The Men Who Built America: Season 1, Episode 2

1. Cornelius Vanderbilt may be the richest

2. and most powerful man in the country,

3. accustomed to getting what he wants,

4. but he has no idea what he's about to encounter.

5. -

6. Do you play cards, Mr. Rockefeller?

7. No.

8. Shame.

9. You could learn a lot about competition.

10. I know all I need to know.

11. So. I'm looking to do a deal with an oil refinery.

12. And that could be you.

13. I'm willing to do an exclusive deal.

14. A dollar sixty-five a barrel.

15. That's a discount of more than a third.

16. There are several refineries in Cleveland.

17. Why should I give you such a deal?

18. Because I'll fill all your trains with my oil.

19. And if you don't do the deal,

20. I'll fill someone else's trains.

21. Mr. Rockefeller.

22. Do you trust him?

23. I don't know.

24. Rockefeller may have gotten the rate

25. he was looking for, but in return,

26. he's agreed to provide Vanderbilt

27. with over sixty train cars of oil every day.

28. The only problem is, Rockefeller has

29. no way to produce that much kerosene.

30. His capacity is less than half of that.

31. Rockefeller has over-promised,

32. but he knows the deal with Vanderbilt

33. will be the opportunity he's been waiting for.

34. He just needs to find a way to produce more kerosene.

35. It's a daunting task, but John D. Rockefeller

36. has been beating the odds his entire life.

37. Rockefeller is raised in a poor Cleveland household,

38. but even as a young man, he yearns for something more,

39. something bigger, and he knows

40. it isn't going to be handed to him.

41. As a young man, he shows a strong entrepreneurial streak,

42. starting his own small business

43. selling candy to local children.

44. Thank you very much.

45. Here's three pieces.

46. From an early age, Rockefeller helps to support

47. his family, mostly because he was never able

48. to rely on his father.

49. It cures cancer.

50. Folks, that is right, it cures cancer.

51. Now you're asking yourself - Sir,

52. I bet in your mind you're saying, "Bill, is this true?"

53. John Rockefeller's father is a conman.

54. ... Rebecca, I met seven years ago.

55. She had pneumonia.

56. Better known around Cleveland as "Devil Bill".

57. Who would like to buy some?

58. A dollar twenty-five a bottle. Yes, sir.

59. He disappears for months at a time,

60. leaving his family without money to support themselves.

61. I'm only here for one day.

62. Once I'm gone, I am gone.

63. I may not be back.

64. Never trust anybody, son.

65. Not even me.

66. With his father gone, Rockefeller is forced

67. to quit school and get a job to support his mother and siblings.

68. His work ethic and intuition will become

69. the building blocks for the American dream.

70. - D. - My great-grandfather,

71. John D. Rockefeller, was an absolutely

72. brilliant businessman when he started out.

73. He wasn't even in oil or anything.

74. You know, he worked at it very very hard,

75. and there's an ethic in the Rockefeller family of hard work.

76. Stuck in a dead-end job,

77. he becomes fixated on finding a big idea,

78. and taking a chance.

79. Be therefore perfect,

80. even as your father, which is in Heaven, is perfect.

81. Would you please rise?

82. Let us sing Hymn 89.

83. Get out! It's gonna blow, get out!

84. I think entrepreneurs, and certain business people,

85. just look at life, and look at things

86. that are changing, and are able to see those things

87. and say, "I can create a business out of that."

88. Rockefeller realizes oil has the potential

89. to change the world.

90. And, make him rich in the process.

91. But Rockefeller knows that drilling for oil

92. is a gamble filled with uncertainty.

93. And since he doesn't believe in luck,

94. he starts looking for a way to make money from oil

95. without the risk.

96. H.W. He had a mind for efficiency.

97. And there was probably something in him

98. that looked at the production process and saw

99. how wasteful that was.

100. In the first place you drill wells,

101. and they turn up dry.

102. And then you drill wells and they hit a gusher,

103. and half the oil would be lost.

104. And that offended his sense of efficiency.

105. Rockefeller knows there's a better way.

106. Today, everybody wants to be an entrepreneur.

107. They've heard these great stories, you know, about Apple.

108. But, you know what, when you start a company,

109. you can think what the revenues are gonna be,

110. how much it's gonna be worth to shareholders,

111. but you always need a technical element.

112. You need somebody who knows how to do it

113. and build the things. You need the scientists.

