This week in history: Creation of an oil behemoth

10 January 1870

The 40 years following the American Civil War are often seen as the era of the ‘robber barons’. These businessmen exploited new technologies (such as rail transport), evolving corporate structures and ruthless methods to build national business empires. The most controversial was John Rockefeller, founder of the Standard Oil Company.

From a single oil refinery in 1863, Rockefeller built his assets in partnership with other oil producers. The turning point came on 10 January 1870 when he incorporated Standard Oil. This allowed him to centralise his holdings, giving him the capital needed to expand faster by taking over rivals.

He used his scale to negotiate special rates with the railfirms who moved his oil, giving him a big price advantage. By 1904, Standard Oil controlled 90% of US oil production – but it also generated a huge backlash.

That same year, journalist Ida Tarbell published The History of the Standard Oil Company, accusing it of practices from industrial espionage to bribery. In 1909, the US government took action under the Sherman Antitrust Act.

In 1911, in a landmark judgement, the US Supreme Court decided that Standard’s size and tactics made it an unreasonable monopoly. It was split into 34 separate companies, some of which gave rise to ExxonMobil and Chevron.

But Rockefeller retained a stake in each, and by his death in 1937 was worth an estimated $1.4bn ($27.2bn in today’s money).

Merryn

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