Standard Oil - Revision history

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Repoint 2 dead mises.org links to the archived original (automated; see Austrian Economics Wiki:Link repointing)

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	=== Monopoly pricing ===		=== Monopoly pricing ===
	The argument that Standard Oil extorted high prices from the public is simply unsupported by evidence. Indeed, the opposite appears to be true: Refined oil prices "fell from over 30 cents per gallon in 1869, to 10 cents in 1874, to 8 cents in 1885, and to 5.9 cents in 1897." <ref>{{cite news \| last = Galles \| first = Gary \| title = 100 Years of Myths about Standard Oil \| newspaper = \| publisher = [[Ludwig von Mises Institute]] \| date = 2011-05-13 \| url = ~~http~~://mises.org/daily/5274 \| accessdate = 2011-11-09}}</ref> Being a large market power, but a market power nonetheless, Standard Oil could not create monopoly prices for fear of competitors springing up to win over dissatisfied customers.		The argument that Standard Oil extorted high prices from the public is simply unsupported by evidence. Indeed, the opposite appears to be true: Refined oil prices "fell from over 30 cents per gallon in 1869, to 10 cents in 1874, to 8 cents in 1885, and to 5.9 cents in 1897." <ref>{{cite news \| last = Galles \| first = Gary \| title = 100 Years of Myths about Standard Oil \| newspaper = \| publisher = [[Ludwig von Mises Institute]] \| date = 2011-05-13 \| url = https://mises.freecapitalists.org/daily/5274 \| accessdate = 2011-11-09}}</ref> Being a large market power, but a market power nonetheless, Standard Oil could not create monopoly prices for fear of competitors springing up to win over dissatisfied customers.

	The argument of monopoly pricing further fails when considering substitute goods - alternative goods that customers may buy to achieve the same ends with different means. For example,		The argument of monopoly pricing further fails when considering substitute goods - alternative goods that customers may buy to achieve the same ends with different means. For example,
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	=== Competition ===		=== Competition ===
	While Standard Oil owned 88% of refining business at its height (by no means a monopoly), its market share had already decreased to 64% by 1911 (before the anti-trust case) <ref>{{cite book \| last = DiLorenzo \| first = Thomas \| author-link = Thomas DiLorenzo \| title = [[How Capitalism Saved America]] \| publisher = Random House \| date = 2005 \| location = [[New York City\|New York]], [[New York\|NY]] \| pages = \| url = ~~http~~://mises.org/daily/2317#3}}</ref>. Indeed, many competitors were present and ready to pick up any time that Standard Oil did not meet expectations <ref>[[#refHidy1955\|Hidy, 88, 120]]</ref>. Furthermore, whenever Standard Oil hesitated in taking an action into a new field, competitors sprang up in the new area, as was the case with discovery of the inferior grade Lima oil which would require new processing techniques <ref>ibid, 156</ref>. This suggests that competition was hardly stifled and that Standard Oil retained the top spot thanks to its efficiency and quality (and its size was likely increased by the government ''help'', including patents and tariffs, mentioned above).		While Standard Oil owned 88% of refining business at its height (by no means a monopoly), its market share had already decreased to 64% by 1911 (before the anti-trust case) <ref>{{cite book \| last = DiLorenzo \| first = Thomas \| author-link = Thomas DiLorenzo \| title = [[How Capitalism Saved America]] \| publisher = Random House \| date = 2005 \| location = [[New York City\|New York]], [[New York\|NY]] \| pages = \| url = https://mises.freecapitalists.org/daily/2317#3}}</ref>. Indeed, many competitors were present and ready to pick up any time that Standard Oil did not meet expectations <ref>[[#refHidy1955\|Hidy, 88, 120]]</ref>. Furthermore, whenever Standard Oil hesitated in taking an action into a new field, competitors sprang up in the new area, as was the case with discovery of the inferior grade Lima oil which would require new processing techniques <ref>ibid, 156</ref>. This suggests that competition was hardly stifled and that Standard Oil retained the top spot thanks to its efficiency and quality (and its size was likely increased by the government ''help'', including patents and tariffs, mentioned above).