114. Refining oil turns crude from the ground

115. into kerosene, a clean-burning fuel that can be used in lamps.

116. Once the oil gets to three-hundred and fifty degrees,

117. the kerosene starts to vaporize.

118. Then once it's cooled, you have a stable, pure product.

119. How much to produce a gallon?

120. - Fifty, sixty cents. - I don't know.

121. Rockefeller's insight puts him

122. one step ahead of his competitors.

123. He believes that while gamblers drill for oil,

124. businessmen refine it.

125. Whoever could control the refining process

126. could very well have the whole industry.

127. At twenty-four years old,

128. Rockefeller invests everything he has—

129. about four thousand dollars—

130. into building his first refinery.

131. No, higher!

132. Higher!

133. But he struggles early on

134. to find an edge in the industry.

135. That changes when the most powerful man

136. in the country comes calling.

137. Mr. Rockefeller.

138. The deal with Vanderbilt gives him cheap

139. shipping rates and the chance

140. to corner the U.S oil market.

141. But he's over-promised, agreeing to supply sixty

142. barrels a day, when his capacity is less than half that.

143. And when you've made a deal with the most powerful man

144. in America, failure is not an option.

145. You have to be smart,

146. you have to have vision, you have to have

147. all these different things, but the most successful people

148. are the people that had the right idea

149. but never ever quit or gave up.

150. The people that really succeed in life

151. are those that don't quit.

152. Rockefeller needs to quickly expand his company,

153. and to do that, he needs investors.

154. The problem is, kerosene is getting a bad name.

155. Stories of the fuel exploding and burning down

156. homes are on the front page of newspapers

157. across the country, making potential investors skeptical.

158. Due to high demand, many refiners are rushing

159. to market with dangerous kerosene

160. that's extremely volatile.

161. Rockefeller sees the problem as an opportunity.

162. He realizes that there's a need to calm

163. the public's fears and provide them with a product

164. they can rely on.

165. Oil refining. Warehouses. Barrel making.

166. And shipping facilities.

167. Why the name?

168. Because Standard Oil will be the only company

169. in the industry to guarantee a uniform

170. quality of kerosene.

171. The Rockefellers,

172. and all these guys, they were all great salesman.

173. At the end of the day, it's the salesmen

174. who make the money.

175. Well, you can certainly understand

176. how Rockefeller could've named his oil company

177. Standard Oil.

178. Pretty ambitious, organic name.

179. He was creating a standard, and, uh, it worked.

180. Rockefeller's Standard Oil quiets fears

181. and immediately becomes the most sought-after product

182. in the country, bringing in investor after investor.

183. America is expanding rapidly.

184. Cornelius Vanderbilt's rail roads have united the country,

185. and commerce now moves faster than ever.

186. But America's newest obsession is light—

187. clean, safe light.

188. The kind provided by John D. Rockefeller.

189. Oil is changing the world.

190. And the Ohio refiner is leading the charge.

191. The titans of that day

192. revolutionized business in America.

193. We became the sort of dominant economic force

194. in the world because we could make stuff,

195. we could create stuff, we could build stuff,

196. we could power stuff.

197. John Rockefeller's Standard Oil is now

198. the largest producer of refined kerosene in the country.

199. And his exclusive deal with Vanderbilt allows him

200. to ship his project to homes throughout

201. the country at incredibly cheap rates.

202. But for Rockefeller,

203. it isn't enough.

204. He's outgrown his deal with Vanderbilt.

205. Once unable to fill Vanderbilt's trains,

206. now he has more oil than the Commodore can possibly ship,

207. and Vanderbilt's biggest competitor knows it.

208. Tom Scott is the president

209. of one of the largest train lines in the country.

210. He wants to take Vanderbilt's place

211. as King of the Railroads, and he knows a deal with

212. Rockefeller is the key.

213. Scott heads to Cleveland with his protege,

214. a young up-and-comer named Andrew Carnegie.

215. As Scott's most trusted lieutenant,

216. Carnegie has helped craft the pitch.

217. What's I'm proposing is an alliance between—

218. You want a cartel between oil and rail roads.

219. I prefer to call it by its—

220. Give me the numbers.

221. Standard Oil will receive a forty percent

222. rebate for every barrel it ships.

223. We'll send papers over in the morning.

224. No.

225. A verbal contract is fine.

226. Rockefeller gets a better deal from Scott

227. than he ever could've gotten from Vanderbilt.

