Posts
The Oil Extraction
The 1872 Law Still Giving Away Public Resources Today — And How Rockefeller Built $340 Billion on What You Already Owned
THE ENDLESS FRONTIER: Public Money, Private Empires — Post 3 | February 2026
"Different Frontier. Same Extraction. Since 1850."
Post 1: The Pattern — 200 years, one mechanism
Post 2: The Railroad Theft — 175 million acres, the birth of American extraction
Post 3: The Oil Extraction ← YOU ARE HERE
Post 4: The Internet Heist — DARPA built it, Silicon Valley owns it
Post 5: The Defense Machine — 70 years of cost-plus contracts
Post 6: The Space Grab — The biggest extraction in human history, happening now
Post 7: The Same Players — How public wealth compounds into private dynasties
Post 8: What Breaks the Cycle — Three attempts, one possibility
The Law That Time Forgot (But Mining Companies Didn't)
Most Americans have never heard of the General Mining Act of 1872. The mining companies that use it every day are very familiar with it.
Here is what it does:
It opens 350 million acres of federal public land — more than 15% of all the land in the United States — to hardrock mineral extraction. On this land, any U.S. citizen or corporation can stake a mining claim by paying $100 to the Bureau of Land Management and making minimal annual improvements. For a fee of $5 per acre (set in 1872, never updated for inflation), a claim can be "patented" — converted to full private ownership of federal land.
No royalties. No environmental protection requirements at the time of enactment. No requirement to even report what minerals are being extracted. The federal government receives no income from minerals taken from lands that belong to the American public.
Compare this to oil and gas extraction on public land: companies pay royalties of 12.5% on production. Coal pays royalties. Even sand and gravel extraction has fees. But gold, silver, copper, uranium — the most valuable hardrock minerals — extracted from public land you own: zero royalties for 153 years.
The result, documented by Earthworks and the Mineral Policy Center: more than $300 billion in minerals extracted from public land since 1872. Zero royalties paid to the public treasury.
That's not a historical scandal. That's an ongoing one. It happened yesterday. It's happening today. It will happen tomorrow — unless Congress acts. And Congress has been trying to reform this law since 1987 with no success.
WHAT IT DOES:
• Opens 350 million acres of federal public land to hardrock mining
• Any U.S. citizen/corporation can stake a claim for $100 fee
• Can convert to full private ownership (“patent”) for $5/acre
• $5/acre price: Set in 1872. Never updated for inflation. Still $5.
WHAT IT DOESN’T REQUIRE:
• No royalties on minerals extracted (zero, not 1%, not 5%, zero)
• No royalty reporting to the federal government
• No requirement to report quantity or type of minerals extracted
• No environmental protections (enacted 1872, before environmental law)
THE RESULT (153 YEARS):
• $300B+ in minerals extracted from public land
• $0 in royalties paid to the American public
• Source: Mineral Policy Center / Earthworks
THE CONTRAST:
• Oil/gas on public land: 12.5% royalty to public
• Coal on public land: Royalties required
• Sand/gravel on public land: Fees required
• Gold, silver, copper, uranium: ZERO ROYALTIES
U.S. DEPARTMENT OF INTERIOR (2022):
“Hardrock mining is the only extractive industry on U.S. public lands
that pays no royalties to taxpayers.”
HOW MANY TIMES HAS CONGRESS TRIED TO REFORM IT?
Since 1987: Multiple attempts (1994, 2007, 2014, 2022). All failed.
Mining industry lobbying has blocked every reform attempt for 37 years.
This is not a historical law. It is active extraction. Right now. Today.
Frontier Compounding: How Railroad Infrastructure Built the Oil Monopoly
To understand Rockefeller, you have to understand the sequence.
Rockefeller didn't invent oil. He didn't discover the Pennsylvania oil fields. He didn't build the railroads that moved oil to market. What he did — with extraordinary precision — was identify how to use each layer of existing public infrastructure to monopolize the next layer of the economy.
Layer 1: Railroads (already built on public land grants)
The transcontinental railroad was complete by 1869. The eastern rail network — built substantially on public land grants and government bond guarantees — connected the Pennsylvania oil fields to refineries in Cleveland and Pittsburgh and markets in New York.
Rockefeller didn't need to build this infrastructure. The public had funded it. He needed only to control access to it.
