Review Questions for Epstein’s Essay on Standard Oil

As I recently noted, Liberty In the Books, which I co-moderate, reviewed Alex Epstein’s essay, “Vindicating Capitalism: The Real History of the Standard Oil Company.”

I strongly recommend that free-market activists join a reading group in their area — or start a new one. See my notes for some ideas about how to do that. (Alternately, if you live out in the boondocks, you can follow the Denver group’s lead on your own.)

Following are my review questions that we used to guide our discussion. Remember, the point of review questions is to inspire discussion and keep it basically attached to the assigned reading. There is no need to discuss every question on the list. Page numbers here refer to the printed edition; I also include the section headers. This reading, assigned in advance of our meeting, worked great for a two-hour discussion.

1. Describe the views of John D. Rockefeller expressed by:‎
a) Henry Demarest Lloyd, 1881 (Pages 29-30)
b) Ida Tarbell, 1904 (Page 30)
c) Howard Zinn, 1980 (Page 31)
d) Paul Krugman, 1998 (Page 31)

2. What is the view of free markets expressed by Ron Chernow and John Sherman? (Pages 31-32)

The “Pure and Perfect” Early Refining Market

3. What is the theory of “pure and perfect competition?” (Pages 32-33)

4. What is Epstein’s basic economic critique of the doctrine of “pure and perfect competition?” (Page 33)

5. What were the benefits of kerosene to human life? (Page 33)

6. What caused the dramatic increase in kerosene refineries from 1859 to 1864? What were some of the problems with earlier refineries? (Pages 33-35)

7. What was the trend in refineries from 1865 to 1870? (Page 35)

The Phenomenon

8. What regional advantages contributed to Cleveland’s oil refineries of 1863? (Page 36)

9. What were the characteristics of Rockefeller’s first refinery? (Page 36)

10. What in Rockefeller’s background contributed to his success in business? (Pages 36-37)

11. In what specific ways did Rockefeller improve efficiency, expand markets, and advance technology in his industry? (Pages 37-39)

12. What is “vertical integration,” how did Rockefeller practice it, and what are the benefits? (Page 38)

13. What was the state of Rockefeller’s venture in 1870? (Page 40)

The Virtuous Rebates

14. What was Ida Tarbell’s view of the railroad rebates granted to Rockefeller, and what is Epstein’s criticism of Tarbell? (Page 41)

15. Why did railroads grant Rockefeller rebates? (Pages 41-42)

16. Were Rockefeller’s practices “anticompetitive?” (Pages 42-43)

The Missing Context of Standard’s Rise to Supremacy

17. From 1870 to 1880, what challenges did oil refineries face, what was the growth of Standard Oil, and what was the shift in oil prices? (Pages 43-44)

18. Why doesn’t Epstein believe that cartels can succeed? (Pages 44-45)

19. What was the strategy of the South Improvement Company, and what were the results? (Pages 45-46)

20. What was the Pittsburgh Plan, and what were the results? (Pages 45-46)

From 10 to 90 in Eight Years

21. According to Epstein, what motivated Rockefeller to buy out various competitors? (Pages 46-47)

22. Did Rockefeller’s treatment of some competitors to “a good sweating” constitute “predatory pricing?” (Pages 47-48)

23. What was the state of Standard Oil in 1873 and 1874? (Pages 48-49)

24. What arguments did Rockefeller make to competitors to persuade them to sell their businesses to him? (Pages 47, 49)

25. How did the Pennsylvania Railroad attempt to compete with Standard Oil, and what was the result? (Pages 49-50)

26. How did Standard Oil operate from 1870 to 1880, and what happened to the level of oil production and to kerosene prices? (Pages 50-51)

The 1880s and the Peril of the “Monopolist”

27. Did Standard Oil operate according to standard antitrust theory in the 1880s? (Page 52)

28. What was the “peak oil” theory articulated in the mid 1880s? Was was the problem with this theory? (Sound familiar?) (Page 52)

29. Why did Rockefeller expand oil production in the 1880s, what did he find, how did he cope with “skunk oil,” and what did this do for Standard Oil? (Pages 52-53)

