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This Day in Legal History -- Standard Oil of New Jersey v. United States, 221 U.S 1 (1911)

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Houston (perhaps) rightly considers itself the home of the oil industry, but the most famous legal case involves a company headquartered in New Jersey. On this date the U.S. Supreme Court handed down its decision in the case of Standard Oil of New Jersey v. United States, 221 U.S. 1 (1911). 

Standard Oil dominated the oil market in the United States and its path to such a lofty place was not without controversy. Ida Tarbell’s scathing investigation of the “Oil Trust” opened many people’s eyes to its tactics and control of the market. It also brought interest from the federal government and its antitrust powers embodied in the Sherman Antitrust Act.  States had tried to reign in Standard Oil, but had failed. New President Theodore Roosevelt felt he could do better, and he succeeded. 

At the time the case was brought the parties believed the case to be one of the most important cases heard by the Supreme Court. US Attorney General George W. Wickersham said of the case, “ never in the history of this country have there been presented to any tribunal controversies in which the issues were more momentous than those in the case against the American Tobacco Company and in the case at bar.” It seemed the fate of capitalism itself was being decided.

Standard Oil lost and its largest stockholder, John D. Rockefeller, became richer than ever. The case is famous for breaking up Standard Oil into a variety of regional oil companies (Amoco, Chevron, Exxon, and Mobil to name the most famous) and giving Rockefeller stock in each. The case spurred the creation of the Federal Trade Commission. Its legal legacy is the adoption of the “rule of reason” (unreasonable restraint of trade was actionable) as a foundation for future antitrust actions and “helped to establish the rules and character of market capitalism in modern America.” The case of Standard Oil of New Jersey vs. United States remains a “powerful and enduring. . .symbol of big business and the extent of its public accountability.”

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