A Classification of American Wealth
History and genealogy of the wealthy families of America - Sponsors


 Part 1 : Colonial and Mercantile America  Part 2 : America in the Gilded Age
 Part 3 : America in the Twentieth Century  Encyclopedia of American Wealth

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   Part II-Chapter 11 :  The Trusts  > Index and Introduction  :  Previous  1 - 2 - 3 - 4 - 5 - 6  Next  

The concept of "trusts" was invented during the Gilded Age, as a response to the specific legal situation, which forbid corporations from owning other companies or assets in other states. It notably appeared as the legal form, the Standard Oil alliance took in 1882, to unite its shareholders as it could not merge its constituent companies. The introduction of the holding company in New Jersey during the 1890's allowed what was formerly impossible and thereby accelerated the trust movement in corporate America during this period. Under public pressure, the US Congress reluctantly introduced anti-trust laws to rein in the growing concentration of wealth and power in the hands of a few individuals and fight the large corporations in their efforts to restrain competition. These efforts proved rather futile, as witnessed by the creation in 1890 of the American Tobacco trust, the same year in which the Sherman Act passed. The American Sugar Refining Company joined in January 1891 and the nine year old Standard Oil trust made no efforts to adjust, despite the fact that it was the target of the Sherman anti-trust legislation. It would take twenty years until these three major trust would be dissolved by order of the Supreme Court of the United States.

In time most American industries fell prey to the consolidation or trust movement, many of them during the 1890's. However, some sectors were more suited to be "organized" than others. Such was the case of the nascent (rock) oil or petroleum industry, which came under the influence of the secretive John Davison Rockefeller and his partners, including Henry Morrison Flagler, Stephen Vanderburgh Harkness and Oliver Hazard Payne. Drawing his strength in his deep faith, John D. Rockefeller relentlessly brought his Standard Oil Company forward, until it owned 90% of the nation's oil refining capacity and controlled all essential oil transportation infrastructures, with its pipeline network, tank car fleet and secret railroad rebates. The four major railroads serving the Western Pennsylvania Oil Regions then were the New York Central - Lake Shore, the Erie - Atlantic & Great Western, the Pennsylvania and the Baltimore & Ohio. To achieve his goal of monopolizing the oil industry, John D. Rockefeller allied himself with his strongest competitors : refiners Charles Lockhart (Pittsburg), William Gray Warden (Philadelphia), Charles Pratt and Jabez Bostwick (New York) and J.N. Camden (West Virginia). He also enrolled the most fervent of his opponents in the Oil Regions, such as John Dustin Archbold and lawyer Samuel C.T. Dodd.

Standard Oil became so fabulously profitable, that it was soon known as the "Mother of Trusts", standing behind the consolidation of many other industries. By then, John D. Rockefeller inherited the mantle of evil from Jay Gould, the brand-mark of the villain, who tried to monopolize just every sector he could get hold on and thereby required his tribute from the innocent consumer and producer. This impression was actually wrong, as these enterprises sprang from the initiatives of the oil trust's individual shareholders and were not orchestrated by a common entity. Although John D. Rockefeller had some ambitions to consolidate the steel industry, (which he failed to do), most of the trusts financed by Standard Oil money were organized by other partners. The most active were Oliver Hazard Payne (American Tobacco), Henry Huddleston Rogers (the smelters trust) and Rockefeller's brother William, who promoted the great Amalgamated Copper scheme in 1899, with the support of James Stillman and the National City Bank. There were lesser trusts with Standard Oil influence, such as the National Lead Company and the American Linseed Company.

The Trusts  > Index and Introduction  :  Previous  1 - 2 - 3 - 4 - 5 - 6  Next  

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The Trusts


 

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