Ellis Mckay. Gerry Wixted. 01-23-2017. The Standard Oil

While Standard Oil did come to basically control the price of oil in the United States, it never engaged in 'predatory', or deep and unnecessary price cutting to push out it's competitors. John McGee states this about how Standard Oil accomplished this by other means: “It is correct that Standard discriminated in price, but it did so to maximize profits given the elasticities of demand of markets in which it sold. It did not use price discrimination to change those elasticities. Anyone who has relied upon price discrimination to explain Standard's dominance would do well to start looking for something else. The place to start is merger” (McGee 168). Carnegie on the other hand preferred to buy out all competitors that were in the same area of production as he was, and consolidate. Through consolidating most steel mills in the Pittsburgh/Pennsylvania area, he was able to control that particular step of the production process in the steel business, therefore maximizing his profits like Rockefeller, but in a different way. Carnegie preferred stable prices and stable business, and Harold Hotelling manages to place Carnegie's view on why he consolidated his mills as such: “This is the fact that of all the purchasers of a commodity, some buy from one seller, some from another, in spite of moderate differences of price. If the purveyor of an

1. What did John D. Rockefeller believe was the key to stabilizing the oil industry? He believed that centralizing the administration, hard-working people that applied themselves and work together, and a monopoly – owning as much as they can – would stabilize the oil industry.

Oil policies went deep into the personalities and early experiences of Rockefeller and his colleagues. They had heightened uncertainty and speculation about their activities by their secrecy in building the alliance and by their evasive and legal testimony on the witness stand. There tended to be aroused antagonism because the very

The Sherman Antitrust Act broke apart Standard oil into several pieces in 1911, and one of these pieces, named Standard Oil Co. of California, would later become Chevron. It was a part of the “Seven Sisters”, which dominated the oil industry on a global level in the early 20th century. Standard oil of California could only use the name when it was in California, and so it adopted the name Chevron. In 1933, Saudi Arabia Granted the company a concession to find oil, which led to the discovery of oil in Saudi Arabia, and the world’s largest oil field.

John Davison Rockefeller was the founder of Standard Oil Company in 1870 and ran it until he retired in 1897. Standard Oil gained almost complete control over the oil refining market in the United States by underselling its competitors. Rockefeller and his associates owned dozens of corporations operating in just one state.

By establishing these set shipping rates with the railroad companies, it not only made it impossible for his competitors to stay in business, but it also allowed Rockefeller to establish a strong relationship with a key method of transportation for shipping products (Biography). By establishing a strong relationship with the railroad companies, Rockefeller was able to use his successful business practice to “control over 90 percent of the nation’s oil-refining industry by 1880” (The New Tycoons). As time continued on and his business became more successful, he also applied another clever business strategy known as vertical integration. This process consisted of a company purchasing and controlling each and every step of one’s industry production process. Rockefeller’s company used this process very efficiently as they “became known to manipulate crude oil prices to drive refineries to bankruptcy, allowing him to buy them cheaply” (Epstein). By controlling each production step, he was able to minimize costs by removing any companies from the middle that were previously completing steps on the way to the finish product. Rockefeller was also known to manipulate prices of crude oil in order to drive his competing refineries into bankruptcy which allowed him to buy them cheaply (Epstein). However, his economic beliefs and ideas were not the only strategies which John Rockefeller used to elevate his business and personal profile to a national level and

Edwin Drake an employee working for a Pennsylvania Rock Oil Company. Drake discovered oil near Titusville, Pennsylvania, which caused oil to become a popular industry. He has discovered the idea of drilling oil out of the ground. Oil wells and pumps developed quickly and became very advanced when Rockefeller started. Andrews, Clark & Company was established in 1863. It was made up of Rockefeller, Maurice Clark, Clark’s brothers and Chemist Samuel Andrews. Oil production was large in Pennsylvania and Rockefeller knew that with the new Atlantic & Great Western Railroad(A&GW) which snaked through parts of Pennsylvania and New York before connecting with the Erie Rail line. This meant that Rockefeller would have access by rail to the heart of the oil region. When Rockefeller started he knew Pennsylvania oil was so far the best quality and in demand so he focused on all the small details to make his system of oil refinement the most efficient. He did this by vertical integration. Rockefeller bought out all the companies he’d need to make his system work. For example he bought his own plumber, plumbing supplies, his own cooperage shop where he constructed his own barrels for the oil. He purchased his own wagons and horses for transporting the wood for the barrels. He also bought all the other businesses needed to make the

During the Gilded Age, the United States saw an increase in the power of big businesses, many of which monopolized their industries. This time period, although it appeared successful from the outside, was filled with governmental corruption. Manipulated by the robber barons of the Gilded Age, the United States government fell victim to their control. Contrary to this downfall, the nation celebrated much success in the numerous life-changing inventions attributed to this era. With the invention of the internal combustion engine, among others, there also came a major increase in the demand for oil. Entering the flourishing oil business in 1870, John D. Rockefeller created the Standard Oil Company, which later dominated the entire oil industry. Although he had years filled with success in the business, Rockefeller faced a disastrous court case that dissolved his company and years of his hard work. Despite this catastrophic event, Rockefeller found other ways to contribute his knowledge and hard-work by making innumerable philanthropic donations. After many years and countless efforts, John D. Rockefeller had one of the most outstanding and positive influences on the United States through his work in the oil industry and his philanthropic actions.

