Standard Oil

Former type	Ohio Corporation (1870–1882) Business Trust (1882–1892) New Jersey Holding Company (1899–1911)[1]
Industry	Oil and gas
Successor(s)	See list of successor entities
Founded	1870
Defunct	1911
Headquarters	Cleveland, Ohio (1870–1885) New York City, New York (1885–1911)[2]
Key people	John D. Rockefeller, Founder & Chairman Henry M. Flagler, Senior Executive John D. Archbold, Vice President William Rockefeller, Senior Executive & New York Representative Samuel Andrews, Chemist & First Chief of Refining Operations Charles Pratt, Senior Executive Henry H. Rogers, Senior Executive Oliver H. Payne, Senior Executive Daniel O'Day, Senior Executive Jabez A. Bostwick, Senior Executive & First Treasurer William G. Warden,[3] Senior Executive Jacob Vandergrift,[4] Senior Executive
Products	Fuel, Lubricant, Petrochemicals
Employees	60,000 (1909)[5]

Standard Oil was a predominant American integrated oil producing, transporting, refining, and marketing company. Established in 1870 as a corporation in Ohio, it was the largest oil refiner in the world^[6] and operated as a major company trust and was one of the world's first and largest multinational corporations until it was broken up by the United States Supreme Court in 1911.

John D. Rockefeller was a founder, chairman and major shareholder. As it grew exponentially and engaged in business strategies, tactics and practices that were lawful but drove many smaller businesses under, Standard Oil became widely criticized in the public eye, even as it made Rockefeller the richest man in modern history. Other notable Standard Oil principals include Henry Flagler, developer of Florida's Florida East Coast Railway and resort cities, and Henry H. Rogers, who built the Virginian Railway (VGN), a well-engineered highly efficient line dedicated to shipping southern West Virginia's bituminous coal to port at Hampton Roads.

Early years[link]

John D. Rockefeller c. 1872, shortly after founding Standard Oil

Standard Oil began as an Ohio partnership formed by the well-known industrialist John D. Rockefeller, his brother William Rockefeller, Henry Flagler, chemist Samuel Andrews, silent partner Stephen V. Harkness, and Oliver Burr Jennings, who had married the sister of William Rockefeller's wife. In 1870 Rockefeller incorporated Standard Oil in Ohio. Of the initial 10,000 shares, John D. Rockefeller received 2,667; Harkness received 1,334; William Rockefeller, Flagler, and Andrews received 1,333 each; Jennings received 1,000; and the firm of Rockefeller, Andrews & Flagler received 1,000.^[7] Using highly effective tactics, later widely criticized, it absorbed or destroyed most of its competition in Cleveland in less than two months in 1872 and later throughout the northeastern United States.

In the early years, John D. Rockefeller dominated the combine, for he was the single most important figure in shaping the new oil industry.^[8] He quickly distributed power and the tasks of policy formation to a system of committees, but always remained the largest shareholder. Authority was centralized in the company's main office in Cleveland, but decisions in the office were made in a cooperative way.^[9]

In response to state laws trying to limit the scale of companies, Rockefeller and his associates developed innovative ways of organizing, to effectively manage their fast growing enterprise. In 1882, they combined their disparate companies, spread across dozens of states, under a single group of trustees. By a secret agreement, the existing thirty-seven stockholders conveyed their shares "in trust" to nine Trustees: John and William Rockefeller, Oliver H. Payne, Charles Pratt, Henry Flagler, John D. Archbold, William G. Warden, Jabez Bostwick, and Benjamin Brewster.^[10] This organization proved so successful that other giant enterprises adopted this "trust" form.

Standard Oil Refinery No. 1 in Cleveland, Ohio, 1889

The company grew by increasing sales and also through acquisitions. After purchasing competing firms, Rockefeller shut down those he believed to be inefficient and kept the others. In a seminal deal, in 1868, the Lake Shore Railroad, a part of the New York Central, gave Rockefeller's firm a going rate of one cent a gallon or forty-two cents a barrel, an effective 71% discount from its listed rates in return for a promise to ship at least 60 carloads of oil daily and to handle the loading and unloading on its own.^{[citation needed]} Smaller companies decried such deals as unfair because they were not producing enough oil to qualify for discounts.

In 1872, Rockefeller joined the South Improvement Company which would have allowed him to receive rebates for shipping and receive drawbacks on oil his competitors shipped. But when this deal became known, competitors convinced the Pennsylvania Legislature to revoke South Improvement's charter. No oil was ever shipped under this arrangement.^{[citation needed]}

Standard's actions and secret^[11] transport deals helped its kerosene price to drop from 58 to 26 cents from 1865 to 1870. Competitors disliked the company's business practices, but consumers liked the lower 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 control all aspects of the trade.

In 1885, Standard Oil of Ohio moved its headquarters from Cleveland to its permanent headquarters at 26 Broadway in New York City. Concurrently, the trustees of Standard Oil of Ohio chartered the Standard Oil Company of New Jersey (SOCNJ) to take advantages of New Jersey's more lenient corporate stock ownership laws.

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 "restraint of trade" remained subjective. The Standard Oil group quickly attracted attention from antitrust authorities leading to a lawsuit filed by Ohio Attorney General David K. Watson.

From 1882 to 1906, Standard paid out $548,436,000 in dividends at 65.4% payout ratio. As is common practice in business, a fraction of the profits was put back into the business, rather than being distributed to stockholders. The total net earnings from 1882 to 1906 amounted to $838,783,800, exceeding the dividends by $290,347,800. The latter amount was used for plant expansions.

1895–1911[link]

In 1897, John Rockefeller retired from the Standard Oil Company of New Jersey, the holding company of the group, but remained a major shareholder. Vice-president John Dustin Archbold took a large part in the running of the firm. At the same time, state and federal laws sought to counter this development with "antitrust" laws. In 1911, the US Justice Department sued the group under the federal antitrust law and ordered its breakup into 34 companies.

Standard Oil's market position was initially established through an emphasis on efficiency and responsibility. While most companies dumped gasoline in rivers (this was before the automobile was popular), Standard used it to fuel its machines. While other companies' refineries piled mountains of heavy waste, Rockefeller found ways to sell it. For example, Standard created the first synthetic competitor for beeswax and bought the company that invented and produced Vaseline, the Chesebrough Manufacturing Company, which was a Standard company only from 1908 until 1911.

One of the original "muckrakers" was Ida M. Tarbell, an American author and journalist. Her father was an oil producer whose business had failed due to Rockefeller's business dealings. After extensive interviews with a sympathetic senior executive of Standard Oil, Henry H. Rogers, Tarbell's investigations of Standard Oil fueled growing public attacks on Standard Oil and on monopolies in general. Her work was published in 19 parts in McClure's magazine from November 1902 to October 1904, then in 1904 as the book The History of the Standard Oil Company.

The Standard Oil Trust was controlled by a small group of families. Rockefeller stated in 1910: "I think it is true that the Pratt family, the Payne-Whitney family (which were one, as all the stock came from Colonel Payne), the Harkness-Flagler family (which came into the Company together) and the Rockefeller family controlled a majority of the stock during all the history of the Company up to the present time".^[12]

These families reinvested most of the dividends in other industries, especially railroads. They also invested heavily in the gas and the electric lighting business (including the giant Consolidated Gas Company of New York City). They made large purchases of stock in US Steel, Amalgamated Copper, and even Corn Products Refining Company.^[13]

Standard Oil In China[link]

Standard Oil's production increased so rapidly it soon exceeded US demand and the company began viewing export markets. In the 1890s, Standard Oil began marketing kerosene to China's large population of close to 400 million as lamp fuel.^[14] For its Chinese trademark and brand Standard Oil adopted the name "Mei Foo", translating roughly as beautiful and trustworthy or beautiful confidence.^[15][16] Mei Foo also became the name of the tin lamp that Standard Oil produced and gave away or sold cheaply to Chinese peasants, encouraging them to switch from vegetable oil to kerosene. Response was positive, sales boomed and China became Standard Oil's largest market in Asia. Prior to Pearl Harbor, Stanvac was the largest single US investment in SE Asia.^[17]

