Standard Oil Vs. The United States
Standard Oil Vs. The United States
Rockefeller was obsessed with the refinement of oil. He saw the tremendous potential of the industry and he decided to dominate it. Rockefeller left the drilling of oil alone, instead he focused on refineries and certain pipe lines that were used to move oil around. Rockefeller and several companions founded the Standard Oil Company.
Two years after its conception Standard Oil Co. had taken control of over all but 4 of the almost 40 refineries in the Cleveland, Ohio area. To ensure a monopoly in Ohio the company started obtaining preferential rates and rebates from the railroad industry that was vital to the oil refining business. Rockefeller sometimes used brut force to make sure his monopoly would stay continues unrestricted. Other oil companies were forced out by Standard Oil by the use of price-cutting, which gave them an unfair advantage. After Standard Oil’s success in Ohio, Rockefeller decided to expand into New York, Pennsylvania, and parts of New England. In these states the company accumulated even more refineries by the same unfair tactics. To insure their monopoly the company acquired pipelines from the drilling sites to competing oil companies.
This allowed them to control how much oil was refined in the oil processing centers that standard oil did not own. By 1880 Rockefeller himself controlled around 90 percent of the nations oil businesses. In 1889 he found a legal way to tie the businesses together. This was done by the invention of the “trust”. By turning over the administration to nine trusties, they were able to legally hold onto the business. In 1889, The State of Ohio ordered the dissolution of the trust as a violation of state laws. Rockefeller then tried to outsmart the state by transferring the companies stock to people not in the trust agreement.
However, the state of Ohio caught on to this and instituted contempt proceedings on the grounds that the trust had not been dissolved. Rockefeller countered by creating a giant holding company, Standard Oil of New Jersey. Standard Oil owned the majority of stock of the corporations involved in all phases of the oil industry including, purchasing, transporting, refining, shipping, pricing, and selling in all part of...