Hooray for J.D. Rockefeller, Sr.!
21 January 2008
The Editor, The Economist
25 St James's Street
London SW1A 1HG
United Kingdom
SIR:
Lexington (January 19) correctly reports that the muckraking journalist Ida Tarbell alleged that Standard Oil's success in the late 19th century grew from "fraud, deceit, special privilege, gross illegality, bribery, coercion, corruption, intimidation, espionage or outright terror." But Ms. Tarbell also described John D. Rockefeller's company as "a marvelous example of economy."
Research over the past several decades reveals Ms. Tarbell's latter description to be the truer one. Her famous allegation that Standard Oil grabbed market share through predatory pricing is solidly discredited. Also discredited is any implication that Standard hurt consumers: the price of kerosene (Standard's chief output) fell steadily as Standard's market-share grew. By 1897 this price had fallen by 80 percent from where it was at the time of Standard's founding in 1870.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
The Editor, The Economist
25 St James's Street
London SW1A 1HG
United Kingdom
SIR:
Lexington (January 19) correctly reports that the muckraking journalist Ida Tarbell alleged that Standard Oil's success in the late 19th century grew from "fraud, deceit, special privilege, gross illegality, bribery, coercion, corruption, intimidation, espionage or outright terror." But Ms. Tarbell also described John D. Rockefeller's company as "a marvelous example of economy."
Research over the past several decades reveals Ms. Tarbell's latter description to be the truer one. Her famous allegation that Standard Oil grabbed market share through predatory pricing is solidly discredited. Also discredited is any implication that Standard hurt consumers: the price of kerosene (Standard's chief output) fell steadily as Standard's market-share grew. By 1897 this price had fallen by 80 percent from where it was at the time of Standard's founding in 1870.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Posted by Don Boudreaux on
Sunday June 15, 2008 at 1:49pm