How did the Standard Oil split up came to be? Did Rockefeller try to buy his way in Congress to prevent it from happening?

by Maffaxxx
Archiiii

I'll try to explain this one as briefly as I can, so bear with me, if you have any other questions I'll be happy to answer them.

At the turn of the 20th century new oil fields were developed in the Gulf Coast area of the United States, this allowed new competitors to come in but Standard was still the biggest corporation in America at that time. Nevertheless, Standard's ability to control the oil price and oil market in the United States was slowly drifting away as the Gulf Coast fields were becoming more profitable to their (very) small competitors.

In the wake of this development, the public perceived Standard Oil as a powerful, malicious, invasive but mysterious enterprise. To Standard's executives, this criticism was hard to understand, Rockefeller himself considered his company to be America's greatest and one that had helped build the nation and its people upwards. Standard itself was a product of America's swift industrial revolution that occurred over the course of the 19th century, and through trusts controlled the US' vertical and horizontal petroleum process. The company itself and all its subsidiaries was accountable to no one except a small number of executives. Standard's rapid growth, methods and direction made a lot of Americans anxious at the turn of the century, as a result, they looked to their government for help.

Ohio, Texas, Oklahoma, and Kansas were the first states to sue Standard Oil for its malicious practices, it took a considerable amount of time for Standard executives to understand what was happening, and how the public perceived them. The states achieved some victories but none of them were really successful in their attacks, for example, after Standard was banned from the state of Texas, its property and equipment was sold back to them through intermediaries. Legal battles continued, in 1892, a court decision in Ohio forced the company to be dissolved and its shares split between twenty different companies, but even still, control remained with the same owners.

The owners found a solution in New Jersey in 1899, where holding companies (companies who owned stock in other companies) were legal, thus, Standard Oil became Standard Oil of New Jersey. The Standard pyramid of holdings and subsidiaries continued its operations in the Garden State. At the same time Rockefeller's health was deteriorating more and more and by 1897 he stepped aside for one of his directors: John D. Archbold.

The election of 1904 brought Theodore Roosevelt to the White House. He earned himself the name of "Trust-Buster" as one of the key elements of his program was corporate power. Roosevelt was not an enemy of trusts and corporations in fact he even saw them as an inevitable form of economic progress. But to the new president, controlling them was key. At the centre of this approach were two combined tactics: public scrutiny and regulation through legislation. Public scrutiny was already in place (see above) but the White House made sure not to overdo it too much so as to not instigate or provoke a nationwide revolt against the system, for Roosevelt, the American system needed to be preserved. The distinction was made between "good trusts" and "bad trusts", Standard oil of New Jersey, as the biggest of them all, was put in the latter category. The newly elected president wasted no time after his election win to launch an investigation against Standard Oil of New Jersey. Archbold went to see the President in Washington in 1906 to ask him to not continue with legal actions against the company, claiming that Standard had been investigated numerous times in the past without any solid result. According to Archbold and his associates, the meeting went well, he even believed that the President was impressed with what he said.

Again, reality evaded them. In November 1906, the Roosevelt administration sued Standard Oil of New Jersey through the Federal District Court of St. Louis under the provisions of the Sherman Anti-Trust act of 1890 with conspiring to restrain trade. Roosevelt had revived the public scrutiny against Standard. Over the course of the following two years, 444 witnesses were brought to the stand and more than 14.000 pages were written spread out over 21 volumes. At the same time, other lawsuits were launched all over the country against Standard.

Eventually, the Federal court ruled in favour of the government and ordered the dissolution of the Standard Oil trust. Archbold appealed to the Supreme Court, and by May 1911 the final verdict was pronounced: Chief Justice Edward White introduced a new principle by declaring that judicial evaluation of restraint of trade under the Sherman Antitrust act would be based on reason. Socal would therefore only be penalised if its methods and practices were unreasonable and worked against the public interest, which it obviously did. Chief Justice White Declared:"No disinterested mind can survey the period [from 1870 onwards] in question without being irresistibly driven to the conclusion that the very genius for commercial development and organization which it would seem was manifested from the beginning soon begot an intent and purpose to exclude others which was frequently manifested by acts and dealings wholly inconsistent with the theory that they were made with the single conception of advancing the development of business power by usual methods, but which, on the contrary, necessarily involved the intent to drive others from the field, and to exclude them from their right to trade, and thus accomplish the mastery which was the end in view." Standard Oil was to be dissolved, the Federal Court decision was maintained and thus final.

In July 1911, the company was dissolved as follow: The largest element, Standard Oil of New Jersey, with the biggest value became a company of it own and would later become Exxon. Standard Oil of New York, with its 9% value eventually became Mobil. Standard Oil of California, who later discovered the Saudi oil fields, evolved into Chevron. The Ohio and Indiana branch evolved into Sohio and Amoco respectively, while Continental Oil became Conoco.

These entities became oil companies of their own with no overlapping or supervising entity or individuals. They all respected each other's markets in the United States, but it should be noted that some of them joined forces abroad, for example in Saudi Arabia in the 1940s.

If you have any other questions, I'd be happy to answer them below. I did not find any reference or information about Rockefeller buying his way into Congress.

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