Socony's North China Department operated a subsidiary called Socony River and Coastal Fleet, North Coast Division, which became the North China Division of Stanvac after that company was formed in 1933.^[18] To distribute its products, Standard Oil constructed storage tanks, canneries (bulk oil from large ocean tankers was re-packaged into 5-gallon tins), warehouses and offices in key Chinese cities. For inland distribution the Company had motor tank trucks and railway tank cars, and for river navigation it had a fleet of low draft steamers and other vessels.^[19] Stanvac's North China Division, based in Shanghai, owned hundreds of river going vessels, including motor barges, steamers, launches, tugboats and tankers.^[20] Up to 13 tankers operated on the Yangtze River, the largest of which were Mei Ping (1,118 gt), Mei Hsia (1,048 gt),and Mei An (934 gt).^[21] All three were destroyed in the 1937 USS Panay incident.^[22] Mei An was launched in 1901 and was the first vessel in the fleet. Other vessels included Mei Chuen, Mei Foo, Mei Hung, Mei Kiang, Mei Lu, Mei Tan, Mei Su, Mei Xia, Mei Ying, and Mei Yun. Mei Hsia, a tanker, was specially designed for river duty and was built by New Engineering and Shipbuilding Works of Shanghai, who also built the 500-ton launch Mei Foo in 1912. Mei Hsia ("Beautiful Gorges") was launched in 1926 and carried 350 tons of bulk oil in three holds, plus a forward cargo hold and space between decks for carrying general cargo or packed oil. She had a length of 206 feet (63 m), a beam of 32 feet (9.8 m), depth of 10 feet 6 inches (3.20 m) and had a bulletproof wheelhouse. Mei Ping ("Beautiful Tranquility") launched in 1927, was designed offshore but assembled and finished in Shanghai. It's oil fuel burners came from the U.S. and water tube boilers came from England.^[23][24]

Monopoly charges and anti-trust litigation[link]

By 1890, Standard Oil controlled 88% of the refined oil flows in the United States. The state of Ohio successfully sued Standard, compelling the dissolution of the trust in 1892. But Standard only separated off Standard Oil of Ohio and kept control of it. Eventually, the state of New Jersey changed its incorporation laws to allow a company to hold shares in other companies in any state. So, in 1899, the Standard Oil Trust, based at 26 Broadway in New York, was legally reborn as a holding company, the Standard Oil Company of New Jersey (SOCNJ), which held stock in 41 other companies, which controlled other companies, which in turn controlled yet other companies. This conglomerate was seen by the public as all-pervasive, controlled by a select group of directors, and completely unaccountable.^[25]

U.S. President Theodore Roosevelt depicted as the infant Hercules grappling with Standard Oil in a 1906 Puck magazine cartoon

In 1904, Standard controlled 91% of production and 85% of final sales. Most of its output was kerosene, of which 55% was exported around the world. After 1900 it did not try to force competitors out of business by underpricing them.^[26] The federal Commissioner of Corporations studied Standard's operations from the period of 1904 to 1906^[27] and concluded that "beyond question... the dominant position of the Standard Oil Company in the refining industry was due to unfair practices—to abuse of the control of pipe-lines, to railroad discriminations, and to unfair methods of competition in the sale of the refined petroleum products".^[28] Due to competition from other firms, their market share had gradually eroded to 70% by 1906 which was the year when the antitrust case was filed against Standard, and down to 64% by 1911 when Standard was ordered broken up^[29] and at least 147 refining companies were competing with Standard including Gulf, Texaco, and Shell.^[30] It did not try to monopolize the exploration and pumping of oil (its share in 1911 was 11%).^{[citation needed]}

In 1909, the US Department of Justice sued Standard under federal anti-trust law, the Sherman Antitrust Act of 1890, for sustaining a monopoly and restraining interstate commerce by:^[31]

"Rebates, preferences, and other discriminatory practices in favor of the combination by railroad companies; restraint and monopolization by control of pipe lines, and unfair practices against competing pipe lines; contracts with competitors in restraint of trade; unfair methods of competition, such as local price cutting at the points where necessary to suppress competition; [and] espionage of the business of competitors, the operation of bogus independent companies, and payment of rebates on oil, with the like intent."

The lawsuit argued that Standard's monopolistic practices had taken place over the preceding four years:^[32]

"The general result of the investigation has been to disclose the existence of numerous and flagrant discriminations by the railroads in behalf of the Standard Oil Company and its affiliated corporations. With comparatively few exceptions, mainly of other large concerns in California, the Standard has been the sole beneficiary of such discriminations. In almost every section of the country that company has been found to enjoy some unfair advantages over its competitors, and some of these discriminations affect enormous areas."

The government identified four illegal patterns: 1) secret and semi-secret railroad rates; (2) discriminations in the open arrangement of rates; (3) discriminations in classification and rules of shipment; (4) discriminations in the treatment of private tank cars. The government alleged:^[33]

"Almost everywhere the rates from the shipping points used exclusively, or almost exclusively, by the Standard are relatively lower than the rates from the shipping points of its competitors. Rates have been made low to let the Standard into markets, or they have been made high to keep its competitors out of markets. Trifling differences in distances are made an excuse for large differences in rates favorable to the Standard Oil Company, while large differences in distances are ignored where they are against the Standard. Sometimes connecting roads prorate on oil—that is, make through rates which are lower than the combination of local rates; sometimes they refuse to prorate; but in either case the result of their policy is to favor the Standard Oil Company. Different methods are used in different places and under different conditions, but the net result is that from Maine to California the general arrangement of open rates on petroleum oil is such as to give the Standard an unreasonable advantage over its competitors"

The government said that Standard raised prices to its monopolistic customers but lowered them to hurt competitors, often disguising its illegal actions by using bogus supposedly independent companies it controlled.^[34]

"The evidence is, in fact, absolutely conclusive that the Standard Oil Company charges altogether excessive prices where it meets no competition, and particularly where there is little likelihood of competitors entering the field, and that, on the other hand, where competition is active, it frequently cuts prices to a point which leaves even the Standard little or no profit, and which more often leaves no profit to the competitor, whose costs are ordinarily somewhat higher."

On May 15, 1911, the US Supreme Court upheld the lower court judgment and declared the Standard Oil group to be an "unreasonable" monopoly under the Sherman Antitrust Act. It ordered Standard to break up into 34 independent companies with different boards of directors, the biggest two of the companies were Exxon and Mobil.^[35]

Standard's president, John Rockefeller, had long since retired from any management role. But, as he owned a quarter of the shares of the resultant companies, and those share values mostly doubled, he emerged from the dissolution as the richest man in the world.^[36]

Breakup[link]

This section requires expansion.

By 1911, with public outcry at a climax, the Supreme Court of the United States ruled, in Standard Oil Co. of New Jersey v. United States, that Standard Oil must be dissolved under the Sherman Antitrust Act and split into 34 companies. Two of these companies were Jersey Standard ("Standard Oil Company of New Jersey"), which eventually became Exxon, and Socony ("Standard Oil Company of New York"), which eventually became Mobil.

Over the next few decades, both companies grew significantly. Jersey Standard, led by Walter C. Teagle, became the largest oil producer in the world. It acquired a 50 percent share in Humble Oil & Refining Co., a Texas oil producer. Socony purchased a 45 percent interest in Magnolia Petroleum Co., a major refiner, marketer and pipeline transporter. In 1931, Socony merged with Vacuum Oil Co., an industry pioneer dating back to 1866, and a growing Standard Oil spin-off in its own right.

In the Asia-Pacific region, Jersey Standard had oil production and refineries in Indonesia but no marketing network. Socony-Vacuum had Asian marketing outlets supplied remotely from California. In 1933, Jersey Standard and Socony-Vacuum merged their interests in the region into a 50–50 joint venture. Standard-Vacuum Oil Co., or "Stanvac", operated in 50 countries, from East Africa to New Zealand, before it was dissolved in 1962.

Other Standard Oil breakup companies include "Standard Oil of Ohio" which became SOHIO, "Standard Oil of Indiana" which became Amoco after other mergers and a name change in the 1980s, "Standard Oil of California" became the Chevron Corporation.

Legacy and criticism of breakup[link]

The U.S. Supreme Court ruled in 1911 that antitrust law required Standard Oil to be broken into smaller, independent companies. Among the "baby Standards" that still exist are ExxonMobil and Chevron. Some have speculated that if not for that court ruling, Standard Oil could have possibly been worth more than $1 trillion today.^[37] Whether the breakup of Standard Oil was beneficial is a matter of some controversy.^[38][39] Some economists believe that Standard Oil was not a monopoly, and also argue that the intense free market competition resulted in cheaper oil prices and more diverse petroleum products; in 1890, Rep. William Mason, arguing in favor of the Sherman Antitrust Act, said: "trusts have made products cheaper, have reduced prices; but if the price of oil, for instance, were reduced to one cent a barrel, it would not right the wrong done to people of this country by the trusts which have destroyed legitimate competition and driven honest men from legitimate business enterprise".^[40]

The Sherman Antitrust Act prohibits the restraint of trade. Defenders of Standard Oil insist that the company did not restrain trade; they were simply superior competitors. The federal courts ruled otherwise.

