Rockefeller himself was an unlikely business tycoon, born into a relatively poor family in upstate New York on July 8, 1839. His mother was the daughter of a local minister. His father was effectively a con artist, who had multiple identities and sold fake cures for cancer and other maladies. Still, he changed the world forever.
Five years ago, The New York Times attempted to rewrite American history by identifying 1619, the year slaves first arrived on our shores, as the true founding year of the entire United States rather than 1776, but their plan was far more insidious and destructive than merely rewriting the past. The real objective was to attribute almost everything about America in the present to the legacy of slavery, undermining our government, economic, and social systems. The goal was to make the principles, customs, and laws that underlie the country forever irredeemable because all of it was permanently stained with racism to this day, a systemic racism that could only be excised by embracing their neo-Marxist ideologies. Chief among these targets was the free market itself, the foundation of our economy and every transaction we undertake within it, which was characterized as unnecessarily brutal and unfair purely because of the plantation system in the antebellum South and its ever lasting impact on the work you perform to this day. As Matthew Desmond described it, “In order to understand the brutality of American capitalism, you have to start on the plantation.” He began his argument by summarizing the state of the free market in the US, or rather his opinion of its many failings. “This is a capitalist society. It’s a fatalistic mantra that seems to get repeated to anyone who questions why America can’t be more fair or equal. But around the world, there are many types of capitalist societies, ranging from liberating to exploitative, protective to abusive, democratic to unregulated. When Americans declare that ‘we live in a capitalist society’ — as a real estate mogul told The Miami Herald last year when explaining his feelings about small-business owners being evicted from their Little Haiti storefronts — what they’re often defending is our nation’s peculiarly brutal economy. ‘Low-road capitalism,’ the University of Wisconsin-Madison sociologist Joel Rogers has called it. In a capitalist society that goes low, wages are depressed as businesses compete over the price, not the quality, of goods; so-called unskilled workers are typically incentivized through punishments, not promotions; inequality reigns and poverty spreads.” After making these claims without providing any real evidence to support them, he lays out his thesis that slavery is to blame, “Those searching for reasons the American economy is uniquely severe and unbridled have found answers in many places (religion, politics, culture). But recently, historians have pointed persuasively to the gnatty fields of Georgia and Alabama, to the cotton houses and slave auction blocks, as the birthplace of America’s low-road approach to capitalism.”
Of course, this would be rather damning if it were remotely true. If, indeed, we inhabited an economic world defined by the whips that brutalized slaves more than one hundred and fifty years ago, fair minded people would have every reason to want to rise up against it in mass. In reality, the post-war economies that developed almost exclusively in the North were radically different than the slave-holding economy that dominated in the South before the war, and it was the industrial North that gave rise to many companies that still exist to this day, leaving an indelible imprint on how we do business in America, for better or worse without the stain of slavery. Mr. Desmond himself comes close to touching on the truth, when he alludes to but doesn’t mention the father of modern capitalism by name, John. D. Rockefeller, “Cotton was to the 19th century what oil was to the 20th: among the world’s most widely traded commodities.” Oil, however, was actually among the world’s most widely traded commodities in the second half of the 19th century, replacing the increasingly rare and expensive whale oil used to light houses prior to electricity, long before the point Mr. Desmond chooses to emphasize. This is important because the industry rose to prominence only after slavery was defeated and the plantation system destroyed, representing an entirely new approach to business in the United States. Oil, in fact, is what made Rockefeller among the richest men in history beginning in the late 1870s, when he turned Standard Oil into a business empire, integrating every aspect of oil production including shipping. Rockefeller himself was a cutthroat business man who made some ethically questionable decisions to amass his fortune, but whatever your opinion on his character or practices, capitalism continues to bear his imprint more so than almost anyone else, primarily in the form of a financial statement, the reduction of everything to profit and loss. As Max Weber, author of The Protestant Ethic and the Spirit of Capitalism put it, “rational bookkeeping” was the critical ingredient to organizing complex enterprises and it only came to prominence after slavery was abolished. Modern capitalism, “turns the unit of money into a tool of rational cost-profit calculations, of which the towering monument is double-entry bookkeeping” explained Joseph Schumpeter was an Austrian political economist, who taught at Harvard and briefly Finance Minister of Austria in 1919.
