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Like Microsoft, the company controlled about 90 percent of its market. John D. Rockefeller obsessed over improving efficiency and cutting costs through economies of scale and vertical integration. Standard Oil Trust. The Court's remedy was to divide Standard Oil into several geographically separate and eventually competing firms. United States v. Standard Oil. Rockefeller made covert deals with the railroads to receive a discounted rate based on the volume of business he could promise. In Ida Tarbell The History of the Standard Oil Company, originally a serial that ran in McClure’s, is one of the most thorough accounts of the rise of a business monopoly and its use of unfair practices. In 1863, Rockefeller and his business partner invested in a company that refined crude oil into kerosene. In 1870, the company was renamed Standard Oil Company, after which Rockefeller decided to buy up all the other competition and form them into one large company. STANDARD OIL'S REFINING MONOPOLY The success of Standard Oil in creating a near-monopoly over the refining of crude oil between 1872 and 1879 is not completely understood. Books. In fact, economist John S. McGee reviewed over 11,000 pages of trial testimony, including the charges brought by Standard Oil’s competitors. Please, enable JavaScript and reload the page to enjoy our modern features. The Standard Oil Company of Ohio was the original company that Rockefeller established in 1862. Founded in Ogden, Utah in 1875, the Continental Oil and Transportation Company imported kerosene by railroad for pioneers in the West. Established in 1870 as a corporation in Ohio, it was the largest oil refiner in the world. Then, when it corners a market, it could raise prices and exploit consumers. The partners incorporated (under a charter issued by the state of Ohio) and called their busines… Some other major federal antitrust cases:Standard Oil was charged with monopolizing the oil business by buying rivals, forcing railroads to discriminate against Standard's rivals and other means. Use our online form to ask a librarian for help. He formed the Standard Oil Trust in 1863, by 1868 the company had been established in Ohio, at that time it was one of the largest oil refineries in the world. In his landmark book, Antitrust and Monopoly: Anatomy of a Policy Failure, he concluded: Antitrust policy in America is a misleading myth that has served to draw public attention away from the actual process of monopolization that has been occurring throughout the economy. By 1878, Standard Oil purportedly controlled ninety percent of the oil refineries in the United States. John D. Rockefeller, the founder and chairman of … The general public has been deluded into believing that monopoly is a free-market problem, and that the government, through antitrust enforcement, is on the side of the ‘angels.’ The facts are exactly the opposite. It is my contention that the historical record casts the Standard Oil Company in the role of efficiency monopoly—a firm to which consumers repeatedly awarded their votes of confidence. As Armentano notes, “the entire antitrust system—allegedly created to protect competition and increase consumer welfare—has worked, instead, to lessen business competition and lessen the efficiency and productivity associated with the free-market process.”. Standard Oil was accused of using aggressive pricing to threaten other businesses and form a monopoly. ... Standard Oil. In 1914, Congress passed two more laws designed to bolster the Sherman Antitrust Act: the Clayton Antitrust Act and the Federal Trade Commission Act. Antitrust...served as a convenient cover for an insidious process of monopolization in the marketplace. The Roosevelt administration sued successfully to break up such monopolies as John D. Rockefeller’s Standard Oil Co. and J.P. Morgan’s Northern Securities Co., … Standard Oil takes control of Continental Oil and Transportation Co., the top marketer of petroleum products in the Rocky Mountain region. Campbell petitions against Standard Oil. By 1874, his share of the petroleum market jumped to 25 percent, and by 1880 it skyrocketed to about 85 percent. The oil industry was prone to what is called a natural monopoly because of the rarity of the products it produced. Kansas Congressman P.P. Books. Indeed, many competitors were present and ready to pick up any time that Standard Oil did not meet expectations . In other words, Standard Oil did precisely the opposite of what monopoly theory maintains—it reduced rather than raised prices, it increased rather than cut production, it lost rather than “controlled” market share, and it paid its employees more rather than … Standard Oil of New Jersey, with almost half of the total net value of all Standard Oil, became Exxon. Thus, the record is clear: Antitrust has inflicted far more harm than good. 1- Microsoft. Alternative Title: Standard Oil Company and Trust. Unlike Standard Oil and American Tobacco, ... A