On This Day

john d rockefeller, jd rockefeller
John D. Rockefeller Sr.

On This Day: Standard Oil Ordered to Dissolve

May 15, 2011 06:00 AM
by findingDulcinea Staff
On May 15, 1911, the U.S. Supreme Court ordered the dissolution of Standard Oil Company, ruling that it violated the Sherman Antitrust Act.

Court Orders Standard Oil to Dissolve

Standard Oil was created in 1870 by John D. Rockefeller and a collection of other businessmen. It was a successful company that soon began buying up its competitors.

In 1872, Standard Oil attempted to join the South Improvement Company, an alliance of oil refiners and railroads. It would have raised the price of rail shipping, but offered discounts to member refiners. When reports on the alliance leaked out, rival oilmen protested and the company disbanded.

In 1882, Rockefeller and his partners merged their separate companies under a corporate trust, the Standard Oil Trust. The massive trust allowed the companies to work in unison, dictating oil prices, pressuring railroads into giving discounts and controlling almost 90 percent of refined oil flows in the United States.

The rise of large, monopolistic companies such as Standard Oil spurred Congress to pass the Sherman Antitrust Act in 1890, which outlawed, “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce.” The act was not long or specific, and many early antitrust cases were unsuccessful in breaking up monopolistic companies

Standard was sued in 1892 under the Sherman Antitrust Act by the state of Ohio and was forced to disband the trust. The ruling only applied to Ohio, however, so the trust could be recreated as a holding company, the Standard Oil Company of New Jersey.
In the early 20th century, the media began to report critically on Standard Oil and other large companies. Ida Tarbell published a 19-part series in McClure’s magazine called the “History of Standard Oil,” which exposed Standard Oil’s ruthless tactics and helped turn public opinion against Rockefeller.

The government sued Standard in 1909 for violation of the Sherman Antitrust Act. Two years later, the Supreme Court ruled the SOCNJ “constituted a combination in restraint of trade and also an attempt to monopolize.” Standard was ordered to divide into 34 independent companies.

Though the court ruled against the trust, it interpreted the Antitrust Act narrowly and ruled that a monopoly is defined by an “unreasonable” restraint of trade. Wisconsin Sen. Robert La Follette, a prominent opponent of trusts, remarked, “If it is true that the court holds that the law applies only to unreasonable restraint of trade, it is a very dangerous decision. … it is precisely what the trusts want.”

Biography: John D. Rockefeller

Our profile of John D. Rockefeller provides a comprehensive picture of Rockefeller's life, chronicling his rise to becoming the world’s richest man. Rockefeller was a brilliant entrepreneur who revolutionized the oil business, making it more productive and efficient.

Standard Oil Today

Following the Supreme Court decision, Standard Oil broke up into 34 companies, scattered across the U.S. and abroad. Since then, many of these companies have split, merged, been renamed, or gone out of business.

Today, Standard Oil lives on in the form of ExxonMobil, Chevron, ConocoPhillips and others. The Web site U.S. Highways tracks the evolution of the Standard Oil brands from before 1911 to today.

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