“Monopoly means single source of supply. Monopoly is completely harmless unless it is coercive.”–Andrew J. Galambos 1
This chapter examines the adverse consequences of state intervention in business competition.
The English word monopoly denotes a single source of supply. The etymology of the word is from the Greek word monopolion, meaning a single seller. A monopoly is the condition that exists when there is a single source of supply for goods or services.
According to the Antitrust Division of the United States Department of Justice (the federal agency delegated the power to control business competition), its “. . . mission . . . is to promote and protect the competitive process and the American economy through the enforcement of the antitrust laws.” 2 However, in practice and operation the federal antitrust laws are used to attack the most efficient and successful producers, to protect inefficient producers from competition by more efficient producers and to carry out a policy of “. . . hostility to the concentration in private hands of power so great that only a government of the people should have it.” 3
The original, and continuing, political justification of anti-monopoly political laws is that monopolies in commerce are harmful to consumers. However, the federal state claims a monopoly of its own: a monopoly of coercion. Business monopolies that do not use coercion cannot harm anyone, but the state’s coercive operations harm everyone.
U.S. political laws are vague in their definition of just what is a commercial monopoly. Illegal monopoly status is not limited to a business that is a single and unique source of supply. Rather, monopoly is defined as a combination of businesses or a conspiracy among businesses in restraint of trade. 4 In practical application this has meant that one or more individuals or businesses is accused of restricting competition because no one else wants to or can supply comparable goods or services as well and as cheaply.
Even when a business is a monopoly, it cannot hurt consumers, because the monopoly cannot compel anyone to buy. A commercial monopoly is vulnerable to the ability of consumers to reduce their purchases if prices are unacceptably high and to substitute alternative goods and services. This is true even in the case of water, a resource essential to life. This concept will be discussed in further detail in the main text below.
High profits of a monopoly would attract competitors seeking to offer the product or service at a lower, yet still profitable price. Therefore, there can be no sustainable monopoly in a free market where no one can coerce others into buying.
Let’s contrast a business monopoly to the way the state operates. The state
- demands the right to be the sole source of supply for many of its services;
- does not offer the services on a voluntary basis, but imposes the services on those unwilling to have such services;
- dictates what people must pay as taxes for state services;
- asserts the power to wage war and to raise armies by placing its citizens in military servitude under penalty of imprisonment or death for refusing to participate;
- demands unquestioned obedience to military orders, no matter how senseless
Alfred Lord Tennyson wrote in his famous poem, The Charge of the Light Brigade about a British military order to a brigade of cavalry to ride into almost certain death:
‘Forward, the Light Brigade!’
Was there a man dismay’d ?
Not tho’ the soldier knew
Some one had blunder’d:
Theirs not to make reply,
Theirs not to reason why,
Theirs but to do & die,
Into the valley of Death
Rode the six hundred.
No business organization has such power—the power to order men to go to their death in military combat. Andrew Galambos observed that it is a supreme irony of political democracy that politicians wielding the coercive powers of the state have convinced most of the American people that state coercion was their only protection against exploitation by non-coercive private enterprise.
In nineteenth century America there were virtually no impediments to the accumulation of wealth. Poor, young men, such as Andrew Carnegie and John D. Rockefeller, could accumulate money by working hard and saving much of their earnings. Some such men directed their accumulated savings into the creation of businesses. A few of such businesses became giants of industries such as railroads, steel, and petroleum. The men who built those industries were entrepreneurs. Their activities caused an unprecedented rise in the American standard of living and also caused the leading entrepreneurs to become enormously wealthy.
At the same time, during the second half of the nineteenth century, the ideas of socialism and even communism were gaining currency and adherents in America. Among those ideas was that the wealth of successful entrepreneurs was due not to their own abilities, but rather to their exploitation of the far more numerous workers, called the masses in socialist terminology.
Nevertheless, despite such anti-capitalistic animus, the spirit of enterprise survived in America as entrepreneurs have continued to develop new industries and large businesses making products and providing services as diverse as aluminum, automobiles, computers, retail merchandise, and electric generation equipment, to name just a few. Entrepreneurs of such companies acquired great wealth, for example men such as Bill Gates, Henry Ford, Steve Jobs, Gordon Moore, Sam Walton and Thomas Watson.
A MONOPOLY IN WATER
Water is a resource that is necessary to sustain life. Galambos posited that even a monopoly source of water could not charge any price it pleased. Consumers can reduce their consumption to the minimum needed for drinking and bathing. Bottled water for drinking could be available in local stores at a lower cost than the local monopoly’s charges. People could move out of the area of monopoly or refrain from moving there due to an excessive price for water. The reduction in consumption caused by high prices would cause a reduction in revenues and profits to the monopoly supplier of water. Furthermore, high profits in a monopoly product provide a powerful incentive for the entry of competitors into a market, even one where the cost of building an infrastructure of supply would, ordinarily, be a barrier to the entry of competitors into the market.
If a monopoly of water supply is not a threat to consumers, neither could any other non-coercive business monopoly. A non-coercive business monopoly cannot force people to patronize it and cannot charge any price it wants, no matter how vital the product of which it is a monopoly source of supply. Unlike the state, businesses do not say to people use and pay for our service or go to jail; engage in physical resistance to our collection of payment (called taxes) and risk being killed while resisting arrest.
JOHN D. ROCKEFELLER –
ROBBER BARON OR BENEFACTOR OF HUMANITY?
The almost universally accepted image of Rockefeller in American history is: “Admired by some as a genius of management and organization, he also came to rank as the most hated and reviled American businessman, in part because he was so ruthless and in part because he was so successful.” 5 However, study of the Standard Oil monopoly prosecution and of John D. Rockefeller himself has convinced the author of this book (Capitalism: The Liberal Revolution) that John D. Rockefeller was not only a business genius and entrepreneur of prodigious ability, but was also a fine individual and one of the most important men in American history.
Almost everything about the generally accepted view of Standard Oil and John D. Rockefeller is either false or a mis-characterization of what Standard did. Standard Oil built its prominence “. . . by taking on a youthful, wild, unpredictable, and unreliable industry, and . . . transforming it . . . into a highly organized, far-flung business that satisfied the basic hunger for light around the world.” 6
John D. Rockefeller was born into a family of modest means. His father was a peddler who often struggled to make ends meet. His mother stayed at home to raise the six Rockefeller children. John graduated from public high school in Cleveland in 1855 at age sixteen. He began work immediately as an assistant bookkeeper at the low wage of 50 cents a day. Nevertheless, from the beginning of his working career Rockefeller gave part of his income to his church and to charity.
In 1859, “. . . several months before his 20th birthday Rockefeller went into business for himself, forming a partnership with a neighbor, Maurice Clark. Each man put up $2000 and formed Clark & Rockefeller commission merchants in grain, hay, meats, and miscellaneous goods.” 7
The Inception of Rockefeller’s Standard Oil
In 1863, at age 24, Rockefeller was already a success in his merchant business when a man named Samuel Andrews approached Rockefeller and his partner Maurice Clark seeking their investment in a refinery. After investigating the industry, Rockefeller convinced Clark that they should invest four thousand dollars.