228. The shyster.

229. The Commodore has lost his competitive edge.

230. J.S.To the great frustration of Vanderbilt,

231. Rockefeller very skillfully played

232. those rail roads against each other.

233. Oil was something the rail roads

234. couldn't afford to let go, and so they fought very hard

235. to get that traffic.

236. With the rail roads in his pocket,

237. Rockefeller can supply every home in the nation

238. with Standard Oil kerosene,

239. and with all that profit,

240. Rockefeller begins to buy out his competitors.

241. We need to stand together.

242. I'm offering all of you a way out,

243. so you can hold your heads high.

244. The opportunity to sell to Standard Oil

245. will be a godsend to you all.

246. If you take Standard Oil stock,

247. you and your loved ones will never know want.

248. His intent is simple:

249. he wants to own

250. every refinery in the country.

251. It's a concept that's been impossible to execute.

252. Today, we know it as a "monopoly".

253. But Rockefeller isn't just expanding his company,

254. he's also looking to maximize profit—

255. by any means necessary.

256. We've got another refinery.

257. One more into the fold.

258. Do you want me to take a look at it?

259. No. I want you to shut it down.

260. The business of creating monopolies,

261. crushing opposition— part of me says he did that

262. because it was there to be done,

263. and he could do it better than anybody else

264. and he made a bloody fortune out of it.

265. By the time he's finished,

266. Rockefeller controls ninety percent

267. of the North American oil supply.

268. His company, Standard Oil, is the country's first monopoly.

269. At thirty-three, the Ohio oil man

270. is now the most powerful man in the country.

271. The Commodore has created a monster.

272. He realizes that the only way to combat Rockefeller

273. is for the rail roads to start working together.

274. He forms an unlikely alliance with his biggest rival,

275. Tom Scott, and together,

276. they agree to pull all of Rockefeller's deals.

277. Thank you.

278. To Rockefeller, the move

279. is nothing short of a declaration of war.

280. America is emerging as one of the mightiest nations on earth.

281. The country is now crowded with rail lines

282. and kerosene lights most homes.

283. The amazing evolution has been led by two men driven

284. by a desire to create a world that few imagined.

285. "Commodore" Cornelius Vanderbilt and John D. Rockefeller

286. have sparked the modernization of the country.

287. But the former partners' interests are no longer aligned.

288. Vanderbilt has formed an unlikely alliance

289. with Tom Scott, aimed at forcing their biggest client

290. to pay going rates.

291. John Rockefeller sees their actions

292. as a declaration of war,

293. and he's not going down

294. without a fight.

295. H.W. John Rockefeller had the ruthlessness

296. that sometimes come from utter conviction

297. that what he was doing was right, and not just correct,

298. but divinely inspired, and the people who opposed him

299. weren't really entitled to their point of view,

300. because their point of view was wrong.

301. It was almost as though they had turned aside God's grace.

302. Well, if you turn aside God's offer of grace,

303. then expect no mercy.

304. Rockefeller is determined to find

305. another way to transport his oil.

306. He knows if he can't, the rail roads will win.

307. Rockefeller's solution again comes

308. from the most unlikely of places.

309. So we can increase the yield of the kerosene,

310. but then we get more of the volatile waste.

311. We can burn some of it off as fuel in the refinery,

312. but its high flammability creates a storage problem.

313. When we get to higher temperatures

314. we can start creating the lubing oils.

315. I'll need to reconfigure the refinery.

316. Oil in the refinery is moved using large pipes,

317. and Rockefeller realizes if those pipes can transport

318. oil over short distances,

319. they could also be used over longer distances.

320. If Rockefeller can build a pipeline large enough,

321. he'll be able to cut the rail roads

322. out of the oil business, for good.

323. The pipeline will require a massive investment,

324. and incredible risk.

325. But if he gets it right, Rockefeller will be able

326. to do what he loves to do most, win.

327. It probably comes early in an entrepreneur's life

328. where you realize you're willing to do things

329. in the business world that other people aren't willing to do.

330. Everybody has got ideas, and everybody's got

331. ambitions, but most people aren't willing

332. to cross that line, and I think an entrepreneur

333. that's successful, that's your nature.

334. Wherever there's change, wherever there's uncertainty,

335. there's opportunity.

