South Improvement Company - Definition and Overview

The South Improvement Company was a Pennsylvania corporation in the second half of the 19th century. It was created as part of John D. Rockefeller's early efforts to organize and control the oil and natural gas industries in the United States which eventually became Standard Oil.

Rockefeller set up the South Improvement Company in the fall of 1871. The company merged several of the Cleveland area refineries and issued 2,000 shares of stock, of which 900 were controlled by Rockefeller and his partners. Rockefeller then started negations with the three major railroads running through Cleveland: the Erie, the Pennsylvania Railroad, and the Central. The results of the negotiations were as follows: (1) The official rate per barrel from Cleveland to New York would be $2.56, but South Improvement would receive a $1.06 rebate; (2) The railroads would also pay South Improvement $1.06 for barrel of oil shipped that was not produced by South; (3) The railroads would also give reports of the shipping destinations, costs, and dates of all of South's competitors; (4) The commerce would be divided evenly among the railroads, with a double share going to Pennsylvania Railroad; and (5) South would provide tank cars and loading facilities.

These concessions helped lessen the vicious competition among the railroad lines by giving a steady, standardized flow of commerce. But the benefits to the South Improvement Company were much greater: with cheap shipping and intelligence of their competitor's activities, South Improvement was able to pressure rival refineries in the Cleveland area to sell out at a loss. Just two years after the formation of the company, Standard Oil was the only major refinery in the Cleveland area.

See Also

• John D. Rockefeller
• Standard Oil
• Charles Pratt
• Henry H. Rogers
• Charles Pratt and Company
• Ida M. Tarbell