30. What new competitors did Standard Oil face in the 1880s? (Pages 53-54)

31. What was the difference between Standard Oil and government monopolies? (Pages 54-55)

The Standard Oil Trust and the Science of Corporate Productivity

32. What was a trust, and what legal problems did it overcome? (Page 56)

33. What were Standard Oil’s successes as a trust? (Pages 57-58)

34. What were Rockefeller’s skills as a business manager? (Pages 59-60)

35. What changing market conditions did Standard Oil face from 1899 to 1914, and what happened to the company’s output and market share? (Page 60)

36. What were the journalistic and political responses to the successes of Standard Oil? What was the motivation of this reaction? (Pages 61-62)

Rand on Prohibition, Hoover

Yesterday I briefly discussed Rand’s take on Prohibition and FDR. Jeff Britting turned me on to a couple of comments that Rand made about Prohibition and Hoover. Mark Wickens looked up these quotes and sent me the result. Here’s what Rand had to say:

Only one thing is certain: a dictatorship cannot take hold in America today. This country, as yet, cannot be ruled — but it can explode. It can blow up into the helpless rage and blind violence of civil war. It cannot be cowed into submission, passivity, malevolence, resignation. It cannot be “pushed around.” Defiance, not obedience, is the American’s answer to overbearing authority. The nation that ran an underground railroad to help human beings escape from slavery, or began drinking on principle in the face of Prohibition, will not say, “Yes, sir,” to the enforcers of ration coupons or cereal prices. Not yet. (“Don’t Let It Go, Part II,” The Ayn Rand Letter, Vol. 1, No. 5, December 6, 1971, page 21 of the bound volume.)

President Nixon opened the way for [McGovern] (just as another “conservative,” President Hoover, opened the way for the welfare-state policies of President Roosevelt). (“The Dead End,” The Ayn Rand Letter, Vol. 1, No. 20, July 3, 1972, page 85 of the bound volume.)

It has been an interesting hundred years, and I suspect our times will grow more interesting still.

Did Resurrection Myth Precede Jesus?

Sheera Frenkel of The Times (of London) reports a debate of a Dead Sea tablet called Gabriel’s Vision of Revelation. She writes:

Israel Knohl, a biblical studies professor at the Hebrew University of Jerusalem, argued yesterday that line 80 of the text revealed Gabriel telling an historic Jewish rebel named Simon, who was killed by the Romans four years before the birth of Christ: “In three days you shall live, I, Gabriel, command you.”

Professor Knohl contends that the tablet proves that messianic followers possessed the paradigm of their leader rising from the grave before Jesus was born. …

Professor Knohl defended his theory at a conference at the Israel Museum in Jerusalem marking 60 years since the discovery of the Dead Sea Scrolls. He said that New Testament writers could have adapted a widely held messianic story in Judaism to Jesus and his followers.

Others, of course, dispute this interpretation of a damaged text.

I regard it as an intriguing but unproved theory.

But it won’t affect modern Christianity, either way. If it were shown definitively that resurrection stories preceded Jesus, Christians would respond by saying that of course the resurrection was prophesied, and this is not diminished by its application to a false prophet.

It’s not as though this is the only myth suspected to precede Christianity; other resurrection myths are known to precede it. For example, Paul Tobin summarizes:

The myth of Adonis was known to the Greeks as early as the fifth century BCE. The Egyptian myth of Osiris dates back to at least 4,000 BCE and was recorded in detail by the Greek biographer Plutarch (c46-120 CE). The Persian Sun-God Mithras was mentioned in the writings of the Greek historian Herodotus (c480-c245 BCE). The cult of Mithraism reached Rome in the first century BCE.

The way the early church fathers defended against the mystery religions showed that they knew these pagan myths antedated the Christian ones. Justin Martyr (c160-165) claimed that the devil plagiarized Christianity by anticipation with the pagan religions in order to lead people from the true faith. He claimed the myth of the virgin birth of Perseus, an ancient Greek legend that preceded Christianity, was pre-copied by the “deceiving serpent” (Dialogue with Trypho: 70). Similarly he asserted that the cultic rites of Mithraism had a diabolical origin (Apology 1:66). Tertulian (c160-c225) made the same claim: that it was the devil that provided this “mimicry” [notes omitted].

