Standard Oil

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Standard Oil (1863 - 1911) was a large integrated oil producing, transporting, refining, and marketing organization. It was founded by John D. Rockefeller (1839-1937) and partners in 1863, with the plan of making kerosene, which was sweeping the home lighting market, supplanting the commonly used whale oil (blubber). Borrowing heavily to expand his business, Rockefeller drew five big refineries including the business concern of Henry Morrison Flagler into one large firm, Rockefeller, Andrews & Flagler. By 1868 Rockefeller and Company headed Standard Oil of Pennsylvania, based in Pittsburgh, one of the world's largest oil refining concerns.

Contents

Foundation

On January 10, 1870 Rockefeller formed his business concerns into one large company, the Standard Oil Company of Ohio, based in Cleveland. Cleveland with its port on Lake Erie and a large refinery complex, was more suited to the growing concern. Standard sought out efficiencies in its own processes and aggressively competed for refinery business, buying out rival companies. In 1874, Rockefeller acquired the oil interests of Charles Pratt and Company. The founder Charles Pratt (1830-1891) and his protégé Henry Huttleston Rogers (1840-1909) came with the deal. By 1878 Standard Oil held about 90% of the refining capacity in the U.S. In 1882 the company was reorganized as the Standard Oil Trust. The three key leaders of Standard Oil Trust were Henry H. Rogers, William Rockefeller, and, the most well known, John D. Rockefeller. The quality of kerosene did improve greatly, up to the new standard of refined products.

Monopoly

By 1890 Standard Oil controlled over 90% of the refined oil flows in the United States. Though conspicuous, it made John D. Rockefeller the wealthiest man in the world. It was at this time that Standard Oil of Ohio moved its headquarters out of Cleveland and into its permanent headquarters at 60 Broadway in New York City. Concurrently, the trustees of Standard Oil of Ohio chartered the Standard Oil Company of New Jersey in order to take advantages of New Jersey's more lenient corporate stock ownership laws. Standard Oil of New Jersey eventually became one of many important trusts that dominated key markets, such as steel and the railroad. Also in 1890, Congress passed the Sherman Antitrust Act - the source of all American anti-monopoly laws. The law forbade every contract, scheme, deal, or conspiracy to restrain trade, though the phrase "restrain trade" remains open to interpretation. Standard Oil Trust quickly attracted attention from antitrust authorities and the Ohio Attorney General filed and won an antitrust suit in 1892.

Standard Oil's quasi-monopolistic position had developed from aggressively competitive business practices, including purchasing competitors and engaging in volume-discount transportation deals with the railroad companies, in order to ensure that it could undercut smaller competitors' prices. This helped kerosene to drop in price from 58 to 26 cents between 1865 and 1870. Competitors might not have appreciated the company's business practices, but consumers appreciated the drop in prices. Standard Oil, being formed well before the discovery of the Spindletop oil field and a demand for oil other than for heat and light, was well placed to control the growth of the oil business. The company was perceived to own and controll all aspects of the trade. Oil literally could not leave the oil field unless Standard Oil agreed to move it: the "posted price" for oil was the price that Standard Oil agents printed on flyers that were nailed to posts in oil producing areas, and producers were in a take-it-or-leave-it position.

Then came Ida M. Tarbell, an American author and journalist, and one of the original "muckrakers". Following extensive interviews with senior executive Henry H. Rogers, Tarbell's investigations of Standard Oil fueled growing public attacks on Standard Oil and on trusts in general. His work was published in 19 parts for McClure's magazine, from November 1902 to October 1904, in which year it was published in book form as The History of the Standard Oil Company. Tarbell's investigation is credited with hastening the breakup of Standard Oil, in 1911.

The antitrust breakup

As the public became more aware of the Standard Oil trust in allowing its oil companies in different states to be headed by the same board of directors, there was more public support in calling for its dissolution. Eventually, the company was broken up after the United States Supreme Court declared the trust to be an "unreasonable" monopoly under the Sherman Antitrust Act. Thus, on May 15, 1911, though Standard Oil's share of the market had been steadily declining from 1900 to 1910 (Standard's share of oil refining was 64% at the time of the trial and in competition with over 100 other refiners), the Supreme Court of the United States ordered the dissolution of Standard Oil Company into into 34 smaller companies, each with their own board of directors. It was at this time that John D. Rockefeller retired his position as President of the Standard Oil Company of New Jersey.

Successors

Successor companies to Standard Oil include:

Other Standard Oils:

See also

References

  • Droz, R.V. (2004). Whatever Happened to Standard Oil?. Retrieved June 25, 2005.
  • {{{Author|}}}{{|{{{3}}}}}}|show1| (1994)}}{{{{{Year|}}}}}}|show1|.}} {{|{{{3}}}}}}|show1|[{{{URL}}}}} Mercantile States and the World Oil Cartel, 1900-1939{{|{{{3}}}}}}|show1|]}}{{|{{{3}}}}}}|show1|, {{{Pages}}}}}{{|{{{3}}}}}}|Show1|, Cornell University Press}}. {{{ID|}}}
  • Standard Oil Company of California (1980). Whatever happened to Standard Oil?. Retrieved June 25, 2005.

External links

Retrieved from "http://en.freepedia.org/Standard_Oil.html"


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