470 Chapter 17 An Industrial Giant Emerges
Rockefeller and other Standard Oil offi-
cials that without violating their con-
sciences, they could deny under oath that
Standard Oil of Ohio owned or controlled
other corporations “directly or indirectly
through its officers or agents.” The
trustees controlled these organizations—
and Standard of Ohio too!
After Standard Oil’s duplicity was
revealed during a New York investigation in
1888, the wordtrust,formerly signifying a
fiduciary arrangement for the protection of
the interests of individuals incompetent or
unwilling to guard them themselves,
became a synonym for monopoly. However,
from the company’s point of view, monop-
oly was not the purpose of the trust—that
had been achieved before the device was
invented. Centralization of the management
of diverse and far-flung operations in the
interest of efficiency was its chief function.
Standard Oil headquarters in New York
became the brain of a complex network
where information from salaried managers
in the field was collected and digested,
where top managerial decisions were made,
and whence orders went out to armies of
drillers, refiners, scientists, and salesmen.
Competition and Monopoly: Retailing and Utilities
That utilities such as the telephone and
electric lighting industries tended to form
monopolies is not difficult to explain, for
in such fields competition involved costly
duplication of equipment and, particu-
larly in the case of the telephone, loss of
service efficiency. However, competitive
pressures were strong in the early stages of their
development. Since these industries depended on
patents, Bell and Edison had to fight mighty battles
in the courts with rivals seeking to infringe on their
rights. A patent, Edison said bitterly, was “simply an
invitation to a lawsuit.”
Competition in the electric lighting business raged
for some years among Edison, Westinghouse, and
another corporation, the Thomson-Houston Electric
Company, which was operating 870 central lighting
stations by 1890. In 1892 the Edison and Thomson-
Houston companies merged, forming General Electric,
a $35 million corporation. Thereafter, General Electric
and Westinghouse maintained their dominance in the
manufacture of bulbs and electrical equipment as well
as in the distribution of electrical power.
A sneeze is captured on film—the first copyrighted movie (1894). In 1889 Thomas A.
Edison conceived of a machine that would do for the eye what the phonograph did
for the ear. Over the next two years, Edison invented two separate devices—a camera
to take a rapid sequence of pictures and a machine to view them, called a
kinetoscope. In 1893 he developed reliable film for his camera. The motion picture
industry was born.The pattern of competition leading to dominance
by a few great companies was repeated in many busi-
nesses. In life insurance an immense expansion took
place after the Civil War. High-pressure salesmanship
prevailed; agents gave rebates to customers by shav-
ing their own commissions; companies stole crack
agents from their rivals and raided new territories.
They sometimes invested as much as 96 percent of
the first year’s premiums in obtaining new business.
By 1900, after three decades of fierce competition,
three giants dominated the industry—Equitable, New
York Life, and Mutual Life, each with approximately
$1 billion of insurance in force.
In retailing, the period saw the growth of urban
department stores. In 1862 Alexander T. Stewart had
built an eight-story emporium in New York City that