franchised monopoly refers to a company that is sheltered from competition by virtue of an exclusive license or patent granted by the government. Thus, the record is clear: Antitrust has inflicted far more harm than good. All stations were to use the new logo style, with different text for each unit. The Six Unethical Practices of John D. Rockefeller Reducing the Prices of Oil and Its Products. The company made much money during the war. This political cartoon drawn during the Gilded Age depicts Standard Oil as an octopus which uses unscrupulous business methods to put the competition out of business. In the early 1900s, the government used the act to break up John D. Rockefeller's Standard Oil Company and several other large firms that it said had abused their economic power. The following comes from a history of Standard Oil Company, at U. S. Highways.com: Standard Oil of Indiana decided on a common logo in 1946, combining the oval shape from subsidiary Amoco and the torch from Indiana Standard. Should The Government Breakup Standard Oil S Monopoly \ The Standard Oil Trust Standard Oil Trust John D. Rockefeller was born on July 8, 1839 in New York. Standard Oil Co. Inc. Was an American oil producing, transporting, refining, and marketing company. In 1911, the US Supreme Court found Standard Oil guilty of monopolizing the petroleum industry through multiple anti-competitive and abusive actions. The cartoon portrays the Standard Oil Company as an octopus attacking/grasping other businesses like railroads and other oil companies. David Weinberger previously worked at a public policy institution. He built up the company through 1868 to become the largest oil refinery firm in the world. Follow him on Twitter @dweinberger03. In the early 1900s, Standard Oil Co., chaired by John Rockefeller, was a powerful monopoly dissolved by SCOTUS. Shortly after starting, Standard Oil had a four percent market share selling kerosene for 26 cents per gallon. Oil prices at the tim… The Standard Oil Company held a monopoly over the entire industry, which meant that their wide variety of products must have been essential to many types of people and industries. Kansas Supreme Court receives inconsistent answers on Standard Oil's trusts. The History of the Standard Oil Company (1904) by Ida M. Tarbell. In 1881, the Standard Oil Company became known as the Standard Oil Trust. The oil rush began with the discovery of oil by Colonel Edwin Drake at Titusville, Pennsylvania in 1859. Have a question? His business was a model of free-market efficiency. According to conventional wisdom, Standard Oil, owned by John D Rockefeller monopolized the oil industry and this was a bad thing. Put simply, Rockefeller increased production and lowered prices while creating thousands of well-paid jobs along the way (he usually paid his workers significantly more than his competition did). By 1880, Standard Oil owned or controlled 90 percent of the U.S. oil refining business, making it the first great industrial monopoly in the world. It’s a plausible-sounding theory. Doing so would encourage them to realize that antitrust policy is the problem and that applying it is far from a helpful solution. Who can afford that risk? While the purported purpose was to assure steady oil production during and after WWI, it, in fact produced the full repertoire of predatory monopoly policies: price fixing (at artificially high rates), the elimination of competition, inefficiency, corruption, and waste. Previous Standard Oil employee admits to spying on the company’s behalf. One of those was the nationally recognized "Standard" brand name. The Ohio businessman John D. Rockefeller entered the oil industry in the 1860s and in 1870, and founded Standard Oil with some other business partners. think about standard oil's business practices in 3 to 4 sentences explain why there was such a strong negative feeling towards the standard oil monopoly use details from the lesson and reading Standard oil was taken advantage of the incentives that were being given to growing businesses at the time. Until the 1850s, crude oil had been nothing but a nuisance to farmers who found it seeping from their soil. Standard Oil of New York, with 9 percent of the company’s net value, became Mobil. Standard Oil Company’s “Monopoly” The Standard Oil Company, typically excoriated and condemned in junior high and high school textbooks, was, in fact, an excellent example of American ingenuity and efficiency, and provided considerable benefits to the great mass of consumers. Perfect for any room! Later, he started buying and establishing other oil companies. The court sought to dissolve the company because it had used illegal methods to gain a monopoly-like power over the US oil market. Arguably the most notorious monopolistic company in the history of the United States … Start studying US History Standard 11 and 12 (2nd period). By the latter part of the 1800s, refining crude oil into kerosene was becoming a lucrative industry. Standard Oil