Layer 2: The Railroad Rebate System (private negotiations on public infrastructure)
In November 1871 — the same year the General Mining Act was being written — Rockefeller sat down with railroad executives including Henry William Vanderbilt to negotiate the South Improvement Company agreement.
The deal: Standard Oil would guarantee railroad companies steady, high-volume business. In exchange, railroads would give Standard Oil secret rebates — charging Standard 40 cents less per barrel than competitors. More explosively: Standard would receive "drawbacks" — rebates on every barrel its competitors shipped, and intelligence on competitor shipping prices.
The railroads were publicly subsidized infrastructure. Using them was supposed to be available to all shippers equally. But Rockefeller negotiated secret private advantages on public infrastructure. His competitors paid full rates. He paid discounted rates. And received a cut of what his competitors paid.
Layer 3: The Cleveland Massacre (using infrastructure advantages to eliminate competition)
Armed with railroad rebates that his competitors couldn't match, Rockefeller moved. In three months between February and March 1872, Standard Oil bought out, shut down, or bankrupted 22 of its 26 Cleveland competitors.
The threat was simple: Rockefeller's railroad advantage made competition impossible. Smaller refineries could either sell to Rockefeller at his price or be bankrupted by a competitor whose transportation costs were 40 cents per barrel lower than theirs. Most sold. The holdouts went bankrupt.
By the late 1880s, Standard Oil controlled 90% of American refineries. Built on railroad infrastructure the public had funded.
FRONTIER 1 (Railroad) → FRONTIER 2 (Oil):
How public railroad infrastructure enabled oil monopoly
STEP 1: Railroads built on public land grants (1850-1869)
• 175 million acres of public land → private railroad companies
• Public bond guarantees → railroad construction financed
• Result: National rail network connecting oil fields to markets
STEP 2: Rockefeller negotiates secret railroad rebates (1871)
• November 1871: Meets with Henry William Vanderbilt + railroad executives
• South Improvement Company: Secret deal on publicly-subsidized rails
• Standard Oil rate: Normal rate MINUS 40 cents/barrel
• Competitor rate: Normal rate PLUS 40 cents/barrel rebate TO Standard
• Bonus: Intel on competitor prices (industrial espionage via railroad data)
STEP 3: Cleveland Massacre (1872)
• Feb-March 1872: 22 of 26 Cleveland competitors bought/bankrupted
• Mechanism: Railroad advantage made competition mathematically impossible
• Competitors: Sell at Rockefeller’s price or go bankrupt. Most sold.
STEP 4: National monopoly (1870s-1880s)
• Repeated Cleveland pattern in Pittsburgh, Philadelphia, New York
• By 1880: Standard Oil controls 90% of U.S. refining
• By 1882: Standard Oil Trust created (first modern holding company)
STEP 5: Public mineral rights complete the empire
• General Mining Act 1872: Cheap access to public mineral resources
• Standard Oil uses publicly-owned mineral rights for raw material access
• Two layers of public subsidy: railroad infrastructure + mineral rights
• Neither layer appears on Standard Oil’s balance sheet
RESULT: Rockefeller fortune = ~$340 billion (today’s dollars)
Built entirely on sequenced exploitation of public resources.
The Secret Cartel Meeting Nobody Talks About
In November 1871, John D. Rockefeller met in New York with the presidents of the three most powerful railroads in America — the Pennsylvania, the New York Central, and the Erie. Also present: Henry William Vanderbilt, son of Cornelius Vanderbilt and heir to the railroad empire built on public land grants.
This meeting produced the South Improvement Company agreement — a secret cartel that would have given Standard Oil structural monopoly advantages over every competitor in America.
The agreement:
- Railroads would raise rates for all oil shippers
- Standard Oil (and a small group of large refiners) would receive secret rebates — paying less than the published rate
- Standard Oil would additionally receive "drawbacks" — a payment for every barrel its competitors shipped
- Standard Oil would receive its competitors' shipping price data — enabling it to underprice them precisely
This was a secret agreement between the owners of publicly-subsidized infrastructure (railroads) and a private refiner, designed to give that refiner structural advantages impossible for any competitor to overcome — using public infrastructure as the weapon.
Public outcry forced the South Improvement Company to disband in April 1872. But by then, Rockefeller had already used the threat of the agreement to complete the Cleveland Massacre. The secret cartel was exposed. The damage was done.
— U.S. Government antitrust lawsuit against Standard Oil, 1906
"The sole beneficiary." The government's own investigation concluded that Standard Oil was essentially the only company in America receiving discriminatory preferential treatment from publicly-subsidized railroads.
