From Snake Oil to medical research

His major philanthropic emphasis turned out to be medical research and education, and here, his priorities had a curious psychological genesis. John D.’s father William Avery Rockefeller, nicknamed Devil Bill, was a colorful, disreputable scoundrel. He was a bigamist and a snake oil salesman, who peddled crack remedies to gullible country people. Doc Rockefeller, as he liked to style himself, would drive into a town in his wagon and distribute handbills that said, “Dr. William A. Rockefeller, the celebrated cancer specialist, here for one day only. All cases of cancer cured unless too far gone and then can be greatly benefitted.”

Given John D.’s contempt for his father, it’s fitting that in the 1890s he came up with the idea for an American institute devoted purely to medical research—an idea that now seems commonplace but was considered revolutionary and even quixotic at the time. Nobody imagined that you could just pay grownups to sit back and dream up discoveries, that you could institutionalize innovation.

During the summer of 1897, Frederick Gates waded through a thousand- page tome—Principles and Practice of Medicine. While the book delineated the symptoms of many diseases, it seldom identified the responsible germs and presented cures for only four or five diseases in the entire book. This was at the time the major medical text in the United States.

Gates found this shocking, and he drew up plans for what became the Rockefeller Institute for Medical Research, today known as the Rockefeller University, the home of pampered Nobel laureates. Rockefeller and Gates chose the Johns Hopkins Medical School as their model and drafted several of its scientists to serve the new institute. When pathologist Simon Flexner was recruited as its first director, he asked Gates why he was certain that they would discover something. Gates smiled and said that he had the faith of fools. True to Gates’s prophecy, the new institute shortly developed a treatment for meningitis.

Again Rockefeller, mysterious man that he was, maintained a salutary distance from his medical institute and did not even visit it for several years. One day he and his son, John D. Rockefeller Jr., were on New York City’s East Side when Junior said to him: “Father, you have never been at the medical institute. Let’s take a taxi up there and look at it.” Rockefeller reluctantly acquiesced.

When they pulled up outside the institute, he just sat in the car and stared at his creation. “Father,” his son gingerly prodded him, “don’t you want to go in and look at it?” “No,” said Rockefeller, “I can see the outside.” After gentler coaxing, Rockefeller Sr. finally agreed. He was given a brief tour of the premises, expressed his deep gratitude, and then left, never to return.

From the mid-1890s until his death in 1937, Rockefeller’s activities were philanthropic. Rockefeller's fortune peaked in 1912 at almost $900,000,000, but by that time he had already given away hundreds of millions of dollars. His son, John D. Rockefeller, Jr., in 1897 joined Gates in the full time management of the fortune.

The University of Chicago -- which Rockefeller was largely responsible for creating -- alone received $75,000,000 by 1932.

He set up, at the urging of his son, the Rockefeller Institute for Medical Research (now Rockefeller University) and his gifts to it totaled $50,000,000 by the 1930s.

He founded the General Education Board in 1903 (later the Rockefeller Foundation). The General Education Board helped to establish high schools throughout the South by providing free professional advice on improving instruction and education. The effort was a cooperative one, and local money was used to build the high schools. In 1919, Rockefeller donated $50,000,000 to the Board to raise academic salaries, which were very low in the wake of WWI.

The Rockefeller Foundation was officially established in 1913 and Rockefeller transferred $235,000,000 to it by 1929.

In 1909, Rockefeller established the Rockefeller Sanitary Commission which was largely responsible for eradicating hookworm in the South by 1927.

When Rockefeller died, on May 23, 1937, his estate totaled only $26,410,837. He had given most of his property to his philanthropies and to his son and other heirs.

Rockefeller was a Schumpeteran entrepreneur. He clearly changed "the stream of the allocation of resources over time by introducing new departures into the flow of economic life" by creating the modern oil industry. His emphasis on size and efficiency and the use of modern chemistry resulted in the development of a wide variety of new products that made the lives of ordinary people better as a consequence. He made light cheap for untold millions and his great creation was ready, willing, and able to provide the cheap gasoline when it was needed, thus ushering in the age of the automobile in America.

Last, but not least, he set the standard for philanthropy. Just the eradication of hookworm in the South alone would merit his place as one of the great humanitarians of the 20th Century. But his reputation was so sullied that he never received the credit that he was due for this great act on behalf of humankind.