When Rockefeller and Andrews set up their first refinery the refining process was at a primitive stage. Producing quality kerosene and the other by-products of petroleum (namely kerosene, gasoline, naphtha, and paraffin wax) requires precise temperature controls and various additional purification procedures. Impure kerosene could be highly explosive and kerosene accidents were responsible for five to six thousand deaths in the mid 1870’s. This is why Rockefeller insisted on consistency and quality control, and why he chose the name Standard for his company. 8
In 1865, the 58-cent a gallon market price of kerosene was one-fifth the cost of whale oil. At that price anyone with cheap and primitive distillation equipment could make money producing kerosene. However, between 1865 and 1870, refining capacity expanded faster than oil production, and accordingly the price of kerosene fell to 26 cents a gallon by 1870. At that price most of the small refiners lost money and went out of business.
A Rapidly Growing Business
In 1867 Henry Flagler (1830-1913), an energetic and enterprising new partner, brought $100,000 into the business. This cash was essential as it allowed the fledgling business to expand and leverage economies of scale to stay afloat in a competitive market.
In 1870 the partners incorporated their firm under the name Standard Oil. By that time the firm was producing more than fifteen hundred barrels a day, more than most refineries could produce in a week, and at lower cost than anyone else. Nearly fifty years later, Rockefeller recalled:
“We had vision. We saw the vast possibilities of the oil industry, stood at the center of it, and brought our knowledge and imagination and business experience to bear in a dozen, in twenty, in thirty directions.” 9
The business of Rockefeller and his partners thus remained profitable due largely to Rockefeller’s business acumen, demonstrated by the following measures taken to reduce costs and increase revenue.
- Building the largest refinery in Cleveland and using the highest quality materials to get maximum longevity and reliability from refining equipment
- Lowering the cost of buying crude oil by employing their own purchasing agents, thereby eliminating the need for paying jobbers (purchasing middlemen)
- Building large storage facilities to keep crude oil in reserve, so that the firm would not have to pay exorbitant prices in the event of a spike in price.
- Lowering costs in the refining process by scientific research and development of better technology.
- Cutting the cost of transporting oil by making their own barrels at a cost far below the industry average, investing in tank cars (railroad cars fitted with giant tanks), and using pipelines to transport crude oil, thereby reducing the need for barrels or railroad transport by tank cars.
- Great attention was devoted “. . . to the quality of the product . . . and the neatness and cleanliness of the operations, from refinery . . . [to] development of a marketing system to match the company’s huge production capacity.” 10
- Rockefeller reinvested as much of the firms profit as possible in its growth, efficiency, and durability. This enabled the company to operate independent of financiers and insulated the company from the violent bursts and depressions that would drove competitors to the wall.
- Constant improvements in efficiency, technology, and productivity made Rockefeller’s company vastly more productive and profitable than most of its competitors, setting Standard Oil on a path to revolutionizing the oil refining industry.
Constant improvements in efficiency made Rockefeller’s company vastly more productive and profitable than most of its competitors and set Standard Oil on a path to revolutionizing the oil refining industry. The decade of the 1870s was both the time of most rapid growth for Standard Oil and the time when its hard-driving business practices engendered a negative public image, the hostility of many competitors and the eventual enactment of a federal law aimed at dismantling the great business organization created by John D. Rockefeller and his associates.
In 1881, The Atlantic magazine published an essay by Henry Demarest Lloyd entitled “The Story of a Great Monopoly.” Lloyd accused Standard of having “. . . driven into bankruptcy, or out of business, or into union with itself [most of] . . . the petroleum refineries of the country [achieving] . . . monopoly [and] . . . by conspiracy with the railroads . . . [dictating] the price [of kerosene] and has ended by making us pay what it pleases for kerosene.” 11
After study of the history of Standard Oil, it appears that Lloyd’s accusations are gross exaggerations that have, at most, a tenuous basis in fact.
Andrew Galambos and Jay Snelson taught that there was nothing to fear from any non-coercive monopoly and that Standard Oil was never a monopoly in the sense of a single source of supply, a position borne out by facts. That use of the word monopoly is slipshod, imprecise, and pregnant with the political and economic errors described in this chapter. Constant improvements in efficiency made Rockefeller’s company vastly more productive and profitable than most of its competitors and set Standard Oil on a path to revolutionize the industry. The company was considered a “monopoly” because it became dominant in its industry.
Moreover, while Standard’s practices were cut throat, and on a few occasions even underhanded, natural market forces are the most efficient remedy for such matters. Intervention of the state is not just unnecessary; it is detrimental. This will be shown in our discussion of the Sherman Antitrust Act.
Standard Oil’s Controversial Business Practices
Many petroleum refining companies did go out of business during Standard’s rise to prominence. This was due partly to Standard’s consolidation of the industry and partly to the attrition that inevitably occurs as an important new industry emerges, spawning a plethora of small competitors, most of whom prove incapable of surviving the rigors and vicissitudes of business. 12
By 1871 the demand for kerosene had evoked an even greater supply as 250 or more refining companies had been formed to take advantage of the big, new market for kerosene. The law of supply and demand operated, as it always does, to cause prices to fall when there is an excess supply of anything. Kerosene prices fell so far that the refining industry as a whole was losing money. “Even Rockefeller, though head of the strongest company, was worried [that his company could not survive] . . . It was at this anxious time that Rockefeller conceived of his bold vision of consolidating nearly all oil refining into one giant combination . . . to save the business . . . by eliminating excess capacity.” 13
Rockefeller and his partners called this strategy “Our Plan.”
“If a company Rockefeller wanted to buy was not willing to sell, according to some accounts Standard would give the competitor ‘a good sweating,’ an expression attributed to Rockefeller’s partner Henry Flagler, by lowering prices to a point where Standard remained profitable but the competitor would go out of business quickly.” 14
However, contrary to popular belief, Standard Oil did not use predatory price discrimination to drive out competing firms. John S. McGee of the University of Chicago published a careful study of the history of Standard Oil. Professor McGee examined all the evidence in the prosecution of the federal state’s antitrust case against Standard and found that the company was not guilty of the charge of price discrimination leveled by the government. 15
Among those companies that accepted Standard’s buyout offer, Rockefeller would close down the more inefficient refiners, but with quite a few Rockefeller took them in as part of Standard Oil. Their employees continued in their jobs, and Standard brought their managers into the management of the parent company. Some of these managers eventually were brought into partnership status.
John Archbold was the head of one such company. Once a competitor of Standard, in 1875 he accepted an invitation to join Rockefeller’s company, and in 1897, upon the retirement of John D. Rockefeller, Archbold became the Chief Executive Officer of Standard Oil. 16
Standard’s plan to expand by acquisition worked well, so well that it had the unintended consequence of generating widespread envy and distrust of Rockefeller’s motives and intentions. In 1870 Standard’s share of total refined oil output was no more than 4%. By 1874 the company’s share was 25% and by 1880 it was nearly 85%. During this decade the number of refinery companies declined from the original 250 or so down to between 80 and 100. 17
Price Fixing Schemes
It has been the generally accepted view that Standard Oil was able to drive competitors out of business due to making secret agreements with railroads to ship his oil with them if they gave him large freight discounts. 18
In the early 1870s Standard Oil participated in two short-lived cartels to fix oil prices and rail transportation costs for the benefit of cartel members and the detriment of non-members. 44 The cartels in which Standard Oil participated were known as The South Improvement Company and The Pittsburgh Plan.
