Transcripts For CSPAN2 Breaking Rockefeller 20170716

It is in many ways the culmination of years of research and effort to put together what an answer to a question that i have always wanted to ask. That was, who were the other guys and gals . Who were the other people who compromised the story of oil . A lot of times we know about johnny rockefeller, the richest man in the world. When he was alive and today, of all days for the release of the softcover of breaking rockefeller is important. Because i do not pick this day. But may 23 is the 80th anniversary of rockefellers death. So 80 years ago, John D Rockefeller, there was some historical symmetry there always good for some who lets really good stories about history. Interestingly enough, on the day that he died, rockefeller failed to achieve what was essentially the biggest goal in his life. Sure, it was to get rich. Sure it was to beat is very powerful oil but as he achieved his first both his new goal emerged. He truly wanted to live to be 100 years old. This was going to be the accomplishment of his life. When he died on may 23, 1937, he was two years, i counted. Two years, one month, 15 days shy of his 100th birthday. Sadly, rockefeller failed. But in the process he died a great philanthropist. It is interesting because on the very last day of his life, the very last things that rockefeller did was to pay off the mortgage of the euclid Avenue Baptist Church back in cleveland ohio. The place where he had his wrist very powerful religious experience and an experience that would not only define his life, define how he viewed himself and those around him but create one of the greatest armies of this man. That is that every sunday rockefeller would build out hymns from the pews and considered himself a very godly man. And yet he was ruthless. Those whom he went up against, he was utterly ruthless in destroying all competition and he created elaborate explanations in his own mind. For what his wealth was a sign of the blessing from god. Even though the people he destroyed viewed him as the darth vader of his age. As the true feeling of his time. And so, i want to tell a story about those upstarts and underdogs. Some who rockefeller crushed but ultimately those who found a way to beat rockefeller at his own game. And that essentially is the departure point for this story. A couple of points were raised already and it is fascinating to really understand the stakes of what these upstarts and underdogs were up against. So after he died on may 23, the New York Times went out and actually does off one of his old tax returns and try to answer the question, how rich was rockefeller truly . And it turns out that when you adjust for inflation, at those scales and time differentials, average inflation adjustment doesnt do it justice. One of the things i did was use some excellent scholarship from some of the economists in a company to how much would rockefeller have been worth at the peak of his power in todays money . Turns out, rockefeller was not a rich man. Rockefeller was an incredibly wealthy man. When you do the calculations it turns out he was worth 357 billion by todays calculations. By comparison the richest human being on the planet today, bill gates is worth around 80 billion. So compared to the blazing fire of rockefeller and bill gates has a smoldering amber. This was the accomplishment of his life. And in looking at how rockefeller systematically collected that wealth, in the process, not only took his company known as standard oil into becoming the largest refinery in the oil business. Standard wasnt even the Largest Oil Company in a sense in the oil business. Standard at the peak of his power was the oil business. And that is when the story begins and breaking rockefeller for that is the moment in 1889 when rockefeller is essentially the king of broadway. He has created a luxurious headquarters for himself on 26 broadly. You can still go there today and at the top of broadway, rockefeller ran one of the largest Oil Production refining and Distribution Companies in the world. Yet, there was a problem. And that is that rockefeller was a monopolist. And rockefeller systematically destroyed any other form of independent competition. At its peak standard oil controlled essentially 80 percent of all oil on the planet. If you think about that for a second in our own day and age, yes, things are different now. But think about one company that controls 80 percent of all the oil on planet earth. That was John D Rockefeller. It also gives you an idea about the stakes of those that went up against him. In 1889 the story begins, the world is making his transition from cultural oil. The individuals who would help push that transition along with help make the world that we enjoy and live in today had a problem. Rockefeller was their problem. And from that problem is of the outbreak of what is essentially the worlds first great oil war. And from that where we have a lot of important things. First will that were transformed rockefeller from being that rich man into the wealthiest human being who has ever lived. That were created the Global Energy market as we know it. Because it created a global price for oil. Today, the price of a barrel of oil is the same in shanghai essentially as it is in london as it is in moscow. There is a reason for that. The reason