And the railroads — built on 175 million acres of public land — were the instrument of this discrimination. Public infrastructure, privatized and used against the public interest.
Ida Tarbell: The First Investigative Journalist to Document the Pattern
In November 1902, journalist Ida Tarbell began publishing a 19-part investigative series in McClure's Magazine documenting Standard Oil's practices. It was published as a book in 1904: The History of the Standard Oil Company. It remains one of the most consequential pieces of investigative journalism in American history.
What Tarbell documented:
- The secret railroad rebates (Standard's structural advantage on public infrastructure)
- The Cleveland Massacre (using infrastructure advantage to eliminate competition)
- Standard Oil's espionage operations (spying on competitors through railroad shipping data)
- The bribery of elected officials (regulatory capture)
- The "bogus independent companies" (separate entities used to hide monopoly control)
Tarbell understood the core mechanism: Standard Oil's power came not from being better at refining oil. It came from having structural advantages on publicly-subsidized infrastructure that competitors could never match.
She grew up in the Pennsylvania oil fields. Her father was an independent oil producer who was driven out of business by Standard's practices. She documented this not as abstract economics but as concrete destruction of people's livelihoods by a company weaponizing public infrastructure for private monopoly.
Rockefeller called her "Miss Tarbarrel" and "this poison woman." He refused to comment publicly. Standard Oil lobbied, threatened, and maneuvered to discredit her work.
It didn't matter. Her documentation was precise. Her sources were documented. The facts held.
In 1906, the U.S. government filed suit under the Sherman Antitrust Act. In 1911, the Supreme Court ordered Standard Oil broken into 39 independent companies.
Rockefeller was already retired. His wealth was already accumulated. The breakup came after the fortune was built. Standard Oil's successors — Standard Oil of New Jersey (Exxon), Standard Oil of New York (Mobil), Standard Oil of California (Chevron) — remained dominant oil companies. The Rockefeller family fortune endured and compounded.
The pattern was not broken. It was temporarily inconvenienced.
WHAT TARBELL DOCUMENTED:
• Secret railroad rebates on publicly-subsidized infrastructure
• Cleveland Massacre: 22/26 competitors eliminated in 3 months
• Espionage: Competitor price intelligence via railroad shipping data
• Bribery: Elected officials + regulators
• Bogus independent companies: Separate entities hide monopoly control
TARBELL’S CORE INSIGHT:
Standard Oil’s power wasn’t from better refining.
It was from structural advantages on public infrastructure competitors couldn’t match.
THE PARALLEL TO OUR NFL SERIES:
Tarbell: Standard Oil uses public railroad infrastructure for private monopoly
THE LAND GRAB: NFL owners use public stadium subsidies for private real estate empire
Same mechanism. Different asset. 100 years apart.
WHAT THE 1911 BREAKUP DID:
• Broke Standard Oil into 39 companies
• Standard Oil NJ → Exxon (still dominant)
• Standard Oil NY → Mobil (merged with Exxon 1999)
• Standard Oil CA → Chevron (still dominant)
• Rockefeller fortune: Already accumulated, continued compounding
WHAT THE BREAKUP DIDN’T DO:
• Didn’t reclaim public mineral rights
• Didn’t return value extracted from public resources
• Didn’t change the General Mining Act of 1872
• Didn’t prevent Exxon, Chevron from using same public land access
• Didn’t stop the wealth from funding the next frontier
By the time the public stopped it, the extraction was done.
Same as every frontier before and after.
The 1872 Law Today: $2-3 Billion Per Year, Zero Royalties
The General Mining Act of 1872 is not a relic. It is active law governing active extraction right now.
Every year, mining companies extract $2-3 billion in minerals from public federal land under the 1872 law. Every year, they pay the American public zero royalties on those extractions. This has been happening continuously since 1872.
The U.S. Department of the Interior stated in 2022 — on the law's 150th anniversary: "Congress did not, however, account for the legacy of environmental degradation that mining would have on its surrounding communities, nor did it provide for royalties, or a comprehensive system... Hardrock mining is the only extractive industry on U.S. public lands that pays no royalties to taxpayers."
The Biden administration's own Interior Secretary was testifying before Congress that a 150-year-old law was still operating and still extracting public value with zero public compensation.