Neither cartel ever became operational because they were discovered by independent oil producers who would have been badly harmed by the price fixing of the proposed cartels. The independent oil producers organized a highly successful boycott of the railroad and oil refiners that had formed the cartel. The boycott came close to putting Standard Oil out of business, for lack of supply for its refineries. 19 One of the cartels dissolved voluntarily and the state of Pennsylvania outlawed the other.
Attempted participation in the cartels was one of the biggest mistakes of Rockefeller’s business career. Rockefeller got bad publicity for participating in these abortive cartels, and later admitted that he had been wrong. 20
Standard Oil did eventually get the lowest transportation rates by devising ways to make its oil cheaper to ship and by setting shippers in competition with one another so that he could negotiate them down to the best price. For example, when the Lake Shore railroad built a connection to Cleveland in 1867, Rockefeller’s partner Henry Flagler offered to pay 35 cents a barrel for shipping crude from the Oil Regions of Pennsylvania to Cleveland, and $1.30 a barrel for kerosene sent to New York. In exchange for these discounts, Flagler offered the Lake Shore a major incentive: guaranteed, large, regular shipments. This was a huge boon to the Lake Shore, which accepted Flagler’s proposal.
The Sherman Antitrust Law
The federal state pretends that it acts against producers to protect consumers from unjustifiably high prices. However, the federal state passes and enforces laws that hurt consumers by raising prices. That occurred in 1890, the year that the U.S. Congress enacted the Sherman Antitrust Act (Sherman Act) almost unanimously. 21
The stated purpose of the Sherman Act was to protect the consumers by preventing arrangements designed, or which tend, to advance the cost of goods to the consumer. 22
However, this statement of intent is false, as evidenced by the following:
First, it was well known in 1890 that between 1863 and 1890 the price of kerosene had been reduced by nearly 90% due in large part due to the activities of John D. Rockefeller and his Standard Oil Company. The apparent purpose of the Sherman Act was to protect less efficient producers from competition with more efficient producers. Thus, “. . . [d]uring a debate over the act in 1890, Republican Representative William Mason said ‘trusts have made products cheaper, have reduced prices; but if the price of oil, for instance, were reduced to one cent a barrel, it would not right the wrong done to people of this country by the trusts which have destroyed legitimate competition and driven honest men from legitimate business enterprise.’” 23
Second, just three months after enactment of the Sherman Act, Congress enacted The Tariff Act of 1890 (known as the McKinley Tariff). 24 The McKinley Tariff raised the average tax on imports to almost 50%. The law effectively raised prices to consumers by protecting not the consumer, but American producers, from foreign competition. It was severely unpopular.
Just like the McKinley Tariff, the real intent of the Sherman Antitrust Act appears to have been to protect less efficient producers from the lower prices of more efficient competitors.
That the politicians who are the state want to maintain a monopoly of power is indicated quite clearly in a 1948 U.S. Supreme Court opinion of Justice William O. Douglas who said of federal Antitrust laws that “[Federal law] is founded on a theory of hostility to the concentration in private hands of power so great that only a government of the people should have it.” 25
In 1890 Americans did not need federal laws to protect them from the pricing power of large industrial companies that were the target of the Sherman Act. For example, “. . . over the decade prior to the 1890 Sherman Act, . . . the industries accused of monopolization by Senator John Sherman and his colleagues were expanding production four times faster than the economy as a whole . . . [and] were also dropping their prices faster than the [overall] price level was dropping.” 26
Andrew Galambos observed that it is a supreme irony of political democracy that politicians wielding the coercive powers of the state have convinced most of the American people that state coercion was their only protection against exploitation by non-coercive private enterprise. This chapter corroborates that opinion.
Sherman Act Prosecution of Standard Oil
In 1906, the DOJ, brought suit in federal court to force Standard Oil to dissolve into 34 separate companies. Between 1904 and 1906, at least twenty-one state antitrust suits also were brought against Standard Oil subsidiaries in ten states. 27 444 witnesses gave testimony and 1,371 documents were introduced over the course of more than two years. The full written record spanned 14,495 pages bound in twenty-one volumes. 28
In 1909 the federal district court ordered what the DOJ had sought. In 1911 the U.S. Supreme Court affirmed this decision in 1911, allowing Standard just six months to break itself up into 34 separate companies.
The basis for the trial court decision was that by combining many oil companies under centralized ownership and management Standard Oil had eliminated competition. The trial court stated: [Standard Oil had] “. . . the power to fix the . . . purchase and selling prices which all these companies should pay and receive for petroleum . . . The principal company and many of the subsidiary corporations were . . . capable of competing with each other . . . and would have been actively competitive if they had been owned by different individuals or different groups of individuals . . . [The principal company] controlled and operated all these corporations and those which they controlled, and has prevented them from competing with it or with each other.” 29
The company was punished for things it was alleged to have done in the past that were not then illegal. The Supreme Court said that Standard’s “. . . genius for commercial development and organization . . . manifested . . . an intent and purpose to exclude others [and] . . . to drive others from the field and to exclude them from their right to trade.” 30
The Supreme Court affirmed the trial court judgment, stating that “. . . the combining of the stocks of various companies in the hands of the Standard Oil Company of New Jersey in 1899 constituted a combination in restraint of trade and also an attempt to monopolize and a monopolization under section 2 of the Anti-Trust Act.” 31
The underlying rationale for the Sherman Act was supposedly to protect consumers from a company that would achieve a monopoly position in order to enable the company to restrict the supply of a product and then charge higher prices. Thus, the essence of Standard’s wrongdoing, according to the state, was establishing a monopoly that eliminated competition.
However, “. . . the . . . record of the [petroleum] industry indicates that while Standard Oil grew ever larger and more profitable petroleum prices fell, outputs expanded, product quality improved, and hundreds of firms at one time or another produced and sold refined petroleum products in competition with Standard Oil. . . As new crude [oil] supplies in Kansas, Oklahoma, Texas, and California reached the market, new, large, vertically integrated petroleum companies came into existence to direct the crude flow towards the new demand.” 32 Pure Oil Company is an example. Formed in 1895, by 1904 it owned fourteen refineries and was capitalized at over $10,000,000 which is equivalent to over $250,000,000 today.
Competition for Standard Oil
In 1878 Thomas A. Edison invented the incandescent electric light bulb. In 1887 Nikola Tesla invented the first workable alternating current system of transmitting electricity. Together these two inventions provided the basis for development of electricity as a less expensive and more convenient source of illumination. By 1900 electric lighting was coming into ever growing use, thereby eroding the market for kerosene as an illuminant.
