David Rosenthal: prediction

Transcript context

…But they thought it would be bad for the shareholders. Maybe, maybe. We'll see. All right. So first let's cover the trouble on the homefront back in Ohio. Right as the Sherman Act was passing, the state legislature members in Ohio, remember, they're pretty pissed at Rockefeller and Standard Oil. This goes all the way back to the Cleveland massacre. He has a lot of enemies back home. The state attorney general, a guy named David Watson, decides that he's going to bring a case. I don't think it was actually an antitrust case, but he argues that it's not. The case is that Standard Oil is in violation of the state corporation laws and that they are an Ohio Corporation, but they are conducting illegal interstate commerce is what they alleged. Standard Oil created this trust structure that was so brilliant. But this suit is like, hey, this is just a sham and a front. You don't really transfer any assets here and you're actually breaking our laws. It took a couple of years, but by 1892, the case reached the Ohio Supreme Court—State Supreme Court—which rules against Standard Oil. Which means that the trust has to be dissolved. This is the letter of what this means. This Ohio ruling is like game over, but obviously, that's not what happened. How do they get around this? This seems like a pretty big problem. Well, it turns out our Standard Oil friends have an escape plan that they've already hatched that they have in their back pocket just for this very occasion. Standard Oil lawyers had figured out that in the state of New Jersey—now they have operations, Standard Oil has operations in New Jersey, but there's no Rockefeller and crew there, 26 Broadway in New York. It started in Ohio. There's no real reason why headquarters, they don't have any special attachment to New Jersey. But in New Jersey, there actually is a loophole in state corporate law at the time that did allow New Jersey corporations to straight-up hold stock in other out-of-state corporations. No even need for a trust structure. What Ohio is suing them for, New Jersey just allows. That was the reason why they needed the trust structure in the first place is because Standard Oil of Ohio couldn't own any other Standard Oil companies that are operating in any other states. They couldn't have operations in other states. It's just this crazy remnant of the fact that we are the United States and every single state to date has basically said, if you have the charter to operate a corporation in our state, that's all the business you can do. Your total addressable market is our state.…

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