Titan Agonistes: The Wealth Effects of the Standard Oil (N.J.) Case

Michael Reksulak, Georgia Southern University
Bill Shughart, University of Mississippi
Bob Tollison, Clemson University
Atin Basu Choudhary, Virginia Military Institute

Abstract

This paper explores the puzzling wealth effects of the Standard Oil (N.J.) case. Contrary to conventional interpretations of the purposes and effects of antitrust law enforcement, John D. Rockefeller’s personal fortune tripled in the wake of the Supreme Court’s May 1911 decision ordering his company’s dissolution. A number of explanations for this unexpected outcome have been advanced. It turns out on closer inspection, however, that none of them holds empirical water. Coupled with evidence confirming that the major events related to Standard Oil’s antitrust encounter did not produce abnormal returns for the company’s stockholders, we conclude that the most plausible reason why the market failed to react to news of the trust’s dismantling is that investors anticipated that the government’s antitrust sanctions would be ineffective.