In the first decade of the twentieth century extremely large oil fields were being discovered and developed by new companies in Texas, Oklahoma, Louisiana and California. 33 In those states new oil companies sprang up and eventually went into successful competition with the Standard Oil companies. In the meantime, large deposits of petroleum had been found in Russia and the Dutch East Indies (now Indonesia). European companies developed the oil industry in those locations, further reducing Standard’s share of foreign markets for oil.
As the petroleum industry grew and grew after 1880, Standard’s share of refined oil output decreased from a peak of almost 90% in the early 1880s to 64% by 1914. That 64% share of refinery output was only part of the picture. Standard’s share of total production of all refined petroleum products was 34% in 1898, 26% in 1902, and only 11% in 1906. 34
The dominance of Standard Oil had started to erode in the first decade of the twentieth century, before the federal state’s attack of the company vis-à-vis the Sherman Act began. The wealth of Standard Oil had been built upon production of petroleum products for lighting (kerosene) and lubricants. However, changing uses of petroleum and new discoveries of petroleum, over time, reduced the power of Standard Oil.
The market for oil remained confined to lighting, lubricants and solvents until Gottlieb Daimler and Karl Benz of Germany, independently of each other, invented the first gasoline-powered, motor-driven automobiles in 1885. The Duryea Brothers (Charles and Frank) produced the first American-built automobile in 1893. Companies other than Standard Oil pioneered the use of petroleum in the form of gasoline for fueling internal combustion engines.
Reading the history of Standard Oil and John D. Rockefeller and of the hostility they engendered this author is drawn to the conclusion that the company and its founder were vilified by critics and prosecuted by the state because Rockefeller and his colleagues became extremely wealthy while many smaller competitors left the petroleum industry due to inability to compete successfully. Kerosene was by far the most widely used petroleum product during Standard’s ascendancy to industry preeminence. It did not matter to those critics that the price of kerosene fell by 90% while Standard grew from an upstart to by far the largest company in the industry, nor that Standard always had competitors. It did not matter that electricity for illumination was supplanting kerosene even before enactment of the Sherman Antitrust law, nor that strong new competitors were coming into existence before and during the time the state was preparing to prosecute Standard under the Sherman Act.
Standard Oil continually increased production and reduced prices throughout the period of its alleged monopolistic actions. Just as the company reached the zenith of its position in the petroleum market new technologies and new competitors already were eroding its relative competitive position. By the time the federal state initiated its antitrust lawsuit to break up Standard Oil in 1906, the firm’s oil production as a percentage of total market supply was down to 11%. 35 The attack on Standard as a perceived monopoly began in 1890 with enactment of the Sherman Antitrust law, after developments in the market place had already started to erode the power of the company, and culminated with full-scale assault by the state in the 1906 antitrust lawsuit when free market competition had already ended Standard’s dominance in the petroleum industry.
Positive Contributions of Standard Oil
Almost everything about the generally accepted view of Standard Oil and John D. Rockefeller is either false or a mis-characterization of what Standard did. Standard Oil built its prominence “. . . by taking on a youthful, wild, unpredictable, and unreliable industry, and . . . transforming it . . . into a highly organized, far-flung business that satisfied the basic hunger for light around the world.” 36
Ida Tarbell, in what has been regarded as the definitive Rockefeller biography, stated that Rockefeller was one of the most reviled businessmen in American history, partly because he was so ruthless and partly because he was so successful.
While Rockefeller was indeed a shrewd – and sometimes ruthless – businessperson, he also made enormous contributions to society. Rather than being a villainous robber baron, Rockefeller was actually a great benefactor of mankind.
He had a genius for business. Through his imagination he foresaw the enormous possibilities of the petroleum industry, and was “. . . a key part of the two big transformations of the oil industry: the making of kerosene for lighting homes and the making of gasoline for running [automobiles].” 37
In 1885 . . . Rockefeller wrote one of his partners, “Let the good work go on. We must ever remember that we are refining oil for the poor man and he must have it cheap and good.” 38
Saving whales from extinction
Thanks in large part to John D. Rockefeller the sperm whale survived the era of hunting and killing sperm whales to use their oil for illumination. It was Rockefeller, more than any other person, whose entrepreneurial activities developed the eventual large market for kerosene as an illuminant. Until the beginning of large-scale production of kerosene from petroleum in the 1860s, the oil of Sperm whales was particularly prized as an illuminant in oil lamps, as it burned more brightly and cleanly than any other available oil and gave off no foul odor. Due to the hunting and killing of Sperm whales their global population fell by 29% from the early 18th century to the late 19th century. Sperm whale oil as a source of illumination was replaced after 1860 by cheaper, more efficient kerosene. The introduction of kerosene for illumination may have saved the Sperm whale from extinction. 39
Light to Mankind
Rockefeller played the most influential role in the creation of the petroleum industry, an industry that has benefited everyone by bringing to mankind light, and the fuel that provides power to industry, and mobility undreamed of until the dawn of the 20th century. Even poor individuals in the poorest of countries may benefit from motor vehicle transport for travel and transport of goods.
Avoiding pollution of streams and rivers
The refining process could use 60% of the crude oil to make kerosene, the most valuable product in the early days of the industry. Many of Rockefeller’s competitors threw away the other 40% of the oil, wasting the resource and causing pollution by dumping the unwanted residue into streams and rivers, but not Rockefeller and his company. They extracted naphtha (a solvent) as well as kerosene and sold most of the rest of the crude oil to refiners specializing in other non-kerosene products such as paraffin wax and gasoline. Later, Rockefeller’s firm refined and sold these products as well.
Standard Oil grew and flourished in the last three decades of the nineteenth century, a time of much labor unrest in American industry. Labor unions won the legal right to bargain for wages and working conditions, a right formerly denied under both American and English law. There were some violent conflicts between labor unions and management, some resulting in deaths on both sides. 40 Paying higher than market wages was Rockefeller’s policy: he believed it helped slash costs in the long run. . . Standard was rarely hurt by strikes or labor unrest. 41
The wealth of Rockefeller
While Rockefeller became the world’s richest man, his wealth appears well earned when considered in the context of the benefits his activities brought to the world. Standard Oil customers used the company’s products to light up homes at night and to power automobiles. Rockefeller’s lifetime accumulation of wealth reached $900 million by the early twentieth century, when he had retired from business. Given Standard’s market penetration, it is estimated the company had approximately 100 million customers. That $900 million amounted to probably about $9 per person per lifetime for customers of Standard Oil from 1863 when Rockefeller entered the petroleum industry until his death in 1937.
From his very first paycheck Rockefeller tithed ten percent of his earnings to his church. As Rockefeller’s wealth grew, so did his giving, primarily to educational and public health causes, but also for basic science and the arts. In total he gave $550 million to a broad range of philanthropic causes.
ALUMINUM COMPANY OF AMERICA
Over its first half century of operation (1888 to 1937) the Aluminum Company of America (Alcoa), reduced the real (inflation-adjusted) cost of aluminum by 98%. Its reward from the state was to be prosecuted for violation of the antitrust laws.