336. Rockefeller's workers labor around the clock—

337. —blasting through the countryside,

338. and laying over a mile and a half of pipeline every day.

339. Business, in the end,

340. is understanding the playing field.

341. Tell me who's on it, what their strengths are,

342. what their weaknesses are, and what is your checkmate play,

343. to top 'em, and nail 'em.

344. And so you're always in that competitive game.

345. You're looking at innovation.

346. You're looking at leap-frogging,

347. trying to get ahead of them.

348. You're never complacent.

349. You're semi-paranoid about what they're doing.

350. That's what the game is all about.

351. By the time the pipeline is complete,

352. it's over four thousand miles long,

353. stretching across Ohio and Pennsylvania,

354. and connecting thousands of the world's most

355. lucrative oil wells directly to Rockefeller's refineries.

356. John Rockefeller has finally found his way

357. to eliminate the rail roads from the oil business,

358. and in the process, he's forever revolutionized

359. the way oil is transported.

360. For twenty-five years, the rail roads have been

361. the biggest industry in the country,

362. the backbone of the American economy.

363. No one has ever had the nerve to take them on, until now.

364. Rockefeller knows that without his oil,

365. the rail roads will struggle to stay alive.

366. It's a colossal blow to the industry,

367. and with all that leverage,

368. Rockefeller has Vanderbilt and the rail roads

369. right where he wants them.

370. The United States of America is changing

371. like never before.

372. In just a decade, the country has become

373. one of the most advanced on earth,

374. and darkness no longer means the end of the day.

375. Two men have driven this remaking of the country.

376. John D. Rockefeller and Cornelius Vanderbilt

377. are locked in a battle of wills.

378. Commodore.

379. Mr. Rockefeller.

380. Vanderbilt and his competitors are in drastic

381. search of passengers and cargo to fill the trains

382. running on their lines.

383. In the 1870s, the country needed to be connected

384. via rail roads, and what happens

385. then is everybody who thinks they have an edge

386. in the rail road business goes out and raises money

387. and they start their own rail road.

388. And what happened then is we've seen happen

389. many of times since then, is it created a huge bubble.

390. John D. Rockefeller's oil

391. makes up nearly forty percent

392. of the cargo shipped on the rails.

393. But when Vanderbilt teams with his biggest rival

394. to push for a rate increase, Rockefeller takes it

395. as a declaration of war.

396. He builds a pipeline in response,

397. and begins to pull his shipments.

398. And since the rail roads have been drastically overbuilt,

399. losing cargo means losing money.

400. Stocks plummet as investors run scared.

401. When prices get out of control,

402. and smart people decide,

403. "Wow, this thing is a bubble, I want out",

404. then you can get a collapse very quickly.

405. By the time the Panic is through,

406. one-third of the country's 360 rail road companies

407. have gone bankrupt.

408. Every crisis of this type,

409. whether it's 2008,

410. or 1873,

411. has got the same roots.

412. Namely, that it was unanticipated.

413. So a necessary condition for a crisis is nobody expects it.

414. The crash is the worst America has seen

415. in its short history.

416. Unsure how to prevent a complete collapse,

417. the stock exchange shuts down and stays closed

418. for ten straight days.

419. H.W. The Panic of 1873 triggered

420. the first full-blown national depression,

421. and nobody quite knew what to do about it.

422. For the first time, large—very large—

423. numbers of American workers were without jobs.

424. Workers got laid off, but the owners,

425. they still lived in the style

426. that they were accustomed to.

427. But no one was shedding any tears for John D. Rockefeller.

428. People were saving their tears for themselves,

429. when they found themselves out of work,

430. out of their homes, out of food, out of hope.

431. While many of the biggest companies

432. in the country struggle to survive,

433. Rockefeller sees opportunity,

434. his belief in the survival of the fittest kicking in.

435. As his competition collapses,

436. Rockefeller picks them off,

437. buying out bankrupt oil companies for next to nothing.

438. I find that I do better in bad markets.

439. I buy things in bad markets.

440. And, you can't do that in a great economy.

441. You can't buy it.

442. Either you're gonna buy it very expensively

443. or not be able to buy it at all.

444. So there's a lot of opportunity, I find,

445. in the bad times.

446. By the time the depression is through,

447. Rockefeller has created

448. the largest corporate empire in America.

449. H.W. He was playing the game of industry,

450. and he was simply better at it than everybody else.

