At its peak, Standard Oil of New Jersey was the single most powerful company in the world, producing over 90% of the refined oil sold in the United States. And because Standard Oil was involved at every step, from discovery and extraction to refining and distribution, it could control the flow of money with absolute discretion, often adjusting its prices and payments to drive out the few competitors who remained standing against them. According to Eliot Jones, who wrote about Standard Oil in 1922, "In 1904 there were some seventy-five independent refiners all told. The total output of these companies was less than that of either the Bayonne or the Philadelphia works of the Standard Oil Company."[1] In other words, one arm of Standard Oil could produce just as much oil as every single non-Standard refinery combined--a clear indication that something was wrong.
Standard Oil's unprecedented success also meant unprecedented wealth for those who invested great sums of money in the company, and no one benefitted more from Standard Oil's monopolistic existence than its co-founder, chairman, and major shareholder, John D. Rockefeller.* Essentially retired from the company by 1897, Rockefeller remained the company's de facto CEO and its most public face, not to mention the richest man in the world at the time. (Adjusted for inflation, Rockefeller's wealth would today make him the richest man in history, valued somewhere between $300 and $650 billion, which is--conservatively--five times as rich as Bill Gates ever was. Rockefeller was also the world's first billionaire.) Rockefeller carried so much weight and was feared by so many that, investigation after investigation, he was able to avoid answering questions because of supposed lapses in his memory. These lapses were obvious fabrications, yet no elected official ever rose to challenge him.
Standard Oil dominated the oil business for decades, brushing aside legal and political challenges to its dynasty through bribes, bullying, and a thick network of connections. In 1904, however, an obscure investigative journalist named Ida Tarbell began researching the company and, in the process of courting interviews and gathering original documents, compiled a history that was thorough and damning; serialized over the course of two years, her findings were eventually published as a two-volume, 900-page book that today ranks as one of the most important works of nonfiction in American history. Seven years later, in 1911, the United States Supreme Court handed down a ruling against Standard Oil that proclaimed the company a monopoly and ordered it broken up. The ruling, based on the Sherman Act of 1890, ended the company's thirty-year reign, though it did so with an irony that is both biting and paradoxical in retrospect.
When Standard Oil eventually disassembled itself into 34 separate companies, an act that would supposedly encourage competition between not only those entities but also independent refineries that were otherwise too small by comparison, its major shareholder experienced a rapid expansion of his wealth, and all because he lost in court. The percentage of Standard Oil shares that Rockefeller owned suddenly became the percentage of shares he owned in every single one of the 34 new companies, propelling him into a stratosphere of wealth that was not only unprecedented but also unthinkable at the time. (As Steve Weinberg notes, Rockefeller's wealth "tripled, then quadrupled.") And while the one mammoth company was now a few dozen smaller ones, they remained outside of one another's zones to avoid competition--a sort of monopolized Frankenstein--for years.
In his opinion for the Supreme Court case, Justice John Harlan wrote that the American people would suffer if companies such as Standard Oil were allowed to continue unchallenged and unregulated, describing it as "the slavery that would result from aggregations of capital in the hands of a few individuals and corporations controlling, for their own profit and advantage exclusively, the entire business of the country, including the production and sale of the necessities of life." [2] Harlan's notion of enslavement wrought through business and industry could almost have been written today, and by someone warning the nation of the exact same possibilities--too much wealth in the hands of too few at the expense of too many. It is an argument that has fixed itself into our political discourse since the Great Recession of a few years ago, when phrases like "wealth gap," "income inequality," "the one percent," "redistribution of wealth," and "job creator" became grenades launched across the battlefield by both sides in a performance that had been staged more than a century earlier.
It's also ironic to note Harlan's use of the term "slavery" to describe the impact of consolidated wealth and monopolized industry on the rest of the country, since Harlan had come to be both respected and reviled for his standalone dissents in civil rights cases, when he would fight for the rights of African-Americans and escaped slaves while every single other justice wrote of non-white races with hatred, prejudice, and disgust. And while Harlan himself possessed racist tendencies and ideas not unlike those of his colleagues, his legacy as one of the most outspoken proponents of racial tolerance suggests that his choice of "slavery" in this context was far from coincidental. In his mind, the trust issue and the issue of slavery were one in the same: one person beholden to another. In this case, millions of Americans--people of every race, age, and gender--were forced to purchase a necessity without choice, and in doing so they lined the pockets of men who controlled the prices through unethical business practices.