The Alcoa story began in 1888 with a handful of men who raised $20,000 42 and started producing aluminum in a corrugated-iron shed with a dirt floor in Pittsburgh. At that time, aluminum was selling at $8.00 a pound and output averaged less than ten pounds a day. According to Harold Fleming, author of Ten Thousand Commandments: A Story of the Antitrust Laws (1951), “The gist of the Alcoa idea was . . . innovation . . . to develop something new . . . [and] . . . to keep it always new, cheap and desirable, and ahead of the competition. . .”
Alcoa was so efficient, by the late 1930’s the company had cut the price of aluminum to 20 cents a pound 43 and raised production to over 300,000,000 pounds a year. But by 1937, the Antitrust Division of the Department of Justice (DOJ) sued Alcoa for being a monopoly in the aluminum business. Alcoa lost the trial court on a single count of the one hundred forty separate counts as the DOJ alleged that it had monopolized the market for virgin aluminum ingots. 44
With World War II looming, Alcoa in 1938 initiated a $200,000,000 war-expansion program. Fleming states, “When the federal government started in earnest to prepare for WW II, Alcoa’s aluminum was an indispensable product for military purposes.” 45
Businessmen had been castigated by politicians as robber barons and monopolists in the late nineteenth century through the 1930s. President Franklin D. Roosevelt (1882-1945), U.S. President from 1933-1945, repeatedly used the phrases “economic royalists” and “malefactors of great wealth” to describe big business in his 1936 reelection campaign. 46 However, by 1940, the President came to regard big business as vital to the effort to win World War II because, in Roosevelt’s own words American industry needed to become “the great arsenal of democracy” in order to prosecute the war successfully. 47
With the war nearing a victorious conclusion for the U.S., the federal antitrust prosecutors continued with their case against ALCOA, pressing an appeal from the trial court judgment adverse to the prosecutors. In 1945, the federal Appellate Court, in a decision written by the eminent Judge Learned Hand, declared that Alcoa was an illegal monopoly. In his opinion, Judge Hand stated:
[Alcoa] insists that it never excluded competitors; but we can think of no more effective exclusion than progressively to embrace each new opportunity as it opened, and to face every newcomer with new capacity already geared into a great organization, having the advantage of experience, trade connections, and the elite of personnel. Only in case we interpret exclusion as limited to maneuvers not honestly industrial, but actuated solely by a desire to prevent competition, can such a course, indefatigably pursued be deemed not exclusionary. 48
Fleming concludes: “In effect the Court said that Alcoa excluded competitors by being so efficient. This was a new view of the meaning of the Sherman Antitrust Act. Up to this opinion if you excluded competitors you did so by . . . maneuvers not honestly industrial. Alcoa beat its competitors by keeping ahead of them. This was a new kind of crime. This was perhaps also the legal basis on which the Department of Justice [asserted] that efficiency is no defense.” 49
With his decision, judge Hand sent the ALCOA case back to the trial court for a determination of how to break up ALCOA, the outcome sought by the federal antitrust lawyers. By that time, as a result of developments during WW II, there were two effective new producers of aluminum, Reynolds Metals and Kaiser Aluminum. Therefore, in 1950 the trial court judge ruled against breaking up ALCOA, but retained jurisdiction over the case to ensure that Alcoa would not again become so dominant.
ALCOA was a monopoly, the only producer of primary aluminum, for fifty years. However, it was not a coercive monopoly. It did not force anyone to buy its aluminum. It was a monopoly because no other company wanted to try to compete with Alcoa due to its combination of high production, high quality, and low prices. Alcoa was prosecuted by the state because it was considered to be too good a competitor.
THE DUPONT CELLOPHANE CASE
In 1924, William Hale Charch (1898-1958) invented moisture-proof cellophane while working at DuPont, a leading American chemical company. This invention transformed the food packaging industry, allowing use of inexpensive, transparent cellophane to wrap meat, fruits, vegetables, and other products. 50
“DuPont . . . after spending millions on research and development of this wholly new thing, . . . put it on the market in 1926 at $2.65 a pound. 51 Its success was such that the company subsequently cut the price 20 times in the next 20 years, down to 45 cents a pound. . .” 52
The Department of Justice soon brought suit against DuPont under the Sherman Act for monopolizing cellophane. The DuPont directors thereupon cancelled their expansion plans. Cellophane remained scarce.
In 1950, the DuPont directors ran full-p. advertisements in industry trade magazines, making the following astonishing statements:
“‘The Du Pont Company regrets that it is unable at this time to meet the growing requirements of its customers for Cellophane . . . [Several years earlier] DuPont planned to build additional plant capacity. . . [Then] the Department of Justice brought suit in December 1947, charging that our position in the Cellophane business constituted a monopoly . . .” 53
The advertisement continued, stating that DuPont had actively sought other companies to independently produce cellophane, “in order that additional film would be available” to customers. DuPont eventually did connect with Olin Industries, and designed and built a Cellophane plant for them, sharing all expertise and patents with Olin Industries in the process.
The complaint filed by the Department of Justice in 1947 charged DuPont with monopolizing, attempting to monopolize and conspiracy to monopolize interstate commerce in cellophane and cellulosic caps and bands in violation of Section 2 of the Sherman Act. After a lengthy trial, judgment was entered for DuPont on all issues. The U.S. Supreme Court affirmed, in a 4-3 decision. 54
THE PROBLEM OF UNCERTAINTY IN ANTITRUST LAWS
The comments of Justice Felix Frankfurter, quoted immediately below, concurring with the 4-3 majority of the court in deciding the DuPont cellophane case in favor of DuPont, highlight the problems confronting business managers in deciding how to proceed under the ever possible threat of prosecution under the federal antitrust laws.
“The boundary between the course of events by which a business may reach a powerful position in an industry without offending the outlawry of monopolizing under . . . the Sherman Act and the course of events [that violates the Act] cannot be established by general phrases. It must be determined with reference to specific facts . . .” 55
No one, not even a judge of the U.S. Supreme Court, knows with certainty what the legal rules require. Justice Frankfurter said, in effect, that the courts will decide what the law means on a case by case basis. And when the courts do decide, the law is so unclear that they may disagree among themselves, as indicated by the DuPont case in which four judges ruled in favor of DuPont and three judges ruled against DuPont.
Time and again business people have complained to Congress and the antitrust enforcement agencies that they need clear cut rules; otherwise they must decide whether or not to risk capital on some venture later prosecuted as illegal, and must also bear the risk and cost of lawsuits with the federal antitrust prosecutors. Congress and the antitrust enforcement agencies have no sympathy with the plea of business people for clarity in the law. Rather, Congress and leaders of the antitrust enforcement agencies seem to pride themselves on keeping the antitrust rules so vague that no business can plan its affairs so as to be safe from attack by federal antitrust lawyers. For example:
- Lowell Mason, acting Chairman of the FTC said in 1948: “[U]nder these [court] decisions . . . we can take orders against 100,000 businessmen.”
