The Evolution Of Antitrust Laws In America
ARI SHAPIRO, HOST:
When Senator Elizabeth Warren called for the breakup of some big tech companies last week, our Planet Money team sprang into action. They have been studying the evolution of antitrust law in America. One of the most important antitrust cases in this country started with a teenage girl who grew up to take on one of the richest men on Earth. Julia Simon reports.
JULIA SIMON, BYLINE: One hundred and fifty years ago, Titusville, Pa., was a booming oil town - lots of nice houses, including this wood house with a glass tower where a teenage girl used to look down on the horses and wagons carrying oil. Her name was Ida Tarbell. Tarbell became a journalist. And biographer Kathleen Brady explains that around 1900, Tarbell was hanging out with her editor, thinking about story ideas.
KATHLEEN BRADY: They decided to take up the trust, the question of the trust, which they regarded as the question of the age.
SIMON: Trusts were a bunch of smaller companies legally stitched together, and they were everywhere. There was a sugar trust, a meat trust, a rope trust. Tarbell knew one trust particularly well.
BRADY: And Ida was saying, well, it's got to be something like what happened in the oil industry.
SIMON: Her own recollections.
BRADY: Her own recollection of the oil industry.
SIMON: Tarbell's editor was like, yes, you will write about one of the biggest trusts around - Standard Oil. And you will profile the head of it, one of the richest men in the world - John D. Rockefeller. At this point, Rockefeller controlled at least 90 percent of oil refining in America.
BRADY: And Ida thought, piece of cake because there are all these court records.
SIMON: She thought she'd just find the records from some Standard Oil cases and use that for her writing, but that's not what happened. The records had disappeared.
BRADY: Standard Oil had bought up all the copies of this man.
SIMON: Oh, man. Had they burned them or, like, just kept them?
BRADY: I don't know what they did with them, but they - I would assume they did. They didn't want them in circulation.
SIMON: But she finally finds this record that she thought had been destroyed that helps her understand how Rockefeller conquered the oil industry. Rockefeller got big enough that he had gone to the railroads and said I ship a lot of oil, if you want my business, I want a discount. But let's make this look like I get the same rate as everybody else, then give me money back later.
And also he said I'm not so crazy about you carrying my competitors' oil. I'll let you do it, but every time, you need to pay me too. These were bombshell details. It meant Standard Oil had a secret, possibly unfair advantage over its competition. Rockefeller would say to rival refineries, you can either join me or you have to compete with me. And if you do that, I will crush you. Tarbell started publishing her stories.
Everybody's reading this around America.
BRADY: Everybody's reading it. Everybody's reading this around America. It was an enormous success.
SIMON: So successful that it reached the desk of President Theodore Roosevelt. The Department of Justice filed a lawsuit against Standard Oil, and in 1910, they ended up before the Supreme Court. It was an important test of this law called the Sherman Antitrust Act that had been around but that people hadn't used that much because it was so broad and confusing.
The Sherman Antitrust Act said trusts that were in restraint of trade were illegal, but until this point, the country hadn't worked out exactly what restraint of trade meant. The justice said, well, some of the things that Ida Tarbell uncovered like making secret deals with the railroads that force your competitors out of business, that's restraint of trade. The Supreme Court ordered the breakup of Standard Oil into 34 companies.
Today, antitrust types are talking about Ida Tarbell again. This time, it's not big oil, it's big tech. But they're asking the same question - if, yet again, it's time for another big company breakup. Julia Simon, NPR News.
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