page_title: Standard Oil
section_title: Founding and early years
hierarchical_section_title: Standard Oil / Founding and early years
caption_attribution_description: English: John D. Rockefeller, founder of Standard Oil. c. 1872
context_page_description: Standard Oil Co. was an American oil-producing, transporting, refining, marketing company. Established in 1870, by John D. Rockefeller and Henry Flagler as a corporation in Ohio, it was the largest oil refiner in the world of its time. Its history as one of the world's first and largest multinational corporations ended in 1911, when the U.S. Supreme Court ruled, in a landmark case, that Standard Oil was an illegal monopoly.
  Standard Oil dominated the oil products market initially through horizontal integration in the refining sector, then, in later years vertical integration; the company was an innovator in the development of the business trust. The Standard Oil trust streamlined production and logistics, lowered costs, and undercut competitors. "Trust-busting" critics accused Standard Oil of using aggressive pricing to destroy competitors and form a monopoly that threatened other businesses.
  Rockefeller ran the company as its chairman, until his retirement in 1897.
context_section_description: Standard Oil's pre-history began in 1863, as an Ohio partnership formed by industrialist John D. Rockefeller, his brother William Rockefeller, Henry Flagler, chemist Samuel Andrews, silent partner Stephen V. Harkness, and Oliver Burr Jennings, who had married the sister of William Rockefeller's wife. In 1870, Rockefeller abolished the partnership and incorporated Standard Oil in Ohio. Of the initial 10,000 shares, John D. Rockefeller received 2,667; Harkness received 1,334; William Rockefeller, Flagler, and Andrews received 1,333 each; Jennings received 1,000, and the firm of Rockefeller, Andrews & Flagler received 1,000. Rockefeller chose the "Standard Oil" name as a symbol of the reliable "standards" of quality and service that he envisioned for the nascent oil industry.
  In the early years, John D. Rockefeller dominated the combine; he was the single most important figure in shaping the new oil industry. He quickly distributed power and the tasks of policy formation to a system of committees, but always remained the largest shareholder. Authority was centralized in the company's main office in Cleveland, but decisions in the office were made in a cooperative way.
  The company grew by increasing sales and through acquisitions. After purchasing competing firms, Rockefeller shut down those he believed to be inefficient and kept the others. In a seminal deal, in 1868, the Lake Shore Railroad, a part of the New York Central, gave Rockefeller's firm a going rate of one cent a gallon or forty-two cents a barrel, an effective 71% discount from its listed rates in return for a promise to ship at least 60 carloads of oil daily and to handle load and unload on its own. Smaller companies decried such deals as unfair because they were not producing enough oil to qualify for discounts.
  Standard's actions and secret transport deals helped its kerosene price to drop from 58 to 26 cents from 1865 to 1870. Rockefeller used the Erie Canal as a cheap alternative form of transportation—in the summer months when it was not frozen—to ship his refined oil from Cleveland to New York City. In the winter months his only options were the three trunk lines—the Erie Railroad and the New York Central Railroad to New York City, and the Pennsylvania Railroad to Philadelphia. Competitors disliked the company's business practices, but consumers liked the lower prices. Standard Oil, being formed well before the discovery of the Spindletop oil field (in Texas, far from Standard Oil's base in the Midwest) and a demand for oil other than for heat and light, was well placed to control the growth of the oil business. The company was perceived to own and control all aspects of the trade.
caption: John D. Rockefeller c. 1872, shortly after founding Standard Oil
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