The Best of Cutthroats

...The company, Chemow writes, "did an excellent job at providing kerosene at affordable prices...

...Nevins, who like Chernow based his work on the Rockefeller Archive in Sleepy Hollow, New York, claimed the company had been almost wholly innocent of them...

...After he retired, his charitable bequests started flowing in earnest...

...These anticorporate currents continue to flow on the Right...

...Standard Oil offered what had formerly been a privilege of wealth—a longer day—at the lowest cost in history...

...Finally, he was smart, and not just in petroleum: He invested in the Mesabi Range, with its great deposits of iron ore, earlier than Andrew Carnegie did and got the best of the founder of US...

...At the height of Standard Oil's power, in the last decade of the 19th century...

...By the first decade of the 20th century, Standard Oil had powerful rivals both in refining and production...

...a Standard Oil salesman brought gasoline to Kitty Hawk...

...This began to happen in the decades following the Civil War...

...But Chernow does not argue that his subject was more guilty of reprehensible conduct than the other robber barons, or even that the public was seriously injured by it...

...Nevins may have been right to contend that a monopoly was needed to create the conditions for long-term investment...

...Rockefeller had always been a fount of charity...

...But even Rockefeller's distinctly less respectable confederates had their saving graces: Henry ("Hell Hound") Rogers, for instance, rescued the finances of his devoted friend Mark Twain, who also liked Rockefeller...

...They resented it...

...Random, 774 pp., $30.00), he "was fantastically charitable from boyhood" and devoted a very large part of his fortune to noble causes...

...Rockefeller's companies refined 80 per cent of the petroleum sold in the United States and—having by now moved into production as well—pumped a third of it from the ground...

...Tarbell, writes Chernow dismissively, "evoked a paradise of free, independent producers in western Pennsylvania [where the earliest wells were struck in 1859], 'ruddy and joyous' men, enamored of competition, who were snuffed out by the sinister Standard Oil...

...As his latest biographer, Ron Chemow, emphasizes in the first-rate Titan: The Life of John D. Rockefeller, Sr...

...In most cases the initiative seems to have come from Rockefeller's immediate subordinates or from Standard Oil people on the spot...

...It was the emergence of the motor car that made the petroleum industry bigger and more important than ever before, and saved the company and its successors in the process...

...The others included direct threats and vandalism against rivals, as well as bribes, disguised as fees, for public officials...

...John Davison Rockefeller is another plausible contender for that distinction: Of all the robber barons who directed this country's advance to the high table of industrial nations, the founder of Standard Oil was probably the most appealing and beneficent...

...Gasoline for motor cars did not enter the picture until he retired...

...From the beginning to the present day, busts have followed booms in the petroleum business as old sources of oil run out and new sources unpredictably appear...

...Indeed, at times, Chernow defines his own biography in opposition to that work, particularly in his insistence upon Rockefeller's personal responsibility for the sometimes illegal and immoral tactics his company used in its rise to eminence...

...Moreover, as Chernow rightly emphasizes, a lot of Standard Oil's skulduggery was caused by the "antiquated legal framework" existing in the absence of a Federal incorporation statute...

...A less concentrated, less efficient refining industry would have had higher average production expenses...

...Steel, who bought his holdings...

...Over the years he shelled out at least $475 million to philanthropies, including Rockefeller University, Spellman College and the University of Chicago, all of which he founded...

...It was unacceptable only to rival refiners, to the producers of petroleum, and to railroads and pipeline companies that crossed swords with Standard Oil...

...Meanwhile, as petroleum began to gush in large quantities from wells in Texas and California, such competitors as the Mellon family and Sun Oil Company appeared in the United States...

...Chernow never argues that a willingness to cut moral corners explains Rockefeller's achievement, or that he initiated much of the misconduct—only that it occurred and that he "knew everything that was going on...

...It boasted far lower unit costs than competitors and relentlessly drove down costs" over time...

...In other words, Rockefeller simply succeeded in doing what almost everyone in the industry was trying to do...

...So the new conditions made him far richer in retirement than he had ever been as the active president of Standard Oil, in part because its epigones gave out dividends much higher than any he would have tolerated...

...It is a fact that there wasn't much competition...

...Bill Gates, the richest man of our time as Rockefeller was of his, has paid out almost no dividends...

