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John D. Rockefeller as the First Dollar Billionaire in Human History
Due to the high efficiency of Standard Oil (high quality and low prices), the company’s share of the oil products market grew from 4% in 1870 to 25% in 1874 and to about 85 per cent in 1880. All these features characterized Standard Oil as a monopoly. Was John Rockefeller’s plans to become a monopolist initially? Not really. His actions were a way to survive among aggressive competition. Not only Rockefeller turned his attention to the promising petroleum product market in the early 1860’s. The oil boom has begun, which has led to the growth of the refining industry. Competition escalated and led to overproduction. The oil industry, into which hundreds of millions of dollars poured, fell into a tough crisis.
The history of the creation of the monopoly “Standard Oil” began in 1871. With a conspiracy of interests and advantages called the South Improvement Company. The South Improvement Company is a cartel consisting of several oil refining companies that make up no more than 10% of the total market and several of the largest railway carrier companies.
The railway facilities could not cope with the increased demand for oil transportation, and therefore the South Improvement company agreed to mutually beneficial terms with Standard Oil, agreeing to provide the company with a 50% discount on transportation and raise prices by more than 2 times for other companies not involved in the transaction. This allowed Standard Oil to become the largest oil company in the United States, which caused great discontent among those companies that were not involved in the cartel.
By the spring of 1872, the South Improvement Company began to lose ground, but by then Standard Oil had already regulated about 90% of the US oil market.
One of the most serious challenges the company received in 1879. By May 1879, the first long-distance pipeline was built, stretching 110 miles from Oil City to the Reading Railway. This project was called the “Coastal Pipeline” and it was implemented in the strictest confidence of “Standard Oil”. The successful construction of this pipeline made a technological breakthrough. The Onshore Pipeline became the main rival to the railways and shook the influence of Standard Oil.
Thanks to the timely response, Standard Oil was able to build 4 pipelines in the direction from Oil City to Buffalo, Cleveland, New York and Philadelphia respectively. Rockefeller also acquired a small portion of the shares of the ‘Coastal Pipeline.’ Thus, by the end of 1870’s, Standard Oil managed to overcome the crisis by becoming the largest oil producing and refining company in the United States, which controlled most of the pipelines leaving Oil City.
At the turn of the 20th century, John Rockefeller’s “Standard Oil” reached the peak of its power. In 1904, the company controlled 91% of oil production and 85% of sales in the United States.
As a result, in 1906, legal proceedings began against the company. “Standard Oil” was accused of violating antitrust laws. In 1911, the Supreme Court demanded the abolition of the company. Thus, the great oil company was divided into smaller 34 companies, geographically divided.
But John Rockefeller benefited from the separation of his own company. He retained a controlling stake in all companies. The corporation’s market share fell to 64%, but its share price more than doubled, making Rockefeller the richest man in the world.
Thus, John Rockefeller is one of the most controversial personalities in the history of mankind, but no matter how we relate to him, it should be remembered that “Standard Oil” was the largest American oil corporation engaged in the extraction, transportation, refining and marketing of petroleum products. His business vision system was one of the most effective systems of his time, which allowed John Rockefeller to become the first dollar billionaire in human history and changed the lives of ordinary Americans.
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