	=== Trust cohesion ===		=== Trust cohesion ===

46.249.76.82: /* Tariffs */

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Tariffs

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	=== Tariffs===		=== Tariffs===
	[[Tariff]]s are another government intervention in the free market which contributed the the size of Standard Oil. There was a consistent tariff on kerosene in the US. In 1865 the kerosene tariff was increased to 40 cents per gallon <ref>ibid, 6</ref>. In ~~1984~~, kerosene was placed on the free list, yet with a catch: if another country had a tariff on the goods of the US, then the kerosene tariff on that country was 40 percent. As D.T. Armentano explains, tariffs restrict foreign competition, which is a vital section of the free market (after all, foreign competition is simply business which is outside of the arbitrarily-drawn line of a given country) <ref>Armentano, D.T. ''Monopoly''. Freedom Daily. 1992</ref><ref>{{Citation		[[Tariff]]s are another government intervention in the free market which contributed the the size of Standard Oil. There was a consistent tariff on kerosene in the US. In 1865 the kerosene tariff was increased to 40 cents per gallon <ref>ibid, 6</ref>. In 1884, kerosene was placed on the free list, yet with a catch: if another country had a tariff on the goods of the US, then the kerosene tariff on that country was 40 percent. As D.T. Armentano explains, tariffs restrict foreign competition, which is a vital section of the free market (after all, foreign competition is simply business which is outside of the arbitrarily-drawn line of a given country) <ref>Armentano, D.T. ''Monopoly''. Freedom Daily. 1992</ref><ref>{{Citation
	\| title = 100,000,000 Barrels Surplus Oil Stored \| newspaper = [[The New York Times]] \| year = 1909 \| date = 1909-08-05 \| url = http://query.nytimes.com/mem/archive-free/pdf?res=F2071EFA385F12738DDDAC0894D0405B898CF1D3 \| archiveurl = \| archivedate = \| accessdate = 2011-11-09}}</ref>. The hindering of possibly more efficient foreign competitors shielded Standard Oil from pressure to lower its prices even further. Indeed, abroad Standard Oil was forced to lower its prices to compete with Russian oil <ref>[[#refHidy1955\|Hidy, 139]]</ref>, yet the protective tariffs prevented the same from occurring in the US. This is another example of government intervention during the [[Gilded Age]] distorting market forces and creating inefficient, less competitive scenarios.		\| title = 100,000,000 Barrels Surplus Oil Stored \| newspaper = [[The New York Times]] \| year = 1909 \| date = 1909-08-05 \| url = http://query.nytimes.com/mem/archive-free/pdf?res=F2071EFA385F12738DDDAC0894D0405B898CF1D3 \| archiveurl = \| archivedate = \| accessdate = 2011-11-09}}</ref>. The hindering of possibly more efficient foreign competitors shielded Standard Oil from pressure to lower its prices even further. Indeed, abroad Standard Oil was forced to lower its prices to compete with Russian oil <ref>[[#refHidy1955\|Hidy, 139]]</ref>, yet the protective tariffs prevented the same from occurring in the US. This is another example of government intervention during the [[Gilded Age]] distorting market forces and creating inefficient, less competitive scenarios.

