Supreme Court Breaks Standard Oil: Antitrust Law Born

John D. Rockefeller's monopoly over American oil ended with a single Supreme Court decision on May 15, 1911. The Court ruled unanimously that Standard Oil of New Jersey constituted an unreasonable restraint of trade under the Sherman Antitrust Act and ordered the company broken into thirty-four independent entities. Chief Justice Edward Douglass White, writing for the Court, established the "rule of reason" standard that would govern antitrust law for the next century. Standard Oil had controlled roughly 91 percent of American oil refining at its peak. Rockefeller built the monopoly through a combination of ruthless efficiency, secret railroad rebates, predatory pricing, and the systematic acquisition or destruction of competitors. Journalists, particularly Ida Tarbell, whose father's oil business had been crushed by Rockefeller, spent years documenting these practices. Tarbell's nineteen-part expose in McClure's Magazine, published between 1902 and 1904, created the public pressure that led to the government's lawsuit. The breakup produced companies that became some of the twentieth century's largest corporations. Standard Oil of New Jersey became Exxon. Standard Oil of New York became Mobil. Standard Oil of California became Chevron. Standard Oil of Indiana became Amoco. Together, these successor companies dominated global oil markets for decades and, through mergers, eventually reconsolidated into today's energy giants ExxonMobil and Chevron. The decision's greatest irony was its effect on Rockefeller's personal wealth. He held shares in all thirty-four successor companies, and as each grew independently, the combined value of his holdings skyrocketed. The breakup that was meant to punish monopoly power made Rockefeller richer than he had been before. The "rule of reason" standard the case established gave courts wide discretion in applying antitrust law, a flexibility that corporations learned to navigate and that reformers have criticized ever since.