Editing Standard Oil (section)

===Monopoly charges and antitrust legislation===
{{See also|Standard Oil Co. of New Jersey v. United States}}
By 1890, Standard Oil controlled 88 percent of the refined oil flows in the United States. The state of [[Ohio]] successfully sued Standard, compelling the dissolution of the trust in 1892. But Standard simply separated Standard Oil of Ohio and kept control of it. Eventually, the state of [[New Jersey]] changed its incorporation laws to allow a company to hold shares in other companies in any state.<ref name="auto">{{harvp|Yergin|1991|pp=96–98}}.</ref>

So, in 1899, the Standard Oil Trust, based at 26 Broadway in New York, was legally reborn as a [[holding company]], the ''Standard Oil Co. of New Jersey'' (SOCNJ), which held stock in 41 other companies, which controlled other companies, which in turn controlled yet other companies. According to [[Daniel Yergin]] in his [[Pulitzer Prize for General Non-Fiction|Pulitzer Prize-winning]] ''[[The Prize: The Epic Quest for Oil, Money, and Power]]'' (1990), this conglomerate was seen by the public as all-pervasive, controlled by a select group of directors, and completely unaccountable.<ref name="auto"/>

[[File:PuckCartoon-TeddyRoosevelt-05-23-1906.jpg|thumb|170px|U.S. President [[Theodore Roosevelt]] depicted as the infant [[Hercules]] grappling with Standard Oil in a 1906 ''[[Puck (magazine)|Puck]]'' magazine cartoon by [[Frank A. Nankivell]]]]
In 1904, Standard controlled 91 percent of production and 85 percent of final sales. Most of its output was [[kerosene]], of which 55 percent was exported around the world. After 1900 it did not try to force competitors out of business by selling at a loss.<ref name="YjrPF" /> The federal Commissioner of Corporations studied Standard's operations from the period of 1904 to 1906<ref name="CNNcF" /> and concluded that "beyond question ... the dominant position of the Standard Oil Co. in the refining industry was due to unfair practices—to abuse of the control of pipe-lines, to railroad discriminations, and to unfair methods of competition in the sale of the refined petroleum products".<ref name="KaxEH" />

Because of competition from other firms, their market share gradually eroded to 70 percent by 1906 which was the year when the antitrust case was filed against Standard. Standard's market share was 64 percent by 1911 when Standard was ordered broken up.<ref name="zEhM2" /> At least 147 refining companies were competing with Standard including Gulf, Texaco, and Shell.<ref name="bXoDi" /> It did not try to monopolize the exploration and extraction of oil (its share in 1911 was 11 percent).{{Citation needed|date=February 2008}}

[[File:Landis Rockefeller 1.png|thumb|170px|John D. Rockefeller sitting in the witness stand and testifying before Judge [[Kenesaw Mountain Landis]], July 6, 1907]]
In 1909, the [[United States Department of Justice|U.S. Justice Department]] sued Standard under federal antitrust law, the [[Sherman Antitrust Act]] of 1890, for sustaining a monopoly and restraining interstate commerce by:

<blockquote>Rebates, preferences, and other discriminatory practices in favor of the combination by railroad companies; restraint and monopolization by control of pipe lines, and unfair practices against competing pipe lines; contracts with competitors in restraint of trade; unfair methods of competition, such as local price cutting at the points where necessary to suppress competition; [and] espionage of the business of competitors, the operation of bogus independent companies, and payment of rebates on oil, with the like intent.<ref name="MUnNu" /></blockquote>

The lawsuit argued that Standard's monopolistic practices had taken place over the preceding four years:

<blockquote>The general result of the investigation has been to disclose the existence of numerous and flagrant discriminations by the railroads on behalf of the Standard Oil Co. and its affiliated corporations. With comparatively few exceptions, mainly of other large concerns in California, the Standard has been the sole beneficiary of such discriminations. In almost every section of the country that company has been found to enjoy some unfair advantages over its competitors, and some of these discriminations affect enormous areas.<ref name="rC00n" /></blockquote>

The government identified four illegal patterns: (1) secret and semi-secret railroad rates; (2) discriminations in the open arrangement of rates; (3) discriminations in classification and rules of shipment; (4) discriminations in the treatment of private tank cars. The government alleged:

<blockquote>Almost everywhere the rates from the shipping points used exclusively, or almost exclusively, by the Standard are relatively lower than the rates from the shipping points of its competitors. Rates have been made low to let the Standard into markets, or they have been made high to keep its competitors out of markets. Trifling differences in distances are made an excuse for large differences in rates favorable to the Standard Oil Co., while large differences in distances are ignored where they are against the Standard. Sometimes connecting roads prorate on oil—that is, make through rates which are lower than the combination of local rates; sometimes they refuse to prorate; but in either case the result of their policy is to favor the Standard Oil Co. Different methods are used in different places and under different conditions, but the net result is that from Maine to California the general arrangement of open rates on petroleum oil is such as to give the Standard an unreasonable advantage over its competitors.<ref name="lVwTF" /></blockquote>

The government said that Standard raised prices to its monopolistic customers but lowered them to hurt competitors, often disguising its illegal actions by using bogus, supposedly independent companies it controlled.

<blockquote>The evidence is, in fact, absolutely conclusive that the Standard Oil Co. charges altogether excessive prices where it meets no competition, and particularly where there is little likelihood of competitors entering the field, and that, on the other hand, where competition is active, it frequently cuts prices to a point which leaves even the Standard little or no profit, and which more often leaves no profit to the competitor, whose costs are ordinarily somewhat higher.<ref name="oDQ16" /></blockquote>

On May 15, 1911, the [[US Supreme Court]] upheld the lower court judgment and declared the Standard Oil group to be an "unreasonable" [[monopoly]] under the [[Sherman Antitrust Act]], Section II. It ordered Standard to break up into 39 independent companies with different boards of directors, the biggest two of the companies being Standard Oil of New Jersey (which became [[Exxon]]) and Standard Oil of New York (which became [[Mobil]]).<ref name="yA9lf" />

Standard's president, John D. Rockefeller, had long since retired from any management role. But, as he owned a quarter of the shares of the resultant companies, and those share values mostly doubled, he emerged from the dissolution as the richest man in the world.<ref name="6rWCc" /> The dissolution had actually propelled Rockefeller's personal wealth.<ref name="DmItM" />