46.249.76.82: /* Tariffs */

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Tariffs

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	=== Tariffs===		=== Tariffs===
	[[Tariff]]s are another government intervention in the free market which contributed the the size of Standard Oil. There was a consistent tariff on ~~kerosense~~ in the US. In 1865 the kerosene tariff was increased to 40 cents per gallon <ref>ibid, 6</ref>. In 1984, kerosene was placed on the free list, yet with a catch: if another country had a tariff on the goods of the US, then the kerosene tariff on that country was 40 percent. As D.T. Armentano explains, tariffs restrict foreign competition, which is a vital section of the free market (after all, foreign competition is simply business which is outside of the arbitrarily-drawn line of a given country) <ref>Armentano, D.T. ''Monopoly''. Freedom Daily. 1992</ref><ref>{{Citation		[[Tariff]]s are another government intervention in the free market which contributed the the size of Standard Oil. There was a consistent tariff on kerosene in the US. In 1865 the kerosene tariff was increased to 40 cents per gallon <ref>ibid, 6</ref>. In 1984, kerosene was placed on the free list, yet with a catch: if another country had a tariff on the goods of the US, then the kerosene tariff on that country was 40 percent. As D.T. Armentano explains, tariffs restrict foreign competition, which is a vital section of the free market (after all, foreign competition is simply business which is outside of the arbitrarily-drawn line of a given country) <ref>Armentano, D.T. ''Monopoly''. Freedom Daily. 1992</ref><ref>{{Citation
	\| title = 100,000,000 Barrels Surplus Oil Stored \| newspaper = [[The New York Times]] \| year = 1909 \| date = 1909-08-05 \| url = http://query.nytimes.com/mem/archive-free/pdf?res=F2071EFA385F12738DDDAC0894D0405B898CF1D3 \| archiveurl = \| archivedate = \| accessdate = 2011-11-09}}</ref>. The hindering of possibly more efficient foreign competitors shielded Standard Oil from pressure to lower its prices even further. Indeed, abroad Standard Oil was forced to lower its prices to compete with Russian oil <ref>[[#refHidy1955\|Hidy, 139]]</ref>, yet the protective tariffs prevented the same from occurring in the US. This is another example of government intervention during the [[Gilded Age]] distorting market forces and creating inefficient, less competitive scenarios.		\| title = 100,000,000 Barrels Surplus Oil Stored \| newspaper = [[The New York Times]] \| year = 1909 \| date = 1909-08-05 \| url = http://query.nytimes.com/mem/archive-free/pdf?res=F2071EFA385F12738DDDAC0894D0405B898CF1D3 \| archiveurl = \| archivedate = \| accessdate = 2011-11-09}}</ref>. The hindering of possibly more efficient foreign competitors shielded Standard Oil from pressure to lower its prices even further. Indeed, abroad Standard Oil was forced to lower its prices to compete with Russian oil <ref>[[#refHidy1955\|Hidy, 139]]</ref>, yet the protective tariffs prevented the same from occurring in the US. This is another example of government intervention during the [[Gilded Age]] distorting market forces and creating inefficient, less competitive scenarios.

46.249.76.82: /* Quality of products/Self-regulation */

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Quality of products/Self-regulation

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	=== Quality of products/Self-regulation ===		=== Quality of products/Self-regulation ===
	Standard Oil worked to bring both a higher and more uniform standard of products to the market.<ref>ibid, 210-211</ref> Indeed, it also built better infrastructure than competitors: when constructing its pipelines, it sunk the pipe beneath the earth at least eighteen inches deep, except over solid rock, while some competitors only sank their line when ~~int~~ crossed tilled land. This resulted in whipsawing of the pipes of competitors when cold weather came <ref>ibid, 81</ref>.		Standard Oil worked to bring both a higher and more uniform standard of products to the market.<ref>ibid, 210-211</ref> Indeed, it also built better infrastructure than competitors: when constructing its pipelines, it sunk the pipe beneath the earth at least eighteen inches deep, except over solid rock, while some competitors only sank their line when it crossed tilled land. This resulted in whipsawing of the pipes of competitors when cold weather came <ref>ibid, 81</ref>.

	Standard Oil also provides an example of market regulations at work. Standard Oil engaged outside experts to investigate complaints and to recommend methods for improvement whenever necessary <ref>ibid, 140</ref>. When there were leaks in its barrels it immediately sealed them and sought out the cause (resulting in environmentally-friendly policies due to a desire to not lose profit). Furthermore, when there were allegations that the company was using inaccurate and fraudulent measurements on its tanks, Standard Oil invited all of the oil exchanges to send delegates to check their measurements. No errors were found, and honesty of Standard Oil's field storage units were never again seriously questioned <ref>ibid, 84</ref>.		Standard Oil also provides an example of market regulations at work. Standard Oil engaged outside experts to investigate complaints and to recommend methods for improvement whenever necessary <ref>ibid, 140</ref>. When there were leaks in its barrels it immediately sealed them and sought out the cause (resulting in environmentally-friendly policies due to a desire to not lose profit). Furthermore, when there were allegations that the company was using inaccurate and fraudulent measurements on its tanks, Standard Oil invited all of the oil exchanges to send delegates to check their measurements. No errors were found, and honesty of Standard Oil's field storage units were never again seriously questioned <ref>ibid, 84</ref>.