- Attorney General Howard McGrath said in 1949: “I don’t think it would be desirable to put down a specific code [of conduct].”
- Emanuel Celler, Chairman of the House Judiciary Committee 56 said in 1950: “I would vigorously oppose any antitrust laws . . . giving bills of particulars to replace general principles. . . Otherwise, . . . the process would become a rat-race between the monopolist seizing upon omissions and the Congress trying to fill them into the law . . .” 57
Although these comments were made several decades ago, the cases discussed below show that the foregoing comments epitomize the consistent attitude of Congress and the antitrust enforcement lawyers throughout the years since the inception of the antitrust laws. For example, as the IBM case shows, even the Antitrust Division of the Department of Justice is uncertain what business conduct is illegal, although they will wage a war of attrition to impose their will on a business they choose to prosecute.
THE IBM CASE
International Business Machines (IBM) was the most spectacularly successful American company of the period ranging from 1914 to the early 1970s. IBM traces its history back to 1896. Its shares and bonds were first listed on the New York Stock Exchange in 1915. From that point forward over the next 55 years its growth in sales and profits were so impressive that it was considered America’s premier growth company for over half a century. 58
In the 1960s and early 1970s IBM had seven competitors, including DEC (Digital Equipment Corporation), all of which were large companies in their own right that together shared the rest of the market for computers. 59
IBM’s personnel and technology played an integral role in the federal state’s space program and landing the first man on the moon in 1969. In the same year, 1969, the federal state sued IBM in federal court for allegedly monopolizing or attempting to monopolize the market for business computers. Just as in the Standard Oil case of 1906 to 1911, the U.S. Department of Justice asked the federal court to break IBM into smaller companies that would compete against one another.
IBM contested the prosecution. The case became a war of attrition, lasting for thirteen years. The case was litigated by legions of lawyers all around the country. IBM and the state incurred tens of millions of dollars of legal fees. The company also had to defend itself from private suits by competitors based on the same facts as the state’s prosecution. Only a company as strong as IBM could have withstood the attacks by the federal state and private competitors.
During thirteen years of litigation of the IBM case (1969-1982) IBM’s dominance was undermined by developments in computer technology, namely production of relatively inexpensive microprocessors by Intel Corporation and growing use of personal computers by business.
In 1982, the Justice Department finally conceded that its prosecution of IBM was without merit and ended the litigation by abandoning its case. However, the Department of Justice continued to harass IBM by repeatedly questioning its business decisions and operations during much of the 1980s. 60
A knowledgeable technology writer states: “Even greater than the financial cost to IBM [and that was enormous] was the cost in managerial attention and entrepreneurial energy that was diverted into resisting the attack of the state. Experts argue that IBM was mired in antitrust troubles for more than a decade after the dismissal [of the case] and did not recover from the legal morass until the early to mid-’90s.” 61
Furthermore, analysis of IBM’s pricing shows that the company raised its prices after the prosecution started. Why? Because a company that is concerned about losing a case of alleged monopolization is motivated (a) to increase profits while it still can, and (b) to reduce its chance of losing the case by shrinking its market share through charging higher prices. That is what IBM did in the 1970s. 62
THE AT&T MONOPOLY
For seventy years, AT&T and its Bell System functioned as a legally sanctioned, regulated monopoly. The federal state granted AT&T monopoly status in 1913, then in 1974 sued to break up the AT&T monopoly. AT&T finally agreed to its dismemberment effective January 1, 1984.
Until Bell’s patent expired in 1894, only Bell Telephone and its licensees could legally operate telephone systems in the United States. Between 1894 and 1904, over six thousand independent telephone companies entered the telephone business in the United States. 63 By 1907, non-Bell firms operated 51% of the telephone business. Increased competition drove prices down; AT&T’s profits and prices during this period began to shrink. 64
AT&T went to the federal state for aid in excluding competitors, asking to be allowed to function as a legally sanctioned, regulated monopoly. The rationale for this, formulated by AT&T president Theodore Vail in 1907, was that, “the telephone by the nature of its technology would operate most efficiently as a monopoly providing universal service. . . The United States government accepted this principle, initially in a 1913 agreement known as the Kingsbury Commitment.” 65
Adam D. Thierer, in his work Unnatural Monopoly, explains: ”[A]t no time during the development of the Bell monopoly did government not play a role in fostering a monopolistic system. . . AT&T attempted to restrict competition throughout [most of the 20th] century. . . What is . . . widely ignored, is exactly how federal and state government actions encouraged the Bell monopoly to develop during the early years of [the 20th] century. Once the government allowed this monopoly to develop with its assistance, AT&T’s strength could not be matched by any competitor, resulting in a monopolistic market structure that survived well into the 1980′s.” 66
But by the late 1950’s, technological change, regulatory distortions, and entrepreneurial activity enabled competing companies to enter the telecommunications industry. In 1974, these competitors persuaded the U.S. Department of Justice to file a huge antitrust suit against AT&T. After a wireless telephone network was developed by MCI Communications in the late 1960s, MCI became a viable alternative for long-distance telephone service, but not without opposition by AT&T, which went to the state seeking, unsuccessfully, to exclude MCI from connecting its service to customers of AT&T. 67
After eight years of litigation (1974-1982) AT&T entered into an agreement with the U.S. to divest eight large regional telephone companies effective January 1, 1984. By the early twenty-first century the wireless telephone was in ascendancy, with billions of mobile wireless telephones in service, and the business of wired telephone service was stagnant or even in decline.
THE MICROSOFT ANTITRUST CASE
A 1998 federal antitrust suit against Microsoft illustrates and re-emphasizes the risk that great success in business will result in great troubles with the state’s enforcement of the antitrust laws.
Before there were any companies manufacturing personal computers, Bill Gates and Paul Allen started Microsoft Corporation in 1975 to develop computer software for personal computers when an early Intel microprocessor first became available. A microprocessor is a programmable integrated circuit or combination of circuits that stores the information used to operate a computer or computer-like devices in other products such as automobiles and telephones. Software consists of instructions for operating the central processing unit of a computer (the microprocessor) and its peripheral components such as the monitor (or video screen), the keyboard, and the printer.
At the time Gates and Allen started Microsoft they were, respectively only nineteen and twenty-one years of age. By dint of much long and hard work and entrepreneurial skill, within less than a decade Gates and Allen led Microsoft to becoming the world’s largest and most profitable provider of computer software.
In 1998 the Department of Justice and eighteen states brought suit against Microsoft Corporation seeking to break the company into several parts. This lawsuit was instigated when competitors of Microsoft went to the state with complaints about Microsoft’s allegedly monopolistic practices. 68 The antitrust suit went to trial where judgment was against Microsoft. On appeal by Microsoft the judgment was reversed. Subsequently, in 2001, Microsoft settled the case in a Consent Decree that provided various constraints on the Windows operating system business of Microsoft.
