Trusts were not legal mergers however rockefeller

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entitled to dividends on profits earned by the trust. Trustswere not legal mergers, however. Rockefeller used a trust togain total control of the oil industry in America.ROCKEFELLER AND THE “ROBBER BARONS”In 1870,Rockefeller’s Standard Oil Company of Ohio processed twoor three percent of the country’s crude oil. Within a decade,it controlled 90 percent of the refiningbusiness. Rockefeller reaped huge profitsby paying his employees extremely lowwages and driving his competitors out ofbusiness by selling his oil at a lowerprice than it cost to produce it. Then,when he controlled the market, hehiked prices far above original levels.Alarmed at the tactics of industrial-ists, critics began to call them robberbarons. But industrialists were also phil-anthropists. Although Rockefeller keptmost of his assets, he still gave awayover $500 million, establishing theRockefeller Foundation, providing fundsto found the University of Chicago, andcreating a medical institute that helpedfind a cure for yellow fever.BackgroundSeemonopolyonpage R43 in theEconomicsHandbook.BThis 1900 cartoon, captioned “What a funny little government!”is a commentary on the power of the Standard Oil empire. John D.Rockefeller holds the White House in his hand.MAIN IDEAMAIN IDEABSummarizingWhatstrategies enabledbig businesses toeliminatecompetition?KEYPLAYERKEYPLAYERJOHN D. ROCKEFELLER1839–1937At the height of John DavisonRockefeller’s power, an associatenoted that he “always sees a littlefarther than the rest of us—andthen he sees around the corner.”Rockefeller’s father was aflashy peddler of phony cancercures with a unique approach toraising children. “I cheat my boysevery chance I get. . . . I want tomake ’em sharp,” he boasted.It seems that this approachsucceeded with the oldest son,John D., who was sharp enoughto land a job as an assistantbookkeeper at the age of 16.Rockefeller was very proud of hisown son, who succeeded him inthe family business. At the end ofhis life, Rockefeller referred notto his millions but to John D., Jr.,as “my greatest fortune.”
Andrew Carnegie donated about 90 percent of the wealth he accumulatedduring his lifetime; his fortune still supports the arts and learning today. “It willbe a great mistake for the community to shoot the millionaires,” he said, “forthey are the bees that make the most honey, and contribute most to the hive evenafter they have gorged themselves full.”SHERMAN ANTITRUST ACTDespite Carnegie’s defense of millionaires, thegovernment was concerned that expanding corporations would stifle free com-petition. In 1890, the Sherman Antitrust Actmade it illegal to form a trustthat interfered with free trade between states or with other countries.Prosecuting companies under the Sherman act was not easy, however, becausethe act didn’t clearly define terms such as trust. In addition, if firms such asStandard Oil felt pressure from the government, they simply reorganized into sin-gle corporations. The Supreme Court threw out seven of the eight cases the feder-al government brought against trusts. Eventually, the government stopped trying

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