Pestergaines: Extended intro with ref.

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Extended intro with ref.

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	'''Standard Oil''' was an American company principally concerned with oil refining to produce kerosene and petroleum byproducts (such as paraffin wax, lubricating oils, and naphtha) from its foundation in 1870 to its breakup by the [[U.S. Supreme Court\|Supreme Court]] in the 1911 [[antitrust]] case of ''Standard Oil Co. of New Jersey v. United States''.		'''Standard Oil''' was an American company principally concerned with oil refining to produce kerosene and petroleum byproducts (such as paraffin wax, lubricating oils, and naphtha) from its foundation in 1870 to its breakup by the [[U.S. Supreme Court\|Supreme Court]] in the 1911 [[antitrust]] case of ''Standard Oil Co. of New Jersey v. United States''. It was founded by [[John D. Rockefeller]] and associates, and it controlled almost all oil production, processing, marketing, and transportation in the United States.<ref name="Britannica_Standard">''Encyclopædia Britannica Inc.'', [http://www.britannica.com/EBchecked/topic/562986/Standard-Oil-Company-and-Trust "Standard Oil Company and Trust"], 05 Apr. 2013. Referenced 2013-04-05.</ref>

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	Standard Oil did indeed outcompete many of its competitors		Standard Oil did indeed outcompete many of its competitors

	1) <u>Buying up competitors</u>: The majority of Standard Oil buyouts were not aggressive and benefited both parties. As Hidy notes, "Rockefeller and his associates ... won the confidence of competitors through comprehensive voluntary association." <ref>ibid, 33</ref>. Many of the former executives of the firms which were bought up were offered high-ranking position in the new company and a guarantee of equality in management <ref>ibid, 34</ref> and were integrated into the management due to their experience in refining and their knowledge of local markets.		1) <u>Buying up competitors</u>: The majority of Standard Oil buyouts were not aggressive and benefited both parties. As Hidy notes, "[[John D. Rockefeller\|Rockefeller]] and his associates ... won the confidence of competitors through comprehensive voluntary association." <ref>ibid, 33</ref>. Many of the former executives of the firms which were bought up were offered high-ranking position in the new company and a guarantee of equality in management <ref>ibid, 34</ref> and were integrated into the management due to their experience in refining and their knowledge of local markets.
	The Standard Oil trust was not comprised of one company which had bought out all others. Instead, the Trust was very much a cooperation of different companies {{Citation needed}} which sought to improve their competitive advantage and which still maintained competition even in-between the member companies <ref>ibid, 71</ref>.		The Standard Oil trust was not comprised of one company which had bought out all others. Instead, the Trust was very much a cooperation of different companies {{Citation needed}} which sought to improve their competitive advantage and which still maintained competition even in-between the member companies <ref>ibid, 71</ref>.

Pestergaines: Reverted edits by 173.242.70.30 (talk) to last revision by 77.12.4.75

2013-01-31T23:24:28Z

Reverted edits by 173.242.70.30 (talk) to last revision by 77.12.4.75

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	==Notes==		==Notes==
	{{~~reflish surgh df sdhg 8uSh gfsdhfHDfiosdhfhsdifhsdut~~\|2}}		{{reflist\|2}}

	[[Category:Organizations]]		[[Category:Organizations]]

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Notes

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	==Notes==		==Notes==
	{{~~reflist~~\|2}}		{{reflish surgh df sdhg 8uSh gfsdhfHDfiosdhfhsdifhsdut\|2}}

	[[Category:Organizations]]		[[Category:Organizations]]

77.12.4.75: Undo revision 22001 by 67.39.250.8 (talk)

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Undo revision 22001 by 67.39.250.8 (talk)

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	=== Monopoly pricing ===		=== Monopoly pricing ===
	After Standard Oil destroyed its competitors and had monopoly power, it would raise its prices above the market level and extort high rates from consumers		After Standard Oil destroyed its competitors and had monopoly power, it would raise its prices above the market level and extort high rates from consumers
	hi