Some economic historians have observed that Standard Oil was in the process of losing its monopoly at the time of its breakup in 1911. Although Standard had 90% of American refining capacity in 1880, by 1911 that had shrunk to between 60 and 65%, due to the expansion in capacity by competitors.^[41] Numerous regional competitors (such as Pure Oil in the East, Texaco and Gulf Oil in the Gulf Coast, Cities Service and Sun in the Midcontinent, Union in California, and Shell overseas; all except Citgo have since either merged with a Standard descendant or was bought by a company that was itself later bought by a Standard descendant) had organized themselves into competitive vertically integrated oil companies, the industry structure pioneered years earlier by Standard itself. In addition, demand for petroleum products was increasing more rapidly than the ability of Standard to expand. The result was that although in 1911 Standard still controlled most production in the older US regions of the Appalachian Basin (78% share, down from 92% in 1880), Lima-Indiana (90%, down from 95% in 1906), and the Illinois Basin (83%, down from 100% in 1906), its share was much lower in the rapidly expanding new regions that would dominate US oil production in the 20th century. In 1911 Standard controlled only 44% of production in the Midcontinent, 29% in California, and 10% on the Gulf Coast.^[42]

Some analysts argue that the breakup was beneficial to consumers in the long run, and no one has ever proposed that Standard Oil be reassembled in pre-1911 form.^[43] ExxonMobil, however, does represent a substantial part of the original company.

Successor companies[link]

The successor companies from Standard Oil's breakup form the core of today's US oil industry. (Several of these companies were considered among the Seven Sisters who dominated the industry worldwide for much of the 20th century.) They include:

• Standard Oil of New Jersey (SONJ) - or Esso (S.O.) – renamed Exxon, now part of ExxonMobil. Standard Trust companies Carter Oil, Imperial Oil (Canada), and Standard of Louisiana were kept as part of Standard Oil of New Jersey after the breakup.
• Standard Oil of New York – or Socony, merged with Vacuum – renamed Mobil, now part of ExxonMobil.
• Standard Oil of California – or Socal – renamed Chevron, became ChevronTexaco, but returned to Chevron.
• Standard Oil of Indiana - or Stanolind, renamed Amoco (American Oil Co.) – now part of BP.
• Standard's Atlantic and the independent company Richfield merged to form Atlantic Richfield or ARCO, now part of BP. Atlantic operations were spun off and bought by Sunoco.
• Standard Oil of Kentucky – or Kyso was acquired by Standard Oil of California - currently Chevron.
• Continental Oil Company – or Conoco now part of ConocoPhillips.
• Standard Oil of Ohio – or Sohio, acquired by BP in 1987.
• The Ohio Oil Company – or The Ohio, and marketed gasoline under the Marathon name. The company is now known as Marathon Oil Company, and was often a rival with the in-state Standard spinoff, Sohio.

Other Standard Oil spin-offs:

• Standard Oil of Iowa – pre-1911 – became Standard Oil of California.
• Standard Oil of Minnesota – pre-1911 – bought by Standard Oil of Indiana.
• Standard Oil of Illinois - pre-1911 - bought by Standard Oil of Indiana.
• Standard Oil of Kansas – refining only, eventually bought by Indiana Standard.
• Standard Oil of Missouri – pre-1911 – dissolved.
• Standard Oil of Louisiana – always owned by Standard Oil of New Jersey (now ExxonMobil).
• Standard Oil of Brazil – always owned by Standard Oil of New Jersey (now ExxonMobil).

Other companies divested in the 1911 breakup:

• Anglo-American Oil Co. – acquired by Jersey Standard in 1930, now Esso UK.
• Buckeye Pipe Line Co.
• Borne-Scrymser Co. (chemicals)
• Chesebrough Manufacturing (now Unilever)
• Colonial Oil.
• Crescent Pipeline Co.
• Cumberland Pipe Line Co.
• Eureka Pipe Line Co.
• Galena-Signal Oil Co.
• Indiana Pipe Line Co.
• National Transit Co.
• New York Transit Co.
• Northern Pipe Line Co.
• Prairie Oil & Gas.
• Solar Refining.
• Southern Pipe Line Co.
• South Penn Oil Co. – eventually became Pennzoil, now part of Shell.
• Southwest Pennsylvania Pipe Line Co.
• Swan and Finch.
• Union Tank Lines.
• Washington Oil Co.
• Waters-Pierce.

Note: Standard Oil of Colorado was not a successor company; the name was used to capitalize on the Standard Oil brand in the 1930s. Standard Oil of Connecticut is a fuel oil marketer not related to the Rockefeller companies.

Rights to the name[link]

Of the 34 "Baby Standards", 11 were given rights to the Standard Oil name, based on the state they were in. Conoco and Atlantic elected to use their respective names instead of the Standard name, and their rights would be claimed by other companies.

By the 1980s, most companies were using their individual brand names instead of the Standard name, with Amoco being the last one to have widespread use of the "Standard" name, as it gave Midwestern owners the option of using the Amoco name or Standard.

Currently, three supermajor companies own the rights to the Standard name in the United States: ExxonMobil, Chevron Corporation, and BP. BP acquired its rights through acquiring Standard Oil of Ohio and Amoco, and has a small handful of stations in the Midwestern United States using the Standard name. Chevron has one station in each state it owns the rights to branded as Standard except in Kentucky, which it withdrew from in July 2010.^[44] ExxonMobil keeps the Esso trademark alive at stations that sell diesel fuel by selling "Esso Diesel" displayed on the pumps. ExxonMobil has full international rights to the Standard name, and continues to use the Esso name overseas.^[45]

• 

  One of 16 Chevron stations branded as "Standard" to protect Chevron's former trademark; this one is in Las Vegas, Nevada.

• 

  A combination gasoline/diesel pump at an Exxon in Zelienople, Pennsylvania selling Exxon gasoline and "Esso Diesel".

• Bpstandarddurand.jpg

  BP station with "torch and oval" Standard sign in Durand, Michigan.

See also[link]

• The History of the Standard Oil Company (book)
• History of the United States (1865-1918)
• Standard Oil Gasoline Station
• Wamsutta Oil Refinery

References[link]

Bibliography[link]

• Bringhurst, Bruce. Antitrust and the Oil Monopoly: The Standard Oil Cases, 1890–1911. New York: Greenwood Press, 1979.
• Chernow, Ron. Titan: The Life of John D. Rockefeller, Sr. London: Warner Books, 1998.
• Droz, R.V. Whatever Happened to Standard Oil?, 2004. Retrieved June 25, 2005.
• Folsom, Jr., Burton W. John D. Rockefeller and the Oil Industry from The Myth of the Robber Barons. New York: Young America, 2003.
• Giddens, Paul H. Standard Oil Company (Companies and men). New York: Ayer Co. Publishing, 1976.
• Henderson, Wayne. Standard Oil: The First 125 Years. New York: Motorbooks International, 1996.
• Hidy, Ralph W. and Muriel E. Hidy. History of Standard Oil Company (New Jersey : Pioneering in Big Business 1882–1911). New York: Ayer Co. Publishing, 1987.
• Jones; Eliot. The Trust Problem in the United States 1922. Chapter 5; online edition
• Klein, Henry H. Dynastic America and Those Who Own It. New York: Kessinger Publishing, [1921] Reprint, 2003.
• Knowlton, Evelyn H. and George S. Gibb. History of Standard Oil Company: Resurgent Years 1911–1927. New York: Harper & Row, 1956.
• Larson, Henrietta M., Evelyn H. Knowlton and Charles S. Popple. New Horizons 1927–1950 (History of Standard Oil Company (New Jersey), Volume 3). New York: Harper & Row, 1971.
• Latham, Earl ed. John D. Rockefeller: Robber Baron or Industrial Statesman?, 1949. Primary and secondary sources.
• Manns, Leslie D. "Dominance in the Oil Industry: Standard Oil from 1865 to 1911" in David I. Rosenbaum ed, Market Dominance: How Firms Gain, Hold, or Lose it and the Impact on Economic Performance. Praeger, 1998. online edition
• Montague, Gilbert Holland. The Rise And Progress of the Standard Oil Company. (1902) online edition
• Montague, Gilbert Holland. "The Rise and Supremacy of the Standard Oil Company," Quarterly Journal of Economics, Vol. 16, No. 2 (February , 1902), pp. 265–292 in JSTOR
• Montague, Gilbert Holland. "The Later History of the Standard Oil Company," Quarterly Journal of Economics, Vol. 17, No. 2 (February , 1903), pp. 293–325 in JSTOR
• Nevins, Allan. John D. Rockefeller: The Heroic Age of American Enterprise. 2 vols. New York: Charles Scribner's Sons, 1940.
• Nevins, Allan. Study In Power: John D. Rockefeller, Industrialist and Philanthropist. 2 vols. New York: Charles Scribner's Sons, 1953.
• Nowell, Gregory P. (1994). Mercantile States and the World Oil Cartel, 1900–1939.. Cornell University Press. 
• Standard Oil Company of California. Whatever happened to Standard Oil?, 1980. Retrieved June 25, 2005.
• Tarbell, Ida M. The History of the Standard Oil Company, 1904. The famous original expose in McClure's Magazine of Standard Oil.
• Wall, Bennett H. Growth in a Changing Environment: A History of Standard Oil Company (New Jersey), Exxon Corporation, 1950–1975. New York: Harpercollins, 1989.
• Williamson, Harold F. and Arnold R. Daum. The American Petroleum Industry: The Age of Illumination, 1859–1899, 1959: vol 2, American Petroleum Industry: the Age of Energy 1899–1959, 1964. The standard history of the oil industry. online edition of vol 1
• Yergin, Daniel. The Prize: The Epic Quest for Oil, Money, and Power. New York: Simon & Schuster, 1991.

