The Standard Oil Company (and the trust associated with it) was an economic game changer for America and tarnished the ideals of purist capitalism. It demonstrated a very clear flaw and was met with reform and punishment. This company developed by John D. Rockefeller, used many tactics and strategies to systematically eliminate the competition in the new emerging economy of oil. Following this capitalism on a national level was seen as a system of “haves” and “have nots”. Furthermore, it exposed the selfishness and greed of the upper class. This all caused America to completely reinvent it’s economic policy to avoid private corperations from controlling the country and it’s great people.
John D. Rockefeller began his work in the oil industry
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in 1863 with his partners Maurice B. Clark and Samuel Andrews. Rockefeller took $4,000 from his father and began the company's first refineries in Ohio. They began in the oil industry manufacturing oil to burn in lamps across America. But, with Henry Ford’s cars hitting the streets Rockefeller saw the future in oil to fuel these vehicles. Seeing this as an opportunity for growth Rockefeller bought out Clark in 1965, then Andrews in 1967. With sole ownership of his company he sought to expand his company. The genius of Rockefeller's initial business plan was not in masterful business tactics. Rather, in his innovation with the disposal of oil. He began using every scrap from the refined oil and turning it into other products that could then make him more money. Rockefeller’s refinery was on the up and up and began looking to expand. By 1870 Rockefeller managed to have an almost statewide monopoly on oil, controlling up 95% of the oil based products in the state. Soon following that Rockefeller decided to expand further, pushing up through New Jersey and into Pennsylvania. Once there the Standard Oil Company had began exploiting the laws in place (or lack thereof) to gain the upper hand on competitors. He began with attempting to buy out his competitors and had began threatening them if they did not comply. This was at first ignored because the refinery owners had assumed he would never come back. Following his ruthless attempts at trying to buy them Rockefeller drained them.
Rockefeller would buy up anything and everything needed to make and distribute oil. He would do things such as purchase all of the barrels in the area so that other companies couldn't pack their oil and dispense it. He would also go as far as to threaten the workers so that they wouldn't go to work. With the oil companies close to bankrupt Rockefeller would buy them at a fraction of the price as he would’ve before. These tactics were cruel and unfair to the smaller companies and their business owners because there was no way for the companies to respond. The companies either didn’t have the money to hold out or, it was simply impossible for them to sell any of their product. Shortly thereafter, John soon began to make backdoor deals with the South Improvement Company, a railroad company that offered him cheap rates in turn for all of Standard Oil’s shipping remain with the South Improvement Company. This company would ship his oil all across the country at a fraction of the cost that others would have to pay for it. Shipping was so expensive many companies couldn't keep up with Rockefeller’s mass amounts of oil shipped and soon they were left in the wake of Standard Oil. Rockefeller exploited mass production by allowing him to refine and distribute oil at a much cheaper cost than its …show more content…
competitors. Since Rockefeller held a majority of the markets oil at the time he was able to fix prices as he needed. In order to drive out competitors he would set lower prices in parts of the country where he still had fierce competition. Even if his prices were low enough that he would lose money, Rockefeller knew that his competitors would lose even more money. This meant that Standard Oil could wait out the other companies and eventually shut them down due to lack of business or, the companies would go bankrupt and cease to exist. By 1882, Standard Oil gained control of the national market and controlled 93% of refineries and pipelines in the US making it one of the largest companies in the US. The Standard Oil Trust was created by Rockefeller as a more efficient way to hold all for the companies that Standard Oil had absorbed. This new holding was very secretive and allowed for Rockefeller to continue manipulating the oil market without resistance from other corporations or the government. The trust was a way of having stockholders pay for a certificate and was used to take earnings from the company. This made it harder for the individual refineries to cheat the system. The could cheat the company by not reporting all of their revenue and keeping money that belonged to the trust. The new change maximized profits and turned to company into a well oiled machine. It was a highly efficient and secret way of controlling companies, keeping order, and reinvesting into the company. The efficacy was so immense that Rockefeller could invest more earnings into other parts of the company to minimize cost. For starters, he began doing almost his entire business in house. The company made its own barrels, drilled its own oil, and even had its own scientists constantly figure out ways to either maximize efficiency or to convert the waste into other useful goods. Tactics like these are widely used today by many corporations but at the time this was seen as very unethical. Manufacturing everything in house took away business from the people that formally supplied the company with these nessesites and put their owners out of the job. It was even frowned upon by many in the company who were losing even more money to Rockefeller. This created unrest in the company and often led to managers being fired. The trust flourished for years and made the company most of its fortune through greedy and illegal tactics. In 1890 congress signed into law the Sherman Antitrust act. This law was signed into law in order to keep large corporations in check. It outlawed many practices that; excluded trade between states, limited competition, or established monopolies on trade or commerce. This was to insure that large corporations did not gain too much power over the economy. Standard Oil however found many loopholes in this law. The law mainly covers singular corporations such as Carnegie Steel or, American Tobacco. The Standard Oil trust was exempt because it owned individually operated companies that were treated as their own entities when in the legal system. Despite all of this Ohio, the state where the Standard Oil Trust resided took Standard Oil to court and won. As a result the Standard Oil Trust was ordered to be dissolved and the holding was to no longer exist. The company complied and dissolved all of its assets from the state of Ohio and moved them into the Standard Oil New Jersey company. Now, instead of the Standard Oil Trust they used Standard Oil New Jersey as their new shell for all of its other companies. The recent ruling in the Ohio State Court over the Standard Oil Trust being a monopoly gained the interest of the national press.
