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Standard oil monopoly
History of the standard oil company essay
Standard oil monopoly
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An important mark in history is a point when there is a change of great significance. Big business grew to sizes wielding incredible power during the late 19th century. The power of these businesses would be expressed in the form of monopolies that would allow them to dominate their specific area of the market, if not multiple areas of the market. John D. Rockefeller’s Standard Oil was a prime example of a large monopoly over oil and everything that was needed to produce it and distribute it. His control over oil would eventually lead to the need of enacting laws of regulation by the government. Standard Oil would initially draw the attention of the State of Ohio and eventually the Supreme Court. The dissolution of the companies that made up the monopoly of Standard Oil would come with the passage of the Sherman Anti-Trust Act of 1890 (The Editors of Encyclopædia Britannica). The very origin of Standard Oil began with John D. Rockefeller himself. Rockefeller was born in Richford, New York in 1839 and he moved with his family to Cleveland, Ohio in 1853. By 1859, he established a business which dealt with hay, grain, meats, and other merchandise. He first saw a future in oil production in Pennsylvania in the early 1860s. He immediately established his own oil refinery in 1863 and became the largest refinery around the Cleveland area within two years (“John D. Rockefeller”). In 1870, Rockefeller, along with Samuel Andrews and Henry M. Flager incorporated the Standard Oil Company (The Editors of Encyclopædia Britannica). Rockefeller’s Standard Oil began prospering and soon began buying out competitors. In 1872, the company had almost complete control over all the refineries in Cleveland. With such power, the company could negotiate... ... middle of paper ... ...The U.S government took action against the company again in 1906 under the Sherman Anti-Trust Act. (The Editors of Encyclopædia Britannica) On May 15 of 1911, the final decision from the Supreme Court came which called for the dissolvent of Standard Oil within 6 months. In the specifics, “the court determines against the Standard Oil Company on the ground that it is a combination in unreasonable restraint of inter-State commerce” (New York Times Company). The dissolution of Standard Oil marked an important turning point in history for its adding of regulation against monopolies. The Sherman Anti-Trust Act, which brought an end to this excessive restraint by the company, allowed the Federal government to hold cases against trusts such as the one Standard Oil had. This turning point was the beginning of regulation against restraint or monopolies by other businesses.
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. ...
Imperial Oil ltd. Limited (Esso) is a Canadian public corporation that produces crude oil and natural gas. Currently the headquarters are based out of Calgary, Alberta employing over 5000 people, with Exxon Mobil owning 69.6 percent of the company. Imperial Oil ltd. was previously located in Toronto and has recently moved all main facilities over to the Calgary, Alberta headquarters.1 Esso was incorporated in London, ON in 1880 and became a land mark in the development of crude oil and natural gases.1 Its retail business consists of service stations and "On the Run Express and Tiger Express-brand" convenience stores. Esso also owns a 25% portion of Syncrude, which are the world’s largest oil sands.1
However, the reason Rockefeller controlled 90% is because of a company that basically appeared from nowhere and had some actual competition for Standard Oil and actually surprised Rockefeller. The company was known as the Tidewater Pipe-line Company, it started by building a pipeline from north Pennsylvania to Williamsport. Rockefeller tried to acquire the company but in the end it ended up as Standard only competition with Tidewater controlling 10% of the oil refining market. This was however of not a large concern to Standard as they were developing products besides oil from Vaseline to candy.
