In early 1880s, John D Rockefeller had reached the top of oil business. But, many were predicting his demise. Because the entire oil industry was getting in jeopardy. The Pennsylvania oil fields were running dry and electricity was beginning to compete with lamps for lighting homes. Russians were capturing Standard Oil’s (Rockefeller’s company) foreign markets. Some experts predicted the imminent death of the American oil industry; even Standard Oil’s loyal officers began selling some of their stock.
In this scenario, JDR came up with yet another masterstroke of business judgment: He staked the future of his company on new oil discoveries near Lima, Ohio. Drillers found oil in this Ohio-Indiana region in 1885, but they could not market it. It had a sulphur base and stank like rotten eggs. Even touching this oil meant a long, soapy bath or social ostracism. No one wanted to sell or buy it and no city even wanted it shipped there.
But, Rockefeller went for it. He also hired 2 chemists to figure out how to purify the oil. His partners were skeptical, and they “held up their hands in holy horror” at Rockefeller’s gamble and even outvoted him at a meeting of Standard’s Board of Directors. “Very well, gentlemen,” said Rockefeller. “At my own personal risk, I will put up the money to care for this product: $2 million-S3 million, if necessary.” Rockefeller recounted what then happened:
This ended the discussion, and we carried the Board with us and we continued to use the funds of the company in what was regarded as a very hazardous investment of money…
2 or 3 of our practical men stood firmly with me …
We . . . at last found ourselves able to clarify the oil.
The “worthless” Lima oil that Rockefeller had stockpiled suddenly became valuable; Standard Oil would be able to supply cheap kerosene for years to come!
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