25 for 25. Standard Oil Company (1870)

Snapshots from a quarter-millennium

Don't like big business? Blame John Rockefeller. Don't like multi-billionaires? Blame John Rockefeller. Don't like climate change? Blame John Rockefeller.

Don't like famine? Thank John Rockefeller. Don't like yellow fever? Thank John Rockefeller. Don't like ignorance? Thank John Rockefeller.

In 1870, John Davison Rockefeller founded the Standard Oil Company. First headquartered in Cleveland, it leveraged its access to the oil fields of western Pennsylvania to become the leading refiner of petroleum products in America. 

Rockefeller was obsessed with efficiency. He paced the floor of his refineries seeking even the smallest savings. Learning that a standard tin of kerosene was sealed with forty drops of solder, he asked his foreman to try thirty-eight. A small percentage of them leaked. He said to try thirty-nine. A thousand of the tins performed flawlessly. Thirty-nine drops became the norm.

In the competitive world of Gilded Age capitalism, Rockefeller was the most competitive of all. Yet competition offended his taste, for in any competition there were losers, and their losses represented avoidable waste. His competitive goal was to eliminate competition. “The day of individual competition in large affairs is past and gone," he remarked. “You might just as well argue that we should go back to hand labor and throw away our efficient machines.”

His practice was to approach his business rivals and offer to buy them out. They would receive cash or shares in Standard Oil. Canny ones took cash, receiving fair value for their property. The more insightful took shares, which made them rich as Standard grew and prospered. The foolish, rejecting both, were ground beneath the wheels of the juggernaut. Rockefeller thought he was doing humanity's work. “Much of it was old junk, fit only for the scrap heap," he said of the companies and equipment he bought. “The Standard was an angel of mercy, reaching down from the sky and saying, ‘Get into the ark. Put in your old junk. We’ll take all the risks.’”

Before long Rockefeller achieved his goal of eliminating competition. Standard Oil controlled more than 90 percent of the refining market in America. He could have crushed the rest but felt it impolitic to do so.

The self-denial won him few friends. Rockefeller’s defeated rivals complained to their elected representatives, who passed laws to rein him in. The 1890 Sherman Antitrust Act might have been called the anti-Rockefeller act, for his was the trust—monopoly—the critics most loved to hate.

And it was the trust other titans of industry most wished to mimic. There were trusts in steel, coal, copper, sugar, leather, railroads, shipping, insurance, construction, finance.

Rockefeller felt little kinship with their masters. Monopoly made most men lazy. They gouged their customers. Rockefeller passed his efficiencies along. The price of kerosene fell steadily. His customers got more lighting for less money year after year.

For this reason the trust busters went after others first. But they finally came after him. And the Supreme Court ruled in 1911 that Standard Oil was an illegal monopoly. It must be dismantled. 

Rockefeller wasn't surprised. Nor was he particularly dismayed. “Have you some money?” he answered a friend who asked for advice. “Buy Standard Oil.” The court had done him a favor. The industry had changed. The parts of Standard would be more valuable than the company as a whole.

The breakup gave him cause to retire. His son lacked his finesse and brought shame on the company by turning hired thugs loose on strikers and their families in Colorado, killing a score.

Rockefeller devoted his retirement to philanthropy. The Rockefeller Foundation was a pioneer in the field of public health. During World War I it funded food for starving millions. Rockefeller underwrote the founding of the University of Chicago, an act he called “the best investment I ever made.” 

Yet the good he accomplished didn't silence the critics. Measured against the size of the economy, Rockefeller was the richest man in American history. Devoted democrats asserted that no one should be allowed to amass such a fortune. It didn’t help that Standard’s practice of swallowing competition was adopted by other firms, eventually including the tech giants of Silicon Valley. And when twenty-first-century climate warriors needed a corporate villain, none was handier than Exxon Mobil, created by merging offspring of the original Standard.