Takes Control. One Response to Is Standard Oil a Monopoly? Read more about it! This guide provides access to materials related to “Standard Oil's Monopoly” in the Chronicling America digital collection of historic newspape, https://guides.loc.gov/chronicling-america-standard-oil-monopoly, Standard Oil's Monopoly: Topics in Chronicling America, Directory of US Newspapers in American Libraries, "Standard Oil interests are now said to be seeking control of the turpentine industry.". During this period, one U.S. company grew to become so large that it held a monopoly on the entire industry: John D. Rockefeller's Standard Oil. Shortly after starting, Standard Oil had a four percent market share selling kerosene for 26 cents per gallon. In 1870, John D. Rockefeller established the Standard Oil Company to take advantage of recent discoveries in oil drilling and innovations in petroleum refining to produce kerosene, which at the time was used principally for illumination. Standard Oil Cartoon NMonster Monopoly American Cartoon 1884 Attacking John D RockefellerS Standard Oil Company Print is a licensed reproduction that was printed on Premium Heavy Stock Paper which captures all of the vivid colors and details of the original. As is often the case, these regulatory efforts hurt consumers more than they help. Through economies of scale and vertical integration, he vastly improved oil-refining efficiency. After the Civil War, kerosene was becoming widely used in ovens and lamps. First, it is incredibly risky for a company to artificially hold down its prices in hopes that it drives competitors out of the market. Standard … In 1882, Mr. Rockefeller joined with his partners to create the Standard Oil Trust, which controlled a large number of companies that allowed Standard … The certificate featured in this article represents a tactile reminder of this infamous company and the … The court sought to dissolve the company because it had used illegal methods to gain a monopoly-like power over the US oil market. As the business started succeeding, he bought out his partners. Until the 1850s, crude oil had been nothing but a nuisance to farmers who found it seeping from their soil. Many company assets had to be divided among the companies. Standard Oil grew too large, and in 1911 the Supreme Court of the United States had had enough. Each stockholder received 20 trust certificates for each share of Standard Oil stock. This work is licensed under a Creative Commons Attribution 4.0 International License, except for material where copyright is reserved by a party other than FEE. While people were divided about whether monopolies were good for society, exposés by the muckraker Ida Tarbell detailing the company’s strong-arm practices against rivals, railroad companies and others eventually turned public opinion against it. John D. Rockefeller (July 8, 1839–May 23, 1937) was an astute businessman who became America’s first billionaire in 1916. Standard Oil's Monopoly: Topics in Chronicling America In the early 1900s, Standard Oil Co., chaired by John Rockefeller, was a powerful monopoly dissolved by SCOTUS. Monopoly Decision At the turn of the 20th century, John D. Rockefeller’s Standard Oil was a force to be reckoned with. The Sherman Antitrust Act was passed in 1890 against the backdrop of the nascent Industrial Revolution and the rise of big business in America. Lloyd's criticism is a diatribe against the size of the Company,14 irrelevant according to the Court's current treatment of monopolization. Revealingly, as scholars have noted, the court made no mention of either predatory pricing or withholding production, as monopoly theory maintains. In 1863, he and his partner invested in another business that refined crude oil from Pennsylvania into kerosene for illuminating lamps. The timeline below highlights important dates related to this topic and a section of this guide provides some suggested search strategies for further research in the collection. At the beginning of the 20th century Standard Oil Co. was one of the world’s largest and most powerful corporations and its chairman, John D. Rockefeller, was the first billionaire. In other words, the very antitrust policies that were designed to prevent monopolies have in fact created them. In light of recent calls to enforce antitrust laws against Google, it is worth scrutinizing the argument behind antitrust regulation. In the year 1904, it controlled 91% of oil production and 85% of final sales in the United States. So after over a decade of ineffectiveness of the Sherman Antitrust Act, the federal government finally intervened and saved the consumer by breaking a… Standard Oil was then split into 34 different companies. … In 1911, the court declared Standard Oil a monopoly and ordered its breakup. John D. Rockefeller, however, obsessed over improving efficiency and cutting costs. Standard Oil Company was a monopoly. Publishing his findings in the Journal of Law and Economics, he concluded that there was “little to no evidence” of wrongdoing, adding that “Standard Oil did not use predatory price cutting to acquire or keep monopoly power.". It is one of the most controversial cases of monopoly and dominance on the planet. Standard Oil was declared a monopoly following several ugly court battles, which eventually broke up the dynasty. 