In 1993, 103 years after the passing of the Sherman Act, the US Supreme Court stated that the Act’s purpose:
… is not to protect businesses from the working of the market; it is to protect the public from the failure of the market. The law directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself.
The US and the states pursued many trusts over a number of decades, the best-remembered being Mr Rockefeller’s Standard Oil. This letter dated 30 November 1894 exemplified the experience of many independent operators:
Mr. Keenan, who is with the Waters-Pierce people at Galveston [Waters-Pierce was an associate of Standard Oil], has made us several visits and made us propositions of all kinds to get us out of the business. Among 2042others, he offered to pay us a monthly salary if we would quit selling oil and let them have full control of the trade, and insisted that we name a figure that we would take and get out of the business, and also threatened that if we did not accept his proposition they would cut prices below what oil cost us and force us out of business. We asked him the question, should we accept his proposition, would they continue to sell oil as cheap as we were then selling it, and he stated most positively that they would advance the price at once should they succeed in destroying competition.
In 1899 and as part of its response to the pursuit, the Standard Oil Trust rebirthed itself as a holding company, the Standard Oil Co of New Jersey.
In 1911, the US Supreme Court ruled that Mr Rockefeller had not gone far enough and the entity was split into 34 entities. One was Standard Oil Company of New Jersey, Jersey Standard for short, Exxon for Americans and Esso for the rest of the world. Another was Standard Oil of New York, Socony for short, and Mobil for most of us.
On 30 November 1999 and after Federal Trade Commission approval, the two entities merged to create ExxonMobil. Today it is the largest oil company headquartered in the west and in the top ten publicly traded corporations by revenue.
It is tempting to see the merger as the closing chapter in a failure for progressives and there is no dispute that the merged corporation has faced stiff and possibly justifiable criticism. But the question “is a corporation capable of affecting the public interest” is different than the question “is this merged corporation’s capability of affecting the public interest qualitatively different from the sum of the capabilities of the unmerged corporations?”
The merger did attract some adverse comment and doubtless some retail affiliates suffered in the result. On the other side of the equation, Daniel Yergin, who had won the Pulitzer Prize for his history of the industry in 1990, said in 1999:
I think that the mergers are a way to get scale to take on the huge risks of 20-year multibillion-dollar projects, to manage costs in the face of price volatility and to deliver the stock performance that the pension funds and mutual funds demand.
An interesting side question in a corporate and global world is the changing composition of “the public interest”. Consumers, tax payers, the billions of foreign nationals affected, the pension and mutual funds in whom those consumers, taxpayers and foreign nationals have invested, or some other hypothetical “reasonable voter”.
In 1906 in the midst of Mr Rockefeller’s regulatory problems, Mark Twain was at a New York Press Club dinner in memory of Dickens:
‘John D. Rockefeller, Jr.,’ said Mr. Clemens, ‘told his Sunday school class a few weeks ago all about veracity, and why it was better that everybody should always keep a plentiful supply on hand, and I want to say to you that among the hundreds of letters I receive each week many of them have suggested that I ought to attend Mr. Rockefeller’s class. I know Mr. Rockefeller very well. He is a fine fellow, and competent in many ways, but as to his knowledge of veracity – well, he is only 35 years old, and I am 70. I have been familiar with veracity twice as long as he has.’
It is classic Twain and, in isolation, a little edgy. However, one has to recall that Twain was now hobnobbing with the likes of Mr Rockefeller and had himself been managed out of bankruptcy by Henry Huttleston Rogers, a key member of the Standard Oil team.
Mr Clemens was born on 30 November 1835.
