1870s STANDARD OIL

After the Civil War, as railroads made the United States into a single vast market, farsighted capitalists looked to unprecedented economies of scale, to standardized products that they could sell to infinities of customers. John D. Rockefeller saw farther than any of them. He made oil his business, and monopoly his goal.

In 1870 Rockefeller set up the Standard Oil Company. He started in Cleveland, close to Pennsylvania’s petroleum fields, and gained control of that city’s refineries. This gave him a third of the nation’s oil-refining business, and he soon went after the rest.

He relied on able associates, made good use of bank credit, and showed uncommon confidence during the Panic of 1873. He also showed uncommon ruthlessness thereafter, and by 1878 Standard Oil controlled some 90 percent of the nation’s petroleum. In 1882 he organized his holdings as the Standard Oil Trust, introducing a corporate structure that maintained centralized control while operating across state lines.

Standard Oil became a model for many other trusts—but its commercial voracity also brought on the Sherman Antitrust Act of 1890. Invoking this law, a court order broke up Standard Oil in 1911.

Hence, the company offered no more than a half-step into the future. It achieved the vast scale of operations that Rockefeller sought, but it failed to avoid running up against laws that would dismantle it. The challenge for its twentieth-century successors would be to do both.

—T.A.H.