is the war to break rockefellers empire it helps create this global price for oil. And give us a lot of legacies. Legacies of science, innovation and legacies of government regulations that we still live with today. I wanted to tell this story because i wanted to show those enduring links between oils past and all present. And so the stakes for the and more importantly, the lives and of individuals who helped make that possible. So, who were these essential figures . Start digging into it and turns out there are some rather colorful characters the first one in the center of the story is a fellow named Marcus Samuel junior. Marcus samuel was not oil man Marcus Samuel was in a sense, and east london merchant trader. He did not know much about the oil business but he knew the east asian import export business. His Early Arrival in the oil industry as the story unfolds was a take no prisoners Oil Executive named he also had a problem in a sense because he had essentially inherited a company from his mentor so abruptly died and left him as the interim director of a company known as royal dutch. Samuels company would eventually become known as shell. And this initially defined the early part of the relationship. They were essentially friendly in the modern sense because they were enemies who also that along and nothing of the day, we were enemies. And rockefeller was benefiting from this rivalry. Rockefeller was taking advantage of the fact that instead of fighting him, the main source of competition of standard oil spent all of its time fighting each other. Mainly across vast ports of the far east and asia. And so, as i am unpacking the story through my research, i certainly hit on a interesting idea. That defines a narrative in the story structure for how i tell this history of the war to break rockefellers empire. The idea was this. In almost every single previous historical treatment of this fight against rockefeller, take no prisoners Oil Executive always gets top billing. Marcus samuel is also always at the bottom of the marquee. The reason is quite simple. In the end, defeated marcus in a sense in their commercial competition with each other. And that defeat is resulted in the combination of two powerful companies known today as royal dutch and shell. Read or the shell oil group. And i said why not tell this story upside down . Why not look at how it from the perspective of horatio . Why not tell the story of don quixote . But in this case, look at panza as a true hero of the story. As a start looking at this in essence, marcus was the true hero of the story. Because in order to be rockefeller, in order to outflank the most powerful oil monopoly of his time, marcus had to unravel a complicated fivepart puzzle of distance, geography, risk, technology and greed. And in doing so he did a lot of amazing things. Such as kickstart the innovation that would lead to the modern oil tanker. Developments and breakthroughs that are still used today in todays oil tankers. Finding a way to finally open up the recently were most recently inaugurated suez canal. Shipments would still transit the canal today but it was not so Marcus Samuel found a way to make it happen that the oil world changed permanently. That the balance of energy power on planet earth was fundamentally shifted thanks to marcus. Emma start unpacking all of these things and i think to myself, this is a story that has to be told. There is a story that really has to be told and along the way there is not just Marcus Samuel and put a whole cast of characters. Many of them forgotten. People who are forgotten to history, heroes that made their contributions. Contributions we all enjoy today and yet we dont know about it. There were amazing figures such as the spectacle of italian geologist named who is essentially reinventing petroleum geography one shovel scoop at a time and the wiles of sumatra. Then there was that one id profit of oil in spindle top texas. Higgins could not have been more wrong about absolutely everything he ever touched and yet, thanks to pattillos failure, we have the kickstart of the texas oil boom. An event that we in defines a state of texas as we know it frankly, American Power as we know it. We also have amazing trailblazing female, and amazing trailblazing female journalist. Such as ida tarbell. A woman who rockefeller destroyed. He broke it is mother both financially and frankly, psychologically. Certainly emotionally over the course of his attempt as an independent oil man in pennsylvania. Rockefeller broke it father. And she was only an adolescent at the time so ida did anything that the other woman would have done at the time and that was to get out. In order to get out, ida had to get an education. So she became the very first woman in her graduating class of Allegheny College to graduate from college. She traveled across the atlantic, studied and eventually met a fellow with a godless mustache, a taste for floppy bowties and he had just created this new magazine that he was very humbly going to name it after himself. His name was sam mcclure and he was, and started mcclures magazine. It was the parent of mcclures magazine and idas Meticulous Research information in many ways to essentially effect her final revenge against the man who destroyed her father, John D Rockefeller. And so in telling that story i actually get