If you believe that there is a God who can raise people from the dead, that you will live forever in Heaven, that you talk to God, etc., then you’ll hardly be troubled by conflicting resurrection stories. This is, after all, about faith. If we restrict the discussion to proof, then all resurrection stories are easily recognized as myths.

Gibbon on Roman Religion

Finally I’m reading Edward Gibbon’s Decline and Fall of the Roman Empire (I know; it’s about time. Gibbon assumes more background knowledge than I have, so thank goodness for Wikipedia). I came across this interested quote from the first part of Chapter II of the first volume:

The policy of the emperors and the senate, as far as it concerned religion, was happily seconded by the reflections of the enlightened, and by the habits of the superstitious, part of their subjects. The various modes of worship, which prevailed in the Roman world, were all considered by the people, as equally true; by the philosophers, as equally false; and by the magistrate, as equally useful. And thus toleration produced not only mutual indulgence, but even religious concord.

While the era had some serious problems, such as slavery, which Gibbon describes elsewhere, and while Christian unity did bring some advantages, on the whole “mutual indulgence” has a lot going for it.

I am not so much concerned that many people do not regard all religions as equally true; what concerns me is that many philosophers fail to see them as equally false, and many political leaders find right-wing Christianity particularly useful.

Heroes Live in Shadow of War

The following article originally appeared in the May 26, 2008, edition of Grand Junction Free Press.

May 26, 2008

Heroes live in the shadows of war

by Linn and Ari Armstrong

Amanda is a vivacious, intelligent woman your elder author met last year in Rangely. She helped coordinate a law enforcement class at Colorado Northwestern Community College. She surprised me at lunch when she said, “There are not any heroes.” Yes, Amanda, there are heroes. They surround us like shadows. Recently we talked with some of them.

Bob Magos was a WWII submariner. On December 5, 1941, he was hitchhiking the seven miles to school in Hamilton, Ohio. Nobody stopped, so he crossed the street to try his luck. He ended up in Florida.

Bob says he was “going down through Kentucky on December 7.” He continued, “I stayed in one of those fifty-cent bed and breakfasts. I walked down on the highway and stuck my thumb out and an Army Intelligence officer stopped in a black ’38 Ford and said, ‘Do you boys need a ride?’ And I said, ‘Yeah we’re going to Florida.’ He said to hop in.

“He said, ‘Did you hear about Pearl Harbor?’ And I said, ‘Where in the hell is Pearl Harbor? How would I hear about it in Kentucky?’ He told me where it was and what the Japanese did and he kept playing with the radio.”

As they traveled through rural Kentucky they came to a country store where people had gathered to listen to the radio for news. Within a few days Bob had returned home to enlist in the Navy.

Mort Perry, a retired Mesa State professor who worked to expose students to divergent political views, is another WWII veteran.

Mort is Jewish from his mother’s side. In his youth he saw the news casts of Adolph Hitler ranting and raving. Mort recalls that, when he was 16, his father said, “We are going to have war sooner or later.”

At 20, Mort entered the Army Air Corps. Mort ended up in North Africa in Morocco and Algeria. He flew as the gunner of a B-17. While traveling with British troops in a lorry Mort’s group was attacked by a Stuka dive-bomber. Mort was seriously wounded while pulling his fellows from harm’s way.

“I was taken to Casa Blanca and treated by a Colonel Knots, a world’s leading kidney expert who saved my kidney for 20 years before it had to be removed.”

Mort received the Purple Heart.

In the summer of 2007 your elder author was walking with a group to the parking lot after a tennis doubles match. The license plate on Larry Beidleman’s car stated that he too was a Purple Heart recipient.

We asked Larry if he received the Purple Heart in Viet Nam. He replied, “Oh no, I received that one in the Korean War. But I was also in WWII.”