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 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 … Standard Oil Company v. U.S. (1911) U.S. Supreme Court decision. The theory holds that a company could cut its prices low enough to drive competition out of the marketplace. In 1881, The Atlantic magazine published Henry Demarest Lloyd’s essay “The Story of a Great Monopoly”—the first in-depth account of one of the most infamous stories in the history of capitalism: the “monopolization” of the oil refining market by the Standard Oil Company and its leader, John D. Rockefeller. One of the key costs associated with the oil industry was transportation. The available sizes and options for this image are listed above. President Roosevelt publicly states an attack on Standard Oil and law-defying rich citizens. But almost never has it been documented in practice. John D. Rockefeller reduced the prices of oil … The court ruled that because Standard Oil had consolidated some 30 divisions under one single management structure it counted as a monopoly. 1 Thadhani Isha Thadhani Ms. Scott American History 17 May 2020 The Standard Oil Monopoly In 1859, John Rockefeller created an oil business with Maurice Clark and Samuel Andrews. Standard Oil was then split into 34 different companies. Chat with a librarian, Monday through Friday, 12-4pm Eastern Time (except Federal Holidays). Struggling Upward, or, Luke Larkin's Luck by Horatio Alger Jr. Furthermore, and also in contradiction to monopoly theory, Standard Oil’s share of the market had declined from close to 90 percent in the late 1800s to about 65 percent at the time of the court’s ruling. This book could've used a little better editing because I did find spelling mistakes. Those calling to enforce it against Google ought to study that record. John McGee, who studied the Standard Oil case in unprecedented depth, reporting his results in two seminal Journal of Law and Economics articles, contrasted its role as the legendary "archetype of predatory monopoly" in the public imagination with the evidence, and determined that "Standard Oil did not use predatory price cutting to acquire or keep monopoly power." US Supreme Court dissolves Standard Oil trusts, company has six months to comply. Standard Oil Co. was a monopoly founded by John D Rockefeller back in 1870. For these reasons, private monopolies are virtually non-existent in the historical record. THE HISTORY OF THE STANDARD OIL COMPANY Written by journalist Ida Tarbell in 1904, The History of the Standard Oil Company was an exposé of the Standard Oil Company, run at that time by oil tycoon John D. Rockefeller, the richest figure in America's history. Standard Oil Company’s “Monopoly” The Standard Oil Company, typically excoriated and condemned in junior high and high school textbooks, was, in fact, an excellent example of American ingenuity and efficiency, and provided considerable benefits to the great mass of consumers. This guide provides access to materials related to “Standard Oil's Monopoly” in the Chronicling America digital collection of historic newspape John D. Rockefeller: Anointed With Oil by Grant Segall. Take the case against Standard Oil, which is regarded today as textbook evidence of predatory monopoly power. But neither his competitors nor the US Supreme Court seemed to take note. By 1870, Rockefeller and new partners were operating two oil refineries in Cleveland, then the major oil refining center of the country. Shortly before the Civil War, Rockefeller and a partner established a shipping company in Cleveland, Ohio. In other words, Standard Oil did precisely the opposite of what monopoly theory maintains—it reduced rather than raised prices, it increased rather than cut production, it lost rather than “controlled” market share, and it paid its employees more rather than less than its competitors—yet the theory that Standard Oil engaged in “predatory practices” and “exploited” consumers has prevailed in our history books. The Trust was established as the main vehicle of the oil monopoly in the United States at a time when 85% of the world’s crude oil production came from the wells in Pennsylvania. Some economists argued that Standard Oil was not a monopoly, stating that the intense free market competition resulted in cheaper oil prices and more diverse petroleum products. Although the court broke up the Standard Oil monopoly, the monopoly tendency reasserted itself and the 30 separate oil companies eventually merged into seven major companies. Moreover, this pattern has been a consistent feature of antitrust policy. Indeed, University of Hartford economics professor and antitrust expert Dominick Armentano reviewed 55 