to the heart of the real problem that we face in todays day and age. A problem that defines our current policy debate. And it is a reason in traveling the country and talking with folks from the atlantic to the pacific. Especially around the oil industry. The revitalized oil industry of the United States. And it is this. There is a question and it is an unsolved question in the american politics and a question that breaking rockefeller ways into. That is, do you need just the force to protect you against monopolists . Is a Supreme Court in the federal government alone enough to protect us . I argue in breaking rockefeller that the answer to that question is no. That you actually have to have both the shield of federal regulation represented by the courts and the sort of competition you actually have to have both competition and protective regulations in order to protect consumers from companies that would otherwise just take advantage of them. This is actually an unsettled question right now. And it is one which i think we can learn from. In tying a connection between oil, past and present. And along the way you get a fantastic riproaring good story in breaking rockefeller. I think that is perhaps the best part of writing the book. Going back and systematically recreating some of the most often banished places that Marcus Samuel and John D Rockefeller would have known. But today they are completely gone. So in the story for example, in showing how the world made that important transition from coal oil, breaking rockefeller actually recreates an original journey on the Orient Express. Leaving from paris and traveling east. Because at the time, that was the fastest way gets the oil fields in russia. I even found an actual menu that was used on the outbound journey from paris. And got to follow stepbystep station by station mainly through the diaries of americans had just come back from a ride on the Orient Express and talked about the horrendous experience that it was. Because at the time, this was not the gas and electric Orient Express. It was burning fuel oil and excess liquid fuel oil allowed for more powerful engines. Greater horsepower, heavier training carriages. More luxuries. But at the time, the cold burning Orient Express was something of a rinkydink affair. It was still a varies by the standards of today if you were european, if you are american, it was actually something of a disappointing experience. So it is showing how the world was before oil. You would actually explore the experiences of these people. Traveling through the jungles of sumatra and actually following the track of the trailblazing geologists who for the very first time, managed to take the ideas of science and make them practical for oilmen who were actually, they did not care about science. They just wanted to know okay wise guys, how do i use your science to find the next big usher or flowing well . Turns on the up until the jungles of sumatra, no one had been able to use science to say, this is where you will find the next major oil discovery. This is where the next major gusher will be. Not until the spectacle of italian and his german colleague. Actually undertook to do just that. They actually achieve something great. To this day, the language of geology and science permeates the oil industry. It is thanks to the trail blazers and these unknown figures that we actually enjoy the benefits of hydrocarbons today. Finally there was the far east. Now, the oil will come on chinas insatiable desire for energy. And in answering that, in quenching that desire today just as back in Marcus Samuels time, great fortunes can be made. Or lost. And so as i am telling this story i am starting to uncover a lot of these connections. And for me that is the most important art of breaking rockefeller. Because i love history. I love a great story. I love a great narrative driven story that features real people against somewhat daunting but real stakes. You have to gamble big. Sometimes they fail, sometimes they succeed. That is why i want to read books. I would like to find that book. And in writing breaking rockefeller i wanted to write the kind of what i always wanted to read. But history is all well and good. Unless we can learn from it, it is just a good story. So the final part of this story and this conversation is about how do we learn from it . And in doing so, i thought i might do Something Special for the audience. Not only folks i got here early but the folks who are crammed in the back here. I encourage you to come sit down after so we can do q a. In doing this i would stop and talk about the controversy, heresies and the legacies of breaking rockefeller. Things that have emerged in conversations with folks around the country. As i have been discussing this book. First the controversies. 