Good Entrepreneurs Are Good Environmentalists: How Rockefeller Helped Save Whales And Natural Resources

Posted: Jun 11, 2018 10:51 AM
Good Entrepreneurs Are Good Environmentalists: How Rockefeller Helped Save Whales And Natural Resources

Do you consider that John D. Rockefeller was an environmentalist?

Most see him as the CEO of Standard Oil and one of the world’s richest men. Per The Rockefellers: The Legacy Of History's Richest Man in 1937, Rockefeller’s “assets equaled 1.5 percent of America’s total economic output. To control an equivalent share today would require a net worth of about $340 billion dollars,” in today’s dollars. 

In my view, Rockefeller was more than an capitalist; he was also an environmental capitalist..

Environmental capitalist

My definition of an environmental capitalist is a person or organization which uses natural resources to create products or services for humans to use, but also considers its responsibilities toward and stewardship of the resources it uses.  Such as the term agroforestry, a land use management system which counters western corporate farming methodologies (large acreage corporate farms, systems, and processes) and combines shrubs and trees in agricultural and forestry technologies to create more diverse, productive, profitable, healthy, ecologically sound and sustainable land-use systems. Plant with Purpose is an organization which teaches this concept.

So how is Rockefeller an environmental capitalist? His mother constantly drilled maxims into him on frugality such as, ‘Willful waste makes woeful want.” This translated into his business habits and practices.

Before the automobile, nobody knew what to do with the light fraction of crude oil known as gasoline, and many refiners, under cover of dark, let this waste product run into the river.

“We used to burn it for fuel in distilling the oil… and hundreds of thousands of barrels of it floated down the creeks… and the ground was saturated with it… and made Cuyahoga River became so flammable that if steamboat captains shoveled glowing coals overboard, the water erupted in flames."[1]

So rather than seeing waste, Rockefeller saw a resource that could be put to better use. By extension, he became an unwitting environmentalist. 

Rockefeller contributed to saving the whales

Whale oil was one product used to light homes and to make soap and margarine. When Rockefeller got into the oil business, kerosine both saved the whales (only the affluent could afford the rising demand and prices) and helped the poor (increased the illuminant supply to them) and extending day into night.[2] But because kerosene now took over the job of lighting homes, the creative destruction of this new alternative energy source not only saved the whales, and the decline of the whaler’s jobs and careers, but saved the environment, too.

While other refiners were throwing the refined waste byproducts of kerosene on the ground, Rockefeller hired chemists and others and developed 300 other products to sell and increase his profits. Using their creativity, they turned waste into new goods and services for the public.[3]

Obsession with controlling costs saves the environment

Rockefeller created an atmosphere of continuous improvement, not unlike the Total Quality Management of the 1990s or Lean Startup of today. Efficiencies lead to fewer resources needed to do the same job or task. The mammoth scale of his operations encouraged close attention to details.

A penny saved in one location might multiply and cascade their cost savings throughout the rest of the business. Rockefeller inspected one plant in New York which filled and sealed five-gallon tin cans of kerosene for export with drops of solder. Watching the machine solder the cans, he asked the resident expert (one of his many great leadership habits): 

“How many drops of solder do you use on each can?” “Forty,” the man replied. “Have you ever tried thirty-eight?” Rockefeller asked. “No?” “Would you mind having some sealed with thirty-eight and let me know?” When thirty-eight drops were applied, a small percentage of cans leaked—but none at thirty-nine. Hence, thirty-nine drops of solder became the new standard instituted at all Standard Oil refineries. “That one drop of solder,” said Rockefeller, still smiling in retirement, “saved $2,500 the first year; but the export business kept on increasing after that and doubled, quadrupled…saving…many hundreds of thousands of dollars.[4]

Most entrepreneurs and business people see only the cost-savings, forgetting the cost-savings translates into the larger picture of saving resources, i.e. reducing the need for future purchases. 

Rockefeller teaches his family market environmentalism

Rockefeller created a make-believe market economy in his home to learn the value of money. He made his wife Cettie “general manager” of the home (remember home economic courses in high school?). Unlike most girls in high school, she took courses to master business principles, became her high school class valedictorian, and her commencement speech was, “I Can Paddle My Own Canoe.”[5] Rockefeller required his children to keep careful account books of all of their pocket money they earned doing chores. His one daughter was responsible for keeping the gas turned down low in the house where it was not needed. She earned the difference in savings from what his kerosene gas bill would have been.[6]

Rockefeller wrote in his little book a minister's quote: “Get money; get it honestly, and then give it wisely.” It permeated in his life. He wanted to accumulate wealth, but inculcate the economic values he grew up with; he considered his wealth as a public trust, not a private indulgence. His financial accounting habits served his son Junior into college. “He recorded every expense in his little book—sometimes to snickers from classmates—…to the last decimal because Rockefeller allowed him to use all the money he wanted…but insisted on an exact account of every penny.”[7]

“A penny saved is a penny earned,” but can you now see how saving money through efficiencies translates into saving and extending our valuable and various resources?

[1] See Titan: The Life of John D. Rockefeller by Ron Chernow, pg 101

[2] See Titan: The Life of John D. Rockefeller by Ron Chernow, pg 73

[3] See John D. Rockefeller: Anointed with Oil by Grant Segall, pg 48-49

[4] See Titan: The Life of John D. Rockefeller by Ron Chernow, pg 180

[5] See John D. Rockefeller: Anointed with Oil by Grant Segall, pg 89-91

[6] See John D. Rockefeller: Anointed with Oil by Grant Segall, pg 124

[7] See John D. Rockefeller: Anointed with Oil by Grant Segall, pg 350