Chevron and BP.
How much money did Rockefeller give away? More than 500 million dollars during his lifetime, commonly counted at around 540 million, funding the University of Chicago, medical research and the Rockefeller Foundation, among many other causes.
Would Rockefeller still be the richest person today? Measured against the size of the whole economy, quite possibly. His fortune at death was about 1.5 percent of U.S. GDP; the same share of today’s economy would be worth hundreds of billions of dollars, more than any modern fortune.