This ruling was seen nationwide in everything from local newspapers, and even national papers. The United States Supreme court also took a great interest in this case. Rockefeller had violated state laws in Ohio but the laws had not yet been established in New Jersey. However, federal law as dictated in the Sherman Antitrust act said that limiting competition through price fixing was illegal. As previously stated Standard Oil’s prices had been fixed at different rates across the country but it had never been noticed until the government investigated the company. Although the Federal Government hadn’t found enough evidence to get a convictions, Ida Turnbal published the book “History of the Standard Oil Company” outlining their unfair business. She went into the barrel shortages and alluded to the deals Rockefeller had made with the railroad companies. The book delved into in many aspects of social morality including legally and under Christian morals. Her book became wildly popular throughout the country sparking public outrage from many. The new public opinion on the company forced politicians to act. Theodore Roosevelt had led a push to stop corporations like Standard Oil from monopolizing their markets. He also targeted many of Rockefeller’s subsidiary companies such as Standard Grain, but also after other mega-corporations like Carnegie Steel.
This quickly allowed for Government to investigate Rockefeller and they had found evidence of Rockefeller threatening small companies to close or else. These were enough to put Rockefeller and the Standard Oil Company up with being in violation of a slue of antitrust acts recently signed into law. Standard Oil was forced to split, and all owners were forced to sell out of the company.The court had ordered that the company be split into other smaller companies. This in turn created 33 companies and in present day 4 of them are fortune 500 companies; Exxon/ Mobil, Chevron, Amaco, and ARCO. Following the split, the Price of oil went up due to the new lack of organization and had almost caused a crash and could even be linked to the great depression due to the sudden stagnation of the total economy. At the time the public was appeased because their current problem had been solved. This ruling had made almost all major monopolized companies be forced to dissolve and took the country off the path of crony capitalism. This was to great benefit to the American public and changed the course of America to allow for small businesses to flourish. As a result America was set on an entirely different path and was setup to prosper throughout the 20th century and onward.
Rockefeller even wrote in a letter to a partner, "we must remember we are refining oil for the poor man and he must have it cheap and good" (83).
Fifth Edition Vol 2, New York: Longman, 1999. Hidey, Ralph W. and Muriel E. "History of Standard Oil Company (New Jersey), Vol. 1" Pioneering in Big Business" " Taking Sides Clashing Views on Controversial Issues in American History" eds.
Tarbell had always accused the leader of the Standard Oil Company, John D. Rockefeller, of putting her father and many other small oil companies out of business by the use of his ruthless tactics. ...
Rockefeller was a Robber Baron for the simple reason that he was greedy and selfish. He has treated his workers horribly and did use his money for others. He used aggressive tactics to get to where he was.
Carnegie bought his own iron and coal mines (which were necessities in producing steel) because purchasing these materials from independent companies cost too much and was insufficient for Carnegie’s empire. This hurt his competitors because they still had to pay for raw materials at much higher prices. Unlike Carnegie, John D. Rockefeller integrated his oil business from top to bottom. Rockefeller’s system was considered a ‘horizontal’ integration. This meant that he followed one product through all phases of the production process, i.e. Rockefeller had control over the oil from the moment it was drilled to the moment it was sold to the consumer.
Industrial development of the late 18th century (around 1865-1900) is often characterized by it’s affluent, aggressive and monopolistic industrial leaders of the likes of men such as Andrew Carnegie, William H. Vanderbilt, and John D. Rockefeller. Due to their ruthless strategies, utilization of trusts, and exploitation of cheap labor in order to garner nearly unbreakable monopolies and massive sums of wealth, these men are often labelled as “robber barons”. At the same time, they are also often referred to as “industrial statements” for their organization, and catalyst of, industrial development; not to forget their generous contributions to the betterment of American society. Therefore, whether or not their aforementioned advances in industry were undertaken for their own personal benefits, one cannot ignore their positive effects on America. Thus, one can conclude that not only were the captains of industry both “robber barons” and “industrial statements”, but that that these two labels, in fact, go hand-in-hand.