No wonder that only a handful of people can’t distinguish that this old man was a crock and deserves to rot in hell! With all this positive media attention, the public had been fed lies! In real life, this money hungry, greedy villain is the prime reason why the Sherman Antitrust Act was passed. Rockefeller’s dream was to monopolize the oiling industry, and he so successfully did. Because of his great empire (the Standard Oil Co.)

John D. Rockefeller also started at humble beginnings. By taking risks and investing he found himself engulfed in the rapidly expanding oil industry. Not yet in the business directly he started his own company, The Standard Oil Company of Cleveland. Rockefeller's stake in the oil industry increased as the industry itself expanded caused by the rapidly spreading use of kerosene. The Standard Oil eventually, in a few years, purchased and controlled almost all the refining firms in Cleveland, plus two refineries

Standard Oil’s sales continued to increase, and the company began to acquire smaller companies to continue their rapid growth. When Rockefeller would acquire smaller companies, he would completely shut down the ones he believed were inefficient and keep the ones that he thought he could bring up to his caliber of quality. Unfortunately for the workers from the companies that were shut down, they were put out of work. Rockefeller also began to warehouse oil products in order to have more control over the oil market by having the ability to possess large amounts of oil. Rockefeller had the ability to send in oil, or hold the oil in the warehouses which could cause a riff in the oil market. In order to acquire more business from customers Rockefeller struck a deal with Lake Shore Railroad, to give Standard Oil a 71% discount in return for a promise to ship at least 60 carloads of oil daily and to handle the loading and unloading. This move cut the throats of smaller refineries because they could not produce enough oil fast enough to be able to be offered discounts by railroad companies like Rockefeller did. These deals that Rockefeller had in place allowed

In Texas, there is an economic powerhouse that not only runs deep beneath fields of cotton, but also reaches miles beyond the green pastures of cattle. Its multitude of uses in daily life also far outweighs the benefits of technology. This resource, greater than any other in Texas, is oil. In 1866 the first commercial oil well was dug near Nacogdoches, Texas but unfortunately the well came up dry. Thirty years later in 1894 oil was discovered in Corsicana, Texas by accident while a water well was being dug. This was the first economically significant discovery of oil in Texas. On January 10, 1901, Texas was catapulted into the era of oil and gas with the discovery at Spindletop. The Spindletop well, located south of Beaumont produced roughly

With reference to the levels and spheres of corporate power discussed in the chapter, Rockefeller and the powers of Standard Oil had impacts to the society economically, technologically, politically, and culturally. When Rockefeller was young, he found an investment that would change him for the rest of his life. The Cleveland petroleum refinery in which he invested $4,000 in 1863, was still in its beginning stages. However, Rockefeller was devoted to the oil business, soon becoming one the most successful men in history. Economic power is the ability of the corporation to influence events, activities, and people by the virtue of control over resources, particularly property. The power of Standard Oil changed society by leading the economy to economic growth. The Standard Oil business had built facilities and employed workers. In turn, this had also increased the economy to a fuel related industry. As Rockefeller had expanded the business of his company, Standard Oil also improved and perfected their oil refined technology. In terms of a deeper level of the power, the Standard Oil business sparked the development in other industries, such as the automobile industry. The textbook states, “However, just as electric lightbulbs were replacing oil lamps, the

Rockefeller was obsessed with controlling the oil market and used many of undesirable tactics to flush his competitors out of the market. Rockefeller was also a master of the rebate game. He was one of the most dominant controllers of the railroads. He was so good at the rebate that at some times he skillfully commanded the railroad to pay rebates to his standard oil company on the traffic of other competitors. He was able to do this because his oil traffic was so high that he could make or break a section of a railroad a railroad company by simply not running his oil on their lines. Another one of Rockefellers earlier mentioned but not explained tactics was his horizontally integrated monopoly. Rockefeller used this horizontal monopoly to set prices and force his competitors to merge with him. (All with Doc. J) Document J shows that Rockefeller had his tentacles, or his influence and power around every piece of the oil industry. That, also, includes the politicians and their support.

Rockefeller negotiated rates from the railroads which transported his and other competitors oils. Due to this, it was hard for Rockefeller’s competitors to stay in business. Soon enough, in 1892, the Supreme Court of Ohio declared the company illegal and had the company end in 1899. The company was reorganized as a holding company, the Standard Oil Company of New Jersey. The United States Supreme Court declared that this company was an illegal monopoly and it was ordered to completely end in 1911.