Notes[link]

External links[link]

• The Dismantling of The Standard Oil Trust
• Educate Yourself- Standard Oil -- Part I
• Witch-hunting for Robber Barons: The Standard Oil Story by Lawrence W. Reed—argues Standard Oil was not a coercive monopoly.
• The Truth About the "Robber Barons"—arguing that Stand Oil was not a monopoly.
• Google Books: Dynastic America and Those Who Own It, 2003 (1921), by Henry H. Klein
• Standard Oil Trust original Stock Certificate signed by John. D. Rockefeller, William Rockefeller, Henry M. Flagler and Jabez Abel Bostwick - 1882
• Whatever happened to Standard Oil?: Pre-1911 and Post-1911—Timeline of the various subsidiaries
• Standard Oil around the World: Post-1911
• CHARLES A. WHITESHOT: THE OIL-WELL DRILLER.A HISTORY OF THE WORLD'S GREATEST ENTERPRISE, THE OIL INDUSTRY Publisher: MANNINGTON 1905

Larry Reed

Austrian economics
Born	(1953-09-29) September 29, 1953 (age 58)
Nationality	United States
Institution	Foundation for Economic Education
Field	Economics, Public Policy
Alma mater	Slippery Rock University of Pennsylvania (M.A.) Grove City College (B.A.)
Influences	F.A. Hayek Ludwig von Mises Henry Hazlitt Fredric Bastiat
Information at IDEAS/RePEc

Lawrence W. (Larry) Reed (born September 29, 1953) is president of the Foundation for Economic Education (FEE), headquartered in Irvington-on-Hudson, New York, a position he has held since September 1, 2008. Before joining FEE, Reed served as president of the Mackinac Center for Public Policy, a Midland, Michigan based free-market think tank. To date, he remains Mackinac’s president emeritus.^[1][2]

Reed's interests in political and economic affairs have taken him as a freelance journalist to 78 countries on six continents since 1985.

Over the past twenty-five years, he has reported on hyperinflation in South America, black markets from behind the Iron Curtain, reforms and repression in China and Cambodia, and civil war inside Nicaragua and Mozambique. Additionally, he spent time with the Contra rebels during the Nicaraguan civil war; and lived for two weeks with Mozambique rebel forces at their bush headquarters in 1991, while the country was engaged at the height of their guerrilla conflict. Among many foreign adventures, Reed visited the ravaged nation of Cambodia in 1989 with his late friend, Academy Award winner Dr. Haing S. Ngor.

In 1986, while traveling with the Polish anti-communist underground,^[3] Reed was arrested and detained by border police.^[4]

An advocate for free market solutions to national and global issues, Reed has authored over 1,000 newspaper columns and articles, 200 radio commentaries, as well as dozens of articles in magazines and journals in the United States and abroad.^[5] His articles have appeared in The Wall Street Journal, Christian Science Monitor, Baltimore Sun, Detroit News, Detroit Free Press and USA Today, among numerous others.^[6][7]

During a 2003 address on the floor of the House of Representatives, Congressman Ron Paul paid tribute to Reed, acknowledging him as "one of America’s leading advocates for liberty", and remarked that Reed's writings "reflect his unswerving commitment to limited government and the free market as the best way to promote human happiness."^[8]

Personal life[link]

Reed was born and raised in Pennsylvania, United States.

He has cited the 1968 event between the Czechs and the Soviets known as the "Prague Spring", as the genesis for his interest in liberty and freedom, and has referred to the Czech cause as a “flowering of liberty.” As a result of interactions with FEE in his teen years, Reed became exposed to the ideas of F.A. Hayek, Ludwig von Mises and others from the Austrian school of economics.^[9]

In 1982, he was the Republican candidate for U. S. Congress in Michigan’s 10th district.^[10]

Education and appointments[link]

Reed holds a Bachelor of Arts degree in economics from Grove City College (1975) and a Master of Arts degree in History from Slippery Rock University of Pennsylvania (1978).^[11]

From 1977 to 1984 he taught economics at Midland, Michigan’s Northwood University, serving as chairman of the Department of Economics from 1982 to 1984. While at Northwood, Reed designed the university's dual major in Economics and Business Management and founded its annual "Freedom Seminar."

In addition to his undergraduate and graduate education, Reed was awarded an honorary Doctorate of Public Administration from Central Michigan University in 1994 and an honorary Doctorate of Laws from Northwood University in 2008. Reed is also the recipient of the Grove City College Distinguished Alumni Award.

Long active in Michigan policy, Reed was appointed in 1993 by the state's then-Governor John Engler(R) to the Headlee Amendment Blue Ribbon Commission. The Commission had been established as part of the state's 1978 "Headlee Amendment" for the purpose of limiting local and state government spending.^[12] It was officially abolished in 2004 by current Michigan Governor Jennifer Granholm.^[13]

In 1994, Reed was named to the Secchia Commission on Total Quality Government, a task force charged by Governor Engler to streamline Michigan state government. Engler and many of his administration's officials frequently cited the work of the Mackinac Center as influential in shaping administration policies.

In December 2007, the Washington, D.C. based Heritage Foundation named Reed Visiting Senior Fellow.^[14]

Mackinac Center for Public Policy[link]

Located in Midland, Michigan, the Mackinac Center for Public Policy became, during Reed’s tenure, the largest state-based free market think tank in America.^{[citation needed]}

Foundation for Economic Education[link]

On September 1, 2008, Larry Reed became president of the Foundation for Economic Education. The Foundation, founded in 1946 by Leonard Read, has widely been recognized as the first not-for-profit organization of its kind, familiarizing people with the issues of liberty. As Reed has put it, the organization is “Aimed at relative newcomers to the freedom philosophy”. It is FEE’s mission to provide people with the “economic and moral” foundations of a free and civil society. Under his guidance, FEE has expanded its website as well as its travel itinerary, becoming a more visible presence at freedom-centric functions and seminars in other states. As president, Reed hopes to reassert FEE’s position as a “mothership” for the freedom movement at large.^[15]

According to Reed, “FEE believes a free society is not only possible, it is imperative because there is no acceptable alternative for a civilized people. Our vision for the future is that through education, men and women will understand the moral, philosophic and economic principles that undergird a free society. They will appreciate the direct connection between those principles and their material and spiritual welfare. They will strive to pass those principles on from one generation to the next.” ^[16]

Economic philosophy[link]

Reed is a long time advocate for what is recognized as the Austrian School of economics. His prolific writing career, as well as his occupational affiliations, have been dedicated to advancing free societies via recognizable Austrian credos such as spontaneous order of pricing systems, voluntary contractual agreements, and limited government intervention in all aspects of life.^[17] Austrian economists champion free enterprise and competition,--something Reed has referred to as one of the highest and most beneficial forms of human cooperation^[18]-- and believe human interaction and the human condition are the true dictators of how societies are formed, and how they will perform.

Reed believes that, "Competition in the marketplace means nothing less than striving for excellence in the service of others for self-benefit. In other words, sellers cooperate with consumers by catering to their needs and preferences."^[19]

I’m an advocate of what is known as the Austrian school. Its most notable scholars were Ludwig von Mises and Nobel Laureate F. A. Hayek, who were born in Austria. Austrian economists (most of whom have never been to Austria, by the way; it’s just the name for a school of thought) start from the premise that “the economy” cannot be best studied as lumps of lifeless stuff you can express with equations. It is composed of living, breathing, decision-making entities called individuals. All economic phenomena can and should be traced back to how individuals perceive, think, act and interact. Austrians see competition and the entrepreneur as critical factors in economic growth. We appreciate the role of incentives and of free prices as natural market-clearing mechanisms. We suffer from no “pretense of knowledge” that would suggest any group of people with power could rationally plan an economy from the top down. We are rigorous in our analysis of money as an invention of the market and are constantly warning that when government takes charge of it, the door is wide open to business cycles and currency debasement. We also tend to be among the strongest defenders of private property; ultimately, everything has an owner and it’s only a question of whether the person to whom it really belongs owns it, or somebody else with a gun owns it. No school has all the answers, but I think it is ever more apparent with time that the Austrian school starts from the right premises, analyzes the economy with the proper tools and humility, and yields the most fruitful insights of any school of thought.^[20]

Seven principles[link]

Reed is well known for his "Seven Principles of Sound Public Policy". He has stated that he believes these principles are the "pillars of a free economy", and believes their ability to guide society has been made manifest over the course of recorded history.^[21]

• 1) Free people are not equal, and equal people are not free.
• 2) What belongs to you, you tend to take care of; what belongs to no one or everyone tends to fall into disrepair.
• 3) Sound policy requires that we consider long-run effects and all people, not simply short-run effects and a few people.
• 4) If you encourage something, you get more of it; if you discourage something, you get less of it.
• 5) Nobody spends somebody else's money as carefully as he spends his own.
• 6) Government has nothing to give anybody except what it first takes from somebody, and a government that's big enough to give you everything you want is big enough to take away everything you've got.
• 7) Liberty makes all the difference in the world.

