The picture of a saintly gentleman seated in harmless pose to your right, by the painter John Singer Sargent, represents a brilliant example of the portraitist’s art: the subject is John D. Rockefeller, Sr., more usually depicted as a grasping oligarch, who on this day in 1870 incorporated the Standard Oil Company under the laws of Ohio with a declared capital stock of one million dollars.
Standard Oil remains a standard tale of how to build a vertical monopoly: begin at the processing stage; move forward through transportation to retail, then backward to securing raw materials. Also, a bit more excitingly, it includes the story of how to defend and expand such an empire, from the elegant use of venue shopping to seek the most favorable state in which to incorporate (the Trust was established in New Jersey), to the sinuous and (according to the New York Times) “continuous and habitual violation of the law through the acceptance of secret rebates from railroads,” to the blunt and allegedly routine use of thugs and saboteurs.
Ida Tarbell’s History of the Standard Oil Company pits the Standard Oil firm against the early oil pioneers, her heroes: “There was nothing too good for them, nothing they did not hope and dare. But suddenly … a big hand reached out from nobody knew where, to steal their conquest and throttle their future.”
But as Charles and Mary Beard pointed out in their brilliant Rise of American Civilization, the oil pioneers were pretty grasping, too — just not as daring or efficient as Rockefeller. “One of their own number, after battling for years in their behalf, spoke of them as a ‘cowardly, disorganized mob.'” So the Beards posed the counterfactual (see, you thought it was just Niall Ferguson): “Would the public, the politicians, and the consumers have been more fortunate in the hands of a grand consolidated producers’ union composed of Miss Tarbell’s heroes than under the imperial sway of the Standard Oil Trust?”
Standard Oil’s size and ruthlessness brought about, through Theodore Roosevelt, a corresponding growth in government. Roosevelt’s proposed Bureau of Corporations, mild though it may seem to us today, aroused Rockefeller’s ire and elicited telegrams to a number of Senators, signed “John D. Rockefeller,” saying “We are opposed to any anti-trust legislation,” and adding, with no little ominousness, “Our counsel … will see you. It must be stopped.” It was too blunt an instrument, even for those days. “No such formidable weapon ever has been put in the hands of one man … as was put in my hands by the sender of that telegram,” declared one Senator. “If necessary, I will rise in my place in the Senate and read it.”
Technically, the telegrams came from the twenty-nine-year old “idealist” John D. Rockefeller, Jr., and not from his titanic father, which Roosevelt did not emphasize as perhaps he should. And he got his law.
But Standard Oil survived that, and even also, the Beards wrote, “a decree from the Supreme Court of the United States [in 1911] ordering its dissolution into constituent elements. Still the New Jersey corporation did not perish; it declared a sixty per cent divided in 1913 and a 400 per cent stock dividend in 1922. By that time much water had run under the bridge.”