The Consent Decree did not reduce Microsoft’s importance and dominance in the software industry. Rather, innovation by and competition from other companies were far more effective in limiting Microsoft’s industry dominance. Google emerged as the leading search engine, so much so that the word “google” came into common use as a word describing an internet search, relegating Microsoft’s Internet Explorer and Bing to secondary importance among search engines. 69 “Google . . . handles two-thirds of all U.S. web searches and more than 80% in much of Europe.” 70
CTLR posits that the federal antitrust prosecution of Microsoft was an abuse of the power of the U.S. Federal Trade Commission and the Antitrust division of the U.S. Department of Justice. The antitrust prosecution of Microsoft due to its then dominance in the computer operating system business was a waste of taxpayers’ money, needlessly damaging to Microsoft, and of no benefit to the computer-using public. This position has been validated by time and the normal course of competition in business.
In July, 2015, Microsoft announced that it would release Windows 10, the latest version of the Microsoft Windows operating system used in more than 1.5 billion computers and other digital devices. In the Windows 10 announcement Microsoft said that it would not charge customers to upgrade to Windows 10 on computers.
According to analysis in a report in the New York Times, “the decision to make free a product that once cost $50 to $100 is a sign of [competition in Microsoft’s industry] . . . Companies like Google have crept into Microsoft’s business with free software and services subsidized by its huge advertising business, while Apple in recent years has made upgrades to its applications and operating systems free, earning its money instead from hardware sales.” 71
THE 3M CASE
In 2012 the Department of Justice objected to a proposal of 3M Corporation (3M) to buy the labels business of Avery Dennison Corporation on grounds it would enable 3M to monopolize a product known as Post-Its or sticky notes. In 1968 Spencer Silver of 3M invented the adhesive used on Post-Its and in 1974 Charles Fry of 3M innovated the idea of using this adhesive to make the Post-it note, which is a piece of paper with a strip of adhesive on the back, designed for attaching notes to documents and other surfaces. The Post-Its adhesive allows the notes to be easily attached and removed without leaving marks or residue.
After expiration of the 3M patent on the Post-It innovation, the law allowed anyone to make Post-It type note papers. Although 3M still makes Post-Its, large office product chain retailers with thousands of stores around America, such as Staples and Office Depot, offer their own version of Post-Its. These office supply stores had achieved 15% of the market for Post-It type note papers at the time the federal antitrust lawyers objected to the 3M-Avery transaction. The office supply stores house brands of Post-Its sell for a significantly lower price than the 3M brand. The cost of sticky notes is trivial, amounting to around $1 per 100. 72
Because Post-Its are extremely inexpensive there appears to be no benefit to consumers from the state interfering with the market for this product.
Avery and 3M called off their transaction, presumably because in their determination the cost of defending a federal antitrust prosecution was not worth the potential gain from the proposed transaction.
Andrew Galambos and Jay Snelson asserted that the antitrust laws allowed the state to charge any business with illegal and even criminal activities for almost any activity in the normal course of business. Therefore, these laws are an extremely harmful expansion of the power of the state.
In the preceding chapter we gave close examination to the wars of the United States of America. The picture presented is ugly. In this chapter close examination reveals a similarly ugly picture of the U.S. laws on competition, the antitrust laws.
Antitrust and competition laws do not protect the consumer. They attack producers who benefit consumers. They penalize productivity and efficiency, thereby harming consumers. Rather than promoting competition, they are anti-competitive; they are used by some businesses to seek state protection against competition from other businesses. The analysis in the full text of this chapter shows that the antitrust laws in operation are every bit as harmful to producers and consumers as Galambos and Snelson claimed.
The author would like to thank John W. Deming, Jr., a good friend, for his invaluable contributions to this chapter, which include but are not limited to:
- Articulating fundamental errors in the first draft of the portion of the text dealing with John D. Rockefeller and the Standard Oil Company and generally accepted but entirely erroneous ideas about the subject of commercial monopolies
- Providing important insights regarding the history and contemporary operation of the petroleum industry
- Directing the author to highly informative works by Dominick T. Armentano and Alex Epstein cited herein
- Helping the author deepen this essay’s treatment of several other subjects, e.g., the labor hypothesis of value, the theory of subjective value, and and the paramount role of prices in every day practical economic calculation referred to in a subsequent chapter and elsewhere herein.
- Quoted from Galambos, Sic Itur Ad Astra (1999), pages 218 and 222 ↩
- Quoted from Employment Opportunities, Dept. of Justice website at http://www.justice.gov/atr/contact/jobs.html ↩
- Quoted from dissenting opinion of Justice Douglas in the case of United States v. Columbia Steel Co. (1948) ↩
- This is the terminology of the Sherman Antitrust Act of 1890 ↩
- Yergin, Daniel, The Prize: The Epic Quest for Money, Oil and Power (1992), p. 36 ↩
- Quoted from Yergin, The Prize, p. 55. ↩
- Quoted from The Rockefellers, text of a PBS documentary, http://www.pbs.org/wgbh/amex/rockefellers/peopleevents/p_rock_jsr.html ↩
- Yergin, The Prize, pgs. 40 and 50. ↩
- Folsom, Burton W., Jr., The Myth of the Robber Barons: A New Look at the Rise of Big Business in America, chapter 5, (5th ed. 2007) ↩
- Quoted from Yergin, p. 50 ↩
- Quoted from “Vindicating Capitalism: The Real History of the Standard Oil Company,” by Alex Epstein, The Objective Standard, Summer 2008, http://www.theobjectivestandard.com/issues/2008-summer/standard-oil-company.asp which quotes from Lloyd, Henry Demarest, “The Story of a Great Monopoly, Atlantic Monthly,” March 1881, http://www.theatlantic.com/doc/188103/monopoly ↩
- There were over 2,000 different American companies manufacturing automobiles in the early years of the twentieth century but by the 1950s there were fewer than ten. ↩
- Quotation from Yergin, pgs. 40, 42 ↩
- Quotation from Epstein, Vindicating Capitalism, third paragraph following note 54. ↩
- McGee, John S., Predatory Price Cutting: The Standard Oil (N.J.) Case, Journal of Law and Economics, Vol. 1 (1958), pp. 144-148. The full text of McGee’s article is available online at john_mcgee_predatory_pricing_standard-oil1958.pdf and www-personal.umich.edu/~twod/oil-ns/articles/research-oil/research ↩