James B. Weaver was a populist party candidate in 1892, in his speech ‘The Call to Action’ he referenced the Oatmeal trust of 1887. This trust decided to close part of its mills that “stood idle” and raise the price of oatmeal by a dollar. This business integration took jobs of former employees and raised prices unfairly, cutting corners by producing only seven million barrels of wheat. This tactic isn’t fair to consumers or workers, and it’s unfair. Ida Tarbell, an investigative journalist focused her attention on John D. Rockefeller's company ‘Standard Oil’ and composed the ‘History of Standard Oil Company’. According to Tarbell Standard Oil created a ”remarkable scheme” which competitors couldn’t fight for very long. Standard Oil demanded cheaper rates on their moved oil or ‘rebates’ from railroad companies. This unfair tactic allowed Standard Oil to lower their prices dramatically which would eventually decrease competition. What Tarbell alluded to in her piece was that when a monopoly is achieved over the industry, Standard Oil would be able to raise prices without refutation. William Vanderbilt, the son of the 19th century industrialist Cornelius Vanderbilt conducted an interview on the railroads constructed during his father's’ era. According to Vanderbilt, the businesses that
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,
Rockefeller was just at the start of his infamous oil monopoly. At the age of 23 Rockefeller teamed up with an inventor named Samuel Adams to find a cheap way to purify crude oil (McGill). Together the two of them produced kerosene, a cheaper fuel used to light lanterns, homes, and businesses. This man meant business, and it was only the beginning. In 1870 Rockefeller organized the Standard Oil Company, and in only eight years he obtained ownership of 90 percent of the nation’s oil refineries. In 1882 the Standard Oil Trust was created. “The first of its kind in the United States, the trust was devised so shareholders of various companies would hand over their shares to a board of trustees, receiving certificates of trust in place of the shares. Many powerful companies in the United States followed Rockefeller's example and established trusts” (McGill). However, in 1890 congress passed the Shermin Anti-Trust Act and the Standard Oil Trust was abolished. Oddly enough, it was in his days of retirement that Rockefeller became a billionaire; this was due to the increased need of oil in motor vehicles and the dividends from his many small
Numerous families living in small town America lost their income because of Standard Oil and forced hardship upon many. The legacy of John D. Rockefeller shall always live on as he has permanently shaped how this country looks. He has funded huge advancements in the fields of education and medicine along with starting the events to end lassiez-faire economics. The petroleum industry changed greatly during his career thanks to his research and completely new business methods were thought up of by him, some still in practice today.
The booming of industries many farmers found themselves struggling to keep up with the businesses that increased the demands of goods and services. Two of the most influential people of the Gilded Age was a man named, John D. Rockefeller and Andrew Carnegie, symbolisms for corporate power. They revolutionized business Many Americans witnessed the American Dream coming true for John D. Rockefeller was the founder of the Standard Oil Company and the Standard Oil Trust having organized Standard Oil in Cleveland in 1870 before moving his headquarters to New York. Rockefeller’s Oil companies controlled about 90% of the oil business in America and also controlled the oil cars on the Pennsylvania Railroad. During this time, where he was growing and
Rockefeller had partnered up with a colleague to establish a shipping company that made significant profits during the Civil War. These profits were used to start up Standard Oil, which was in the oil refinery business. Rockefeller and Standard Oil had different types of business power such as economic power, legal power, political power and power over individuals. During this time, the government did not have policies to ensure fair business practices and Standard Oil took advantage of that. Standard Oil possessed business power that it used to compel railroads to offer discounted shipping rates. The company used its economic power to change society in terms of competition. Standard Oil 's competitors could not compete on an equal platform.
After looking for a way to sell kerosene in San Francisco in 1875, the inception of ConocoPhillips commenced as Continental Oil and Transportation Co. by founder, Isaac E. Blake. For the following ten years, Standard Oil acquired Conoco, until the U.S. Supreme Court overturned that acquisition. By this time, Conoco’s competitive advantage shifted from kerosene to gasoline refineries, as automobiles began to gain popularity.
He not only wanted to horizontally consolidate, but also vertically consolidate. This is the act of controlling oil from start to finish and being able to completely control it. In just 9 years, Rockefeller controlled 90% of the oil industry. Because of his control, he could run other companies out of business by driving prices in an area so low that the competitors couldn’t compete with him and would need to sell out, which allowed him to keep this status. However, when Thomas Edison invented the light bulb, there was fear in the oil industry. But, when Henry Ford made the first automobile powered on gasoline, which was considered a useless by-product of the refining of kerosene, oil was now needed again.
The oil companies had to get the oil that was found in the south and then refine this oil to make it ready to power the automobiles.(Automobile 814) Due to this high demand of oil for the use in automobiles, the oil companies, such as Standard Oil, could impose a high price on oil. (Jones, 112) This high price caused the oil companies to obtain a large profit, which i...
Many early discoveries of oil have been noted in our history. Early settlers of the 16th