Author[link]

Reed's most recent book is A Republic—If We Can Keep It, a collection of essays by Reed and historian Burton W. Folsom, Jr. that surveys the economic history of the United States and the modern world.^[22]

Another of Reed's recent books is Striking the Root: Essays on Liberty, a bundling of works previously published in FEE's magazine, The Freeman. The essays zero in on what Reed identifies as the chief root of many America's burdens: the failure of the its people to recognize that, in order to survive and have influence, governments must use force.^[23]

Reed's other books include Lessons from the Past: The Silver Panic of 1893, and Private Cures for Public Ills: The Promise of Privatization, both published by the Foundation for Economic Education, and When We Are Free, with Dale M. Haywood.

Published works and Interviews[link]

Academic books (authored or coauthored)[link]

• A Republic—If We Can Keep It ISBN 1-57246-031-8
• Striking the Root: Essays on Liberty ISBN 1-890624-72-1
• Lessons from the Past: The Silver Panic of 1893 ISBN 0-910614-90-3
• Private Cures for Public Ills: The Promise of Privatization ISBN 1-57246-019-9
• When We Are Free, with Dale M. Haywood ISBN 0-87359-045-7

Essays[link]

• Great Myths of the Great Depression ASIN B001O8DYP0
  • Great Myths audio page

Interviews[link]

Reed has consented to a number of interviews over the years including:

• Interview at The Imaginative Conservative by Bradley Birzer in February 2012
• Interview with Staff at The Daily Bell in January 2012
• Interview with Trent Hill at Young Americans for Liberty in 2011
• Interview with Israel Wayne at Biblical Worldview in 2011
• Interview with Strike-the-Root in 2002

Selected articles[link]

• (2009) The Story of Nicholas Winton
• (2009) Rome and the Great Depression
• (2003) The True Meaning of Patriotism

See also[link]

• Haing S. Ngor

External links[link]

• Mackinac Center for Public Policy
• Foundation for Economic Education
• State Policy Network
• The Michigan Experiment Common Cause Magazine
• Just Good Frieds, Really Common Cause Magazine
• Paul Krugman Flunks Capital Theory The Freeman
• Part Two: Economic revolution throttles inventor

References[link]

John Davison Rockefeller
John D. Rockefeller in 1885
Born	(1839-07-08)July 8, 1839 Richford, New York, U.S.
Died	May 23, 1937(1937-05-23) (aged 97) The Casements, Ormond Beach, Florida, United States
Resting place	Lake View Cemetery, Cleveland, Ohio, United States 41°30′40″N 81°35′28″W / 41.511°N 81.591°W / 41.511; -81.591Coordinates: 41°30′40″N 81°35′28″W / 41.511°N 81.591°W / 41.511; -81.591
Nationality	American
Occupation	Founder and former chairman of the Standard Oil Company Founder of the University of Chicago and Rockefeller University Founder of the General Education Board Founder of the Rockefeller Foundation
Net worth	$663.4 billion in 2007 dollars, according to List of wealthiest historical figures, based on information from Forbes – February 2008.
Religion	Baptist

John Davison Rockefeller (July 8, 1839 – May 23, 1937) was an American industrialist and philanthropist. He was the founder of the Standard Oil Company, which dominated the oil industry and was the first great U.S. business trust. Rockefeller revolutionized the petroleum industry and defined the structure of modern philanthropy. In 1870, he founded the Standard Oil Company and aggressively ran it until he officially retired in 1897.^[1] Standard Oil began as an Ohio partnership formed by John D. Rockefeller, his brother William Rockefeller, Henry Flagler, Jabez Bostwick, chemist Samuel Andrews, and a silent partner, Stephen V. Harkness. As kerosene and gasoline grew in importance, Rockefeller's wealth soared, and he became the world's richest man and first American worth more than a billion dollars.^[2] Adjusting for inflation, he is often regarded as the richest person in history.^[3][4][5][6]

Rockefeller spent the last 40 years of his life in retirement. His fortune was mainly used to create the modern systematic approach of targeted philanthropy with foundations that had a major effect on medicine, education, and scientific research.^[7]

His foundations pioneered the development of medical research, and were instrumental in the eradication of hookworm and yellow fever. He is also the founder of both the University of Chicago and Rockefeller University. He was a devoted Northern Baptist and supported many church-based institutions throughout his life. Rockefeller adhered to total abstinence from alcohol and tobacco throughout his life.^[8]

He had four daughters and one son; John D. Rockefeller, Jr. "Junior" was largely entrusted with the supervision of the foundations.

Asteroid 904 Rockefellia is named in his honour.

Early life and business career[link]

Rockefeller was the second of six children born in Richford, New York, to William Avery Rockefeller (November 13, 1810 – May 11, 1906) and Eliza Davison (September 12, 1813 – March 28, 1889). Genealogists trace some of his ancestors to French Huguenots who fled to Germany in the 17th century.^[9][10] His father, first a lumberman, then a traveling salesman, billed himself as a “botanic physician” and sold elixirs. The locals referred to the mysterious but fun-loving man as "Big Bill," and "Devil Bill".^[11] He was a sworn foe of conventional morality, who had opted for a vagabond existence and who returned to his family infrequently. Throughout his life, William Avery Rockefeller gained a reputation for shady schemes rather than productive work.^[12] Eliza, a homemaker and devout Baptist, struggled to maintain a semblance of stability at home, as William was frequently gone for extended periods. She also put up with his philandering and his double life, which included bigamy.^[13] Thrifty by nature and necessity, she taught her son that "willful waste makes woeful want."^[14] Young Rockefeller did his share of the regular household chores, and earned extra money raising turkeys, selling potatoes and candy, and eventually loaning small sums of money to neighbors. He followed his father’s advice to "trade dishes for platters", and always get the better part of any deal. Big Bill once bragged, "I cheat my boys every chance I get. I want to make ‘em sharp."^[15]

In spite of his father’s absences and frequent family moves, young Rockefeller was a well-behaved, serious and studious boy. His contemporaries described him as reserved, earnest, religious, methodical, and discreet. He was an excellent debater, and expressed himself precisely. He also had a deep love of music, and dreamed of it as a possible career.^[16] Early on, he displayed an excellent mind for numbers and detailed accounting.

Rockefeller at age 18, ca. 1857

When he was a boy, his family moved to Moravia, New York and, in 1851, to Owego, where he attended Owego Academy. In 1853, his family moved to Strongsville, a suburb of Cleveland. Rockefeller attended Cleveland's Central High School and then took a ten week business course at Folsom's Commercial College where he studied bookkeeping.^[17] In September 1855, when Rockefeller was sixteen, he got his first job as an assistant bookkeeper, working for a small produce commission firm called Hewitt & Tuttle. He worked long hours and delighted, as he later recalled, in “all the methods and systems of the office”.^[18] He was particularly adept at calculating transportation costs, which served him well later in his career. The full salary for his first three months' work was $50 (50 cents a day).^[19] From the beginning, he donated about 6% of his earnings to charity, which increased to 10% by the age of twenty, when he tithed to his Baptist church.^[20]

In 1859, Rockefeller went into the produce commission business with a partner, Maurice B. Clark, and they raised $4,000 in capital. Rockefeller went steadily ahead in business from there, making money each year of his career.^[21] After wholesale foodstuffs, the partners built an oil refinery in 1863 in "The Flats", then Cleveland's burgeoning industrial area. The refinery was directly owned by Andrews, Clark & Company, which was composed of Clark & Rockefeller, chemist Samuel Andrews, and M. B. Clark's two brothers. The commercial oil business was in its infancy. Whale oil had become too expensive for the masses, and a cheaper, general-purpose lighting fuel was needed.^[22]

