It seems as though the US media are unveiling another example of corporate scandal almost daily. Although all these headlines probably become tiresome to executives working hard to run their companies honestly, the media ultimately help them by promoting free, fair, and open competition.
If history is a judge, then our economy works best with a free press. The US petroleum industry knows this firsthand, having benefited from the workings of a free press nearly 100 years ago.
From that same experience, the industry also knows that this is not the first time the White House has moved to stop abusive business practices amid a public outcry about corruption in big business.
Early last century, President Theodore Roosevelt began antitrust actions that led to the break up of the Standard Oil Co. monopoly in 1911. That opened the door to other entrepreneurs and helped create the oil and natural gas industry that we know today.
But the court-ordered Standard Oil divestiture into more than 30 companies might not have happened when it did without the actions of an unlikely player at the time-a woman journalist writing for McClure's Magazine, Ida Tarbell.
Tarbell, who was not antibusiness, called for ethical conduct in business. Her research on Standard Oil was listed fifth among the top 100 works of 20th Century journalism in the Mar. 1, 1999, edition of the New York Times.
Big business
Following the 1901 assassination of President William McKinley, then-Vice-Pres. Roosevelt moved into the Oval Office. His first address to Congress called for federal supervision of interstate trusts.
Trusts were the form that the biggest businesses took in that era. Multimillionaires who accumulated their wealth during the Civil War had consolidated their holdings from numerous industries into these monopolistic trusts.
The biggest and most successful was Standard Oil, a trust amassed by John D. Rockefeller, who described the growth of huge companies as "a survival of the fittest, the working out of a law of nature and a law of God."
But journalism, coupled with US business laws, ultimately proved stronger than the oil tycoon's business tactics. Tarbell took on Standard Oil, beginning her research in 1900.
Trusts' role in campaign fund-raising had been an issue in the 1896 presidential election, and public antagonism of trusts continued to mount.
McClure's published Tarbell's stories exposing Standard Oil's unethical practices in a 19-article series during November 1902-October 1904. The articles also were published in 1904 as an 815-page, two-volume book, "The History of the Standard Oil Company."
Tarbell reported that Standard Oil controlled the majority of oil products output from refineries nationwide and manipulated rail freight rates to help squash its competitors. Some businessmen might have thought Rockefeller showed business savvy, but the US government thought otherwise.
Roosevelt implemented a selective prosecution policy, differentiating between public-spirited trusts and the "malefactors of great wealth." Standard Oil fell into the latter category.
US corporate laws
The Standard Oil case led to a 1911 US Supreme Court ruling that clarified the 1890 Sherman Antitrust Act. All this preceded the 1934 establishment of the Securities and Exchange Commission in the ongoing evolution of business laws.
Upon signing a corporate-fraud bill last month, President George W. Bush referred to the SEC's creation when he called the latest legislation, "the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt."
Just as the breakup of Standard Oil and other trusts helped dictate the tenor of business practices for the past 100 years, the latest rash of corporate scandal could change the way US business is run for the next century.
Ethics plays a part in business, but its voice needs an outlet to be heard. At the turn of the century, that outlet was Tarbell. In Vol. 2, pp. 291-2, of her book on Standard Oil, she wrote:
"There is something alarming to those who believe that commerce should be a peaceful pursuit, and who believe that moral law holds good throughout the entire range of human relations, in knowing that so large a body of young men in this country are consciously or unconsciously growing up with the idea that business is war and that morals have nothing to do with its practiceellipseWe, the people of the United States, and nobody else, must cure whatever is wrong in the industrial situation…."
History shows that big business occasionally needs a reckoning, a call to stay the course rather than stray into malfeasance and greed. Journalism helps provide that reckoning.