11 people have said and i think it is a good point, breaking rockefeller isnt, youre not really talking about breaking the man. In fact, rockefeller did great. The breakup of his oil empire, thanks to the Supreme Court decision in 1911 was a bountiful shockwave. It was in breaking up this giant monolith into smaller pieces. Each one rockefeller became the majority owner of. Once the companies were listed on the new york stock exchange, the wealth of rockefeller proliferated. Wasnt breaking rockefeller actually a good thing . The answer is, short in some sense. The story is not about breaking rockefeller the man. The story is about breaking everything that he stood for. Because in business, rockefeller always won. Even if he had to cheat. That is not good business, that is not fair play. And in dealing from the bottom of the deck, rockefeller created a monopoly that was a predator. A monopoly that preyed upon average people. That is bad. And so breaking rockefeller, the idea, breaking standard oil and breaking a company that views its customers as prey is actually something that i stand by. And i am encouraged by the fact that these upstarts and underdogs managed to accomplish just that. Some heresies as we have heard about. This idea that the federal government is enough. All you need is a studious legal code and a dedicated bureaucrat and that is really all you need in order to defend customers. From predatory practices. Perhaps, but really what you need is both. You have to have at the end of the day, it doesnt matter how good your regulations are. It doesnt matter how dedicated your bureaucrats are. Someone has to wade into the marketplace and offer a commercial alternative for there is no true competition. Washington d. C. Cannot sign a memo and say quick, we need competition, make it happen someone has to take the financial risk. Someone has to risk failure in order to create true competition. As we know, even after the Supreme Court broke apart rockefellers empire, parts of it still work colluding with each other. The shadow or the practices of rockefellers corporate culture, this monopolistic idea never really was burned away. As one oligarch said after the breaking up of standard oil, how on earth is someone going to force someone else to compete against themselves . It is really hard to do. Someone is has to come in. So i would say that breaking rockefeller the book puts an idea in our own idea which is yes, you have to have competition. Competition is good. In many ways this is an ode to competition. Im very part of the reactions and debates that it has inspired. I think the last part is most compelling. And this is the part that i will end on because i often get the question isnt as bad and should we not be focused on oil anymore . Can we be focused on the alternatives to oil . And i say absolutely in the sense that we have options. We have alternatives to the kind of Energy Options that Marcus Samuel and rockefeller new in their day and age. But, we can learn from oils passed in order to define our energy future. There will be a day, it will probably be decades from now but they will be there when a country like saudi arabia runs out of customers before they ever run out of crude. That is because the options and alternatives to traditional hydrocarbons like oil are becoming cheaper. More available. And they make a lot more sense and center markets. But we will always have a need for oil. So how do you learn about it . Well, it turns out that if you take the exact problem that Marcus Samuel had to solve in order to beat John D Rockefeller at his own game, this puzzle of distance, geography, risk, technology and greed. You overlay it on to todays energy markets. From the oilfields of china where they have vast resources of natural gas. They can access through fracking using American Ingenuity and technology. If you go and look at the eus antitrust fight with gas the modern day iraq monopoly. Or if you look at some of the exact same problems that we have had in the United States. We have market problems, transportation problems that have resulted from the rebirth of our own oil industry. If you apply that exact same problem of distance geography, Risk Technology and greed, it all works. So the final chapter without giving away any major spoilers here. Because at heart i am an analyst. So have to, i cannot write a book without giving suggestion. So this is has to take the exact same weapons from the past and use them to identify answers to some of our most vexing Energy Problems today. A riproaring good story, highstakes, upstarts and incredible odds. And yet, something we can learn from and apply to our own day and age . For me, that was a story that had to be told and it had to be told right. I really want to thank most especially, my wife charlotte who is here. Who actually, in no small part, helped make this book a reality. Least of which you can thank her for a live excellent sentences. She was an inspiration and every good writer has an editor who informs them that they have to kill their darlings and so charlotte in many ways it was mine. Thank you very much. I thought we would take some q a and im happy to answer your questions. I encourage you to sit down who have arrived after we got started. Thank you very much [applause] i have a microphone here for folks asking questions. What kind of was rockefellers focus to be more venom off more of a monopolist. It seemed like his focus was on the entirety of the oil industry. The problem for rockefeller was price. Back in the early boom time of the oil industry. Any time to ignore harry with access to a steam pump essentially, a drilling rig and the authorization of the local landowner could have been an oil man. The onrush of Oil Production through the price of oil, if you look at the price it went through these peaks and valleys that if it had happened to your 401 k , you would