Standard Oil

Founded by John D. Rockefeller in the gilded age, Standard Oil dominated the early oil business. Standard oil prefigured many features that became common in the large corporations of the 20th and 21st century such as1:

  • vertical integration
  • creating it’s own market. For example, to increase it’s kerosene market it would give away lamps and wicks.
  • It became so cash rich that it out grew banks and basically became a bank itself

During it’s initial heyday, the laws made it difficult to operate an interstate business, corporations had to open separate corporations within each to state to operate.

After John D. Rockefeller retired, John D. Archbold took over in the mid 1890s. During Archbold’s tenure dividends rose, and less savory tactics such as political bribery became more common place. The trust was openly disdainful of government regulation.

The trust was broken up in 1911 by a Supreme Court upholding the decision to break up the trust. 33 subsidiaries were created out of the original trust. These form many of the recognizable oil names of today:

Standard Oil of New York -> Mobil Standard Oil of New Jersey -> Exxon Standard Oil of California -> Chevron Atlantic Refining -> Arco -> Sun

Since Rockefeller had been conservative in his capitalization of Standard Oil, the valuation of the new companies on the stock was much higher. Since Rockefeller retained approximately 1/4 of the spun off companies stock, his net worth went quickly from approximately 300M to 900M in a short period1.

John D. Archbold

Succeeded John D. Rockefeller running Standard Oil in 1896 and presided over Standard Oil during the break up of the trust. He expanded the dividend in the 1890s and was antagonistic towards regulators.