Congress has attempted to reform the law repeatedly:
- 1987: Reform efforts begin (no result)
- 1994: Clinton administration proposes 12.5% royalty (failed)
- 2007: House passes Hardrock Mining and Reclamation Act (died in Senate)
- 2010: Senate reform bill — killed by Harry Reid, citing other legislative priorities
- 2014: Reform bill introduced (died)
- 2022: Biden administration pushes reform (ongoing)
37 years of attempted reform. Zero results. The mining industry lobby has blocked every effort.
This is regulatory capture perfected. Not a revolving door (though that exists too). Just raw lobbying power preventing reform of a 153-year-old law that gives away public resources for $5 per acre.
CURRENT ANNUAL EXTRACTION:
$2-3 billion in minerals/year from public land (Mineral Policy Center)
$0 in royalties paid to American public
CUMULATIVE EXTRACTION (1872-1993):
$230 billion extracted (Mineral Policy Center, 1993 study)
$300 billion+ total (Earthworks, more recent estimate)
$0 in royalties
THE $5/ACRE PRICE:
Set: 1872
Current value (inflation-adjusted): ~$120/acre
Actual charge: Still $5/acre
Discount to mining companies: 96%
WHAT OTHER INDUSTRIES PAY ON PUBLIC LAND:
Oil/gas: 12.5% royalty
Coal: Royalties required
Sand/gravel: Fees required
Gold/silver/copper/uranium: $0
REFORM ATTEMPTS (1987-2022):
37 years of failed attempts
Mining lobby has blocked every bill
Current status: Law unchanged
THE PARALLEL TO SPACE:
2015 U.S. Space Act: Private companies own resources extracted from asteroids
No royalties to public
No environmental requirements
Same structure as 1872 Mining Act — applied to space
They didn’t have to invent a new model for space extraction.
They copied the 1872 model and applied it to asteroids.
The Rockefeller-Carnegie-Vanderbilt Network: How Frontier 1 Funded Frontier 2
The extraction did not operate in isolation. The wealth from railroad land grants didn't just make railroad barons rich. It created the investment capital, the banking relationships, and the infrastructure that made oil extraction possible.
The network:
Vanderbilt → Rockefeller: Vanderbilt's railroad empire (New York Central) was one of the railroads that gave Standard Oil its secret rebates. The publicly-subsidized railroad infrastructure (Frontier 1) became the competitive weapon for oil monopoly (Frontier 2). Vanderbilt's family reinvested railroad dividends "in other industries, especially railroads" according to Standard Oil's own records — and in oil companies, creating direct financial links between the two frontiers.
Carnegie → Rockefeller: Carnegie built Carnegie Steel by supplying rails to railroad companies flush with public-subsidized capital. Carnegie Steel then supplied the pipelines that Standard Oil used to move oil — replacing the railroads as the primary oil transport method. Carnegie's steel empire (built on Frontier 1 railroad contracts) literally supplied the infrastructure for Frontier 2 oil extraction.
J.P. Morgan → All Frontiers: Morgan's bank financed railroad construction (Frontier 1), Standard Oil's trust formation (Frontier 2), AT&T's telecommunications monopoly, and eventually the defense contractors and tech companies of subsequent frontiers. J.P. Morgan Chase — still one of the largest banks in the world — is the direct institutional descendant of banking relationships built on 19th-century public subsidy extraction.
This is what "the same players" means: not the same individuals, but the same accumulated capital flowing from one frontier to the next. Rockefeller's oil profits funded philanthropies (Rockefeller Foundation) that shaped public policy and research institutions (University of Chicago) that influenced economics and policy for the next 100 years. Carnegie's steel profits funded Carnegie Mellon University — which today produces defense technology researchers and computer scientists who work at the companies of Frontiers 4 and 5.
The wealth compounds. The players evolve. The mechanism continues.
Standard Oil's Descendants: Still Extracting, Still Dominant
The 1911 antitrust breakup of Standard Oil is celebrated as a triumph of public interest over monopoly power. And it was a genuine interruption of the extraction — for a time.
But look at what the breakup produced:
- Standard Oil of New Jersey → Exxon → ExxonMobil (2024 revenue: $398 billion)
- Standard Oil of New York → Mobil → Merged with Exxon (1999)
- Standard Oil of California → Chevron (2024 revenue: $200 billion)
- Standard Oil of Indiana → Amoco → Merged with BP (1998)
- Standard Oil of Ohio → Sohio → Part of BP
The 39 "independent" companies created by the 1911 breakup largely re-merged over the following 90 years. Today, Standard Oil's direct descendants — ExxonMobil and Chevron alone — have combined annual revenues of nearly $600 billion.