feel richer one day and pembroke and terrified the next. This happened with alarming frequency. Because the industry was getting started. And it went through these terrible blooms and bus. Rockefeller was a refiner. He was in the downstream or midstream of this industry peers of the ups and downs in the price of oil was growing his Balance Sheet into chaos. He could not predict things. In so, in his mid20s he left cleveland. He traveled to pennsylvania and he subjected the Early Oil Industry to a methodical study. He pulled out his pen and traveled from one side of pennsylvania to the other. He asked so many questions of local oilmen at the time that he actually acquired a local nickname. Folks just called him the sponge. Because he was absorbing the collective wisdom of the oil industry. That was a terrible mistake. Because in doing so, he came to a startling conclusion in his view. I think his view was wrong. But in his view competition wasnt a benefit to the oil industry, competition was the enemy. Competition was the problem. So from this idea came the conclusion if you could throttle competition, the refining sector, the thing that turns oil from a useless product into something that people need. Whoever could control the refining sector could ultimately be the rule giver. Could dictate prices. Cassette quotas, bring rationality. That was the start. The problem is that rockefeller never stopped. This animus to, to control competition, to view it as unchecked, on regular, irresponsible competition. It is something that we think is a good thing wednesday, uber or other ridesharing apps go up against the taxi monopolies. But in rockefellers mind, this was bad. And so i think for rockefeller, that was his fatal flaw. He started and did not stop. The road to control the oil industry was, it was a mission in his life that ultimately was a great comment it did great harm and those who helped break apart this empire did great good. At only for the people alive at the time but in many ways for folks alive today. [inaudible question] with the futures market, i do not get into the development of the features of derivatives markets. What i do look at, as there are two pivotal moments actually in the development of the energy world. The first was an obscure notice that was posted at an open outcry market for oil. The notice said as of such and such a date in the near future, the Standard Oil Company transport keep in mind this monopoly will only by and sell oil that was big. Because what that signified was that the arrival of competition into the United States in a big way. When i look at in the book and we explore through the actual retellings of firstperson accounts was the rise of russian oil what it did. And it did this, it created so much crude in the world that their artificially highpriced. It was now at risk. And a seller could sell it to a port in boston and philadelphia and unload their kerosene challenging the Standard Oil Monopoly on its home turf. So in looking at how the rise of large alternative production, Different Companies offering competing products through a Global Distribution chain. In many ways, doing or using standards Business Model better than the standard was employing it. This allowed for the formation of what we now know today as a global price. The price of oil in one country is the same as the price of oil in another. That is eliminated arbitrage opportunities. The other thing is the way in which standard did not play fair. Standard oil sometimes did not have to drive, they can buy them in the open market. That was almost what happened to a very fledgling Royal Dutch Shell. The dutch competitor led by. Shell had Common Shares and extended oil constantly by the company. Except royal dutch was worth too much money. Its stock was too high. So standard, it is widely believed in the actually social and evidence where i think standard, we can catch them doing this started manipulating the market. Rockefellers Company Started spreading fake news about Royal Dutch Shell as a way of rattling investors. That is something we have a problem with today and so as a result, Royal Dutch Shell created what is essentially special shares practices that we would all look at is a will that is just typical Corporate Governance ways to protect yourself from a hostile takeover. This was cuttingedge finance in the 1890s. Development that were actually pioneered as a way to protect themselves. Against editorial practices of standard. So competition is great, the free market must play a role. But again, there has to be a balance because the free market left unchecked without smart self protective mechanisms or rules to prevent transport can create problems of its own. And you must have a balance, you must have the shield and the sword combined. It is combining the two that is a great way to answer a lot of the enduring questions that we face not only in others. [inaudible question] what inspired you to focus on this personality . Why this topic . Like i said, youre an expert on so many issues. Why rockefeller . Truth is, i have read about some really wild and crazy folks. Who did something that just sounded so insane, i was a little bit jealous i had not had a chance to take part of it. That was back in the early 2000 at the start of. A group of oil experts, videographers, other industry folks purchased