While his brother Frank fought in the Civil War, Rockefeller tended his business and hired substitute soldiers. He gave money to the Union cause, as did many rich Northerners who avoided combat.^[23] In February 1865, in what was later described by oil industry historian Daniel Yergin as a "critical" action, Rockefeller bought out the Clark brothers for $72,500 at auction, and established the firm of Rockefeller & Andrews. Rockefeller said, "It was the day that determined my career."^[24] He was well-positioned to take advantage of post-war prosperity and the great expansion westward, fostered by the growth of railroads and an oil-fueled economy. He borrowed heavily, reinvested profits, adapted rapidly to changing markets, and fielded observers to track the quickly expanding industry.^[25]

Marriage and family[link]

In 1864, Rockefeller married Laura Celestia "Cettie" Spelman. They had four daughters and one son together. He said later, "Her judgment was always better than mine. Without her keen advice, I would be a poor man."^[21]

Beliefs[link]

Rockefeller became a lifelong member of the then-new Republican Party, and a strong supporter of Abraham Lincoln and the party’s abolitionist wing. He was a faithful congregant of the Erie Street Baptist Mission Church, where he taught Sunday school, and served as a trustee, clerk, and occasional janitor.^[26] Religion was a guiding force throughout his life, and Rockefeller believed it to be the source of his success. As he said, "God gave me money", and he did not apologize for it. He felt at ease and righteous following John Wesley’s dictum, "gain all you can, save all you can, and give all you can."^[27]

Oil[link]

In 1866, his brother William Rockefeller built another refinery in Cleveland and brought John into the partnership. In 1867, Henry M. Flagler became a partner, and the firm of Rockefeller, Andrews & Flagler was established. By 1868, with Rockefeller continuing practices of borrowing and reinvesting profits, controlling cost and using refineries' waste, the company owned two Cleveland refineries and a marketing subsidiary in New York; it was the largest oil refinery in the world.^[28][29] Rockefeller, Andrews & Flagler was the predecessor of the Standard Oil Company.

Standard Oil[link]

John D. Rockefeller ca. 1875

By the end of the American Civil War, Cleveland was one of the five main refining centers in the U.S. (besides Pittsburgh, Philadelphia, New York, and the region in northwestern Pennsylvania where most of the oil originated). In June 1870, Rockefeller formed Standard Oil of Ohio, which rapidly became the most profitable refiner in Ohio. Standard Oil grew to become one of the largest shippers of oil and kerosene in the country. The railroads were fighting fiercely for traffic and, in an attempt to create a cartel to control freight rates, formed the South Improvement Company, in collusion with Standard and other oil men outside the main oil centers.^[30] The cartel received preferential treatment as a high-volume shipper, which included not just steep rebates of up to 50% for their product, but also rebates for the shipment of competing products.^[30] Part of this scheme was the announcement of sharply increased freight charges. This touched off a firestorm of protest from independent oil well owners, including boycotts and vandalism, which eventually led to the discovery of Standard Oil's part in the deal. A major New York refiner, Charles Pratt and Company, headed by Charles Pratt and Henry H. Rogers, led the opposition to this plan, and railroads soon backed off. Pennsylvania revoked the cartel’s charter and equal rates were restored for the time being.^[31]

Undeterred, though vilified for the first time by the press, Rockefeller continued with his self-reinforcing cycle of buying competing refiners, improving the efficiency of his operations, pressing for discounts on oil shipments, undercutting his competition, making secret deals, raising investment pools, and buying rivals out. In less than four months in 1872, in what was later known as "The Cleveland Conquest" or "The Cleveland Massacre", Standard Oil had absorbed 22 of its 26 Cleveland competitors.^[32] Eventually, even his former antagonists, Pratt and Rogers, saw the futility of continuing to compete against Standard Oil: in 1874, they made a secret agreement with their old nemesis to be acquired. Pratt and Rogers became Rockefeller's partners. Rogers, in particular, became one of Rockefeller's key men in the formation of the Standard Oil Trust. Pratt's son, Charles Millard Pratt became Secretary of Standard Oil. For many of his competitors, Rockefeller had merely to show them his books so they could see what they were up against, then make them a decent offer. If they refused his offer, he told them he would run them into bankruptcy, then cheaply buy up their assets at auction. He saw himself as the industry’s savior, "an angel of mercy", absorbing the weak and making the industry as a whole stronger, more efficient, and more competitive.^[33] Standard was growing horizontally and vertically. It added its own pipelines, tank cars, and home delivery network. It kept oil prices low to stave off competitors, made its products affordable to the average household, and to increase market penetration, sometimes sold below cost if necessary. It developed over 300 oil-based products from tar to paint to Vaseline petroleum jelly to chewing gum. By the end of the 1870s, Standard was refining over 90% of the oil in the U.S.^[34] Rockefeller had already become a millionaire.^[35]

In 1877, Standard clashed with the Pennsylvania Railroad, its chief hauler. Rockefeller had envisioned the use of pipelines as an alternative transport system for oil and began a campaign to build and acquire them.^[36] The railroad, seeing Standard’s incursion into the transportation and pipeline fields, struck back and formed a subsidiary to buy and build oil refineries and pipelines.^[37] Standard countered and held back its shipments, and with the help of other railroads, started a price war that dramatically reduced freight payments and caused labor unrest as well. Rockefeller eventually prevailed and the railroad sold all its oil interests to Standard. But in the aftermath of that battle, in 1879 the Commonwealth of Pennsylvania indicted Rockefeller on charges of monopolizing the oil trade, starting an avalanche of similar court proceedings in other states and making a national issue of Standard Oil’s business practices.^[38]

Monopoly[link]

Standard Oil gradually gained almost complete control of oil refining and marketing in the United States through horizontal integration. In the kerosene industry, Standard Oil replaced the old distribution system with its own vertical system. It supplied kerosene by tank cars that brought the fuel to local markets and tank wagons then delivered to retail customers, thus bypassing the existing network of wholesale jobbers.^[39] Despite improving the quality and availability of kerosene products while greatly reducing their cost to the public (the price of kerosene dropped by nearly 80% over the life of the company), Standard Oil's business practices created intense controversy. Standard’s most potent weapons against competitors were underselling, differential pricing, and secret transportation rebates.^[40] The firm was attacked by journalists and politicians throughout its existence, in part for these monopolistic methods, giving momentum to the anti-trust movement. By 1880, according to the New York World, Standard Oil was "the most cruel, impudent, pitiless, and grasping monopoly that ever fastened upon a country."^[41] To the critics Rockefeller replied, "In a business so large as ours … some things are likely to be done which we cannot approve. We correct them as soon as they come to our knowledge.”^[41]

At that time, many legislatures had made it difficult to incorporate in one state and operate in another. As a result, Rockefeller and his associates owned dozens of separate corporations operating in just one state, making their management of the whole enterprise rather unwieldy. In 1882, Rockefeller's lawyers created an innovative form of corporation to centralize their holdings, giving birth to the Standard Oil Trust.^[42] The "trust" was a corporation of corporations, and the entity's size and wealth drew much attention. Nine trustees, including Rockefeller, ran the 41 companies in the trust.^[42] The public and the press were immediately suspicious of this new legal entity, but other businesses seized upon the idea and emulated it, further inflaming public sentiment. Standard Oil had gained an aura of invincibility, always prevailing against competitors, critics, and political enemies. It had become the richest, biggest, most feared business in the world, seemingly immune to the boom and bust of the business cycle, consistently racking up profits year after year.^[43]

Its vast American empire included 20,000 domestic wells, 4,000 miles of pipeline, 5,000 tank cars, and over 100,000 employees.^[43] Its share of world oil refining topped out above 90% but slowly dropped to about 80% for the rest of the century.^[44] In spite of the formation of the trust and its perceived immunity from all competition, by the 1880s Standard Oil had passed its peak of power over the world oil market. Rockefeller finally gave up his dream of controlling all the world’s oil refining, he admitted later, “We realized that public sentiment would be against us if we actually refined all the oil.”^[44] Over time foreign competition and new finds abroad eroded his dominance. In the early 1880s, Rockefeller created one of his most important innovations. Rather than try to influence the price of crude oil directly, Standard Oil had been exercising indirect control by altering oil storage charges to suit market conditions. Rockefeller then decided to order the issuance of certificates against oil stored in its pipelines. These certificates became traded by speculators, thus creating the first oil-futures market which effectively set spot market prices from then on. The National Petroleum Exchange opened in Manhattan in late 1882 to facilitate the oil futures trading.^[45]

Even though 85% of world crude production was still coming from Pennsylvania wells in the 1880s, overseas drilling in Russia and Asia began to reach the world market.^[46] Robert Nobel had established his own refining enterprise in the abundant and cheaper Russian oil fields, including the region’s first pipeline and the world’s first oil tanker. The Paris Rothschilds jumped into the fray providing financing.^[47] Additional fields were discovered in Burma and Java. Even more critical, the invention of the light bulb gradually began to erode the dominance of kerosene for illumination. But Standard Oil adapted, developing its own European presence, expanding into natural gas production in the U.S. then into gasoline for automobiles, which until then had been considered a waste product.^[48]