And they still use the General Mining Act of 1872. They still extract from public land with minimal royalties. The extraction model was not broken in 1911. It was reorganized.
This is the critical lesson for every frontier: antitrust action and regulatory reform can interrupt the extraction temporarily. But if the underlying mechanism — public resources given to private companies with no royalty structure — isn't changed, the extraction resumes. Under new names. With new owners. At larger scale.
THE 1911 “BREAKUP” INTO 39 COMPANIES:
Standard Oil NJ → Exxon → ExxonMobil ($398B revenue, 2024)
Standard Oil NY → Mobil → Merged into ExxonMobil (1999)
Standard Oil CA → Chevron ($200B revenue, 2024)
Standard Oil Indiana → Amoco → BP (1998)
Standard Oil Ohio → Sohio → BP
WHAT THE BREAKUP DID:
• Created 39 theoretically independent companies
• Temporarily disrupted monopoly control
• Rockefeller’s wealth: Already accumulated, continued compounding
• His fortune actually INCREASED after breakup (owned shares in all 39)
WHAT THE BREAKUP DIDN’T DO:
• Change General Mining Act 1872 (still $0 royalties)
• Reclaim public mineral rights already granted
• Return extraction profits to public treasury
• Prevent re-consolidation (39 companies → effectively 4-5 majors today)
THE LESSON FOR EVERY FRONTIER:
Antitrust action can interrupt extraction temporarily.
If the underlying mechanism isn’t changed, extraction resumes.
Under new names. New owners. Larger scale.
The same lesson applies to:
• Defense contractor monopolies (post-WWII)
• Tech platform monopolies (today)
• Space monopolies (forming now)
The Line From 1872 to Space
The General Mining Act of 1872 established a principle that has governed every extraction frontier since:
Public resources → Private ownership → Zero royalties → Extraction without public compensation
In 2015, Congress passed the U.S. Commercial Space Launch Competitiveness Act. It gave private companies the right to own resources they extract from asteroids, the Moon, and other celestial bodies. No royalties to the American public. No environmental requirements. No public benefit sharing.
This is the General Mining Act of 1872 applied to space.
The asteroid belt contains mineral wealth estimated — conservatively — in the quadrillions of dollars. The 2015 Space Act gave private companies the right to extract those resources and keep everything.
The same principle. The same structure. Applied to resources worth not billions but quadrillions.
They didn't need to invent a new extraction model for space. They copied the 1872 model and applied it to the solar system.
In Post 4, we follow the money from oil extraction to the next frontier: DARPA's internet. How publicly-funded research became Silicon Valley's $11 trillion in private market value — and how the oil industry's lobbying model became the template for tech's regulatory capture strategy.
KEY SOURCES FOR THIS POST:
General Mining Act 1872: Wikipedia analysis, Earthworks (advocacy organization with documented figures), U.S. Department of the Interior 2022 testimony to Congress, Congressional Research Service (Library of Congress), Ballotpedia. Standard Oil: Wikipedia (extensively cited), Britannica Money, Library of Congress Business History research guides, PBS American Experience, Yale Energy History, H-Net Reviews of Ron Chernow’s “Titan,” Teach Democracy (based on court records).
THE KEY NUMBER ($300B+):
The $300 billion figure for minerals extracted under the 1872 Act comes from the Mineral Policy Center, cited in multiple sources including Wikipedia and Earthworks. This is the most widely cited figure; some estimates are higher. We’ve used the conservative documented figure.
THE SMOKING GUN DISCOVERED IN RESEARCH:
The November 1871 meeting between Rockefeller and Henry William Vanderbilt — the railroad baron whose empire was built on public land grants — to negotiate the South Improvement Company agreement. This meeting, documented in Standard Oil research including the NTNU case study citing Ron Chernow’s “Titan,” directly connects Frontier 1 (railroad land grants) to Frontier 2 (oil monopoly) through a specific, documented meeting between the key beneficiaries of both extractions. The frontiers didn’t just compound abstractly — they were connected by the same people meeting in the same room.
WHAT COMES NEXT:
Post 4 (The Internet Heist) documents how DARPA built the internet, NSF grants seeded Silicon Valley, and how the oil industry’s lobbying model — perfected over 50 years of blocking mining law reform — became the template that tech companies used to prevent platform regulation.
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