for themselves in world war ii soviet motorcycle. And in the sidecar they put a barrel of crude oil. And what they did was they followed the course of a phantom pipeline that did not get exist. In this motorcycle into begin this wild sort of group of motorcycles who filmed themselves terribly Dangerous Things across dangerous parts of the world and also in turkey and saber part. In order to make a point. They wanted to draw National Attention to the fact that phantom pipeline was not yet built. This pipeline is faced with so many problems that they needed to deliver the very first barrel of a very crude from transport to the turkish port of. That was then. Today, the btc pipeline is a reality. But in overcoming the impediments who built this pipeline that they overcome, again, it is the exact same kind of problem set that marcus and mill faced. This is never where people needed. Distance, geography is internal. It will always be chokepoints and geographic impediments that prevent oil from getting more energy from getting married as to where it needs to be. Risk, someone has to weigh into the marketplace. Technology, technology defines the oil industry. It defines so many other industries. Innovations like the development of the modern oil tanker or other pipeline breakthroughs. Technology has helped to make our modern world possibly. And then there is greed. It is a twosided coin. It is a good way for someone to get an way into a marketplace good but it can also get out of hand. In one man, the most powerful monopolist of his time in the wealthiest human being who has ever lived, John D Rockefeller. The breaking of what rockefeller stood forth was just a story as i said, i really wanted to tell well. Any other questions . These are good i guess the final thought and what i would encourage all of you to do as you look at breaking rockefeller is to perhaps ask this question. For me this was the hardest. I offer an answer but it was the hardest in writing the book. That is that john the rockefeller i believe is one of the most complex human beings that has ever lived. Wealth amplifies all that was great and noble. And also ruthless. In the financial sense, bloodthirsty about rockefeller. It collided with his faith which he believed that there was a just god and he was doing the work of god and that tension i think really affected how rockefeller viewed himself. How he viewed his competitors and ultimately it is fire his actions for his life. One of the cool post scripts of the story is that we started the discussion talking about rockefellers wealth and the size of the wealth. It is interesting to think that to this day, rockefellers wealth still lives on. Through philanthropic vehicles such as the Rockefeller Foundation. Which is to this day, one of the largest philanthropic donor organizations in the world. The great irony of course is that rockefellers wealth was created on oil. And yet in our own day and age the Rockefeller Foundation is committed to doing things like spending rockefellers money to help mitigate the effects of climate change. The little ironies of life are perhaps the sweetest. And in asking and answering for yourself that question, who was rockefeller . And what made them try and break his monopoly . I tried to capture that in the book and try to make it compelling a narrative driven story and i really hope all of you enjoy reading it. As much as i enjoyed writing it. With that, i really want to thank you and i look forward to signing copies when we are done. Thank you very much. [applause] if you would mind pushing a chairs against the site here so folks can make it up. We appreciate it. [inaudible conversations] you are watching booktv on cspan2. Television for serious readers. Here is our prime time lineup. At 7 00 p. M. Eastern, jeffrey west author of scale discusses the universal laws that govern everything from plants and animals to cities and economics. Then at 8 35 pm jenna bush and barbara bush remember their childhood and their years living in the white house. On booktvs after words at 9 00 p. M. Bestselling author and columnist naomi klein in an interview with cofounder Medea Benjamin discusses her book, know is not enough. Resisting trumps shop politics and winning the worldly. And at 10 oclock eric provides his thoughts on how to rid washington of corruption. In the swamp. At 1115 p. M. Discusses her body and the impact it is not on her life. Her book is hunger. That all happens tonight on cspan2s booktv. Booktv recently visited capitol hill to ask members of congress what they are reading this summer. I am in the middle of reading testimony by scott which is a mystery both. Not mr. But a suspense book that is too close to reality as he talks about the struggles of the Human Rights Violations against a population. I cannot wait to get home to finish it. Just one last question senator. What does it take to get you interested in a book . Especially with your busy schedule . Had defined time and what type of books get your attention . Two types. One would be about historic figures which i enjoy reading and learning. The other is a suspense fiction that takes me far away from the realities of washington as possible. It is an escape for me and enjoyment. I tried to do this as often as i can. Lets booktv want to know what you are reading. Send us your Summer Reading list