Comparison Of Standard Oil And The Sherman Antitrust Act

As America’s first billionaire, few individuals in history can compare with John D. Rockefeller Sr. His wealth around the turn of the 20th century would be worth roughly twenty-two billion dollars in modern United States dollars. It is undeniable that Rockefeller changed the landscape of the American petroleum industry by defining the nature of oil production. By 1883, Rockefeller was laying the foundations for what we now know as the vertically integrated company and the modern multinational. The fruit of Rockefeller’s labor, the Standard Oil companies, controlled ninety five percent of petroleum refining and transport by 1880. It would not come as a surprise, given Rockefeller’s opulence, to find Standard Oil and its business practices

It states: every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. The passage of the Sherman Act was motivated by widespread hostility toward monopoly – considered detrimental to the interests of consumers and small business and also antithetical to democratic institutions.

It is not a question of whether Standard Oil violated the Sherman Antitrust Act. Standard Oil was clearly in a trust combination and based on its questionable business practices, retraining trade and commerce throughout its oil hegemony. The penalties, up to a ten million dollar fine and up to three years imprisonment for involved individuals, would have crippled Standard Oil’s capital and leadership. Yet despite clearly violating the Sherman Antitrust Act, it was not until 1911 that the Standard Oil Trust was finally

John D. Archbold, one of seven trustees, reacted to the discovery of oil in Oklahoma by saying, “Are you crazy, Man? Why, I’ll drink every gallon of oil produced west of the Mississippi!” Obviously, the board of trustees did not prioritize expansion of Standard Oil’s infrastructure into the west. Two factors contributed to this lack of enthusiasm regarding western oil. One of these factors was the logistical nightmare of redeveloping the infrastructure needed to transport oil to the refinery. As early as 1881, Standard oil operated approximately 3,000 miles of pipelines, eventually owning ninety percent of the nation’s pipelines. Although transcontinental railroads were an available alternative, pipelines were cheaper, reduced handling and storage fees, and were more efficient. The fact that modern oil companies invest hundreds of millions of dollars into speculating for sustainable natural oil deposits implies that such deposits are rare and hard to identify with a passing glance. If the spurts of oil proved to be isolated incidents, the capital invested in building pipelines and reestablishing a monopoly would have been squandered. Expansion of Standard Oil’s influence into the western half of America proved to be a huge economic risk, a risk that the board of