Rockefeller was the founder of the Standard Oil Company who utilized horizontal integration to dominate the oil industry; Rockefeller was another capitalist considered to be a “robber baron” of industrial America between the time period of 1865 and 1909 who acquired a great amount of wealth. This money was acquired with the usage of cutthroat tactics that disadvantaged his competitors immensely; Rockefeller did anything to increase his own wealth. He ran competitors out of business, lowered his prices drastically in places where competition was rough, and even threatened companies into bankruptcy, such as Ida Tarbell’s father’s business. Rockefeller believed that industrial combinations were a necessity and firmly believed in them being of benefit to the public (Doc. 6). James B. Weaver, a Populist presidential candidate, however, {disproves} this alleged belief that trusts were for the benefit of the public {theory} in his book A Call to Action by stating that trusts are the product of “threats, intimidation, bribery, fraud, wreck, and pillage” (Doc. 3). He further discredits trusts by providing an example of how the Oat Meal Trust in 1887 proved to be extremely unfortunate for and to the disadvantage of the laborers at the mills who lost their jobs (Doc. 3). This shows that the trusts that Rockefeller thrived on and made Rockefeller wealthier, though advantageous for consumers and Rockefeller himself, could often be to the disadvantage of the laborers. Rockefeller
...nd eventually morph it into what it has become modernly. The industry is transformed over time into a cut-throat game of international relations. The United States specifically becomes overwhelmed with the amount of public relations that are involved. In many cases, the country has much more pull in the affairs than that of the United States’ interests. As a result, President Eisenhower imposes mandatory quotas which protect domestic oil and stabilize the price of U.S. oil.
John D. Rockefeller and other members of his family produced the fuel that powered America and Europe. In fact, 85% of the world's kerosene supply was produced in a company of Rockefeller's in Pennsylvania. J.P. Morgan, a giant in finance was equally successful by capitalizing small businesses and taking private corporations public. His genius for investing and financing was known world-wide. Because of Morgan and investors like him the American economy grew at a rate that the world had not seen before. His "Gentlemen's Agreement" brought stability to a railroad industry that was unstable because of it's incredible growth. The agreement regulated rates, settled disputes and imposed fines for companies that did not abide by the terms of their contracts. J.P. Morgan helped create a centralized banking system and paved the way for what was to become The Federal Reserve. Henry Ford a corporate giant in transportation built the Ford Motor Company and
...mpanies, it eventually came to the point where they couldn’t keep up and eventually became a part of Standard Oil. By the time Rockefeller had reached the age of 40, his company had controlled all national oil refining by 90% and about 70% of international export of said oil.
Near the end of the nineteenth century, business began to centralize, leading to the rise of monopolies and trusts. Falling prices, along with the need for better efficiency in industry, led to the rise of companies, the Carnegie Steel and Standard Oil company being a significant one. The rise of these monopolies and trusts concerned many farmers, for they felt that the disappearance of competition would lead to abnormaly unreasonable price raises that would hurt consumers and ultimately themselves. James B. Weaver, the Populist party's presidential candidate in the 1892 election, summed up the feelings of the many American Farmers of the period in his work, A Call to Action: An Interpretation of the Great Uprising [Document F]. His interpretations of the feelings of farmers during that time were head on, but the truth is that the facts refute many of Weaver's charges against the monopolies. While it is true that many used questionable methods to achieve their monopoly, there were also other businessmen out there that were not aiming to crush out the competition. In fact, John D. Rockefeller, head of Standard Oil and a very influential and powerful man of that time, competed ardently to not crush out his competitors but to persuade then to join Standard Oil and share the business so all could profit.
Rockefeller was America’s first billionaire, and he was the true epitome of capitalism. Rockefeller was your typical rags-to-riches businessman, and at the turn of the twentieth century, while everyone else in the working class was earning ten dollars max every week, Rockefeller was earning millions. There has been much discussion as to whether Rockefeller’s success was due to being a “robber baron”, or as a “captain of industry”. By definition, a robber baron was an industrialist who exploited others in order to achieve personal wealth, however, Rockefeller’s effect on the economy and the lives of American citizens has been one of much impact, and deserves recognition. He introduced un-seen techniques that greatly modified the oil industry. During the mid-nineteenth century, there was a high demand for kerosene. In the refining process from transforming crude oil to kerosene, many wastes were produced. While others deemed the waste useless, Rockefeller turned it into income by selling them. He turned those wastes into objects that would be useful elsewhere, and in return, he amassed a large amount of wealth. He sold so much “waste” that railroad companies were desperate to be a part of his company. However, Rockefeller demanded rebates, or discounted rates, from the railroad companies, when they asked to be involved with his business. By doing so, Rockefeller was able to lower the price of oil to his customers, and pay low wages to his workers. Using these methods,
When the topic of American economics arises, the infamous Robber Barons of the 19th Century often springs to mind. They are often glorified as "Captains of Industry" for their money making strategies and enterprising methods. Those who hold this view probably do not know the evils of the laissez-faire capitalism in which the Robber Barons believed and participated. They wanted an unrestricted system of economics so that they could amass as much money as they could to out do each other and control the power in society. They were not as glorious and generous as some people make them out to have been.
Roberts, Michael D. "Rockefeller and His Oil Empire." Northeast Ohio's Business Enthusiasts. Town Hall of Cleveland, July 2012. Web. 1 Feb. 2014. .
middle of paper ... ... On Rockefeller’s march to the top of the oil industry, he stomped upon the lives of many hard working American’s. The smaller oil operations had no chance of competing with Standard Oil due to all the tactics they employed to keep their prices low. This ravished small town families and had a similar effect as to what Wal-Mart does to family run shops nowadays.