...Both became wealthy as the leading shareholders and active managers of companies they founded themselves...

...Before the late 19th century, Anglo-Saxon law looked askance at the idea of a limited liability company, then generally regarded as an open invitation to venality...

...That is certainly what the history of Standard Oil suggests...

...In the United States, corporations could run and own businesses in only a single state and therefore had to resort to subterfuges to operate throughout the country...

...Thus it was that Standard Oil was broken up, in 1911, as a result of a lawsuit initiated by a Republican President, Teddy Roosevelt, under the Sherman Anti-Trust Act, which had been introduced by a Republican Senator and passed by a Republican Congress...

...Foreign competitors— the British businessman Sir Marcus Samuel, the French Rothschilds, and the Swedish Nobel family—started exploiting reserves in Russia and in what is now Indonesia...

...Most remarkable, though, is how little Chernow's correction of Nevins affects the overall portrait...

...They were low because it had made a huge investment in physical plant, which in turn required huge sales to function efficiently...

...Fortune called a 1995 cover story on the attitudes of Republican Senators and Representatives elected in 1994 "The GOP to Big Business: Drop Dead") After losing the antitrust action, Standard Oil was divided into its constituent entities, including the predecessors of Mobil Oil, Amoco, Chevron, and Exxon, as well as Chesebrough-Pond's, Pennzoil, and Union Tank Car Company...

...Refineries were less numerous, although their numbers too proliferated, since they were cheap to build...

...Eventually, however, new capacity becomes so plentiful that it is impossible to sustain them...

...he gave away upward of 10 per cent of his income as a 20-year-old clerk...

...Rockefeller was the dominant figure in the first 40 years of the petroleum refining industry, whose main product in his day was a form of artificial lighting, kerosene, that was vastly cheaper and better than its predecessors, such as whale oil...

...A strikingly articulate man of strong and, in many respects, sound principles, he lived rather modestly considering his enormous wealth...

...There are other similarities between the two men as well...

...But this development was probably inevitable...

...Rockefeller was the leading shareholder in each of them...

...Either the competitors would have been forced to accept lower margins, along with increased levels of failure, or they would have had to charge higher prices than Standard Oil...

...He was a good husband, and though unsuccessful as a father he did not fail for lack of effort...

...And there was a more serious problem still: Electric lighting had eclipsed kerosene...

...The world would not have been a better place if instead of one John D. Rockefeller there had been a great many Franklin Tarbells...

...This oversupply continually generates efforts to control it through combinations...

...In the early days, however, there were too many of them for this approach to succeed...

...In fact, the producers didn't respond to Rockefeller by advocating freer competition but by forming their own counter-conspiracy...

...Much of the money he left to his son was also given to good causes...

...Nevertheless, Rockefeller's business judgment, the nature of the petroleum industry, and the fundamentally unobjectionable consequences of the monopoly were not the only reasons for its existence...

...Gluts outnumber shortages...

...For the first time, local businessmen faced competition from national companies...

...Chernow is less indulgent than Allan Nevins was in A Study in Power: John D. Rockefeller, Industrialist and Philanthropist (1953...

...Low prices for consumers were built in to this arrangement...

...Tarbell absurdly claimed that such misdeeds wholly explained Rockefeller's success...

...Not until the 1890s did it even become clear that large exploitable deposits of petroleum existed anywhere on earth outside the American Midwest...

...Chernow argues forcefully that company documents "reveal that [Rockefeller] and Standard Oil entered willingly into a staggering amount of corruption...

...Curiously, the breakup occurred just as Standard Oil was losing its monopoly...

...No doubt this is true, but the author never really addresses the question of what in these papers his subject actually read, took seriously, and remembered...

...Once that question was put to rest, change had to come...

...During the 1970s the push to set up a cartel came at the producers' end of the industry...

...For most people this state of affairs was acceptable...

...As Rockefeller relinquished control of the company, it was looking anxiously for a new line of business...

...Both attained their monopolies by giving the consumers of their products what those consumers actually wanted—in Rockefeller's case a dependable supply of cheap, high-quality kerosene, in Bill Gates' a means of access to the largest and cheapest selection of computer hardware...

...One of those producers, Franklin Tarbell, was the father of the muckraker Ida M. Tarbell, who villainized Rockefeller in her History of the Standard Oil Company (1904...