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Witch-hunting for Robber Barons: The Standard Oil Story
Posted on 1/10/19 at 1:55 pm
Posted on 1/10/19 at 1:55 pm
LINK
Lately big government advocates on this board have advocated for government prosecution of companies like Facebook, Amazon and Google under the ridiculous notion they are monopolies (they are not) and monopolies are evil. In reality their biggest sins in the eyes of the poster advocates are speaking or working against Trump.
The above link makes the case that the prosecution of Standard Oil in the early twentieth century that eventually spawned the Sherman Anti Trust act was nothing but a witch hunt and that Standard Oil did nothing economically or morally wrong. I agree.
I invite readers to read the short article for a different perspective than the leftist academia tend to advance.
Lawrence Reed is the author. He too is an academic.
Lately big government advocates on this board have advocated for government prosecution of companies like Facebook, Amazon and Google under the ridiculous notion they are monopolies (they are not) and monopolies are evil. In reality their biggest sins in the eyes of the poster advocates are speaking or working against Trump.
The above link makes the case that the prosecution of Standard Oil in the early twentieth century that eventually spawned the Sherman Anti Trust act was nothing but a witch hunt and that Standard Oil did nothing economically or morally wrong. I agree.
I invite readers to read the short article for a different perspective than the leftist academia tend to advance.
Lawrence Reed is the author. He too is an academic.
quote:
Lawrence W. (“Larry”) Reed became president of FEE in 2008 after serving as chairman of its board of trustees in the 1990s and both writing and speaking for FEE since the late 1970s. Prior to becoming FEE’s president, he served for 20 years as president of the Mackinac Center for Public Policy in Midland, Michigan. He also taught economics full-time from 1977 to 1984 at Northwood University in Michigan and chaired its department of economics from 1982 to 1984.
He holds a B.A. in economics from Grove City College (1975) and an M.A. degree in history from Slippery Rock State University (1978), both in Pennsylvania. He holds two honorary doctorates, one from Central Michigan University (public administration, 1993) and Northwood University (laws, 2008).
This post was edited on 1/10/19 at 2:44 pm
8
Posted on 1/10/19 at 2:39 pm to I B Freeman
The break up of Standard Oil turned Rockefeller in to a billionaire.
When the outcome of the antitrust became obvious that his company would be broken up, Rockefeller told all of his friends to buy as much stock in his company as they could afford.
His friends asked why, and he reportedly said "the pieces are worth more than the whole"
When the outcome of the antitrust became obvious that his company would be broken up, Rockefeller told all of his friends to buy as much stock in his company as they could afford.
His friends asked why, and he reportedly said "the pieces are worth more than the whole"
Posted on 1/10/19 at 2:41 pm to I B Freeman
John D Rockefeller....greatest environmemtalist of all time, yet villified by the eeconomically illiterate Left (I know,redundant).
Posted on 1/10/19 at 2:48 pm to I B Freeman
quote:
Standard Oil did nothing economically or morally wrong. I agree.
Standard Oil took heavy losses on purpose to drive competitors out of business. Once a monopoly, they recouped their losses.
Posted on 1/10/19 at 2:56 pm to Zach
There is no possible way they could have maintained any monopolies on oil long term and there is no way they could have continued to lose money to maintain any monopolies.
Did they say they lost money or did their competitors say that? Because of the extensive vertical integration they very well could have made money at lower prices than the break even of their competitors.
Did they say they lost money or did their competitors say that? Because of the extensive vertical integration they very well could have made money at lower prices than the break even of their competitors.
Posted on 1/10/19 at 2:59 pm to Zach
quote:
Between 1870 and 1885 the price of refined kerosene dropped from 26 cents to 8 cents per gallon. In the same period, the Standard Oil Company reduced the [refining] costs per gallon from almost 3 cents in 1870 to 0.452 cents in 1885. Clearly, the firm was relatively efficient, and its efficiency was being translated to the consumer in the form of lower prices for a much improved product, and to the firm in the form of additional profits.
quote:
Judging from the Record, Standard Oil did not use predatory price discrimination to drive out competing refiners, nor did its pricing practice have that effect. Whereas there may be a very few cases in which retail kerosene peddlers or dealers went out of business after or during price cutting, there is no real proof that Standard’s pricing policies were responsible. I am convinced that Standard did not systematically, if ever, use local price cutting in retailing, or anywhere else, to reduce competition. To do so would have been foolish; and, whatever else has been said about them, the old Standard organization was seldom criticized for making less money when it could readily have made more.
This post was edited on 1/10/19 at 3:01 pm
Posted on 1/10/19 at 3:10 pm to I B Freeman
quote:
There is no possible way they could have maintained any monopolies on oil long term and there is no way they could have continued to lose money to maintain any monopolies.
They could have if they got the federal government to impose high tariffs on imported oil, amirite?!
Posted on 1/10/19 at 3:13 pm to I B Freeman
I would highly recommend “The Prize” by Daniel Yergin.
Great book about the oil industry.
Great book about the oil industry.
Posted on 1/10/19 at 3:13 pm to SlapahoeTribe
Ahhh the coercive monopoly!!! Very good point Slapahoe---a modern example today is the coercive oligopoly Wilbur Ross is trying to contruct of steel manufacturers.
Does this definition sound familiar.
