Standard Oil Company

Collier's New Encyclopedia (1921)

a union of business interests that have held since 1880 a predominant position in the petroleum industry. Its rise goes back to 1867, when the firm of Rockefeller, Andrews and Flagler was formed. The next important step in its progress occurred three years later, when the firm was reorganized under the name of the Standard Oil Company of Ohio, then controlling something like 10 per cent. of the industry. During the years that followed, the interests of the company developed to such an extent that in 1880 it, in company with other firms in which the same men were interested, attained to the control of something like 90 per cent. of the industry. The business genius of the founders played no small part in the phenomenal growth of the company, but methods that were not wholly legitimate were charged against it, recourse having been had to the securing of discriminating rates of transportation that gave the company an unfair advantage over its competitors. In 1882 the company was reorganized as the Standard Oil Trust, and all the stock holdings of 14 companies, together with the majority holdings in 26 other companies, were put in the hands of 9 trustees having irrevocable powers of attorney. By this arrangement the stockholders of the several companies so brought together received trust certificates on which dividends were declared, amounting to $70,000,000, the 9 trustees being the owners of $46,000,000 of the total amount. Litigation then marked the progress of the group and a decision in the courts of Ohio in 1892 pronouncing the trust form of organization illegal, led to its dissolution, the stocks of the companies being distributed to the holders of trust certificates on a pro rata plan which ruse altered the form and not the substance of the trust. Seven years later the plan of a holding company was evolved and the Standard Oil Company of New Jersey was organized. The company issued securities in exchange for the stocks in the hands of the trustees and other individuals, having an authorized capital of $110,000,000. This was made the basis of extensive developments, particularly in the foreign field. By 1904 the refineries of the company despite independent developments of petroleum fields that had taken place, consumed 84.2 per cent. of the crude oil of the entire country, and produced 86.5 per cent. of the refined oil. As a result of the Sherman Anti-Trust Law the dissolution of the company was ordered in 1909, the decision of the United States District Court of St. Louis being confirmed by the Supreme Court in 1911. The stock was redistributed, but the combination of interests still worked in a manner that continued to keep control of the industry in the same hands. The earnings of the group between 1899 and 1905 grew from $34,420,314 to $57,- 459,356.