Before Standard Oil was the largest oil company in the world, and before it was dismantled by US authorities following anti-trust litigation, the company was known as “Rockefeller, Andrews & Flagler.” John Rockefeller had bought out his partners by 1866, and was looking to expand his business.
The Civil War had just ended and the North was prospering. Rockefeller was well poised to take home great returns if he fostered pro-growth policies.
Rockefeller’s primary strategy was to borrow against his profits and reinvest in his companies through various means. For example, controlling costs or handling refinery waste. The more aspects of his own production were controlled by him, the better for his business. That took capital and others involved in the strategy.
He needed partners and he found them once he’d arrived in Cleveland. His brother William had already partnered with a chemist named Samuel Andrews, and they were receiving funding from Jabez A. Bostwick and Henry Flagler.
Flagler’s partnership was most interesting, because he didn’t have the capital himself. Flagler became a commissioned merchant for a grain business that Rockefeller had worked for, so the two were well acquainted. Flagler had already attempted to start his own salt business, which had failed, so his funds were dry. He enlisted his brother, Stephen Harkness, as a silent partner.
Together they formed Standard Oil in earnest in June of 1870, which rapidly grew to become the largest provider of oil and kerosene. By 1872, Standard Oil was producing 10,000 barrels of oil every day.
About the Author: Samuel Phineas Upham is an investor at a family office/ hedgefund, where he focuses on special situation illiquid investing. Before this position, Phin Upham was working at Morgan Stanley in the Media and Telecom group. You may contact Phin on his Samuel Phineas Upham website or LinkedIn.