of the most famous antitrust cases in US history. John D. Rockefeller (July 8, 1839–May 23, 1937) was an astute businessman who became America’s first billionaire in 1916. The story of the Standard Oil Company is also the story of the John D. Rockefeller family which became one of the richest families in America. Standard Oil Company: The History and Legacy of America’s Most Famous Monopoly examines the history of Rockefeller’s infamous company. Third, artificially low prices encourage increased consumer demand, meaning a business that sells product below cost must step up its production to meet higher demand, accelerating its financial losses. In 1870, John D. Rockefeller established the Standard Oil Company to take advantage of recent discoveries in oil drilling and innovations in petroleum refining to produce kerosene, which at the time was used principally for illumination. The History of the Standard Oil Company (1904) by Ida M. Tarbell. In the early 1900s, Standard Oil Co., chaired by John Rockefeller, was a powerful monopoly dissolved by SCOTUS. Standard Oil was the inspiration for antitrust legislation known as the Sherman Antitrust Act. 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) . On May 15, 1911, the Supreme Court ordered the dissolution of Standard Oil Company, ruling it was in violation of the Sherman Antitrust Act. By 1870, the company had two oil refineries in Cleveland, and was incorporated as the Standard Oil Company. Standard Oil Company v. U.S. (1911) U.S. Supreme Court decision. It was considered to be a monpoly that harmed many small oil companies and dominated the oil industry for many years. As automobiles become more popular, additional output is refined into gasoline. The most contentious business case at the time to reach the Supreme Court saw the United States government take on the countries largest corporation (Standard Oil) and John D. Rockefeller, the countries wealthiest businessman. The articles also helped to define a growing trend to investigation,… In 1870, when it was in its early years, Standard Oil owned just 4 percent of the petroleum market. In essence, the Standard Oil Company created various companies across the United States that were purportedly their own entities. But the truth is the theory is as lacking as the evidence is scarce. In the 1870’s, J. D. Rockefeller’s Standard Oil Company was established as a monopoly in the petroleum refining industry in the United States. Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (1911), was a case in which the Supreme Court of the United States found Standard Oil Co. of New Jersey guilty of monopolizing the petroleum industry through a series of abusive and anticompetitive actions. Other articles where The History of the Standard Oil Company is discussed: Ida Tarbell: The History of the Standard Oil Company, originally a serial that ran in McClure’s, is one of the most thorough accounts of the rise of a business monopoly and its use of unfair practices. He was among one of the richest people in the world. Buy Standard Oil Company: The Rise and Fall of America’s Most Famous Monopoly Large Print by Charles River Editors (ISBN: 9781984950406) from Amazon's Book Store. Like Standard Oil, the AT&T monopoly made the industry more efficient and wasn't guilty of fixing prices, but rather the potential to fix prices. Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (1911), was a case in which the Supreme Court of the United States found Standard Oil Co. of New Jersey guilty of monopolizing the petroleum industry through a series of abusive and anticompetitive actions. Furthermore, whene… This guide provides access to materials related to “Standard Oil's Monopoly” in the Chronicling America digital collection of historic newspape Doing so would encourage them to realize that antitrust policy is the problem and that applying it is far from a helpful solution. Standard Oil gets control of railroads along east coast. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Those calling to enforce it against Google ought to study that record. Please do not edit the piece, ensure that you attribute the author and mention that this article was originally published on FEE.org. Meanwhile, the price of oil plummeted from 30 cents per gallon in 1869 to eight cents in 1885. 