Incredibly, this wasn’t standard practice before the rise of Standard Oil and, perhaps less surprisingly, Rockefeller seemed to have trained his entire life to make it so. As a student, he wasn’t particularly exceptional in most subjects, except when it came to arithmetic. “Arithmetical problems most attracted him,” explained his mother in law, Lucy Spelman, “for he had been taught at home to keep accurate accounts of his gains and losses.” His first job in Cleveland was actually as a bookkeeper at seventeen years old, where he noted “Many of the brightest kept their books in such a way that they did not actually know when they were making money on a certain operation and when they were losing it.” Rockefeller, in contrast, “charted [his course] by figures, nothing but figures.” Biographer Ron Chernow, claimed in his magisterial, Titan: The Life of John D. Rockefeller, that a focus on financials “gauged performance, exposed fraud, and ferreted out hidden inefficiencies. In an imprecise world, they rooted things in solid empirical reality,” and Rockefeller, to a large extent, built his empire on numbers. One instance in particular is illustrative of his overall approach and its impact on modern business; the sort of thing that occurs on a daily basis today, but was practically unheard of at the time. While touring a plant in New York City that packaged kerosene in cans for sale overseas, he asked a foreman how many drops of solder were used to seal the top. When he learned it was 40, he asked a follow up question, why is that the ideal amount? “Have you ever tried 38? No, Would you mind having some sealed with 38 and let me know?” As it turns out, 38 drops causes some leakage, but 39 drops works just as well as 40, saving 2.5% of solder per can. In his mind, even this small efficiency was worth commenting years later. “That one drop of solder saved $2,500 the first year; but the export business kept on increasing after that and doubled, quadrupled – became immensely greater than it was then; and the saving has gone steadily along, one drop on each can, and has amounted since to many hundreds of thousands of dollars.” Aside from any personal predilection for numbers, some of the reduction of a business to profit and loss was driven by the necessity of running the largest enterprise in the world at the time. Joshua John Ward, of Georgetown County, South Carolina, is considered by many to be the largest slave holder in the United States, dubbed “the king of the rice planters.” In 1850 he held 1,092 slaves. Some claim Stephen Duncan is the record holder at 2,200 across 14 plantations, but by 1880, Rockefeller employed over 100,000 in a sprawling empire that stretched from the Midwest to the Northeast, consisting of some 20,000 oil wells, 4,000 miles of pipeline, and 5,000 tank cars. Standard Oil extracted crude from the ground, refined it, transported it and manufactured much of the infrastructure for this transportation, packaged it and manufactured most of his packaging, manufactured byproducts from the remains of the refining process, and more The only way to understand and control an organization of that complexity back then, when all they had was a telegraph, was to reduce it to numbers, normalize it, and measure it, extracting meaningful data from their operations and finances the same way they extracted oil from the ground. As Mr. Chernow described it, “Given the primitive communications and record keeping of the late 19th century, Rockefeller couldn’t have managed his decentralized empire without masterfully coordinating a vast array of data. The ledger book enabled him to play the puppeteer and manipulate his empire by invisible strings. By mastering numbers, he reduced the most varied systems to a common standard, and he accepted their harsh verdict without hesitation.” This was something even his detractors acknowledged. Mark Hanna, a United States Senator, referred to him as a “kind of economic super-clerk, the personification of ledger keeping.”
Rockefeller himself was an unlikely business tycoon, born into a relatively poor family in upstate New York on July 8, 1839. His mother was the daughter of a local minister. His father was effectively a con artist, who had multiple identities and sold fake cures for cancer and other maladies. His upbringing was modest to say the least, but grounded in religious fervor, some of which was directed against the evil institution of slavery throughout his coming of age. Even in high school, he wrote essays condemning slavery and finding it incompatible with the fundamental promise of America, damning the “cruel masters” who drove fellow humans “beneath the scorching suns of the South. How under such circumstances can America call herself free?” He also donated money – before his eighteenth birthday – money he didn’t have at the time to anti-slavery causes. As he matured, he developed somewhat ironic views about capitalism and the free market considering his legacy as one of history’s most rapacious robber barons. A practical man, he mocked academics who strictly adhered to the doctrine of the free market, laissez faire, and social Darwinism that were in vogue at the time, at least some of which were used to justify the racism that persisted under Jim Crow, calling them “academic enthusiasts” and “sentimentalists.” Cut throat competition at all costs, in his view, was the driving force behind the boom and bust economy prevalent after the Civil War, before businesses and business conditions became more standardized. The challenge was relatively simple: Government regulation, as it is known today, barely existed and the markets opened up by the Industrial Age were all immature. No one had any idea what innovations would stand the test of time, leading to long term, stable profits, or what was merely fad leading to earning a quick buck followed by insolvency. This prompted companies to spring up any time there was a boom in a market, glut the market with cheap product which drove down prices past the point of profitability, over leverage themselves because they couldn’t keep losing money, and then go bankrupt, causing an economic downturn and destabilizing prices even further so that even serious businessmen like Rockefeller found it almost impossible to manage their companies. Oil was perhaps the clearest example of this phenomenon, a product that only emerged in the 1860s and where prices fluctuated from $1 to $12 a barrel in a single year in the first couple of decades. The result was that entire towns were built only to disappear shortly thereafter, serving as a cautionary tale. Rockefeller himself described the phenomena. “You have seen Pithole and Petroleum Center – the places where once stood big, prosperous cities in which men made millions of dollars out of oil. Now they are bits of wilderness, overgrown with weeds, and with nothing left to tell of their greatness but a few scattered parts of old houses and the memory of a few aged men. Prudent men did not want to place all their capital into business in such places.”
Thus, he believed Standard Oil’s insatiable, unstoppable drive to monopolize the entire industry in a way highly illegal today was “forced upon us. We had to do it in self defense. The oil business was in confusion and daily growing worse. Someone had to make a stand.” “This movement was the origin of the whole system of economic administration. It has revolutionized the way of doing business all over the world. The time was ripe for it. It had to come, though all we saw at the moment was the need to save ourselves from our wasteful conditions. The day of the combination [the term for the equivalent of a modern conglomerate back then] is here to stay. Individualism is gone, never to return.” Today, the statement is as true of slavery as it is of pre-Civil War business models in general. You cannot find modern supply chain than doesn’t conform to these principles, even when they aren’t owned by a single company, but you don’t he to take my word for it over Mr. Desmond. History itself vindicates the reality that slave owners bear no imprint on modern capitalism. The plantations are all gone, whatever Mr. Desmond my claim, while Rockefeller’s companies remain among some of the largest in the world. Standard Oil was broken up in 1911, but to this day Exxon-Mobile, Chevron, and others still continue to thrive. Whether you call him a villain, a hero, a rapacious robber baron or a philanthropist, a genius or someone who just got extraordinarily lucky, we’re living in his economy, not some slaveholders.
Confessions of a Conservative Atheist 