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Breaking Rockefeller
The Incredible Story of the Ambitious Rivals Who Toppled an Oil Empire
Peter Doran
(Economist)
JUST over 100 years ago Standard Oil, from which both Exxon and Mobil sprang, was the undisputed leader of the global oil industry. American trustbusters were soon hot on the heels of its competition-killing owner, John D. Rockefeller. So too was a scrappy Anglo-Dutch company, the product of a merger of Shell Oil with Royal Dutch in 1907, which had defied fearsome odds to muscle onto Standard's home turf in America.
That amalgamation had been the work of two men: Marcus Samuel, a brilliant Jewish merchant who built the Shell Transportation and Trading Company from his father's business selling seashells in Houndsditch, East London, and Henri Deterding, a Dutch wheeler-dealer who built Royal Dutch from unpromising beginnings in the swamps of Sumatra into an Asian powerhouse. These two egos, for years bitter rivals, eventually joined forces to confront a 'hammerlock on the planet's oil market'. Their story, though not new, is grippingly retold in 'Breaking Rockefeller'.
Rockefeller's life is vivid enough, though he is more of a presence snaking menacingly through the book than a central character. From his grand Manhattan office on 26 Broadway, the fastidiously punctual former book-keeper, with an eye permanently on the ledger, launched a 'cut-to-kill' strategy whenever competition threatened his stranglehold on the kerosene industry. He would slash prices in one district to snuff out rivals, and raise them elsewhere to recoup his profits. Such was his dominance of global petroleum that he could do this with impunity throughout America, Europe and Asia.
The guts, greed and gusto of this cast of characters are what gives the book its vigour. The colourful backwaters where they waged their counter-offensives, from London's East End, to Baku in the Caspian, to Spindletop, Texas, add historical flavour. Peter Doran, a Washington-based scholar on European affairs, admits he has borrowed heavily from such books as 'The Prize' by Daniel Yergin to tell his story. Samuel ordered almost all of his papers to be burned when he died, so some of the lively personality traits found here may be more the result of imaginative storytelling than documentary rigour.
But the book is timely in an era when America's shale revolution has upset the OPEC cartel's efforts to control the world's oil markets, and eastern Europe struggles to free its gas markets from dependence on Russia's Gazprom. It is a vivid reminder of the dangers of monopolies, and of the merits of no-holds barred competition and technological upheaval.
Samuel's great coup was to commission the first modern oil tanker, which enabled him to ship hydrocarbons through the Suez Canal. Thus he could undercut Rockefeller in the Far East with cheap Russian fuel. Royal Dutch's triumph came from applying new geological methods to find gushers of crude in the Dutch colonies of the East Indies, enabling it to fight Shell in Asia.
Their tie-up, arranged by another intriguing Londoner, Fred 'Shady' Lane, followed the Russian revolution of 1905, which knocked out Shell's Caspian production and almost broke the company. But the timing proved superb. Instead of fighting each other, jointly they became a match for Standard. Its empire was under attack from Ida Tarbell, an American investigative journalist whose father had been ruined by Rockefeller. Her 19-part series starting in 1902 revealed Standard's secret contracts, kickback schemes, Rockefeller's 'unholy alliance' between oil refiners and producers, and the extent of its monopoly.
Within a decade, the Supreme Court had ordered Standard Oil to be dismantled, though the bits into which it was broken were so valuable that 'in the span of a few months at the end of 1911, Rockefeller went from being a very rich man to a fabulously wealthy one,' Mr Doran writes. His end, as a cheeky old man playing golf and seducing girls in the back seat of his car in Florida, is described with humour.
So is the retirement of Samuel, or Viscount Bearsted as he became, who helped persuade Winston Churchill to commission oil-burning dreadnoughts just before the first world war. Having climbed the social ladder as a Jew in Victorian England was a source of lifelong pride: 'You can't think what pleasure it gives me to put 'The Honourable' on my children's envelopes,' he said after being made a peer.
The book acknowledges that Royal Dutch Shell could not have toppled Standard Oil alone. 'The trustbusters weakened Rockefeller's monopoly. Free marketeers like Deterding [and Samuel] provided a competitive alternative to it.' Thanks to the competition that they engendered, the oil industry has become more vigorous ever since. The author does not dwell on the challenges to oil's supremacy that have arisen lately as a result of climate change. But if Royal Dutch Shell's challenge to Standard Oil is any lesson, companies that develop alternative forms of energy will only become true challengers to Big Oil with guts, greed and better technology. They are not quite there yet.
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