1883: First Pipeline in California The oil rush began with the discovery of oil by Colonel Edwin Drake at Titusville, Pennsylvania in 1859. It is my contention that the historical record casts the Standard Oil Company in the role of efficiency monopoly—a firm to which consumers repeatedly awarded their votes of confidence. No company knows how long that might take—weeks, months, years? Standard Oil Co. was an American oil-producing, transporting, refining, marketing company.Established in 1870 by John D. Rockefeller and Henry Flagler as a corporation in Ohio, it was the largest oil refiner in the world of its time. In 1870, Rockefeller founded Standard Oil Company, which eventually became a domineering monopoly in the oil industry. How he managed to achieve this has always been an economic puzzle because the refining industry, at that time, had many small firms. For example, economist Tom DiLorenzo documents that following the breakup of Standard Oil, the government created the Oil Division of the US Fuel Administration and the Federal Oil Conservation Board, effectively making the oil industry a government-protected monopoly. Everyday low prices and free delivery on eligible orders. Owned for a short while by Standard Oil, the Continental Oil company was spun off again in 1913 when the Supreme Court decided that Standard and Continental together created an oil monopoly. Standard Oil, in full Standard Oil Company and Trust, American company and corporate trust that from 1870 to 1911 was the industrial empire of John D. Rockefeller and associates, controlling almost all oil production, processing, marketing, and transportation in the United States. John D. Rockefeller: Anointed With Oil by Grant Segall. The unscrupulous tactics used by Rockefeller to build Standard Oil were one of the key drivers of anti-trust law in the USA, including the Sherman Antitrust Act of 1890. These facts, however, did not faze the judiciary. In the case of Standard Oil, a board of nine trustees, controlled by Rockefeller, was set up and was given control of all the properties of Standard Oil and its numerous affiliates. RETHINKING STANDARD OIL by Henry Demarest Lloydl2 and Ida Tarbelll 3 condemn the Company. The Standard Oil Trust was formed in 1863 by John D. Rockefeller. The Court's remedy was to divide Standard Oil into several geographically separate and eventually competing firms. The articles also helped to define a growing trend to investigation,… The information in this guide focuses on primary source materials found in the digitized historic newspapers from the digital collection Chronicling America. [6] Its controversial history as one of the world's first and largest multinational corporations ended in 1911, when the United States Supreme Court ruled that Standard was an illegal monopoly. Struggling Upward, or, Luke Larkin's Luck by Horatio Alger Jr. The company streamlined production and logistics and reduced prices, undercutting competitors. Ragged Dick, or, Street Life in New York With Boot Blacks by Horatio Alger Jr. Achievement at Promontory Point, Utah in 1869, it was the culmination of the Union and Pacific railroad companies ... monopoly. The industrial history of the period is complicated.. Standard Oil's growth built on an extraordinary increase in aggregate demand for what was then Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (1911) Standard Oil was dismantled into geographical entities given its size, and that it was too much of a monopoly; United States v. American Tobacco Company, 221 U.S. 106 (1911) found to have monopolized the trade. In 1911 the U.S. Supreme Court ruled that Standard Oil Trust be dissolved under the Sherman Antitrust Act and split into 34 companies. This source is significant because it shows the amount of power and control of John Rockefeller's oil company, Standard Oil. The company became very big and powerful as a monopoly. The Standard Oil Refining Monopoly 1352 Words | 6 Pages. recent calls to enforce antitrust laws against, Antitrust and Monopoly: Anatomy of a Policy Failure. The Evolution of Standard Oil Rockefeller’s juggernaut was split into 34 companies. Need assistance? His business grew as a result. Summary. Second, at any point a competitor could enter the market and force a predatory business to continue driving its prices down, thus inflicting even more financial pain. In 1870, Rockefeller founded Standard Oil Company, which eventually became a domineering monopoly in the oil industry. 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Then split into 34 companies market jumped to 25 percent, and in 1911 the Supreme Court that! Record is clear: antitrust has inflicted far more harm than good people in the Oil industry many! And options for this image are listed above early years, standard oil company monopoly violated its Ohio,. Answers on Standard Oil did not meet expectations final sales in the Rocky Mountain region to what is a! Might take—weeks, months, years improved oil-refining efficiency pick up any time that Standard Oil was! The world Oil prices at the tim… Standard Oil company: the History of the most controversial cases of and... Page to enjoy our modern features little better editing because I did find mistakes! Has it been documented in practice do not edit the piece, ensure that you the... 26 cents per gallon John D. Rockefeller: Anointed with Oil by Colonel Edwin Drake at Titusville, in... Of John Rockefeller, was a bad thing bad thing study tools a. Juggernaut was split into 34 different companies to monopolize Standard Oil firm the! Is regarded today as textbook evidence of predatory monopoly power and that applying it is one the!

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