Last year, more than a century after Harlan's opinion, "slavery" was employed yet again by a public figure in talking about money. This time, former vice-presidential nominee Sarah Palin used the word in describing the United States' future indebtedness to countries like China, saying, "Our free stuff today is being paid for today by taking money from our children and borrowing from China. When that money comes due and, this isn’t racist, so try it, try it anyway, this isn’t racist, but it’s going to be like slavery when that note is due. Right? We are going to be beholden to a foreign master." When she was later asked to clarify her remarks, Palin said, "There is another definition of slavery and that is being beholden to some kind of master that is not of your choosing. And, yes, the national debt will be like slavery when the note comes due." [3]
In Palin's words we see hints of the very mindset Harlan was so passionately writing against. Two completely dichotomous individuals and careers, to be sure, but it is in this dialogue--divided over 100 years--that we see the opposing ideals that now dominate our national discussion on the topic of business and government, one that is rooted deeply in the story of Standard Oil and has been growing ever since. On one side we have those who believe that the American people must not be controlled by companies and industries--businesses--that operate without ethics, undermine their competition, remove the freedom of choice from consumers, fix prices, and amass unparalleled profits. On the other side are those who believe we must not suffer under a government that spends money it either doesn't have or garners unethically while simultaneously targeting businesses and business-owners who are achieving record success in a free-market system. Or, to reduce these argument to even greater platitudes, it is corporations versus government. One is seen as a force for good against the evils of the other. Unfortunately, discussions like this will never disappear from national discourse because the causes of such turbulent economics will never disappear: greed, vampiric competition, and a desire for ever-increasing profits. It's part of capitalism to want increased business, that is true, but this truth exposes a flaw in that same system--namely, that it depends on people to keep it fair for as many as possible, and far too often those in control of the system are more interested in themselves than the "many" out there.
In the decades since Rockefeller, much has changed about the American economy. Where Rockefeller was the first billionaire, there are now almost 500 such people in the United States. Where Standard Oil once raked in record profits, we see monthly reports celebrating when another company--Apple, ExxonMobil, Amazon.com--have surpassed that same benchmark. Even the story of Standard Oil's downfall has been distorted; the subtitle of Weinberg's book, "How Ida Tarbell Brought Down John D. Rockefeller and Standard Oil," is a misleading suggestion that Rockefeller and his company suffered because of Tarbell's expose, even though the records show otherwise, and all that Tarbell accomplished in the end was exposing corruption and leading to a company's charade dissolution, which are respectable accomplishments but far from the ones professed in textbooks and historical nonfiction. Similarly, competition is much more readily available than it was in Rockefeller's time, though we see the occasional suggestions that this reality may not exist for much longer. In the current fight over net neutrality, we see large media corporations attempting to change the rules to give themselves greater control over the internet, which will make it harder for small, independent companies to compete; at the same time, those very same media giants have staked out areas in the country where they can dominate the market without coming into direct contact with other giants. It's similar to Standard Oil both before and after their court-ordered dissolution, only now there is no Ida Tarbell to render their transgressions in print. Even worse, there is a public that seems disinterested in knowing the truth of the situation and unaware of how much a monopoly can damage their livelihoods--a lesson that was learned over a century ago before being quickly--and tragically--forgotten.
*As Steve Weinberg points out, Rockefeller encouraged all of his employees to reinvest in the company by buying stocks, though in no way did their profits match Rockefeller's.
1. Jones, Eliot. The Trust Problem in the United States. Macmillan & Co.: New York, 1922. 59. eBook (Questia).
2. Weinberg, Steve. Taking on the Trust: How Ida Tarbell Brought Down John D. Rockefeller and Standard Oil. W.W. Norton & Co.: New York, 2008. 255. Print.
3. Capehart, Jonathan. "Sarah Palin invokes slavery, inappropriately of course." washingtonpost.com. N.p. 15 November 2013. Web. 26 June 2014.
