The Oil Business

By: Mason Fisher

John Davison Rockefeller

Born - July 8, 1839 in Richford, New York

Died - May 23, 1937 in Ormond Beach, Florida (age 97)

Parents - William Rockefeller, Eliza Davison

The Growth of the Oil Industry

The oil business grew because the process of refining crude oil was introduced. This enabled different products to be marketed and used for a lot of different purposes, which increased profits

His Career

When John was 26 years old, he and four partners set up an oil refinery in Cleveland, Ohio. In 1870 he organized the Standard Oil Company and aggressively ran it until he retired in 1897. He acquired almost all of the oil refineries in and around Cleveland. Rockefeller used horizontal integration - which combines other competing businesses into one corporation. To strengthen Standard Oil's position, John lowered his prices, and pressured his customers not to deal with other rival companies. He persuaded railroads to grant him rebates in exchange for his business. He increased his control by forming a trust where a group of companies are managed by the same board directors. Rockefeller soon created a monopoly - almost total control of a single producer - of the oil industry.

Government Restriction

The government began restricting trusts and monopolies. They did so by passing the "Sherman Antitrust Act" in 1890. This law sought "to protect trade and commerce against unlawful restraint and monopoly".