Standard Oil moved its headquarters to New York City at 26 Broadway, and Rockefeller became a central figure in the city’s business community. He bought a personal residence in 1884 on 54th street near the mansions of other magnates such as William Vanderbilt. Despite personal threats and constant pleas for charity, Rockefeller took the new elevated train to his downtown office daily.^[49] In 1887, Congress created the Interstate Commerce Commission which was tasked with enforcing equal rates for all railroad freight, but by then Standard was depending more on pipeline transport.^[50] More threatening to Standard’s power was the Sherman Antitrust Act of 1890, originally used to control unions, but later central to the breakup of the Standard Oil trust.^[51] Ohio was especially vigorous in applying its state anti-trust laws, and finally forced a separation of Standard Oil of Ohio from the rest of the company in 1892, the first step in the dissolution of the trust.^[51]

In the 1890s, Rockefeller expanded into iron ore and ore transportation, forcing a collision with steel magnate Andrew Carnegie, and their competition became a major subject of the newspapers and the cartoonists.^[52] Rockefeller also went on a massive buying spree acquiring leases for crude oil production in Ohio, Indiana, and West Virginia, as the original Pennsylvania oil fields began to play out.^[53] Amidst the frenetic expansion, Rockefeller began to think of retirement. The daily management of the trust was turned over to John Dustin Archbold and Rockefeller bought a new estate, Pocantico Hills, north of New York City, turning more time to leisure activities including the new sports of bicycling and golf.^[54]

Upon his ascent to the presidency, Theodore Roosevelt initiated dozens of suits under the Sherman Antitrust Act and coaxed reforms out of Congress. In 1901, U.S. Steel, now controlled by J. Pierpont Morgan, having bought Andrew Carnegie’s steel assets, offered to buy Standard’s iron interests as well. A deal brokered by Henry Clay Frick exchanged Standard’s iron interests for U.S. Steel stock and gave Rockefeller and his son membership on the company’s board of directors. In full retirement at age 63, Rockefeller earned over $58 million in investments in 1902.^[55]

One of the most effective attacks on Rockefeller and his firm was the 1904 publication of The History of the Standard Oil Company, by Ida Tarbell, a leading muckraker. She documented the company’s espionage, price wars, heavy-handed marketing tactics, and courtroom evasions.^[56] Although her work prompted a huge backlash against the company, Tarbell claims to have been surprised at its magnitude. “I never had an animus against their size and wealth, never objected to their corporate form. I was willing that they should combine and grow as big and wealthy as they could, but only by legitimate means. But they had never played fair, and that ruined their greatness for me.” (Tarbell's father had been driven out of the oil business during the South Improvement Company affair.)

Rockefeller responded by calling her “Miss Tarbarrel” in private but held back in public saying only, “not a word about that misguided woman.”^[56] Instead Rockefeller began a publicity campaign to put his company and himself in a better light. Though he had long maintained a policy of active silence with the press, he decided to make himself more accessible and responded with conciliatory comments such as, “capital and labor are both wild forces which require intelligent legislation to hold them in restriction.”^[57] He wrote and published his memoirs beginning in 1908.

Rockefeller as an industrial emperor, 1901 cartoon from Puck magazine

Critics found his writing to be sanitized and disingenuous and thought that statements such as “the underlying, essential element of success in business is to follow the established laws of high-class dealing” seemed to be at odds with his true business methods.^[57]

Rockefeller and his son continued to consolidate their oil interests as best as they could until New Jersey, in 1909, changed its incorporation laws to effectively allow a re-creation of the trust in the form of a single holding company. Rockefeller retained his nominal title as president until 1911 and he kept his stock. At last in 1911, the Supreme Court of the United States found Standard Oil Company of New Jersey in violation of the Sherman Antitrust Act. By then the trust still had a 70% market share of the refined oil market but only 14% of the U.S. crude oil supply.^[58] The court ruled that the trust originated in illegal monopoly practices and ordered it to be broken up into 34 new companies. These included, among many others, Continental Oil, which became Conoco, now part of ConocoPhillips; Standard of Indiana, which became Amoco, now part of BP; Standard of California, which became Chevron; Standard of New Jersey, which became Esso (and later, Exxon), now part of ExxonMobil; Standard of New York, which became Mobil, now part of ExxonMobil; and Standard of Ohio, which became Sohio, now part of BP. Pennzoil and Chevron have remained separate companies.^[59]

Rockefeller, who had rarely sold shares, held over 25% of Standard’s stock at the time of the breakup.^[60] He, as well as all stockholders, received proportionate shares in each of the 34 companies. In the aftermath, Rockefeller’s control over the oil industry was somewhat reduced but over the next ten years, the breakup also proved immensely profitable for him. The companies’ combined net worth rose fivefold and Rockefeller’s personal wealth jumped to $900,000,000.^[58]

Philanthropy[link]

From his very first paycheck, Rockefeller tithed ten percent of his earnings to his church.^[61] His church was later affiliated with the Northern Baptist Convention, which formed from American Baptists in the North with ties to their historic missions to establish schools and colleges for freedmen in the South after the American Civil War. As Rockefeller's wealth grew, so did his giving, primarily to educational and public health causes, but also for basic science and the arts. He was advised primarily by Frederick Taylor Gates^[62] after 1891,^[63] and, after 1897, also by his son.

Rockefeller believed in the Efficiency Movement, arguing that: "To help an inefficient, ill-located, unnecessary school is a waste...it is highly probable that enough money has been squandered on unwise educational projects to have built up a national system of higher education adequate to our needs, if the money had been properly directed to that end."^[64]

He and his advisers invented the conditional grant, which required the recipient to "root the institution in the affections of as many people as possible who, as contributors, become personally concerned, and thereafter may be counted on to give to the institution their watchful interest and cooperation."^[65]

In 1884, Rockefeller provided major funding for a college in Atlanta for African-American women, which became Spelman College (named for Rockefeller's in-laws who were ardent abolitionists before the Civil War).^[66] The oldest existing building on Spelman's campus, Rockefeller Hall, is named after him.^[67] Rockefeller also gave considerable donations to Denison University^[68] and other Baptist colleges.

Rockefeller gave $80 million to the University of Chicago^[69] under William Rainey Harper, turning a small Baptist college into a world-class institution by 1900.

His General Education Board, founded in 1903,^[70] was established to promote education at all levels everywhere in the country.^[71] In keeping with the historic missions of the Baptists, it was especially active in supporting black schools in the South.^[71] Rockefeller also provided financial support to such established eastern institutions as Yale, Harvard, Columbia, Brown, Bryn Mawr, Wellesley and Vassar. The study had been undertaken by the Carnegie Foundation for the Advancement of Teaching; it revolutionized the study of medicine in the United States.

Rockefeller and his son John D. Rockefeller, Jr. in 1915

Despite his personal preference for homeopathy, Rockefeller, on Gates's advice, became one of the first great benefactors of medical science. In 1901, he founded the Rockefeller Institute for Medical Research^[70] in New York City. It changed its name to Rockefeller University in 1965, after expanding its mission to include graduate education.^[72] It claims a connection to 23 Nobel laureates.^[73] He founded the Rockefeller Sanitary Commission in 1909,^[70] an organization that eventually eradicated the hookworm disease,^[74] which had long plagued rural areas of the American South. His General Education Board made a dramatic impact by funding the recommendations of the Flexner Report of 1910.

He created the Rockefeller Foundation in 1913^[75] to continue and expand the scope of the work of the Sanitary Commission,^[70] which was closed in 1915.^[76] He gave nearly $250 million to the foundation,^[66] which focused on public health, medical training, and the arts. It endowed Johns Hopkins School of Hygiene and Public Health,^[70] the first of its kind.^[77] It also built the Peking Union Medical College in China into a notable institution.^[68] The foundation helped in World War I war relief,^[78] and it employed William Lyon Mackenzie King of Canada to study industrial relations.^[79]

Rockefeller's fourth main philanthropy, the Laura Spelman Rockefeller Memorial Foundation, was created in 1918.^[80] Through this, he supported work in the social studies; this was later absorbed into the Rockefeller Foundation. In total Rockefeller donated about $550 million.

Rockefeller became well known in his later life for the practice of giving dimes to adults and nickels to children wherever he went. He even gave dimes as a playful gesture to wealthy men, such as tire mogul Harvey Firestone.^[81]

John D. Rockefeller's painting by John Singer Sargent in 1917

As a youth, Rockefeller reportedly said that his two great ambitions were to make $100,000 and to live 100 years.^[82]

Death[link]

Rockefeller died of arteriosclerosis on May 23, 1937, two months shy of his 98th birthday,^[83] at the Casements, his home in Ormond Beach, Florida. He was buried in Lake View Cemetery in Cleveland.

