Abstract

"An American Oil Company in the British Empire: How Standard Oil Emerged as a Multinational Corporation, 1859-1905"

Minseok Jang, SUNY Albany (mjang7@albany.edu)

The typical narrative of the petroleum industry begins with a corporate myth: oil reserve was discovered, unregulated competition caused chaos, and a vertically integrated corporation rationalized the trade. This aged myth is still a counterexample to historians’ attempts to highlight the role of the state in American capitalism. Although the oil industry was not disconnected from the state, its initial evolution seems pretty corporate-led because Standard Oil established trading routes and quality control systems without much help from federal or state governments.

This essay refutes this myth by revealing Standard Oil’s dependence on another state—the British Empire. During the first thirty years of the trade since 1859, the US was not able to marketize petroleum on a global scale: the Civil War impeded domestic consumption; the deficiency of outlets obstructed the expansion to the world market; and the export portfolio centering on raw materials led to inexperience in the quality control of manufactured exports. These holes were filled up by Europeans who consumed 7-80 % of petroleum. Particularly, the British Empire provided up to 26% of annual demand from its mainland alone, stabilized maritime routes connected to its colonies and the world, and a quality inspection system based on advanced technology and administrative capacity. In exchange, it took commercial margins of the global trade. Beginning in the late 1880s, this transimperial system began to be taken over by Standard Oil. With some help from American consuls, the company merged with British firms, lobbied on the trade around the Suez Canal, and built relationships with British experts and politicians. Although Britons were cautious of this encroachment, they missed the apt timing of intervention due to their faith in free trade, and because requests for intervention mainly came out from Scottish MPs in petroleum-producing districts who did not have much political power. Capitalizing on this hesitance, Standard Oil grew as a multinational corporation—though, by the early 20th century, when petroleum became a strategic resource to fuel the navy, the British Empire struck back.