Does this definition sound familiar.
quote:
In some other cases, the government may not ban competition outright, but simply bestow privileges, immunities, or subsidies on one firm while imposing costly requirements on all others. Regardless of the method, a firm which enjoys a coercive monopoly is in a position to harm the consumer and get away with it.
Posted on 1/10/19 at 3:23 pm to I B Freeman
quote:This definition is a close dancing partner with unions in States and industries in which membership is forced.
In some other cases, the government may not ban competition outright, but simply bestow privileges, immunities, or subsidies on one firm while imposing costly requirements on all others. Regardless of the method, a firm which enjoys a coercive monopoly is in a position to harm the consumer and get away with it.
In general I agree with you that coercive monopolies and crony capitalism are awful practices (as are their use of tariffs), but I suspect we differ in opinion as to why tariffs are currently being used against China.
Posted on 1/10/19 at 3:28 pm to SlapahoeTribe
quote:
we differ in opinion as to why tariffs are currently being used against China.
1) Steel tariffs and the Chinese tariffs are two different beast---just a fact you can check on the Trade Representatives website
2) There is no debating why tariffs are currently being used against China. The goals are spelled out in the 301 directive to the trade representative. People can conjure up all these ideas about why they exist but the law says the President has to define the reasons in his 301 directive and he has. He wants IP protections for companies trying to do business in China and the end of forced partnerships by China for companies trying to do business in China. Whatever else you think they are about is simply not in the directive. It is much more cut and dry than many believe.
This post was edited on 1/10/19 at 3:31 pm
Posted on 1/10/19 at 3:55 pm to I B Freeman
quote:
Standard Oil did nothing economically or morally wrong. I agree.
You find nothing wrong with buying the pipeline that feeds your refinery for the sole purpose of driving you into bankruptcy? How about buying the land around you to prevent you from building your own pipeline?
Keep in mind that at the time oil was much more of a utility than it is today.
Posted on 1/10/19 at 3:58 pm to I B Freeman
John Rockefeller was first to the game so he grew very big before he got any real competition. He was no angel though and a lot of what Rockefeller did was in order to dissuade competition. His deals with the railroad was epic....they were essentially shipping it for him for close to free per barrel .
The oil business of today is very much a cartel. You really only have 5 or 6 real companies in the game.
The oil business of today is very much a cartel. You really only have 5 or 6 real companies in the game.
Posted on 1/10/19 at 3:58 pm to rooster108bm
No I do not. Simple competitive advantage. I bet no one else built a refinery without a clear interest--contractual or actual-- in the pipeline feeding it. Think of the pipeline owner--are you saying he should have been allowed to sell his pipeline to whoever he wanted??
Posted on 1/10/19 at 4:02 pm to I B Freeman
Do you think Alabama power should be able to do the same thing?
Should they be allowed to buy the water and shut ot off to the Hoover dam?
Should they be allowed to buy the water and shut ot off to the Hoover dam?
Posted on 1/10/19 at 4:03 pm to KiwiHead
quote:
was in order to dissuade competition.
Every day I try to dissuade competition in my business.
The Sherman Anti Trust Act was a bad over reach for a problem that did not exist. Obviously Rockefeller did not have the political power of his competitors---how do you explain that? How if he was a monopoly did he have competitors?
We see with Trump threats to Google and Facebook that the Act gives too much power to the government.
Posted on 1/10/19 at 4:05 pm to I B Freeman
IB so you think Rockefeller hving his people on the trains dump hot coal on men building a pipeline adjacent to the rail line was OK?
Don't give me the line that those who were victims had legal recourse......Rockefeller owned state officials and by the time something like that would get to court the competition was driven into bankruptcy.....you should read Yergin's book about all of the things he did like that
Don't give me the line that those who were victims had legal recourse......Rockefeller owned state officials and by the time something like that would get to court the competition was driven into bankruptcy.....you should read Yergin's book about all of the things he did like that
Posted on 1/10/19 at 4:10 pm to rooster108bm
quote:
Do you think Alabama power should be able to do the same thing?
A coercive monopoly.
quote:
Should they be allowed to buy the water and shut ot off to the Hoover dam?
100 Alabama Powers could not buy the water in the Colorado river or the Hoover dam but if they could why would they shut it off???
Would they have the generating capacity to replace the power it generates? Should the owners of the Hoover Dam be protect by government from more efficient electrical suppliers that would sell Las Vegas electricity cheaper??
Posted on 1/10/19 at 4:19 pm to I B Freeman
quote:
Every day I try to dissuade competition in my business.
A true capitalist you are, no doubt.
quote:
Obviously Rockefeller did not have the political power of his competitors---how do you explain that?
He may not have been well liked, many people could not stand him personally, but to say he did not have the political power of his competitors is laughable. The kind of money he had made every important person his "friend". Hell, there is a belief that he along with Carnegie and Morgan basically bought the Presidency in 1896. Got his "friend" McKinley to run for President and then bankrolled the campaign. Mc Kinley then went about and made sure that nothing touched himPosted on 1/10/19 at 4:19 pm to I B Freeman
quote:
Would they have the generating capacity to replace the power it generates?
That doesnt matter. They are buying for the sole purpose of driving them out of business so they can buy it at pennies on the dollar. Rockefeller did this several times in areas he didnt have a market in.
Since his oil was so cheap why did he have to resort to these tactics?
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