Legacy[link]

Rockefeller had a long and controversial career in the oil industry followed by a long career in philanthropy. His image is an amalgam of all of these experiences and the many ways he was viewed by his contemporaries. These contemporaries include his former competitors, many of whom were driven to ruin, but many others of whom sold out at a profit (or a profitable stake in Standard Oil, as Rockefeller often offered his shares as payment for a business), and quite a few of whom became very wealthy as managers as well as owners in Standard Oil. They also include politicians and writers, some of whom served Rockefeller's interests, and some of whom built their careers by fighting Rockefeller and the "robber barons".

Biographer Allan Nevins, answering Rockefeller's enemies, concluded:

Biographer Ron Chernow wrote of Rockefeller:

Notwithstanding these varied aspects of his public life, Rockefeller may ultimately be remembered simply for the raw size of his wealth. In 1902, an audit showed Rockefeller was worth about $200 million—compared to the total national GDP of $24 billion then.^[86] His wealth continued to grow significantly (in line with U.S. economic growth) after as the demand for gasoline soared, eventually reaching about $900 million on the eve of the First World War, including significant interests in banking, shipping, mining, railroads, and other industries. According to the New York Times obituary, "it was estimated after Mr. Rockefeller retired from business that he had accumulated close to $1,500,000,000 out of the earnings of the Standard Oil trust and out of his other investments. This was probably the greatest amount of wealth that any private citizen had ever been able to accumulate by his own efforts."^[87] By the time of his death in 1937, Rockefeller's remaining fortune, largely tied up in permanent family trusts, was estimated at $1.4 billion, while the total national GDP was $92 billion.^[88] According to some methods of wealth calculation, Rockefeller's net worth over the last decades of his life would easily place him as the wealthiest known person in recent history. As a percentage of the United States' GDP, no other American fortune — including those of Bill Gates or Sam Walton — would even come close.

The Rockefeller wealth, distributed as it was through a system of foundations and trusts, continued to fund family philanthropic, commercial, and, eventually, political aspirations throughout the 20th century. Grandson David Rockefeller was a leading New York banker, serving for over 20 years as CEO of Chase Manhattan (now part of JPMorgan Chase). Another grandson, Nelson A. Rockefeller, was Republican governor of New York and the 41st Vice President of the United States. A third grandson, Winthrop Rockefeller, served as Republican Governor of Arkansas. Great-grandson, John D. "Jay" Rockefeller IV is currently a Democratic Senator from West Virginia and a former governor of West Virginia, and another, Winthrop Paul Rockefeller, served ten years as Lieutenant Governor of Arkansas.

Poem about his life[link]

Rockefeller, at the age of 86, penned the following words to sum up his life:^[89]

See also[link]

References[link]

Bibliography[link]

• Bringhurst, Bruce. Antitrust
• Chernow, Ron. Titan: The Life of John D. Rockefeller, Sr. Warner Books. (1998). ISBN 0-679-75703-1 Online review.
• Collier, Peter, and David Horowitz. The Rockefellers: An American Dynasty. New York: Holt, Rinehart and Winston, 1976.
• Ernst, Joseph W., editor. "Dear Father"/"Dear Son:" Correspondence of John D. Rockefeller and John D. Rockefeller, Jr. New York: Fordham University Press, with the Rockefeller Archive Center, 1994.
• Folsom, Jr., Burton W. The Myth of the Robber Barons. New York: Young America, 2003.
• Fosdick, Raymond B. The Story of the Rockefeller Foundation. New York: Transaction Publishers, Reprint, 1989.
• Gates, Frederick Taylor. Chapters in My Life. New York: The Free Press, 1977.
• Giddens, Paul H. Standard Oil Company (Companies and men). New York: Ayer Co. Publishing, 1976.
• Goulder, Grace. John D. Rockefeller: The Cleveland Years. Western Reserve Historical Society, 1972.
• Harr, John Ensor, and Peter J. Johnson. The Rockefeller Century: Three Generations of America's Greatest Family. New York: Charles Scribner's Sons, 1988.
• Harr, John Ensor, and Peter J. Johnson. The Rockefeller Conscience: An American Family in Public and in Private. New York: Charles Scribner's Sons, 1992.
• Hawke, David Freeman. John D: The Founding Father of the Rockefellers. New York: Harper and Row, 1980.
• Hidy, Ralph W. and Muriel E. Hidy. History of Standard Oil Company (New Jersey : Pioneering in Big Business). New York: Ayer Co. Publishing, Reprint, 1987.
• Jonas, Gerald. The Circuit Riders: Rockefeller Money and the Rise of Modern Science. New York: W.W. Norton and Co., 1989.
• Josephson, Matthew. The Robber Barons. London: Harcourt, 1962.
• Kert, Bernice. Abby Aldrich Rockefeller: The Woman in the Family. New York: Random House, 1993.
• Klein, Henry H. Dynastic America and Those Who Own It. New York: Kessinger Publishing, [1921] Reprint, 2003.
• Knowlton, Evelyn H. and George S. Gibb. History of Standard Oil Company: Resurgent Years 1956.
• Latham, Earl ed. John D. Rockefeller: Robber Baron or Industrial Statesman? 1949.
• Manchester, William. A Rockefeller Family Portrait: From John D. to Nelson. New York: Little, Brown, 1958.
• Morris, Charles R. The Tycoons: How Andrew Carnegie, John D. Rockefeller, Jay Gould, and J. P. Morgan Invented the American Supereconomy . New York: Owl Books, Reprint, 2006.
• Nevins, Allan. John D. Rockefeller: The Heroic Age of American Enterprise. 2 vols. New York: Charles Scribner's Sons, 1940.
• Nevins, Allan. Study in Power: John D. Rockefeller, Industrialist and Philanthropist. 2 vols. New York: Charles Scribner's Sons, 1953.
• Pyle, Tom, as told to Beth Day. Pocantico: Fifty Years on the Rockefeller Domain. New York: Duell, Sloan and Pierce, 1964.
• Roberts, Ann Rockefeller. The Rockefeller Family Home: Kykuit. New York: Abbeville Publishing Group, 1998.
• Rockefeller, John D.; Random Reminiscences of Men and Events. New York: Sleepy Hollow Press and Rockefeller Archive Center, 1984 [1909].
• Rose, Kenneth W. and Stapleton, Darwin H. "Toward a "Universal Heritage": Education and the Development of Rockefeller Philanthropy, 1884; 1913 " Teachers College Record" 1992/93(3): 536–555. ISSN.
• Sampson, Anthony. The Seven Sisters: The Great Oil Companies and the World They Made. Hodder & Stoughton., 1975.
• Smith, Sharon. Rockefeller Family Fables Counterpunch May 8, 2008 http://www.counterpunch.org/sharon05082008.html
• Stasz, Clarice. The Rockefeller Women: Dynasty of Piety, Privacy, and Service. St. Martins Press, 1995.
• Tarbell, Ida M. The History of the Standard Oil Company 2 vols, Gloucester, Mass: Peter Smith, 1963. [1904].
• Williamson, Harold F. and Arnold R. Daum. The American Petroleum Industry: The Age of Illumination,, 1959; also vol 2, American Petroleum Industry: The Age of Energy, 1964.
• Yergin, Daniel. The Prize: The Epic Quest for Oil, Money, and Power. New York: Simon & Schuster, 1991.
• Public Diary of John D. Rockefeller, now found in the Cleveland Western Historical Society

External links[link]

Wikimedia Commons has media related to: John D. Rockefeller

Wikiquote has a collection of quotations related to: John D. Rockefeller

• Works by John D. Rockefeller at Project Gutenberg
• The Rockefeller Archive Center
• The History of the Standard Oil Company, by Ida Tarbell, full text, HTML
• John D. Rockefeller Biography
• Timeline of the Rockefeller family history since his birth
• A genealogy of his family
• Illustrated article about John D Rockefeller and the Standard Oil Company
• Financier's Fortune in Oil Amassed in Industrial Era of 'Rugged Individualism' NY Times Obituary, May 24, 1937
• A Capital Life A New York Times book review of "Titan" by Ron Chernow (1998).
• American Experience: The Rockefellers A full transcript of the PBS documentary on the family history, with contributions from Paul Krugman and author Ron Chernow.
• Edward Parsons (Jan 01, 2001). "John D. Rockefeller, Sr". American financier, oil magnate and philanthropist. Find a Grave. http://www.findagrave.com/cgi-bin/fg.cgi?page=gr&GRid=886. Retrieved Aug 18, 2011. 
• Booknotes interview with Ron Chernow on Titan: The Life of John D. Rockefeller, Sr., June 21, 1998.