How Did Rockefeller Make His Money? (2024)

John Davison Rockefeller Sr. is an iconic businessman widely considered the wealthiest American in modern history. His name is all over New York, from Rockefeller Center (from which the show 30 Rock gets its name off NBC’s street address) to Roc-a-Fella Records, which launched hip-hop mogul Jay-Z.

But how did Rockefeller make his money?

Rockefeller was the first billionaire in the United States, and the story of how it happened isn’t what you may think. He founded Standard oil, an oil refinery company that gained importance as kerosene and gasoline became everyday staples.

These oils were used for power before electricity and automotive fuels after their invention. This made Standard Oil the country’s first great business trust, owning 90 percent of domestic oil at its peak. It wasn’t long before the company drew regulatory ire, and it was broken up in 1911.

In fact, the company is the reason we have antitrust laws.

It turns out each individual part was worth more than the whole, which only amplified Rockefeller’s wealth as majority owner. The components of Standard Oil became BP, Exxon (XOM), ConocoPhilips (COP), Chevron (CVX), and all the other names you know as Big Oil.

Although his wealth was reported at over $1 billion, or around 2 percent of the country’s GDP at its peak in 1916, his estate was only valued at $26 million upon his death. This is because he gave away most of his wealth, making him both the richest and most generous man to ever live.

We examine the books on Rockefeller to understand the tycoon and philanthropist who created the modern oil industry over a century ago.

How John D. Rockefeller Got Started

Rockefeller was born in 1839 New York to a con artist father known for being involved in schemes. By the time he was 16, he had a job as an assistant bookkeeper for a small produce commission. He earned $58 per month and once quipped his goal was to make $100,000 and live to be 100.

When the Civil War hit, Rockefeller sold food and supplies to the Union Army up north. Soon, he and a partner discovered the inefficiencies in oil extraction and production. Often kerosene was extracted, and the rest dumped back into the environment.

Rockefeller was thrifty, using the gas to fuel the refinery, while creating paraffin wax, lubricating oil, petroleum jelly, tar, and other products from the byproducts.

Also, instead of eliminating the competition (which was standard business practice at the time), Rockefeller bought them. He considered himself a savior who helped these businesses by absorbing them, creating a vertically integrated powerhouse that quickly expanded to create the country’s first monopoly.

Who Funded Rockefeller?

Not only was he extraordinarily wealthy, but Rockefeller was also self-made. His first business started with a $4,000 investment. Half was put up by partner Maurice Clark, while Rockefeller borrowed $1,000 from his father (at 10 percent interest) to put up his half.

Profits soon soared, with each pulling $17,000 a year income from the company. The Civil War fueled much of this revenue, and it also prompted the company to shift from foods to oils.

It wasn’t long before the company experienced exponential growth. The market existed and had a cheap barrier to entry of only $1,000-$2,000 per refinery. By the time the war ended, Rockefeller introduced cheaper kerosene to the working class, which further fueled profits.

His aggressive strategy of buying low-performing refineries, optimizing them, and underselling the competition created rapid horizontal growth.

It wasn’t long before a sweeping antitrust movement targeted Standard Oil as its first monopoly.

Rockefeller and Standard Oil

Rockefeller built Standard Oil through generating enormous levels of cash and acquiring competitors. It’s a playbook today’s business executives still follow. By the turn of the century, American crude oil accounted for 85 percent of the global market.

The company was vertically integrated, so it owned oil fields, refineries, pipelines, tankers, and retailers. Soon it expanded into iron ore, which put Rockefeller into a longstanding feud with steel magnate Andrew Carnegie.

By the time his son took over, Standard Oil was found in violation of the Sherman Antitrust Act. It was deemed a monopoly and broken into 34 new companies. These companies became what we now know as ConocoPhillips, Chevron (CVX), ExxonMobil (XOM), BP (BP), Pennzoil, Marathon, and more, including pipelines, refineries, and chemical companies.

As the biggest shareholder, Rockefeller only increased his wealth from this breakup.

How Did Rockefeller Make His Money?

At the time of the Standard Oil Breakup, Rockefeller owned over 25 percent of the company’s stock. This meant he was among the shareholders to receive proportionate shares in each of the 34 companies created by the breakup.

While his control over the industry was reduced in 1911, his fortune was increased by a multiple of five over the next decade. He became the country’s first billionaire in 1916 in his 70s.

By this point, he was retired and deeply involved in philanthropy. He followed Carnegie’s lead and gave away the bulk of his fortune, creating foundations for medical research, education, and science. If this story sounds familiar, it’s what Bill and Melinda Gates are doing.

McKenzie Scott is also a known philanthropist, although Jeff Bezos is less so. And that brings about the question of how much Rockefeller is worth compared to modern billionaires.

How Much Did Rockefeller Make in Today’s Money?

Rockefeller’s peak net worth was $1.5 billion, which equates to over $26.29 billion in today’s dollars. In 2020, that would rank him at 29 on Forbes richest billionaires list.

That means although he was the richest man of his time, 28 living people are wealthier. Some of them are already named in this article.

Who Was the Richest Man Ever?

The richest man ever is a close race between Jeff Bezos and Bill Gates, both of whom face their own antitrust problems with their giant conglomerates.

Other living billionaires richer than Rockefeller include Warren Buffett, Mark Zuckerberg, three Waltons, Larry Ellison, Michael Bloomberg, and Charles Koch.

Even Mackenzie Scott’s $36 billion state in Amazon from her divorce settlement beats Rockefeller’s fortunes.

And that’s not even counting the oil industry crash caused by the coronavirus in 2020. It left many of Standard Oil’s predecessors trading for pennies on the dollar. Of course, his family’s fund finally exited the oil business in 2016.

The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.