What Ever Happened To Standard Oil?
Is Rockefeller’s monopoly still alive today?
Anyone with basic knowledge of American history will certainly recall the Standard Oil Company ands its wealthy founder John D. Rockefeller. You might also recall that it was deemed a monopoly by federal courts in the age of trust-busting and dissolved. But what happened after that?
A brief history of Standard Oil
Standard Oil was founded in 1870 by John D. Rockefeller and several other partners, including his brother William. But Rockefeller was the dominant member of the partnership, responsible for expanding the company’s oil production and making deals with railroad companies that made his products irresistibly cheaper than those of competitors.
By 1882, the company had grown so much that it was running into regulatory issues in the states where it operated, prompting Rockefeller to form the Standard Oil Trust. This organizational structure took advantages of loop holes that avoided legal restrictions, minimized taxes and used secretive stock trading to protect assets. Other companies began to emulate this profitable formula, leading to monopolies.
The age of trust-busting
Over the next decade as Rockefeller became the richest American in history, law-makers felt a wave of pressure from businesses all over the country. These honest, hard-working enterprises were suffering losses and closing up shop as powerful trusts were undercutting their ability to compete fairly in the market. Railroad companies, banks, insurance companies and the elephant in the room, Standard Oil, were targeted. Because the trusts had found ways around state laws, new federal legislation would be required in order to combat their dominance and restore free trade and competition to the market.
From this time period came the Sherman Antitrust Act of 1890. Authored by Senator John Sherman, the law granted federal authorities the power to investigate and prosecute trusts and other monopolistic enterprises that were interfering with free trade or discouraging competition via unscrupulous business practices. The state of Ohio attempted to sue Standard Oil two years later, but the company used more of its clever restructuring to move its operations to other states where the laws provided no grounds for legal action.
It took twenty-one years since the Sherman Antitrust Act was passed until Standard Oil was finally recognized as an illegal monopoly under its directive and forced to dissolve. The case, titled Standard Oil Co. of New Jersey v. United States, was tried in the Supreme Court in 1911, bringing an end to the most powerful and most profitable company in the world.
The legacy
In compliance with the Supreme Court decision, Standard Oil broke up into thirty-four separate companies spread out across the United States. Each company initially retained the “standard” name, operating as “Standard Oil of New York” or “Standard Oil of California,” but there soon followed a complicated web of rebranding, mergers and acquisitions that will sound familiar to the modern ear.
Standard Oil of Indiana was renamed to Amoco, and along with the Ohio-based Standard Oil Company was acquired by the multinational oil and gas giant BP. Atlantic Petroleum, headquartered in Philadelphia, PA, merged with ARCO and other smaller operations, later becoming part of BP, as well. Atlantic Petroleum’s assets were then sold to the Dallas-based company Sunoco. Standard Oil of California acquired Standard Oil of Kentucky and renamed itself to Chevron.
By far the most notable evolution is that of the new companies formed in New York and New Jersey. Standard Oil of New Jersey, sometimes using the trademark Esso, merged with other operations to become what should be a very familiar name in the modern oil landscape: Exxon. Similarly, Standard Oil of New York merged with other operations into a new major player in the modern oil market: Mobil. Then in 1999, these two companies merged to become ExxonMobil, now one of the world’s largest and most profitable companies.
Standard Oil in the twenty-first century
ExxonMobil is generally regarded as the modern successor of Rockefeller’s Standard Oil. While it is no longer a monopoly, the company finds itself in as much controversy as any large company might expect, especially as an energy company that primarily profits from refining fossil fuels. It has faced law suits for playing it fast and loose with climate science, misleading investors about its impact and using spurious advertising to persuade consumers.
So it seems that the legacy of power and greed lives on.
If you liked this article and want to become a Medium member, please consider showing your support by using my referral link to sign up. I’ll do my best to keep bringing you interesting ideas from history 😅.
You might also like my fiction work available on Amazon.