Larry, now 85, said, “On October 1942 I enlisted in the U.S. Army. I landed on Normandy on D + 18,” or Debarkation Day plus eighteen days. Larry fought through the hedgerows to join the Battle Of The Bulge, though he points out that he was not at Bastogne, a town where American troops refused to surrender to the Germans. After V-E day (Victory in Europe) Larry spent three years in Austria before returning to the United States.

Larry also fought in Korea, the “forgotten war.” Larry arrived at Incheon during the later part of the war, when UN forces had trench lines on the 38th Parallel.

He recalls, “The military had established MLR (Major Lines of Resistance). The trenches and bunkers and conduct of the war was reminiscent of WWI. Our action at the time was small patrols.”

Larry talked briefly about the events leading to his Purple Heart. Ethiopia sent a small force of soldiers composed of Haile Selassie bodyguards. “I was Liaison Officer assigned to the Ethiopians, who were particularly good at night fighting.” Larry accompanied the Ethiopians through the UN lines. “On returning back from patrol we were discovered by the North Koreans/Chinese and they fired some artillery where I was slightly wounded in the knee.”

Otto Armstrong (next up in our family line) never talks much about the war. The picture album he brought back with him sometimes provokes comments. Otto and Tommy Etcheverry, school friends, joined the military together here in Grand Junction.

Otto was one of the first occupation troops at Hiroshima and then Nagasaki. The pictures show the devastation of the bombed out cities. “We just marched up the street where the atomic bombs had gone off. The bombs had caused quiet a bit of damage but hell, they had it cleaned up overnight.”

Theo Eversol, grandfather on the other side, told plenty of stories about the Pacific Rim. He’s gone now, as are so many of the veterans from that terrible war.

Amanda, we still have heroes, though they may not think of themselves as heroes or talk much about it. Search for them in the shadows.

Computer History Museum

Those who created the computer technology that now helps us in virtually every aspect of our lives are heroes of production. The Computer History Museum is dedicated to preserving and telling the history of that development. Thanks to a reader of, I found a video that introduces the museum.

My first computer was a Commodore 128, with twice the capacity of the popular Commodore 64. The “128” refers to the 128 kilobytes of RAM packed into the then-amazing machine. The computer on which I am now typing contains two gigabytes of memory. If I’m doing the math right, that means that my current machine has around 15,000 times the memory capacity of my first machine.

My first experience with digital storage was a tape drive — as in a regular ol’ cassette tape recorder. Then we went to 5.25 inch floppies, then 3.5 inch floppies, then “zip” floppies. Now new computers don’t even come with floppy drives. Some 5.25 disks held 1.2 megabytes of material. The DVD drive that I now own uses disks that hold 4.7 gigabytes of material. Again, if I’m doing the math right, the new laser disks hold about 4,000 times as much material as the old magnetic disks held.

My first experiment with computer communications involved stringing a phone line from the kitchen phone to my bedroom so that I could call a local server with my 300 baud modem. A couple of times I even called a computer in California, but that meant long-distance telephone charges. Now I’m blogging at connection speeds so fast that only video seems slow.

To the men and women who have made my life so much better by improving computer technology, I offer my thanks.

Brutality as Entertainment

A while back I picked up Will In the World: How Shakespeare Became Shakespeare,by Stephen Greenblatt. It is filled with vivid descriptions of the world in which the bard lived. I was particularly struck — and horrified — by the cruelty of his society. For example, Shakespeare was caught in the middle of the Christian strife in which Catholics tried to kill the queen and the queen had traitors executed in the most barbaric of ways.

For example, here is Greenblatt’s description of the torture and execution of Thomas Cottam:

[T]he scavenger’s hoop… was a hoop of iron that slowly closed around the prisoner’s spine, bending it almost in two. … On May 30, 1582, he was executed in the grisly way designed to demonstrate the full rage of the state: he was dragged on a hurdle through the muddy streets of Tyburn, past jeering crowds, and then hanged, taken down again while he was still alive, and castrated; his stomach was then split open and his intestines pulled out to be burned before his dying eyes, whereupon he was beheaded and his body cut in quarters, the pieces displayed as a warning. (page 98)

You know it’s a bad day when getting your head chopped off is the good part.

