• Choose a category
• All
• Classic-Fiction

By Root 7803 0

displeasure at the “fever for building and extending competitive lines.” The assembled magnates agreed to reject unbridled competition and establish spheres of influence. But the “Corsair Compact,” like previous pools, lasted little more than a year. The wars commenced again, this time with the Vanderbilts as rate cutters and Gould promoting stability. There seemed no way to quit the free enterprise merry-go-round, so the ride spun on, propelled by fear of failure, accumulated rancor and mistrust, monumental egoism, and the sheer exhilaration and momentum of combat. In 1887 matters worsened further when farmers, passengers, small businessmen, and the New York City merchants assembled in the National Anti Monopoly League convinced Congress to outlaw pools altogether. Wars of unparalleled ferocity chewed up earnings, and the economy tipped downward once more. In 1888 Morgan summoned the presidents of sixteen major roads to the library of his Madison Avenue mansion and hammered out another pact—which quickly crumbled.

Industrialists, facing much the same dilemma, had meanwhile invented the “trust,” a legal device they believed might solve the problem. Oil refiner John D. Rockefeller and his leading rivals had joined forces in a Standard Oil cartel that used its collective domination of processing capacity and railroad transportation to force thousands of combative oil producers to stabilize prices, with William Rockefeller dispatched to New York City to handle the Standard’s export operations. When competitors threatened to bypass this arrangement by launching pipelines that would pump crude oil directly to New York Bay for refining and export, the Standard fought back. It gained control of most independent metropolitan-area outlets—folding Charles Pratt’s Astral Oil company (which Rockefeller had bought up secretly in 1874) with other Hunter’s Point and Newtown Creek operations into Standard Oil Company of New York (SOCONY)—and ran its own pipeline from the Pennsylvania oil fields to newly centralized operations in Bayonne, New Jersey.

The problem was that this enormous enterprise lacked a legal and administrative superstructure—until 1882, when New York attorney Samuel C. T. Dodd conceived the Standard Oil Trust. Shareholders of the cartel’s now forty companies exchanged their stock for certificates in the trust, which in turn was authorized to “exercise general supervision over the affairs of the several Standard Oil Companies” out of a unified headquarters in New York City. Here, clearly, was an outfit that knew how to overcome competition, and indeed boasted of it: “The day of combination is here to stay,” John D. declared. Industrial consolidation, he announced, was a step up the evolutionary ladder. It represented the “survival of the fittest,” Rockefeller said, “the working out of a law of nature and a law of god.”

Inspired by the Standard’s example, ten other processing industries established trusts and all but two located their central offices in New York City. In 1887 Elihu Root, corporate attorney and pillar of the Manhattan Bar, helped Henry O. Havemeyer wring competition out of one of New York’s oldest industries. Seventeen metropolitan sugar refining companies, representing 78 percent of the nation’s capacity, came together in a Sugar Trust, which consolidated its members’ production and purchasing and proceeded to drive remaining competitors out of business, a process it acclaimed as advancing “the common good.”

Small businessmen, farmers, and consumers disagreed. They denounced trusts for raising prices and concentrating power. In 1890 these opponents won passage of the Sherman Act, which declared the trustee device an illegal restraint of trade. Gloomy businessmen faced another murderous round of free enterprise.

At this juncture, Wall Street attorneys James Brooks Dill and William J. Curtis (a partner in Sullivan and Cromwell) took a new tack. Dill drafted a law that permitted one manufacturing company to purchase and hold stock in any other company “manufacturing and producing materials necessary to