- Yergin, The Prize, pgs. 98-99 ↩
- Quoted from Armentano, p. 58 ↩
- This is the criticism of Standard Oil summarized in Zinn, Howard, A Peoples History of the United States: 1492-Present (2003), p. 256. ↩
- Epstein, Vindicating Capitalism, at text accompanying Epstein note 51, citing Morris, Charles R., The Tycoons (2005), p. 85. ↩
- See Folsom, The Myth of the Robber Barons, at p. 88, citing Williamson, Harold F. and Daum, Arnold R., The American Petroleum Industry (1959), pgs. 342-368 ↩
- The Act passed the Senate by a vote of 51-1 and passed by unanimous vote of 242-0 in the House of Representatives. http://en.wikipedia.org/wiki/Sherman_Antitrust_Act ↩
- Statement of legislative intent by Senator John Sherman, sponsor of the Sherman Antitrust Act, quoted at http://en.wikipedia.org/wiki/Sherman_Antitrust_Act ↩
- Quoted in Wikipedia, Sherman Antitrust Act, under caption Criticisms, http://en.wikipedia.org/wiki/Sherman_Antitrust_Act ↩
- After then Representative and later President William McKinley ↩
- Quoted from dissenting opinion of Justice Douglas in the case of United States v. Columbia Steel Co. (1948) ↩
- Quotation from DiLorenzo, Thomas J., Organized Crime: The Unvarnished Truth About Government (2012), p. 21. Professor DiLorenzo provides as authority for the quoted statement a peer-reviewed article he published entitled “The origins of antitrust: An interest-group perspective,” International Review of Law and Economics, Volume 5, Issue 1, June 1985, P.s 7390. ↩
- Quoted from Armentano at p. 68 ↩
- Quoted from Yergin p. 108 ↩
- Quoted in Armentano, p. 68 ↩
- Quoted from Standard Oil Company of New Jersey v. United States, 221 U.S. 1, at p. 76, cited and quoted in Armentano, p. 70 ↩
- Standard Oil of New Jersey vs. United States, 221 U.S. 1 (1911) ↩
- Quoted from Armentano, pgs. 67, 71 ↩
- See Yergin, page 81 et seq. and Wikipedia, History of the Petroleum Industry in the United States, http://en.wikipedia.org/wiki/History_of_the_petroleum_industry_in_the_United_States#Lima-Indiana_District ↩
- Armentano, p. 67. ↩
- Armentano, pgs. 66-67 ↩
- Quotation from Yergin, The Prize, p. 55 ↩
- Quotation from Folsom, The Myth of The Robber Barons, p. 100. ↩
- Quotation from Folsom, The Myth of The Robber Barons, p. 83. ↩
- Wikipedia, Sperm Whaling, http://en.wikipedia.org/wiki/Sperm_whaling#1800s ↩
- In a strike at the Homestead Steel of Carnegie Steel Company in 1892 there were ten fatalities; and in the Pullman strike of 1994 there were 13 fatalities. Wikipedia, Homestead Strike, http://en.wikipedia.org/wiki/Homestead_Steel_Strike#Battle_on_July_6 and Standiford, Les, Meet You in Hell: Andrew Carnegie, Henry Clay Frick, and the Bitter Partnership that Transformed America (2005), chapter 15. Wikipedia, Labor History of the United States, http://en.wikipedia.org/wiki/Labor_history_of_the_United_States ↩
- Folsom, p. 92 ↩
- Equivalent to about 0 a pound in early 21st century America ↩
- Equivalent to about .20 in the early 21st century ↩
- Quoted from Fleming, pgs. 50-54 ↩
- 0 million in 1938 was equivalent to .2 billion in the early 21st century. Quotation from Fleming, note 4 above at page 41 ↩
- Quoted in Folsom, Burton W. Jr., New Deal or Raw Deal? (2008), p. 133 ↩
- President Roosevelt used the phrase “the great arsenal of democracy” in a radio address to the American people on December 29, 1940 urging an all-out effort to get ready for war. That speech is reproduced at http://www.americanrhetoric.com/speeches/fdrarsenalofdemocracy.htm See also Herman, Arthur, Freedom’s Forge: How American Business Produced Victory in World War II (2012). ↩
- Quotation from United States v. Alcoa, 148 F.2d 416 at p. 431 (2d Cir. 1945), reproduced in Fleming’s Ten Thousand Commandments, p. 55. ↩
- Quotation from Fleming, p. 55. ↩
- See Heartland Science, “Ohio’s legacy of Discovery and Innovation, Cellophane Packaging,” http://www.heartlandscience.org/matrls/cellophane.htm ↩
- Equivalent to a pound in early 21st century America ↩
- Equivalent to .50 per pound in early 21st century America. ↩
- The DuPont advertisement quoted above is reproduced in Fleming, note 4 above at pages 57-58. ↩
- Two of the nine Supreme Court Justices recused themselves (chose not to participate in the decision) because of conflict of interest, namely their prior association with the Department of Justice during the pendency of the DuPont investigation and prosecution. ↩
- Quoted from U.S. vs. du Pont & Co., 351 U.S. 377 (1956), at page 414 ↩
- Where Congressional changes in the antitrust could originate ↩
- Quotations from Fleming, note 4 above, at pages 16, 22. ↩
- See Graham, Benjamin, The Intelligent Investor (revised edition, edited and expanded by Jason Zweig, 2003), pages 565-567 and History of IBM, Wikipedia,http://en.wikipedia.org/wiki/History_of_IBM#1960.E2.80.931968:_The_System.2F360_era ↩
- The competitors were Burroughs, Control Data, General Electric, Honeywell, NCR, RCA, and UNIVAC. ↩
- See History of IBM, Wikipedia, http://en.wikipedia.org/wiki/History_of_IBM#1969:_Antitrust.2C_the_Unbundling_of_software_and_services ↩
- Quoted from “IBM and Microsoft, Antitrust then and now,” by Rachel Konrad, CNET News, June 7, 2000, http://news.cnet.com/2100-1001-241565.html ↩
- See “System Error: How the IBM Antitrust Suit Raised Computer Prices,” by David Levy and Steve Welzer, Cato Institute, Regulation, page 27, September/October 1985. ↩
- Quoted from “A Brief History: The Bell System,” http://www.corp.att.com/history/history1.html ↩
- Quoted from “Unnatural Monopoly: Critical Moments in the Development of the Bell System Monopoly,” by Adam D. Thierer, Cato Institute, Cato Journal, Vol. 14, No. 2 (Fall 1994), page 270, PDF stored at http://www.cato.org/cato-journal/fall-1994/unnatural-mosystem-monopoly ↩
- Quoted from A Brief History: The Bell System, http://www.corp.att.com/history/history1.html ↩
- Quoted from “Unnatural Monopoly: Critical Moments in the Development of the Bell System Monopoly,” by Adam D. Thierer, Cato Institute, Cato Journal, Vol. 14, No. 2 (Fall 1994), pages 268-269, PDF stored at http://www.cato.org/cato-journal/fall-1994/unnatural-mosystem-monopoly ↩
- Crandall, Robert, After the Breakup (1991), p. 41 ↩
- Sun Microsystems and several other companies agitated for antitrust prosecution of Microsoft. ↩
- A search engine is a computer software program that searches in the internet for information about a specific word or phrase ↩
- Quoted from FTC Drops Google Probe, by J. Guynn and J. Puzzanghera, The Los Angeles Times, January 4, 2013 (Business, page 1), http://www.latimes.com/business/la-fi-ftc-google-20130104,0,6394780.story ↩
- Windows 10 Signifies Microsoft’s Shift in Strategy, by Nick Wingfield, New York Times, July 19, 2015 http://www.nytimes.com/2015/07/20/technology/windows-10-signifies-microsofts-shift-in-strategy.html ↩
- As of January 2013 a package of about 1,200 sticky notes at Staples was priced a .99 for the Staples house brand and .29 for the 3M brand. ↩