Chapter 6 is titled, “Life in the Suburbs.” In the sport of “baiting,” a bull or bear is “penned up in a ring or chained to a stake and set upon by fierce dogs.” Greenblatt writes:

In a popular variation, an ape was tied to the back of a pony, which was then attacked by the dogs: “To see the animal kicking amongst the dogs, with the screams of the ape,” wrote one observer, “beholding the curs hanging from the ears and neck of the pony, is very laughable.” (page 177)

Why might people find such a sickening spectacle funny? Greenblatt notes that this violence against animals mirrored the routine violence against people:

[P]arents frequently whipped children, teachers whipped students, masters whipped servants, beadles whipped whores, sheriffs whipped vagrants… Almost daily [Shakespeare] could have watched the state brand, cut, and kill those it deemed offenders. (page 178)

It was, in short, a nasty time to live.

Obviously, we moderns gasp at these “very laughable” deeds. Yet looking at the horrific violence of the past might give us pause about certain practices of the present. Here are a few examples:

* Should modern laws protect animals from abuse? If so, what is the basis of such laws, and what should be their limits?

* The Supermax prison of Colorado, recently featured on 60 Minutes, keeps inmates isolated for 23 hours per day. Does that drive people insane? Does that matter?

* We have modernized our punishments; should we also see the death penalty as outdated because of the horribleness of putting somebody to death?

* On the other hand, rape is common in American prisons. People on TV and in the movies often joke about prison rape or suggest that rape is part of the expected punishment of prison.

* Let us say that we have overwhelming evidence that a nuclear bomb is planted in a U.S. city, and we also have overwhelming evidence that the suspect in custody knows where it is. Do you consider the use of torture? But there’s torture, and then there’s torture. There’s the “scavenger’s hoop,” and then there’s waterboarding. Would you rather be Thomas Cottam or a prisoner in Abu Ghraib (after the fall of Saddam Hussein)? But should anyone have to contemplate either horror? At what point does interrogation become torture? Are there any circumstances in which any sort of torture is justified?

* On two occasions, I have accidentally gone to a bar during “fight night.” People pay money to watch “Ultimate Fighting” on television. The idea is that two contestants are locked in a cage, where they proceed to beat each other to bloody pulps, often until one gets beaten to unconsciousness. There are various rules to protect contestants, but it’s perfectly legal to pound somebody in the face with a knee, for example. Boxing seems quite civilized by comparison. Should this be legal? Assuming that it should be, should people watch it? And why do they watch it? What does that say about the state of our culture that a sport like that gains in popularity?

The Power of Moral Suasion

C. Bradley Thompson’s sixteen page history of the abolitionist movement — comprising the introduction to Antislavery Political Writings, 1833-1860, which Thompson edited — makes for fascinating reading.

Prior to the 1830s, Thompson points out, arguments against slavery tended toward pessimism and compromise. “Like most Americans at the time, [Thomas] Jefferson favored gradual emancipation and the expatriation of the slaves to Africa” (page xv).

During the early 1830s, antislavery thought took a radical turn. Inspired by the Enlightenment natural-rights philosophy of the Declaration of Independence and the religious revivals of the Second Great Awakening, a new moral sensibility — indeed, a moral revolution — swept over the American landscape that promoted an uncompromising vision of good and evil. (page xv)

However, within the decade, the abolitionist movement fell into schisms. Is political action necessary to achieve results, or does it compromise and water down the core principles? Thompson reviews the history of the Liberty Party, founded in 1840, and the continued debate over political strategy. Thompson also summarizes the debate over the Constitution: was it fundamentally a proslavery or antislavery document?

What emerges from Thompson’s overview is that abolition inspired various tactics, from apoliticism to electoral politics to outright violence. In the end, historical circumstances determined what tactics won out. But those circumstances were made possible only because of the fundamental moral vision of the abolitionists: slavery is immoral and a great evil, and it should be done away with. And it was done away with, within just a few decades of the inception of the movement.