	=== Controlling the price of oil ===		=== Controlling the price of oil ===

67.39.250.8: /* Monopoly pricing */

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Monopoly pricing

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	=== Monopoly pricing ===		=== Monopoly pricing ===
	After Standard Oil destroyed its competitors and had monopoly power, it would raise its prices above the market level and extort high rates from consumers		After Standard Oil destroyed its competitors and had monopoly power, it would raise its prices above the market level and extort high rates from consumers
			hi

	=== Controlling the price of oil ===		=== Controlling the price of oil ===

Wheylous: /* Destruction of competition */

2012-06-16T10:32:10Z

Destruction of competition

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	Furthermore, the idea of predatory pricing only considers the supply side of the equation without taking into account the demand side. Assuming that a company manages by some magical means to use predatory pricing to destroy a few competitors and then institute "monopoly prices" (see below), consumers in other parts of the nation who hear of such behavior must really be of a low mental caliber to buy up the cheaper products of Standard Oil when it comes in the future to their market knowing that this would help Standard Oil destroy competition and institute new high prices.		Furthermore, the idea of predatory pricing only considers the supply side of the equation without taking into account the demand side. Assuming that a company manages by some magical means to use predatory pricing to destroy a few competitors and then institute "monopoly prices" (see below), consumers in other parts of the nation who hear of such behavior must really be of a low mental caliber to buy up the cheaper products of Standard Oil when it comes in the future to their market knowing that this would help Standard Oil destroy competition and institute new high prices.

	3) <u>Preferential rail rates</u>: Standard Oil did indeed make deals with railroads for cheaper product transport, as did many of its competitors, hardly making it an unfair market practice. In fact, almost all of the refiners in the country enjoyed some of the advantages of favorable railroad rates at one time or another <ref>[[#refHidy1955\|Hidy, 202]]</ref>. Railroads were quietly seeking the business of Standard Oil's competitors <ref>ibid, 198</ref>. Hidy note that "In fact, bargaining with railroads was a delicate task and the results were not always satisfactory. ... Once bulk stations had been built on a particular line, Standard Oil marketers could not easily transfer their business to another line and their bargaining capacity was curtailed. ... Standard Oil enjoyed advantages in rates, but the favors were neither so easily come by nor so certain as critics implied." <ref>ibid, 119</ref> Furthermore, if Standard Oil could secure for the railroads a stable inflow of traffic, then this is a legitimate market practice by any standard, as production is streamlined and stabilized. It is also important, as Hidy note, that "Rebates to Standard Oil on crude oil shipments had been virtually eliminated without recourse to legislative enactment." <ref>ibid, 89</ref>		3) <u>Preferential rail rates</u>: Standard Oil did indeed make deals with railroads for cheaper product transport, as did many of its competitors, hardly making it an unfair market practice. In fact, almost all of the refiners in the country enjoyed some of the advantages of favorable railroad rates at one time or another <ref>[[#refHidy1955\|Hidy, 202]]</ref>. Irwin, one of Standard's competitors, notes that everyone got rebates. <ref>McGee, http://www-personal.umich.edu/~twod/oil-ns/articles/research-oil/research-oil/john_mcgee_predatory_pricing_standard_oil1958.pdf, page 147</ref>Railroads were quietly seeking the business of Standard Oil's competitors <ref>ibid, 198</ref>. Hidy note that "In fact, bargaining with railroads was a delicate task and the results were not always satisfactory. ... Once bulk stations had been built on a particular line, Standard Oil marketers could not easily transfer their business to another line and their bargaining capacity was curtailed. ... Standard Oil enjoyed advantages in rates, but the favors were neither so easily come by nor so certain as critics implied." <ref>ibid, 119</ref> Furthermore, if Standard Oil could secure for the railroads a stable inflow of traffic, then this is a legitimate market practice by any standard, as production is streamlined and stabilized. It is also important, as Hidy note, that "Rebates to Standard Oil on crude oil shipments had been virtually eliminated without recourse to legislative enactment." <ref>ibid, 89</ref>

	The argument breaks down even more considering that Standard Oil increasingly transported oil through pipelines and not on rails <ref>ibid, 215</ref>.		The argument breaks down even more considering that Standard Oil increasingly transported oil through pipelines and not on rails <ref>ibid, 215</ref>.