Standard Oil Company – north oil company.

Standard Oil Company

Standard Oil Refinery No.1 in Cleveland (1899) – north oil company
The U.S. Standard Oil Company was the largest oil refinery company in the world until it was broken up. It was founded by John D. Rockefeller together with some north oil company business partners (including Henry M. Flagler ) and was the source of the legendary wealth of the Rockefeller dynasty. [1] The business practices of the company led to the first anti- monopoly legislation set the United States and finally to the unbundling of the company into today major oil companies.

Founding period

The first Rockefeller & Andrews company building in Cleveland
In 1863, Rockefeller and a partner founded a small oil refinery in Cleveland . The company was successful and grew steadily. In 1870 Rockefeller reorganized the company and called it the Standard Oil Company .

In 1871, some refinery owners around Rockefeller planned to form an alliance in order to receive transportation discounts from the railways for their oil. At the same time, the railways should be persuaded to charge higher prices to competitors who were not part of the alliance. The alliance was founded by taking over an existing unknown company with the meaningless name South Improvement Company . Rockefeller became the main shareholder of the South Improvement Company and thus its managing director through its Standard Oil Company . [2]

The South Improvement Company was located opposite the railway companies of as the legitimate representative of the majority of American oil companies. In fact, it represented only about 10% of the industry. However, the railways were able to convince and thus enforce transport discounts for the alliance and price increases for the competitors.

The oil war of 1872
In early 1872, the company’s conspiratorial approach became known. When the new transport prices were accidentally published early and were twice as high as the old prices for non-members of the alliance, the other oil companies fought back. Among other things, the oil producers boycotted the Standard Oil Company, which then closed its refineries. A court banned the railroad companies from offering discounts. The US Congress condemned the conspiracy.

Rockefeller, however, was not deterred by this and was now demanding discounts that were granted to him as an influential customer under strict confidentiality. Oil producers also had to quickly abandon their boycott of deliveries because they depended on sales. This is how Rockefeller received its discounts and oil deliveries and emerged victorious from the crisis. [3]

The National Refiners Association

Rockefeller founded the end of 1872, the National Refiners Association (association of national oil refineries ), which he became Chairman. About 80% of all American refineries were represented in the association. As a countermeasure, the oil producers founded the Petroleum Producer’s Agency , which tried to keep crude oil prices up by means of production restrictions – a process that is still used today by OPEC . [4]

Rockefeller played along with the sham, and his National Refiners Association approved the funding restriction, only to threaten the Petroleum Producer’s Agency with a total boycott a few months later because it allegedly did not comply with its own funding restriction. Many smaller oil producers feared the boycott because they were heavily in debt. The Petroleum Producer’s Agency broke up just ten months after it was founded .

The expansion of Standard Oil

Standard Oil Company stock dated May 1, 1878
Rockefeller continuously expanded its power. He traveled through America from 1875 to 1878 and convinced the owners of the 15 largest refineries to join Standard Oil. Little refineries were handled very squeamishly. Rockefeller put them under pressure and bought them up to 40% of their market value or less. In addition, the recalcitrant Vacuum Oil Company’s facility was destroyed by a deliberate explosion. The perpetrator later confessed to being bribed for sabotage.

Rockefeller’s approach did not go unnoticed. He and some of his directors were found guilty of conspiracy by the jury of a court after a legal battle in 1879. However, through a deal negotiated by Rockefeller, everyone escaped the actual conviction. As part of the deal, Rockefeller had to forego the special prices for rail transportation, but was able to continue its expansion and monopolization unhindered. From 1879, Standard Oil made practically all pipelines using the tried-and-tested methods already used to obtain the refineriesown in the USA. Standard Oil then turned to the dealer network. It established its own dealer network and wholesaler and pushed the existing dealer networks out of the market. It had practically the entire oil supply chain under its control.

In 1891, 90 percent of US kerosene exports came from Standard Oil Company, and the company controlled 70 percent of the world market.

The American Congress passed a law in 1890 that, among other things, banned the conspiracy to safeguard monopolies and undue interference in trade. This Sherman Antitrust Act led to a further reorganization of Standard Oil. It was the Standard Oil Company ( New Jersey ) Holding founded. This reorganization temporarily prevented the Sherman Antitrust Act from being applied to Standard Oil.

In the 1880s and 1890s, Standard Oil began international expansion, typically by establishing joint ventures with existing national oil trading companies. In 1890, for example, Standard Oil founded the German-American Petroleum Society (DAPG) together with the merchants Franz Ernst Schütte and Wilhelm Anton Riedemann . DAPG was renamed Esso in 1950 in Germany (after the initials of S (tandard) O (il)). In 1891, the Società Italo-Americana pel Petrolio (SIAP) was founded together with the company Walter & Co. zu Venice and Carlo Wedekind & Co. founded by Karl WedekindEsso Italiana was renamed. [6] [7]

From the 1880s, petroleum for lamps began to be sold in China. The brand name Mei Foo was chosen for this, which roughly translates to beautiful and reliable or beautiful trust . That was also the name for the lamps produced by Standard Oil and sold very cheaply. According to marketing statements, it was best to use Standard Oil petroleum, which was available in the same shop as the lamp. Until then, the farmers had used lamps with vegetable oil.

Unbundling
The government under President Theodore Roosevelt was the first to take action against Standard Oil’s influential monopoly. In his campaign under public pressure, he had promised to act against monopolies. In 1906, his government opened a lawsuit against Standard Oil for violating the Sherman Antitrust Act . This process is considered a milestone in American legal history. In 1911, the United States Supreme Court ruled that Standard Oil violated the Sherman Antitrust Acthad violated, and ordered the unbundling of the company, whereupon the share price fell significantly. Rockefeller assumed that the price would recover and bought up the shares in his company. He made cautious estimates of $ 200 million (which was about $ 5.7 billion today in 1901) on the boom that began, [8] because the invention of the automobile and the First World War left the need for oil rise to previously unimaginable dimensions.

Standard Oil has been divided into the following 34 individual companies.

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