451. He saw the industrial marketplace

452. as a place for the survival of the fittest,

453. and he was fitter than anybody else,

454. therefore he survived.

455. Not only that, therefore he deserved to survive,

456. and they didn't.

457. While Rockefeller expands his company,

458. his adversaries at the rail roads

459. are struggling to survive.

460. Then, at the height of the depression,

461. the king of the American rail roads,

462. Cornelius Vanderbilt,

463. dies, at the age of 82.

464. Vanderbilt leaves his empire,

465. worth over one hundred million dollars,

466. to his son, William.

467. Rockefeller knows that without Vanderbilt,

468. he would've never been able to build his empire.

469. But Rockefeller's last remaining adversaries

470. refuse to go down without a fight.

471. Tom Scott, and his protégé, Andrew Carnegie,

472. have managed to survive.

473. And since Rockefeller's pipeline doesn't extend

474. to Pittsburgh, he's forced to continue to use their trains.

475. But Scott knows if he and Carnegie don't diversify,

476. they won't survive.

477. Scott devises an aggressive plan

478. to expand his empire.

479. One that's sure to catch Rockefeller's attention.

480. He's going to break into the oil business

481. by building a pipeline of his own.

482. But if there's one thing John Rockefeller

483. hates more than anything else, it's competition.

484. Tom Scott is in for war.

485. I've tried to be friendly to the Pennsylvania.

486. I've given you plenty of business, have I not?

487. And now, I find that you're invading my field.

488. And that, my friend, is piracy.

489. We'll take your feelings into account,

490. Mr. Rockefeller.

491. Two thirds of the oil you carry comes from me.

492. If you don't retreat, I'll take it to the other rail roads.

493. As far as I'm aware, there isn't another rail road

494. that runs from Pittsburgh to New York.

495. America's growth after the Civil War is driven

496. by rail roads uniting the country,

497. and oil lighting the way.

498. No one has capitalized on the growth

499. more than John D. Rockefeller,

500. who now controls ninety percent

501. of the U.S oil market.

502. With the death of Cornelius Vanderbilt,

503. only one man stands in the way of Rockefeller's

504. complete control of oil,

505. Tom Scott.

506. H.W. There was a sort of mutual admiration

507. among the big capitalists, but it was an admiration

508. that was accompanied by deep suspicion.

509. The big capitalists of the day eyed each other very warily.

510. Rockefeller looked on Tom Scott,

511. of the Penn Railroad, as a competitor.

512. Tom Scott's trains transport oil to

513. and from Rockefeller's refineries in Pittsburgh,

514. where the Standard Oil pipeline doesn't reach.

515. With all that leverage, Scott is confident

516. he has the ammunition to take on Rockefeller.

517. But Rockefeller isn't one to back down from a fight.

518. I don't want one drop of our oil traveling

519. on the Pennsylvania.

520. But what about the Pittsburgh refineries?

521. Shut them down.

522. Shutting down his refineries will cost

523. Standard Oil a fortune in lost revenue,

524. but for Rockefeller, crushing his competition

525. matters more than anything else.

526. Without Rockefeller's oil, Scott loses nearly

527. half of his business,

528. forcing him to lay off

529. tens of thousands of workers, and drastically cut wages.

530. Those workers take to the streets in protest.

531. And as darkness falls on Pittsburgh,

532. they turn violent.

533. A fire is set in Tom Scott's train yards.

534. Before the night is over,

535. more than thirty-nine buildings

536. and over twelve hundred train cars are destroyed.

537. Tom Scott's company lays in ruin.

538. H.W. This is how capitalism works.

539. The rail roads had been the big suppliers

540. of transportation in the oil industry,

541. and so the rail roads quite naturally resisted.

542. They dug in their heels whenever they could.

543. Eventually they lost.

544. Come on.

545. Let's go.

546. John D. Rockefeller

547. has replaced Cornelius Vanderbilt

548. as the richest man in America.

549. His net worth is now over $150 million,

550. or $225 billion today.

551. - D. - It's dazzlingly amazing

552. that one individual was able to corner about ninety-eight

553. percent of all the kerosene and eventually

554. all production in the world.

555. He was a brilliant business person.

556. I can only give him credit for that.

557. I don't have to give him credit for

558. the way that he became that powerful.

559. But all titans are targets.

560. And now Rockefeller is about to come face to face

561. with his biggest challenge ever.