Random House • 1998 • 774 pages • $30.00
D. T. Armentano, professor emeritus of economics at the University of Hartford, is the author of Antitrust and Monopoly: Anatomy of a Policy Failure.
For me, this is the image that sticks: John D. Rockefeller, president of Standard Oil, age 57, in bicycle suit and goggles, racing around the University of Chicago campus in 1897, harried administrators in tow, with students on the sidewalk chanting: “Rah, Rah, Rah, Rockefeller, he’s the feller.” Priceless.
He was indeed “the feller,” as this scintillating retelling of his life and times by Ron Chernow aptly demonstrates. Chernow must surely be one of the few historians who can really write. That a 774-page book about a businessman born in 1839 can be a wonderful page-turner in the late 1990s says a lot about Chernow’s literary talents—and about the object of his attention, John D. Rockefeller.
Chernow’s early hunch was that the Rockefeller legend was “exhausted” and that he should skip the project. We can rejoice that he did not. For here, finally, is an intelligent and insightful account of the most important industrialist of his time, of his personal and family life, his religious beliefs, his massive philanthropy, and the company he created. This important revisionist account of the man and the myth is about as good as we are likely to get.
Who was John D. Rockefeller? Chernow shows that he was, above all else, a man who held fast to certain core values throughout his life. His early Baptist religious training shaped his lifelong attitudes toward the importance of hard work and charitable giving. Rockefeller threw himself into both without reservation. “Get money and give money” was his double-entry bookkeeping for reconciling capitalism and Christianity. His church work and other charitable causes were never an apology for his commercial success. Readers of this magazine can be grateful that he sank many millions into creating the University of Chicago.
Despite great wealth, Rockefeller was always economical, some would say miserly, in his own affairs. He reviewed every household bill and often “patrolled the hallways turning off gaslights.” The titan and his family owned several residences, but there were no racehorses, no decadent parties, no yachts, no extravagant traveling or gaudy personal trinkets. When Cettie, his beloved wife of 50 years, died in 1915, her most costly items of clothing were a seal coat and muff valued at $135. Rockefeller gave away hundreds of millions of dollars to his children and to selected causes (including medical research and black schooling). When he died, his own personal estate (which had been devastated by the 1929 crash) stood at a “mere” $26 million.
Chernow labors mightily to set Standard’s commercial accomplishments reasonably straight. He identifies correctly the factors that account for the early growth of the firm (entrepreneurship, economies of scale, technological innovation) and its ability to maintain market leadership. He also identifies correctly the changing market conditions at the turn of the century that eroded Standard’s market share prior to the antitrust suits. Indeed, Chernow even admits that the subsequent legal actions may have been “superfluous.”
But there are problems with some of his economic and legal analysis. Lacking a correct (Austrian) theory of monopoly, Chernow is unnecessarily bothered by Standard’s “predatory” pricing and by the “rebates” it was able to wring consistently from the railroads. Also, he constantly refers to Standard as a “monopoly” even though there were always rivals in domestic refining (147 in 1911), and even though most markets were legally open to entry.
The greatest disappointment in Titan is Chernow’s virtual non-treatment of the classic antitrust decisions that broke up Standard. While the book builds to this climax, the Circuit Court (1909) and Supreme Court (1911) decisions are tossed off in less than two pages! Readers are not told that the Circuit Court never made any legal judgment on Standard’s business practices or economic performance. Instead, it decided the case on the more narrow issue of whether Standard Oil of New Jersey was a “trust” or “combination” in restraint of trade. Under the legal precedents, it was. Guilty; divestiture ordered. And while the Supreme Court announced that dominant firms should be judged by a “rule of reason,” it never applied that rule to the evidence in the case.
These are not dry academic points. They are crucially important to any overall evaluation of the firm in the marketplace and to an understanding of any appropriate “monopoly” policy. Unfortunately, Chernow misses it all very badly. Still this is a blockbuster book that every student (and professor) of business history would do well to study carefully.